Solo Energy acquired by SMS Plc, Voysis acquired by Apple, PFS agree a sale price reduction, Flutter and Stars merger gets UK approval, the Code Institute, Fincovi and Robitify announce funding & much more in this week's Renatus M&A Newsletter.
Renatus Weekly M&A & Company Performance Newsletter 05/04/2020
You are receiving this mail every week as we see you as a key partner and we look forward to continuing to enjoy our journey with you over the decades ahead.
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
We are in awe at the response, resoluteness and creativity of all the executive teams in our portfolio companies in Rennicks, Simtech and Boojum in recent weeks.
Both the UK and Irish governments realised quite early on the important role restaurants offering delivery could play in helping people stay at home, easing pressure on supermarkets and offering a simple pleasure in difficult times. In Boojum, David Maxwell and his committed team have pivoted from a primarily in-store model to a safe delivery and contactless collection model to support this thinking and as part of their own business resilience strategy.
Boojum has a people first approach with staff working on a voluntary basis and each person receiving a 15% premium on top of their regular wage. All staff on furlough or temporary leave are receiving weekly pay cheques, with access to support systems and free food from the trading stores.
All of the stores operate on an EHO approved, risk assessed delivery/collection model with social distancing at the forefront. Boojum has delivery and collection operating in Cork, Limerick, Galway, Dublin (Mespil Road, Kevin Street & Smithfield) and in Belfast (Botanic Avenue & Lisburn Road).
Our recently launched app allows you order and pay on your phone and collect in store there is a link to it here:
The response to coronavirus is very much a community effort and there are amazing initiatives at the grass root level keeping people fed of which Boojum is a significant supporter. In the last week Boojum has distributed over 1200 free meals to homeless charities, community groups and the NHS/HSE.
Resilience, thoughtfulness and creativity at the forefront of Boojum strategy.
Solo Energy acquired by SMS Plc
Deal Details: Irish energy tech start-up, Solo Energy, has been acquired by Smart Metering Systems plc (SMS) for an undisclosed sum.
Solo Energy, co-founded in 2015 by Killian O’Connor from Schull and Mark Hamilton, has developed a cloud-based energy flexibility IT platform – FlexiGrid – to control and aggregate data and revenue from generation and battery storage assets.
SMS is a UK-based company, which connects, owns, operates and maintains metering systems.
Advisers: None mentioned.
Renatus Comment: Solo Energy have a model whereby they roll-battery storage and Vehicle-to-Grid chargers for free. This is a land-grab tactic that is often employed in tech sectors, most famously with Amazon. This strategy is most effective when the industry is new and the lifetime value of customer is high.
The growth of energy efficiency is a trend that will only continue in future. Large wind and solar plants are nothing new and well publicised, but more niche markets such as electric vehicle charging installations, battery management, etc. are only really coming into view now. Solo Energy and SMS are early movers in these new spaces.
Voysis acquired by Apple
Deal Details: Voysis, an Irish company that has developed technology that helps digital voice assistants understand natural language better, has been acquired by Apple.
Voysis was founded in 2012 by Peter Cahill who had previously spent 15 years researching speech technology and neural network research. The company has developed a voice recognition platform driven by natural language instructions and search capabilities that is extremely good at recognising and responding to voice commands from users. Its technology allows the use of computer speech systems technology on a smartphone without an internet connection.
The business has offices in Dublin, Edinburugh and Boston and raised an $8m Series A funding round from Noel Ruane’s Polaris Ventures in 2017.
Deal value is rumoured to be c. €50m.
Advisers: Gavin Pitcher and David Regan of CKS Finance provided corporate finance advice to Voysis and Gar Smyth of Wallace Corporate Counsel provided legal advice Voysis.
Renatus Comment: There has been a good start to 2020 for Irish technology companies exiting to the mega tech giants, with Apple’s acquisition of Voysis following Google’s acquisition of Pointy back in January.
Both businesses were backed by Polaris Partners which also counts Irish businesses Boxever and Profitero in its portfolio.
