Renatus Weekly M&A & Company Performance Private Equity Newsletter 01/10/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
WELCOME MARION KANE
We at Renatus are delighted to welcome Marion Kane to our team as Finance Director.
Prior to joining Renatus, Marion was a Financial Controller with &Open. She trained as an accountant with KPMG and has since held roles with NAMA, Kerry Group and Now Group. As well as that, she also worked as an assistant lecturer at IT Carlow and founded a strategic financial services advisory company called She Means Business.
We are delighted for someone of Marion’s calibre to be joining our team and we wish her all the best in her role.
THOUGHT FOR THE WEEK
The traditional leadership organisation chart has evolved and contains less standard C-level titles than before. The most entertaining deviation away from the norm was Ken Robertson who progressed from Head of Communication in Paddy Power to ‘Head of Mischief’ in 2011 and held the role for three years! The recurring deviation from tradition we find most interesting is seeing the title of Chief of Staff(‘CoS’) emerge at a senior level, particularly in tech companies. Harvard Business Review wrote an interesting piece back in 2020 (link) outlining the case for making the hire.
A common description of the role is similar to that of a high-ranking executive assistant that also holds significant influence as an advisor to the CEO. Former CoS at Horizon Blue Cross Blue Shield, Patrick Aylward, described his role as being the “air traffic controller”. This person serves as a buffer and liaison between executives and the broader team, helping to anticipate where problems may arise and steering the team clear of potential bottlenecks. The CoS works across functions and workstreams, and therefore can take a holistic view of the challenges facing the organisation, picking up on any pain points and blind spots.
Although Euan Godbold, Director of Strategy at The Chief of Staff Association, describes the CoS role as “someone who does the bottom half of their principal’s to-do list”, the CoS usually focuses more on ‘big-picture’/ strategic thinking and less on administrative tasks, than a typical EA. In large organisations the position can take on a political dimension, with the individual sometimes having to manage internal power struggles and personality clashes, while in other firms, the job description places significant emphasis on HR tasks such as drafting job descriptions and screening candidates for top hires.
Perhaps the most important thing for the CoS to be successful, is that they hold the complete trust of the CEO. This allows them to speak candidly and also act with the implicit authority of the principal in their absence. Top executives are often pulled in many directions and do not always receive honest and critical feedback on the true state of play surrounding their organisations. A reliable confidant, that holds a license to speak freely, can be invaluable in this regard.
The CoS is a unique role, offering high-level access and exposure without direct reporting requirements. Responsibilities can be broad-sweeping and the wrong hire could easily be spread too thin, resulting in them becoming overwhelmed and ineffective. A true superstar CoS is hard to find but can be worth their weight in gold, freeing up the senior management team to focus on their core responsibilities. Adaptability, emotional intelligence, discretion and diplomacy are the key traits which will determine any candidate’s suitability for the role.
RWL Advanced Solutions acquired by Genuine Cable Group
Deal Details: RWL Advanced Solutions has been acquired by Genuine Cable Group. Deal consideration was not disclosed.
RWL Advanced Solutions is a provider of data cabling and network solutions throughout Europe. It is based in Dublin and also has offices in the UK and the Netherlands. The company was owned by Robert Walsh, Sean Kirby and Kevin Quinn. In FY Dec 21 it reported turnover of c. €23.3m which converted to an EBITDA of c. €3.2m.
Genuine Cable Group is a Chicago-based distributor of wire, cable, and other products for the transportation, telecom and industrial sectors. In 2019 the company was acquired by Audax, a US-based private equity firm. The group does not report turnover or EBITDA information.
Advisers: RWL Advanced Solutions: Corporate Finance: Clearwater International led by John Sheridan, Daniel Lavelle, Matthew Fee and Chris Finnegan. Legal: Eversheds Sutherland led by Tony McGovern, Jonathan Ennis, Vanessa Lawlor and Avis-Marie Mulvihill. Transaction Services: Mazars led by Mark Mulcahy, Kevin Hogan and Bence Takacs. Tax: Lacey Consulting led by Martin Lacey.
Genuine Cable Group: Legal: William Fry led by Ronan Shanahan and Ben Kennedy.
