Aspire Technology acquired by NEC, Zeus Packaging acquires JJ O’Toole and much more in our latest weekly Renatus M&A newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 03/07/2022
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
Auto-enrolment for pensions is good news but at a cost.
Years ago, there were a large number of defined benefit schemes that guaranteed good quality of life to anyone in retirement and helped boost the grey dollar available to the economy. Then anyone who didn’t have a pension probably owned a home which was a pension of sorts. Without defined benefit pension schemes and less homeownership due to rising property costs, one would worry about what the country looks like in 30 to 40 years. Auto-enrolment seems to be a big answer. We are unlikely to have auto-enrolment live in Ireland until 2024 but it has gone live in the UK and the stats are startling. 22-29-year-olds are now participating in pensions at a rate of 86%. This is good news for anybody worried about the cliff but there is a cost coming to all businesses to match employee contributions which needs to be borne in mind.
Aspire Technology acquired by NEC
Deal Details: Aspire Technology Unlimited has been acquired by NEC. Deal consideration has not been disclosed.
Established in Dublin in 2010 by Bill Walsh, Aspire Technology Unlimited is focused on specialised system integration (SI) specialising in designing and integrating open networks for 5G technology. Aspire Networks now delivers solutions to over 50 countries. The company does not publish turnover or EBITDA information.
Founded in Toyko, Japan in 1899 by Kunihiko Iwadare, publicly traded NEC Open Networks offers an end-to-end suite of open products and solutions. In FY21 it reported a turnover figure of over €24bn which converted to an EBITDA of c. €1.5bn.
Advisers: Aspire Technology: M&A Advisory: A Focus Capital team of Alan Kelly, Owen Hackett, and Dermot Brennan. Accounting: RBK. Legal: LK Shields.
NEC: None mentioned.
Renatus Comment: While deal consideration was not disclosed, this is a global business and a significant and successful exit for Bill Walsh and his team.
There should be a lot of learnings from this story. If you look at the CVs of the main players including Bill they all got their global learnings working together in Ericsson.
That speaks to the double bottom line benefit of getting global players into Ireland for future entrepreneurial spin-offs. We spoke about this when Philip O’Doherty exited E&I and many other examples. It makes you wonder with so many tech players active in Ireland what they will spawn over the decades ahead. Anyone in a multinational with an entrepreneurial itch should study the CVs of the team at Aspire.
Do not be afraid to call us in Renatus if you want to brainstorm how you could transition to an SME, we love brainstorming with world-class talent even if it does not lead to a deal.
Source: NEC Press Release
Zeus Packaging acquires JJ O’Toole
Deal Details: Zeus packaging has acquired packaging rival, JJ O’Toole. The deal consideration was not disclosed.
Founded in 1914, JJ O’Toole is a supplier of packaging located in Limerick. The business was owned and led by MD Vicki O’Toole, a previous winner of Image Magazine’s Business Woman of the Year and EY entrepreneur of the year finalist in 2018. The business employed c. 19 staff as of FY21 and reportedly had accumulated profits of €2.1 million.
Zeus is an Irish-owned packaging solutions company, supplying the retail and food industries. As we learned through a recent Renatus podcast with founder and owner Brian O’Sullivan, Zeus has become a global packaging force with a forecasted annualised turnover of €400 million in 2022, and a staff of nearly 800 people in 26 countries. Listen to the full podcast here: Renatus Podcast.
Advisers: JJ O’Toole: Financial: Grant Thornton led by Dara Kelly.
Zeus: None mentioned.
Renatus Comment: Zeus Packaging has been very busy recently having acquired two UK-based packing businesses, BoxMart and Swanline Group just three weeks ago along with Canadian Agri-Flex, earlier in 2022. Prior to this acquisition, it was reported that Zeus’s other acquisitions throughout 2022 had added c. €60m of revenue to the business with this latest acquisition bringing Zeus ever closer to its target of half a billion in revenue.
