Musgrave completes acquisition of Drinks-Inc, Waha sells remaining stake in AerCap, Wright Insurance Brokers Acquired by Aston Lark, XOCEAN expands with acquisition of 4D Ocean and much more in this week's Renatus M&A Newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 08/12/2019
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.
Musgrave completes acquisition of Drinks-Inc
Deal Details: Musgrave announced that it has agreed to acquire the brand and company assets of Drinks Inc. The value of the deal was not disclosed.
Belfast-based Drinks Inc has a portfolio of over 1,000 products covering the spirits, wines, beer and soft drink categories. Drinks Inc is also the exclusive agent for premium brands and wineries including BrewDog, Dingle Distillery and the UK’s number one wine brand Isla Negra. Following the deal, Drinks Inc will continue to trade as a stand-alone business.
Advisers: None mentioned
Renatus Comment: We mentioned this deal in ‘Deals in the Making’ a few weeks back and we have seen how competitive it’s getting in this space for growth with BWG Foods acquiring Heaney Meats last week. This completes another acquisition for the Musgrave Group, who also completed the acquisition of Donnybrook Fair and La Rousse foods only last year.
Musgrave Group reported pre-tax profits of c. €84.5m with a turnover of c. €3.9bn in FY18. The Cork-headquartered Group owns brands including SuperValu, Centra, Mace and MarketPlace.
Source: Musgrave Group
Waha sells remaining stake in AerCap
Deal Details: Abu Dhabi-based Waha Capital is selling it’s remaining 6% stake of Dublin-based AerCap.
Waha and its Avia subsidiary are selling 4 million shares in the world’s biggest aircraft lessor AerCap.
AerCap has agreed to buy more than 2.4m shares from Avia at the same price per share that the four million shares are being sold.
AerCap is paying about $150m (€135.8m) for the shares, which will be funded from its cash balances.
In 2010 Waha acquired 20% stake in AerCap in a deal valued at $380m (€343m) at the time. Since then the company has gradually reduced its stake in the business and sold 2.1% of the lessor in the first quarter of the year bringing its holding down to 6%.
Advisers: None mentioned.
Renatus Comment: Aviation leasing is one of Ireland’s great success stories with it firmly placed as a hot-spot for aircraft leasing firms. Ireland accounts for about 50% of the total lessor demand worldwide with AerCap, as well as a number of other top global lessors, based here. The industry continues to thrive and contributes more than c. €500m to the Irish economy each year.
AerCap’s portfolio of owned and managed aircraft was over 1,000 as of 30th September 2019 with more than 200 customers in over 80 countries.
Wright Insurance Brokers Acquired by Aston Lark
Deal Details: Wright Insurance Brokers, with offices in Wexford and Carlow has been acquired by UK-based Aston Lark, which is controlled by Goldman Sachs. The financial consideration for the deal was not reported.
Wright Insurance Brokers is a specialist in the Commercial and Transport sectors and also offers a range of insurance solutions for private clients. It’s most recent accounts for the year to the end of May 2018 show an operating profit of €4.8m and revenues of €24.5m. The group paid a €2.3m dividend.
The deal is Aston Lark’s second in Ireland, following the acquisition of Robertson Low in January 2019, and its first since the UK broker itself was bought by Goldman Sachs for £320m (€379m) in September.
Advisers: J R Sweeney LLP, led by Bryan Sweeney (Corporate Partner), acted for Wright Insurance Brokers along with Brendan French and Billy Sweetman of PWC. Eversheds-Sutherland (Birmingham), Eversheds-Sutherland (Dublin) and Matheson acted for Aston Lark.
Renatus Comment: If we were to rank the most active industries for M&A featured in our newsletter over 2019, insurance brokers would likely be at or near the top. There has been a flurry of activity as trade players and private investors alike have moved in to be consolidators as the industry landscape shifts.
