--- title: "Industrial Insights: Why Capstreet Invests in this Growing Sector" description: "If you’re an industrial business owner seeking to attract a private equity partner, we believe understanding the investment strategies and value-add approach..." url: https://capstreet.multisites.ai/insights/industrial-insights-why-capstreet-invests-in-this-growing-sector publisher: Capstreet phone: +1-713-332-2700 contact: https://capstreet.multisites.ai/contact --- # Industrial Insights: Why Capstreet Invests in this Growing Sector InsightsPublished September 9, 20244 min read ![Capstreet team members at Houston Reads Day](https://capstreet.multisites.ai/_astro/houston-reads-day.DxNd9bIr_Z23gxjt.webp) If you’re an industrial business owner seeking to attract a private equity partner, we believe understanding the investment strategies and value-add approach of firms investing in this space is crucial. Capstreet has a long-established focus on industrial companies, particularly those supporting the maintenance and service needs of large-scale facilities across the Gulf Coast. In this Q&A, we spoke with Paul De Lisi, Partner at Capstreet, to explore the firm’s approach to investing in the industrial sector and how they drive growth within their portfolio. **Q: How did Capstreet begin investing in industrial companies, and why did you choose this sector?** A: Our focus on industrial companies is a natural extension of being based in Houston, which is an industrial epicenter. From the very beginning, we saw an opportunity to provide capital to this sector. Many Houston-based private equity firms traditionally focused on natural resources, particularly in oil and gas. Over the years, we’ve invested in more than 20 industrial companies, building a strong track record and valuable relationships throughout the Gulf Coast’s industrial ecosystem. What draws us to this market is the recurring revenue model of maintenance-based companies. These businesses provide essential services and products that industrial facilities depend on for reliable operations. In many cases, they combine elements of manufacturing, fabrication, and specialized services, which in our opinion makes them highly value-add and scalable. Our strategy is to help these companies grow profitably by expanding their geographic reach and diversifying their product and service lines, positioning them for sustainable growth. **Q: Which industrial subsectors does Capstreet focus on, and what makes them attractive?** A: We primarily target companies that provide maintenance, products, and services to large-scale industrial facilities in sectors like petrochemicals and power. These are foundational industries in the Gulf Coast, and their infrastructure requires constant upkeep and innovation. In recent years, we’ve also seen growth opportunities in emerging sectors like semiconductors, batteries, and energy transition industries. We view these sectors as evolving rapidly, and presenting exciting possibilities for both industrial services and the broader economy. **Q: What has been the key to successful exits in your industrial investments?** A: A common factor in our most successful exits is investing in companies with a solid reputation for delivering high-quality products and services. From the start, having a clear growth thesis makes a significant difference. Take our investment in OnPoint1, for example—a provider of maintenance project management services. When we first invested, they offered a single service. We expanded their offerings, refined their go-to-market strategy, and emphasized the value of these new bundled services. As a result, the company grew from less than $20 million at acquisition to $150 million in revenue before a successful exit. We believe that transformation was driven by a focused strategy and disciplined execution by a top-notch management team. **Q: What value-add strategies does Capstreet often implement in its industrial portfolio companies?** A: Our approach focuses on improving several key areas that drive growth and operational efficiency. This includes enhancing go-to-market efforts, optimizing supply chains, refining pricing strategies, and expanding the geographic reach to attract larger, multi-site customers2. Operational improvement is another cornerstone of our value-add strategy. We often start by building a strong management team that can take a detailed, hands-on approach to optimizing each aspect of the business. This focus on leadership and operational excellence is what in our view helps these companies scale and thrive in competitive markets. **Q: How do current market conditions influence your outlook on industrial investments?