Investcorp, Trilantic to acquire traffic safety company

Formerly backed by Orix, RoadSafe, a major traffic control and safety products provider, marks investment by another set of PE players.

As President Joe Biden shapes the infrastructure proposal, Bahrain’s Investcorp teamed up with Trilantic North America to deploy capital into the US’s largest pavement marking, traffic control and safety product distributor.

RoadSafe Traffic Systems, which offers rental equipment like barricades and installs custom road signage, is poised to see increased demand, especially if the proposed $2 trillion infra plan passes the Senate, alluded Amit Gaind, managing director and head of industrial services at Investcorp.

Gaind pointed to the latest four-year assessment report by the American Society of Civil Engineers, which gave the nation’s infrastructure an overall ‘C’ grade. The rating suggests that US infrastructure is in mediocre condition and not enough investment has been made to maintain it.

Although Charles Fleischmann, partner at Trilantic agrees with long term requirement in infrastructure spend, the rationale for the deal according to him remained unmotivated by political outcomes.

RoadSafe, which generated north of $250 million in revenue last year, offers services to federal agencies, highway contractors, schools and more. Operating in 48 continental states with more than 1,600 employees, RoadSafe has made multiple add-on acquisitions to expand its footprint under the seller Orix Capital Partners.

“There’s a tremendous opportunity to put together a bunch of smaller players,” said Gaind, referring to the fragmented nature of the sector, “and continuing on with the organic growth.”

In March, RoadSafe acquired Bluffdale, Utah-based Innovative Marking Systems, a sign installer and waterborne paint marking service provider. The acquisition followed RoadSafe’s previous investment in Corona-based A Cone Zone, which offered traffic management equipment and services to South California.

Overall, the traffic control, pavement marking and related products market is somewhere between $8 billion to $10 billion. “You have the top 10 players accounting for 10 to 15 percent and all are privately held businesses,” Fleischmann said.

The traffic safety company first secured private capital in 2007 through a buyout by Aperion Management. Aperion sold most of its equity to Orix in 2016, while maintaining a minority position. The business, advised by William Blair, subsequently marketed the company to exit their respective stakes. Initial indications by bidders were due in late Jan/Early feb timeframe, according to a source familiar with the deal.

Investcorp met the targets’ managers and tracked the company over the past three years, while Trilantic was first introduced to RoadSafe a year ago. The investment is part of the Trilantic’s five-year focus on the infrastructure market, Fleischmann said.

For Investcorp, the deal will also pave the way for direct pure infrastructure investments in projects like US ports and toll roads, according to a recent CNBC interview of Rishi Kapoor, co-chief executive at Investcorp.

The firms plan to focus RoadSafe’s growth in the local markets and will close the deal in the next week or two.

Update: This report has been updated with additional details around the deal process.