Maas shares fall 22.4% as Firmus considers cutting IPO price

Maas Group shares closed down 22.4% on 8 October, erasing about A$517 million in market value, as concerns grew that Firmus Technologies could shrink its planned $5 billion initial public offering, Reuters reported.

Firmus weighs a lower offer price

Firmus and its advisers were considering reducing both the size of the sale and its price from A$11 to A$8.25 a share, according to local media reports cited by Reuters. ABC News reported a different possible price of about $8 a share. Both prices were reported as possibilities, with the offer terms still being finalised on 8 October.

Investment banks stopped taking bids on 8 October and were set to determine the listing price. Goldman Sachs was reportedly approached at midday to help prevent the float from collapsing. Reuters said overseas demand for Firmus shares had fallen short of expectations, according to local media reports.

Fund manager Roger Montgomery said investors had previously been informed that indicative orders at A$11 a share exceeded the size of the offer. Indicative orders are expressions of interest made before formal bids. The prospect of a lower price followed that earlier message to prospective buyers.

Reuters put the planned IPO at $5 billion. ABC News reported that Firmus intended to seek up to $7 billion from institutional and retail investors. Reuters described the transaction as Australia’s second-largest share sale, behind Telstra’s 1997 float, which it put at roughly $10 billion. The Guardian put Telstra’s sale at $14 billion.

Maas Group’s 3.2% Firmus stake

Maas, a construction services provider, owns 3.2% of Firmus. Its shares fell as much as 30% during trading on 8 October before recovering part of that decline. The company was valued at A$1.79 billion after the closing fall, Reuters reported.

The Australian Securities Exchange questioned Maas about the share movement. Maas said in an exchange filing, as reported by Reuters, that speculation over whether the Firmus IPO would proceed had affected sentiment. It said it was unaware of any undisclosed information that would account for the trading.

Emanuel Ajay Datt, managing director of fund manager Datt Group, estimated that a reduction in Firmus’s offer price from A$11 to A$9 would lower the value of Maas’s holding by about A$75 million. Datt said that amount was modest compared with the day’s decline in Maas’s market value. His estimate used a A$9 offer price, rather than the lower prices under discussion.

Firmus valuation rests on planned capacity

Firmus was valued at just under $2 billion in a private funding round about a year before its planned listing, The Guardian reported. The newspaper described a targeted ASX debut valuation of more than $40 billion. ABC News reported that the IPO could value Firmus at more than $50 billion.

The company is building an AI data centre in Launceston and plans two more in Tasmania. Its ambitions also extend elsewhere in Australia and into Southeast Asia. The Guardian reported that Firmus operated two facilities, in Melbourne and Singapore, while most of its planned development remained unbuilt. Ten Cap portfolio manager Jun Bei Liu said that 97 per cent of the capacity Firmus had promised had yet to be built.

A draft prospectus described by The Guardian forecast $5 billion in annual earnings once Firmus’s development pipeline progressed. AI Affairs previously reported that Firmus expected a $77 million half-year loss ahead of the IPO.

Firmus targets 23 October ASX debut

Firmus was absent from the ASX’s upcoming floats and listings webpage on 8 October. The exchange’s webpage says it records listings after receiving a formal application and is usually updated within three business days of receipt. Firmus is scheduled to float on the ASX on 23 October.