Morgan Stanley Capital Partners has acquired a majority stake in Olsson, an engineering and design firm based in Lincoln, Nebraska, PE Hub can reveal.
Founded in 1956 and with over 2,000 employees, Olsson offers a suite of infrastructure engineering design and consulting services to public and private clients. Its markets include technology, transportation, water infrastructure, power, industrial and federal.
“The engineering market remains very large with significant tailwinds,” said Eric Kanter, MSCP’s head of industrial services. He pointed to the amount of money that is being channeled to revamp aging infrastructure, enable reshoring and support the computing capability and power required for AI adoption.
One source of that funding is the Infrastructure Investment and Jobs Act, passed in 2021 to modernize infrastructure.
“This is a company that has a tremendous relationship with a very diversified set of public clients such as states and municipalities on the infrastructure side, and they also have a top-tier position with a number of private sector clients, including blue-chip data center operators, utilities and industrial companies,” he added.
Olsson can also benefit from its engineering work around utilities, particularly with the power grid, which has suffered from under-investment. There has been a significant effort by utilities companies to make the grid more stable and reliable through grid hardening and repair over many years, according to Kanter.
“This was the primary driver of increased investment over the past decade. In more recent years, this has been meaningfully amplified with greater electrification resulting from significantly more renewables, electric vehicles, etc. Now AI has dramatically increased the need for power to support its computing needs,” he said.
MSCP also liked that Olsson was an employee-owned firm.
AI factor
There has been a boom in data center construction across the US to support the deployment of artificial intelligence.
While the majority of Olsson’s business is not data center-oriented, “there ought to be a very significant increase in demand for these services as AI is adopted over time,” said Kanter.
Part of Olsson’s advantage in this area is its end-to-end engineering services, starting with site due diligence, project design, construction support, project close out and ‘Day 2 operations,’ according to Kanter.
Olsson has “deep technical expertise” in a broad range of disciplines such as site civil, structural, mechanical, electrical, fire protection and more, which are compelling to several of its clients. “These advantages have led to Olsson being a trusted and top-tier partner to many of the leading players in this sector,” he said.
Growth
The Olsson deal marks MSCP’s fourth investment in infrastructure services. The three previous investments are Apex Companies, a provider of end-to-end environmental and infrastructure consulting and engineering services based in Rockville, Maryland, Resource Innovations, a provider of services aimed at helping clients use energy more efficiently based in Half Moon Bay, California and Decatur, Alabama-based Alliance Technical Group.
MSCP recently sold Alliance, an environmental compliance, on-site testing and monitoring, and laboratory testing and analysis company, to Blackstone.
MSCP hopes to bring part of its Alliance growth playbook to Olsson.
Under MSCP, Alliance doubled up organic and inorganic strategies to achieve what Kanter described as “a very successful outcome.” Alliance did more than 30 add-ons. However, Kanter said MSCP is still at the front end of a process to identify specific gaps, either in terms of geographic, engineering capabilities or talent, to invest in Olsson’s growth.
As part of the growth strategy, Olsson will also break into new markets such as education and healthcare, Kanter said.
