Fermi Inc. has secured support from its second-largest investor, Caddis Capital, as the company battles a proxy fight led by former CEO Toby Neugebauer. Caddis, holding a 9.3% stake, endorsed the board’s decision to oust Neugebauer in April and reject his attempts to install new directors or initiate a sale, per a Bloomberg statement. This aligns with broader investor skepticism about Neugebauer’s strategy to privatize the data-center developer, which saw its stock plunge 40% post-IPO last year.

Caddis’ backing strengthens the board’s position, though Neugebauer’s legal challenge could prolong the conflict. The dispute highlights tensions between founder-led vision and shareholder demands for stability, with Caddis citing Fermi’s “distracting governance battles” as a risk to its $3.2 billion market cap. Analysts note the outcome could set a precedent for tech IPOs facing founder resistance.

Neugebauer, who stepped down amid allegations of financial misconduct, argues the board’s actions violate shareholder rights. His push for a special meeting to appoint allies underscores a high-stakes power struggle. Meanwhile, Caddis warns that prolonged infighting may deter institutional investors, jeopardizing Fermi’s growth plans in cloud infrastructure.

The clash underscores risks in high-profile IPOs where founder-CEOs retain influence. With Caddis’ support, the board aims to refocus on expanding data-center capacity, but a Neugebauer victory could trigger a shareholder revolt. Investors await court rulings to determine whether Fermi will prioritize operational execution or corporate governance reforms.