Investment Committee memorandum
ToInvestment Committee
FromClaire Hendry, Marcus Webb, Priya Raman, Daniel Osei
DateFebruary 26, 2026
ReProject Kestrel: binding offer for Alder Drive Systems, Inc.
Recommendation
We recommend that the Committee approve confirmatory diligence, with a budget of $6.5 million, and a binding offer for Alder Drive Systems, Inc. (“Alder”) at 11.0x FY2025A adjusted EBITDA of $104 million, an enterprise value of $1,144 million. Alder supplies e-motors, inverters, and integrated e-axles to makers of Class 4–8 trucks and transit buses, and it holds about 10% of a market forecast to grow 20% a year to 2030. We would finance the purchase with $520 million of debt and $686 million of equity from Fund V. In the base case, the investment returns 2.67x and a gross IRR of 21.7% over five years, with exit at the entry multiple.
Key terms
| Transaction | Purchase of 100% of Alder from its founding family and a minority investor |
| FY2025A results | Revenue of $612 million; adjusted EBITDA of $104 million, a 17.0% margin1 |
| Enterprise value | $1,144 million, 11.0x FY2025A adjusted EBITDA, on a cash-free, debt-free basis |
| Debt | $520 million (5.0x): Term Loan B due 2032 and senior notes due 2033, committed by three banks |
| Equity | $686 million from Fund V, including $37 million of fees and expenses and $25 million of cash |
| Hold and exit | Five years; exit at 11.0x FY2030E EBITDA, the entry multiple |
| Timetable | Binding offers due March 20, 2026; three other bidders remain |
Investment thesis
- 1.The market is large and growing quickly. E-drive systems for medium- and heavy-duty commercial vehicles in North America and Europe were a $6.1 billion market in 2025, forecast to reach $15.2 billion in 2030, a 20% CAGR.2 Our base case assumes 12% annual growth and no change in Alder’s 10% share.
- 2.Silicon carbide raises Alder’s content per vehicle. A silicon-carbide (SiC) inverter sells for about 35% more than the IGBT unit it replaces and extends vehicle range. Alder has SiC awards on four programs that launch in 2026 and 2027, and its SiC units earn a gross margin about four points above its IGBT units.
- 3.Margin can rise without help from the market. Moving inverter assembly to Alder’s Monterrey plant and buying semiconductors and magnets through our purchasing program would add 100 to 150 basis points of margin by FY2028, by our operating partners’ estimate. The base case takes about 100 basis points from these programs and about 90 from a richer mix, for 19.0% by FY2030.
Key risks and mitigants
| Risk | Mitigant |
|---|
| Customer concentration. The top three customers are 58% of revenue. | Alder is sole-sourced on all of their current programs, which end between 2029 and 2031. The downside case assumes one of them moves its next program to a competitor. |
| Adoption pace. US truck emissions rules are under review. | The base case assumes 12% market growth, not 20%. Europe, which has binding emissions targets, is 15% of revenue; grant-funded transit buses are 24%. |
| Competition. Tier 1 suppliers and OEM in-house teams target Class 8. | Class 8 is 22% of revenue; Class 4–7 and bus volumes are too small for in-house programs. Technical diligence will test Alder’s SiC inverter against rival designs. |
Returns
| Case | Revenue CAGR,
FY2025–30 | EBITDA margin,
FY2030E | Exit multiple | Gross MOIC | Gross IRR |
|---|
| Base | 12% | 19.0% | 11.0x | 2.67x | 21.7% |
| Downside | 6% | 16.0% | 9.0x | 1.15x | 2.9% |
| Upside | 16% | 20.0% | 11.0x | 3.47x | 28.3% |
Returns are net of the management incentive plan, before fund fees and carried interest, and assume $686 million of equity invested at the end of FY2025 and realized at the end of FY2030. The market grows 12% a year in the base case, 16% in the upside, and 8% in the downside.
Feather
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