Renatus’ Weekly M&A Newsletter – 30/01/2022
January 30, 2022Renatus’ Weekly M&A Newsletter – 13/02/2022
February 13, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 06/02/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
We have kept a close eye on inflation and often thought out loud on it as it relates to SME Ireland.
In October 2021 we said:
“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.”
In December 2021 we wrote:
“However, from talking to lots of business, most have yet to put their prices up to counter increased costs but are on the verge of doing so. To us, this suggests that current inflation is not capturing what is coming”.
This week’s Sunday Independent Ireland Thinks opinion poll illustrates how quickly inflation has established itself as the electorate’s number one concern.
The spectre of inflation has been firmly on the horizon for some time and is now rife across industry and business, with energy prices and grocery being the most visible barometers of rising prices.
A fortnight after most Covid-19 restrictions were lifted, a clear majority say the cost of living (56%) up 28 points in a month, and housing (55%), up 11 points in a month, are now the two most important issues facing the Government.
Inflation has definitely arrived on the consumer’s door. What is not clear is what the catalyst will be to stop the vicious circle now that there is momentum.
M&A ACTIVITY
Welltel acquires ANS
Deal Details: Welltel, the Irish business communications provider, has acquired Irish cloud, security and managed IT services firm, ANS. No financial consideration was disclosed.
Dublin headquatered, Welltel, provides telecommunication services across cloud-based and on-premise phone systems, voice over Internet Protocol (VoIP) and integrated services digital network (ISDN), broadband services, and unified communications. The company reported turnover of c. €10.7m in FY20, which converted to an EBITDA of c. €862k. The company is led by Chief Executive, Ross Murray.
ANS Technology provides cloud migration and business continuity services. The company is based in Dublin and was founded by Managing Director Colum Traynor. ANS employs over 200 people.
Advisers:
Buy-Side:
Deal advisory: PwC, led by Ronan Somers, provided transaction support to Welltel and assisted Welltel’s in-house M&A team which was led by Nicky Brennan.
Legal: BHSM, led by Eimear Grealy, acted for Welltel.
Sell-Side:
Deal Advisory: Bay Advisory, led by Brian McDonald and Rory Butler, advised ANS on the transaction.
Legal: Regan Wall, led by Kieran Regan and Neil Nolan, acted for ANS.
Renatus Comment: Consolidation in the IT services market is one of the key themes we see regularly in our newsletter. Welltel are an active player in the space and have leveraged programmatic M&A to accelerate growth. Over the last number of years, they have acquired Novi, Intellicom, Invistech, Strencom, Capstone and now ANS. Private equity firm Livingbridge backed the company in early January and it’s likely we will see more acquisitions from Welltel in the future.
Source: Welltel Press Release
Version 1 acquires Evoco
Deal Details: Dublin-based Version 1 has acquired UK-based Evoco in its 13th acquisition to date. The deal consideration was not disclosed.
Version 1 is an Irish company specialising in international management consulting, software asset management, software development and cloud computing. The business, which was founded in 1996 reported revenues of over €140m in 2020 and has offices in Dublin, Belfast, Cork, Edinburgh, Manchester, and London. Partners include Microsoft, Amazon, and Oracle.
Evoco is a Hull-based service design and digital transformation specialist with 41 employees. The business reported net assets of over £425k in the year ending March 2021. The full Evoco team will stay on following this transaction and become employees of Version 1.
Advisers: None Mentioned.
Renatus Comment: This Evoco acquisition, the 13th in the firm’s history to date, is the latest move in the business’s aggressive growth strategy. The business was backed by private equity fund, Volpi Capital in 2017. Other notable acquisitions since Volpi backed the business include Presidon in 2018, TE4B in 2019, Singlepoint in 2020, and Neueda in 2021. Version 1 has been an impressive case study in the value creation from a private equity-supported buy and build growth strategy.