Source: The Irish Times
PFS agree a sale price reduction
Irish fintech Prepaid Financial Services announced a deal to sell their business to Australian EML Payments at the end of 2019. The deal was agreed at AUS453.6m (€253m). In addition, there was an earn-out component of about €60m. As a result of the Covid-19 outbreak, however, EML have negotiated a third off the original price and will now acquire PFS for €148.9m, paid in a mix of cash and equity, including two €11.35m cash payments deferred until mid-2024 and mid-2025.
Flutter and Stars merger gets UK approval
Flutter Entertainment takeover of The Stars Group has been unconditionally cleared by the Competition and Markets Authority. The deal is expected to be finalised later this year once all necessary regulatory approvals have been secured. It has been cleared by a number of other countries’ regulators but still needs to win the approval of Flutter and Stars Group shareholders at meetings this month.
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.
Irish Wind Energy Association appoints new chairperson Peter Lynch has been named as chairperson of the Irish Wind Energy Association. He is presently managing director for renewable energy at forestry body Coillte, which is a member of the association. Along with Mr Lynch’s appointment, two other new board members are joining namely Eoin Cassidy, partner and energy sector lead at Mason Hayes & Curran and Kevin Moloney, head of sales – Ireland, Siemens Gamesa Renewable Energy. Mr Lynch succeeds former chair Peter Harte from Statkraft, who stepped down after a six-year term.
Matheson appoint new Partner Law firm Matheson continue to add to their team of partners with the appointment of Kimberley Masuda as Commercial Real Estate Partner. Ms Masuda joined the firm 4 years ago. She previously had a 15-year career as an Architect having worked for a number of architecture firms
Caytons appoints two new solicitors Legal services firm Caytons has appointed two new solicitors at its Dublin based firm. Mary Smith joins the firm as a senior associate while John Sparks joins as a solicitor. Ms Smith previously worked at Beale & Company and Mr Sparks joins from DWF where he worked as an Insurance Litigation Solicitor.
New adjunct professor of law appointed at University of Limerick University of Limerick School of Law has announced the appointment of Patricia Gilheaney as an adjunct professor. Professor Gilheaney, who has a background in psychiatry and nursing, was appointed as Ireland’s prisons inspector two years ago. Prior to her prisons’ role, Professor Gilheaney served as chief executive of the Mental HealthCommission from 2011.
Elkstone appoints new leader of its Galway office Joe Bergin will lead the new Galway office of Dublin-based investment services provider Elkstone. Mr Bergin previously worked at Ulster Bank. He is well known for his Gaelic football achievements with his native Galway. He is a qualified financial advisor and has a degree in Business Studies from Galway Mayo Institute of Technology.
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.
Based in Belfast, Calvert Office Equipment Limited is one of the largest providers of multifunctional copier and network printers in Northern Ireland, with over 8,500 devices operating in 3,500 private and public sector customers. The company had a steady performance in FY19 with revenue increasing marginally by 2.5% to c. £11.5m while EBITDA also increased slightly by 1.3% to £5.2m. The company employed an average of 53 staff during the year at a cost of c. £1.9m. Cash increased very slightly by c. £8k after significant working capital movements removed c. £840k of cash, while the company also had a Capex spend of c. £900k and paid a dividend of c. £2.8m during the year. Cash on the balance sheet stood at c. £1.7m against a debt balance of c. £276k. Net assets increased during the year by 9.7% to c. £5.3m. The company is owned by David Andrew Calvert (50%) and Robert Ross Calvert (50%).
Lurgies Holdings Limited is the parent of Industrial & Farm Machinery Limited, or IFM, as it is better known. The family business recently celebrated 50 years of trading in 2018 and continues to go from strength to strength. IFM is a wholesaler and retail distributor of hydraulic hoses and couplings, adaptors, oils and greases to construction, farm and related industires. For the financial year to December 2018, IFM saw revenue grow by 9.9% to c. €18.4m while EBITDA rose by 19.0% to c. €3.5m. EBITDA converted to a net cash increase of c. €847k to leave an ending cash balanceof c. €6.9m. The biggest use of cash was an investment of c. €1.7m in land & buildings, plant and vehicles. IFM was established in 1968 by Cecil and Aileen O’Reilly and is today stewarded by their son Joseph and his wife Trish.
