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A data centre real estate start-up co-founded by former US energy secretary Rick Perry jumped 28 per cent in its Wall Street debut as investors flocked to the latest stock offering tied to artificial intelligence.
Fermi’s shares opened at $25, above the $21 initially marketed to investors, and rallied as high as $27.37 on Wednesday — giving the group a fully diluted market capitalisation of more than $16bn — as the Texas-based power group began trading on Nasdaq. The offering raised more than $682mn for the company.
Fermi is also set to trade on the London Stock Exchange on Thursday, marking a coup for the UK’s beleaguered equity markets — where the five listings in the first six months of the year raised just $160mn, the lowest half-year figure since 1995. It is the first Nasdaq-LSE dual listing in decades. The London listing is intended to attract capital from foreign investors.
Fermi is tapping into surging demand for electricity from data centres to power the AI boom with plans to build the world’s largest energy and data campus in Amarillo, Texas. It aims to build nuclear, natural gas and renewable energy assets capable of delivering up to 11 gigawatts of electricity, which is more than the peak power demand of Portugal.
The build-out of the energy assets is expected to cost more than $50bn and includes plans to construct four Westinghouse AP1000 nuclear reactors.
The company’s IPO comes a week after Nvidia, the world’s biggest public company, pledged to invest up to $100bn in OpenAI, the start-up behind ChatGPT, and as other big data companies, including Google and Microsoft, have committed to building out vast data centre facilities to develop and power advanced AI.
Shares in companies supplying energy hungry data centres have seen record gains this year, with nuclear developer Oklo quadrupling in value. Constellation Energy, turbine manufacturer GE Vernova and power group NRG Energy have surged 53 per cent, 76 per cent and 80 per cent, respectively, since January, ranking them among the best performing stocks on the blue-chip S&P 500.
Some commentators, including UK tech investor James Anderson, have warned about an AI stock market bubble.
In an interview with the Financial Times, co-founder and chief executive Toby Neugebauer said he was not concerned the company would be derailed by over-optimistic forecasts of surging power demand.
“I think it is delusional to think we’re going to live in a world that doesn’t need dramatically more power,” he said. “There’s not enough electrons to fuel it.”
Fermi, which was founded in January, has still not announced the identity of its first customer. Neugebauer said it had clinched a deal with “one of the most valuable and respected technology companies on the planet” and is in talks with four other potential customers.
The company has close ties with the Trump administration, as Perry, a Republican and former Texas governor, served as energy secretary during the president’s first term in office. Fermi has provisionally named its energy centre the “President Donald J Trump Advanced Energy and Intelligence Campus”.
Perry, who is a director, twice sought the Republican nomination for the US presidency, famously promising he would eliminate the energy department if elected, though he forgot its name during a televised debate. He was later a contestant on the television show Dancing with the Stars.
The company is in the business of powering “the world’s most expensive sheds”, said Nick Davis, a London partner at Haynes Boone, which advised Fermi on its IPO.
The listing process in London had been streamlined by co-operative regulators, he added. “The [Financial Conduct Authority] and LSE have been incredibly pragmatic and helpful,” Davis said. “London is showing it is able to move at scale.”
Tapping global investors, particularly in the Middle East, drove Fermi’s decision to dual list in London, according to Davis. “People in the Far East and the Middle East who want time zones and want familiarity, are more comfortable trading through London than they are through New York,” he said.
Fermi is named after Italian-born scientist Enrico Fermi, who led the team that built the first nuclear reactor in the US in 1942. The company is structured as a real estate investment trust, which has secured a long-term lease on a 5,263 acre site next to Texas Tech University. It has not yet generated any revenues and does not expect to within the next 12 months.
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