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Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
Deal Details: Northern Irish education and corporate software provider Texthelp, has secured investment from mid-market private equity firm LDC. Texthelp’s products include Read&Write, EquatiO, Browsealoud and WriQ. It has customers in Europe, the Americas, the Middle East and Australasia.
Texthelp is a leading provider of world class literacy and numeracy support software.
The investment will support the company’s management team which will be led CEO Mark McCuskar (who owned just under 10% of shares pre investment), CTO Martin McKay (who owned c.28% pre-investment) and CFO Seamus Scullion (who owned c.2% pre investment). This allows the firm to explore new opportunities and drive new product development.
As part of the deal, David Gilbertson has joined Texthelp’s board as non-executive chairman alongside LDC’s Steve Aston and Joseph Fison, who led the transaction and were supported by Dan Gluckman.
Texthelp currently generates revenues of £19m with the majority from the North America market where Texthelp has a significant and growing presence.
Advisers: LDC was advised by KMPG, Gateley, EY-Parthenon and PwC. Texthelp was advised by Jefferies and Pinsent Masons.
Delta Equity Fund LP were the biggest investor with just under half of the shares, Maurice Roche led from their side. The deal value was not publicly disclosed but industry sources suggested it was an “outlier” valuation and that Delta have taken a big return off the table. This is hot on the heels of another big exit by Delta from the sale of Digit to Scopely.
Deal Details: The international multi-service company Dussmann Group, Berlin, has agreed to acquire the specialist engineering service provider STS Group (STS). No financial consideration has been disclosed however, it is believed to be worth an estimated €50m. STS is a quality-oriented provider of technical services that operates in many regions for various blue-chip customers.
STS employs c. 700 staff with most of its work done in Europe. Dussmann employs around 66,000 people across 17 countries. STS senior management team members, led by CEO Eddie Walsh and MD Richard Hogan, will remain with STS after the acquisition.
Advisers: LK Shields advised the Dussmann Group on the acquisition.
Renatus Comment: The takeover deal is expected to close by the end of June, and if completed it will be another notable sale involving businessman Eddie Walsh. He was previously managing director and shareholder in Suir Engineering, which was sold to Dutch firm Imtech in 2007 for €30m. The Dussmann Group offers sufficient security with an annual turnover of c. 2.34bn euros.
Source: The Dussmann Group
Deal Details: Toonz Media has acquired a majority stake in Telegael, an Emmy-winning production house for an undisclosed sum. Established in 1988, Telegael employs the services of c. 350 staff. It co-produces animated and live action content for a range of international partners and broadcasters.
Toonz is one of Asia’s largest animation and entertainment groups and has a workforce of over 400 in India. It stated that it sees this investment as a way of boosting its own intellectual property while also expanding its presence in the European market.
Advisers: None mentioned.
Renatus Comment: Ireland is a big player in the world of animation, particularly TV animation, with the likes of Brown Bag, JAM Media, Boulder Media and Telegael. Paul and Frances Ui Chuimin own over 2/3rds of the company between them, Micheal O’Domhnaill over 10% and four others have over 5% each.
Deal Details: Carlyle Cardinal Ireland (CCI), has agreed to make an investment in The City Bin Co., an award-winning waste management company. Terms of the investment have not been disclosed but is expected to be completed in the coming months, pending CCPC approval. The City Bin Co. was co-founded by Gene Browne in 1997 to bring a customer-centric approach to the waste management industry. Today the company is a leading provider of waste management services in both Dublin and Galway City, serving c. 80,000 household and commercial customers.
Gene Browne will remain as CEO of the company and the existing management team, including Niall Killilea, MD and Louise Niemann, CFO, will continue to lead the company. Ian Daly, Director, Cardinal Capital Group, Esmond Greene, Director, The Carlyle Group, and Jonathan Cosgrave, Managing Director, The Carlyle Group will join the board of directors of The City Bin Co. post-transaction.