Kilsaran produce a range of concrete products for the residential and commercial sectors from their base in Dunboyne, Co. Meath. In their financial year to June 2019, the business saw revenue increase by 13.4% to c. €16.2m and EBITDA increased by 15.6% to c. €4.0m. The business was a beneficiary of a general upturn in construction activity in the country. Kilsarsan appears to have a policy of distributing excess cash to shareholders at year end and doesn’t retain cash reserves. The primary uses of cash during the year were €650k on plant and machinery as well as a significant working capital movement. Kilsaran is ultimately owned by McKeown family members Dermot, David, Roy, Derry and Mary.
Who: Code Institute, a global EdTech founded by businessman Anthony Quigley in 2015, has raised funding.
What: €1.2m round was led by Kernel Capital, through the Bank of Ireland Kernel Capital Growth Funds, and Cyril McGuire’s Infinity Capital. Kernel Capital was advised by LK Shields on this transaction. The company is also backed by the State through Enterprise Ireland.
Why: The financing will be used for international expansion.
Who: Fincovi, a Roscommon based renewables company, founded by John Harney, Ray O’Neill & Damien Malone, has closed a seed round.
What: €600K seed round was led by the Western Development Commission and a syndicate of private investors, notably Maurice O’ Gorman, who will also join the board.
Why: The company plans to hire 15 more staff into their headquarters in Monksland and to further develop their OneView platform.
Source:Fincovi Press Release
Who:Coco Platform, a games app platform founded by Colm Lynam and Marguerite Murphy.
What: The startup has raised a seed round with investors including Cartrawler’s Greg Turley, Blue Insurance’s Rowan Devereux, financier Fergal Mulchrone, Cantor’s Ronan Ried and former Cantor Fitzgerald exec Shawn Matthews.
Why: Use of funding now disclosed.
Source:The Sunday Times
Who:Robitify, a coding and virtual robitics education platform founded in 2015 by Evan Darcy and Adam Dalton.
What: The business has raised €1m from existing and new investors. The firm is backed by Sláinte Healthcare founder Andrew Murphy, Enterprise Ireland and a group of existing and new investors.
Why: Not specifically disclosed by expected that funding will be used to help scale the platf
Source:The Sunday Independent
THOUGHT FOR THE WEEK
The narrative we keep hearing is that Trump is making an eejit of himself and Leo has really restored his reputation. It’s a number of weeks since we referred to the betting markets to get their take.
The implied probability from bookmakers who will be elected US President later this year from betting odds is thus:
Trump 47% (10/11 odds) Joe Biden 40% (5/4 odds) Other 13%Leo has increased in probability but Mr Martin is still the most likely to take the baton next:Micheal Martin 60% (4/9 odds) Leo Varadkar 33% (13/8 odds) Other 7%
The year-on-on year increase in the average cost of buying a home in Ireland for Q1 2020 amounting to €273,000, while the average asking price in Dublin was €380,000, according to a report by Myhome. @IrishTimesBiz
283,037 & 25,104
The total number of people availing of the Pandemic Unemployment Payment and the COVID-19 Wage Subsidy Scheme respectively at the end of March.
The number of individuals on the live register and receiving COVID related payments, up from 205,209 in February. 513,350 is c. 21% of our total labour force. @CSOIreland
The year-on-year drop in new car sales in Ireland for March 2020, amounting to 6,174 new cars registered, according to SIMI. @irishexaminer
The year-on-year increase in the house prices in Northern Ireland for March 2020 with the average cost of home £143,438 , according to the Nationwide Building Society. @BelTel
Renatus was established in 2014 by Mark Flood and Brendan Traynor 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 of €5m and above. Our typical solutions include: