Morgan Stanley’s PE arm to sell HVAC firm to Goldman Sachs Alternatives

(Reuters) -Morgan Stanley’s private equity arm is selling its heating, ventilation and air conditioning (HVAC) business Sila Services, about three years after it invested in the company to take advantage of the growing interest in the sector.

Pennsylvania-based Sila will be sold to the private equity unit of Goldman Sachs Alternatives, Morgan Stanley (NYSE:) said on Monday (NASDAQ:), but did not disclose the financial terms of the deal.

Reuters had reported in September that a transaction could value Sila, which provides residential HVAC, plumbing and electrical services, at about $1.5 billion, including debt.

HVAC companies have emerged as a lucrative target for private equity firms due to their stable cash flows and the essential nature of services they provide.

The firms have been benefiting from busier construction activity due to lower borrowing costs and stringent environment regulations that drive demand for eco-friendly HVAC services.

Dealmaking in the sector rose 6.9% year-over-year as of late last month, according to a report by M&A advisor Capstone Partners.

Sila’s management team will retain a minority stake in the company and will continue to lead the business, Morgan Stanley said.

William Blair was the lead adviser to Sila, with co-advisory support from Robert W. Baird & Co.

Morgan Stanley invested in Sila in 2021. Its other investments in the industry include outdoor home care and maintenance provider Fairway Services and residential roofing company Allstar Services.