Source: Aston Lark
XOCEAN expands with acquisition of 4D Ocean
Deal Details: Ocean data company XOCEAN has acquired a specialist autonomous hydrographic survey company 4D Ocean for an undisclosed sum.
XOCEAN is transforming the way ocean data is collected using marine robotics known as Unmanned Surface Vessels (USVs). The services provided by XOCEAN include mapping the seabed, inspecting subsea structures and monitoring the environment.
4D Ocean, founded by Duncan Mallace, is an ocean data analytics specialist with over 25 years of seabed mapping experience.
Advisers: None mentioned
Comment: This acquisition sees XOCEAN capture more of the value chain in its industry. Traditionally focused on the collection of ocean data, they now offer customers processing and analysis of same. The businesses had worked together before the acquisition but by bringing 4D in-house, XOCEAN will likely strengthen their value proposition in the market and increase customers’ reliance on them as more of an end-to-end solution provider.
Source:XOCEAN Press Release
Compu b parent acquires Stormfront
Deal Details: B.Iconic, Compu b parent company, has agreed a deal to buy British Apple reseller Stormfront. The deal is expected to add about €60m to group turnover.
B.Iconic is an Irish-owned and operated group that represents 100 technology brands including Apple, Bang & Olufsen and Go Pro. Last year, B.Iconic’s annual turnover was €150m.
Compu b was founded in 1992. It operates across seven retail locations and also has a sales division. It reported a €1.1m pre-tax profit for the year to the end of March 2019 as revenues fell to €139.6m from €157.4m a year earlier.
Stormfront is one of the UK’s largest Apple premium reseller with 23 stores and a sales division. It is also one of the tech giant’s biggest authorised service providers handling over 70,000 repairs last year. The group employs over 300 people and made a pre-tax loss of £475,000 (€562,532) in the 12 months to September 2017, as revenues reached £61.6m.
Advisers: Mark Mulcahy of Mazars led the Financial DD for the acquirer and was supported by his tax colleagues.
Renatus Comment: Compu b will add Stormfront’s 23 Apple operations to its existing seven, making it the largest Apple reseller and service provider in Ireland and the UK.
Source: Irish Times
Fiducia Bidco set to acquire Irish HomeCare
Deal Details: Fiducia Bidco, a subsidiary of MML-managed Fiducia Healthcare, is set to acquire Sora Healthcare (t/a Irish HomeCare) and Caraingangels (a related entity of Sora Healthcare). Management of Irish HomeCare are set to partner with MML to complete an MBO of the homecare provider and will be led by the group finance manager John Florence.
Irish HomeCare has its HQ in Co. Monaghan with offices around the country and employs c. 600 people. The company provides a range of services across Ireland, including meal preparation, dementia assistance, as well as training for healthcare workers. Caraingangels provides nursing care for children and young adults.
Fiducia Bidco is a wholly-owned subsidiary of Fiducia Healthcare, an Irish private limited company managed by MML Funds.
Advisers: Stuart Fitzgerald of Fitzgerald Power advised the management team and Grant Thornton Corporate Finance advised the owner.
Comment: While staffing availability and costs are a challenge in this and the adjacent nursing home industry there is no doubt the demographics are only going one way and domiciliary care and nursing home markets can only grow in the years ahead.
Source: The Sunday Times
Voxpro remaining shares acquired by Telus
Telus, a Canadian call centre giant acquired a 55% stake in Voxpro in 2016 for $58m (€52.4m). Following CEO Dan Kiely stepping down, Telus have now completed the acquisition of the rest of the company in a deal valued at up to $150m (€135.8m).
Voxpro, founded in 1995 by Dan and Linda Kiely, started with six people working above a pub on Marlboro Street in Cork city. Since the initial deal with Telus, Voxpro has seen its workforce grow from 2,700 employees to more than 6,000.
The last publicly available accounts for Voxpro show it recorded a €2.5m pretax loss for the 12 months ending December 2017, as it invested heavily in the business. Revenues jumped 50% to €91.1m.
