Renatus’ Weekly M&A Newsletter – 28/05/2023
May 28, 2023Renatus’ Weekly M&A Newsletter – 11/06/2023
June 12, 2023
Renatus Weekly M&A & Company Performance Private Equity Newsletter 04/06/2023
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
This week saw the publication of the Environmental Protection Agency’s (EPA) latest report which laid out a stark warning that Ireland was falling well behind in its targeted reduction of greenhouse emissions. The EPA estimate that by 2030 Ireland’s greenhouse gas emissions will only reduce by 29% compared to a targeted 51%. This, unlike previous reduction targets, is legally binding and will result in significant financial penalties.
This should act as a signal to both the private and public sectors that further investment and innovation in these areas are required.
We at Renatus wholly support the increasing importance of the private sector in reducing emissions across current investments and the future and hope as a nation we can get there without any greenwashing.
We hope that whatever actions are taken have a true net global impact and are not pursued just to tick a box which is the case for some areas being targeted for reduced emissions.
Thankfully many of Ireland’s leading companies are stepping up to meet the challenge in a real way. Gene Murtagh of Kingspan gave a captivating speech on their intertwined business and environmental strategy recently at The Real Deal event where he explained how decarbonising buildings can do so much to help meet the target and is a great example of a company doing the right thing for both its business and the environment with a double bottom line impact.
If you click here, from 24 minutes should give you a good flavour of this.
M&A Activity
Herdwatch acquires Farmplan
Deal Details: Herdwatch, the market-leading farm software company founded in 2012, and Farmplan, founded in 1972 and part of Proagrica, have announced a deal that will see all Farmplan livestock software customers upgrading to the Herdwatch platform, starting this month.
Herdwatch was founded by Fabien Peyaud in Roscrea, Tipperary. It is a true success story in the Agtech sector, having become the leading provider of livestock management software across the UK and Ireland since the app launched in 2014. The app saves farmers an average of 3 hours a week on paperwork, according to a recent member survey by the company (1,600 responses). It is used on over 18,000 farms in Ireland and the UK at present. The app is fully approved and integrated with the Department of Agriculture and fully compliant with ICBF and Bord Bia. Herdwatch received an investment from Renatus Capital Partners in November 2022.
Farmplan was part of Proagrica, a global provider of agronomic and business data solutions across the agricultural supply chain. Farmplan is based in England and it provides farm software, IT solutions, and support to help UK farms and rural businesses manage records, demonstrate compliance and improve performance. Piers Costley, Farmplan’s Managing Director, said, “Great care was taken to find the perfect partnership to provide this upgrade to our cattle and sheep software customers.”
Advisers: None Mentioned.
Renatus Comment: We view this as an excellent acquisition which significantly boosts Herdwatch’s footprint in the UK. It is also in line with Herdwatch’s ambition to become the leading global farm solutions software provider.
Fabien Peyaud, CEO of Herdwatch said, “We have a very similar ethos and look forward to welcoming customers to the Herdwatch platform as we continue our investment in the future of British farming. Our easy-to-use, cloud-based solution can be used by multiple users, to access multiple holdings, on multiple devices, making it the perfect solution for Farmplan sheep and cattle software customers.”
Earlier this year, Herdwatch launched Flockwatch, a platform allowing sheep farmers to track ewe and flock performance and streamline compliance. We are pleased to report that Flockwatch is now available in over 170 countries. For a brief explanation of what Herdwatch can do for farmers, visit here.
Source: Herdwatch Press Release
PM Group acquires Milestone Solutions
Deal Details: PM Group has announced the acquisition of Milestone Solutions. Deal consideration was not disclosed and it is subject to regulatory approval.
PM Group is an international engineering, architecture, project and construction management firm. The business is employee-owned and in FY Dec 21, the business reported turnover of c. €474.8m which converted to an EBITDA of c. €47.3m.
Milestone Solutions is a Cork-based business that provides IT and automation services to large multinational manufacturing companies. The business was majority owned by William Wilmot and it is reported that the business generated revenues of c. €18.5m last year.
Advisers:
PM Group:
None Mentioned.
Milestone Solutions:
Corporate Finance: KPMG led by David O’Sullivan, David O’Kelly, Jonathan Coleman and Connor Young
Tax: KPMG led by Michael O’Brien, Michael Lynch and Niamh Clifford
Legal: McMahon O’Brien Tynan Solicitors led by Paul O’Brien
Renatus Comment: PM Group has completed this acquisition to enhance its ability to deliver automated and smart manufacturing systems to its international industrial and biopharma clients, which include MSD, Pfizer, and Alexion. Milestone Solutions currently works with companies in the pharma, life sciences, and fast-moving consumer goods (FMCG) sectors, an area that has been experiencing significant growth in Ireland. PM Group’s acquisition of Milestone Solutions will provide synergies to share existing clients and integrate systems to help fuel growth.
