EV/EBITDA BY ACQUIRER

for water treatment, StormTrap’s services become more attractive. The company’s executives are working with government associations and water-management nonprofits to target progressive and practical regulation for stormwater management in an environmentally friendly way, notes Don Traubert, director at PSP Capital.

family investment firm Sunny River Management. Komline has made six purchases since Sunny River bought the New Jersey-based company in 2021. Most recently, Komline acquired Wyssmont Co., a designer and manufacturer of equipment for product filtration, thermal processing, wastewater management and other industrial applications in June 2022.

Fausto Lucero, principal at Sunny River, says the firm generally employs a buy-and-build strategy. Komline’s management was looking to grow through acquisitions, so the shared goals made sense for the deal. The company was already growing and has quadrupled in size since its acquisition by Sunny River.

Federal laws have been a further boon to growth in the water utilities sector. The America’s Water Infrastructure Act of 2018, for example, provides for water infrastructure improvements throughout the U.S., while the $1.2 trillion Infrastructure Investment and Jobs Act of 2021 earmarked funds to expand access to clean drinking water for households, businesses and schools. The latter includes provisions for replacing lead pipes and addressing contaminants like the so-called forever chemicals known as PFAS in drinking water, among other priorities. Ultimately, the 2021 bill “creates an estimated $60 billion opportunity for upgrading water infrastructure,” says Lucero.

New Solutions

The modern challenges to water management require innovative solutions, which increasingly are drawing the interest of investors.

When PSP Capital acquired StormTrap, a Romeoville, Illinoisbased provider of solutions for managing water runoff during storms, in 2022, the firm’s executives felt the business model was attractive and offered opportunities for expansion. The company’s solutions allow property owners to manage and treat stormwater themselves, says PSP Capital’s Oleshansky. “The rising frequency of extreme weather events and legacy stormwater infrastructure deficiencies mean new solutions are needed,” he adds.

With rising population density in some areas and a growing need

PSP Capital found StormTrap in collaboration with its real estate arm, Pritzker Realty Group, which owned a property that was a StormTrap customer. (PSP runs buyout, venture capital, real estate and asset management strategies.) Thanks to perspectives provided by its real estate affiliate, PSP can see trends in population growth and density in urban areas that require new water solutions. One of the things they noticed is “antiquated infrastructure in many areas of the country that creates a great burden” on water supply, says Oleshansky.

Over at Aegion, the business backed by New Mountain Capital, the team is developing new technology solutions to make its work easier, such as using artificial intelligence and robotics to find and fix leaks and predict when the infrastructure will need upgrades.

“There is an opportunity to become a technology leader and provide sensing capabilities,” Delgado says. “We’ve made a significant investment in robotics, sensing technology and analytics in the field.”

The company’s technological expansion had been largely organic, while add-ons are still a pursuit for other purposes. “We’re looking for several things: First is a great team with the right winning culture, a leadership position in a category, a product or capability that we don’t have, or geographical expansion,” Delgado says. //