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.
ArdMac appoints new Chief Operating Officer ArdMac Group, an Irish construction company, has appointed Alan Coakley as its COO. Mr Coakley joined the group in 2013 as Operations Director from PJ Hegarty where he worked for 16 years in senior Contracts Management roles.
PCH appoints new Chairman
PCH International has announced the appointment of Mike McNamara as its new Chairman. Mr McNamara was CEO of Flex for 13 years, leading a business of 200,000 employees in 30 countries. He is a venture partner at Eclipse Ventures and serves on the board of Workday. Mr McNamara was previously on the boards of Delphi, Sunedison and Therasense. He advises Tsinghua University School of Economics and Management, and has advised MIT, USA, and Sloan School of Management Visiting Committee.
New Litigation Partner announced at ByrneWallace
ByrneWallace has announced the appointment of Helen Gibbons as a partner in the firm’s litigation and dispute resolution team. Ms Gibbons is an experienced commercial and corporate litigator and advisor, specialising in advising senior management of corporate and public-sector bodies in litigation and regulatory matters. Ms Gibbons previously worked for almost 20 years for Noel Smyth & Partners. She joined ByrneWallace in 2018.
New leadership appointments at Maples Legal Dublin partners Colm Rafferty and Karen Killaleahave been appointed to the global management team of the Maples Group. The leadership appointments were announced alongside that of Cayman Islands partner Jonathan Green as the firm’s new global managing partner, succeeding Alasdair Robertson. Mr Rafferty joined Maples in 2007, five years after joining the roll of solicitors, and now co-heads the corporate team in Dublin. Ms Killalea joined Maples as partner and head of employment earlier this year after six years as an employment partner at A&L Goodbody.
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.
Connaught Electronics Limited, which trades as Valeo Vision Systems, is a Galway-based company that is part of the Valeo Group which is one of the world’s leading automotive suppliers, designing and manufacturing components and systems for cars and trucks. The Group has production sites and R&D centres across 28 countries worldwide and also employs 61,400 people. In Ireland, Valeo Vision Systems consists of an R&D centre and production site which forms part of the Comfort and Driving Assistance Business Group of Valeo. In its most recent financial year, Valeo Vision Systems turnover was down slightly by 2.5% to c. €271.9m although EBITDA increased by 5.0% to c. €60.8m due to increased gross profit margin. The company employed an average of 1,097 people at a cost of c. €58.6m in FY18. During the year, the company spent c. €11.3m on the addition of fixed assets which largely related to new computer equipment (c. €2.3m), construction (c. €3.5m), plant and machinery (c. €3.7m) and customer tooling (c. €1.4m). Net assets for the year stood at c. €43.1m, up from c. €15.7m the previous year.
Based in Sandyford Industrial estate in Dublin, PrepayPower is Ireland’s largest pay as you go electricity and gas provider which boasts over 150k homes as customers. In FY18, the company saw a 29.3% increase in turnover to c. €157.6m while EBITDA increased by 2% to c. €14.4m as a result of a 1.2 percentage point decline in gross margins and a c. €7.6m increase in admin expenses. The company employs 219 staff at an annual cost of c. €11.6m per annum and generated c. 3% of its turnover from the UK. During the period the cash balance increased by c. €970k to €23.1m. Cash generated in the business was predominantly used for (1) c. €4.9m of capital expenditures which largely related to its smart meters, (2) c. €1.7m in bank debt and interest repayments and (3) a €5.24m dividend to its shareholders. The accounts note that subsequent to the FY18 period end, the board has decided to wind down its UK operations.
Who: West Cork-based award-winning cheese producer Carbery Group, owned by four Irish co-operatives (Bandon, Barryroe, Drinagh and Lisavaird), has secured financing.
What: €35m loan has been provided by the European Investment Bank (EIB), the Group also receives continued support from AIB, BOI, and Rabobank.
Why: The money will support the construction of a €78m manufacturing plant.
