Warren Equity closes second small-cap infra solutions fund at $550m

Warren Equity Partners, an investor in infrastructure and facility solutions, closed a second offering under its ELIDO lower mid-market strategy.

Warren Equity Partners ELIDO Fund II, launched last fall, wrapped up in February at its $550 million hard-cap with the backing of new and existing LPs, according to a release seen by Buyouts. As such, the vehicle topped an initial target of $450 million. Aqueduct Capital Group was the placement agent.

ELIDO Fund II follows last year’s closing of the Jacksonville Beach, Florida, manager’s latest flagship fund, Warren Equity Partners Fund IV, at $1.4 billion, ahead of a $1.2 billion initial target.

Warren was founded in 2015 by managing partner Steven Wacaster and partners Scott Bruckmann and Henrik Dahlback to invest in buyouts, carve-outs and recaps of companies providing mission-critical products and services to infrastructure end-markets. Wacaster and Bruckmann were previously with Pegasus Capital Advisors.

The firm was a “first mover” in its space, Wacaster told Buyouts, targeting thematic opportunities in businesses that maintain, operate and upgrade infrastructure. Its core sectors – power and utilities, waste, water and wastewater, digital infrastructure, transportation, buildings and facilities, and environmental, health and safety – make up a $2 trillion market.

Warren’s approach to this opportunity set is not as an asset investor, like traditional infrastructure firms. It instead seeks a private-equity return from investing in “dynamic operating businesses in stable markets,” Wacaster said, that can be grown organically and through M&A with the help of the manager’s operations team.

Starting out as a deal-by-deal investor, Warren in 2018 raised $310 million for a first institutional fund.

The ELIDO strategy, begun with the 2021 close of a $255 million debut vehicle, was created with the flagship strategy in mind. There is “a high degree of overlap” between the two, Wacaster said, in terms of thematic focus.

The idea behind ELIDO was formulated when Warren’s flagship funds “encountered small-market companies that are not add-ons,” he said. This led to the design of a lower mid-market strategy that would observe the primary criteria of the flagship but geared to businesses with EBITDA of $5 million-$15 million.

To date, Warren has made 28 platform investments as part of 124 transactions completed in total. Its latest small-cap deal, done in January by ELIDO Fund I, backed Southeast Lineman Training Center, a vocational training services provider for utility and communications lineworkers.

Warren’s most recent flagship investment, made in early 2023, was Ovation Holdings, a distribution and maintenance, repair and operations services provider to the flow-control and instrumentation markets.

The firm also this year announced the sale of USA Water, an operations and maintenance services provider for water and wastewater systems, to Levine Leichtman Capital Partners. USA Water was formed by Warren in 2020 as a platform for acquisitions.

(This story was updated to correct the year Warren closed its first institutional fund.)