Renatus’ Weekly M&A Newsletter – 27/11/2022
November 27, 2022Renatus’ Weekly M&A Newsletter – 11/12/2022
December 11, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 04/12/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THE RENATUS PODCAST
In our latest Renatus podcast, host Greg Dilger chats with Fergus Clancy, who is one of Ireland’s most accomplished healthcare executives. Fergus, among many other positions, is currently Chairman of the Mater Private Network and Principal of FC Advisory, a boutique advisory firm operating exclusively in the Irish health and social care sector. Fergus is no stranger to Private Equity having advised, exited, and co-invested in various deals throughout the years.
This episode investigates the macro view of the Irish Healthcare system, while also delving into some transactions Fergus was previously, and is currently involved in. Some topics covered include;
- Life before the Mater Private
- Working with different Private Equity owners
- CEO vs Chairman roles
- Transition from CEO to Chairman
- Managing through adversity
- Transition of the Mater Private to the Mater Private Network
- Challenges facing the nursing home industry
- Getting real on the digitisation & communitisation of healthcare
- HSE – “At an international level, Irish healthcare compares more favourably than we think, but less favourably than we should”
- Sláintecare – the right direction of travel
Listen here: A life in healthcare – with Fergus Clancy of Mater Private Network
THOUGHT OF THE WEEK
This week we had the exciting privilege to be at our very own Oscars, The EY Entrepreneur of the year 2022. The entrepreneurial spirit empowers dreamers to become doers, a theme we were reminded consistently throughout the night.
Congratulations to all this years finalists, alumni, and those grafting away today who will be finalists in future years.
Particular congrats to the winners;
Martin McKay, the founder, and CEO of the company, Texthelp, was named the International and overall 2022 EY Entrepreneur of the Year.
Tom O’Connor and Kieran Cusack co-founders of Conack Construction were named the Established Entrepreneur Of The Year.
Emerging Entrepreneur Of The Year was awarded to Fionn Lahart and Christoph Hennersperger, co-founders of OneProjects, a medical device company based in Dublin and Munich.
Stephen Nolan, Managing Director of Nutritics was named winner of the Sustainability Award category in recognition of the company’s foodprint service.
M&A ACTIVITY
ATA acquires Van Hoorn Carbide and Industrial Tooling Corporation (ITC)
Deal Details: ATA has acquired Van Hoorn Carbide and Industrial Tooling Corporation (ITC). Deal consideration was not disclosed. This transaction should bring the group’s pro-forma 2022 revenue to c. €100m and the global headcount to c. 500.
ATA is a precision tool manufacturer based in Co. Cavan, established in 1963. It is led by CEO Peter Cosgrove who purchased the business along with others in 2008. In FY21, it reported turnover of c. €68.7m which converted to c. €14.0m EBITDA. The business was owned by Peter Cosgrove, BDO, NTMA, and others.
Van Hoorn Carbide is a Dutch manufacturer of carbide round tools. It was previously owned by Ralph Van Hoorn. The business does not report turnover or EBITDA information. ITC is a UK-based supplier of specialist tools. The business was previously owned by Peter and Laura Graves. In FY21, it reported turnover of c. €9.6m which converted to EBITDA of c. €1.5m.
Advisers:
ATA:
Legal: McCann Fitzgerald (Ireland), AKD (Netherland), Burgess Salmon (UK).
Debt: AIB and Bank of Ireland.
Adviser: PwC.
Van Hoorn Carbide:
Legal and Financial: Marktlink.
ITC:
Legal: George Green and Michael Kay.
Renatus Comment: We have previously covered Peter Cosgrove’s success story following the MBO that he led in 2008 when the business was generating c. €17m in revenue and he continues to be a great example for blue chip executives considering buying into SME. ATA has acquired four businesses since 2019 including German microtool manufacturer Karnasch in 2021 and Swiss company Näpflin Schleiftechnik AG at the beginning of this year. European expansion is clearly a main priority for the company at the moment as it continues to go from strength to strength.