Renatus Comment: RWL Advanced Solutions distributes its products to companies in the data centre, telecoms, commercial, governmental and pharmaceutical industries. There are c. 82 data centres operating in the Republic as of June 2023, according to Bitpower. We have documented numerous times how Irish engineering specialists like Mercury, KN Networks, Winthrop, Dornan, Kirby and H&MV are building the global cloud. Distributors such as RWL Advanced Solutions also play an important role in this ecosystem.
Source: Clearwater International Press Release
Flutter acquires 51% stake in MaxBet
Deal Details: Flutter Entertainment plc has acquired a 51% stake in MaxBet. The deal is worth a reported €141m. Flutter has the opportunity to acquire the remaining 49% of shares in 2029.
Flutter is a global sports betting, gaming, and entertainment provider, formed in 2016 following the merger of Paddy Power and Betfair. The company is led by CEO, Peter Jackson. The company is headquartered in Dublin and is traded on both the London and Dublin Stock Exchanges. The business is due to complete a secondary listing on the New York Stock Exchange in Q4’23. In FY Dec 22, the business reported a turnover of c. £7.7bn which converted to an EBITDA of c. £918m.
MaxBet is a Serbian sports betting and gaming operator. The company was owned by Sasa Marceta, who founded the business in 1997. It employs 2,400 people and has over 400 retail outlets across the Balkans region. In FY Jun 23, the business reported revenue of c. €145m which converted to an adjusted EBITDA of c. €32m.
Advisers: None mentioned.
Renatus Comment: Flutter continues to direct its focus on its fast-growing FanDuel business in the US, having just recently reached profitability there. This milestone came six months earlier than expected, following years of heavy investment, aimed at acquiring customers in states where gambling has recently been legalised. Although much smaller than the US opportunity, Eastern Europe is also a growing market in which the company has previous experience, having acquired the #1 Georgian player Adjarabet, in 2019.
On the company’s most recent earnings call (prior to the announcement of this MaxBet deal) analysts asked CEO Peter Jackson why there had been a slowdown in the company’s acquisition strategy. He responded by saying that the company is only active in 20% of the markets it intends to target, so further acquisitions of “podium players” in new markets remain likely. However, it is worth noting that deals may be limited by a lack of regulation in some jurisdictions. One of Flutter’s main competitors Entain (owner of Ladbrokes), is planning to withdraw from its unregulated markets by the end of the year.
Easytrip Services Ireland acquired by DKV Mobility
Deal Details: Easytrip Services Ireland has been acquired by DKV Mobility Group. Deal consideration was not disclosed.
Easytrip is a provider of centralised services to manage motoring payments such as tolls, parking and breakdown cover. The business is based in Dublin, and is owned by Electro Automation (itself owned by CEO Patrick Doherty) and Egis Group. The company does not report turnover or EBITDA information.
DKV Mobility is a provider of payment solutions for motoring purposes across Europe. It is based in Ratingen, Germany. In 2022, the group reported revenue of c. €620m.
Advisers: Easytrip: Corporate Finance: IBI led by James Doody and Eoin Nagle. Legal: ReganWall LLP led by Adrian Wall, Sarah Connolly and Christopher Murray.
DKV Mobility: Tax and Financial DD: KPMG led by Gavin Sheehan and Jack Gallagher. Legal: Pinsent Masons LLP led by Gerry Beausang, Lisa Early, Joe de Paor, Clare McCourt and Oisin Cronin.
Renatus Comment: DKV Mobility had previously partnered with the likes of Maxol and Valero (Texaco) to provide fuel pump payment services in Ireland. It was also announced this week that the company intends to push ahead with an IPO on the Frankfurt Stock Exchange as early as next week, which will reportedly value the business at over €4bn.
According to TFI, average daily traffic on the M50 recovered to virtually pre-pandemic levels in 2022 (1.65m cars in 2022 vs. 1.67m cars in 2019), with road activity likely to continue to grow in the coming years. When combined with expected toll rate hikes and high barriers to entry in the industry, Easytrip’s toll services business should be well positioned to capitalise on the opportunity.
Source: DKV Mobility Press Release
Occupli acquires Florentine Loughney Safety Training
Deal Details: Occupli has acquired Florentine Loughney Safety Training. Deal consideration was not disclosed.
Occupli (formerly Chris Mee Group) is the largest provider of environmental health & safety and carbon emissions consultancy training and recruitment services in Ireland. The company’s major customers include Gas Networks Ireland, Irish Water, ESB and Eli Lilly. The business received private equity investment from Erisbeg in 2021. The business does not report revenue or EBITDA information.
