Is this the biggest con job of all time?
They say if you live long enough you will see everything and this proposed new listing is the most extraordinary listing I have ever seen come onto any share market anywhere in the world.
The local share market is all abuzz with talk of the proposed listing of a company called Firmus Technologies – a company once focused on cooling system technologies and now caught in the whirlwind of data-centre construction.
Amazingly, the closest it has come to turning a profit is an expected US$77 million loss to be sustained for the six months to December 31, this year.
Every day the proposed valuations for this company are climbing higher. The latest estimate by Morgan Stanley analysts is for this company to list with a market value of about $90 billion.
That’s right. $90 billion and it is yet to turn a profit.
How can this be, I hear you ask?
Well it’s all about selling the sizzle and not the steak.
The people behind Firmus are now promoting it as a data-centre construction juggernaut and that it has contracts or undertakings with several leading technology companies to build data-centres throughout Australia and Asia.
It hasn’t built any to date, mind you. It just has plans to build them.
This is called catching a wave. The team behind Firmus, and let’s not mention one of the founders is Oliver Curtis who not so long ago was spending time in jail for insider trading, have grabbed onto the data-centre craze.
This is the buzzword in international investment circles. Everyone is wanting to be involved in building data-centres and there are only certain locations throughout Asia and Australia that have access to base load power and sufficient water to build them.
The risks though are huge. Building data-centres at scale is largely untested in Australia and while it is tempting to talk up the opportunities, the risks are substantial.
There is a shortage of energy and water in Australia and local communities are already hypersensitive to the prospect of large data-centres being built close to existing infrastructure.
More, there is a significant shortage of skilled workers in Australia available to build these centres with industry analysts estimating that Australia needs an additional 72,000 electricians, engineers and other skilled tradespeople.
Moreover Australia’s international data traffic flows through just 15 submarine cables, which are no thicker than a garden hose and which are regularly being damaged in various ways.
But sure, this company is worth $90 billion. In your dreams!