Kohlberg Acquires Half Stake in USIC at $4.1 Billion Valuation

(Bloomberg) -- Kohlberg & Co. is acquiring 50% of United States Infrastructure Corp. from investment firm Partners Group in a deal valuing the utility location service provider at $4.1 billion including debt.

The purchase of the stake by Kohlberg is being done alongside a new group of investors that includes funds managed by Neuberger Berman, according to a statement reviewed by Bloomberg News. Partners Group will retain a 50% investment in the overall business. 

Founded in 2008, USIC provides more than 1,300 clients with outsourced services for locating, identifying and marking underground utility infrastructure such as pipes and cables. It has a workforce of roughly 9,000 technicians who perform about 80 million so-called locates a year for cable, telecom, electric, gas, water and sewer lines. The Indianapolis-based company serves customers across the US and Canada.

Joel Schwartz, co-head of private equity services at Partners Group, said USIC’s scope and market share were “the core of what attracted” the firm to the asset. The business also stands to gain from federal legislation, he said.  

“The nature of this business is large and steady and growing,” Schwartz said in an interview. “I think that the business will benefit from the infrastructure bill, the telecom bill and the 5G rollout that’s going on. So there’s just a number of trends that should lead to a lot more volume in this sector.”

Partners Group acquired USIC in 2017. Since then, its earnings before interest, taxes, depreciation and amortization have grown by 77%, according to the statement. 

The Switzerland-based investment firm, with about $131 billion in assets under management, has seen a 3.2 return multiple on its original investment in USIC, according to people familiar with the matter who asked not to be identified because the information is private.

Kohlberg, based in Mount Kisco, New York, previously owned USIC. It created the company in 2008 through the merger of portfolio companies SM&P Utility Resources and Central Locating Services and sold it in 2010 to OMERS Private Equity, according to a statement at the time.

Partners Group was advised in the current transaction by Harris Williams, Bank of America Corp. and Ropes & Gray LLP. Goldman Sachs Group Inc., Houlihan Lokey Inc. and Paul, Weiss, Rifkind, Wharton & Garrison LLP represented Kohlberg.

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