Three closed acquisitions in Iowa and Minnesota anchor a new private equity-backed municipal solid waste platform launched on Sept. 10. Blue Sage Capital, the Texas-based private equity firm behind Frontier Waste Solutions, has formed Blue Castle Waste Solutions to build a regional hauling network across Minnesota and Iowa — and it intends to repeat the roll-up strategy that produced a $900 million exit in Texas.

The platform's built capacity so far consists of three acquired haulers: Carter-Miller Trash Service of Moravia, Iowa; Lee's Sanitation of Thief River Falls, Minnesota; and Bridge City and Commercial Sanitation of Ottumwa, Iowa. Blue Castle owns one transfer station and operates two more under contract, according to Peter Huff, founder and managing partner at Blue Sage. Huff declined to disclose the fleet size.

The company plans immediate operational upgrades. Huff said those include a new fleet of automated side-loading vehicles and software from Routeware.

"We have a little bit more scale and a little bit more capital to reinvest back into serving the communities there," Huff said.

Track record in the MSW stream

Blue Sage has executed this playbook before. Its most recent MSW investment, Frontier Waste Solutions, sold to GFL Environmental in a deal valued at $900 million, per Bloomberg. Blue Sage was among Frontier's first backers, teaming up with founder John Gustafson to build the Texas hauling platform from the ground up.

The firm exited Frontier in 2022 through a deal with Summer Street Capital Partners and Concentric Equity Partners, netting Blue Sage more than six times its initial investment, Huff said. Gustafson will serve on Blue Castle's board.

"I was happy when they got their next partner and wanted them to keep growing," Huff said. "We like to sell with some gas left in the tank."

Earlier in its history, Blue Sage sold R360 Environmental Solutions to Waste Connections in 2012.

Organic growth first, M&A second

Frontier posted a revenue growth rate above 100% in its initial years, Huff said. Roughly three quarters of its early growth came from winning hauling contracts; the remaining quarter came through acquisitions. In Texas, Blue Sage also struck occasional deals with the largest national haulers, swapping certain routes or markets in exchange for lower contracted landfill disposal rates.

Huff said Blue Sage plans a similar approach in Minnesota and Iowa, even with slower market growth. "[It's] a much smaller and less dense geography, but a geography that has less competition and more opportunity to do things that we just didn't have the time or capital to do at Frontier," he said.

Blue Castle expects to close an additional two acquisitions in its first year of operations. The pipeline is not limited to collection assets: Huff said the company will explore developing its own disposal infrastructure — building a landfill, acquiring one, or taking over operations from a municipality looking to cut costs.

No MRF in the plan

Blue Castle does not own a materials recovery facility. Huff said the company could acquire one if a client municipality was interested, but his focus remains solid waste, citing volatile commodity prices that expose recyclers to risk.

"We want to be rewarded for doing a good job of what we can control," Huff said. "We don't want to be at risk for things we don't control, like the price of aluminum."

Scale ambitions stay deliberately modest. "We're not trying to take on the Waste Managements and Waste Connections of the world, and we don't have aspirations to be that big," Huff said. "We just want to be a very good, solid regional leader."

The near-term milestone to watch: the two additional acquisitions Huff expects to close within Blue Castle's first year of operations, and any move on disposal infrastructure that would shift the platform from pure collection play toward vertically integrated operations in the Upper Midwest.