(Reuters) – Capitol Investment Corp IV, the fourth “blank-check” acquisition company formed by investor Mark Ein, is nearing a deal to buy a majority stake in NESCO LLC, valuing the aerial lifts and cranes rental company at $1.1 billion, including debt, people familiar with the matter said on Sunday.
The deal represents a bet on increasing demand for such equipment by utility companies overhauling their grids, telecommunications firms upgrading their networks, and railroad operators spending more to maintain their tracks.
Under the terms being discussed, Capitol will acquire a 72 percent stake in NESCO, said the sources, who requested anonymity because no official announcement has been made. Private equity firm Energy Capital Partners, which led a $875 million leveraged buyout of NESCO in 2014, would retain a minority stake.
An announcement could come as soon as Monday, the sources said.
A representative for Capitol declined to comment. Representatives for NESCO and Energy Capital Partners did not immediately respond to requests for comment.
Fort Wayne, Indiana-based NESCO rents out specialized construction and maintenance equipment, such as trucks, cranes and pressure diggers. Its customers include railroad operator Union Pacific Corp and the Los Angeles Department of Water and Power.
Capitol sees scope to grow NESCO by adding to its fleet to meet excess demand, as well as through add-on acquisitions, according to one of the sources.
Capitol also plans to add SBA Communications Corp President and Chief Executive Jeffrey Stoops, and former United Rentals Inc Chief Financial Officer William Plummer to NESCO’s board of directors, with Plummer as chairman, the source said.
Capitol is Ein’s fourth special purpose acquisition company (SPAC), an investment vehicle that raises money for acquisitions through an initial public offering (IPO). IPO investors do not know in advance which company a SPAC will buy.
Capitol completed its IPO in 2017, raising $402.5 million. It will fund its acquisition of NESCO by also using debt.
Ein, who last week closed a deal to acquire the rights of the Citi Open tennis tournament in Washington D.C., worked at Carlyle Group LP, Brentwood Associates and Goldman Sachs Group Inc before setting out on his own as an investor.
His three prior SPACs invested in real estate investment trust Two Harbors, specialty cruise operator Lindblad Expeditions Holdings and Cision Ltd, a provider of software for PR professionals.
SPACs raised around $10 billion in 2018, similar to the amount raised in 2017. This compares to $3.5 billion raised in 2016, according to data provider Dealogic.
Reporting by Joshua Franklin in New York; Editing by Daniel Wallis