Advisers: The deal was led by FOD partner David Ryan assisted by the teams in Galway and Dublin. David Lyons of IBI advised the company on the corporate finance side. Stephen Keogh and Maire O’Neill from William Fry advised Carlyle Cardinal. PwC’s John Casey also advised Carlyle Cardinal on the deal.
Eamon Water’s Panda Waste is the clear market leader in Ireland and it looks like with this investment Gene Browne is muscling up to try and get City Bin closer to this scale and put a gap between themselves and Thorntons, Greyhound, Oxigen, Mr Binman and others.
Deal Details: BoyleSports, one of Ireland’s largest bookmakers led by CEO Conor Gray, has entered the UK retail market through the acquisition of a Midlands independent bookie Wilf Gilbert. Wilf Gilbert, which was owned by Graham Gilbert prior to the transaction, currently operates 13 shops in the UK and BoyleSports has indicated that it plans to complete further acquisitions to bring its overall shop count to 100 within the next 12 months. Consideration for the deal was not disclosed.
Advisers: None mentioned
Renatus Comment: Earlier in the year, the British government introduced strict regulations on fixed odd’s betting terminals which cut the maximum stake which can be placed on the terminal from £100 to £2. This has radically changed the UK’s retail betting environment and many industry figures have warned of widespread closures of betting shops. Nonetheless even the most bearish estimates suggest there will still be over 7,000 UK retail outlets compared to over 1,000 in Ireland. It is still a significant market with plenty of money to be made in it. Boyle Sports are very good betting retailers who have made a lot from acquisition of some the Celtic Bookmakers stores and William Hill exiting Ireland. I’d be surprised if their payback period on these new stores was longer than four years and the FOBT effect is probably priced in. Paddy Power established a good hold on the market when the market was growing via clever organic expansion and getting some prime sites.
Source: Sunday Independent
Deal Details: Dublin-based travel agents World Travel Centre and Core Travel, which trades as E-Travel, have merged to form a €190m business that employs 190 people. Core Travel, founded by David O’Grady, will merge into World Travel Centre and David will take a stake in the enlargened company with no cash reported to be changing hands.
World Travel Centre is run by Aidan Coghlan and deals mainly with travel agents and corporate bookings while Core Travel is a cruise and flight booking specialist.
Advisers: Michael Neary, Patrick Dillon and Ann-Marie Costello of Grant Thornton advised World Travel Centre on the merger.
Renatus Comment: World Travel Centre’s most recent accounts are for the period ending October’18 and show that it made a profit before tax of c. €2.5m off turnover of c. €143m. Core Travel’s most recent accounts are for the period ending October’17 and show that it made a profit before tax of c. €1.1m off turnover of c. €46m
Source: Sunday Independent
Deal Details: US real estate investment group Kennedy Wilson has put the Portmarnock Hotel & Golf Links up for sale, with a guide price of €50m. Since being acquired by the current owners for €27m in 2014, the Dublin resort has undergone a comprehensive upgrade involving all 134 of its guestrooms, and its banqueting and conference facilities. A new award-winning spa and enhanced golf experience were also added as part of the hotel’s €5m refurbishment programme.
Source: Irish Times
Deal Details: Bemis Healthcare Packaging in Derry is on the market after its US parent company announced a decision to sell over competition concerns following its own acquisition. The manufacturer employs c. 300 people and is a subsidiary of Bemis Co Inc in Neenah, Wisconsin. According to the latest company accounts for the business, Bemis is being sold to Australian company Amcor Ltd, with the merger due to complete over the next few months.
A condition of the sale, which has been imposed by the European Commission, is the disposal of Bemis plants in the UK and Ireland – including the plant in Campsie and another in Clara in Co Offaly. Amcor operates Amcor Flexibles in Europe, which includes sites in Sligo and Cumbria. The business makes packaging for markets including pet care, health care and home care.
