Blackstone announced on May 10 its investment in Geosyntec Consultants, an environmental engineering and design consulting firm. Geosyntec offers technical expertise in energy transition, water quality and supply, coastal, infrastructure and environmental restoration. PE Hub caught up with Blackstone Energy Partners global head David Foley and managing director Darius Sepassi to learn more about the deal and how the private equity firm is planning to deploy Geosyntec’s expertise in the energy transition space.
With a team of more than 1,700 engineers, scientists, and other technical personnel, Geosyntec operates from more than 90 offices across the US, Canada, Europe, Australia, and the Middle East.
“We were drawn to Geosyntec, because it is considered one of the strongest providers of specialized environmental engineering services, which is a reputation that the company has built by focusing on technical excellence and by promoting an employee-ownership culture,” said Sepassi.
With this expertise, Sepassi said the firm saw an opportunity for Geosyntec to work with Blackstone’s broader portfolio across real estate, infrastructure and other private equity funds, “all of which have expansive footprints and large asset bases that we can potentially cross-sell into.”
Since 2019, Blackstone has committed approximately $16 billion to projects and companies working around the broader energy transition theme.
The Geosyntec deal also represents two themes, the need to deal with current energy transition as well as the urgency of decarbonizing other sectors such as transportation, construction and agriculture, said Foley.
As the transition moves on from traditional energy, the process of decommissioning fossil fuel-backed power plants that have been operational for decades demands proper execution to avoid long-term land degradation and other unintended hazards. “Those are closing,” Foley said in reference to coal-fired power plants or petroleum refineries, “and you can’t just lock the door, turn off the lights and walk away from those things – they need to be decommissioned responsibly and safely, consistent with all current environmental standards.”
Geosyntec will grow organically by expanding its footprint across the world by recruiting and retaining world-class scientists and engineers, which Sepassi described as the life blood of the company. “Science recognizes and appreciates other science,” he noted.
Environmental engineering offers some other growth perspectives, he said while forecasting an upsurge of demand within the sector. “It is relatively fragmented, so we designed our platform with the goal to make it an attractive partner for other environmental and geotechnical engineering firms.”
Blackstone Energy Partners is also setting up Geosyntec to work with institutions, such as municipalities, to reduce the already looming impacts of climate change, focusing on technical support on water damage, coastal erosion, or storms that usually cause trails of extensive environmental damage.
Foley described Blackstone Energy Partners as a control-oriented and patient investor that is not looking just for quarterly results but for situations where the firm can make a real difference through ownership and creating significant incremental value over the long term. This, he said, will help Geosyntec scale new heights.
In its portfolio, Blackstone Energy Partners has made other acquisitions that support critical infrastructure and the global energy transition.
Among them is an investment in Irth Solutions last year, a company based in Columbus, Ohio, which develops software that automates processes for damage prevention and asset protection across critical network infrastructure assets. In July, the PE firm acquired Sphera, a provider of ESG software, data and consulting services.
In 2020, the PE firm invested in Therma Holdings, a specialty mechanical, electrical and controls services company focused on designing, building and servicing complex systems in mission-critical facilities.
Even as the current macroeconomic environment is threatening the growth of businesses, Blackstone will be able to weather the volatility, Foley said.
“For experienced private equity investors,” he said “the current volatility and downturn in public equity market valuations, particularly for high-growth companies that require capital to scale up (as many energy transition companies do) represents an opportunity.”