Ireland is renowned for its growing life sciences sector, employing over 50,000 people with manufacturing, research, and commercial operations located nationwide. Pfizer announced its €1bn investment in a plant in Clondalkin last year, and there are big opportunities for companies that can serve these sectors to grow with them.
Source: Irish Times
Stripe acquires Okay
Deal Details: Stripe has acquired Okay. Deal consideration was not disclosed.
Stripe is a US-based international payments company founded by John & Patrick Collison. It was established in 2010. It recently agreed $6.5bn in funding which valued the company at c. $50bn. It is reported that Stripe recorded revenues of more than c. $12bn in 2021, up 60% year-on-year.
Okay is a San Francisco-based engineering analytics company established in 2019 by Antoine Boulanger (CEO) and Tomas Barreto (CTO). It has previously raised c. $6.6m in funding from investors including Sequoia and Kleiner Perkins. It does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: This is Stripe’s first acquisition since it bought BBPOS in January 2022. The company’s rate of acquisition has slowed in line with the cool-down in tech markets over the past 18 months. Many commenators have pointed to a missed opportunity to IPO the business when markets were frothy and Stripe was valued at c. $95bn around the time of its previous fundraise in March 2021. Its recent funding ‘down-round’ was necerssary due to its need to raise cash to meet tax liabilities associated with restricted stock units (RSU) used to compensate staff. The Collisons are amongst the most impressive entrepreneurs to come out of Ireland since the turn of the millenium and by continuing to focus on product development amidst the turnmoil, the company should remain well placed in the payments ecosystem in the long run.
Source: Business Post
Dalata Hotel Group acquires Apex Hotel London Wall
Deal Details: Dalata Hotel Group has acquired the long leasehold interest of the Apex Hotel London Wall. There are 107 years remaining on the lease. Deal consideration was reported to be c. €62.2m.
Dalata Hotel Group is an Irish hotel operating company that was founded by Pat McCann in 2007. In FY Dec 22 it reported turnover of c. €558.3m which converted to an Adjusted EBITDA of c. €183.4m.
Apex Hotel London Wall is a 4 star, 89 bedroom hotel located on Copthall Avenue in London city centre. It was previously owned by Apex Hotels.
Advisers: None Mentioned.
Renatus Comment: Earlier this year, CEO of Dalata Hotel Group, Dermot Crowley sat down with Renatus advisor Greg Dilger for a podcast that spanned topics across the hospitality industry. These included the industry’s recovery from the pandemic, the arrival of refugees and the importance of having a strong and empowering employee culture. He also spoke in length about Dalata’s growth strategy and its focus on growing a presence in the UK market. You can listen to it here.
Source: Irish Times
Origin Enterprises plc acquires British Hardwood Tree Nursery
Deal Details: Origin Enterprises plc has acquried British Hardwood Tree Nursery. Deal consideration was not disclosed.
Origin Enterprises plc is a Dublin-based agronomy-services group that provides specialist solutions to promote sustainable land use. In FY Jul 22, it reported turnover of c. €2.3bn which converted to EBITDA of c. €143.1m. It is led by CEO Sean Coyle.
British Hardwood Tree Nursery is a UK-based specialist wholesale supplier of bare root plants and planting accessories. It was established in 1989 and was owned by Andrew and Zoe Henderson. The business does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: As mentioned above in our Thought for the Week, the Environmental Protection Agency (EPA) reported this week that Ireland is on course to miss its 2030 climate targets by a significant margin. The legally binding reduction target is 51% but only 29% will be achieved if the current trajectory continues. Planting trees is one way to off-set carbon footprint and this will be especially important in the agriculture sector as it is amongst the worst offending in the economy, from a carbon emission perspective. This deal further expands Origins Enterprises’ environmental and ecological portfolio following its acquisition of both Keystone Environmental in October last year and Neo Environmental in March this year.
Source: Independent
Tekelek acquired by Rochester Sensors
Deal Details: Tekelek has been acquired by Rochester Sensors for an undisclosed amount.
Tekelek is a Clare-based business that operates in the Internet of Things (IoT) space. It provides the design, development, and supply of electronic monitoring and measuring control solutions. The business is led by CEO, Peter McCarthy and it does not report turnover or EBITDA information.
Rochester Sensors is a US-based manufacturer of gauges and sensors since 1913. The business is headquartered in Texas, with manufacturing facilities in Mexico, Belgium, UK, and China.
