InsightsNewsletterRenatus’ Weekly M&A Newsletter – 01/11/2020

Renatus’ Weekly M&A Newsletter – 01/11/2020

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Dear Reader,

You are receiving this mail every week as we see you as a key partner and we look forward to continuing to enjoy our journey with you over the decades ahead.

Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.

Raising Capital Summit

Raising Capital Summit 2-for-1 ticket offer

Renatus Capital is delighted to offer you a 2-for-1 ticket deal to The Business Post’s Raising Capital Summit on Nov 4th. This virtual event will explore the impact of the Covid-19 pandemic on funding options for viable businesses with growth potential. You’ll make connections on the virtual conference platform where you can discuss funding options and future growth pathways with a great line-up of speakers from capital sources, CEOs, CFOs and entrepreneurs, advisors and deal makers. Check out the great speaker line-up and agenda at https://go.renatus.ie/e/512701/agenda-/3nf8sv/513185915?h=lqgehAFYNi1kvykioTFuU6vfFpGZmC43BkOfcHT_CJkTo book your tickets just input the offer code RENATUS when you book online. Or, you can contact Jackie Bryan on jackie.bryan@sbpevents.ie  or call 087 0557913

M&A Activity

We are excited to announce that we are hiring a graduate to join our team as an Associate.

Check out this video about the role: https://go.renatus.ie/e/512701/46VX4KTCuCQ/3nf8sz/513185915?h=lqgehAFYNi1kvykioTFuU6vfFpGZmC43BkOfcHT_CJk

Our small, tight-knit team means that Associates play an integral role in our activities and receive a high-degree of exposure and responsibility from day one. We’re looking for individuals with ambition, tenacity and a love of entrepreneurs and SMEs to help us build exceptional businesses across the UK&I.

This role is open to final year and graduate students available to start full-time in September 2021, or earlier if applicable.

If you, or someone you know, is interested in applying, please visit Renatus.ie/careers

M&A Activity

CRH sells Brazilian cement business

CRH

Deal Details: Irish building materials giant CRH has agreed to sell its Brazilian business to Companhia Nacional de Cimento (CNC), a joint venture between Italy-based Buzzi Unicem and Grupo Ricardo Brennand, for $218m (€184.4m).

CRH Brazil owned three full-cycle cement plants and two grinding centres in the southeast of the country. The unit, which CRH inherited in 2015 as part of its purchase of €6.5bn of assets from European rivals Lafarge and Holcim as they completed their own merger, sold about 2.5 million tonnes of cement last year.

This divestment is a part of the group retrench plan to reduce its footprint in emerging markets to free up cash flow to give them enough financial capacity entering 2021. Last year, CRH sold its 50% stake in its Indian business, My Home Industries. In September of this year, they reportedly sold a building material company in La Reunion and were reported to be preparing the sale of its Philippines cement unit last year.

Advisers: None Mentioned

Renatus Comment: CRH is one of the most active Irish players in the global M&A market. The company spent €727m last year on just over 60 acquisitions and investments. This divesture comes at a time when emerging markets are struggling and dependency on a liquidity constrained environment could adversely impact the consolidated group performance. By focusing on the developed market regions, CRH can channel its resources into its core manufacturing plants and realise a higher payback potential for its investors.

Source: Irish Times

Asavie acquired by Akamai

ASAVIE

Deal Details: Irish tech company Asavie has been acquired by Nasdaq-listed Akamai. Reports suggest the deal was completed in a cash transaction for €121m.

Dublin-based IoT solutions provider Asavie, founded in 2004 by Ralph Shaw and Tom Maher (each owned about 20% of the business), automates and manages private networks for businesses at scale, and its solutions are sold by top global mobile network operators including IBM, Vodafone and AT&T. Asavie recorded revenues of €23.6m and pre-tax profits of €1.9m last year.

Akamai Technologies, Inc. is one of the world’s largest content delivery networks, responsible for serving between 15% and 30% of all web traffic. It generated revenues of $2.9bn last year.

Following the acquisition, Asavie’s solution will be integrated to Akamai’s security and personalisation service product line which is sold to carrier partners.

