Altada receives backing from Elkstone, Rocktop Partners, and Enterprise Ireland, Zeus acquires Limerick Packaging, All Seasons Hire to be acquired by Cross Rental Services and much more in this week's Renatus Private Equity weekly M&A newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 03/10/2021
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
Altada receives backing from Elkstone, Rocktop Partners and Enterprise Ireland
Altada has developed a software platform that leverages artificial intelligence to increase operational efficiencies in a range of sectors which includes financial services. It helps to automate processes such as contract reading. The business was founded by Allan Beechinor and Niamh Parker in 2017 and is based in Cork. The business employs 70 people across Europe and the US.
The funding will reportedly be used to hire around 100 new employees globally, further expand into the US by opening an office in Austin and expand into the Asia Pacific region.
Advisers: Clearwater International (Altada’s long-term corporate finance adviser) led by John Curtin and Michael Quinlivan, advised on this funding round and will be advising on a larger funding round in Q2 2022. ReganWall, the legal advisers to Altada since its early days, acted for the company on the fundraising.
Renatus Comment: Since being founded in 2017, Altada has grown to become a global company in just three short years, with a portfolio of flagship clients in the financial services sector.
The banking industry has been undergoing a technological upgrade for some time with many traditional, labour intensive processes being improved with solutions such as those that Altada offer. It is also true that these solutions are in demand globally, which is evidenced by Altada’s current geographic footprint and its plans to expand further afield.
The business looks well positioned to go from strength to strength.
Limerick Packaging, founded in 2002 by Connie Ryan and Mike Boland, is focussed on providing corrugated packaging solutions to the health and food processing sectors. It was reported that Limerick Packaging has annual turnover of €17.4m and employs 45 staff.
Zeus Packaging is one of the largest packaging companies in the UK & Ireland. It was established in 1998 by Brian O’Sullivan and is today led by its CEO Keith Ockenden. It employs 670 in total across 26 countries worldwide. The business has sites in Ireland, UK, Northern Ireland, Germany, Spain, Poland, Canada, New Zealand, Australia and China.
Advisers: Limerick Packaging – The deal was led by George Kennedy, Partner and Ciara Downes, Trainee Solicitor at Holmes.
Assisting Zeus in the acquisition with funding, tax and legal advice, and financial due diligence were Sean O’Keeffe, Ulster Bank and OFX Solicitors in Cork.
Renatus Comment: This transaction is the eighth business to be integrated into the Zeus group over the past c. 2 years, with the most recent being the Austrian-based food packaging solutions business, Petruzalek, which it acquired in February 2021.
Zeus has grown at a rate of 7 to 10% per annum for the last 5 years and has an annualised turnover of €325m. Zeus is a great case study for the power of a well-executed M&A growth strategy.
The deal, which is subject to regulatory approval, is expected to close in October.
Novostrat was founded in 2001 and currently has two facilities, one in Ireland and one in Poland. Novostrat specialises in the production of foam for the packaging and building industries.
Abriso-Jiffy was founded in 1985 and is a leader in the European market in the manufacturing of various foam products. Abriso-Jiffy are is headquartered in Belgium with 15 production facilities throughout Europe. It employs a reported 1,500 people.
Advisers: None mentioned
Renatus Comment: Novostrat and Abriso-Jiffys range of products appear to have significant overlap and this acquisition will create significant synergies for the Abriso-Jiffy group, allowing them to better serve the wider European market while also enhancing the competitive strength of Novostrat.
It was reported that Novostrat recorded revenue of c. €30m in its most recent financial year while Abriso-Jiffy had revenue of c. €250m.
Source:Abriso-Jiffy press release
All Seasons Hire to be acquired by Cross Rental Services
Deal Details: HSS Hire Group have agreed to sell All Seasons Hire to Cross Rental Services for a reported £55m (€64m).
HSS Hire Group is a leading supplier of tool and equipment hire in the UK and Ireland.
All Seasons Hire is a heating, ventilation, and air conditioning hire business. The reported reason for the sale was to accelerate the repayment of the HSS Hire’s debt. In its financial year to December 2019 (its most recently filed accounts), All Seasons Hire Limited reported revenue of c. £14.8m and EBITDA of c. £4.4m.
Cross Rental Services is an equipment rental company specialising in heating, cooling, refrigeration and catering equipment operating in Ireland and the UK. This acquisition should allow them to enhance their position as a leading supplier of heating and cooling equipment in the Irish and UK markets.
