Renatus’ Weekly M&A Newsletter – 15/03/2020
March 15, 2020Renatus’ Weekly M&A Newsletter – 22/03/2020
March 22, 2020
Renatus Weekly M&A & Company Performance Private Equity Newsletter 08/03/2020
Dear Reader,
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.
M&A ACTIVITY
Aperee acquire Cork nursing home
Deal Details: Aperee acquire Cork nursing home
Aperee, a residential care home operator, has acquired Padre Pio Nursing Home in Co. Cork for an undisclosed sum.
Aperee was recently established as the operational arm of the Blackbee Healthcare Fund. The BlackBee Group launched the new healthcare investment fund, which will result in the creation of Ireland’s largest residential care group.
The fund is seeking to raise €250m to invest in the acquisition and development of state-of-the-art care homes, with the money being targeted from both institutional and professional private investors.
Padre Pio Nursing Home was built in 1997 by previous owners Mary & Shane McCabe. The 52 bed nursing home is its first of a number of acquisitions of top quality existing homes Aperee aims to acquire in the next 12 to 18 months.
Advisers: None mentioned
Renatus Comment: The nursing home space has seen a spate of funding activity in recent times. Traditionally a fragmented industry, investors have flocked to the sector due in part to the positive underlying economics and the growing need for elderly care in the State.
Irish demographic projections suggest that the number of citizens over 65 will double by 2040 and that the country will have a shortfall of 7,500 beds by 2026. Meanwhile, the cost of constructing a bed is c. €160k in 2019, up 20% since 2015.
Activity to date, and the stated intentions of the primary players, will change the face of the elderly care market in Ireland and the cost of development requires non-State funding to bridge the supply gap. Similar moves are also happening in the under-resourced domililiary care space. Let’s hope that today’s trends ultimately leads to better care for our future population.
Source: Blackbee Press Release
Cylon Controls acquired by ABB
Deal Details: Cylon Controls acquired by ABB
Abb has acquired Cylon Controls Ltd for an undisclosed sum.
Cylon provides building automation and HVAC control solutions, delivering operational efficiency, energy and comfort solutions for commercial and retail buildings, schools and healthcare facilities. The Dublin-headquartered company employs about 100 people.
ABB (ABBN: SIX Swiss Ex) is a Swiss-Swedish multinational technology leader that is driving the digital transformation of industries. ABB operates in more than 100 countries with about 144,000 employees.
Advisers: None mentioned
Renatus Comment: Given the emergence of IoT, Dublin’s booming commercial property scene and its increasingly energy aware tenants, Cylon’s market is a booming one. Cylon has taken advantage of this as it has seen its revenues grow from c. €6m in FY15 to c. €15.5m at the end of FY18.
This is a classic acquisition thesis where the acquirer immediately gains a foothold in a new geography, in terms of expertise, local know-how and customers, that it otherwise would have had to compete for. Cylon also now has the strength of a listed parent which should increase its value proposition with customers.
Source: ABB Press Release
Version 1 acquires Singlepoint
Deal Details: Digital Consulting firm Singlepoint is being acquired by Version 1. The deal, which is subject to CCPC clearance, is Version 1’s 11th acquisition to date.
Financial details of the deal were not disclosed however according to Version 1 the combined entity, which will have over 1400 employees and 500 customers, is forecasting revenues of €140m in 2020.
Dublin-based Singlepoint has 120 employees with expertise in Digital & Cloud Solutions, AI, Analytics and Technology Delivery who will integrate with Version 1’s Digital & Cloud practice. The business was owned by Robert Curley (57%), Brian Seery (21%), William Waldron (21%) and john Collins (1%)
Version 1, Founded in 1996 by Justin Keatinge and John Mullen, implements IT systems for large corporates and government departments and also provides consultancy services. It has offices in Dublin, Belfast, Cork, Edinburgh, Manchester and London. Partners include Microsoft, Amazon and Oracle.
Advisers: Singlepoint received corporate finance advice from John Curtin and Christopher Jordan of Clearwater International and legal advice from Deirdre MacCarthy and Jordan O’Brien of Maples.
Version 1 also received legal advice from Mpales, from Paddy Quinlan and Keelin Gavagan.
Renatus Comment:
Singlepoint is Version 1’s eleventh acquisition and represents a great case study in the value creation from a private equity supported buy and build growth strategy. Version 1, backed by private equity fund Volpi Capital, is continuing on the growth trajectory set by its original co-founders Justin Keatinge and John Mullen who founded the business in 1996.
