KPS Capital Partners’ Raquel Palmer

From our Women's PE Briefs - week commencing July 5, 2021

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KPS Capital Partners is selling a company that co-managing partner Raquel Palmer led the firm into four years ago, an exit she tells Women’s PE Briefs “will result in a great investment return for our limited partners” as well as the employees of the acquired company. DexKo Global, Inc., whose board Raquel chairs, is being sold to publicly traded Brookfield Business Partners L.P. for $3.4 billion. DexKo supplies advanced chassis technology, chassis assemblies and related components for trailers and caravans. It was founded in 2015 through the combination of Dexter and AL-KO Vehicle Technology. KPS acquired it in 2017 from the Sterling Group, who retained a minority ownership stake. “At KPS we pride ourselves in seeing value where others do not,” said Raquel. “I believe many investors incorrectly believed DexKo was an automotive supplier servicing the automotive industry. DexKo is not an automotive supplier and has no exposure to the automotive industry.” With its products going into trailers and caravans, Raquel said, “it’s products and customers are tied to infrastructure, recreational products, home improvement, and industrial trends. When we were first introduced to DexKo, we immediately understood the opportunity to make a good business great. To take a growing, profitable, high cash flowing business and make it better through investing in automation, reducing manufacturing complexity, enhancing supply chain efficiencies, and improving the commercial strategy of the company.”

KPS, said Raquel, also believed that DexKo “could continue its track record of completing highly synergistic acquisitions that allowed it to expand its product offering and geographic reach.” And in fact, during KPS’ four years of ownership, DexKo completed 15 acquisitions. The company, she said is a “text-book example of our investment strategy at work. We provide DexKo not only with the capital to complete highly synergistic acquisitions, but also the highly critical operations support to integrate the acquisitions and achieve the projected synergies.” In the end, she said, “we doubled DexKo’s profitability, achieved industry leading margins, and generated significant free cash flow in the four years under our ownership. We would also note that even during the depths of the COVID-19 pandemic, DexKo maintained double digit EBITDA margins and significant positive free cash flow. DexKo grew EBITDA in 2020 over 2019 as a result of its flexible cost structure and management and KPS’ effective execution on the top line and bottom line. We view this as a proof statement of making DexKo better.”

As to the exit itself, Raquel said, “we are extremely happy with the exit of DexKo. The exit will result in a great investment return for our limited partners and many DexKo employees who participated in the DexKo stock option and incentive plans. The value creation demonstrates KPS’ ability to transform businesses on a global scale and create significant equity value through operational improvements and a focus on executing on wide reaching strategic initiatives.”

Earlier this year another company on whose board Raquel sits – TaylorMade Golf Company, Inc. – was sold by KPS to Centroid Investment Partners for what was reported to be $1.7 billion. Raquel is also on the boards of KPS portfolio companies Howden, AM General, Autokiniton Global Group, Briggs & Stratton, C&D Technologies, Life Fitness and Lufkin Industries. Raquel has spoken at both the Women’s Private Equity Summit and the Women’s Alternative Investment Summit. KPS had more than $12.8 billion in assets under management as of March 31.

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