Advisers: Kirstie O’Flanagan, Marc Rogers, Eimear McCann, Aisléan Nicholson and Craig Harrison from Deloitte Financial Advisory and Tax teams supported Cross Rental Services on this transaction.
Renatus Comment: Cross Rental Services had previously been backed by Lonsdale Capital Partners who acquired a share in the business in 2018 and went on to complete two bolt-on acquisitions in 2019 and 2020. In August of 2021, the business was acquired by Elysian Capital LLP alongside company management. It appears the business hasn’t missed a beat with the acquisition following swiftly after its own transaction.
Service Matters is acquired by CWS
Deal Details: Service Matters Limited (SML) has been acquired by CWS International GmbH for an undisclosed amount.
SML, established in 1997, is a key player in the Irish hygiene, workwear, and the facilities management services sector.
Following this acquisition, CWS becomes one of the largest providers of workwear, washroom and floorcare rental services in Ireland.
The group currently employs 11,000 people in 15 countries. In 2020, the company generated a turnover of €1.2bn euros. CWS International GmbH and its subsidiaries are owned by Franz Haniel & Cie. GmbH.
Advisers: CWS International: Corporate Finance – Greg Hogan & Conor Gleeson (Baker Tilly) Tax – Alma O Brien, Colin Dignam and Kate Prendiville (Baker Tilly) Legal – Ainsley Heffernan, Stuart Connaty, Paul Gough, Daire Russell (Beauchamp Solicitors)
Service Matters Limited: Corporate Finance – David Farrell & Anita Mulligan (Grant Thornton) Tax – Una Ryan & Dympna Connor (Grant Thornton) Legal – Mark Roberts & Sharon Meaney (Leman Solicitors)
Renatus Comment: In Service Matters Limited’s most recently filed financial year to December 2020, the business reported revenue of c. €6.7m which converted to EBITDA of c. €1.7m. Service Matters Ltd operates in a sector that would very likely have been a beneficiary of Covid-19 with hygiene-related products and services being in high demand.
Source: CWS press release
MyComplianceOffice acquires Governor Software
Deal Details: MyComplianceOffice (MCO), a compliance solutions provider for financial services, has acquired Governor Software. The transaction details were not disclosed.
MCO, headquartered in Dublin, provides compliance management software for financial services companies around the world that enables them to reduce their risk of misconduct. The MyComplianceOffice platform lets compliance professionals demonstrate that they are proactively managing the regulated transactions for the firm, the activities of employees, third-parties, and other external entities that the client engages with in their business activities.
Governor Software, founded in 2015 by CEO Richard Pike, is a leading technology company specialising in compliance governance and oversight solutions. Governor Software Ltd supports senior risk and compliance executives at financial institutions maintain governance and oversight through clear visualization of their regulatory obligations and risk appetite.
The financial performance of both companies is not reported.
Advisers: Wallace Corporate Counsel LLP acted for Governor Software on this transaction.
Renatus Comment: This appears to be a combination of very complementary offerings in the Irish market which is home to a significant number of major, global financial institutions.
Richard Pike, CEO of Governor Software, is currently Chairman of Citadel Securities (Ireland) Ltd, an Independent Non-Executive Director and Chair of the Board Risk Committee at Starling International, Independent Non-Executive Director at FBD Insurance plc, Independent Non-Executive Director at Citadel Securities (Europe) Ltd. The addition of Mr. Pike to MCO’s team should open up doors for the Irish business and support future growth.
Source: MCO Press Release
anuview is acquired by VIAVI
Deal Details: anuview, an Irish cyber security software provider, has been acquired by Nasdaq-listed VIAVI Solutions for undisclosed amount.
anuview was founded by Mike McGrath, Ross Palmer and Kevin Wilkie. The business works with some of the world’s leading brands to deliver greater security and visibility to efficiently deal with security threats. It has offices in Dublin, Sligo, London and San Francisco.
VIAVI, together with 350+ global channel partners, sells a broad portfolio to network, communications, and electronics technology leaders across the globe.
Headquartered in the US, VIAVI employs over 3600 people globally and reported annual revenue of $1.2bn (FY ’21).
Advisers: anuview: David Brangam led the Simmons & Simmons team with Andrew Fullen, Patricia McCarvill, Geoffrey Curran, Ruth Crawley and Colin Reynolds.
