MAAS Group Holdings' (ASX:MGH) deal to acquire an additional AU$300 million of Firmus shares and preference shares at AU$230 each adds risk for the company, Jefferies said in a Tuesday note.
The equity research firm estimates that post-deal execution, MAAS Group will have a roughly AU$500 million stake in Firmus, making it the company's biggest single asset.
The deal is a "big gambit" as Jefferies' Neocloud basket has seen a correction of negative 26% over the past two months, highlighting the risk in this emerging space, the investment firm said.
Meanwhile, MAAS Group's new AU$855 million contract with Firmus validates Jefferies' recent upgrade of the company, it added. With the new order, work in hand for MAAS Group's electrical infrastructure subsidiary now exceeds AU$1.2 billion.
Jefferies said its July 7 upgrade of MAAS Group assumed the company would earn AU$1.2 billion from Firmus through fiscal 2031 and beyond, but that now seems conservative given the new contract win.
The firm maintained a buy rating on MAAS Group with a price target of AU$6.40.