Advisers: Maples advised Asavie

Renatus Comment: The impact of Covid-19 will no doubt have a long-term impact on how employees work and how businesses think and operate. Many companies such as Facebook, Google, Microsoft and Salesforce are transitioning to a secure ‘office anywhere’ environment that will benefit from a rapidly installable, scalable and cloud-managed solution that Asavie are known for.

Source: Akamai Press Release, The Business Post

Unity Technologies acquire IT Force

UNITY

Deal details: Unity Technologies I.T Ltd (“Unity”) has announced the acquisition of IT Force Ltd for an undisclsed sum.

Unity, founded in 2010 and led by David Hargaden, is a leading provider of IT Cloud Managed Services, with offices in Dublin and Cork. The business has established a reputation as one of Ireland’s leading cloud services businesses. Customers include the Residential Tenancies Board and Musgrave Retail Partners.

Founded in 1999, Dublin-based IT Force delivers IT Cloud Support, Managed IT Services and Managed IT Security Services to clients. The company has been awarded Deloitte Best Managed company and is ISO27001 certified. Its customers include Pigsback.com, RSM and Insomnia.

Advisors: Unity was advised by Louis O’Neill & Martin Treacy of EY (Corporate Finance). Due Diligence was provided by Marcus Purcell (EY) and Tax Due Diligence was provided by Ciaran Medlar (BDO). David Ryan & Declan Cunningham of Flynn O’Driscoll Solicitors acted as legal advisors.

ITF was advised by Julian Caplin (Hornblower Business) and Stephen Walker of Holmes O’Malley Sexton (Legals).

Pat Walsh & Aidan Lynch of Dunport Capital Management, Unity’s existing banking partner, part-funded the transaction.

SourceUnity Technologies Press Release

Highfield Veterinary Group acquires UK-bsaed Lilac Technologies

HIGHFIELD

Deal Details: Highfield Veterinary Group has acquired UK based Lilac Technology Ltd. Lilac are a leading provider of software to the UK veterinary industry.

Founded in 2018, Highfield are Ireland’s largest indigenous Veterinary Corporate, operating across the entire sector. This acquisition represents Highfield’s second in tech and will allow them to expand their Irish software platform into the UK.

Advisers: Highfield was advised by Patrick O’Shea and Sean Hiney of Wallace Corporate Counsel (legal), Tomás Plunkett of Woods and Partners (financials). Lilac was advised by David Preece – FBC Manby Bowdler (legal) and Simpkins Edwards LLP (financials).

Renatus Comment: As the Covid 19 pandemic continues, health care, including that which relates to animals continues to perform strongly. With the advancement of tech being fuelled by the pandemic it makes sense for aggregators to look at companies straddling both sectors. We expect accelerated consolidation in the veterinary sector in the coming years.

Source: Highfield Press Release

Clear Treasury management complete MBO

CLEAR TRESAURY

Deal Details: The management team of Clear Treasury, Jordan Tilley (joint CEO), Peter O’Flanagan (joint CEO) and Paul Reilly (CCO), have acquired the business from its founder Barry O’Neill.

Clear Treasury, with offices in Dublin and London, is a boutique treasury company replicating the treasury division in a bank from an independent perspective. The company executes deals in FX, commodities, money markets and invoice discounting deals on behalf of corporate customers.

Advisers: The company was advised by James Bullock & Claire Williams of Brachers LLP, Alex Bari from Barnes Roffe LLP, Mike Fletcher and Mark Ibbotson of MICA Accounts.

Renatus Comment: Management buyouts are a real option for owners to exit and can be a way to reward management for their loyalty and ensure continuity in legacy, culture and operations. Management don’t always need to have all the money themselves to fund the purchase of the business and can bring in partners like Renatus to support them in acquiring the business. Check out Mike Flanagan and Dolores Cantwell’s  story here (https://go.renatus.ie/e/512701/portfolio-rennicks-mbo-/3nf8t4/513185915?h=lqgehAFYNi1kvykioTFuU6vfFpGZmC43BkOfcHT_CJk), whom we backed to buy the business. Mike had been an employee of for 35 years.

Source: clear treasury LinkedIn

Deal Updates & Other News

Bombardier announces closing of the sale of its NI operations

Bombardier has announced the closing of its aerostructure business transaction between Bombardier Inc. and Spirit AeroSystems Holding, Inc.

