Key Takeaways
- • New Mountain Capital is raising $2.4 billion through a continuation fund structure to extend its ownership of Azuria Water Solutions, a water infrastructure firm specializing in trenchless pipe rehabilitation technology.
- • The secondary fund could exceed $1 billion in size, according to sources familiar with the matter, representing New Mountain's strategy to retain Azuria rather than pursue a full exit in a challenging dealmaking environment.
- • Azuria is positioned as the largest player in the trenchless water pipe rehabilitation space, providing services primarily to North American municipalities seeking cost-effective alternatives to traditional open-cut pipeline repair methods.
- • New Mountain has consolidated its water services holdings by merging Azuria (acquired May 2021) with Inframark (acquired December 2020) into a combined platform, creating a $2 billion water services entity.
- • The continuation fund approach signals broader private equity trend of using secondary markets to extend portfolio company holds when exit conditions are unfavorable, with New Mountain also retaining the option to sell a stake to another investor.
Summary
New Mountain Capital is pursuing a continuation fund strategy to maintain control of Azuria Water Solutions, its water infrastructure portfolio company, by raising capital through the secondary market. According to Bloomberg, the continuation fund for Azuria could exceed $1 billion in committed capital, allowing the private equity firm to extend its investment horizon beyond typical fund lifecycles in what remains a constrained dealmaking environment.
Azuria represents a significant asset in New Mountain's infrastructure portfolio. The company, formerly known as Aegion, operates as the largest provider of trenchless water pipe rehabilitation services in North America. This specialized technology—known as CIPP (cured-in-place pipe)—offers municipalities a more economical and less disruptive alternative to traditional open-cut replacement methodologies for aging water infrastructure. New Mountain identified the water services sector as a strategic focus area through its multi-year deep-dive initiatives in infrastructure and utility services.
The capital deployment reflects New Mountain's broader consolidation strategy within water services. The firm merged two portfolio companies—Azuria (acquired in May 2021) and Inframark (acquired in December 2020)—into a single combined platform valued at approximately $2 billion. This integrated entity has further expanded through acquisitions including Waterline Renewal Technologies and Infrastructure Systems, Inc., positioning the consolidated platform as a dominant force in North American water infrastructure services.
The continuation fund structure provides New Mountain with flexibility in managing the investment. While the firm intends to retain primary ownership through the secondary vehicle, sources indicate that selling a minority stake to another investor remains a possibility. This approach allows New Mountain to maintain operational control and benefit from continued value creation in the water infrastructure sector while accessing fresh capital from secondary market investors seeking exposure to essential infrastructure services.
Azuria represents a significant asset in New Mountain's infrastructure portfolio. The company, formerly known as Aegion, operates as the largest provider of trenchless water pipe rehabilitation services in North America. This specialized technology—known as CIPP (cured-in-place pipe)—offers municipalities a more economical and less disruptive alternative to traditional open-cut replacement methodologies for aging water infrastructure. New Mountain identified the water services sector as a strategic focus area through its multi-year deep-dive initiatives in infrastructure and utility services.
The capital deployment reflects New Mountain's broader consolidation strategy within water services. The firm merged two portfolio companies—Azuria (acquired in May 2021) and Inframark (acquired in December 2020)—into a single combined platform valued at approximately $2 billion. This integrated entity has further expanded through acquisitions including Waterline Renewal Technologies and Infrastructure Systems, Inc., positioning the consolidated platform as a dominant force in North American water infrastructure services.
The continuation fund structure provides New Mountain with flexibility in managing the investment. While the firm intends to retain primary ownership through the secondary vehicle, sources indicate that selling a minority stake to another investor remains a possibility. This approach allows New Mountain to maintain operational control and benefit from continued value creation in the water infrastructure sector while accessing fresh capital from secondary market investors seeking exposure to essential infrastructure services.
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