Renatus Capital Partners invests in Kappture, Luzern eCommerce receives investment. AIB announces the acquisition of Goodbody Stockbrokers, Boxever acquired by Sitecore, Fortus acquires two companies and more in this weeks Renatus M&A newsletter.
Renatus Weekly M&A & Company Performance Newsletter 07/03/2021
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
Renatus Capital Partners invests in Kappture
Deal Details: We are delighted to announce that Renatus Capital Partners has made a majority investment in Kappture to support the management team’s exciting growth plans.
Kappture is a leading provider of in-house developed EPOS (electronic point-of-sale) and mobile payments software in the stadia, education, and hospitality industries. Since launching with its first customer in 2014, the business has installed over 7,000 EPOS systems for 100+ clients across the UK, Ireland, APAC, UAE, and Western Europe.
Kappture’s co-founders Andrew Motley, Neil Haran and Daniel Syson will continue to lead the business and will be joined on the board by Renatus’ Mark Flood and Philip Gardiner.
This is Renatus’s fifth investment, and the second from its new €40m fund which closed formally before Christmas with investment from ISIF.
Renatus is focused on providing supportive equity capital (minority and majority) to ambitious SMEs across Ireland and the UK.
Advisers: Kappture received corporate finance advice from Alan Mahon and Shane Foyle in AIB Corporate Finance and legal advice from David Brangam, Christine Quigley and Andrew Fullen in Simmons & Simmons.
Renatus received legal advice from a LK Shields team led by Emmet Scully and Lisa McElin, tax advice from Mike Hayes, Sinead Kelly and Aoife Kennedy of KPMG and financial due diligence from Maurice Kennedy and Seán O’Brien in EY. John McGuckian and Paul O’Brien of Tughans assisted LK Shields.
Renatus Comment: Kappture’s talented and ambitious management team has positioned the business as a market leader in its space by being innovative, customer-focused, uncompromising on product quality and service, and creative in finding the right solutions to meet their customers’ needs. Renatus is delighted to partner with the Kappture team, and provide the financial and strategic support to help accelerate their growth plans. We took a view that events will return eventually and the world will eventually return to normal. It was an enjoyable deal to be involved with and took little more than two months from signing heads of agreement to completion, we would like to thank all involded, in particular the aforementioned advisers.
Luzern eCommerce recieves investment
Deal Details: Irish private equity firm Cardinal Capital Group has made a significant investment in Luzern eCommerce Ltd.
Dublin-based Luzern (www.Luzern.co) provides a one-stop-shop platform and services for companies that sell online, both through their own-branded direct-to-consumer websites and through online marketplaces such as Amazon.
The e-commerce platform works with some of the world’s biggest brands including Nestle, Philips, Victorinox and Gatorade.
No financial consideration was disclosed.
Advisers: Stephen Walker of Holmes O’Malley Sexton acted for Luzern eCommerce Ltd.
Maples (Colm Rafferty, Jordan O’Brien & Claire Morrissey) acted for Cardinal Capital.
Renatus Comment: This company has a lot less profile than the likes of its local counterpart eShopWorld and while smaller today has some serious blue chip global clients. Having increased annual sales by 60% over each of the past three years, Luzern is one of Ireland’s fastest-growing technology companies, executing millions of transactions every year for some of the world’s largest brands. Luzern’s growth accelerated in the past 12 months as large numbers of consumers moved online as a result of retail restrictions globally. In filed accounts to February 2020, Luzern reported revenue of c. €34.0m.
AIB announces acquisition of Goodbody Stockbrokers
Deal Details: AIB has reached an agreement to acquire Goodbody, a leading Irish provider of wealth management, corporate finance, and capital markets services.
AIB will acquire the entire share capital for a reported consideration of €138 million reflecting a c. €82 million enterprise value and c. €56 million of excess cash on the balance sheet. Goodbody’s 2020 management accounts recorded revenue of c. €71 million.
Goodbody, which manages assets of c. €8 billion and employs 300 people in offices across Ireland and the UK, provides financial services in three core segments – Wealth Management, Asset Management and Investment Banking – to both private and corporate clients.