Spirit acquired Bombardier’s aerostructures activities and aftermarket services operations in Belfast, U.K.; Casablanca, Morocco; and its aerostructures maintenance, repair and overhaul (MRO) facility in Dallas, U.S. in exchange for the total transaction value of approximately $1.2bn.

Source: Bombardier Press Release

Company Performance

EBITDA  is an accounting term and is often the best indicator of profitability in non-capital-intensive businesses before financing and tax are considered. In capital-intensive businesses EBIT or EBITDA less average Capital Expenditure are often better measures. YoY is an acronym for the year-on-year movement in turnover, EBITDA, etc.

EDWARD DILLION

Founded in 1867, Edward Dillon & Co Limited  is a leading distributor of premium spirit and wine brands in the Republic of Ireland.

In its latest fiscal year,  Edward Dillon & Co saw revenue decrease by a marginal 0.5% to c. €59.8m. EBITDA also decreased by c. 2.4% to c. €1.1m. There was little movement in profit margins YoY. Gross margins remained at a low c.10.5% due to the high cost of sales recorded.

The company had a net cash decrease of c.€1.3m in FY19, leaving an ending cash balance of c.€1.5m. The most significant movements in cash were a c.€640k dividend and a c.€1.3m negative working capital movement.  The company also invested c.€43k in Computer & other equipment.

The company employed an average of 39 employees in FY19 at a total cost of c.€3.2m.  The Company is owned by Moet Hennessy international S.A.S(40%), Bacardi – Martini B.V(40%) and Longnorth Limited (20%).

EDWARD DILLION FIGS
ARRAN

Based in Roscommon, Arran Chemical  is a chemical company specialising in the manufacture of products for pharmaceutical and health care, flavour/fragrance, personal care, and other specialised chemical and industrial applications.

In its latest fiscal year, the company saw revenue increase by 22.4% to c. €23.5m while EBITDA increased by 8.3% to c.€4.6m. Administration costs increased by €950k during the period.

The company had a net cash increase of c.€707k in FY19, leaving an ending cash balance of c.€1.1m. The most significant movement in cash was the c.€2.1m in Fixed Asset Purchases, almost all of which went into Plant & Equipment.

The company hired an extra 15 people in FY19  bringing  the total headcount to 95 people at a total cost of c.€4.7m. Arran Chemical Company Limited’s ultimate parent is the McClay Foundation, a Northern Ireland charitable trust.

ARRAN FIGS

Fundraisings

Who: Drone delivery start-up Manna raised further funding.

What: The investment quantum was not disclosed. Greenman Investments join the existing investors including Dynamo Ventures, Elkstone and Frontline Ventures in this round. It is Greenman’s first investment in the tech sector.

Why: As part of the deal, Greenman is to partner with Manna to put together a pilot programme offering delivery services in mainland Europe.

Source: Irish Times

Who: Galway-based medtech start-up Venari Medical has raised seed equity funding. The Company was founded in 2008 by Stephen Cox, Sean Cummins and Nigel Phelan and is a NUIG spin-out through the BioInnovate Ireland programme.

What: €4.5m investment round was led by Nipro Corporation, a leading Japanese medical product manufacturer. The Western Development Commission and Enterprise Ireland also contributed to the investment, in addition to international medical device experts and vascular surgeons.

Why: The funds will be used to accelerate the development of its ground-breaking BioVena™ device for the treatment of chronic venous disease.

Source: Venari Medical Press Release

Who:  Thriftify, an Irish charity ecommerce platform, has raised funding. Founded in 2008 by Rónán Ó Dálaigh, Rahil Nazir, Timur Negru and Emily Beere, Thriftify already works with more than 90% of Irish charity retailers.

What: €500k funding round was led by Elkstone Partners and Enterprise Ireland.

Why: The funding will be used to accelerate the rollout of its platform internationally.

Source:  Irish Times

Who: Aquiala Bioscience, founded in 2012 at the National University of Ireland, Galway, by Lokesh Joshi, Stokes Professor of Glycoscience. The business has developed a chemical wipe that can neutralise pathogens, or disease-causing organisms that is easy on human skin.

