Target Information

Western States Reclamation, LLC ("WSR"), a portfolio company of Strength Capital Partners, has successfully acquired Naranjo Civil Constructors ("Naranjo"). The acquisition has led to the formation of a new entity named Western States Water, which will incorporate WSR, Naranjo, and WSR's subsidiary, Ecological Resource Consultants ("ERC"). Each entity will continue to operate under its established business name.

WSR is recognized as a premier provider of environmental reclamation and specialty civil contracting services, with a primary focus on the protection and preservation of water resources across the Western United States. Naranjo, founded in 1982, excels in civil contracting, particularly in areas concerning natural waterways, urban drainage, recreational environments, and relevant infrastructure projects within Colorado. The company is known for its expertise in structural and sculpted concrete and employs a dedicated workforce of over 100 professionals.

Industry Overview

The environmental reclamation and civil contracting industry in the Western United States has seen significant development, driven by increasing regulatory requirements and the growing emphasis on environmental sustainability. Companies operating in this sector are tasked with managing and restoring ecosystems, particularly those impacted by urbanization and natural resource extraction.

In Colorado, the emphasis on water conservation and management has intensified due to persistent drought conditions and growing demand for urban water supply. This has fueled opportunities for firms focusing on drainage, waterway rehabilitation, and infrastructure improvements. The state's progressive stance on environmental protection has led to innovative projects integrating sustainable practices.

Additionally, the specialty civil contracting segment is becoming increasingly competitive as firms strive to differentiate themselves through technological advancements and specialized skills. The market is influenced by public infrastructure spending, particularly for projects that enhance water quality and protect vital resources.

Overall, the industry is poised for growth as private and public entities recognize the importance of sustainable practices and invest in the necessary infrastructure to safeguard the environment.

Rationale Behind the Deal

The acquisition of Naranjo is seen as a strategic move for WSR as it enhances their service offerings and market reach within the Western United States. By bringing Naranjo's specialized capabilities into the fold, WSR can expand its portfolio to include advanced civil contracting services, thereby addressing a broader scope of environmental needs in the region.

This strategic combination is expected to enhance operational efficiencies and foster collaborative projects that leverage the strengths of each company. The alignment of their services presents an opportunity for growth in a market eager for comprehensive environmental solutions.

Investor Information

Strength Capital Partners (SCP) is a private equity firm that specializes in investments in the environmental services sector. Their focus is on companies that have a strong foundation and significant potential for growth, particularly in addressing vital environmental issues. The firm brings operational expertise and industry insights to its portfolio companies, nurturing their abilities to expand and enhance their market positioning.

With their investment in WSR and now the acquisition of Naranjo, SCP is reinforcing its commitment to developing leaders in the environmental services space that prioritize sustainability and water conservation. Their strategic vision aims to foster innovations that contribute positively to the industry and the communities served.

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This acquisition is poised to be a beneficial investment for both WSR and Strength Capital Partners. The integration of Naranjo's expertise with WSR’s existing operations not only enhances the capabilities offered to clients but also positions Western States Water as a formidable player in the environmental contracting arena.

The growing emphasis on water resource management in the Western United States aligns perfectly with the capabilities of the newly formed entity. As market demand for water conservation and sustainable infrastructure continues to rise, Western States Water is strategically positioned to capture a significant share of this expanding market.

Moreover, the collaborative potential among the three entities suggests a synergistic effect that could lead to increased project opportunities and improved operational efficiencies. This synergy is instrumental in establishing a competitive edge in a fragmented industry.

In summary, this deal marks a strategic alignment that is likely to deliver long-term value for investors, particularly as water-related challenges become increasingly pressing in the region.

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