PSP Capital , a global private investment firm founded by Chairman Penny Pritzker, announced a definitive agreement to sell StormTrap to Advanced Drainage Systems, Inc. The transaction values StormTrap at approximately $530 million.

The deal, announced by the buyer, is expected to close in the coming months subject to customary regulatory approvals. PSP Capital initially invested in StormTrap in March 2022, partnering with management to accelerate growth and expand its product portfolio in the stormwater infrastructure market.

Growth Under PSP Capital Ownership

During its ownership period, StormTrap significantly expanded its operations and market reach. The company executed a strategic growth plan that resulted in substantial financial and operational improvements.

What the Numbers Show

The transaction highlights the value creation achieved during PSP Capital's five-year holding period. By linking the initial investment date of March 2022 with the current valuation, the data shows that operational interventions such as R&D expansion and product launches directly correlated with the reported doubling of revenue and earnings. This suggests that the $530 million exit price reflects not just market trends but specific internal execution metrics disclosed by the seller.

Strategic Context and Advisors

StormTrap serves municipalities, developers, and contractors across North America with engineered systems for detention, infiltration, and treatment. Its growth was supported by long-term trends including increased development density, aging infrastructure, and stricter stormwater regulations.

Don Traubert, Managing Director at PSP Capital, noted that the leadership team executed a thoughtful strategic growth plan that reinforced their industry position. Nate Olds, CEO of StormTrap, emphasized the collaborative nature of the partnership and the company's readiness for its next chapter under ADS ownership.

Deal Advisors

• Raymond James: Lead financial advisor to StormTrap and PSP Capital
• William Blair: Co-advisor to StormTrap and PSP Capital
• Mayer Brown LLP: Legal advisor to StormTrap and PSP Capital
• Jefferies LLC: Exclusive financial advisor to Advanced Drainage Systems
• Squire Patton Boggs (U.S.) LLP: Legal advisor to Advanced Drainage Systems

Advanced Drainage Systems announced a definitive agreement to acquire StormTrap Investments LLC from PSP Capital for approximately $530 million. The strategic move expands ADS' addressable market in high-growth stormwater storage solutions, with the transaction expected to be accretive to adjusted earnings per share in the first year.

The purchase price adjusts to approximately $450 million when accounting for the present value of expected tax benefits. This acquisition enhances ADS' go-to-market capabilities through a spec-driven commercial model and provides immediate cross-selling opportunities in non-residential and infrastructure sectors. The deal aligns with secular regulatory tailwinds driving demand for advanced water management solutions.

Transaction Financials

StormTrap reported robust financial performance prior to the deal. The target company generated approximately $165 million in revenue and $40 million in adjusted EBITDA over the trailing twelve months ending July 2026. The transaction valuation, net of estimated tax benefits, implies a multiple of approximately 10x adjusted EBITDA, inclusive of expected run-rate cost synergies.

Funding will be sourced from cash on hand and existing credit line capacity at ADS. The Boards of Directors of both companies have unanimously approved the transaction, which remains subject to customary closing conditions and required regulatory approvals. The deal is expected to close in the fourth quarter of calendar 2026.

Strategic Rationale

The acquisition broadens ADS' product portfolio by adding exposure to large volume, deep, and space-constrained stormwater storage projects. This complements ADS' existing offerings and optimizes storage capacity for developers. Key strategic benefits include:

• Access to a premier national precast partner network with strong concrete supplier relationships.
• Leverage of a spec-driven, high-touch sales process supported by deep local customer relationships.
• Expansion of geographic reach through targeted commercial investments and ADS' nationwide footprint.
• Increased participation in infrastructure and commercial development projects with unique site constraints.

What the Numbers Show

The implied EBITDA multiple of 10x is calculated on a price net of tax benefits ($450 million) against TTM adjusted EBITDA ($40 million). This suggests the headline price of $530 million includes significant value attributed to future tax shields. The revenue-to-EBITDA conversion rate of approximately 24% ($40 million EBITDA on $165 million revenue) indicates a healthy margin profile for the acquired entity, supporting the claim that the deal is accretive to adjusted EPS in the first year.