In 2021, Mr. O’Sullivan was announced as the winner of the Irish EY Entrepreneur of the Year and, last month, competed in Monaco for the title of EY World Entrepreneur Of The Year 2022.
Vicki O’Toole’s story is equally as inspirational, competing for and winning various business awards domestically and internationally. She took over the reins of the company when her husband passed and made a huge success of it. Anyone looking for inspiration should look into Vicki O’Toole’s story.
Source: Zeus Press Release
Synova to acquire a stake in 3173
Deal Details: Synova has acquired a majority stake in Belfast-based 3173. The deal consideration was not disclosed and is subject to FCA approval.
Founded in 2000, 3173 provides actuarial, administrative, and investment services to pension schemes via Spence; trustee, and governance services through Dalriada; and operates a proprietary actuarial software platform, Mantle. 3173 reported FY21 turnover of almost €21m which converted to an EBITDA of almost €4m. The business was owned by David Copeland, Brian Spence, and Margaret Butten.
Synova is a private equity firm with offices in London and Dublin. Synova was founded in 2007.
Advisers: 3173: Legal: A&L Goodbody led by Mark Thompson, Sarah Dugdale, and Shane Swaile. Corporate Finance: Beltrae. Financial and tax: Grant Thornton. Commercial Due Diligence: Cardano.
Synova: Legal: Pinsent Masons. Tax: Alvarez & Marsal and MacRoberts Commercial, financial, and tax: EY IT: Endava
Renatus Comment: One of the most interesting aspects of 3173’s business and likely a key factor to this investment is the business’s software platform, Mantle. Mantle is a fully integrated software platform covering administration, actuarial, and investment modelling and the only of its kind in the actuarial industry. This software platform is deployed internally by 3173 and more recently is being offered as a SaaS solution to third-party customers. Scaling Mantle as a Saas offering will likely be a major driver of growth for 3173 and Synova. Synova is co-led by Irish man David Menton who has a super track record of scaling such businesses in recent years.
Source: 3173 Press Release
Arachas to acquire Stuart Insurances
Deal Details: Arachas has agreed to acquire Stuart Insurances. Deal consideration was not disclosed.
Stuart Insurances Limited is a family-owned insurance brokers operating in Ireland, offering insurance on a wide range of products including campervans, home, commercial and retail insurance. The company was founded in 1978 and its head office is located in Blackrock, Dublin with sister offices in Kilkenny and Wexford. Stuart Insurances reported FY21 revenue of c. €1.9m and was majority owned by Neil Stuart.
Arachas Corporate Brokers is a nationwide insurance broker. Originally established in 1969, it has grown into a countrywide insurance provider with 500 employees at offices around Ireland. Arachas was acquired by Ardonagh, an international insurance group with more than 100 offices and 9,000 employees in 2020. The business reported FY21 revenue of over €46m.
Advisers: None mentioned.
Renatus Comment: This acquisition is the latest instalment in a wave of consolidation occurring in the insurance space. This wave is being led by private equity-backed companies such as Arachas, who have been pursuing a consolidation play in the Irish brokerage market since 2017.
Just last week a new competitor joined this race with private equity-backed US insurance giant, Gallagher acquiring Innovu Insurance, who were themselves an active consolidator in the space.
Source: Arachas Press Release
Liscannor Ferry Company acquired by Baid Farantoireachta An Chosta Teoranta
Deal Details: The Liscannor Ferry Company Ltd. has been acquired by Baid Farantoireachta An Chosta Teoranta. Deal consideration has not been disclosed.
The Liscannor Ferry Company, t/a Doolin2Aran, is a family-owned business that operates a ferry service from Doolin to the Aran Islands. The business is headquartered in Liscannor, County Clare, and was owned by the Garrihy family. The company does not report turnover or EBITDA.
