Leonard Green close to buying US Infrastructure Corp -sources

NEW YORK, June 20 Thu Jun 20, 2013 10:52pm EDT

NEW YORK, June 20 (Reuters) - Private equity firm Leonard Green & Partners LP is nearing a deal to buy United States Infrastructure Corporation (USIC), two people familiar with the matter said this week, in a deal that could be valued at between $700 million and $800 million.

The acquisition would be atypical for Leonard Green, which is known primarily for its investments in the retail and consumer sectors.

USIC maintains the underground cables of telecommunications, power and water utilities, and is owned by Ontario Municipal Employees Retirement System (OMERS), one of Canada's largest pension plans.

But Leonard Green, which has a mandate from its investors to invest in business services, has always considered USIC a people's business and is attracted to the cash generated by its 4,300 technicians who look after the assets of most of the top U.S. utilities, one of the people said.

The people asked not to be identified because the matter is confidential. They cautioned that the negotiations had not yet been fully finalized and could still fall apart. Representatives of Leonard Green, USIC and OMERS could not be immediately reached for comment.

USIC's niche market for utility line-locating services was valued by Standard & Poor's Ratings Services at $1.6 billion last year.

Indianapolis-based USIC was formed in 2008 when private equity firm Kohlberg & Co acquired and merged two companies active in the underground locating and marking service sector - SM&P Utility Resources Inc and Central Locating Service Ltd.

In just over a year, USIC's EBITDA had grown by 65 percent, according to Kohlberg's website. In 2010, Kohlberg sold USIC to the private equity arm of OMERS for an undisclosed amount. Leonard Green was also vying for USIC then, one of the people said.

USIC was OMERS' second private equity deal in the United States following its acquisition of rail maintenance equipment company Nordco Inc in 2009.

Based in Los Angeles, Leonard Green has raised over $15 billion for private equity investments since its inception in 1989. These investments includes retailer BJ's Wholesale Club Inc, apparel and accessories chain J. Crew Group Inc and supermarket operator Whole Foods Market Inc.

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