Firmus looks to float

SPEAKER_1 (0:00)

ABC Listen, podcasts, radio, news, music, and more.

Sam Hawley (0:09)

Hi, it's Sam Hawley from ABC News Daily, the podcast that brings you one big story affecting your world each weekday in just 15 minutes.

SPEAKER_3 (0:20)

I personally think that it is an international problem and that you sort of fundamentally need to say, we don't want AIs doing AI research to make a smarter AI that makes a smarter AI that makes a smarter AI, because that could be a feedback loop that gets out of hand very quickly.

Sam Hawley (0:31)

Join me for ABC News Daily. Find us on ABC Listen.

Carrington Clarke (0:36)

The Australian stock market could be set for its second biggest IPO in history, with data center builder and operator Firmus looking to tap the market for billions. So does the business case stack up? Meanwhile, Australians across the country are adjusting to last week's rate hike in an economy with inflation still higher than the RBA is happy with. The RBA says it hopes we can avoid recession as it tries to tame price rises, but what lessons can be learned from previous economic cycles? Welcome to ABC Business Daily.

I'm Carrington Clarke.

Ian Verrender (1:12)

And I'm Ian Verrender, the ABC's Chief Business Correspondent.

Carrington Clarke (1:15)

Ian, I wanted to start by talking about Firmus. Now, this has been bubbling up throughout the whole year. This is the hottest potential IPO in the Australian stock market. It's a company that offers potentially investors here in Australia, a front seat to the AI investment boom.

It's hoping to be one of the big players from an Australian perspective, not just here about building these data centers, owning and operating them, but also pitching itself as a big player in the Asia Pacific, building them offshore as well. What do you make of these numbers? I mean, they're quite extraordinary. You're looking at a valuation north of $40 billion, looking to tap about $8 billion when it actually IPOs on the market towards the end of this month, it looks like. This is a lot of money for a company headed by two men who don't have a long history in tech innovation. What is the market buying into?

Ian Verrender (2:11)

Look, it's an extraordinary story on any measure.

The numbers themselves is set, I think it's $44 billion. It'll be valued out once it hits the market. They're out there at the moment doing the roadshow, trying to sign investors up in the IPO to get on board before it actually lists.

It seems as though it's all going swimmingly at the moment. Everyone seems to be just wanting to jump into this thing. Now, bear in mind that some of the world's biggest tech players and investors have already got on board with this. I mean, you've got Blackstone in there with a big shareholding. NVIDIA, the world's most valuable company, is often vies with Apple and some of the others for that mantle. NVIDIA is also a supplier of the chips. It's also a customer, and this is one of the problems that I think the entire industry has with this whole circular investment. They're all tied in together. You've got a big deal with Meta, which of course is the parent to Instagram and Facebook.

There's a whole lot of really canny, big name investors in this. Now, Firmus itself is what's known as a Neo Cloud. Just to explain what the lingo is all about here, because you're going to be able to say the right words here. Neo Clouds are data centers that aren't just your ordinary run-of-the-mill data centers. The ordinary ones can handle for the likes of Google and all of these other things. Where you've got, they just look after storage, they look after search, they look after just general computerized, everything that requires chips and computers. Neo Clouds, on the other hand, specialize in artificial intelligence. It's a much more sophisticated chip that's required there. It's a much more powerful, power-hungry and water-hungry operation, and so they're quite specialized. So, Firmus is what's known as a Neo Cloud.

Carrington Clarke (4:10)

Part of the argument for Firmus, what they're selling to the market, is that they have technology that allows them to run these data centers, these data factories, in a more efficient way when it comes to power use, and they kind of do the whole thing of setting up, building these things, and then running them. There are some potentially pretty major risks to the business model. You talk about the kind of circular economy at play here. NVIDIA is a big investor. It's also a major customer.

The money is all kind of sloshing around.