Investors have become acclimatised to quarter after quarter of valuation increases, often running to hundreds of millions over each three-month period.
The first slowdown was a slight stall in June 2025, when the value of Infratil’s stake was reduced from A$6.82b to A$6.75b.
“It’s definitely interest rate-driven,” Forsyth Barr analyst Ben Crozier told the Herald.
Debt was set to grow as CDC borrowed to build new data centres to meet its forward contracts.
“A lot of their cap-ex is debt-funded,” Crozier said.
Rises in long-term rates had offset new business won during the quarter.
Headwind for all growth companies
NZ Shareholders Association chief executive Oliver Mander also focused on the forward yield curve, or expectation of higher interest costs.
“That’s going to be a really interesting potential headwind facing a lot of growth companies,” Mander said.
Firmus palaver
Although rising interest rates will weigh on CDC’s debt pile, there has also been market chatter about the apparent dissolution of its partnership with one of its data centre clients, Australian “neo-cloud” start-up Firmus (which was not mentioned in the presentation accompanying Infratil’s market filing).
Infratil and its manager, Morrison, did not immediately respond to questions related to Firmus. Infratil has made no market filing on the apparent issue.
Firmus is lining up an IPO for later this month, with a prospectus due next week. The start-up is expected to target a A$7b raise at a A$43.7b valuation, which would make it the second-largest initial public offering in the Australian Stock Exchange’s history after Telstra’s 1997 float, which raised A$14.2b.
CDC and Firmus’ “Project Southgate” partnership, which would have involved the two companies collaborating on data centres with 1.6GW (1600MW) of capacity, has been dissolved after deployment of just 42MW, according to a report in The Australian quoting Firmus co-founder Oliver Curtis.
A source close to Infratil manager Morrison poured cold water on the multi-gigawatt talk, telling the Herald, “CDC has previously announced 40MW of contracted capacity with Firmus, and this has been delivered. There have been no further contract announcements for this customer.”
In its investor presentation released today, Infratil said CDC’s capacity pipeline had increased from 3.94GW on June 30 to 4.18GW (data centres are described by their peak power usage).
Firmus will now build its own data centres in Malaysia, Indonesia and Tasmania (where community opposition to data centres has emerged), in partnership with Nvidia, according to reports.
The Australian Financial Review (AFR) reported that in an incident inside CDC’s Melbourne data centre – where Firmus has deployed 18,400 Nvidia chips on behalf of Meta – involving testing of the heavily promoted “HyperCube” cooling technology led to flooding. None of the parties would comment on the report.
On Monday, AFR also reported that Firmus had failed to pay its first rental bill to CDC on time.
Firmus began as a crypto-mining firm but pivoted to AI, with pilot data centre operations beginning this year.
Ahead of its prospectus, it has been reported that Firmus made an A$77m loss on “minimal” revenue in the first half. But it has also been tipped that the firm will reveal A$35b or more in contracted revenue from Meta and others when it files its pre-IPO documentation.
Right move to part ways
Across the Tasman, analysts have been sharply split over whether Firmus is a flash in the pan or the next big thing.
ForBarr’s Crozier told the Herald, “To me, it’s not surprising that CDC has chosen to part ways with Firmus.”
It was cheaper for CDC to get credit with high-quality clients like Amazon, Google and Microsoft – all of whom had signed long-term leases, Crozier said. But lenders could see neo-cloud customers like Firmus as a riskier proposition.
$20 price target
In a September 23 research note, Crozier reiterated his “Outperform” rating on Infratil in a September note, with a $20 target price.
He sees CDC as being on track to hit its A$750m ebitda target this year, with contracted capacity that should see it hit its goal of A$2.2b ebitda by 2029.
CDC had “8GW to 10GW of genuine demand” from blue chip clients like Amazon, Google and Microsoft over the period, dwarfing the potential 1GW dangled by neo-cloud contender Firmus.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
