Blackstone Has a Fever and The Only Medicine Is Blue Collar Jobs ($2.5B Goes Brrr)

"Now, you may look around and see two groups here. White collar, blue collar. But I don't see it that way. And you know why not? Because I am collar-blind." - Michael Scott

Well friends, while most of the ones you love (and hate) are getting bent over on AI exposure, wondering if their SaaS portfolio is about to get DeepSeeked into oblivion, Blackstone has dropped $2.5B on a business where the the moat is "we show up to your house and the guy actually knows what he's doing." Genius.

(Source: Giphy) 

In short, Blackstone is acquiring Champions Group from Odyssey Investment Partners in a deal reportedly worth around $2.5 billion. Champions does HVAC, plumbing, and electrical work across major metro areas. Think 1,800 field techs spanning across 150,000 households on a membership program, recurring revenue tied to aging housing stock that nobody's replacing anytime soon. 

But Y tho? 

Well, private equity is quietly rotating away from anything that could get its business model vaporized by a sufficiently motivated language model. And the math makes sense, because here’s the thing about AI disruption… it hits knowledge work and software first. It does not, at present, fix your AC in August when it's 97 degrees in Phoenix. A ChatGPT subscription cannot snake your drain. The Anthropic API does not do same-day electrical.

(Source: Bloomberg) 

That’s the bet here. Buyout shops have spent the last several years loading up on software businesses, tech-enabled services, anything with a recurring revenue slide that could go in a deck. Now some of those same shops are staring at their portfolios wondering how many of their "platform" companies are just middleware that a foundation model is about to guillotine. And the answer, obviously… is more than they’d like. 

So what do you do if you’re about to get waterboarded like this? You get your Warren Buffett on and find businesses with genuine physical moats that include skilled labor, local trust, the fact that plumbing is hard and your furnace doesn't care about your feelings. Meaning, Champions is a good business for the same reason it's been a boring one: people need this stuff regardless of macro, regardless of rates, regardless of whatever's happening on X. Repair and replacement demand doesn't go away. It follows housing stock age, and the US housing stock is old as hell and getting older. 

(Source: Giphy) 

That said, Blackstone didn't discover fire here. BrightSpring, ServiceMaster, the whole home services PE consolidation wave has been running for years. But the framing has shifted. This deal is being talked about explicitly as a hedge against AI disruption. That's new. That tells you something about the temperature in the room at the big alternative asset manager offices right now. Translation: The dirty little secret of the last PE cycle is that a lot of what got labeled "tech-enabled services" was really just services with a thin software wrapper charging a tech multiple. Those companies are sweating right now.

Which is why for Blackstone, the boring trade is the right trade. And while we don’t know for sure how this will all shake out… I have mad respect on the thesis, regardless. Meaning, keep your eyes on this story and place your bets accordingly, friends. Until next time… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.