Baid Farantoireachta An Chosta Teoranta, t/a The Doolin Ferry Company is a family-owned business that operates ferries from Doolin to the Aran Islands, covering the same routes as Doolin2Aran. The business was founded in 1970 by Bill O’Brien and is today owned by Liam and Erin O’Brien. It is headquartered in Kilfenora, Clare. The company does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: The Liscannor Ferry Company has grown to a position of carrying in excess of 100,000 passengers per annum. This deal includes the sale of two 200-seater passenger ferries, the star of Doolin and the spirit of Doolin.
Eugene Garrihy, a director and owner of Liscannor Ferry Company, also owns Dublin Bay Cruises, which he continues to run and intends to expand.
Source: Business Plus
Causeway Geotech acquired by Sealaska
Deal Details: Sealaska has acquired an undisclosed stake in Antrim-based Causeway Geotech. Deal details have not been disclosed.
Causeway Geotech Limited is an independent ground-investigating contractor that operates throughout Ireland and the UK. The company was founded in 2012 and is owned by Paul Dunlop, Ciaran Doherty, John Cameron, and Darren O’Mahony. In FY20, Causeway Geotech reported a turnover of c. £8.8m, which converted to an EBITDA of c. £0.9m.
Established in 1972 and based in Alaska, Sealaska Corporation’s businesses span across natural resources, land management, environmental services and sustainable foods. Sealaska is the Alaska Native regional corporation for Southeast Alaska and is headquartered in Juneau. The company owns and operates on 362,000 acres of land and has approximately 23,000 shareholders, all from native Alaskan tribes. The business did not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Causeway Geotech will become part of Sealaska’s ocean health division within its environmental services business, taking advantage of Causeway’s expertise in underwater ground investigation.
This is Sealaska’s first acquisition on the island of Ireland following its acquisition of English-based New England Seafood International in 2020 which joined the group’s sustainable foods division.
Source: Causeway Geotech Press Release
Gradguide has acquired Covid Interns
Deal Details: Covid Interns has been acquired by Gradguide. Deal consideration was not disclosed.
Covid Interns is a social enterprise set up to help SMEs combat the effects of Covid-19 by linking them with students/graduates. The Dublin-based company was founded in 2020 and is owned by Paddy Ryder, Joshua Mckee, Andrew Kilgallen, Rob Muldowney, and Emily O’Sullivan.
Gradguide is an online career, mentorship, and recruitment platform that pairs mentors with students and recent college graduates to help them successfully transition from college into the tech workforce. The company was founded by Mark Hughes, Ian Guerin, Matthew Brennan, and David Martin in 2019.
Advisers: None mentioned.
Renatus Comment: This deal would be more in the micro deal category compared to others covered this week but well worth covering given the entrepreneurial success Covid Interns was.
Both Gradguide and Covid Interns have been outstanding success stories in their own right. Covid Interns was founded and led by a team of Irish college students during the Covid pandemic. With the founding team now moving on to various other roles and starting their careers outside college it makes sense to pass the company on to a more established player like Gradguide to handle the business’s next phase of growth.
Source: Covid Interns Press Release
Michael Houlihan & Partners and Sellors announce merger
Deal Details: Clare-based Michael Houlihan & Partners LLP (MHP) and Limerick-based Sellors LLP have announced a merger. The deal consideration was not disclosed.
Founded in 1933, MHP is a legal firm that specialises in employment law and litigation, and commercial legal matters. John Shaw, Sinead Nunan, and Helen Rackard are the current partners.
Founded in 1830, Sellors is a legal practice based in Limerick that provides a range of services for both businesses and individuals. The business is led by managing partner, Stephen Keogh with other partners including Ian Sheehy, Miriam O’Connor, Ronan Hynes, and Derek Walsh.
Advisers: None mentioned.
Renatus Comment: Sellors has completed a total of seven acquisitions since its founding. This is the first time major legal practices in Clare and Limerick have merged and the combined entity will create the largest legal practice in the region with 21 solicitors and 51 staff overall. Both companies will continue to operate as previously from their existing locations and the combined entity will be led by Sellors managing partner Stephen Keogh.
The Corner Bakery acquired by Martin Booth
Deal Details: The Corner Bakery, based in Cookstown, has been acquired by Martin Booth. Deal consideration was not disclosed.