Completion of the acquisition is conditional on approval by the Central Bank of Ireland and the CCPC.
Advisers: Eversheds Sutherland advised FEXCO and the Trustees of the Goodbody Employee Benefit Trust on the proposed sale of Goodbody Stockbrokers to AIB. The Eversheds Sutherland team was led by Lee Murphy and Peter Fahy.
Renatus Comment: This deal has been playing out for a number of months and marks a significant return for Goodbody shareholders Fexco, Goodbody CEO Roy Barret and other executives. Fexco and Goodbody management purchased the business from AIB as part of AIB’s European Union restructuring plan tied to its taxpayer bailout for a reported €24m 2011. Today’s reported selling price of €138m marks a 5.75x money return for shareholders. Perhaps another example of the value that was out there for ambitious acquirers in the post-Celtic Tiger years.
Source:Investegate, Eversheds Sutherland
Boxever acquired by Sitecore
Deal Details: Irish data analytics company Boxever has been acquired by US customer experience software developer Sitecore. While the financial consideration was not disclosed by the parties involved, it has been reported that it was in excess of $150m.
Founded by Dave O’Flanagan, Alan Giles and Dermot O’Connor in late 2011, Boxever’s technology uses artificial intelligence and machine learning to help brands engage more effectively with customers by providing a more personalised experience. Boxever has developed a big data and personalisation platform that is predominantly used by airlines. According to management, Boxever’s solutions act as the brain within an organisation’s marketing stack. The majority of Boxever’s 70 employees are based in Ireland.
Advisers: Boxever was advised by Maples (Colm Rafferty, Morgan Pierse, James Reidy) and Sean Wallace of Wallace Corporate Council.
Boxever also received Corporate Finance advice from CKS Finance. It is a milestone deal for Conor Sheahan and his team. They are emerging as a real player in the corporate finance world, particularly in tech.
Renatus Comment: We consistently report on Irish-tech companies receiving investment or realising significant exits. The strength of Ireland’s indigenous tech scene is something to be proud of and nurtured. It is reported that Boxever received funding in excess of $20m from Polaris Partners, Silicon Valley Bank as well as from Irish-based Delta Partners, Frontline Ventures and a Cantor Fitzgerald EIIS fund.
Continuing to foster an environment where Irish start-ups have convenient access to funding should be a priority for the State. In the short-term, it can help support our recovery post-covid, while in the long-term, it will give downside protection to our economy if the large multinationals relocate to other geographies.
Source:Boxever, Irish Times, Sunday Times
Fortus acquires two companies
Deal Details: Fortus Group Holdings has announced the acquisitions of Enterprise Security Distribution as well as remote CCTV monitoring specialist RE:SURE. The financial consideration was not disclosed but it is understood that the acquisitions will more than double the group’s headcount to 170, and it will double turnover to more than €100 million.
Fortus is a distributor of security and fire solutions to businesses across the UK and Ireland. Its stated intention is to become the largest security and fire supply chain business in the UK and Ireland. The business is led by Chief Executive Brian Honan, CFO Mark Brophy and Group Head of Finance Andrew Moran, whom led the on these transactions on behalf of Fortus.
Enterprise, founded in 1992, is a UK supplier of security products to installers. The company has nine locations, employs about 90 staff, and has a customer base of 8,000 customers. All key management will continue with the business under Fortus’ ownership.
Founded in 2007, Re:Sure Intelligence Ltd is a specialist remote CCTV monitoring service serving clients across Ireland and the UK. John McMahon (MD) & Emmet Hogan (Commercial Director) will continue with the business and retain a significant shareholding in the business.
