Morgan Stanley Sells HVAC Business Sila Services

(Reuters) – Morgan Stanley's private equity arm is selling its heating, ventilation, and air conditioning (HVAC) business, Sila Services, about three years after investing in the company to capitalize on the growing interest in the sector.

Pennsylvania-based Sila will be sold to the private equity unit of Goldman Sachs Alternatives, Morgan Stanley (NYSE:MS) announced on Monday (NASDAQ:MNDY), though the financial terms of the deal were not disclosed.

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

HVAC companies have become attractive targets for private equity firms due to their stable cash flows and the essential services they offer. The firms have benefited from increased construction activity stemming from lower borrowing costs and stringent environmental regulations that boost demand for eco-friendly HVAC solutions.

Dealmaking in the sector saw a 6.9% year-over-year increase 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 continue to lead the business, according to Morgan Stanley.

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

Morgan Stanley initially 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.