Flex announces $2 billion convertible preferred investment in Axiom Solutions led by General Catalyst
Funds affiliated with General Catalyst and Koch Equity Development will buy $2 billion of convertible preferred stock in Flex's Cloud and Power Infrastructure segment.
Flex Ltd. (FLEX) announced on Monday that it has entered into a private placement agreement to sell $2 billion of Series A Convertible Preferred Stock in Axiom Solutions International, Inc., its Cloud and Power Infrastructure business segment, to a group of investors led by General Catalyst and Koch Equity Development.
The investment values Axiom at an initial enterprise value of $37.5 billion pro-forma for the separation. Flex intends to spin off Axiom into an independent, publicly traded company in the first quarter of calendar 2027.
"This investment provides equity funding for our recently announced acquisition of EPC Power and will allow Axiom to have a strong balance sheet as we prepare to stand up as an independent, publicly traded company squarely focused on the power, thermal, and compute infrastructure the AI era demands," said Revathi Advaithi, Chief Executive Officer of Flex and expected Chief Executive Officer of Axiom.
"Axiom sits at the center of the power and infrastructure buildout that AI demands, and we’ve been impressed by the team’s execution and the scale of the opportunity ahead," said Hemant Taneja, Chief Executive Officer of General Catalyst.
The investors have agreed to purchase 200,000 shares of Axiom Series A Convertible Preferred Stock at a per share purchase price of $10,000. The preferred stock pays a dividend of 10% per annum in cash prior to the separation, stepping down to 6% per annum in cash or 7% per annum if paid in kind following the separation. Following the completion of the separation, General Catalyst will have the right to nominate one director to Axiom's board of directors.
Net proceeds from the investment will fund a portion of the purchase price for Axiom's pending acquisition of EPC Power Corp., repay intermediate financing related to the acquisition, pay dividends on the preferred stock, or support general corporate purposes. Flex separately secured committed term loan financing for the remaining balance of the EPC Power acquisition.