Advisers: Fortus was supported in terms of financing for these transactions by AIB Corporate Banking (Dublin) led by Conor Brogan; and Rockpool Investments (London) led by Guy Ellis. For professional services, Fortus was advised by: Eversheds Sutherland led by Tony McGovern (Legals – Corporate & Banking), PKF led by Sam Phillips (Financial & Tax Due Diligence – Enterprise) & HNH Partners led by Rodney McCaughey (Financial & Tax Due Diligence – Re:Sure)
Resure were advised by Solara Business Advisory led by Karl Cleere for Corporate Finance advice and Tughans led by John McGuckian for legal advice
Renatus Comment: This is a very ambitious move by Fortus and not the last that we should expect to see. CEO Brian Honan’s stated intention is to execute a buy-and-build strategy to get Fortus to be a €150m+ turnover business and to become the largest security and fire supply chain business in the UK and Ireland. To achieve this, Honan expects the company to buy about ten or more businesses in the coming years, most of which will be based in the UK.
The Enterprise acquisition give Fortus’ UK business scale along with diversifying it away from its current CCTV focus into adjacent security segment including intruder; fire & access control. The Re:Sure transaction is Fortus’ first move from a hardware-based business model to a service-based recurring revenue model. There are significant sales synergies between Fortus and Re:Sure given Fortus status of one of the largest sellers of CCTV equipment across Ireland & the UK.
Fortus has a proven model and through acquisitive growth they plan to scale it quickly.
Source: Fortus, The Sunday Times
Ekco acquires CTI Global
Deal Details: Dublin-based cloud solution specialist Ekco has acquired CTI Global, a business with a similar data management and cloud focus. The financial consideration was not disclosed.
Irish owned, with multiple offices in Ireland, UK & the Netherlands, Ekco was founded by Eoin Blacklock and Jonathan Crowe. Ecko describes itself as an innovator in cloud solutions, managing systems and data securely, helping to drive productivity and scalability for businesses of all sizes.
CTI Global is an International IT Services Company with multiple locations in the United States, as well as locations in Ireland, the U.K. and the Caribbean. The company was founded in 1998 to help organizations implement reliable and flexible security solutions.
Advisers: An LK Shields team of Gerry Halpenny, James Byrne, Stephen Gamble, Jeanne Kelly, Jane O’Grady and Cathal Hester advised CTI Global.
Renatus Comment: Cloud computing has been a hot topic in recent times. At the forefront of the global markets are players such as Amazon, Google and Microsoft Azure which have witnessed exceptional growth. Amazon’s AWS revenue in Q1 2016 was c. $2.5bn while in Q4 2020 it was c. $12.7bn, a compound annual growth rate of 22%+. The mass adoption of cloud technology is supporting the share price growth of the international players but it is also supporting the more local, last-mile cloud implementation and management sector which CTI and Ecko both are benefitting from.
Source:The Currency, LK Shields
Orthoderm is acquired by Affidea Group
Deal Details: Orthoderm Ltd, a private healthcare clinic based in Hillsborough Co. Down, has been acquired by Affidea Group.
Established in 2007, Orthoderm is a leading provider of clinical and medical services across a range of 17 specialties across dermatology, cardiology, plastic surgery as well as pain management and GP services.
The Affidea Group is a leading European provider of diagnostic imaging, outpatient and cancer care services.
No financial consideration as disclosed, and the Orthoderm founders Michael and Elizabeth Eames will remain as Directors of the business.
Advisers: HNH acted as Lead Corporate Finance and Tax Advisor for Orthoderm, with Craig Holmes and Peter Graham advising the shareholders along with Eamonn Donaghy and Mark Hood providing tax advice. Peter Stafford from A&L Goodbody provided legal advice to the vendors.
Affidea Group were advised by Cian O’Leary, Cian Durkan, Ciara Finnan, Ciaran Ferry and Pat Flynn (Corporate) and Caoimhe Heery (Employment) in Flynn O’Driscoll. Deloitte (Andrew Johnston) acted as financial advisors to Affidea.
Renatus Comment: The private hospital space is an area that he seen continued activity recently with major investors taking an interest in the space. American investor UPMC recently acquired Aut Even hospital in Kilkenny, Clane General Hospital in Kildare and Whitfield Clinic in Waterford. Larry Goodman’s interests in the Blackrock and Hermitage Clinic in Dublin and the Galway Clinic. Mater Private Group (Dublin and Cork) was acquired by French investment group Infravia in 2018. Beacon Hospital in Dublin is owned by Denis O’Brien. Santry Sports Clinic took in major investment by Carlyle Cardinal Ireland last year.
