The pullback in listings is a warning sign for the most capital-hungry corner of the AI trade. Developers that depend on fresh equity and debt to build face higher funding costs and tougher scrutiny of their pipelines. That is most negative for neocloud firms and newer developers without completed projects, which already showed in a weeklong slide in CoreWeave and Nebius. Established operators and chipmakers with proven demand are less exposed, but memory-chip weakness shows sentiment is fragile. Higher Treasury yields, driven partly by energy-led inflation, are the macro thread running through it, so a softer inflation backdrop would help reopen the window. Investors reserving capital for the Anthropic and OpenAI listings could also crowd out smaller deals in the coming months.
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Earlier, hopes still up:
UBS sees 28% Q3 S&P 500 earnings growth, says AI and cyclicals can lift US stocks
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The AI trade still has the market’s money, but data centre developers asking for it at listing are finding investors far more selective than a few months ago.
Summary:
ICYMI, Firmus Grid cancelled its Australian IPO, which at almost $5 billion would have been the country’s largest in 30 years, citing market volatility, and plans to raise funds privately and list in the US next year
AirTrunk, which had been preparing to list in Singapore, now hopes to go public in the first half of next year, The Wall Street Journal (gated) reported
Rising interest rates, a volatile market and political pushback against data centres are making investors warier, especially of developers with little track record
SoftBank’s SB Energy delayed its IPO after pushback on valuation; some investors are reserving capital for Anthropic’s planned listing
London-based Nscale is still aiming to list in the coming weeks, while Lambda has opened a final $4 billion pre-IPO round ahead of a planned listing next year
Australia’s Firmus Grid has cancelled what would have been the country’s largest initial public offering in 30 years, as rising interest rates, market volatility and political pushback cool investor appetite for AI data centre listings, The Wall Street Journal reported.
Firmus, which has close ties to Nvidia and is backed by Coatue and Blackstone, had planned to raise almost $5 billion. The company cited recent market volatility and prevailing conditions in pulling the deal and now plans to raise money privately and list on a US exchange next year, according to a person familiar with the matter. Within days, AirTrunk, another Blackstone-backed data centre operator that had been preparing to list in Singapore, pushed its plans back to the first half of next year amid concerns over volatility and interest rates.
The setbacks mark a sharp shift from just a few months ago, when investors were eager for almost any AI-linked listing. Companies that had targeted fourth-quarter debuts are now reconsidering their timing. Sentiment in parts of the AI trade has also turned fragile. Memory-chip makers from Micron to Samsung sold off on Tuesday on concerns about new competition from China, while neocloud firms CoreWeave and Nebius extended a weeklong decline.
Industry concerns were on display at a data centre conference in Las Vegas last week, where one panel was titled “Are We Screwed?” Attendees warned that market conditions and local opposition to data centres could tighten funding and derail deals. Bankers said the backlash is leading buyers to see infrastructure companies as riskier, giving sellers less credit for projects not yet built, with investors increasingly wary of developers lacking a record of completing projects.
That scrutiny has hit SoftBank’s SB Energy, which delayed its IPO after pushback on its potential valuation. Its filing showed it has no data centres in operation, despite a 10-gigawatt project in Ohio for OpenAI and a contracted backlog of more than $400 billion.
Investors are also becoming more selective, with some reserving capital for Anthropic’s planned offering later this year, the Journal reported. The planned listings of Anthropic and OpenAI, expected to be among the largest in market history, have both shaped and been shaped by the uncertainty. Anthropic is hosting an investor day at its San Francisco headquarters on Wednesday after pushing its timeline back by several weeks. Weak performance by recent IPOs is adding to the caution.
Some companies are pressing ahead. London-based Nscale is aiming to list in the coming weeks, though people familiar with its thinking acknowledged the timing is not ideal. Lambda, backed by Nvidia, Blackstone and Coatue, has opened a final $4 billion pre-IPO funding round ahead of a planned listing next year. Whether the window reopens is likely to depend on the path of interest rates and how the AI trade holds up through earnings season.
This article was written by Eamonn Sheridan at investinglive.com.
