Why does Capstreet invest in power and utility?
Capstreet sees decades of underinvestment in the electric grid. It believes that creates a need to upgrade and maintain existing infrastructure, and it has several active themes in the sector.
Capstreet states its view this way on its What We Do page:
We believe decades of underinvestment in the electric grid is creating an imperative to upgrade and maintain existing infrastructure. Capstreet has several active themes in this sector and a long history of investing in and scaling maintenance services businesses.
The key phrase is “maintenance services businesses.” Capstreet does not say it wants to own power plants or build the grid. It says it has a long history of backing and scaling the companies that keep critical assets running.
That history comes from the firm’s industrial work. Its industrial services and products focus includes critical maintenance, which it describes as industrial services and rental, turnaround services, critical equipment maintenance, and testing and inspection.
What kinds of power and utility businesses fit Capstreet?
A fit is a maintenance services business that supports power and utility infrastructure. Capstreet says it has a long history of investing in and scaling companies like this.
| Area | What Capstreet describes |
|---|---|
| Theme | Upgrade and maintain existing electric infrastructure |
| Business type | Maintenance services |
| Customers | Power producers, utilities and related industrial operators |
| Related focus | Critical equipment maintenance, testing and inspection |
| Track record | Capstreet cites a long history of scaling maintenance services |
The customer row comes from the portfolio, not from the thesis paragraph. TOPS serves independent power producers, utilities and LNG operators. Check your own numbers against the firm’s criteria.
How do Capstreet’s criteria apply to power and utility companies?
Capstreet publishes five criteria, and they apply to power and utility owners the same way they apply to every other industry. Each one is listed below.
- Entrepreneur-owned businesses services companies
- $3 to $15 million of EBITDA
- Primarily majority investments
- Entrepreneurs reinvest alongside Capstreet
- Ability to apply the Capvalue Framework®
The firm also says it looks for “a tenured team of owners or managers seeking a majority capital partner, with solid financials, a defensive business model, untapped growth potential, and competitive advantages within their market niche.” Maintenance work for critical assets is hard to defer for long, which supports the defensive business model Capstreet describes. Skilled crews and safety records can also be a competitive advantage in a niche. This is our reading of the criteria, not a Capstreet claim.
Its $3 to $15 million EBITDA range sits in what many call the lower middle market. EBITDA means earnings before interest, taxes, depreciation and amortization. It is the profit measure Capstreet’s range uses. An add-on acquisition is a smaller company that a platform buys and folds in.
Which power and utility companies has Capstreet backed?
Capstreet lists one power company in its portfolio, and it is a current investment. Status is shown as Capstreet publishes it on its portfolio pages.
- TOPS: Current, Fund V & VI. Turbine Overhaul Performance Specialists is an independent, multi-OEM service provider with full-spectrum turbine and generator capabilities. Its customers include major independent power producers, utilities, LNG and other industrial companies. Founded in 2008 and based in Huffman, TX.
What does Capstreet do after it invests?
Capstreet applies its Capvalue Framework® in three steps: Research, Build Scalable Platform, and Drive Business Transformation. Across its history, the firm reports 50+ Platform Acquisitions and 200+ Add-on Acquisitions.
- Research. Perform deep research to identify markets and build relationships with key entrepreneurs.
- Build Scalable Platform. Invest in top talent and technologies, and provide functional expertise for scale.
- Drive Business Transformation. Develop a long-term strategic roadmap and execute a buy and build strategy.
Another portfolio company, Analytic Stress Relieving, lists the power market among its focus areas alongside petrochemical and refining. See the petrochemical page for it.
There can be no guarantee that Capstreet will be successful in applying its Capvalue Framework®.
Next step
If your company serves power and utility, read the full deal criteria, then start a confidential conversation through the contact page. You can also call 713-332-2700 or email connect@capstreet.com. See all industries Capstreet lists.
Frequently asked questions
What power and utility companies does Capstreet invest in?
Capstreet invests in maintenance services businesses that help upgrade and maintain existing electric infrastructure. It says decades of underinvestment in the grid create an imperative. Owners should also meet the firm's general criteria, including $3 to $15 million of EBITDA.
Does Capstreet invest in power producers or utilities?
Capstreet's published thesis is about maintenance services for existing infrastructure, not owning generation or utilities. Its portfolio company TOPS serves power producers and utilities with turbine and generator services. Ask the firm directly if you operate a power asset.
What is TOPS?
TOPS stands for Turbine Overhaul Performance Specialists. It is an independent, multi-OEM service provider of turbine and generator work for independent power producers, utilities, LNG and other industrial companies. Capstreet lists it as current in Fund V & VI. It was founded in 2008.
Why does Capstreet focus on maintenance services?
Capstreet says it has a long history of investing in and scaling maintenance services businesses. The firm's industrial work includes critical maintenance, such as turnaround services, critical equipment maintenance, and testing and inspection. Ask which of those match your business.