VIAVI Solutions Ireland Ltd: John Matson (Corporate & M&A) led the Arthur Cox team and included Niamh Gunning (Corporate and M&A), Ailish Finnerty, Dearbhla Ní Fhloinn and Dearbhla O’Gorman (Tax), Ailbhe Moloney (Employment), Olivia Mullooly and Alison Peate (Technology and Innovation) and Michael Shovlin (Pensions).
Renatus Comment: Since being founded in 2016, anuview has experienced significant growth in its 5 years. While financial results are not reported by the company, the list of its customers is testament to its performance. Today, it counts leading brands such as McDonalds, Musgraves, 3, applegreen, Aurivo and Philips as customers. With the backing of the global brand VIAVI now behind it, we hope to see anuview continue its growth in international markets as well as the domestic market.
Gowan to acquire FCA Ireland
Deal Details: Gowan Group has reached a deal to acquire FCA Ireland. The terms of the deal, which is subject to regulatory approval, were not disclosed.
Gowan Group, founded in 1969 by the late Con Smith, is a family-owned holding company controlling many successful trading companies and is mostly associated with the Irish motor trade.
The deal comes in the wake of the merger of car manufacturers PSA and FCA earlier this year, which created Stellantis, one of the world’s biggest car manufacturers.
Advisers: Richard Curran, Marco Hickey, Pat Ryan and Kristofer O’Shea of LK Shields Solicitors LLP acted for the Gowan Group. McCann FitzGerald provided legal support to Stellantis.
Renatus Comment: New car sales is a sector which tends to move with the fortunes of the wider economy and the past 18 months have certainly been a difficult time for the industry with Covid-19, chip shortages and shipping difficulties.
To get a better understanding of where the industry is today versus recent history, we looked at the past 25 years of new private car sales data provided by the CSO.
In the first 8 months of 2021 (January to August), 88,618 new private cars were licenced in Ireland. On a comparative basis, this ranks 18th in the past 25 years.
2020 was 22nd with 71,873 new private cars licensed.
The year 2000 was 1st with 194,072 new cars (c. 2.2x that of 2021). The year 2009 was 25th with 49,412. Other notable years are 2005, 2006 and 2007 which ranked 4th, 3rd and 2nd respectively.
The industry appears to be returning to growth today in line with the wider economy and let’s hope it continues.
Flutter acquires Singular
Deal Details: Flutter Entertainment plc has acquired Singular for undisclosed sum.
Singular, headquartered in Malta, is an established brand in the iGaming industry providing the full spectrum of iGaming and omnichannel solutions.
Flutter Entertainment plc is an Irish bookmaking holding company created by the merger of Paddy Power and Betfair, and the later acquisition of The Stars Group.
Advisers: Crowe UK and Partis Capital. Justin Edgar, Director at DWF, and Partner Edon Byrnes led the team who advised on the sale.
Renatus Comment: Flutter has been active with M&A in recent times. Since Paddy Power’s merger with Betfair in 2015, the business has gone on to acquire Fan Duel in 2018 as well as adjarabet and Stars Group in 2019. The public markets has responded positively to this and Flutter’s wider activities. Its shares (LSE:FLTR) have increased by c. 70% between the start of 2018 to today. The Group reported revenue of c. £4.4bn in 2020.
Source: European Gaming
BrightPay and Relate Software merge
Deal Details: BrightPay have agreed to merge with Relate Sotfware to create an integrated payroll and accounting software services company for SMEs in Ireland and the UK.
The merger is being backed by private equity investor Hg. The value of the deal was not disclosed.
BrightPay, based in Co Meath, provides payroll and HR software solutions and is led by co-founder and CEO Paul Byrne. Mr. Byrne is a director of Thesaurus Software Ltd which created BrightPay, Bright Contracts and Thesaurus Payroll Manager.
Relate is a specialist in post-accounting, practice management and bookkeeping software. It is led by co-founder and CEO Ray Rogers.
Hg, a software and services investor with experience across Europe and North America, will become a majority investor in the combined entity.
Both Byrne and Rogers will remain as significant investors and become co-CEOs.
Ross Webster and Richie McMahon, co-founders of BrightPay and Relate respectively, will remain as investors.
