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QXO, a startup with intentions of becoming a technology-forward player in the $800 billion building products distribution industry, has raised $3.5 billion in private placement financing. The company is targeting tens of billions of dollars of annual revenue in the next decade through accretive acquisitions in the industry as well as organic growth.

During Zonda’s most recent Building Products Forecast webinar, Zonda principal Todd Tomalak said the $3.5 billion in capital is likely “the largest capital raise in building products history.”

“With the goal to expand much beyond that, we should be thinking about a large player entering the [building product] space upstream,” Tomalak said during the webinar.

Entrepreneur Brad Jacobs, with experience building multibillion-dollar companies in the trucking business, announced intentions of creating QXO in December of 2023 with the goal of becoming a “major force” in the building products distribution sector.

In the private placement, QXO is selling an aggregate of nearly 341 million shares of its common stock at a price of $9.14 per share and an aggregate of 42 million pre-funded warrants at a price of $9.14 per warrant. The private placement, consented by QXO shareholders, is expected to close early in the third quarter of 2024.

The announcement follows QXO’s announcement earlier in June that the company received a $1 billion equity investment. The $4.5 billion provides QXO with significant capital to invest into acquisitions in the market.

Tomalak tells Builder the timing of the most recent QXO investment is “striking.”

“The industry has been quite soft in the first half of 2024, but by late 2024/early 2025 the industry is moving to a different phase—we think—from ‘unwinding pull-forward’ to ‘postponed deferral,’” Tomalak says. “The last time we faced such deferral, remodeling grew by 25% for three straight years as soon as rates stabilized.”

Tomalak says, generally, the industry does not handle swings of such magnitude easily, with supporting evidence as recently as 2021-2022.

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