What: €1.9m in funding received from the European Innovation Council.

Why: Continued R&D into the product and to support the commercialisation of the product.

Source: The Business Post

Who: Steripak, founded in 1992 by Gary Moore and based in Mullingar, Co. Westmeath, is a contract manufacturer for the medical device and pharmaceutical industries. The business also has offies in the US, Malaysia and Poland.

What: Steripak’s US operations has received $828k in funding from the Bill and Melinda Gates Foundation.

Why: Funding received is to support the development of a packaging system for nasal swabs. The company began developing sterile nasal swabs to meet demand from healthcare agencies when COVID began to spread.

Source: The Business Post

Who: Head Diagnostics, a medtech startup developing a rapid assessment device for brain injuries and sports concussions.

What:The business has raised €500k in seed funding from private sources, the National Digital Research Agency and Enterprise Ireland.

Why: Funding will be used to develop a handheld iTremor device ahead of plans to begin clinical trials next year.

Source: The Business Post

Executive and Board Appointments

We in Renatus believe that more important than the deals are the people and we have teamed up with leaders in this field Korn Ferry to provide you with details of key recent executive and board level appointments.

Brice Evin

BRICE

Source:
(Google Images & LinkedIn)

VODA
BRICE BIO

Jason McGuinness

JASON MC

Source:
(Google Images & LinkedIn)

RYANAIR
JASON BIO

Amanda Ward

AMANDA

Source:
(Google Images & LinkedIn)

GT
AMANDA BIO

Andrew Moran

ANDY

Source:
(Google Images & LinkedIn)

FORTUS
ANDY BIO

Michael Nolan

MICHAEL N

Source:
(Google Images & LinkedIn)

DECLARON
MICHAEL BIO

Thought for the Week

Regarding the US election. It is still a 66% probability of Biden and 33% of Trump according to the Paddy Power odds.

Closer to home, Camilla Cavendish wrote an excellent article in yesterday’s FT. Her paragraph on not being able to quantify the effect of closing down etc was excellent and went as follows:

“The prime minister can only feel his way through the complex trade-offs between lives, livelihoods and hospital capacity. He is constantly shown every jump in the “R” number of infections. But there is no “R” number for jobs, no equivalent stream showing when a business owner will lose their life’s savings and life’s work. There is no Downing Street unit scrutinising worst case health scenarios and modelling families queueing at food banks, corporations planning mass redundancies, people contemplating suicide.”

The article is here and well worth reading or getting the FT Weekend to read

https://go.renatus.ie/e/512701/d1-b994-42f5-85a1-a55ae6183625/3nf8tj/513185915?h=lqgehAFYNi1kvykioTFuU6vfFpGZmC43BkOfcHT_CJk

@RenatusCapital Tweets

86.4% & 87.3%

The year-on-year reduction in the overseas arrivals and departures to/from Ireland for September 2020 amounting to 254,400 passenger arrivals and 236,700 departures, according to @CSOIreland

9.7% & 7.2%

The year-on-year increase in the Irish retail sales volume and value indices, respectively, for September 2020 with the most notable volume changes in Motor Trades (+5.7%) and Bars (-49.3%), according to @CSOIreland

€207.1m

The total value of agricultural land sold nationally in 2019 with the average price per acre at €6,534, according to @CSOIreland

48.5

The Irish consumer sentiment index for October 2020, a 4.3 point drop on last month and 21.4 points lower year-on-year, according to Bank of Ireland’s Economic Pulse. @IndoBusiness

30.3% & 27%

The year-on-year reduction in the volume and value of Irish home mortgages drawn down for Q3 2020 amounting to 8,220 loans to the value of €1.96bn, according to BPFI. @IrishTimesBiz

About Renatus

Renatus was established in 2014 to provide growth funding to growing Irish SMEs and to partner with ambitious management teams to help companies reach their full potential.

Renatus targets companies with sustainable earnings of €1m+ and valuations typically in the range of €5m – €20m. Our typical solutions include:

  • Succession planning
  • Management buyouts
  • Management buy-ins
  • Growth financing – both organic and acquisition growth financing
  • Full and partial share sale

Our Family of Investments

Current Portfolio:

Flew the Nest:


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