Succession risk – KPG is a big bet on Brett Kelly. I asked him about this at an AGM, he said all the other partners get to vote on his successor should he be gone at short notice.

Sticky customers works both ways – hard to acquire customers without acquiring the whole business
Need to keep acquiring – volume increase required as group grows (double the acquisitions needed p.a. from when the group was half as big)

Integration / execution risk from acquisition strategy.
Complex accounting for NCI’s due to 51% ownership of ‘owner driver’ model.

Market doesn’t like partnership models listing – SGH, etc.

Despite their ethical approach to the business if anyone can cook the books these guys can…

Cyber security is an ongoing risk – self-identified by Brett at 2019 AGM.

Disc: Held

Brett Kelly’s eponymous business in which he owns 51%.
The alignment of management (especially Brett Kelly, CEO & Chair) is so strong that this is really a bet on Brett.
In reading his writing, listening to him speak and in my interactions with him he seems like a very driven, earnest, focussed, long term thinker – mimics Buffett, et al.

Revenue CAGR 15% p.a. since IPO and projected to continue until 2024 at least.
Pays 50% of NPAT in Dividends which have been growing 10% p.a. since IPO and set to continue for the foreseeable future.

Clever use of debt to fund acquisitions – capital raises unlikely.
Very thoughtful strategy with good track record of execution (from scratch) and long runway ahead.

Reputation growing in target market as an acquirer of choice.

‘Death and Taxes’ thematic

Disc: Held