Flex said Oct. 5 it agreed to sell $2 billion of convertible preferred stock in Axiom Solutions International, its cloud and power infrastructure unit, in a round led by General Catalyst with Koch Equity Development, valuing Axiom at an initial enterprise value of $37.5 billion, according to the company's press release.
The preferred stock carries a 10% annual cash dividend before Axiom's planned separation from Flex, stepping down to 6% in cash or 7% if paid in kind afterward, and General Catalyst gets a board seat once the spinoff closes, Flex said. Axiom is expected to debut as an independent, Nasdaq-listed company in the first quarter of 2027.
Proceeds will help fund Axiom's pending acquisition of EPC Power, repay bridge financing and strengthen its balance sheet as it positions itself as an independent AI-focused power, thermal and compute infrastructure provider, Flex said. Flex chief executive Revathi Advaithi, expected to lead Axiom after the split, said the investment "will allow Axiom to have a strong balance sheet." General Catalyst chief executive Hemant Taneja said Axiom "sits at the center of the power and infrastructure buildout that AI demands."
The round was the largest of the week by dollar amount, ahead of a $870 million round for decision-model maker TypeSafe and a $475 million round for quantum computing startup Oratomic, according to Crunchbase News.
Power and cooling, not model weights, are becoming the bottleneck line item in AI infrastructure deals, and a $37.5 billion valuation on a business built from power conversion and thermal management is a sign investors now price that bottleneck the same way they price compute.