Buy this ASX share to get exposure to the Firmus IPO

The upcoming share market listing of data centre company Firmus is shaping up to be the biggest float since Telstra Group Ltd (ASX: TLS) went public back in the 1990s, and the company’s valuation is living up to the hype.

Recent reports indicate that the Firmus initial public offer has been priced at $11 per share, valuing the company at $43.7 billion.

And while you can’t buy Firmus shares just yet, you can get exposure by buying into Maas Group Holdings Ltd (ASX: MGH).

Diversified services company leans into AI

Maas Group has been buying up Firmus shares in recent years and now owns 3.2% of the company.

Maas Group Chair Stephen Bizzell told the company’s recent annual general meeting that the company had made a considered investment in AI.

He said:

During the year and subsequent to financial year end, Maas took meaningful steps to increase its exposure to next-generation infrastructure. This included a strategic investment in Firmus Grid Limited, securing significant electrical infrastructure work supporting the development of AI and data infrastructure in Australia through JLE Group, and the acquisition of commercial property with power availability and grid proximity for future digital and energy infrastructure developments. These initiatives, together with the proposed Construction Materials divestment, represent a clear evolution in the Group’s strategic direction.

AI driving a higher valuation

Macquarie has released a new research report into Maas Group, with a conservative valuation for the company’s Firmus stake.

The broker said that the $43.7 billion valuation of Firmus implied a value of $4 per share for Maas Group’s holding, but it was currently only ascribing $1.42 per share in its valuation of the company.

Macquarie added:

MGH is in a period of transition after divesting the construction materials business and accelerating growth in its civil construction and hire and electrical businesses. Further contract awards and updates in this segment (including Firmus IPO), and strategic M&A, will be catalysts.

Macquarie increased its price target on Maas Group shares from $6.75 to $8.15, up from the current $6.76.

Maas Group also announced this week that the divestment of the construction materials business had formally been completed, and it had been paid $1.61 billion.

The company also remains entitled to receive contingency payments of up to $120 million, subject to the achievement of agreed commercial and operational milestones.

Macquarie said the deal gave Maas Group “substantial capital flexibility”, which was reflected in the company’s shareholders approving a buyback of up to 20% of its shares.

Maas Group is valued at $2.53 billion.

The post Buy this ASX share to get exposure to the Firmus IPO appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.