Impact Investing Case Study - Osmose

Written by Neha Jatar

This article continues a series that aims to provide illustrative case studies of impact investments that promote critical environmental, social, and corporate governance objectives. As a Managing Director at EQT Partners, a global private equity group, I have been responsible for developing, leading, and completing substantial corporate transactions that have improved the efficiency, safety, sustainability, and profitability of leading infrastructure companies.  In a prior article, I discussed EQT’s investment in, and subsequent re-structuring of, First Student, the largest student transportation services company in the United States.  This article presents another case study involving EQT’s acquisition of Osmose Utility Services, the market-leading provider of recurring, non-deferrable asset health services for critical utility and telecom infrastructure.

A major challenge for the United States in the coming decades will be to identify and implement efficient and sustainable solutions for its aging infrastructure.  The complexity and magnitude of the problem is compounded by increasing energy demands as well as severe weather events emanating from climate change.  The services of companies like Osmose are essential for ensuring the safety and reliability of the North American transmission and distribution grid.  Osmose, being the largest provider of inspection, preventative maintenance, repair, and resiliency services for overhead and underground utility and telecom assets across 49 states, is undoubtedly a critical component of the U.S. infrastructure.

During the diligence and post-acquisition phases of the Osmose transaction, EQT developed and implemented several value creation initiatives across the company’s commercial, technology, and operational functions.  A key objective was to contribute to the resiliency of utility and telecom grids against deterioration arising from continued aging, increased loads due to the proliferation of electrification, renewables, the buildout of broadband/5G networks, and extreme weather conditions.

In order to improve Osmose’s capabilities in this regard, we deployed an ambitious, multi-faceted strategy that included the development of a new resiliency service, investments in technology to improve the company’s data and analytics capabilities, strategic acquisitions to expand the company’s geographic reach and breadth of services, and enhancements to its human resources by funding a wage reset and recruiting additional technical and engineering talent.

As a Member of the Board of Directors, I helped lead the development of a new resiliency service, which features the use of predictive analytics to proactively harden the distribution grid through the use of prioritized, systematic trussing on high-risk wood poles and steel transmission structures.  In 2025, this offering is expected to generate $35 million in revenue, up from $0 in 2019.  As a testament to its efficacy, an ongoing resiliency program in the Southeast resulted in 80% fewer outages and 90% lower restoration costs following Hurricane Irma, despite serving three times as many customers.  The value provided by Osmose’s resiliency solutions is critically important for the infrastructure of the United States, given the $150 billion in annual power outage costs for the Department of Energy.

In addition, we substantially improved Osmose’s data and analytics capabilities and expanded the breadth of its services by completing several strategic acquisitions, which included Power Survey, a mobile contact voltage detection business that uses proprietary, patented technology to scan for contact voltage to improve the safety of underground grid infrastructure.  Another key acquisition was Imcorp, the technology leader in underground power cable life cycle condition assessment and performance.  Other companies acquired by Osmose over this time are Effigis, Provincial Pole, and Associated Utility Supplies, businesses in Canada and the United Kingdom, that increased the adoption of wood and steel asset health services by utilities and network operators.

To enable and further enhance these operational improvements, the Board of Directors planned and oversaw a substantial increase in Osmose’s human resources capabilities. This included the recruitment of 60 net new corporate employees and 600 net new field employees, contributing to job creation in the United States.  Osmose employs a large, distributed field workforce of approximately 4,000 individuals across the crew, foreman, and supervisor ranks in 49 states.  This workforce is critical to ensure safe and efficient delivery of Osmose’s services at scale.  Following EQT’s acquisition of the company, we worked closely with operations teams and human resources management to consistently invest in Osmose’s technical talent.  This includes approving a wage reset, supported by a $15 million investment, to ensure best-in-class field retention and productivity, annual employee engagement surveys, and investing millions of dollars in the recruiting and training functions.

Since the EQT acquisition, Osmose has grown from approximately 2,800 employees to the current head count of 4,500.  The expansion of Osmose’s services has resulted in substantial revenue growth, from $365 million in 2018 to $700 million in 2023.  Initiatives championed by EQT has also led to improved labor retention and productivity, increased employee wages, and improved safety.  And last but not least, by driving a focus on analyzing and creating impact business cases, the company has made a substantial contribution to improve the structural resiliency and safety of the transmission and distribution grid, while reducing costs for end users.

Neha Jatar is a managing director in EQT’s Infrastructure fund, having joined EQT in 2018. Neha co-leads the transportation and logistics sector and has led investments in Osmose Utilities Services, a leading provider of asset health services for utilities and telecoms in North America, First Student, the largest provider of student transportation to school districts across North America, and most recently, Scale Microgrids, a developer, owner, and operator of microgrids and advanced distributed energy resources in the US.