Private Equity Flows into Water as Sterling Group Acquires Scruggs Infrastructure Platform

AUSTIN, TX – April 27, 2026 – In a significant move highlighting private equity's growing appetite for essential public services, The Sterling Group announced today its acquisition of The Scruggs Companies, a leading regional provider of municipal water infrastructure solutions. The company was sold by Rox Capital Partners, a Texas-based private equity firm that strategically assembled the platform over the past several years.

While financial terms of the transaction were not disclosed, the deal marks a pivotal moment for the water infrastructure sector, particularly across the Southern and Midwestern United States where Scruggs operates. The acquisition transfers a key player in water and wastewater systems from one private equity owner focused on initial platform creation to another known for scaling industrial businesses into national powerhouses. The existing leadership team from Scruggs and its integrated companies will continue to manage the business, ensuring operational continuity as it enters a new phase of growth under Sterling's ownership.

The Making of a Strategic Asset

The sale represents a successful exit for Rox Capital Partners, validating its 'buy and build' strategy in the lower middle market. Rox Capital began assembling the platform with its acquisition of the legacy Scruggs company in 2021. Recognizing the synergy between product distribution and field services, Rox acquired Neil Technical Services (NTS) in 2023, integrating its deep expertise in the installation, maintenance, and repair of water and wastewater equipment.

This combination created a comprehensive one-stop-shop for municipal clients, offering everything from flow control products like valves and actuators to the critical hands-on services required to keep public water systems running. The platform was further expanded in early 2025 with the bolt-on acquisition of Mid-America Valve, a Kansas-based distributor that extended Scruggs' geographic reach firmly into the Midwest.

Under Rox's ownership, the combined entity focused on enhancing its service capabilities, expanding its product offerings, and scaling operations to meet growing regional demand. This strategic development transformed a set of complementary businesses into a cohesive and valuable platform attractive to a larger investor.

"We are proud of what the Scruggs and NTS teams have accomplished and grateful for our partnership with management," said Al Cameron, Managing Partner at Rox Capital Partners, in a statement. "This investment reflects our strategy of partnering with strong operators to build leading businesses in essential service sectors. We believe the company is well positioned for continued success in its next chapter with Sterling."

A Rising Tide of Investment in Water Infrastructure

The Scruggs acquisition is not happening in a vacuum. It taps directly into one of the most pressing and capital-intensive challenges facing the United States: the modernization of its aging water infrastructure. The American water and wastewater market, valued at over $120 billion in 2024, is projected to swell to nearly $180 billion by 2032, driven by a confluence of powerful factors.

Much of the nation's 2.2 million miles of water pipes are nearing the end of their operational lifespan, leading to frequent breaks and significant water loss. The Environmental Protection Agency (EPA) has estimated that clean water infrastructure alone will require over $630 billion in investments over the next two decades. This need is particularly acute in the high-growth Southern and Midwestern states that comprise Scruggs' core market. Texas, for instance, faces a staggering $154 billion water infrastructure funding gap over the next 50 years due to rapid population growth and increasing water scarcity.

This enormous need, coupled with the historic but still insufficient infusion of $50 billion from the Infrastructure Investment and Jobs Act (IIJA), has created a massive opening for private capital. Investors like The Sterling Group are drawn to the sector's non-discretionary, recession-resilient nature. Municipalities must provide clean water and treat wastewater regardless of economic cycles, creating a stable, long-term demand for the products and services Scruggs provides.

The Sterling Group's Industrial Playbook

The buyer, The Sterling Group, is a Houston-based firm with a 40-year track record of acquiring and growing industrial businesses. Unlike purely financial investors, Sterling is known for its hands-on, operational approach. The firm has a history of taking regional companies and scaling them through operational improvements, organic growth initiatives, and strategic add-on acquisitions.

The acquisition was made through Sterling's Foundation Fund, which specifically targets lower middle-market companies with the potential for significant growth. This indicates a long-term strategy to build upon the foundation Rox Capital created. With approximately $9.0 billion in assets under management and a portfolio built on transforming industrial services, building products, and distribution companies, Sterling has the experience and capital to elevate Scruggs from a regional leader to a dominant force.

Sterling's playbook often involves professionalizing systems, expanding service lines, and leveraging its deep industry network to create scaled national operations. For Scruggs, this could mean further geographic expansion, the adoption of new technologies for smart water management, and an even broader portfolio of products and services to offer its municipal client base.

What New Ownership Means for America's Heartland

For the cities, towns, and utility districts across the South and Midwest, the transition in ownership is more than just a financial headline. It represents a potential acceleration in the modernization of their most critical infrastructure. With the backing of a well-capitalized and operationally focused owner like Sterling, Scruggs will be better equipped to help municipalities tackle their immense infrastructure backlogs.

This partnership could facilitate the deployment of more advanced technologies to improve efficiency and prevent system failures, ultimately ensuring greater reliability for residents and businesses. As municipalities continue to grapple with limited budgets and a lack of in-house technical expertise, specialized partners like Scruggs become indispensable. The stability provided by the continuation of the current management team, combined with the growth capital from Sterling, positions the company to be a more robust and capable partner in the long-term effort to secure the nation's water supply.