California-based StepStone Group made a bold move during the third quarter, acquiring 292,428 shares of Karman Holdings, a provider of mission-critical systems for the aerospace and defense sector. This new position, valued at approximately $21.11 million, solidifies Karman as the fund’s second-largest holding following the latest transactions.
StepStone Group’s strategic investment in Karman reflects a confidence in the company’s growth potential within the defense and space sectors. Despite Karman’s stock price more than tripling from its IPO price earlier in the year, StepStone Group remains bullish on the company’s prospects.
Karman Holdings specializes in designing, manufacturing, and testing essential systems for missile defense, space programs, hypersonics, and launch vehicles. The company generates revenue through the sale of specialized aerospace and defense hardware, payload protection systems, aerodynamic interstage systems, and propulsion solutions. With a focus on serving government agencies, defense contractors, and commercial space launch providers, Karman is well-positioned to capitalize on the increasing demand for advanced aerospace and defense solutions.
In the latest quarter, Karman reported record revenue of $121.8 million, a 42% year-over-year increase, demonstrating strong growth and operational efficiency. The firm’s funded backlog also reached a record $758.2 million, providing long-term revenue visibility across various programs.
Compared to other holdings in StepStone Group’s portfolio, Karman offers a unique risk profile tied to government spending and defense budgets. While the company’s stock rally reflects strong fundamentals, future returns will depend on backlog conversion and margin discipline rather than just multiple expansion.
Overall, StepStone Group’s investment in Karman Holdings showcases a strategic approach to capitalizing on growth opportunities in the defense and space sectors. With a strong track record of delivering high-performance solutions and a focus on innovation, Karman is well-positioned for continued success in the aerospace and defense industry.
