Gas engine maker Ineo was valued at more than $23 billion after rising nearly 15% in its Nasdaq debut on Thursday as AI infrastructure-linked companies flocked to the IPO market.

Munich, Germany-based Ineo’s stock opened at $31, up from an offer price of $27.

AI Alpine, Ineo’s major shareholder, co-owned by Advent and a fund managed by the Abu Dhabi Investment Authority, sold 90 million shares at the top end of a marketed range of $24 to $27 to raise $2.43 billion.

Investors are flocking to the companies underpinning the AI ​​buildout, moving beyond chip firms to “picks and shovels” businesses that supply the infrastructure needed to support the technology’s expansion.

Inio sits at the heart of the AI ​​boom – addressing its growing energy needs by providing power generation systems for data centers.

“The market backdrop is very supportive of companies making up the physical backbone of AI, with investors rewarding companies that can show a link to revenue and data-center demand – power, cooling, grid equipment, renewables and so on,” said Lucas Mühlbauer, associate at IPOX Research.

“This strong interest also stems from the fact that it is not a speculative early-stage ‘AI story’ but has an established history with GE heritage.”

Inio was formed in 2018 when US buyout firm Advent International acquired General Electric’s distributed power business in a $3.25 billion deal.

The data center boom

Inio manufactures gas engines under the Jenbacher and Waukesha brands for data centers, microgrids, grid stabilization, industrial power and gas compression.

One of its main customers is the German city of Kiel, where it provides power and heat to thousands of people.

Demand for Ineo’s gas engines has surged as data center operators increasingly seek alternative power systems to reduce exposure to grid disruptions.

AI’s energy needs are huge, with generative AI requiring much more electricity than traditional computing tasks.

Inio’s data center equipment orders rose to $1 billion as of March 31 from $309 million a year earlier. It has won some marquee wins, including a contract for a multi-gigawatt power plant.

“Over the next few earnings cycles, the stock will be judged on whether Ineo can convert its growth story into consistent revenue that justifies the current AI premium,” Muhlbauer said.

“The key for the company will be to show that equipment order growth can continue and turn into long-term service revenue. For data centers, reliability is critical and gas engines require maintenance over many years.”