Partners Group to expand the shareholder base of USIC, the leading North American provider of utility location services; Kohlberg & Company to acquire a 50% stake
New York, US; 10 August 2022
- Partners Group will retain a 50% co-lead interest in USIC
- Together, Partners Group and Kohlberg will implement new value creation initiatives
- The transaction values USIC at an enterprise value of USD 4.1 billion
Partners Group, a leading global private markets firm, is, on behalf of its clients, expanding the shareholder base of United States Infrastructure Corporation ("USIC" or "the Company"), the leading North American provider of utility location services. Kohlberg & Company ("Kohlberg") is acquiring a 50% stake in USIC and Partners Group will retain a 50% co-lead interest. Kohlberg was joined in this investment by a group of new partners that includes funds managed by Neuberger Berman. The transaction values USIC at an enterprise value of USD 4.1 billion.
Founded in 2008 and headquartered in Indianapolis, USIC is a leading provider of outsourced "utility locate" services, which involve locating, identifying, and marking sub-surface utility infrastructure such as pipes, cables, and fiber. These services are provided on behalf of public utilities that are required by law to ensure underground infrastructure is marked correctly before ground is broken on any new project. USIC currently serves over 1,300 customers in the US and Canada across six utility markets: cable, telecom, electric, gas, water, and sewer. It has a workforce of 9,000 technicians that perform 80 million locates each year. The demand for USIC's services is set to rise due to higher excavation activity following President Biden's Infrastructure Bill, new 5G densification initiatives, increased awareness of the importance of conducting locates, and a shift to outsourcing on the part of utilities.
Since acquiring USIC in 2017, Partners Group has installed an entrepreneurial Board that has helped transform the Company and drive strong organic growth, with EBITDA increasing 77% in the last five years. Key value creation initiatives have included investing in technician training, launching new tools to improve productivity and operational performance, and capturing pricing adjustments and improved contract terms. Partners Group also introduced a program to improve USIC's approach to health & safety, which has led to technician motor vehicle accidents falling by a third and field injuries and lost-time incident rates halving. Partners Group and Kohlberg will implement new value creation initiatives to further build on these foundations, including investing in sales and digital capabilities.
Mike Ryan, Chief Executive Officer, USIC, comments: "Underlying excavation demand has remained stable for decades, driven by routine infrastructure maintenance as well as commercial and residential construction, and we are now looking ahead to a new period of market growth. USIC's national scale, fast response times, and reputation for quality positions us well to capitalize on this growth. Partners Group has been instrumental in transforming USIC's services and we are delighted to continue working with the firm, while welcoming Kohlberg on board."
Joel Schwartz, Partner, Co-Head Private Equity Services Industry Vertical, Partners Group, says: "USIC has a strong, resilient business model that is underpinned by consistent demand from a blue-chip customer base and long-term contracted cashflows. Our thematic research shows the locating services market is experiencing growth tailwinds and we have conviction in USIC's future prospects, as demonstrated by our ongoing commitment to the business. Given the success of our previous value creation initiatives, we also have a deep understanding of what levers can be pulled to further transform USIC."
Benjamin Mao, Partner, Head of Infrastructure Services, Kohlberg & Company, says: "We are honored to have the opportunity to work alongside Partners Group to support Mike and the USIC management team in its exciting next chapter of growth. USIC is uniquely positioned as a leading provider of mission-critical safety services to utilities and telecommunications customers, who are undergoing periods of significant growth and transformation driven by grid modernization, continued technological innovation, and further accelerated by infrastructure stimulus."
Partners Group was advised by Harris Williams, Bank of America Corporation, and Ropes & Gray LLP. Kohlberg was advised by Goldman Sachs, Houlihan Lokey, and Paul, Weiss, Rifkind, Wharton & Garrison LLP.