Source: Version 1 Press Release
ByrneLooby acquired by Ayesa
Deal Details: ByrneLooby, the Irish engineering consultancy, has been acquired by Ayesa. Deal consideration has not been disclosed.
ByrneLooby provides engineering and design services across a number of specialist sectors, including marine and coastal, buildings, transportation, energy, environment, water, and waste management. The company was founded in 1998 and employs 225 people across 14 offices globally. The company is led by Managing Director John Byrne and has annual revenues of approximately €24m.
Ayesa is a Spanish multinational specializing in engineering, technology, and consulting (ETC). The company is led by José Luis Manzanares Abásolo. In 2020, the company recorded turnover of €256m and employs 5,400 people globally.
Advisers:
Sell-Side:
Legal: Ronan Daly Jermyn advised ByrneLooby. The RDJ transaction team included Gillian Keating, Sean O’Reilly, Liam O’Keeffe, Teniola Ayeni, Brendan Cunningham, Mark Ludlow, Claire Macken, Simon Lynch and Evan Collins.
Buy-Side:
Legal: Ayesa were advised by US firm Weil, Gotshal & Manges LLP and a Flynn O’Driscoll LLP team comprised of Alan O’Driscoll, Laura Melody-Moran, Deirdre Walsh, Caoimhe Heery, Julian Cunningham and Eliza O’Grady.
Renatus Comment: The deal will allow ByrneLooby to significantly expand its service offering and will give Ayesa a presence in the UK & Ireland. A&M Capital Europe acquired a stake in Ayesa in October 2021, with this capital now being used to fund the company’s growth plans to double in five years, with M&A consolidation plays globally forming a key part of this strategy.
Source: ByrneLooby
Foxpak Flexibles acquired by SEE
Deal Details: Foxpak Flexibles, an Irish packaging solutions company, has been acquired by US, publicly listed business, Sealed Air (SEE). The deal consideration was not disclosed and the transaction is reportedly subject to SEE’s financial results.
Foxpak is a Louth-based provider of sustainable, flexible packaging solutions which are entirely compostable. The business was founded in 2001 and employed c. 34 employees throughout 2020. The business supplies both food and non-food businesses with packaging and its customer list includes various household names such as Supervalu, Flahavan’s, Reese’s, and Kelkin. One of the business’s selling points seems to be its proprietary digital printing technology which is used to print the likes of labels on packaging.
Sealed Air Corporation is a publicly listed packaging company known for its brands: Cryovac food packaging and Bubble Wrap cushioning packaging. The business was founded in 1960 in New Jersey and has been led by current CEO Edward Doheny since 2018. The business employs c.16,500 people and reported revenues of c. $5bn in 2020.
Advisers:
Sell-Side:
M&A advisory: Focus Capital with Brian Barrett and Niall McGann leading the team.
Legal: BDM Boylan, led by Colm Manning.
Renatus Comment: This acquisition appears to be Sealed Air Corporation’s latest move to a greener image. Sealed Air’s flagship packaging products are not entirely environmentally friendly and the business has made a huge effort over the past years to improve its offering in terms of ESG. This move has been largely been received positively by shareholders with SEE stock reaching new all-time highs month-on-month since March 2020 and currently sitting at $64.36. As well as access to Foxpak’s compostable packaging and digital printing solutions, this latest acquisition will expand Sealed Air’s presence in Europe, where it currently does not have a strong foothold.
Source: Sealed Air Press Release
Moneycube acquires two companies
Deal Details: Moneycube, the online investments and pensions company, has acquired two companies, Allen Retirement & Finance and Pension Investment & Property Trustees. Deal details were not disclosed.
Moneycube, based in Dublin, offers online investments and pensions advice. The company was set up in 2015 by Ralph Benson and Feargal McKenna.
Allen Retirement & Finance (ARF) and Pension Investment & Property Trustees (PIPT) both specialise in corporate pensions consultancy and private wealth management. Both are based in Dublin, established in 2000 and 2005 respectively. ARF is led by Declan Allen, while Sean Cassidy founded PIPT. ARF reported 2020 turnover of €287k, while PIPT reported 2020 turnover of €83k.