Advisers:
Tekelek:
Deal Advisory: Montanum Advisory led by Jim Mulqueen & Fiona McGuire
Legal: Shannon O’Connor led by Eamonn Shannon & Ellen O’Connor
Tax: Clancy & Associates led by David Clancy & Dean Weir – Clancy
Rochester Sensors:
Legal: DLA Piper led by Stephen Duggan & Edel O’Kelly
Tax: Mazars led by Gerry Vahey
Renatus Comment: The Internet of Things (IOT) space is very interesting. Berg Insight estimates that the global installed base of active remote tank monitoring (RTM) solutions reached c. 6.2m units in 2021, and it is reported that there are over 100 RTM solution providers active worldwide, including Otodata, Anova, and SkyBitz. Many industries stand to benefit from remote tank level monitoring, including Oil & Energy, Water & Wastewater, Agriculture, Food & Beverage, and Chemicals.
Tekelek has built and deployed more than 5m monitors on tanks, IBCs, barrels, drums, piped networks, and more, in 40 countries, across 6 continents. The acquisition of Tekelek is part of a multi-year plan to broaden Rochester’s technical capabilities and market penetration as it seeks to establish a diverse, international liquid-level sensor business.
Source: Tekelek Press Release
Kerry Group acquires Proexcar
Deal Details: Kerry Group has acquired Proexcar for a reported c. $62m. Kerry Group will receive 100% of the share capital in Proexcar in exchange for an initial consideration of c. $44m with the potential of an additional $18m payable in 2025, based on earnout conditions.
Kerry Group is a taste and nutrition partner for the food, beverage, and pharmaceutical markets, with a broad range of solutions that reaches over 1bn consumers around the world. The Group was founded in 1972 as a co-op and was led by Denis Brosnan until 2003. Kerry is now led by Edmond Scanlon. In FY Dec 22, the business reported turnover of c. €8.8bn which converted to an EBITDA of c. €1.2bn.
Proexcar is a Columbian-based business that produces and supplies raw materials used in the food manufacturing process. The business currently employs c. 120 people.
Advisers: None Mentioned.
Renatus Comment: This marks Kerry Group’s first acquisition of the year having already acquired e-LEcta, Almer and Natreon, and the Kraft Heinz cheese business in 2022. The business reported that LATAM delivered excellent growth across 2022 led by Mexico and Brazil. Volumes in Brazil were driven by performance in meals and meat. The acquisition of a Columbian-based business is likely to further its position within the LATAM market.
Source: RTE
Esker Rí Nursing Home acquired by Evergreen Care
Deal Details: Esker Rí Nursing Home has been acquired by Evergreen Care for an undisclosed amount.
Esker Rí Nursing Home is based in Offaly, and it is majority owned by Geraldine Tighe. The business does not report turnover or EBITDA information.
Evergreen Care, led by CEO Eamonn Prone currently has 11 homes in Ireland, including Esker Rí. The business is based in Meath and it does not report turnover or EBITDA information.
Advisers:
Esker Rí Nursing Home:
Legal: Holmes led by Stephen Walker and Ciara Downes (Corporate) and Lisa Killeen and Kevin Harty (Banking and Commercial Property)
Evergreen Care:
None Mentioned.
Renatus Comment: There has been a well-documented consolidation in the Irish nursing home industry. Large worldwide care home organizations, French and Belgian funds, as well as a variety of private equity firms have all shown interest in the sector. We are seeing a slowdown in the number of nursing home deals now. These homes were very sought after when there were zero yields but the opportunity cost of capital is higher and economic conditions are tougher with inflation, food and labour inflation in particular, and rising energy costs in the picture.
Source: Holmes
DEAL UPDATES & OTHER NEWS
ESB and offshore wind company Ørsted have agreed to jointly develop an Irish offshore wind portfolio
Deal Details: The partnership has the capacity to produce renewable energy projects totaling up to 5 gigawatts (GW). The agreement was launched by Minister for Enterprise, Trade & Employment, Simon Coveney, and the project will help Ireland reach its target of up to 80% renewable electricity by 2030. In 2020, wind provided over 86% of Ireland’s renewable electricity and 36% of our total electricity demand according to the SEAI.
Advisers:
ESB:
Corporate Finance: KPMG led by Russell Smyth, James Delahunt and Lucie Murphy
Legal: McCann FitzGerald led by Valerie Lawlor, Rory O’Malley and Donncha Sexton
Orsted:
Legal: Arthur Cox
Source:
RTE
Simply Blue Group partners with EDF Renewables for an Irish offshore wind project
Deal Details: Simply Blue Group has partnered with EDF Renewables, a French energy firm. The partnership will work to develop two significant offshore floating wind energy farms in Irish waters, underpinned by the government’s ambition to generate 7GW of electricity from offshore wind by 2030. Sam Roch Perks, CEO of Simply Blue Group, stated that “Simply Blue are delighted to partner with EDF Renewables to deliver these strategic assets and to deliver Ireland’s first floating offshore wind farms”.
