Asphalt paving and maintenance is fast becoming a service of choice for private equity investors.

The fragmented category, which only five years ago had little backing from financial sponsors, now has portfolio companies contesting for family and founder owned assets to build businesses of scale.

Sunrise, Fla.-based commercial pavement services platform Atlantic Southern Paving and Sealcoating LLC, which made its eighth add-on acquisition on Oct. 17 since an investment from Fort Lauderdale, Fla.-based Harbor Beach Capital LLC in 2019, has seen competition tick up over the past couple of years.

“Initially when we were talking to a company, we were the first one to call, but a lot of times now, we’ll find out we’re maybe the third or fourth phone call that they’ve got,” Atlantic Southern corporate development manager Amanda Szabolcs told The Deal. “It’s definitely a popular space right now.”

Recurring revenue, diversified customer base, recession resistance and high Ebitda margins of 15% to 25% have private equity knocking on the door of asphalt pavers.

Meanwhile, barriers to entry due to capital requirements for equipment and skilled worker training haven’t stopped new investors as federal infrastructure funding and an abundance of dry powder have led PE into new investment categories.

“There’s been a change in people’s perspective around how they’re categorizing these types of businesses,” said Jarrad Zalkin, managing director at investment bank TM Capital.

“For a long time, [sponsors] looked at them as specialty contractor or construction businesses that were very project-centric, but today things are different — acquirers view these companies as facilities services platforms, and a study of their revenue segmentation does highlight a lot of recurring and reoccurring relationships.”

Even with the change in perception, sources admit the category is still in its early innings of consolidation.