Source: ATA Press Release
Enisca acquired by Renew Holdings
Deal Details: Enisca has been acquired by Renew for a reported c. £15.6m.
Enisca is based in Cookstown and provides design, engineering, and construction services for the power and environmental sectors. In FY21, the business reported a turnover of over £13.0m, which converted to an EBITDA of c. £1.2m. The business was majority owned by Thomas Ruddy, Conor King, and Rory Hampsey. Thomas Ruddy is exiting the business after several years of being both an investor and chairman.
The publicly listed company, Renew, provides multidisciplinary engineering services to support infrastructure in the UK’s rail, infrastructure, energy, and environmental markets. In FY22, the business reported turnover of c. £816.3m which converted to an EBITDA of c. £69.8m and an Enterprise Value of c. £540m.
Advisers:
Enisca Group:
Financial: FPM led by Malachy McLernon, Ashok Thomas, and Eímer McMillen.
Legal: Mills Selig led by Glenn Watterson and Darren Marley.
Renew Holdings PLC:
None mentioned.
Renatus Comment: The consideration of £15.6m is on a cash-free/debt-free basis and will be funded by a combination of cash and the Group’s existing revolving credit facility. The acquisition is likely to benefit from the UK government’s commitment to spend £51bn over AMP7 to improve environmental standards by paying more attention to the quality of water bodies. Renew’s management team has forecasted Enisca sales of £30m and an operating profit of £2.1m for the 12 months to September 2023.
Source: Renew Holdings PLC Press Release
Eolas Recruitment acquired by Erisbeg
Deal Details: Erisbeg has reportedly acquired a majority stake in Eolas Recruitment for an undisclosed amount. The deal is subject to approval from the CCPC.
Eolas Recruitment Is a Wicklow-based IT recruitment specialist founded by Vincent and Mary Flynn. The business did not report turnover or EBITDA information. The business was owned entirely by Mary and Vincent Flynn.
Erisbeg is an Irish private equity firm founded in 2017 by Alan Kerr and Thomas Davy.
Advisers:
Eolas Recruitment:
Corporate Finance: Clearwater International led by John Sheridan, John Devine, and Jonathan McDonnell.
Erisbeg:
Legal: LK Shields led by Emmet Scully, Marco Hickey, Aideen Burke, Ruairi Mulrean, Gillian Dully, Jennifer O’Neill, Lester Sosa-Villatoro, Colin Gannon, Jane O’Grady and Eimear McCluskey.
Renatus Comment: The tech sector has had to learn to navigate its way through the pandemic’s complications as well as the minefield that working remotely had created. As a result, we have seen many businesses increasingly rely on digital IT tools and infrastructures. Eolas Recruitment has an established blue-chip client base, across a variety of industries, including the financial, business services, consumer products, and payments sectors. The business has announced the appointment of Jim Ryan as Managing Director, to succeed Vincent Flynn. The company also announced the appointment of Senior Executives, Peter Kirby and Stephen Daly, to the board of directors.
Source: Clearwater International Press Release
Musgrave Limited acquires Caulfield Supermarket UC
Deal Details: Musgrave has acquired three Caulfield Supermarkets, which includes Riverside Shopping Centre, Loughboy Shopping Centre and The Hypercentre Shopping Centre. Deal details have not been disclosed and the deal is subject to approval by the CCPC.
Musgrave is an Irish food retail, wholesale and food service company founded by brothers Thomas and Stuart Musgrave in Cork. In FY22, the business reported a turnover of c. €4.5bn, which converted to an EBITDA of c. €176.2m. The business is owned by a variety of individuals and businesses including Hugh Mackeown, Computershare and the Musgrave family, with the Musgrave family still holding the majority of shares.