Source: The Belfast Telegraph
Deal Details: The Aircoach service that operates a number of routes to Dublin Airport could have a new owner within months. UK transport company First Group said it’s looking to sell its bus division, which includes the Irish business. FirstGroup is also selling the iconic Greyhound coach service in the United States as part of a new strategy. It confirmed that the so-called separation plan for its First Bus operation could include a sale of Aircoach, which employs c. 200.
Source: Irish independent
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 details of key recent executive and board level appointments
Urebo Residential appoints new Partner
Urebo Residential has appointed Richard Ball as a Partner at the firm. Mr. Ball previously worked for Hibernia REIT as CIO and Clancourt Group as Investment Manager. Prior to Clancourt, Mr. Ball was Corporate Finance Manager at Michael McNamara & Co. He is a Chartered Accountant having trained at BDO.
Focus Capital Partners appoints new Associate Director
Brian Barrett, a former Director at EY, has joined Focus Capital Partners as Associate Director. Mr Barrett, who is a UCC graduate and CIMA qualified, previously worked at IBI Corporate. In his earlier career, he worked at Bank of Ireland Securities Services and at State Street.
Deloitte appoints Harry Goddard as Ireland CEO
Harry Goddard is Deloitte Ireland’s new CEO. Mr Goddard has worked at Deloitte for over 11 years as a Partner at the firm. He previously worked at KPMG Consulting as a Principal before assuming the Managing Director role at the firm’s Bearing Point business. Mr. Goddard is a graduate of the University of Limerick.
Arkphire appoints new Group Financial Controller
Irish owned IT solutions and managed services company, Arkphire, has appointed Daragh McMahon as Group Financial Controller. Having trained and qualified as a chartered accountant with KPMG, Mr McMahon has since assumed senior financial roles in leading international businesses including H&K International and ICON Plc. He is a graduate of the University of Limerick and is a member of the Institute of Chartered Accountants in Ireland.
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.
Headquartered in Limerick with operations in Dublin and Lisburn, Shortt Stainless Steel is a supplier of stainless steel raw materials as well as additional processing services to a number of industries, including the dairy, food processing, pharmaceutical and architectural industries. Despite flat revenue growth in FY18 and 2.3 percentage point deterioration in gross margin, the business grew EBITDA by c. 6% as a result of cutting its admin costs by c. €600k. The company employs 102 staff at an annual cost of c. €4.4m and is a capital intensive business with the company having spent a cumulative c. €2.7m on CapEx in the prior two fiscal periods, the majority of which went into plant and equipment. The company has bank debt of c. €260k along with an additional c. €1.85m in finance lease obligations against a cash balance of c. €1m. The company is owned by Dermot (70%), Brendan (15%) and Marie Shortt (15%).
Demesne Electrical, based in Tallaght, is an independent electrical supplier, importer and distributor of industrial and electrical goods. The company was founded in 1977 and is a Deloitte Best Managed company. FY18 saw the company’s revenue growth by 6.5% to just under €16m while EBITDA grew by 20% to c. €1.2m. The EBITDA increase can be traced to a one percent decline in admin expenses as a percentage of sales. The company spent c. €205k on “Other unlisted investments” bringing the total net asset value to just under €400k. Directors remuneration for the period amounted to c. €1.2m for the company’s three directors. At the period end, the company had a cash and equivalents balance of c. €765k against a debt balance of c. €2.83m. The company is owned by Paul Fitzsimons (28%), David Williamson (28%) and Chris Mc Kenna (14%). The remaining 31% is owned by Balfe Securities Holdings Limited, a holding company owned by Paul, David and Chris.
