(Editor’s Note: This story has been revised from an earlier version to reflect that Veritas Capital recently closed on its sixth equity fund, which raised $3.55 billion in less than two months.)
CB&I is selling the Capital Services division of its company to a New York-based private equity firm, Veritas Capital. CB&I President and CEO Philip Asherman announced the $755 million deal late Tuesday in an quarterly earnings conference call with analysts.
The deal will have implications for some 1,500 CB&I employees in the Baton Rouge area who work in the company’s Capital Services division. But Veritas Capital officials say the changes will be positive for the local market, where they hope to grow their new company.
“Baton Rouge will remain a vital area of operations for the company, and we are committed to growing our presence there,” says Ramzi Musallam, chief executive officer and managing partner of Veritas Capital. “We expect that the business will increase jobs locally and provide economic development throughout the state.”
CB&I’s Capital Services division handles maintenance and environmental work, and the bulk of the company’s Capital Services employees are based in Baton Rouge at the company’s Essen Lane office. Veritas officials suggest the company could grow its footprint in the environmental services area in particular, noting that the region’s focus on water management and control is well aligned with the company’s capabilities.
CB&I has been looking to sell its Capital Services business since it acquired The Shaw Group in 2013, according to comments Asherman made during Tuesday’s conference call. He said the Capital Services business “wasn’t core to our strategy,” and that the proceeds from the sale will be used to pare down CB&I’s $2.2 billion debt.
“We’ve been talking about this since we made the original acquisition of the assets,” Asherman said. “We talked about marketing it a couple of years ago. … There were some strategic buyers interested but Veritas had expressed an interest before and was very aggressive in coming to the table to buy this. I think it will perform much more successfully (on its own).”
CB&I Executive Vice President E. Chip Ray, who heads up the Capital Services division, will continue to run the new company. He was briefly based in Baton Rouge after CB&I acquired The Shaw Group but later relocated to CB&I’s U.S. headquarters in The Woodlands, Texas.
CB&I’s Livingston Parish-based pipe fabrication business is under the fabrication division of the company and is unaffected by the pending sale.
The deal is expected to close sometime between April and June. The new company will operate as a standalone company in the Veritas Capital portfolio, which includes more than a dozen companies in a variety of sectors. A name has not been announced.
Veritas Capital was founded in 1998. In the years since, it has originated and managed 70 acquisitions. The firm recently raised $3.55 billion for a sixth equity fund that will invest in middle-market companies that provide products and services to government customers in sectors such as aerospace and defense, health care, technology and national security.
—Stephanie Riegel
