Peterson Partners Raises $510 Million Continuation Vehicle for Draper-based Kelso Industries, Extending its Bet on a $1 Billion-plus Revenue Business

EXECUTIVE SUMMARY

✅ Utah-based Peterson Partners has raised $510 million for a single-asset continuation vehicle centered on Draper, Utah-based Kelso Industries, allowing the investment firm to extend its ownership of the rapidly growing mechanical, electrical and plumbing (MEP) services company.

✅ New York City-based NorthSands Capital committed more than $450 million to the funding, while Peterson Partners rolled its existing Fund X Kelso investment into the new vehicle and added more capital.

✅ Kelso has grown from its 2021 launch to more than $1 billion in annual revenue, with 4,000-plus employees across more than 40 states and roughly 40 acquired MEP businesses.

✅ But key financial details remain undisclosed, including

▪️ Kelso's valuation,

▪️ How much of the $510 million provides liquidity to existing investors versus funding future growth, and

▪️ The post-transaction ownership positions of several investors.

COTTONWOOD HEIGHTS, Utah and DRAPER, Utah — 21 September 2026 — Utah-based Peterson Partners has raised $510 million for a new investment vehicle built around Draper, Utah-based Kelso Industries, extending its ownership of a company that has grown from startup to more than $1 billion in annual revenue in just a few years.

New York City-based NorthSands Capital is providing more than $450 million as sole lead investor in the transaction, according to the announcement from Cottonwood Heights-based Peterson Partners and NorthSands Capital.

Meanwhile, Peterson Partners is rolling its existing Fund X Kelso investment position into the new structure and investing additional capital.

In other words, this is not merely a $510 million financing round for Kelso Industries; it is a more complicated transaction designed to do at least two things:

🟥  Provide liquidity for some existing investors, and also

🟥  Give Peterson Partners and Kelso additional capital (and time) to continue an acquisition-driven expansion that has already assembled roughly 40 businesses under one roof.

What the $510 Million Does

The new entity, Peterson Kelso Coinvest LP, is a single-asset continuation vehicle.

"Single-asset continuation vehicles" allow a private equity sponsor to retain an investment beyond the life or preferred holding period of an existing fund rather than selling the underlying company outright.

Such funding vehicles also allow existing investors to receive liquidity (take money off–the–table) while the sponsor and other investors continue owning the business through a newly capitalized vehicle.

That said, there is an important detail in Wednesday's announcement.

Previously, Kelso Industries had been held by both Peterson Partners' Fund VIII and its Fund X.

Rather than cashing out, however, Peterson Partners transferred its existing Fund X Kelso investment into the new vehicle and committed additional capital.

{AUTHOR'S NOTE: The announcement does not provide comparable information about Fund VIII. Nor did Peterson disclose how the $510 million was divided between liquidity for existing investors and fresh capital supporting Kelso's next growth phase.

Peterson did say that proceeds will support additional acquisitions, investment in people and capabilities, and expansion into new markets and business opportunities.

On 15 September 2026, Dallas, Texas-based Paceline Equity Partners announced that its structured preferred equity investment in Kelso had been redeemed in full in connection with the continuation transaction. Financial terms were not disclosed.

As such, that makes the $510 million both a liquidity event and a growth-capital event.

However, how much belongs to each side of that equation has not yet been disclosed.

From 14 Acquisitions to Roughly 40

Paceline Equity Partners invested $50 million in Kelso in November 2023, saying at the time that the money would fund acquisitions of complementary businesses.

At that point, Kelso had completed roughly 14 acquisitions and employed about 1,700 people.

Now, less than three years later, the company

🔷  Employs more than 4,000 people

🔷  Across more than 40 states, and

🔷  Has acquired roughly 40 businesses.

{AUTHOR'S NOTE: The Wall Street Journal article referenced above noted that sellers typically retain minority ownership and continue operating their companies under their existing brands.}

Regardless, the revenue growth at Kelso has been striking.

Founded in 2021 by childhood friends Steve Carroll and Steve Nicholson (with backing from Peterson Partners), the two Steve's saw an opportunity to create a unified mechanical, electrical, plumbing, HVAC and related installation, maintenance and repair services organization for businesses across the United States.

And roughly four years and 31 acquisitions after its launch, Kelso hit $1 billion in annual revenue in 2025 as an MEP industry leader with a growing U.S. footprint that serves such organizations as

🟠 Advanced manufacturing facilities,

🟠 Airports,

🟠 Data centers,

🟠 Healthcare facilities,

🟠 Industrial operations,

and more.

And Kelso has now acquired 40 firms.

Clearly, that customer mix helps explain some of the investor interest as much of the maintenance and repair work required by such firms is difficult to defer indefinitely.

Meanwhile, continued construction of data centers and advanced manufacturing facilities creates additional demand for the types of systems installed and serviced by Kelso's operating companies.

Another Ownership Question

However, there is another piece of the Kelso ownership story that the continuation funding vehicle announcement does not address.

When Paceline Equity Partners made its $50 million investment in 2023, it identified Kelso as a portfolio company of both Peterson Partners and Salt Lake City-based Oxbow Equity Partners.

And Oxbow's current website still describes Kelso as an Oxbow company.

Wednesday's announcement, however, describes Kelso as a portfolio company of Peterson Partners' Fund VIII and Fund X but does not explain Oxbow's ownership position or whether it changed as part of the $510 million transaction.

That leaves several important numbers unanswered.

Additionally, neither Peterson Partners nor NorthSands Capital disclosed the agreed-upon valuation placed on Kelso.

Nor did either firm disclose

🟣 What percentage of Kelso the new continuation vehicle owns;

🟣 The post-transaction ownership percentages of the various investors;

🟣 How much Paceline received for its stake; or

🟣 What return Paceline generated on its original $50 million investment.

And, to be honest, they also did not disclose how much of the $510 million represents payments to investors seeking liquidity versus capital available for future growth.

More Runway Instead of an Exit

Nevertheless, what is clear is the broader, longer-term decision made by Utah-based Peterson.

After helping build Kelso Industries from its 2021 launch into a nationwide business producing more than $1 billion in annual revenue, Peterson Partners could have fairly easily chosen to pursue an outright sale of its Kelso stake.

Instead, Peterson

🟢  Created a new investment vehicle specifically around Kelso,

🟢  Rolled its Fund X ownership forward into this new investment vehicle,

🟢  Invested additional money into the new investment vehicle, and

🟢  Peterson also attracted NorthSands Capital into the deal with its contribution of more than $450 million.

For Kelso, the capital arrives after the company expanded from roughly 14 acquisitions in late 2023 to approximately 40 today, and Peterson says additional acquisitions remain part of the plan.

From my viewpoint the larger takeaway from this $510 million transaction is not simply that investors have put more money behind another Utah company.

Rather, it is that Peterson Partners has constructed a financial pathway that

⚫️ Allows some earlier capital to find liquidity

⚫️ Without forcing a sale of Kelso Industries, while also

⚫️ Giving the company (and its continuing investors) an extended runway for future growth and expansion.

For a company built largely through acquisitions, I believe there are two central questions that remain unanswered:

1️⃣  How aggressively Kelso uses that $510 million runway, and

2️⃣  Which businesses become acquisitions

▪️ 41,

▪️ 42, and

▪️ Beyond.

Should be fun to watch.

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