Market Selloff and Rising Rates Test AI Data Centre Deal Boom

Investor Scrutiny Intensifies Amid Market Selloff

A market selloff is forcing companies driving the global AI boom to delay fundraising plans or pay more for capital as investors demand proof they can absorb rising interest rates and computing-power costs. The shift comes as investors reassess whether companies racing to build AI infrastructure can generate returns that justify soaring spending on computing power, land and energy.

In the past week alone, as AI-related stocks have weakened and the debt of data-centre operator CoreWeave has slumped towards distressed prices, listings for a Blackstone-backed AirTrunk REIT, Nvidia-backed Firmus and SoftBank-backed SB Energy have either been pulled or paused.

Higher Borrowing Costs Drive Recalculation

Higher borrowing costs are at the heart of the new scrutiny. Benchmark 10-year US Treasury yields posted their sharpest quarterly rise this century last month, prompting investors to take a closer look at whether projected revenues can support growing debt burdens, bankers said.

Firmus, which had aimed to raise $5 billion in what would have been Australia's second-largest stock market listing, struggled to convince investors it could deliver on ambitious revenue projections while carrying about $30 billion of debt. Nuclear services company Holtec cited uncertainty around data-centre demand when it pulled its US listing last month.

Mixed Signals in Deal Activity

M&A involving Asian data centres is still on track for a record year, reaching $21.3 billion as of Tuesday according to Dealogic data, more than double the $10 billion recorded in all of 2025. Debt financing has also remained strong, with syndicated loans and bond issuance totalling $22.3 billion so far this year. Equity capital market fundraising, however, is down at $5.4 billion, a 4.6% drop from the same period in 2025.

Singapore-based DayOne is expected to go public as soon as November, seeking to raise up to $5 billion. AirTrunk is nearing a deal to sell its Johor data centre in Malaysia to a group of investors including local pension fund KWAP at a valuation of about $1 billion. Bain Capital has received final bids for at least 40% of its pan-Asian platform Bridge Data Centres in a deal that could value the business at around $5 billion.

Analysts See Selective Opportunity

Harry Evans, a partner at law firm Freshfields, said the conversation has shifted from growth at any cost to a much sharper focus on quality. He said deal activity could hold up through next year thanks to a strong pipeline, but recent setbacks show investors are becoming more discerning about valuations, leverage and business models.

John Dinsdale, chief analyst at TechInsights, said investors are likely to differentiate between established wholesale operators with long-term customer commitments and higher-risk neocloud and AI-campus builders, questioning which companies will capture growth sustainably.

Sources: Reuters · Kitco News