Axle Point Capital, a newly formed private equity firm, is lining up a host of buy-out targets with a heavy focus on defense tech and highly regulated industries.
Managing Partner Gerik Degner says initial investors include himself, his partners and “a few high-net-worth individuals, most of whom are Orange County residents, and two family offices.”
He says Axle Point will rely on various institutional investors to finance the actual acquisitions and look to deploy between $20 million and $100 million per acquisition. The company will probably have an additional couple hundred million dollars in 2026 to use for buy-outs, he said.
He says Axle Point is looking at a host of potential acquisitions. They include two aerospace companies, a computer systems company and a submarine components firm.
“Our goal is to hopefully close something here in the first quarter,” Degner told the Business Journal on Oct. 18.
Military uses and government services, including healthcare, will be key areas for the firm.
Investment Criteria
The investment criteria include companies poised for expansion or transformation as well as those posting consistent EBITDA (earnings before interest, taxes, depreciation, and amortization) of more than 15%.
So far Axle Point isn’t disclosing the names of any potential target companies.
Other areas the company is looking at include propulsion systems in space, antennas, optics, electronic warfare and specialized computing as well as shipbuilding-related areas.
Degner suggested that Axle Point could invest in companies that produce sensors that might be used by Palmer Luckey’s defense company Anduril Industries.
Anduril, a Costa Mesa defense firm that began in 2017, in its latest funding round was valued at $14 billion in August.
Recent Launch, Four Employees
Axle Point recently launched with four employees and set up its website right after Labor Day.
“We launched this summer,” he said, adding the firm hadn’t made any acquisitions as of Oct. 18.
Degner has been in the investment industry for more than 25 years, including as a founding member of Alpine Pacific Capital, a lower middle market independent investor.
He was a vice president in investment banking at Citibank and was a past president of the Orange County Chapter of the Association for Corporate Growth.
Degner recently returned from Ukraine, where he studied the latest in electronic warfare technologies and other military applications.
He is teaming up with Axle Point Principal Jacob Call, who was a Navy Seal for 10 years and who has worked as an investment banker at Citigroup and Raymond James, and with Chief Legal Officer Tricia Desmarais, a tenured operator and attorney in highly regulated industries.
“They were motivated by an interest in national security and advanced technologies that are emerging in electronic warfare as well as aerospace and defense,” Axle Point says.
Aerospace and defense as well as companies engaged in national security will make up most of its diversified industrials group.
