Forterra floats 29 percent stake in $340 million initial public offering

Water and wastewater infrastructure-geared Forterra Inc., a recently established entity emanating from Forterra Building Products, raised $340 million in a mid-October initial public offering, trading under the symbol FRTA on the Nasdaq Global Select Market. In U.S. Securities & Exchange Commission (SEC) filings, the company indicated that the IPO would give new investors and principal owner Forterra US Holdings LLC, respectively, 29 percent and 71 percent stakes in a 96-plant operation with annual sales of about $1.6 billion across Drainage Pipe & Precast Products and Water Transmission Pipe & Products segments.

“Our extensive suite of end-to-end products covers ‘the First Mile to the Last Mile’ of the water infrastructure grid, ranging from large diameter pipe that transports water to and from treatment centers and manages drainage along major transportation corridors, to smaller diameter pipe that delivers potable water to, and removes wastewater from, end users in residential and commercial settings,” Forterra tells investors in its prospectus. “We employ a specialized technical salesforce, including engineers and field service representatives, which enables us to deliver a high degree of customer service, create tailored solutions and ensure our products meet project specifications to maximize applications in the field. Our product breadth, footprint in the United States and Eastern Canada and significant scale help make us a one-stop shop for water-related pipe and products, and a preferred supplier to a wide variety of customers, including contractors, distributors and municipalities.”

Irving, Texas-based Forterra US Holdings is controlled by Lone Star Fund IX (U.S.), L.P., part of a family of investments under a private equity specialist with offices in Dallas, New York and Europe. Lone Star acquired Hanson Building Products from HeidelbergCement AG in March 2015, rebranding the Pipe & Precast, Pressure Pipe and Bricks businesses under the Forterra banner six months later. Lone Star positioned Forterra Building Products for an 18-month acquisition spree totaling upward of $1 billion. It extended the pipe & precast footprint in the Upper Midwest and Tennessee by acquiring Cretex Concrete Products and Sherman-Dixie Concrete, and created a complementary water transmission segment through the acquisition of ductile iron pipe leader U.S. Pipe Inc.

Ahead of the IPO, Lone Star officials have streamlined the Forterra portfolio around water and wastewater transmission and conveyance products and structures, and separated legacy, United Kingdom-centered Hanson Bricks production and distribution assets. Their SEC filings present Forterra Inc. as the largest producer, by sales volume, of concrete drainage pipe and precast (70 plants), plus concrete pressure and ductile iron pipe (26 plants), in the U.S. and Eastern Canada. The Drainage Pipe & Precast Products segment accounts for 47 percent of sales, while the Water Transmission Pipe & Products accounts for 53 percent.

EXECUTIVE TEAM

Leading Forterra are CEO Jeffrey Bradley, who arrived in September 2015 with chief executive experience from Globe Specialty Metals and Claymont Steel, guiding each through IPOs; Executive Vice President and CFO William “Matt” Brown, who joined in April 2016 after serving in similar capacities with U.S. Concrete Inc.; Drainage Pipe & Products President Mark Carpenter, who transitioned to senior vice president and general manager for the Forterra segment after serving as Hanson Engineered Products senior vice president, responsible for North American pressure pipe, U.S. structural precast and Eastern Canada gravity pipe and precast businesses; and, Water Pipe & Products President William Kerfin, who served as U.S. Pipe vice president of Sales and, earlier in his career, vice president of Finance at Griffin Pipe Products Co., subsequently acquired by U.S. Pipe.

PRECAST CONCEPTS, J&G DEALS

Amid the IPO, Forterra anticipates fourth quarter closing on the bolt-on acquisitions of J&G Concrete Operations LLC, a pipe and box culvert producer in Waxahachie, Texas, for $32 million; and, Precast Concepts, a small- to large-bore concrete pipe producer in Henderson, Colo., for $67 million. Both businesses will join the Drainage Pipe & Products segment. They follow more than $300 million in deals majority Forterra owner Lone Star Funds IX has effected since mid-2015 with an eye to a stronger, national footprint in concrete pipe and drainage structures.

CEO Jeffrey Bradley opened the Nasdaq Market on October 20, the first day Forterra shares traded for investors outside IPO sponsors.
PHOTO: Nasdaq Inc., New York