Artificial intelligence infrastructure startup Fermi America, co-founded by former Texas governor and former U.S. Energy Secretary Rick Perry, in its first day of trading rose to a valuation of more than $19 billion in a reflection of increased investor appetite for AI-fueled data centers.
Shares of Fermi opened at $25 Wednesday on the Nasdaq and closed at more than $32 after its initial public offering raised $682.5 million with 32.5 million shares priced at $21 each. Shares of Fermi are expected to start trading Thursday on the London Stock Exchange, marking the first time a company has launched an IPO with simultaneous listings on the Nasdaq and the London Stock Exchange this century, according to a statement from Haynes Boone, one of the law firms that represented Fermi in the offering.
Fermi is structured as a real estate investment trust, and the IPO’s success could set the tone for how infrastructure is funded in the future, according to the law firm.
Fermi “crossed the finish line just in time” in making its debut Wednesday on the Nasdaq ahead of the U.S. government shutdown. The closure could delay the progress of new REITs that need the approval of the Securities and Exchange Commission, one analyst told CoStar News.
“More broadly, I think the Fermi IPO is excellent for the REIT industry, which is in need of some positive vibes after the worst half-decade ever” in its history spanning more than 50 years, said Alex Pettee, president and director of research at Hoya Capital Real Estate, in an email to CoStar News.
“The mere fact that there is interest — and media coverage — of a REIT IPO is quite meaningful, and certainly private equity firms and others with large property portfolios are watching very closely,” Pettee added.
Fermi, based in Amarillo, Texas, plans to use the proceeds to develop Project Matador, an AI-focused data center campus that is expected to be one of the largest privately led energy infrastructure projects in the nation’s history and one of the world’s biggest data center complexes, according to the statement from Haynes Boone.
Project Matador is planned to rise on more than 5,000 acres in the Texas Panhandle Fermi is leasing from Texas Tech University.
The campus in Amarillo is designed to span 15 million square feet of AI facilities that are expected to be powered by nuclear, natural gas, solar and battery storage. The project is expected to deliver up to 11 gigawatts of energy by 2038, according to regulatory filings.
Meanwhile, Fermi’s prospectus that it filed with the SEC this week warned investors of ongoing legal proceedings tied to the company’s president and CEO, Toby Neugebauer. Those legal issues involve Neugebauer’s time leading GloriFi, a banking app that filed for bankruptcy protection in 2023.
Fermi was founded in January and reported a net loss of $6.4 million as of June 30, according to the prospectus. Fermi’s IPO makes it the first REIT to go public since 2017 without any revenue, The Information reported.
However, Fermi’s successful IPO could be a clear signal that infrastructure and energy assets are entering the REIT mainstream, said Jim Davidson, a partner at law firm Hogan Lovells who specializes in REITs, in an email. Davidson was not directly involved with Fermi’s IPO.
Phase one of Project Matador includes developing 2.6 million square feet of data center capacity with 1.1 gigawatts of power from natural gas by the end of 2026, according to the prospectus.
For the record
Haynes Boone attorneys based in Dallas and London represented Fermi in the IPO. UBS Investment Bank, Evercore ISI, Cantor and Mizuho were the book-running managers for the offering. Ocean Wall is an adviser in connection with the offering’s listing on the London Stock Exchange.
CoStar News' Senior Staff Writer Mark Heschmeyer contributed to this report.