Based in Derry, J.K.C. Garages (Coleraine) Limited is a car dealer that specialises in the sale and service of motor vehicles and accessories for both BMW and MINI. In its most recent financial year, revenue remained static at c. £50.6m which was split between Vehicle sales of c. £46.8m and Servicing and parts of c. £3.8m. EBITDA declined by 7.9% in 2018 to £1.1m which was largely due to an increase in administrative expenses by c. £200K. The company employed on average 76 people for the year at an annual cost of c. £2.3m. At the period end, the company had c. £10k debt against a cash balance of £1.65m. J.K.C. Garages (Coleraine) is owned largely by the Cassidy family with John K. Cassidy owning 46.88%, Cassidy Family Trust 31.25%, Mark Cassidy 15.62% and also Niall McFlynn owning the remaining 6.25%.
Who: KPMG Partner Mike Hayes (also KPMG’s global renewables leader) is working in collaboration with the World Economic Forum to establish a €3B global Sustainable Energy Innovation Fund (SEIF) in order to tackle the energy innovation deficit. This was highlighted in the Paris Climate Change agreement as one of the key challenges in fighting climate change.
What: The SEIF is a unique proposition involving the use of an innovative blended finance model to attract both public and private investors and will focus on transformative solutions that have an application to developing countries. Ireland is one of the possible locations being considered by the SEIF. Both the EU Commission and the UN-backed Green Climate Fund have expressed strong support for the uniqueness and the vast global ambition of the SEIF. Hayes has been instrumental in designing the commercial proposition. A process is currently underway to appoint a global investment manager for the SEIF and it is expected to be formally launched at Davos 2020.
Why: In many ways the SEIF is tackling the same issues as the Bill Gates-backed Breakthrough Energy Coalition but with different areas of focus.
Source: Sunday Independent
Who: Irish craft beer maker Rye River Brewing is planning to raise new funding this year.
What: The business is planning to raise €2.5m. Rye River’s MD Tom Cronin stated it would probably seek to raise the money from a non-bank lender.
Why: The funding will be used to expand the brewing and bottling capacity of its Celbridge plant to increase its export capability.
Source: Irish Times
Who: Aratech Technologies, a business led by Cecil Ryan that develops hand washing technology.
What: The business has raised money from Jim Curley, of Jones Engineering, Paul McKeon, Chairman of Propylon, and the Flynn Contracting Group.
Why: There was no stated reason for the fundraise however we understand the funds will be used to build on the company’s strong momentum in the market.
Source: Sunday Times
Who: Dublin-based Key Capital has raised funding for its latest private equity buyout fund.
What: The firm has secured €72m for its new fund. The average investment per client in the latest fund was between €500,000 and €600,000, according to MD Martin Lally.
Why: About half of the latest fund has already been committed, while the remainder will be funnelled to managers over the next two years.
Source: Irish Independent
Who: Suir Valley Ventures, which backs early-stage technology companies across AR/VR, AI and IoT has announced its participation in a new funding round.
What: The entrepreneur-led venture capital firm announced its participation in a €1.1m funding round for Ambisense, which was led by Atlantic Bridge.
Why: Ambisense raised the funding as it looks to grow into a globally recognised company.
Source: Irish Times
I met a person who I would regard as a great judge of people and C-level executives during the week and he said all of his reading, learning and experience has led him to believe that one trait above all others that sets people apart is curiosity.
It is hard to disagree. I went googling academic support for same and this article was the best I came across https://www.business2community.com/leadership/curiosity-key-success-ceos-01930831 .
3.5% & 4%
The respective year-on-year increases in the value & volume of retail sales in Ireland as of April 2019.
The year-on-year increase for the total number of trips made to Ireland by overseas residents for the month of April 2019, accounting for 938,000 trips.
The year-on-year rise in domestic mortgage approval rates for the three months to the end of April, with approvals jumping 9.5% in April, accounting for €931m of new loans approved for that month alone. According to the Banking & Payments Federation Ireland.
The year-on-year increase in Irish average weekly earnings for the first three months of 2019, rising to €769.98 in Q1 2019 from €744.76 in Q1 2018.
Renatus’ Knowledge Centre
Our Knowledge Centre is filled with insights from some of Ireland’s top business leaders on Succession Planning, Management Buyouts / Buy-Ins, Growth Financing and much more.