Fermi raises more than $680 million in its recently upsized IPO, with a valuation of $12.5 billion
Fermi's IPO priced on the high end of its expected range, as investors look to take part in a new AI - and Donald J. Trump - play.
The pricing of Fermi Inc.'s initial public offering showed investors continue to clamor for new ways to invest in the growth of artificial intelligence, and it helps to have President Donald Trump's name attached to it in one way or another.
The Texas-based company, co-founded by Rick Perry, a former secretary of energy in the first Trump administration, raised a lot more money than it originally expected, with reports suggesting the IPO was multiple-times oversubscribed.
What's fueling this investor demand, even as the company loses money, generates no revenue and was formed less than nine months ago? Besides going public at the best time for the IPO market in years, investors like that the company is in the business of providing power to AI data centers, and that its primary focus is on "Project Matador," which is the name for its plan to develop and operate the Donald J. Trump Generating Plant.
Read: Fermi's IPO to showcase Wall Street fervor for AI - and the Trump effect.
Fermi also plans to become a real-estate investment trust, which are companies that owns and operates real estate that produces income. Being a REIT also requires the company to distribute to its shareholders 90% of its REIT taxable income in the form of dividends, which often leads to their stocks having relatively high dividend yields.
The recently upsized IPO priced late Tuesday at $21 a share, which was on the high end of the expected range of $18 to $22 a share. On Monday, the company boosted the number of shares it would offer for sale to 32.5 million from 25 million, a sign of strong investor demand. That means at the IPO pricing, the company raised $682.5 million vs. the $525 million it would've raised at the original offering.
And with 593.18 million shares outstanding after the IPO, the pricing implies a market capitalization for Fermi of $12.45 billion.
The stock will begin trading on the Nasdaq sometime during Wednesday's session, under the ticker symbol "FRMI." Based on the timing of first trades of stocks of other high-profile IPOs, Fermi shares may open between 11:30 a.m. and 1 p.m. Eastern.
-Tomi Kilgore
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