How the Firmus float just tanked this company's share price

Maas Group Holdings Ltd (ASX: MGH) shares plunged more than 20% on Thursday after doubts were raised that data centre aspirant Firmus's float would get off the ground.

Mega float might sink

Firmus has been in the market trying to get commitments for its initial public offer (IPO) which was rumoured to be priced at $11 per share, valuing the company at $43.7 billion.

But both The Australian and the Australian Financial Review are now reporting that demand for the shares is weak, and that the IPO could be pulled entirely.

This would be bad news for Maas Group, which holds a 3.2% stake in Firmus.

Maas Group Chair Stephen Bizzell recently told the company's annual general meeting that the company had been increasing its exposure to Firmus.

He said:

During the year and subsequent to financial year end, Maas took meaningful steps to increase its exposure to next-generation infrastructure. This included a strategic investment in Firmus Grid Limited, securing significant electrical infrastructure work supporting the development of AI and data infrastructure in Australia through JLE Group, and the acquisition of commercial property with power availability and grid proximity for future digital and energy infrastructure developments. These initiatives, together with the proposed Construction Materials divestment, represent a clear evolution in the Group's strategic direction.

Share valuation at risk

Macquarie this week released a new research report into Maas Group, in which it was conservative as to how it valued the company's Firmus stake.

While saying the 3.2% holding would be worth $4 per share at the $43.7 billion valuation, Macquarie only valued it at $1.42 per share, which reflected the $15.5 billion valuation at the time the investment was made.

The Australian, citing unnamed sources, reported on Thursday that the asking price for Firmus shares had fallen from $11 to $9, then $8.25, while the size of the raise had also fallen, from US$5 billion to US$3 billion.

The report said the IPO could be delayed or shelved altogether.

Maas Group shares fell as low as $4.47 in early trade on Thursday before recovering to be 24.7% lower at $4.81.

Macquarie's price target on the company was increased from $6.75 to $8.15 this week, largely as a result of the Firmus valuation.

Maas Group also announced this week that the divestment of the construction materials business had formally been completed, and it had been paid $1.61 billion.

The company also remains entitled to receive contingency payments of up to $120 million, subject to the achievement of agreed commercial and operational milestones.

The post How the Firmus float just tanked this company's share price appeared first on The Motley Fool Australia.

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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