Corner Bakery Limited, formerly known as the Corner Cake Shop, is one of NI’s most well-known bakeries. The bakery was established in 1951 by David and Lily Turkington and is owned by Tim Turkington. The business includes an in-store bakery and deli counter and provides a range of home-baked goods daily to more than 100 stores and businesses across Northern Ireland. The business did not report turnover or EBITDA information.
Martin Booth is a former teacher and Belfast businessman. Mr. Booth is also the co-founder of MK Awards and founder of Beyond Digital, a digital marketing agency.
Advisers: The Corner Bakery: Legal: MBK Law led by Jose A. Lazaro and Gordon McElroy. Accounting: FEB chartered Accountants led by Michael Flannigan
Renatus Comment: The Corner Bakery has been owned by the Turkington family since its founding over 70 years ago and has established a loyal local customer base as well as partnerships with various retailers. Given Mr. Booth’s history as a teacher of ICT and founder of a digital marketing agency, we will likely see the Corner bakery expand its online presence and modernise over the coming years.
Source: The Irish News
Greencoat Renewables has acquired Ersträsk North Wind Farm
Deal Details: Greencoat Renewables has acquired Ersträsk North Wind Farm in Sweden from ENERCON. The deal consideration was not disclosed.
Greencoat Renewables Plc. is an investor in euro-denominated renewable energy infrastructure assets with a portfolio of over 800MW of generation capacity. The company is headquartered in Dublin and is focused on continental Europe. It was founded by Richard Nourse in 2017. The business reported revenue of c. €140m in FY21.
Ersträsk North Wind Farm is a 134MW windfarm in Norrbotten, Sweden. It is currently under construction by German wind turbine manufacturer, ENERCON and is expected to be fully commissioned during Q4 2023.
Advisers: Greencoat: Legal: DLA Piper.
Enercon: Financial Advisory: DNB Markets.
Renatus Comment: Led by partner, Paul O’Donnell, Greencoat has been a regular feature in this newsletter since it was founded in 2017, having made six previous acquisitions throughout Europe since April. This is Greencoat’s second acquisition in this location in Sweden having acquired Ersträsk South Wind Farm in October 2021, bringing Greencoat Renewable’s overall generation capacity on the site to 235MW. This comes as no surprise given Sweden’s growing status as a major hub for green energy.
Source: DLA Piper Press Release
DEAL UPDATES & OTHER NEWS
Irish Government sells further shareholding in AIB
Deal Details: The Irish Government has announced the sale of 5% of its shareholding in AIB, estimated to be worth around €300m. These shares are expected to be sold through a share placing to institutional investors.
This news comes after the Irish government announced plans to slowly release AIB shares into the market in January of this year which saw the state’s shareholding in the bank reduce from c. 71.1% to c. 68.5%. This latest update is expected to reduce the state’s shareholding to c. 63.5%.
Founded in 1979 by George Whelan Snr, Clare-based Whelan Plant Sales Limited specialises in the supply and service of new and used mobile plant and equipment to customers in the construction, quarry, recycling, and agricultural industries.
Whelan Plant Sales reported an FY21 turnover of c. €22.1m which converted to an EBITDA of c. €1.2m, representing a 44.2% and 11.9% increase year-on-year, respectively. The business’ gross margin percentage was 9.6% in FY21 versus 11.8% in FY20 which restricted EBITDA growth.
Significant post EBITDA cash movements included a working capital investment of c. €1.4m. The business closed FY21 with a cash balance of c. €2.1m.
The company is owned entirely by George Whelan Snr. Whelan Plant Sales employed an average of 13 staff throughout 2020 at a cost of c. €609k.
Based in Carlow, Kellys Agricultural Machinery Limited (t/a Kellys) is one of Ireland’s largest stockists of new and used agricultural machinery, farm machinery, and plant equipment.
Kellys reported FY21 turnover of c. €40.7m which converted to an EBITDA of c. €1.7m. This represented increase year-on-year of 22.4% and 13.1% respectively.
