IPO Forgent Power: shares of data center equipment maker begin trading

Preliminary trading in shares of Forgent Power Solutions started in the trading system for Freedom clients. The company manufactures power distribution equipment for data centers and industrial enterprises. Its IPO will test investor appetite for such manufacturers amid the boom in artificial intelligence, notes Reuters. Later on Feb. 5, the company's securities will appear on the NYSE exchange under the ticker FPS. Click on the FPS ticker to participate.

Forgent Power and its shareholder, investment firm Neos Partners, raised $1.5 billion in an IPO. Investors were sold about 56 million shares at $27 per paper with the previously announced price range of $25-29. According to Bloomberg's sources, demand for the shares was higher than supply. Based on the IPO results, the value of the entire company can be estimated at about $8.2 billion.

The deal was organized by Goldman Sachs, Jefferies, Morgan Stanley, J.P. Morgan, BofA Securities, and Barclays.

Forgent said it will spend the IPO proceeds to buy back stakes in the operating division held by existing shareholders under Neos' control. Neos, which created Forgent through the acquisition of four independent electrical equipment makers, will still own about 80 percent of the company's voting shares after the IPO, The Wall Street Journal reported.

Forgent Power, headquartered in Minnesota, designs and manufactures electrical distribution equipment - from transformers to switchboards - for energy-intensive industrial plants, power grids and data centers that require a stable and reliable power supply.

The company is focusing on high-growth markets like data centers, while tech companies including OpenAI are investing billions of dollars in building new facilities to meet the rapidly growing need for cloud services and neural networks, Reuters explains.

As of 2025, the company served customers primarily in North America. At the same time, 42% of its business was in data centers, 23% in power grids, 19% in the industrial sector and 16% in other markets.

In September 2025, Forgent Power completed construction of a new manufacturing facility in Minnesota, bringing its total square footage to more than 210,000 square feet. For the quarter ended September 30, 2025 (last disclosed), Forgent Power's revenue increased 84% year-over-year to $283.3 million and quarterly earnings increased 114% to $15.6 million.

Forgent's strengths include strong revenue growth, improved operating margins and an impressive order book worth more than $1 billion, as well as the company's ability to generate annual revenue of up to $5 billion after the expansion of production facilities and to take advantage of the growing demand for data centers due to artificial intelligence, says Donovan Jones, an analyst at IPO Edge, an investment firm, whose opinion is cited by Seeking Alpha. Among the risks, the analyst emphasizes the dependence on suppliers and increased debt multiplier, which, however, may decrease after the completion of capital investments. Jones believes that with reasonable valuation of the company, there will be a steady demand for its shares.

The fact that 42% of Forgent's revenue comes from data centers offers investors a rare opportunity to invest directly in AI spending, Lukas Muehlbauer, an analyst at investment firm IPOX, told Reuters.

"With a price-to-sales ratio of 10 times, Forgent is asking for a higher premium than competitors," Muehlbauer added. He believes investors will have to decide whether the rate of revenue growth justifies the high price despite low margins.

With the offering at the maximum reported price of $29 per share and a target price of $37.6, the upside potential is 30%, Freedom Finance analyst Alem Bektemirov said. He recommends buying the shares. But among the risks, the analyst notes that the cost of electrical equipment has risen in recent years. If demand for goods in this category decreases or, on the contrary, increases in the future, the cost of equipment may fall. This may negatively affect the company's revenue and profitability.

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Freedom clients will be able to get access to Forgent Power shares before the opening of the main exchange session. Trading will begin in the early pre-market format 2-3 hours before the opening of the U.S. exchanges (from 15:30-16:30 Astana time). To participate click on FPS ticker.

This article was AI-translated and verified by a human editor