The pair stepped back from the business in 2017 after Volpi Capital’s €90m acquisition of a significant stake in the business and with the support of Volpi, the current management team, led by CEO Tom O’Connor, are continuing on the impressive legacy left by the original founders.
Source: Version 1 Press Release
Conexim acquired by Irish Life
Deal Details: Irish Life Group Limited has acquired Conexim Advisors Ltd for an undisclosed sum.
Conexim, established in 2010, is a leading provider of wholesale financial services via a cost effective independent platform. It provides access to over 4,000 Funds from leading international fund managers as well as direct equity investments, fixed income securities and ETFs from all international markets.
Conexim will continue to operate as an independent entity within the group and will keep its brand and retain its existing leadership team.
Advisers: Pegasus Capital advised Conexim on the sale to Irish Life.
Renatus Comment: M&A activity in the financial services sector has been strong over the past number of years with Irish Life playing an active role. As one of Ireland’s largest life and pensions companies, with over 1.3 million customers, this acquisition adds to its other recent acquisitoins, including Invesco, City Life, Acumen & Trust and APT to name a few.
Source: RTE
Mellanox acquires Belfast firm
Deal Details: Titan IC, a Belfast-based technology developer that was spun out from Queens University, has been acquired by Nasdaq-listed Mellanox Technologies. Financial details of the deal were not disclosed.
Titan IC is a world leader in high-speed complex pattern matching and real-time Internet traffic inspection for advanced cyber security and data analytics applications. Its world class team in Belfast, Northern Ireland will become the centre of advanced network intelligence research and development for Mellanox.
Mellanox is a maker of high-speed servers and storage switching solutions.
Advisers: None mentioned
Source: Mellanox Press Release
CoreHR acquired by UK software company Access Group
Deal details:
Cork-based payroll software company CoreHR has been acquired Access Group, a UK-based business software business.
Access Group is reported to have paid c. €230m to acquire CoreHR and plans to combine the business with People HR, a UK company it acquired last November.
CoreHR was founded by Sean Murphy, an IT consultant, in 1982 as a milk payments system. The business evolved into a payroll software company and employs c. 350 generating revenues of c. €50m.
Advisers:
Paddy Quinlan of Maples advised CoreHR on the sale of the business.
Renatus Comment:
In 2016 Murphy sold an 80% share his business to two private equity investors for a reported €80m. He retained 20% and stayed on the growth journey of the business over following four years up to its full acquisition by the Access Group. In this second sale Murphy netted c. €45m for his 20% stake, valuing the business at more than twice what it was worth in 2016.
This is a great success story of private equity partnering with founders of businesses to allow them monetise some of the value they have built while still staying on the journey and together working towards a continued growth and a second big payout.
Source: Irish Times
Portwest makes investment in Italian safety footwear business
Deal details:
Mayo-based workwear and safety company Portwest has announced an investment in Italian company, Base Protection footwear, a premium safety footwear brand. The investment will bring the annual turnover of the Portwest Group to over €300m.
Base Footwear was established in 2007 and is one of Europe’s leading brands of safety footwear. It operates factories in Italy and Albania, employing over 250 people and in 2019 had revenues of over €50m.
Portwest is one of the fastest growing workwear companies in the world, specialising in fire resistant and high visibility workwear and a full range of personal protective equipment, such as safety footwear and work gloves. Founded in Westport, Co. Mayo in 1904, the company is run by the Hughes family, headed up by brothers Cathal, Harry and Owen Hughes. Portwest currently employs over 4,500 people worldwide, has sales in over 130 countries, warehousing facilities in Ireland, UK, Poland, Dubai, Australia and USA and four fully owned factories in Asia and Africa.
No deal details were disclosed.
Advisers:
Brian Murphy of Corporate Finance Associates Worldwide provided corporate finance advice to Portwest.
Renatus comment:
Portwest is a phenomenal family business success story. Set up in 1904 and now run by the low-key Hughes brothers Harry, Owen and Cathal. Since 1979, the business has grown annual revenues from €200k to over €300m after this latest investment. Led by CEO Harry Hughes, 2017 overall winner of the EY Entrepreneur of the Year award, the business has targets of being a €1bn a year revenue business.
Coming from humble Mayo roots, Portwest is another example of an Irish family business leading the way internationally. There is something in the water in Mayo with two other family run business international success stories with Smyths Toys, originally founded in Claremorris, and McHale Engineering, from Ballinrobe. Any of these private family businesses would be big enough to be listed on the ISEQ stock exchange.