Significant post-EBITDA cash flow movements included a working capital unwinding of c. €2.3m and the repayment of a short-term loan of c. €1.7m. The business’s closing net cash increased by c. €813k throughout FY21.
Kellys is owned by Eileen, Gillian, Richard, and Stephen Kelly. The business employed an average of 45 staff throughout FY21 at a cost of c. €2.2m.
Who: Thanks Plants, a producer of plant-based frankfurters, sausages, and roasts that sell in SuperValu, Tesco, and various other retail stores. The company was founded in 2020 by Aisling Cullen.
What: The business has raised €400,000 from Redesdale Food Fund.
Why: Thanks Plants plans to use the funding to expand the business countrywide, and become an international brand in the sector.
Who: Mac Zero Modular Buildings, a manufacturer of energy-efficient modular buildings. The company was founded by Conor McAvoy Corr and Orla McAvoy Corr in 2021.
What: The business has raised £500,000 from the company’s founders.
Why: The investment went toward the refurbishment and extension of the company’s manufacturing site, purchase of new machinery, new vehicles, and installation of a new IT system.
Who: Kairos Sports Tech, a sports software company that assists elite athletes and teams in managing their schedules, keeping track of training sessions, and providing communication channels. It was founded by ex-Ireland rugby player Andrew Trimble and Gareth Quinn in 2018.
What: The business has raised £500,000 from Whiterock Finance.
Why: The company plans to use the funding to expand in global markets.
Who: Workvivo, an internal communications platform to increase employee engagement. It was founded in 2017 by John Goulding, John Lennon and Joe Lennon.
What: The business has raised €20.8 million in a series B funding led by US investment firm Tiger Global Management.
Why: Workvivo plans to use this funding for product development and innovation.
Who: Micron Agritech, a provider of rapid test kits for farm animals such as cattle, sheep, and horses. The business was spun out from Dublin Technological University in 2019 and was founded by Tara McElligott, Sean Smith, Jose Lopez Escobar, and Daniel Izquierdo Hijazi.
What:The business has raised c. €1.5m in a round led by Yield Lab Europe with participation from Investbridge Capital.
Why:The funding will be used to bring the businesses testing products to the Irish market.
Who: Raylo, a London-headquartered smartphone subscription company founded in 2019 by Karl Gilbert, Richard Fulton, and Jinden Badesha. The business has a customer services and credit control centre in Belfast.
What:The business has raised c. €7.6m from various investors which include Telefónica, Octopus Ventures, and Macquarie.
Why:The funding will go toward expanding Raylo’s data and engineering teams and accelerating the roll-out of its subscription payment service to retailers.
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.
Ireland’s expected inflation rate by the end of 2022 according to an Irish Economy Health Check conducted by @ALGoodbody
The annual increase in Irish property prices during Q2 of this year. According to @daftmedia
The proportion of Irish electricity generated by wind energy in May 2022. According to @GasNetIrl
The average listed price of a home in Dublin from March to June of this year. The nationwide average was €311,874. According to @REAIreland and @daftmedia
The expected increase in the average grocery shopper’s annual bill this year. This figure represents Irish grocery inflation hitting a ten-year high. According to @Kantar
The total foreign direct investment in Ireland in 2020. Over 66% of this came from just 25 companies according to @CSOIreland
The annual increase in road freight tonnage in Ireland in 2021. While 2021 is a 10% increase when compared to 2020, it is a decrease of 3% when compared with 2019. According to @CSOIreland
The total number of overseas passengers who arrived in Ireland in May 2022. This figure is considerably higher than the same figure for 2020 and 2021 but it is still below the pre-pandemic 2019 figure of 1.8 million. According to @CSOIreland
The Republic of Ireland’s ranking in Europe in terms of the cost of food and alcohol. Ireland is behind only Luxembourg and is 17% higher than the EU27 average. According to @CSOIreland
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Renatuswas 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:
Growth financing – both organic and acquisition growth financing