Source: Irish Independent
Who: Dublin-based augmented reality (AR) start-up UtilityAR, founded in 2017 by Patrick Liddy, Séadna Smallwood and Aidan McDonnell, has raised seed funding.
What: €600,000 round was led by BVP and HBAN, which contributed a total of €450,000 to the financing, with Enterprise Ireland investing the remaining €150,000.
Why: The company plans to expand its product offerings and grow its user base, with the hopes of taking advantage of the growing level of investment in the AR sector.
Who:Enterprise Ireland and the Health Service Executive (HSE) have awarded funding to five companies.
What: Bluedrop Medical, Innerstrength, Cadscan, Jinga Life and Infocare have each received €100,000 through Enterprise Ireland’s Small Business Innovation Research (SBIR) programme.
Why: The funding is to support development of new innovations that address complications caused by diabetes.
Who: Gas Networks Ireland has completed a bond issuance.
What: €300m was raised through a five year bond with an interest rate of 0.164%.
Why: The money will be used to support its capital investment programme.
Who: Geowox, a property tech start-up that produces automated property valuation solutions, has secured funding.
What: €1.5m injection comes under the latest round of the European Union’s Horizon 2020 programme. Horizon 2020 is the current EU framework programme for research and innovation with a budget of nearly €80 billion.
Why: Geowox intends to use the additional funding to double its research and development team and further develop its platform.
Who: Irish company Moocall, that developed a calving sensor alert, has received additional funding.
What: €1.6m comes from a consortium including Joe Stanley, a partner at Dublin-based law firm Eversheds Sutherland, and David Cantwell of property firm Hooke & MacDonald and a €2m injection from Michael Smurfit
Why: The purpose of the funding was not disclosed but the company is expanding internationally and presumably it is to fund this growth.
Who: A project by Gas Networks Ireland’s parent company Ervia has been included in the European Commission’s “Project of Common Interest” list.
What: The inclusion on the European list could allow Ervia to access part of a €30b EU infrastructure fund.
Why: Ervia’s project, the Cork CCS project, is seeking to use a Kinsale gas field as a potential store for carbon. The project involves assessing the feasibility of using the soon-to-be-depleted Kinsale gas field to store CO2.
Brexit movement in the Week
Instead of ‘Thought for the Week’, we are bringing you a weekly tracker using odds from oddschecker and taking off bookmakers margin to come up with deemed percentage probability of outcomes.
There has been no movement in the past week in the probability of when some sort of Brexit occurs: By 31 December 2019 3% H1 2020 71% (56% Q1 +15% Q2) H2 2020/2021 13% Not before 2022 13% ——————————————————————————————.
With regard to the outcome of the General Election the markets are guiding a 70% (11 to 4 on) chance of a majority Conservative government.
If you are not in agreement with any of above you can get the odds here and back your opinion: Oddschecker – Brexit
The growth in the number of people at work in the first ten months of the year, showing an additional 53,700 people joining the labour force. There are currently over 2.3m people working here, the highest number in the history of the State. @ibec_irl
The year-on-year rise in the total value of Irish goods exports in the first eight months of 2019. According to @ibec_irl
The year-on-year increase in the tax revenues for end of November 2019 amounting to €54.9bn, 2.7% ahead of target, according to Exchequer. @irishexaminer
The year-on-year increase in the mortgage approval rate nationwide for Q3 2019, according to the Banking and Payments Federation Ireland (BPFI). @RTEbusiness
5.1% & 10.7%
The year-on-year increase in the production index and turnover, respectively, for the Manufacturing Industries for October 2019, according to @CSOIreland
The forecast year-on-year growth for the Northern Irish economy for 2020, according to PwC’s economic outlook. @BelTel
The year-on-year increase in the first time mortgages approved for homes in the commuter belt – Louth, Meath, Kildare & Wicklow for November 2019, according to the Banking and Payments Federation Ireland (BPFI). @rtenews
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: