SCXai (ASX: SCX) IPO

Hi Paul,

SCX.ai is coming to market at an interesting time, with a wave of AI infrastructure IPOs—including Sharon AI and Firmus—set to test investor appetite later this year. Backing from Ellerston Capital and its partnership with Decidr add credibility, although the proposed $40 million raise is relatively modest for a capital-intensive AI infrastructure business competing in a market dominated by global hyperscalers.

We are also cautious around enthusiasm for “hot” IPOs. Strong demand at the time of listing does not always translate into strong returns once a stock starts trading, as investors have seen with Space X which is now 15% below issue price.

The prospectus makes it clear that SCX.ai is still at a very early stage. As at 31 May 2026, the company had $5.4 million of contracted annual recurring revenue, $14.6 million of unbilled contract value and just 298 active users. This is therefore more of an infrastructure rollout story than a scaled software business.

Its key point of difference is Australian-based sovereign AI infrastructure, allowing customers to keep models, data and system logs onshore. That should appeal to regulated industries such as financial services, healthcare and government, where security, compliance and data sovereignty are becoming increasingly important.

The first sovereign AI node went live at Equinix’s Sydney data centre in January, with plans to expand to 11 nodes across Australia and the Asia-Pacific region. The opportunity is potentially significant, with the prospectus citing forecasts that the Australian AI inferencing-as-a-service market could grow from $300 million in 2025 to $3.5 billion by 2030.

SCX.ai is looking to raise $40 million at $0.30 per share, implying a market capitalisation of around $145 million on listing. The proceeds will mainly fund additional GPU hardware, data-centre infrastructure, customer acquisition and working capital.

There is clearly upside if the business can convert its early pipeline into recurring revenue and scale quickly. However, the risks are also meaningful. SCX.ai is not yet profitable, will require ongoing capital investment and is competing with global technology companies that have far greater scale and financial resources. Customer concentration, rapid technological change, access to GPUs, power constraints and the likelihood of further capital requirements all need to be considered.

• Our gut feel is that the stock could trade higher on listing, given the strength of the AI thematic and likely scarcity value, although elevated volatility would not surprise us.

For now, we would prefer to wait until SCX.ai is listed and see how the valuation, liquidity and operating performance develop. We are not close to the company or the transaction, however, so it is difficult to form a strong view at this stage.