Advisors: Relate and Brightpay: Corporate Finance – Mazars team: John Bowe, Sean Damery, Daniel Gallery, Megan Duffy Legals – BHSM – Joe McVeigh, Eimear Greally, Sarah O’Reilly
Hg: Legals – Burness Paul & Arthur Cox
Renatus Comment: The merger of BrightPay and Relate will open up cross-selling opportunities for both businesses’ existing customers whilst also creating a compelling integrated offering for new customers. The benefits of scale as a combined entity, in addition to the backing of an international investor, should also help to unlock opportunities.
Brightpay Ltd reported revenue of c. €8.2m in FY Jun-20 which converted to EBITDA of c. €4.3m. Financial results were not available for Relate.
Source: Private Equity Wire
Pandagreen acquires McElvaney’s Waste & Recycling
Deal Details: It has been reported this morning that Pandagreen has acquired Exomex which trades as McElvaney’s Waste and Recycling for a reported €12m.
Monaghan-based McElvaney Waste and Recycling services includes bin collections, recycling, septic tank cleaning and skip hire. The business was owned by Hugh and Emmet McElvaney.
Pandagreen operates in a similar services, offering residential and commercial bin collections, skip hire (through A1 skips) and commercial waste recycling. Pandagreen is part of The Beauparc Group, a business with its origins in Beauparc, Co. Meath. Panda has over 300,000 customers and over 30 years of experience within the utility industry in Ireland. In June of this year, Macquarie Asset Management, via Macquarie European Infrastructure Fund 6, agreed to acquire Beauparc Utilities (“Beauparc”) from founder Eamon Waters and Blackstone Tactical Opportunities Fund.
Advisers: None mentioned
Renatus Comment: Exomex (Ireland) Limited which trades as McElvaney’s Waste and Recycling reported revenues of €9.2m which converted to EBITDA of c. €1.9m in its most recently filed accounts to December 2019.
Pandagreen Limited’s parent Beauparc Utilities Limited reported revenue of c. €508m which converted to c. €66m of EBITDA in its financial year to December 2019.
Source: Business Post
DEAL UPDATES & OTHER NEWS
Kerry completes the consumer foods meats and meal division sale to Pilgrim
Deal Details: Kerry Group has announced the completion of the sale of its consumer foods meats and meals business to Pilgrim’s Pride for €819m. The sale was first announced in June 2021.
The deal, covered in a June ’21 edition of the Renatus newsletter, sees Kerry’s plan to become a taste and nutrition company coming to fruition. However, those aims appear to hinge on its ability to cut a deal with the Kerry Creameries Co-Op, the company’s largest shareholder, to exit dairy and consumer food entirely.
Source: Kerry Group
Irish Life acquisition of Ark Life approved
Deal Details: The Competition and Consumer Protection Commission has approved Irish Life’s acquisition of Ark Life from Reassure Ltd.
The deal will see Irish Life take over approximately 150,000 policies and €2.1b worth of assets from Ark Life.
The deal consideration was a reported €230m.
Pandagreen acquisition of Exomex is cleared by CCPC
Deal Details: Pandagreen acquisition of Exomex (Ireland) Limited has been approved by the Irish regulator CCPC.
Pandagreen Limited is engaged in waste collection, processing, recovery, disposal, composting and recycling in the State.
Exomex (Ireland) Limited trades as McElvaney’s Waste and Recycling and is engaged in the provision of domestic and C&I waste collection services in Monaghan, Louth and Cavan.
Mediahuis to expand into Germany
Deal Details: Irish Independent owner Mediahuis is in advanced talks to acquire a majority stake in German regional media business owner Aachener Verlagsgesellschaft (AVG). AVG publishes the Aachener Zeitung daily German newspaper.
Successful talks would see Mediahuis become the main shareholder (70%) of AVG main operating subsidiary Medienhaus Aachen. Said takeover would expand Mediahuis’ footprint into the Euregio region along the German-Dutch border.
Mediahuis CEO, Gert Ysebaert outlined aims to become a leading European media player following their successes in Belgium, Holland, Ireland and Luxembourg.
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.
Belfast-based Highway Barrier Solutions provide a range of services related to vehicle restraint systems and traffic management. Established in 2003, the business now has operations across Ireland and the UK with a total of six depots in Ireland, Scotland and England.
In its financial year to March 2021, the business reported turnover of c. £17.2m which converted to EBITDA of c. £3.9m. The business finished the year with a closing cash balance of c. £3.4m, an increase of c. £1.9m from 2020.
The business employed an average of 93 people throughout the year at a cost of c. £3.5m. The business is wholly owned by Nigel Dougan and Darragh Dumigan.