Source: Portwest press release
Connolly’s RED MILLS acquires world’s oldest equine products manufacturer
Deal details:
Kilkenny-based Connolly’s RED MILLS has acquired Carr Day and Martin. Founded in 1765, Carr Day and Martin is the world’s oldest equine products manufacturer. The business is being sold by its current owners, the UK-based Tangerine Group.
Speaking about the deal, Sales & Marketing Director Gareth Connolly added that “Carr & Day & Martin is a company we have admired for many years, as a fifth generation family business, we value the history, heritage and tradition of such companies and now are delighted to include it as part of our family business. As a recognised global leader in Equine Care with high quality products, Carr Day and Martin is an excellent fit and we look forward to building on the long-standing relationships the company has with its staff, customers and suppliers in the years to come.”
No deal details were disclosed
Advisers:
None mentioned.
Renatus Comment:
Similar to Portwest, Connolly’s RED MILLS is another fine example of an Irish company under its original family ownership driving on as an international leader in its space.
Over 100 years old and with its fifth generation of Connolly’s involved in the company, the business is continuing to go from strength to strength and has used careful and strategic acquisitions including Foran Equine in 2012, a market leader in equine healthcare products worldwide, and now the acquisition of Carr Day and Martin.
Source: Connolly’s RED MILLS press release
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.
Aurivo appoints new Group Head of Operations
Aurivo Co-op has promoted Etienne Gerard to the role of Group Head of Operations. Mr Gerard joined the co-op in 2005 having previously worked for Natural Dairies and Kerry Group.
Dell Technologies Ireland appoints new Managing Director
Jason Ward has been appointed as Managing Director of Dell Technologies Ireland. Mr Ward transitioned to Dell from EMC in conjunction with Dell’s acquisition of EMC three years ago. At EMC he assumed a number of senior roles having joined the organisation in 2010. Mr Ward previously worked for SAP, Siebel and JD Edwards.
ByrneWallace appoints new Banking & FS Partner
Law firm ByrneWallace has appointed Neil O’Keeffe a partner in its banking and financial services practice. Mr O’Keeffe joins from LK Shields where he worked for 13 years. Prior to LK Shields, Mr O’Keeffe worked as a Solicitor at McCann Fitzgerald.
Bank of Ireland appoints new Head of Food & Drinks
Róisín O’Shea has been appointed as Bank of Ireland’s head of food and drink sector, a newly created role. Prior to joining Bank of Ireland, she held a number of senior commercial positions in both indigenous and multinational consumer goods companies including PepsiCo, Valeo Foods, Carbery, Boyne Valley and Robert Roberts Ltd.
PIAB appoints new CEO
Rosalind Carroll has taken up the role of chief executive officer at the Personal Injuries Assessment Board. Previously the CEO of the Residential Tenancies Board since 2016, she was appointed to the PIAB last year and took up the role with effect from 2 March 2020.
COMPANY PERFORMANCE
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.
Kilwaughter Minerals trades as two business units across the island of Ireland, K Rend and Kilwaughter Lime. Kilwaughter Lime is a mineral and quary processors with its headquarters in Larne, Northern Ireland which has been in operation since 1939. K Rend is a silicone render manufacturer, specialising in facades and other external wall insulations. The business has a successful year as revenue and EBITDA increased by 22.3% and 16.4% respectively. At the end of the year, cash on hand had decreased by c. £2.4m to stand at c. £7.9m. During the year, the business acquired the external wall insulation division of Alumasc Exterior Building Products Ltd for consideration of £4.7m, which was the primary draw on cash. Kilwaughter employed an average of 178 staff at a cost of c. £6.6m and had net assets of £26.3m at year end. The business is owned by Simon McDowell, Jenifer Ervine, Nicola Stanley and a number of other minority shareholders.
Silork Limited is the trading company behind the 4-star Kerry-based Parknasilla resort. Both revenue and EBITDA increased during FY18 with revenue growing by c. 6% to c. €8.5m while EBITDA grew by c. 2% to €1.5m. The hotel employed an average of 94 staff during the year at an annual cost of c. €3.0m. The hotel spent c. €700k on CapEx in FY18, roughly half of what it spent the prior year. The carrying value of the fixed assets on the balance sheet stood at c. €14.6m at the period end, €12.6m of which relates to freehold land and buildings. There was c. €16.2m of debt against the balance sheet versus a cash balance of c. €380k. The company is 100% owned by British Virgin Islands-based Silvador Limited.
