Osceola invests over $50 million in two-part industrial services deal

The PE firm closed two deals in the refractory services arena.

Osceola Capital simultaneously bought a majority stake in Industry Services Company and acquired Guy Nielson Company for more than a combined $50 million in mid-August, according to a source.

The lower-mid-market PE firm identified GNC as a potential add-on while conducting due-diligence for ISC, the platform business.

Both companies focus on providing refractory services such as maintenance and repair of high heat industrial furnace equipment, although ISC is more diversified and offers other services as well. The two companies serve MNCs in incineration, cement, steel and other industries.

Osceola met with ISC’s management in Mobile, Alabama – the company’s headquarters – right before covid-19 roiled markets but never did an on-site for GNC. “That’s partly because there was a strong familiarity between ISC and GNC; the owners knew each other for five years through trade associations and conferences,” said Patrick Watkins, principal at the firm.

Founded in 1964, ISC was shopped around by bankers at Founders Advisors, a middle-market M&A firm based in Birmingham, Alabama. The auction process produced an equity and debt deal in which ISC’s CEO Shawn Hunter and GNC’s owner rolled over equity to retain a minority stake. Osceola was the first institutional capital invested into ISC.

The Tampa-based private equity firm invested through its $125 million debut fund, which held a second final close in June. Osceola had a previous fund that wasn’t institutional, with its investor base comprising family offices and high-net-worth individuals.

ISC, Osceola’s seventh platform investment, signed the letter of intent in May, followed by GNC in July.

Looking ahead, Osceola has “reserved a significant amount of capital to support further acquisitions for ISC,” said Watkins.

“We are going to support organic growth in terms of hiring more project managers, establishing other branch locations and expanding horizontally to offer other complementary services,” he added, speaking from Osceola’s Tampa location.

This investment fit Osceola’s typical strategy of companies within the $2 million to $10 million EBITDA range.

GNC will be merged into DG Skouse, a division of ISC. The combined business will service 44 states and employ 1,500 people.

Action Item: Check out Osceola’s press release for more info.