LP First Capital has acquired REI Utility Services, a provider of joint-use management services to electric distribution co-operatives.
All of REI’s services assist utility companies, specifically electric cooperatives, with managing their infrastructure and ensuring the safety and reliability of their power distribution networks. Electric cooperatives are member-owned, non-profit organizations that provide electricity to rural and underserved communities. Any surplus revenue is reinvested in the cooperative or returned to members as capital credits, distinguishing them from investor-owned utilities.
REI’s services are varied and include joint-use management (the coordination and administration of shared utility poles and infrastructure by different utility providers); pre-attachment contract management (negotiating and managing contracts between utility companies before any equipment is placed on utility poles); field analysis (collecting and analyzing data from utility sites including inspecting poles and equipment); local, state, or federal permitting; make-ready engineering (preparing utility poles for new attachments); post-attachment pole audits (inspections after new equipment has been attached to utility poles); inspections; and ongoing regulatory support.
REI serves electric co-operatives that operate more than 75,000 distribution line miles throughout Texas and has expanded its operations to include the states of Arkansas, Louisiana, and Oklahoma. Mitchell Mayo, Dylan Mayo, and Steven Murff founded the company in 2016. Its headquarters are 75 miles southeast of Dallas in Athens, Texas.
“Having been with REI from the beginning, I watched my father build something he believed in. I saw the conviction he had to provide services to his clients and friends, which were unmatched,” said Mitchell Mayo, the chief executive officer of REI. “Over time, I have also learned how consistent and intentional efforts are necessary to continue providing unparalleled services to our clients—both the big ‘C’ and the little ‘c’: customers and employees. REI believes that LP First Capital, as a firm, shares the same heart as we do. We believe this partnership is another step toward being consistent and intentional in our growth. We also believe, Lord willing, that we will see remarkable things come to the industry through this new partnership.”
“We are thrilled to partner with Mitchell, Dylan, Steven, and the REI team to build a leading power utility services platform,” said Thomas Ince, a managing partner at LP First. “Their core values—Reliability, Ethics, and Integrity—resonate throughout their organization and are consistent with LP First Capital’s commitment to investing in culture-first founders and management teams. We look forward to continued growth as partners.”
Graycliff Partners and Brookside Capital Partners provided unitranche debt and made an equity co-investment to support LP First’s acquisition of REI.
“We are pleased to partner with LP First and REI on this transaction,” said Frank Cacace, a principal at Graycliff. “The company has built an exceptional track record of serving its co-op clients and will continue to play an important role as it grows its service coverage area and offerings over the next several years.”
“REI serves as an extension of the utility, playing a critical role in ensuring the safety, reliability, and efficiency of power distribution infrastructure while also providing a pathway to reliable internet in underserved communities through its core joint use management service offering,” said Michael Sommerdorf, a principal at LP First. “We see multiple pathways for REI to become the go-to outsourced utility services provider for power utilities across Texas and the broader United States.”
LP First invests up to $10 million of equity in Southwest, Southeast, and Midwest-headquartered companies with enterprise values between $15 million and $75 million and EBITDA of $3 million to $10 million. Sectors of interest include commercial, consumer, education, and healthcare services. LP First was founded in 2018 and is headquartered in Austin, Texas.
© 2024 Private Equity Professional | September 27, 2024