McCormack Family Farms is a second-generation farming enterprise based in Co. Meath. It has been growing, packing and distributing fresh produce for over 40 years. Today, McCormack family farms are the largest grower of baby salad leaves in Ireland and also specialise in fresh cut herbs, microgreens and edible flowers to retail, foodservice and manufacturing channels.
In the financial year to December 2020, McCormack Farms reported revenues and EBITDA of c. €14.3m and c. €1.1m, an decrease of 19.7% and 38.7% respectively on the previous year. The directors noted significant challenges as a result of Covid-19 during 2020 which impacted normal trading conditions. Prior to Covid, the business had been experiencing strong growth with EBITDA growing from c. €1.2m in 2016 to c. €1.8m in 2019.
The business finished the year with a net cash balance of c. €1.2m, an increase of c. €803k YoY. It employed an average of 92 people over the year at a cost of c. €2.5m.
The business is owned by Edward, Stephen and Laura McCormack.
What: €8m investment round was led by VentureWave Capital through their €100m Impact Ireland fund and included other investors such as Chris Huskilson (existing shareholder) and Enterprise Ireland. A number of private investors in Ireland and Canada also participated.
Advisers: Key Capital supported Xocean on this transaction. Paddy Dillon and Tom Roche of Grant Thornton advised VentureWave. Wallace Corporate Counsel acted as legal advisers to XOcean.
Why: The funding will be used to hire around 250 new employees over the next two years and increase the size of its fleet of unmanned sea vessels from c.20 to c.60.
Source: Irish Times
Who: Health Beacon, a digital therapeutics company which has developed a solution that helps patients better adhere to their medication schedule. The company, founded in 2014, is led by Chief Executive Jim Joyce. Its clients include Sanofi, Novartis, Teva, AbbVie, Laya Healthcare and the NHS.
What: The company has raised €6m in funding from Elkstone and Crow Rock bringing total investment to date to €25m.
Why: Health Beacon intends to use the fresh round of funding to scale its team and production to meet current demands and its future growth ambitions.
What: The start-up has secured funding from German VC firm, APX. The value of the investment was not disclosed. APX is a Berlin-based VC outfit that supports start-ups in the pre-seed stage. The start-up is also backed by Enterprise Ireland and was accepted into Social Entrepreneurs Ireland’s Impact Programme this year.
Why: Positive Carbon CEO, Mark Kirwan, explained that the investment will help scale the company’s solutions in Ireland and bring the most advanced food waste monitoring technology to the European market.
What: The company raised $350m, bringing its total funding to $750m since launching via Sean O’Sullivan’s RebelBio accelerator programme in Cork in 2015.
Why: The funding will be used to bring Perfect Day’s lab-developed animal-free dairy products to market. The product uses bioengineered yeast which, through fermentation, produces a protein that is genetically identical to dairy protein.
Source: The Irish Times
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.
We are involved in six companies and each and every one is affected by the global shipping crisis.
We are seeing blatant inflation of containers, the price of which has increased by 600% in some cases. Coupled with the P&L consequences are the working capital costs of increased lead times. A lot of this is demand spill from covid accompanied by suppliers profiteering from volatility.
This is not going away in a hurry. The Inflationary consequences are inevitable with a vicious circle as very few traditional businesses are not exposed in some ways to it.
The necessity to increase prices will be inevitable and it is hard to see how mass inflation will not go away over the next year from the container shortage alone without considering the labour and commodity shortage. It is going to be very interesting to see how the indices present this inflation reality over the months ahead.
The year-on-year increase in the volume of Irish retail sales for August 2021. Vs pre-pandemic August 2019, the retail volumes were 15% higher in 2021, according to @CSOIreland
The year-on-year increase in the residential rents nationwide for Q2 2021 with the national average rent standing at €1,352p/m, according to the Residential Tenancies Board (RTB). @RTEbusiness
The YoY growth in Irish GDP for 2020. @CSOIreland
The AIB IHS Markit manufacturing PMI for September 2021. A reading above 50 signals growth. @RTEbusiness
The year-on-year increase in the Irish exports to Northern Ireland since the NI Protocol, as a result of Brexit, on July 1st ’21. NI exports to the Republic were up 61% in the same period. @BelTel
The KBC Bank Ireland’s consumer sentiment index for September 2021, almost unchanged for August reading of 86.5. @IrishTimesBiz
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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