InsightsNewsletterRenatus’ Weekly M&A Newsletter – 11/12/2022

Renatus’ Weekly M&A Newsletter – 11/12/2022

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Dear Reader,

Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.

Thought for the Week

Despite recent uncertainty, the Irish economy is still performing soundly. November saw a record monthly corporation tax collection of over €5 billion as Ireland’s technology MNCs continue to provide major support to the country despite job cuts and the forecast downturn in activity.

This strong performance is in major contrast to our neighbours in the UK who are still reeling from the impact of September’s disastrous mini-budget and now face significant disruption due to widespread strikes from workers in the travel and healthcare sectors.

Data points are starting to emerge that suggests diverging performance in the two economies:

  • Society of Motor Manufacturers and Traders (SMMT) downgraded its UK 2022 car registration forecast to 1.57 million – the lowest level since 1982.
  • Ireland reported the highest GDP growth in the Eurozone for Q3 with GDP up 0.3% while the UK is down 0.4% in Q3 this year vs. pre-pandemic levels in 2019
  • Inflation in Ireland remains high at 8.9% but it is trending downwards The UK continues to struggle to get prices under control with inflation at a 41-year high of 11.1% as of October

It may be the calm before the storm as historically it was also said if our neighbours get a cold we get the flu but it is worth reflecting with some pride on our current situation. Hopefully we can maintain our position and they can overcome their economic headwinds.

M&A Activity

International Aerospace Coatings (IAC) Group has been acquired by Tiger Infrastructure Partners

IAC

International Aerospace Coatings (IAC) Group has been acquired by Tiger Infrastructure Partners.

International Aerospace Coatings (IAC) Group specialises in aircraft painting. It was established in 2014 when Vance Street Capital merged Shannon-based Eirtech Aviation with California-based Leading Edge Aviation Services and Associated Painters. It is led by CEO Martin O’ConnelI.

Tiger Infrastructure Partners is a New York-based private equity fund that focuses on investment in infrastructrure assets. It was founded in 2010 by Emil Henry, Jr. This is its 7th investment from its Tiger Infrastructure Partners Fund III.

Advisers:
Vance Street Capital:
Legal: Arthur Cox led by Cian McCourt (Corporate and M&A) and Sergio Dos Santos (Corporate and M&A) and included Phil Cody and Eoin Hamill (Finance), Ailish Finnerty and Carl Grenville (Tax).

IAC:
None mentioned.

Tiger Infrastructure Partners:
None mentioned.

Renatus Comment: Ireland’s strong relationship with the aircraft-leasing industry is well publicised but there are also several other aviation-related industries with significant operations here. The Shannon branch of IAC (Eirtech Aviation) employs more than 250 people. The plane painting industry stands to benefit from the expected tailwinds in air travel over the coming years with predicted industry growth of c. 8% per annum. This deal between industry leader IAC and a major US private equity backer, positions Ireland strongly to hold a significant place in the sector going forward.

Source: The Independent

Twomey Moran acquired by PwC

Twomey Moran

Deal Details: PwC has acquired Twomey Moran for an undisclosed sum.

Twomey Moran is a tax advisory business based in Dublin. It was established in 2010 following the split of Kennelly & Twomey into two separate companies. It was principally owned by David Moran and Kieran Twomey and employs c. 20 staff. It does not report turnover or EBITDA information.

PwC is a leading accounting, assurance and professional services firm with operations in over 150 countries. In FY 20, PwC Ireland reported revenue of c. €566m.

Advisers:
Twomey Moran:
Corporate Finance: Pegasus Capital led by Mark Metcalfe.

PwC:
None mentioned

Renatus Comment: We have reported a growing trend of consolidation plays within the professional services space in recent months, but it is by no means a recent phenomenon. Kieran Twomey of Twomey Moran worked at both PwC’s predecessors, Coopers & Lybrand, and PriceWaterhouse before they merged in 1998. Twomey left the firm the prior year to set up Kennelly & Twomey.

Source: Business Plus

Keywords Studios acquires Helpshift

KEYWORDS LOGO

Deal Details: Keywords Studios has acquired Helpshift. The acquisition is based on a conditional agreement and Keywords Studios will reportedly pay up to a  maximum of $75m.