Advisers:
Legal: Fieldfisher led by Feilim O’Caoimh, Elaine Traynor and Jamie Woodcock
Corporate Finance: KPMG led by Russell Smyth and Kyle Tumelty
Source:
Fieldfisher Press Release
COMPANY PERFORMANCE
Flahavan’s (Fingrove Holdings Limited) is a cereal miller, grain merchant and provider of oat based food products. It is based in Waterford and is owned by John and Mary Flahavan.
In its financial year to June 2022, the business generated a turnover of c. €29.3m, an increase of 5.6% year-on-year. This converted to an EBITDA of c. €3.8m, an increase of 7.7% year-on-year. The up-trend in performance is made more impressive when considering the rising cost of grain in 2022, owing to the war in Ukraine, given that both Russia and Ukraine are prominent grain exporters. Together the countries account for c. 30% of global trade in wheat.
Significant post-EBITDA cash movements include working capital investment of c. €1.9m and fixed asset purchases of c. €0.5m. The business finished the year with a cash balance of c. €10.2m, an increase of c. 8.5% on FYJun 21.
In FY Jun 22, the business employed an average of 91 people during the period at a total cost of c. €5.5m.
EEW Limited is a Wexford-based wholesaler of electrical goods that has eight branches across the South East of Ireland. The company was established in 1979 and is owned by Thomas and Catherine Byrne.
In its financial year to June 2022 the business generated a turnover of c. €19.2m, an increase of 8.4% year-on-year. This converted to c. €2.9m EBITDA, an increase of 21.7% year-on-year. The increase in EBITDA was driven by operating leverage realised in the business, with administrative expenses as a percentage of revenue falling from c. 19.8% in FY Jun 21 to c. 17.8% in FY Jun 22.
The business finished the year with a cash balance of c. €8.0m, a c. €1.4m increase on FY21. Working capital investment of c. €0.8m was the most significant post-EBITDA cash movement.
The business employed an average of 52 people during the period at a total cost of c. €2.4m.
RECENT FUNDRAISINGS
Who: Plotbox, an Antrim-based software solutions provider to cemeteries and crematoria.
What: The business has received a c. €5m capital investment led by Guinness Ventures, with some existing investors, including Edinburgh based firm Par Equity, also participating in the round.
Why: The funding will be used to facilitate global growth and expansion.
Advisors:
Plotbox:
Legal: Tughans led by John McGuckian and Brendan Donnelly
Corporate Finance: Princelet Partners led by Stephen Moore
Guinness Ventures:
Legal: Taylor Vintners
Source: Plotbox Press Release
Who: Weev, a Belfast-based EV charging company.
What: The business has raised c. £50m from Octopus Investments.
Why: The raise will help support Weev as it installs new EV charging points across Northern Ireland.
Advisors: Legal: Tughans led by John McGuckian, Aimee Craig, Chris Milligan, James Mulligan and Andrew Kirke.
Source: BBC
Who: NomuPay, a unified payments platform headquartered in Dublin.
What: It has raised c. $54m in a funding round co-led by Finch Capital and Outpost Ventures.
Why: The raise will help the business expand its cross-border payments.
Advisors: Legal: Philip Lee led by Eoghan Doyle, Hugo Grattirola, Patrick Egan, and Patrick Butler.
Source: TechCrunch
Who: Press Up, a hospitality group headed by Matt Ryan and Paddy McKillen Jr.
What: The business has raised a €50m debt facility with Cardinal Capital Group.
Why: The new funding will be used to refinance existing debt on the hotel and also include capital for further expansion of the site on Harcourt Street.
Source: The Times
Who: Outmin, a Dublin-based SaaS accounting and bookkeeping business.
What: The business has raised c. €2m, which has been led by London-based Fuel Ventures.
Why: The new funding will be used to scale the business internationally in the next few months.
Source: Business Post
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.
@RenatusCapital Tweets
7.5%
Increase in retail sales volume in April vs the same month last year, according to @CSO
10%
The fall in demand for gas in the month of April vs. the same month last year, according to @GasNetIrl
€502m
The total amount of venture capital funding provided to Irish SMEs in Q1 2023 according to @IVCA
4.2%
The increase in April passenger arrival numbers in Ireland vs. pre-pandmeic levels in 2019, according to @CSO
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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.
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