City's IPO market roars back to life as US energy and AI data centre developer Fermi lists in London

The City’s moribund IPO market came roaring back to life today with the “groundbreaking” dual listing on Nasdaq and London of electric grid and data centre developer Fermi valuing at more than $13 billion (£9.6 billion)

It is the largest IPO on the London stock exchange by offering size this year and the biggest by market capitalisation since September 2020. Today’s London listing comes after an IPO on Nsadaq yesterday when the share shot up 55% from the opening price of $21 on the first day of trading.

It is believed to be the first concurrent dual listing on Nasdaq and in London since ARM Holdings in 1998.

The listing is a huge boost for the City after one of the most dismal starts to the year for IPOs for decades. Figures this week show the capital fell to as low as 23rd in a global ranking of IPO destinations in the first nine months of the year with just £184 million raised.

There was a further boost for London when it emerged that specialist lender Shawbrook is also preparing to announce intention of a £2 billion London Stock Exchange debut – a move which could take place as soon as Thursday next week .

Texas based Fermi, which is raising $681 million through the listings, is planning to build 15 million sq ft of AI data centre capacity, powered by a mix of natural gas, solar, battery storage, and four planned nuclear reactors connected with a “HyperGrid.”

The huge 5,236-acre site energy and data campus - the equivalent of about 260 football fields or 17 Hyde Parks - is based Texas Tech University campus at Amarillo, eventually delivering up to 11 gigawatts of power. The first gigawatt from the scheme, known as Project Matador, is expected by 2026.

It was co-founded by former US energy secretary and Texas Governor, Rick Perry.

Toby Neugebauer, CEO of Fermi, said it was “not surprising at all” that the company wanted to list in London. He said: “Obviously the US is the dominant financial market in the world, but while our project is in Texas, its execution is solely dependent on global supply chains and when I think international commerce think London.

“London provides a transparency and insight into the business so the fact that we are listed here adds to our global brand. We come over here to enhance our visibility to the world and that is more than playing out.”

Neugebauer said the company had looked at other major global centres is Asia and Europe, including Singapore and Frankfurt but opted for London.He added: “I hope I’m not disappointed, but I don’t see any downside and a lot of potential upside in what we are doing today.”

He praised the City authorities for a swift approval of the listing saying when the company submitted its initial filing from the SEC to the Stock Exchange “they had relatively few comments from the get go, it was a relatively painless process.

“It shows the British government is aware it is going to have to be proactive to stay competitive.”

Neugebauer continued: “The market understands that AI and chips are only as good as the power that supports them. This IPO injects significant capital onto our balance sheet, enabling us to continue locking up long lead-time items and executing at the velocity of the last ten months which will be required to deliver power at scale.

“We are very pleased with the strong investor demand for our IPO in both London and New York, and remain laserfocused on execution, which will add stakeholder value and help America win the race to powering the future of AI.”

UBS Investment Bank, Berenberg, Ocean Wall, Panmure Liberum and Rothschild & Co are acting as financial advisers to the company.

Nick Lawson, chief executive of advisers Ocean Wall, said: “Fermi’s IPO is groundbreaking. It’s the first of its kind: a concurrent dual listing on Nasdaq and the London Stock Exchange.

“Ocean Wall and Haynes and Boone have been at the centre of this rapid, exacting process, working closely with HM Government, the FCA and the LSE to deliver with a record-breaking timetable. The calibre and commitment of every team made it possible.

“The message is clear: London is wide open for new deals, innovative structures and boundary-breaking transactions. Ocean Wall is proud to have helped pioneer a route that lets UK investors share in America’s innovation story.”

Nick Davis, co-office managing partner of the London office of law firm Haynes Boone which advised Fermi on the dual listing said:“The successful execution of a dual listing of this size and complexity is a major milestone – not only for Fermi, but also for the wider market as a signal of what can be achieved in London,”

“Fermi is reshaping the power industry and it is exactly the kind of innovative, high-growth company that London should be attracting. This listing proves London markets can deliver transactions of real scale and provide the capital, expertise and global profile needed to support the most ambitious companies.”

Chris Beauchamp, chief market analyst at IG said: “Fermi’s dual listing and the revival of Shawbrook’s IPO shows that London’s market is not yet doomed to irrelevance. These stories, coming in a week when the UK fell behind Mexico in the global IPO ranking, show that the City can still command the attention of vibrant companies. It sends a message to Westminster that, with a little more love and attention, London can still compete with other major global financial hubs.”