Firmus Technologies has scrapped what was set to be Australia’s biggest company listing in decades after investor demand for its much-hyped AI datacentre business failed to materialise.

A Firmus spokesperson said the board decided that proceeding with the offer was no longer in the best interests of the company and its shareholders.

“Firmus will now pursue capital from the private markets and consider alternative public and private market options,” the spokesperson said on Friday morning.

“We will provide additional information to shareholders as those options progress.”

Firmus, with an anticipated $44bn valuation, was expected to be the biggest ASX listing since Telstra in 1997.

But it faced mounting scepticism over its huge valuation, and forecast earnings, for a company in its startup phase with just two, small operational sites.

Backed by chip maker Nvidia and Wall Street firms Blackstone, Jane Street and Coatue, Firmus’s backers believed they could raise billions of dollars by selling shares in a public float with the help of five brokers.

The lack of demand means Firmus will need to raise money from private investors to fund its plans to build liquid-cooled “AI factories” in Australia and across Asia.

Frantic discussions

The polished Firmus pitch started to unravel midweek after it became clear the company’s bankers had vastly overestimated demand in their bid to raise $7bn from investors ahead of listing on the ASX on 23 October.

This prompted discussions about a heavy reduction in the company’s proposed $11-a-share initial public offering, according to one investment manager briefed on the matter.

The company ultimately decided to withdraw its application to list on the ASX altogether.

Guardian Australia previously reported growing concern that early Firmus investors were going to use retail investors buying into the float as their “exit strategy”, leaving small investors exposed if the excitement dissipated.

The datacentre company’s troubles have already rattled other parts of the market, with shares in Firmus investor Maas Group plunging more than 20% on Thursday.

The anticipated financial worth of the founders – Oliver Curtis, who has spent time in prison for insider trading, his cousin Tim Rosenfield, and Curtis’s former brother-in-law Jonathan Levee – will also be greatly reduced.