Fresh Profile: Independent sponsor Clavis Capital seeks to buy into the manufacturing revolution

Clavis Capital Partners, launched by the former CEO of an electronics manufacturer, wants to capitalize on the resurgent U.S. manufacturing sector, according to Founder and Managing Partner Todd Dauphinais.

“There’s going to be a lot more manufacturing and production and industrial activity that’s going to happen in this country,” Dauphinais said. “We think that will be disproportionately done in the southern U.S. than in other areas. We look to capture those kinds of opportunities.”

Founded in 2014, the Dallas-based independent sponsor invests in manufacturing and industrial service companies primarily in the southeast and southwest U.S., as well as the midwest.

According to the Bureau of Labor Statistics, the manufacturing sector is projected to see a 0.6 percent decrease in employment by 2026. However, real output in the sector is projected to reach almost $6.6 billion in 2024, largely due to technological advances in the industry.

“Manufacturing is becoming much more high tech; much less labor-intensive; automation is a big deal,” Dauphinais said. “There’s all kinds of different technologies that are really being utilized in the production of goods that make the nature of manufacturing different than what it was before. No longer do you have to have big pools of labor in order to run a manufacturing plant.”

Dauphinais, who worked as CEO of EFI Electronics Company for almost four years, said he started Clavis Capital because the “existing private equity ecosystem was pretty homogeneous.”

“It was kind of the same type of person; the same background; they went to the same school, they even dressed the same,” he said. “I don’t hire investment bankers; I don’t hire the same people that every other private equity firm is chasing.”

Clavis Capital targets companies with an Ebitda of $4 million to $25 million, according to its website.

The independent sponsor has four companies in its portfolio: above-ground storage tank manufacturer Alliance Tank Service; gun component manufacturer Azimuth Technology; aerospace manufacturer Solar Group; and gas and oilfield distributor RK Supply, which Dauphinais says is the deal he’s most proud of because his team didn’t have experience in that sector.

Dauphinais leans heavily on its collective background in operations as a key to success, especially in sectors where it lacks expertise.

“We told them upfront that we weren’t oil and gas experts and we were going to learn more from them than they were going to learn from us about their business and their market,” Dauphinais said of the RK Supply deal, which closed in October 2018. “I think they appreciated our honesty and humbleness that we didn’t try to be the smartest guys in the room. In fact, we told them we were the dumbest guys in the room, but that we can help them in areas that they needed help with.”

Dauphinais is joined by Vice President Patrick Hamner, who spent nearly three years at Travis Wolff & Co. before joining Clavis Capital in 2016; Director Jimmy Watson, who joined Clavis in 2018 after spending two years as a senior financial analyst at Demilec USA Inc.; and Managing Partner Jim Collet, who worked for the family office Hersh Family Investments, according to LinkedIn.