Blackstone Bankrolls Rollup In Construction Industry

Target: Summit Materials

Price: $780 million

Sponsor: Blackstone Group, Silverhawk Capital

The Blackstone Group this month announced it was leading an investment of up to $780 million in Summit Materials, a newly formed company created to buy building material businesses.

The investment is part of a roll-up strategy for Blackstone Group in the building materials sector. The first acquisition for the new company is Hamm Inc., a private held aggregates, landfill, asphalt and construction company based in Perry, Kan.

Senior Managing Director Neil Simpkins told Reuters, publisher of Buyouts, that the buyout firm is already seriously looking at 10 possible add-on deals. Targets include private held businesses in several regions around the country, as well as assets that large multinational corporations are jettisoning to reduce their debt load.

Other investors in the deal include Silverhawk Capital Partners, a Greenwich, Conn.-based lower-mid-market private equity firm, individual investors and management at the company. Tom Hill, former CEO of Oldcastle Inc., the $14 billion U.S. division of CRH plc, a Dublin, Ireland-based construction materials company, is the CEO of the new company. Other executives include Michael Brady, executive vice president, and Tony Keenan, CFO.

Blackstone is one of many firms, including Kohlberg Kravis Roberts & Co. and The Carlyle Group, targeting companies in the infrastructure industry. CEO Stephen Schwarzman said in a 2008 conference call that the firm was eyeing infrastructure deals in Europe, and in 2008 Blackstone hired Trent Vichie from Macquarie Securities to lead Blackstone’s infrastructure business. The firm is currently in the pre-marketing mode to raise a $3 billion to $5 billion infrastructure fund, according to the trade publication InfrastructureInvestor.

Blackstone is making the Summit Materials investment out of Blackstone Capital Partners V LP, a $21.7 billion fund raised in 2006. The size of the stakes held by Blackstone and Silverhawk Capital are unclear; Blackstone executives were unavailable for comment and Silverhawk professionals could not be reached by deadline.