The business is predicting turnover of over €1m in its first full year of combined operation. As part of the transaction, the entire ARF and PIPT teams will remain and the three businesses will continue to trade under their existing names.
Advisers:
Buy-Side:
Moneycube was advised by Kirwan McKeown James LLP Solicitors and Harnett Accounting on the transaction.
Sell-Side:
The shareholders of ARF and PIPT were advised by Whitaker & Co. Solicitors and Walsh O’Brien Harnett.
Renatus Comment: The consolidation play by Moneycube will see the expansion of its customer base, in line with its stated target of achieving €100m in assets under management, which will be achieved under the combined group. As outlined in the Renatus blog last week, the insurance industry underwent significant consolidation in 2021. The Pensions and Wealth Management space has also seeing seeing high levels of acquisition activity with Irish Life being a key acquirer in the space.
Our full blog covering highlights from 2021 M&A activity can be accessed through the following link: Renatus Private Equity Newsletter Database M&A Review 2021
Source: Irish Independent
Made to Engage acquired by UNRVLD
Deal Details: Made to Engage, a Belfast-based digital agency, has been acquired by UNRVLD for an undisclosed sum.
Founded in 2011, Made to Engage also has offices in Dublin and Amsterdam, and its 60-strong team enhances the newly enlarged agency to a headcount exceeding 250 across eight locations between the UK and Ireland. Clients of Made to Engage include New Era Cap, Energia Group, Permanent TSB, Irish Ferries and Eason.
UNRVLD, UK-based full-service digital agency that helps brands grow through creating enhanced digital experiences. The business plans to use Made to Engage’s offices in Belfast, Dublin and Amsterdam to widen its European reach.
Advisers:
Sell-Side:
Legal: John McGuckian, Brendan Donnelly and Kate Loughran from Tughans.
Deal Advisory: Wayne Horwood and Peter Graham from HNH.
Financial: Mark Braldey and Colin Piggot of Grant Thortnon.
Buy-Side:
Deal Advisory: Samuel Davies and Bradley Seekings from Cowgills.
Renatus Comment: UNRVLD received a £6m investment from BGF in July 2020 and generated a reported turnover of c. £10m and EBITDA of c. £1.7m in FY Mar 21. Prior to the transaction, Made to Engage was wholly owned by Managing Director Steven Cassin.
Source: Made to Engage
BonusFinder acquired by Gambling.com
Deal Details: Irish online casino and sportsbook comparison website, BonusFinder has been acquired by Nasdaq-listed Gambling.com for a reported maximum consideration of €60m. This will be made up of a €10m initial cash payment with €2.5m in shares and additional earnouts based on FY22 and FY23 financial performance.
BonusFinder was launched in 2019 by Irish-born, Fintan Costello and has developed a strong presence in the US and Canada. Most of the BonusFinder team is based in Amsterdam and the team is expected to remain in place following the transaction.
Gambling.com is based in Dublin and was recently listed on the Nasdaq. The group was founded in 2006 and operates over 30 websites under various brand names including Gambling.com and Bookies.ie The business employs over 200 people and has offices in Dublin, the US, and Malta.
Advisers: None Mentioned
Renatus Comment: As the deregulation of the US gambling industry continues we are likely to see more and more acquisitions of players with strong footholds in this market. This was likely the rationale behind this latest acquisition of BonusFinder. Markets appear to be reacting positively to this latest acquisition with Gambling.com stock currently at $10.79, up from $9.27 in late January.
Source: Gambling.com Press Release
COMPANY PERFORMANCE
Hegarty Demolition Ltd engages in demolition, basement construction, building conservation and civil engineering. It has been involved in projects such as the redevelopment of Temple Bar, Croke Park and the Dublin Docklands since it was established in 1990.
