Front Line Power Construction is working on its first acquisitions following an investment from Ariel Alternatives on 18 February, said Yue Bonnet, senior managing director and head of investments for the PE firm.

“We see this as a platform for significant M&A,” she said. “We have a couple of targets we are actively looking at.”

Organic growth in the region is also likely to remain strong. More than USD 65bn in capital investment has been earmarked by the Electric Reliability Council of Texas to be spent on power infrastructure in the coming years, she said. Front Line, a provider of electrical construction and power infrastructure solutions, operates primarily in Texas and the Southwest. Growth will be driven by data center development, industrial expansion, repopulation of the region and rising electrification, Bonnet said.

Ariel Alternatives had been tracking the company for more than two years because of its stellar reputation, Bonnet said. While the company did run an auction process with Stifel, Ariel was well-positioned given “our expertise in the sector and the industry advisors we brought to the table,” she added. The board includes Jason Lee, former co-head of Oaktree Capital’s Power Opportunities Group, and Al Fosbenner, former CFO of Riggs Distler.

Bonnet said the process was fairly narrow and dominated by sponsors but included some strategics.

Front Line was the second utility services/energy services deal for Ariel Alternatives in only six months.

Together with Lorenna Buck, managing director, who co-led the deal, Ariel Alternatives looked at more than 50 deals in the space in the last two years before identifying Front Line, Bonnet said.

Neither executive would disclose the Houston-based company’s revenue but they said it has over 400 employees.

Buck said acquisitions will ideally be in the South or Gulf Coast so the company can expand contiguously. It will look to acquire substation and distribution line service providers with capabilities such as construction repair and maintenance. Targets must be profitable and can have up to USD 25m of EBITDA, Buck added.

Front Line will also look at providers of complementary services such as engineering, Buck noted. The company competes with the large engineering, procurement and construction (EPC) contractors and wants to provide similar service offerings, the executives said.

Even without acquisitions, the company has experienced double-digit annual growth since its inception more than 15 years ago, Buck added.

For 15 years, Front Line has served utilities, telecommunications providers and industrial customers throughout the Houston metro area and surrounding counties, including Harris, Fort Bend, Montgomery, Brazoria and Galveston, according to the deal announcement.

Stifel advised the seller on the transaction. Truist was the buy side advisor and lead debt arranger. M&C was Ariel’s law firm and Baker Tilly provided accounting. Vinson and Elkins advised the seller. The Cherokee Nation Businesses served as a strategic minority co-investor on the deal.

Bonnet noted that the four out of five members of the deal team for Front Line were female and backing a “rock star” female CEO, Audrey Johnson.  “First time this has happened in my private equity career,” Bonnet said.