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Riverwood invests up to $45 mln in water technology company

Riverwood Capital has invested up to $45 million in Underground Solutions, Inc., a water and wastewater infrastructure technology business. The transaction includes initial funding of $30 million in the company’s Series C preferred stock, with an option for an additional $15 million investment. A portion of the investment will be used to acquire Process Solutions, Inc., which developed and sells two water technologies.

Press Release

Underground Solutions, Inc. (UGSI), a leader in water and wastewater infrastructure technologies, announced that it successfully closed a $45 million financing transaction with Riverwood Capital of Menlo Park, CA. The structured transaction provides for an initial investment of $30 million in UGSI’s Series C preferred stock, with an option for an additional $15 million investment. The financing represents one of the largest private equity transactions in the water technology space in recent years.

A portion of the transaction proceeds was used to acquire Process Solutions, Inc. (PSI), of Campbell, CA. PSI developed and sells two leading water treatment technologies: MicrOclor™ on-site hypochlorite generation for disinfection; and Tank Shark™ for efficient mixing of water reservoirs. In 2012, UGSI acquired the Wallace & Tiernan® chemical feed assets – composed of the iconic PolyBlend®, Encore® and Varea-meter® brands, among others – from Siemens Industry, Inc. and managed the successful turnaround of that business in 2013. The combination of the Wallace & Tiernan® chemical feed assets and PSI creates a water industry leader in chemical metering and disinfection.

“We could not be more excited to combine our efforts in chemical feed and disinfection with PSI. We’ve known the PSI ownership team for many years and have been impressed with their entrepreneurialism and savvy as they built their business. Their MicrOclor™ on-site hypochlorite generator is by far the industry-leading technology platform. Equally important to us is their dedication to customer service and system reliability,” said Andy Seidel, CEO of UGSI.

Gunnar Thordarson, founding partner of PSI, Inc., said: “Brent Simmons and I are excited to partner with the UGSI team. Their historical success speaks for itself and, most importantly, we see the water industry opportunities in the same way: Industry-leading technologies flanged-up with terrific customer service.”

“While our core Fusible PVC® pipe infrastructure business continues to grow profitably at rates of 20-40% per year and is approaching 10,000 installations, it requires very little capital to achieve that growth. On the other hand, our chemical feed and disinfection business would benefit from greater scale as well as a more comprehensive product line to build on the strong organic growth rate it has enjoyed over the past year. Based on management’s 25 years of experience in running water businesses, most notably USFilter Corporation, we see a historic opportunity for acquisitive growth to better position the company in both industrial and municipal markets,” added Andy Seidel.

Jeff Parks, founding partner of Riverwood Capital, said, “We’re excited to partner with the leading management team in the water industry. Their recent success in both the underground infrastructure market with Fusible PVC® pipe and with the quick turnaround of the former Siemens’ assets is impressive and we want to help them build on that platform.”

About Underground Solutions

Underground Solutions, Inc., a private company, is a leader in water and wastewater and electrical infrastructure and process technologies.

About PSI, Inc.

PSI, Inc. is a water industry leader in disinfection and mixing process technologies based in Campbell, CA.

About Riverwood Capital

Riverwood Capital is a globally focused private equity firm that invests in high-growth businesses in the technology and services industries, across a variety of verticals and geographies. Riverwood was established by a talented group of private equity and technology industry executives, which gives Riverwood a unique combination of operational, strategic, financial and technical insight into investment candidates and portfolio companies. Riverwood has offices in Menlo Park, CA, New York, NY, Sao Paulo, Brazil and Beijing, China. Riverwood was founded in 2008 and has raised over $2 billion since inception.