June 4 (Reuters) - Innio is set to make its U.S. market debut later on Thursday after strong investor interest helped the gas engine manufacturer raise $2.43 billion in an upsized initial public offering.
Investors are piling into companies underpinning the AI buildout, broadening enthusiasm beyond chip firms to the "picks and shovels" businesses supplying the infrastructure needed to support the technology's expansion.
Innio sits at the heart of the AI boom - addressing AI's growing energy requirements.
It provides power generation systems for data centers.
"The market backdrop is very supportive for companies building the physical backbone of AI, with investors rewarding firms that can show revenue and a link to data-center demand - including power, cooling, grid equipment, renewables and so forth," IPOX Research Associate Lukas Muehlbauer said.
"This strong interest also comes from the fact that it is not a speculative early-stage 'AI story' but has an established history with GE heritage."
U.S. buyout firm Advent International carved out General Electric's distributed power business in a $3.25 billion deal to form Innio in 2018.
Munich, Germany-based Innio's principal shareholder, AI Alpine, co-owned by funds managed by Advent and the Abu Dhabi Investment Authority, sold 90 million shares at the top end of the marketed range of $24 to $27 apiece.
DATA CENTER BOOM
Innio makes gas engines under the Jenbacher and Waukesha brands for data centers, microgrids, grid stabilization, industrial energy, and gas compression.
One of Innio's key customers is the German city of Kiel, where it provides power and heat to thousands of people.
Demand for Innio's gas engines has boomed as data center operators increasingly seek alternative power systems to reduce exposure to grid constraints.
AI's energy requirements are immense, with generative AI requiring far more electricity than traditional computing tasks.
Innio's data center equipment order has surged to $1 billion as of March 31 from $309 million a year earlier. It has landed some marquee wins, including an agreement for a multi-gigawatt power plant.
"The key for the company will be to show that the growth in equipment orders can continue and turn into long-term service revenue. For data centers, reliability is important and gas engines need maintenance over many years," Muehlbauer said.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shinjini Ganguli)