Florentine Loughney Safety Training is a Dublin-based provider of safety training services. The company is owned by managing director Florentine Loughney. The company’s clients include Maynooth University, CFR and Eversheds Sutherland. The business does not report revenue or EBITDA information.
Advisers: Occupli: Legal: LK Shields team involving Emmet Scully, Lester Sosa-Villatoro and Jonathan Braden.
Renatus Comment: The demand for workplace safety training continues to grow globally due to a rise in workplace safety accidents as well as the existence of strict regulatory environments. According to UK regulators, 1.7m people suffered a work-related illness in 2020-2021. Organisations are beginning to implement a more comprehensive approach to workplace safety with focus shifting from identifying unsafe conditions to programmes that put greater emphasis on education and training. This trend has provided growth opportunities for the likes of Occupli and Florentine Loughney Safety Training.
Source: Global Legal Chronicle
Management of Toga Freight Services complete MBO
Deal Details: The management team of Toga Freight Services has completed an MBO. Deal consideration was not disclosed.
Toga Freight Services is a Dublin-based provider of freight forwarding and logistics services to and from Ireland. It employs 35 staff at its Dublin site. The business was majority-owned by Martin Gately with each of the MBO team also having already owned a stake in the business. It does not report revenue or EBITDA information.
The management team that completed the buyout consists of Robert Dickinson, Muriel Corish and Darragh Toner.
Advisers: MBO Team: Corporate Finance & Tax: BDO Corporate Finance led by Richard Duffy. Legal: ByrneWallace led by Eamonn Carey.
Toga Freight Services: None mentioned.
Renatus Comment: The logistics sector has been fertile ground in recent years from an M&A perspective. The MBO of Toga Freight deviates somewhat from the trend, however, with recent M&A activity in the space being driven primarily by private equity and multinational acquirers. Recent private equity transactions have included the acquisitions of Dixon International, Virginia Logistics and Carna Transport. DFDS, an international shipping and logistics company based in Denmark, has been a notable acquirer of logistics operators on either side of its ocean freight solution. The business has made 7 acquisitions since the start of 2022, including McBurney Transport and Lucey Transport Logistics.
Source: Toga Freight Services Press Release
BiaVest acquires 80% stake in Riesa Nudeln
Deal Details: BiaVest has acquired an 80% stake in Riesa Nudeln for an undisclosed sum.
BiaVest is an Irish-based investment fund focused on the food sector. The fund was co-founded in 2021 by Hilliard Lombard and David McKernan.
Riesa Nudeln is a pasta supplier based in Germany. The company was acquired by family-owned ALB-GOLD in 1993, led by Irmgard, André and Oliver Freidler. The company employs 150 people and has an annual production capacity of 25,000 tonnes of pasta with plans to double capacity to 50,000. In FY Dec 21 the business reported revenue of c. €14.4m and EBITDA of c. €3.1m.
Advisers: None mentioned.
Renatus Comment: This deal marks BiaVest’s fourth acquisition since its inception in 2021, following investments in Nomadic, Off Beat Donuts and Nobo. This is its first deal in Continental Europe. The fresh investment will expand capacity through the construction of a €4m production line for specialised pasta known as spätzle, and will also facilitate expansion into new markets.
Source: Irish Examiner
Shomera management team completes MBO
Deal Details: Genesis Construction Management has acquired 75% of Shomera. The buying group is led by existing Shomera management. Deal consideration was not disclosed.
Shomera is a Meath-based provider of house extensions and garden rooms. The business was established in 1998 and was owned by Frank O’Sullivan and Patrick O’Reilly. It does not report turnover or EBITDA information.
Genesis Construction Management is led by existing Shomera management members David O’Reilly (contracts manager) and Stephen O’Reilly (project manager).
Advisers: Shomera: Legal: Crowley Millar Solicitors LLP incorporating J R Sweeney led by Bryan Sweeney and Colm Shalvey (Corporate) and Catherine Keane (Real Estate). Accounting and Tax: Strata Financial led by Padraic Bermingham.
Management team: Legal: Newman Doyle Solicitors LLP led by Mark Newman and Michael Doyle. Accounting and Tax: Brenson Lawlor led by Michael O’Leary.
