McGrath buys big in modular
By Belinda Smart03 February 2023
US portable accommodation specialist McGrath RentCorp has acquired Vesta Modular from private investment firm Kinderhook Industries for US $400 million (€365 million).
In a concurrent transaction, McGrath has sold Adler Tank Rentals to Kinderhook-owned waste management and temporary storage specialist Ironclad Environmental Solutions for $265 million (€242 million). Adler rents temporary storage tanks and containers used in energy, environmental, industrial and construction applications. Its branches serve 27 states across the US.
The transactions were completed simultaneously on 1 February 2023.
Vesta, founded in 2014, has branches across US states including Atlanta, Houston, and Miami. Its end markets include the education, industrial, construction, government, municipalities, and retail sectors.
As of December 31, 2022, it had generated $40 million of EBITDA on $129 million of total revenues, with a rental fleet totalling 6,000 units.
Headquartered in Southfield, Michigan, the company supplies temporary and permanent modular space solutions via two divisions: Modular Space Leasing, leasing units from its fleet of 6,000 units; and Modular Construction Services, which specialises in the design, manufacture, logistics, and installation of modular buildings.
McGrath said in a press release the acquisition “significantly increases McGrath’s modular revenue mix from 66% to 80%.”
“Mobile Modular’s high margins, recurring revenue, and favourable demand make it a highly attractive business, and one the company will remain highly focused on continuing to grow,” the statement said.
Joe Hanna, President and CEO of McGrath, said in the statement that growing the modular business was a “strategic focus area”.
“We are now able to offer our customers access to an expanded product line across more geographies than ever before. We are confident we will be able to leverage our combined sales and operational resources by seamlessly integrating Vesta in order to grow the new, larger scaled McGrath modular business together.
In a press release from Kinderhook Industries, Sam Keenan, Principal at Kinderhook, confirmed that over two years, “the Vesta team completed five add-on acquisitions and invested heavily in organic growth, nearly tripling the size of its modular fleet and adding five new branch locations.”
Vesta adds to McGrath’s recent acquistions in the modular buildings sector including Titan Storage and Design Space Modular Buildings, both purchased in 2022.
McGrath’s purchase of Vesta was funded through its existing revolving credit facility.
Goldman Sachs & Co. LLC acted as McGrath RentCorp’s exclusive financial advisor and Morrison & Foerster LLP acted as McGrath RentCorp’s legal advisor in the transactions.
Oppenheimer & Co. acted as Vesta and Ironclad’s exclusive financial advisor. Kirkland & Ellis acted as Vesta and Ironclad’s legal advisor in the transactions.