This is not to mention the extensive investment in the private care home space covered almost weekly in this circular.
FMM Mora AV acquires Aqualla Brassware
Deal Details: FM Mattsson Mora Group has completed the acquisition of Aqualla Brassware Limited. Down-based Aqualla is an established and fast growing supplier of bathroom products across the UK and Ireland.
FM Mattsson Mora Group. Which is listed on Nasdaq Stockholm, conducts the sale, manufacture and product development of water taps and related products.
Terms of the transaction see FM Mattsson Mora Group acquire 100% of the share capital of Aqualla for £11.9 million, comprising £8.7 million cash on completion and £3.2 million shares in the group.
Advisers: Grant Thornton undertook the financial and tax due diligence on the deal for FMM. Advisors were FRP advisory (GB) and legals were TLT.
Renatus Comment: Two industry tailwinds that should support home products are the shortage of housing stock on the island of Ireland and the pent up level of savings as a result of Covid that may spur home upgrades and renovationns over the coming years.
Source:FM Mattsson Mora Group
BiaVest invests in Nobo
Deal Details: Irish dairy-free food company Nobó has received investment from BiaVest. The financial consideration was not disclosed.
Nobó was established in 2012 by husband and wife Rachel and Brian Nolan. Originally focusing on dairy-free ice cream, the business now also markets chocolate, olive oil and more. It has become a familiar sight to many through its stockists which include Avoca, SuperValu and more.
BiaVest was set up by food industry executives Hilliard Lombard (who was previously the head of Valeo Foods operations in Ireland and before that a senior executive with Aryzta) and his business partner David McKernan, who built the Java Republic coffee brand.
Advisers: Alan Ryan and Graham Coyne of Wallace Corporate Council LLC provided legal advice to BiaVest.
Source: Irish Times, RTE
Spanwall receives investment
Deal Details:Spanwall, a Belfast-headquartered architectural wall cladding specialist has secured an investment from Cordovan Capital Management.
Established in 1967, The Spanwall Group is one of the UK’s leading architectural wall cladding specialists bringing design and manufacturing expertise to iconic buildings such as the Titanic Museum, Belfast, the Central Bank of Ireland, Dublin and Liverpool Street Station, London.
Advisers: Cordovan Capital Management was advised by Tughans Solicitors. The vendors were advised by EY Corporate Finance Belfast and Millar McCall Wylie Solicitors.
Sirran Communications is acquired by NetNumber Inc
Deal Details: NetNumber, a leading provider of telecom software infrastructure and data services has entered into agreements to acquire SiRRAN Communications Ltd and TD-Mobile AG.
Dublin-headquartered SiRRAN Communications Ltd provides mobile core network products and services for private networks, and portable, secure communications infrastructure.
Liechtenstein-based TD-Mobile AG is a mobile virtual network operator (MVNO), that provides secure connections for private and public entities with connectivity to more than 1,500 mobile network operators (MNO) across the globe.
Advisers: DLA Piper, led by Éanna Mellett and associate Dara McDonald, along with assistance from their UK and German offices acted for Netnumber Inc.
Renatus Comment: These acquisitions are the first for NetNumber, and complement and expand the company’s portfolio in the mobile core network to offer a broader range of end-to-end core network infrastructure, including evolved packet core (EPC) products and global connectivity services.
DEALS IN THE MAKING
Citylink plans to acquire GoBus
Deal Details: It has been reported this morning that Citylink, which is the Irish subsidiary of international transport company ComfortDelGro, plans to acquire Galway-based bus operator GoBus.
Established in Galway in 2009, GoBus is locally owned and operated by Jim Burke and his family. Jimb is a former EY Entrepreneur of the Year finalist.
Comfortdelgro Irish Citylink Limited (T/A Citylink), which is based in Galway, operates six main routes offering 100 daily departures. In its financial year to December 2019, the business reported revenue of c. €16.7m.
The Competition and Consumer Protection Commission was notified last week of the intended acquisition.