Caulfield Supermarkets is active in the retail grocery market with the three acquired retail grocery stores operating as franchises under the ‘SuperValu’ brand in Cork, Kilkenny and Waterford. The business does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Musgrave currently retains c. 25% of market share across Ireland and the current ramp-up of acquisitions will help close the gap against competitors. Eurostat reported a 13.6% year-on-year increase in grocery prices across Ireland in November. The increase can be attributed to numerous factors such as supply chain issues and fertiliser prices. Sales of supermarkets’ own-label lines have increased as a result. Musgrave, which owns the Supervalu brand, has added 3 additional Supervalu stores in Cork, Kilkenny and Waterford. This acquisition will undoubtedly provide scale and allow the group to focus on minimising growth in input costs in a bid to maintain competitiveness in the market.
Source: CCPC
Crowley Millar Solicitors and JR Sweeney announce merger
Deal Details: Crowley Millar Solicitors LLP and J R Sweeney LLP will merge from 1st December 2022.
Crowley Millar is a full-service law firm advising on areas including corporate law and property matters, probate and succession. It is recognised internationally for its leading litigation & dispute resolution department. It was founded in 1989 and is based in the IFSC in Dublin with a regional office in Limerick. The business is led by managing partner Hugh J. Millar. It does not report turnover or EBITDA information.
J R Sweeney LLP has operated as a boutique law firm with a particular focus on advising owner-managed businesses in commercial matters, corporate transactions, private clients, and property matters. It was founded by Joe Sweeney in 2012 and was subsequently joined by and developed with Eileen Kelly and Bryan Sweeney. The business is headquartered in Dublin and does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: In recent years, the Irish legal industry has experienced the entry of and consolidation by UK/US/international firms in the domestic market. This is consistent with the trend seen in other sectors, such as insurance, GP, veterinary and other professional services.
Source: The Irish Times
RWE acquires East Celtic Wind Farm
Deal Details: East Celtic wind farm is to be acquired by RWE for an undisclsoed sum.
The East Celtic wind farm is a a wind farm located between 9km and 36km off Co. Wexford. The first phase of the farm will deliver 900 MW by 2030. It was previously owned by Western Power Offshore Holdings. The business does not report turnover or EBITDA information.
RWE is a German public multinational energy company. In FY21, it reported a turnover of c. €38.3bn which converted to EBITDA of c. €0.8bn.
Advisers: None mentioned.
Renatus Comment: This project was acquired from Irish company Western Power Offshore Holdings and follow’s RWE’s partnership with Saorgus Energy for the Dublin Array wind farm. RWE also operates an onshore wind farm at Dromadda Beg, Co Kerry. Also this week, Energia announced that it has completed seabed surveys at its South Irish Sea project, paving the way for that project to begin construction as soon as 2026, pending further approvals. The industry is a vital component of the Irish government’s future energy plan, with it being earmarked for 7,000 MW of energy production by 2030.
Source: The Irish Times
O’Malley-Griffin acquired by Arachas
Deal Details: Arachas Corporate Brokers has acquired O’Malley-Griffin Insurances. Deal consideration has not been disclosed.
O’Malley-Griffin Insurances is an independent Limerick-based insurance brokerage that offers a wide range of insurance products to the consumer and commercial sectors. The business began trading as Griffin & Co in 1928 and O’Malley-Griffin (Brokers) DAC was established in 1948. The business is led by Eamon O’Malley, managing director. In FY21, the business had turnover of c. €1.0m. The business was owned by Eamon and Siobhan O’Malley.
Arachas Insurance is a nationwide insurance brokerage. Originally established in Cork in 1969, it has grown into a countrywide insurance provider with over 500 employees in Ireland. It is led by CEO, Conor Brennan. Arachas was acquired by Ardonagh, an international insurance group with more than 100 offices and 9,000 employees, in 2020. In FY21, the business reportedly had a turnover of c. €61.0m, which converted to an EBITDA of c. €26.1m.
Advisers: None mentioned.