** A: I believe the current market conditions are highly favorable for industrial investments, particularly in the Gulf Coast. This region is a national industrial stronghold, home to petrochemical plants, refineries, power facilities, and other major process industries. Supporting this infrastructure are countless lower-middle-market companies that provide critical maintenance services and products. Capstreet views these businesses as essential for ensuring the reliability and efficiency of the industrial base. From 2011 to 2022, the Gulf Coast saw a remarkable $212 billion in capital investments across both existing infrastructure and new developments3. Many of our industrial portfolio companies generate most of their revenue from maintenance activities, which, in my opinion, makes them well-positioned to benefit from ongoing growth in the region. With the industrial base continuing to expand and existing infrastructure aging, we believe the demand for maintenance services will remain robust for years to come. We believe this creates a fertile environment for companies that can deliver high-quality services and innovate to meet the changing needs of the market. Capstreet’s commitment to the industrial sector has enabled us to build strong partnerships with business owners and management teams. With positive industry tailwinds and a focus on maintenance-based businesses, we are excited about the opportunities ahead in this dynamic and growing sector. For more information about Capstreet’s investment in industrial products and services, see our [Industrial Services and Products Investment Overview](https://capstreet.multisites.ai/docs/Capstreet_InvestmentOverview_IndustrialServices.pdf). 1 _Onpoint was selected as it is the most recent industrial company exit in Capstreet IV. A complete list of Capstreet’s current and prior investments is available upon request. It should not be assumed that investments made by the Funds are or will be comparable in quality or performance to Onpoint. Past results are not indicative of future performance._ 2 _Not all investment decisions will implement all of these strategies_. 3 _Source: 2024 Gulf Coast Energy Outlook, LSU Center for Energy Studies, _[_https://www.lsu.edu/ces/publications/2023/gceo\_2024.pdf_](https://www.lsu.edu/ces/publications/2023/gceo_2024.pdf)__ Paul is a partner at Capstreet and is a member of the firm’s investment committee. Paul currently serves on the boards of Analytic Stress, Allredi, APG, The Colt Group and hh2. Previously, Paul was on the boards of several Capstreet portfolio companies, including PCS, Onpoint, Thorpe Plant Maintenance & Engineering, Distribution International, Eads Distribution, GHX, and Sprint Industrial. Prior to joining Capstreet, Paul was at Credit Suisse in New York in the Global Energy Group, where he worked with energy clients on various types of M&A and financing transactions. He obtained his Bachelor of Arts degree in Economics from the University of Texas at Austin. ## Terms on this page - [Private Equity](https://capstreet.multisites.ai/glossary/private-equity) ## Keep reading - [Automotive technology private equity for dealer-focused companiesCapstreet invests in automotive technology businesses that help dealerships. The firm targets solutions for sales, marketing, finance and insurance, and service lane operations. It describes several recent investments in the sector and looks for owners with $3 to $15 million of EBITDA who want a majority capital partner.](https://capstreet.multisites.ai/industries/automotive) - [Business Succession and Exit Options: How to Choose the Right Next Step for Your CompanyOwners have five main exit paths: transfer to family, sell to management, sell to employees through an ESOP, sell to a strategic buyer, or partner with private equity. Each trades price, speed, control and legacy differently. Start planning at least three to five years before you want to step back.](https://capstreet.multisites.ai/business-succession-and-exit-options) - [Buy and Build Strategy: How a Platform Company Grows Through Add-On AcquisitionsA buy and build strategy starts with one well-run platform company and adds smaller businesses to it over time. The goal is a larger, more capable company than any single piece could be. It fits fragmented industries best. Owners of smaller firms can sell to a platform and often stay on.](https://capstreet.multisites.ai/buy-and-build-strategy) - [Construction technology private equity for software ownersCapstreet believes technology can drive large changes in construction efficiency and project delivery. It targets software businesses that support project and financial management for general contractors and sub-contractors. The firm sees the industry as early on its technology adoption curve and looks for owners with $3 to $15 million of EBITDA.](https://capstreet.multisites.ai/industries/construction) - [Capstreet deal criteria: the companies we look forCapstreet looks for entrepreneur-owned business services companies with $3 to $15 million of EBITDA. We make primarily majority investments, and entrepreneurs reinvest alongside Capstreet. We want a tenured team, solid financials, a defensive business model, untapped growth potential and a niche advantage. We invest across 12 industries.](https://capstreet.multisites.ai/deal-criteria) - [The due diligence checklist for owners selling to private equityDue diligence is the buyer's check of your business after you sign a letter of intent. Private equity firms review five areas: financial (quality of earnings), operations, tax, HR and benefits, and legal. Owners who gather clean records before the process starts shorten it and face fewer surprises.](https://capstreet.multisites.ai/guides/due-diligence-checklist-for-owners) ## Ready to get started? Let’s talk. Tell us about your company and what you want next. Conversations are private, and there is no obligation. [Start a conversation](https://capstreet.multisites.ai/contact) [(713) 332-2700](tel:+1-713-332-2700)[connect@capstreet.com](mailto:connect@capstreet.com) ![Capstreet team members at a Houston elementary school for Houston Reads Day](https://capstreet.multisites.ai/_astro/houston-reads-day.DxNd9bIr_tggWP.webp)