In its financial year to February 2021, the business reported revenue of c. €28.9m which converted to an EBITDA figure of c. €4.9m. Despite revenue decreasing by 23.9% YoY, EBITDA increased by 22.7% as a result of gross margins increasing to 25.0% this year from 16.6% last year.
The business finished the year with a cash balance of c. €3.2m. The business carries little debt and at the end of the year was in a net cash position of c. €3.0m.
Hegarty Demolition Ltd’s directors include James Duffy, John Tierney, Kieran McKeown, Eamonn Grogan, Noel Gill and Paul Hogan.
Lynch’s Foodstore (Holdings) Limited is a holding company which owns trading businesses primarily engaged in operating multiple Spar and Eurospar locations across Northern Ireland as well as the letting of commercial units.
In financial year to April 2021, the business reported revenue of c. £28.3m which converted to an EBITDA of c. £2.9m, an increase of 34.7% and 74.0% YoY, respectively.
The business finished the year with a cash balance of c. £3.7m. In November of 2020, the business acquired DPK Retail Ltd, a supermarket owner, which represented the majority of Lynch’s c. £4.0m investment in assets during the year.
Lynch’s is owned by Lynch family members Conor, Gary, Paul, Anne and Dennis. It employed an average of 291 persons during the year at a cost of c. £3.4m.
RECENT FUNDRAISINGS
Who: WayFlyer, the Irish start-up providing revenue-based financing and marketing analytics for online businesses, has secured funding.
What: The company has raised $150m (€134m) in funding from investors, valuing the company at $1.6bn, making it Ireland’s sixth home-grown unicorn.
Why: The funding will be used to double the company’s headcount to 500 people, with many roles in Ireland.
Source: WayFlyer Press Release
Who: Sitenna, an Irish telecoms start-up focused on connecting mobile network operators with owners of real-estate assets. The business was founded in 2020 by Daniel Campion and Brian Sexton.
What: The business has raised €1.9 million ($2.1 million) in funding in a seed funding round which was participated in by Samsung, Y Combinator and Merus, an American VC firm.
Why: The funding will go toward product development and helping the business gain a foothold in the US market.
Source: Irish Times
Who: CroíValve, an Irish producer of medical devices for treating heart valves. The business was founded in 2019 and originated from Trinity College Dublin. The business is led by chief executive Lucy O’Keeffe and R&D director Gavin Kenny.
What: The business has raised €8m in funding, led by the HBAN MedTech and Irrus Syndicates. Other participants in this latest funding round include Atlantic Bridge University Fund, Enterprise Ireland, Broadview Ventures, SOSV, Elkstone, Ascentifi and DBIC.
Why: This funding will be put toward completing feasibility studies in Europe and the US which must be completed in advance of the device being approved and reaching the market.
Source: CroíValve
Who: Ardstone, an Irish property developer. Ardstone Capital has three funds in Ireland, the UK and Europe and manages over €500m of assets.
What: The developer has raised a €400m fund. Investors include Patriczia, a German investment manager which contributed a reported €125m.
Why: The funding is to be used to build social and affordable homes as well as social projects throughout Ireland.
Source: The Sunday Times
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
€11.3bn
The year-on-year increase in Irish household deposits at the end of 2021, totaling a sum of €136bn. According to @centralbank_ie. @IndoBusiness
178%
The year-on-year rise in the number of electric cars registered in Ireland for the month of January, with just over 2,700 cars registered during this period. According to @SIMI_IE. @RTEbusiness
25,093
The number of cars that were registered in Ireland during January, down 0.2% year-on-year, and down 22% on pre-pandemic levels in 2019. According to @SIMI_IE. @RTEbusiness
59.4
The AIB Purchasing Managers Index for January 2022, an increase of 1.1 points from December’s nine-month low of 58.3. Readings above 50 indicate overall rises in manufacturing activity. @RTEbusiness
5.1%
The rate of Eurozone inflation in January 2022, a record high, up from 5% in December 2021. @ecb. @RTEbusiness
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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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