Renatus Comment: Consolidation in the Irish insurance market has continued at a rapid pace, with over 50 transactions taking place over the last five years. Growth by acquisition can look relatively inexpensive when there is access to cheap capital compared to organic growth, which can be expensive in a densely populated sector such as the insurance broker market. Arachas has accelerated its consolidation play, with this deal being its 10th since Ardonagh acquired it in 2020. Arachas’ most recent acquisitions include Dublin-based Glennon Insurances, Cork-based Apex Insurance and Dublin-based Stuart Insurances.
Source: Irish Examiner
Dunboyne Castle acquired by TMR Hotel Collections
Deal Details: Dunboyne Castle has been acquired for a reported c. €30m.
Dunboyne Castle was completed in 1764 by Drogheda architect George Darley. Seamus Ross restored the property to its original state and opened it as Dunboyne Castle Hotel & Spa in 2006. In FY21, the business reported turnover of c. €5.1m which converted to an EBITDA of c. €2.0m.
The TMR Hotel Collection is a portfolio of 4 and 5 Star Hotels owned by investor Thomas Roggla. The business is based in Ireland and operates a chain of hotels. TMR Hotel Collection was formerly known as SCIF Hotels and changed its name to TMR Hotel Collection in June 2020.
Advisers: None mentioned.
Renatus Comment: Davy Real Estate acquired Dunboyne Castle on behalf of TMR Hotel Collection in an off-market transaction. The hotel will join the collection of luxury Irish hotels forming the TMR Hotel Collection, including Farnham Estate Spa & Golf Resort, Harvey’s Point, Mount Wolseley, Aghadoe Heights, and the Ballymascanlon Hotel & Golf Resort.
Source: The Sunday Times
DEAL UPDATES & OTHER NEWS
Horizon Therapeutics engaged in takeover offers
Deal Details: Horizon Therapeutics has announced it is highly engaged in discussions surrounding potential takeovers with three pharmaceutical companies Amgen, Sanofi and Johnson & Johnson. The biotech company which develops and manufactures drugs for rare, autoimmune and severe inflammatory diseases has a market capitalisation of c. $18bn. The announcement of the potential sale led to a 31% increase in share price after the US market closed. Discussions are in the preliminary stages and there is no certainty any offer will be made. However, all three have been active in deal-making this year with J&J acquiring Abiomed in November, Amgen acquiring ChemoCentryx in October and Sanofi completing the buy-out of Amunix Pharmaceuticals earlier this year.
Source: Irish Times
COMPANY PERFORMANCE
J.H. Roche and Sons Limited, trading as Roche’s Feeds, is a producer of livestock feed products based in Co. Limerick. The business provides feed for the dairy, calf, beef, sheep, pig and poultry industries.
In its financial year to December 2021, the business generated a turnover of c. €65.0m, an increase of 5.6% year-on-year. This converted to an EBITDA of c. €2.6m, an increase of 7.3% year-on-year. The increase in EBITDA was driven by gross margin expansion.
The business finished the year with a cash balance of c. €3.0m, a c. €0.2m increase on FY20. Significant post-EBITDA cash movements included the repayment of loans and the purchase of tangible fixed assets.
The business employed an average of 57 people during the year at a total cost of c. €5.6m. The business is owned by the Roche family (Robert, Conor, Richard, Peter and Niall).
Louth-based Condon Engineering Limited was founded in 1993 by Tom Condon. The business is an agricultural manufacturer, supplying a range of products from cubicle housing to drinking troughs.
In its financial year to December 2021, the business generated a turnover of c. €22.4m, an increase of 36.5% year-on-year. This converted to an EBITDA of c. €3.5m, an increase of 9.4% year-on-year.
Significant post-EBITDA cash movements includes the purchase of tangible assets of c. €0.7m and advances to subsidiaries of c. €0.7m. The business finished the year with a cash balance of c. €4.2m.