RECENT FUNDRAISINGS
Who: Output Sports, a start-up that uses advanced signal process and machine learning to test different aspects of athletic performance and track training programmes through a wearable sensor. The business, a spin-out from UCD, was founded in 2018 by Martin O’Reilly, Darragh Whelan, Julian Eberle and Brian Caufield.
What: The business has raised €1.3m in seed funding. The funding was led by Atlantic Bridge University Fund, with participation from Elkstone Partners and Enterprise Ireland. Curám Software co-founder and chief executive John Hearne, Leinster Rugby players Adam Byrne and Dan Leavy are also among the backers.
Why: The funding is to be used to help the company expand into other markets and to expand employee numbers.
Source: Irish Times
Who: Ark Housing Association has secured investment.
What: £12m (€13.8m) is backed by Danske Bank and the North’s Department for Communities as an initial investment as part of a 5-year plan with total planned investment of £75m (€86.26m).
Why: The investment will be used for building first 200 of targeted 550 new homes for homeless individuals and families.
Source: Irish Times
Who: Enterprise Ireland approves new fund.
What: €1.14 Small Business Innovation Research (SBIR) programme will fund five competitions, covering climate action, health, biodiversity and transport.
Source: Enterprise Ireland press release
Who: Dublin and London-based venture capital firm Frontline Ventures has announced a new fund.
What: $80m (€72m) will bring the total funds under management by the VC to $200m (€176.7m).
Why: The funding is to help US software companies expand into Europe.
Source: Irish Times
Who: Carrick Therapeutics seeks further funding.
What: The targeted amount was not disclosed. In 2016 the company secured €85m.
Why: The company looks to deliver breakthrough therapies targeting the spread of cancer cells and also a form of ovarian cancer.
Source: Irish Times
Who: Belfast IT company Sonrai Analytics has secured funding.
What: £700,000 (€805,000) comes from a number of Northern Irish and Irish entrepreneurs and local seed funders, led by Techstart Ventures. Invest NI also offered the company £48,000 (€55,200) towards the eight jobs in software engineering and data science.
Why: The funding will further boost the development and commercialisation of our company
Source: Belfast Telegraph
Who: VideoRankMe, a Cork-based artificial intelligence start-up that helps companies appear prominently on Google and YouTube founded by technology entrepreneur Mike English and run by CEO Ricky Hill.
What: The business has raised €1.5m from a number of high-profile investors.
Why: Funding will used for the continued development of the technology.
Source: The Business Post.
Thought for the Week
Bain & Company recently published their annual global private equity report and it is well worth a read. Link here:
https://go.renatus.ie/e/512701/private-equity-report- 2020-pdf/3bksqp/389552414?h= j9abDpGba1k5-NNG6p_ KpMfSMciTEkGNpXqLSXaw0L4 The below chart was the most interesting – highlighting the sheer wall of the $2.5tn of dry powder in the global market today.
What it means is interesting…does it mean just thinking through basic supply and demand theory that with so much money to deploy that asset prices will not be allowed to fall too far and the cycles we knew before may not prevail…does it mean that QE effectively ends up as dry powder and has lost its effect?
@RenatusCapital Tweets
72%
The percentage of residential properties purchased by the household sector in 2019, down from 95% in 2010, according to a KBC report. @IrishTimesBiz
4.8%
The Irish unemployment rate for February 2020 amounting to 120,100 unemployed persons, down from 5% in February 2019, according to @CSOIreland
4.94%
The year-on-year drop in the new car sales in Ireland for the first two months of 2020, according to SIMI. @IrishTimesBiz
59.9
The Purchasing Managers’ Index for services for February 2020 up from 56.9 in January, a reading over 50 indicates growth, according to AIB IHS Markit.
@RTEbusiness
8%
The year-on-year drop in the new car sales in Northern Ireland for February 2020 amounting to 3555 new cars sold, making it the worst February in over 20 years, according to SMMT. @BelTel
5.5%
The year-on-year growth in the Irish GDP for 2019, making it the EU’s fastest growing economy, according to @CSOIreland
0.4% & 14.7%
The year-on-year increase in the Irish industrial production and turnover, respectively, for January 2020, according to @CSOIreland
ABOUT RENATUS
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:
- Succession Planning
- Management Buyouts / Buy-Ins
- Funding for organic growth
- Acquisition Funding; and
- Share Sales
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