Renatus Comment: Shomera was a pioneer of the garden room concept in Ireland, first bringing it to market 25 years ago. The idea has grown massively in popularity in recent years, spurred on by the impact of Covid-19 on both people’s working and living habits. With many people now working from home several days a week, home offices have become a major use case for garden structures. Home gyms, relaxation dens and even DIY drinks bars are some of the other common uses for these products. With over 35 years of combined experience between the management team, the business is in safe hands for the next phase of its growth journey.
Source: Crowley Millar Press release
DEAL UPDATES & OTHER NEWS
Dawn Meats has been cleared to acquire Kildare Chilling
Deal Details: Waterford-based Dawn Meats has received CCPC clearance to acquire Kildare Chilling despite concerns about the deal’s impact on competition in the Irish meat processing sector. The proposed acquisition was notified to the CCPC in February 2023. Kildare Chilling accounts for c. 20% of lamb processing in Ireland, employing approximately 350 people from it’s Kildare site. The business reported turnover of c. €140m in 2021. Dawn Meats is a global meat processing business, employing over 8,000 people and exporting to 50 countries around the world. The company generates c. €2.5bn in annual revenues.
CRH completes listing on the New York Stock Exchange
Deal Details: Global building materials company CRH has completed its listing on the New York Stock Exchange. The move was anticipated for some time with North America accounting for c. 75% of its revenue and offering significant growth potential. The company de-listed from the Irish Stock Exchange earlier this year but will retain its listing on the London Stock Exchange
Source: CRH press release
Irish Bacon Slicers Limited is a bacon processing and meat wholesaling business based in Ballincollig, Co. Cork. It was founded in 1973 and is owned by Olan and Cian Bradley.
In its financial year to December 2022 the business generated a turnover of c. €57.9m, an increase of 49.3% year-on-year. This converted to c. €2.2m EBITDA, an increase of 76.1% year-on-year. The increase in EBITDA was driven by an increase in gross margin from 12.9% in FY Dec 21 to 13.9% in FY Dec 22.
The business finished the year with a negative cash balance of c. (€0.1m), driven by a large investment in fixed assets. This was a c. €0.3m increase on FY21. Significant post-EBITDA cash movements included tax paid and the purchase of tangible fixed assets.
The business employed an average of 56 people during the period at a total cost of c. €5.8m.
Who: ePower, a supplier of electric vehicle chargers for homes, businesses and the public sector headquartered in Little Island, Cork.
What: The company has raised €2m in funding from private investors.
Why: The funding will be used to develop its product range while also expanding its sales and marketing resources.
Advisors: ePower: Corporate Finance: Coombes Finance led by Frank Coombes. Legal: ReganWall led by Kieran Regan and Neil Nolan.
Who: Kilternan Cemetery Park, a multi-denominational premium cemetery situated on a panoramic site in South County Dublin.
What: The company raised €6.3m of senior debt from Cantor Fitzgerald Corporate Finance Ireland led by Conor McKeon and Myles Dwyer.
Why: The funds will be used to refinance an existing loan note and provide support to facilitate growth and the expansion of the cemetery.
Who: FoodCloud, a tech-enabled company that redistributes food that would normally go to waste.
What: The business has secured funding of €500k from Enterprise Ireland.
Why: The funding will go towards R&D to further develop its food distribution platform, Foodiverse, creating an additional 14 jobs.
Who: VentureWave Capital, a venture private equity investor based in Dublin.
What: The business has received €100m in investment from Bank of America.
Why: The investment is in VentureWave Capital’s Impact Ireland fund, which invests in Irish “tech for good” companies.
Who: Kwayga, a Cork-based supermarket supplier sourcing platform.
What: The company has raised €1m in new funding. The investment was led by The Redesdale Food & Beverage Fund.
Why: The funding will be used to scale Kwayga’s team and grow the product.
Advisors: Kwayga: Legal: ReganWall led by Adrian Wall and Neil Nolan.
The Redesdale Food & Beverage Fund: Legal: Wallace Corporate Counsel led by Michael Bambrick, Fran Keogh and Glynn Ladley.
Who: ESB, a semi-state energy company.
What: The group has raised €1bn in new debt from the international bond market.
Why: The funding will be used exclusively to finance eligible renewable energy projects.
EXECUTIVE AND BOARD APPOINTMENTS
We in Renatus believe that more important than the deals are the people and we are pleased to provide you with details of key recent executive and board-level appointments.