The business employed an average of 69 people in FY21 at a total cost of c. €2.4m. The business is owned by Keith, Jason and Graham Condon.
RECENT FUNDRAISINGS
Who: D/RES Properties, an established building company with a primary focus on delivering sustainable homes in the Greater Dublin Area.
What: The business has received an undisclosed investment from the Ireland Strategic Investment Fund.
Advisers: Debt and Capital Advisory: Deloitte including John Doddy, Anthea Ormiston, Daniel Clarke, Padraig Cronin, Dominic O’Shaughnessy, Jonathan Ginnelly and Lyn Barry.
Why: This investment will support and accelerate the delivery of c.1,900 new homes across the Greater Dublin Area.
Source: Deloitte
Who: Re-Vana Therapeutics, a QUBIS spin-out that specialises in sustained-release therapeutics for the treatment of vision-threatening ocular diseases.
What: The business has raised $11.9min a Series A funding round led by Visionary Ventures and including ExSight Ventures, InFocus Capital Partners, Qubis Ltd, Co-Fund NI and TechStart Ventures.
Advisers: Arthur Cox Corporate and Commercial department in Belfast, including Lynsey Mallon and Richard Armstrong, Lois Arbuthnot and Patrick Loughridge.
Why: The funding will be used to advance the development of its novel and proprietary biodegradable drug delivery technologies, and to increase headcount.
Source: Business Post
Who: Carrick Therapeutics, an oncology-focused biopharmaceutical company discovering and developing highly differentiated therapies.
What: The business has raised $60m in a Series C funding round including a $35m investment from Pfizer. Other investors include Arch Venture Partners, Evotec SE, GV Management Company, Rosetta Capital VI, Rosetta Capital Limited, Cambridge Innovation Capital Limited, Lightstone Ventures and LSV Capital Management.
Why: The funding and an agreement with Pfizer will provide Carrick Therapeutics with global development capabilities and expertise to support its Phase 2 study of samuraciclib, which is present in 2/3 of all new female breast cancer cases.
Source: Carrick Therapeutics
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
25%
The increase in Irish venture capital funding raised by Irish firms in the first nine months compared to the same period in 2021. Overall funding is just under €1.1bn compared to €871.8m last year. Irish venture capital funding is now bucking the European trend. @IVCA_ie
40%
Worker productivity levels in the ROI exceed those of NI by 40% in 14 out of the 17 sectors covered by the study. The most sizable gaps were in the administration, support services, financial services, insurance and legal services sectors. According to @ESRIDublin
2.6%
The decrease in the volume of retail sales in October compared with the same month last year. This marks the sixth consecutive month that the annual change was negative. According to @CSOIreland
3.2%
The increase in average weekly earnings in Q3 2022, compared to the same period last year. Year-on-year inflation in Q3 was c. 8%, meaning real earnings declined. The average weekly wage rate now stands at €864.32. According to @CSOIreland
10%
The annual inflation rate across the euro area in November. This compares to a rate of 10.6% in October and is the first time the inflation rate has dropped in 17 months. According to @EU_Eurostat
13.6%
The inflation rate for food, alcohol and tobacco in November compared to 13.1% in October. Despite the rising inflation in the food sector, overall, Irish inflation has slowed to 9% in November from 9.4% in October. According to @EU_Eurostat
16.2%
The drop in Irish residential construction in Q3 2022 compared to the previous quarter. The overall volume of construction activity remains 12.3% lower than pre-pandemic levels however the value of work done has risen 6.1% since Q3 2019. @CSOIreland
12.3%
The year-on-year decline in new car registrations in November. Despite this, the sale of electric vehicles has increased 83% since 2021, with 15,591 being registered this year. November is the 1st month where electric vehicle sales outperformed petrol and diesel. @SIMI_IE
10%
The increase in passengers on Ryanair’s flights in November compared to the same month last year. Overall, this year Ryanair has carried c. 158.4m passengers, which represents an annual increase of 144%. @Ryanair
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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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