While Washington debates the meaning of the word “infrastructure,” investors wager that the government’s definition (and the capital behind it) will land on aggregates, construction, and industrials. Missing in the debate about pending infrastructure bills, though, is a consideration of private sector catalysts for the sectors. 

Enter VSS Capital Partners and Lincolnshire Management’s latest investment in Barrier Companies. The deal is a play on an expected uptick in hospitals’ demand for fire and life safety repairs as the pandemic tapers. Routine maintenance and repairs postponed due to the demands placed upon health care providers during Covid could create a backlog from which Barrier is expected to benefit.

VSS and Lincolnshire invested alongside Barrier management in a transaction with an undisclosed value. Barrier is a nationwide leader preventing the spread of water, smoke and fire in healthcare and hospital environments.

And the prospect of a backlog-generated demand could also stoke returns, given the potential for expansion into non-traditional environments. Assisted living and nursing care facilities could provide new markets for Barrier, and would likely be similarly impacted by an increase in repairs as Covid concerns lessen.

The financial sponsors’ interest could point to bright spots across multiple sectors created by Covid-induced backlogs. In healthcare, many voices have opined about the potential upside from patients delaying routine and elective surgeries. Construction sites around the country have sat dormant as social distancing and financing concerns left projects to idle.

Casting an eye to future hot sectors, analysts at Credit Suisse point to companies’ correlation with traditional economic indicators. The closer a company’s stock trades in line with Treasury yields, high yield spreads, and commodity prices, the higher a company’s gearing to a recovery in GDP, their reasoning goes. Perhaps potential backlog could add a dimension to acquirers’ takeover calculus.