TPG Rise Climate has agreed to invest $500 million in Nexttracker, a provider of intelligent, integrated solar tracker and software solutions. The investment backs Nexttracker being carved out as a separate entity from Flex.
SAN JOSE, Calif., Feb. 2, 2022 /PRNewswire/ — Flex (NASDAQ: FLEX) announced today that it has entered into an agreement to sell $500 million of convertible preferred equity in Nextracker to TPG Rise Climate, the dedicated climate investing strategy of TPG’s global impact investing platform TPG Rise. Through this strategic partnership and investment from TPG Rise Climate, Nextracker will continue to expand its market leading position in solar tracking and software solutions. TPG’s experience and extensive network in renewable energy provide Nextracker a strong partner to support long-term growth.
“We are pleased to announce this exciting partnership today that furthers Nextracker’s leadership, backed by this strategic investment from TPG Rise Climate,” said Revathi Advaithi, Flex Chief Executive Officer.
“Nextracker has established itself as leader in the solar tracking space by developing and deploying best-in-class product quality, technology, value, and flexibility,” said Jonathan Coslet, Vice Chairman of TPG. “As global solar installations continue to grow across the US and globally, Nextracker is well-positioned to be the long-term tracking provider of choice for solar developers and EPCs. We look forward to the value creation from our combined resources, experience, and expertise,” added Steven Mandel, Business Unit Partner in TPG Rise.
As part of the investment, Coslet and Mandel will join the Nextracker board.
The investment is at an implied enterprise value for Nextracker of $3.0 billion, in the form of a convertible preferred security with a 5.0% annual dividend. The convertible preferred security will convert into common equity of Nextracker at the time of a qualified initial public offering for Nextracker. Net proceeds from the transaction will be used to help fund growth and generate returns for Flex shareholders in accordance with its capital allocation policy.
Flex and Nextracker have also entered into a separation agreement to formally separate the operations of the two businesses and have agreed to a transition services agreement to efficiently transition the Nextracker business into a separate business. Flex will report the Nextracker business as a separate operating segment in the future. Nextracker confidential S-1 remains on file with the SEC. The initial public offering and its timing are subject to market and other conditions and the SEC’s review process.
Advaithi added, “We continue to look at the market and will evaluate the right time to do a transaction, but we remain committed to creating value for shareholders.”
TPG Rise’s experience investing in clean energy generation and storage has the potential to drive additional growth opportunities. Since 2018, The Rise Fund has made multiple investments in Fourth Partner Energy, India’s largest distributed solar company. In 2020, The Rise Fund financed and launched Matrix Renewables which now has a 2 GW portfolio of operational, under construction, or near ready-to-build renewable energy projects with a further 2 GW of development pipeline of across Europe, the US, and Latin America. TPG Rise is also an investor in Form Energy, a technology company developing a new class of cost-effective, multi-day energy storage systems.