Morgan Stanley's private equity arm explores sale of HVAC firm Sila, sources say

By Abigail Summerville

NEW YORK (Reuters) - Morgan Stanley's middle-market buyout arm is exploring a sale of Sila Services that could value the residential services company at about $1.5 billion, including debt, people familiar with the matter said on Friday.

King Of Prussia, Pennsylvania-based Sila, which is a provider of services including heating, air-conditioning, and plumbing, is working with investment bank William Blair on the sale process, the sources said, requesting anonymity as the matter is confidential.

Sila could command a valuation equivalent to about 15 times its 12-month earnings before interest, taxes, depreciation and amortization of nearly $100 million, the sources said.

Morgan Stanley Capital Partners, which owns Sila, declined to comment. William Blair and Sila did not respond to requests for comment.

Founded in 1989, Sila operates over 30 brands that provide services including residential heating, ventilation, and air conditioning, electrical, and plumbing in the Northeast, Mid-Atlantic, and Midwest parts of the United States.

MSCP, which acquired Sila for an undisclosed amount in 2021, focuses on acquiring mid-sized businesses and is housed within Morgan Stanley Investment Management, which manages $1.5 trillion of assets.

Private equity firms have traditionally been prolific acquirers of businesses in the residential services industry, because of their steady cash flows and the opportunity to drive consolidation in the fragmented sector.

General Atlantic invested in Flint Group earlier this year, while L Catterton acquired LTP Home Services Group in 2022. Residential services firm The Wrench Group counts TSG Consumer Partners, Leonard Green & Partners, and Oak Hill Capital as investors.

(Reporting by Abigail Summerville in New York; Editing by Chizu Nomiyama)