Source: The Sunday Times
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.
Roseby Limited, based in Dublin, is predominantly a provider of logisitics, warehousing and transport services and trades as Masterlink.
In its financial year to Mar 2019, the business reported revenue of €37.5m, an increase of 10.6% year-over-year. This resulted in an EBITDA increase of 3.7% year-over-year to stand at c. €2.9m. The business ended the year with an ending cash balance of c. €385k, up c. €118k from the previous year.
Roseby is owned by John O’Regan (c. 21%), Thomas O’Regan (c. 21%), John Brosnan (c. 21%), John Darby (12.5%), William Forde (12.5%) and Noel O’Regan (12.5%). The business employed an average of 392 persons at a cost of c. €13.2m.
Based in Dunboyne, Meath, Floor Formhas been supplying flooring solutions into the construction industry for over 30 years in Ireland the UK and Europe. This business has offices in Dunboyne and Armagh.
FY19 was a strong year for the business which saw revenue and EBITDA increase by c. 28% and 20% to €15m and €2.3m, respectively. Cash declined by c. €880k during the period due to (1) a €3m dividend payment and (2) a c. €3m investment into working capital.
The business employs 13 staff directly at an annual cost of c. €900k. Sean and Bernadette Burns are the ultimate controlling parties in the company.
*The incorrect trading name and logo “St. Doolagh’s Park Care” was used in a last week’s newsletter*
Coolmine Healthcare Ltd trades as Millbrook Manor Nursing Home based in Saggart, Co. Dublin.
In its financial year to May 2019, the business reported revenue of €3.9m, an increase of 3.3% year-over-year. This resulted in an EBITDA increase of 4.0% year-over-year to stand at c. €1.1m. The business ended the year with an ending cash balance of c. €92k, up c. €5k from the previous year.
Coolmine Healthcare Ltd is wholly owned by Joseph and Maire Gallagher. The business employed an average of 71 persons at a cost of c. €1.9m.
Who: Belfast-based We Are Paradoxx, a sustainable plastics-free Irish haircare brand, has raised funding.
What: The business has raised £3 million (€3.5 million) in investment.
Why: The new funding is to be used to further expand into the US market, for new product development and for further research and development of hair tools as part of the company’s wider growth plans to extend their electricals offering.
Source: Irish Times, We Are Paradoxx
Who:Motoklik, an Irish motorsport tech start-up, has raised funding.
What: Motoklik has raised €300,000 in seed funding from investors and Enterprise Ireland.
Advisers: Michael Bambrick & Alan Ryan of Wallace Corporate Counsel LLP acted as Legal advisers to company
Why: The funding will be used to create 10 new roles and to complete the commercial design of the product and launch it into the market.
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.
Bain & Company recently released its global M&A report for 2020 showing that a staggering 28,500 deals were completed last year. The report dives into factors affecting M&A across specific industries, however, there was one theme in particular that we found interesting and wanted to lift out:
Frequent acquirers outperform relative to infrequent acquirers
The report highlights that frequent acquirers outperform across industries. They make the point that the most successful acquirers build M&A capabilities for a repeatable M&A playbook from initial screening through to execution and integration.
In particular, market leaders use these capabilities to out-invest competitors in downturns to increase the performance gap and, if necessary, re-position businesses into more attractive end markets and/or to acquire new capabilities.
Developing M&A capabilities is an area that we in Renatus particularly specialise in (it’s one of our core pillars of value-add) and we can specifically help operators in the SME space. We are currently working with a number of entrepreneurs and operators who are looking at opportunistic acquisitions to enhance their business’ positioning. We are always excited by these conversations and would encourage anyone thinking of growth through acquisitions to reach out.
The year-on-year overall increase in the level of activity across the construction sector in Q4 2020 when compared with Q4 2019. According to the Production in Building and Construction Index @CSOIreland
5.8% & 24.8%
The respective measure of Monthly Unemployment & COVID-19 Adjusted Measure of Unemployment for February 2021, according to @CSOIreland
The growth of the Irish economy last year when measured by GDP, according to preliminary figures from @CSOIreland
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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