Keywords Studios is an international technical and creative services provider to the global video games industry. It was founded in 1998 by Giorgio Guastalla and Teresa Luppino and is headquartered in Dublin. The company went public in 2013 and is currently led by Brendan Bodson. The business had FY21 revenues of c. £432.7m, which converted to an EBITDA of c. £72.8m.

Helpshift is a mobile-first customer service platform that manages and supports customer support issues in real-time for mobile apps and games. Helpshift was founded by Baishampayan Ghose and Abinash Tripathy in 2011, it is led by CEO, Eric Vermillion. It is headquartered in San Francisco and backed by True Ventures, Microsoft, Salesforce, and Nexus Venture Partners. The business is reported to be expecting revenues of c. $20m in FY22.

Advisers: None mentioned.

Renatus Comment: Since its IPO in June 2013, the Group has successfully made more than 50 acquisitions which have significantly extended its geographic reach, capacity and expertise. Its share price is up over 1800% in that time from £146.50 to £2,790. It is the only global, full-service provider in the market.

This bolt-on acquisition strategy seems to be supporting significant growth in the company with the business’ turnover growing from less than €135m in FY17 to over €430m as of December FY21. Combining conversational AI, automation, translation and agent support services, Helpshift fits with the player support service line offered by Keywords Studios.

Source: Irish Times

Sparks Lab Supplies acquired by Scientific Laboratory Supplies

sparks lab supplies

Deal Details: Sparks Lab Supplies has been acquired by Scientific Laboratory Supplies for an undisclosed amount.

Sparks Lab Supplies is a laboratory consumables, reagents, and equipment supplier based in Dublin. The business did not report turnover or EBITDA information.

Scientific Laboratory Supplies is a UK-based business that supplies equipment, chemicals, and consumables for laboratory use in the UK. In FY21, the business reported turnover of c. £80.0m which converted to an EBITDA of c. £5.6m.

Advisers:
Scientific Laboratory Supplies:
Legal: Philip Lee led by Anna Hickey, Andreas McConnell and Manuel Florendo (all Corporate) and John Somers (Property).
Financial Advisers: RSM.

Sparks Lab Supplies:
Corporate Finance: Bay Advisory led by Brian McDonald and Rory Butler.
Legal: BHSM led by Joe McVeigh and Sinead Mannion.

Renatus Comment: Scientific Laboratory Supplies has been very active in deal making during 2022, acquiring both Gem Scientific and Aurora Scientific earlier in the year. The acquisition will promote Scientific Laboratory Supplies’ entry into the Irish market as they will gain access to warehousing, logistics, and customer support whilst also working to mitigate the impact of Brexit for Irish customers. Sparks will continue to trade as Sparks Lab Supplies, retaining all employees whilst customers will get access to several new brands available through Scientific Laboratory Supplies portfolio of products.

Source: Scientific Laboratory Press Release

Minority stake acquired in Clarke Group

clarke

Deal Details: BGF has acquired a minority stake in Ballymena-based Clarke Group. It is reported to have invested £5m (€5.8m) as part of the deal.

Clarke Group specialises in innovative design-led façade projects. In FY21 the business reported turnover of c. £19.1m, which converted to an EBITDA of c. £1.1m. The business is family-owned by Michael and Eugene Clarke.

BGF is an investment company that provides growth capital for small and mid-sized businesses in the UK and Ireland.

Advisers: None mentioned.

Renatus Comment: Clarke Group serves a range of blue-chip construction industry clients such as Berkeley, Morgan Sindall, and Balfour Beatty. The Fire Safety (England) Regulations 2022 have been introduced as an important step towards the safety of high-rise buildings post-Grenfell. The business is expected to grow as a result of increasing fire safety concerns. As part of the deal, Adrian Ringrose will join the business as non-executive chair.

Source: Irish Times

Quantum 3 acquired by Burke Porter Group

Quantum 3

Deal Details: Quantum 3 has been acquired by Burke Porter Group. Deal consideration has not been disclosed.

Quantum 3 (Q3) develops production, assembly, workspace and storage solutions for international medical and life sciences clients. The business was founded in 2000 by Pat Hayes and Paul McGrath and is headquartered in Clare. The business does not publish turnover or EBITDA information.

Burke Porter Group (BPG) is a global supplier of automated diagnostic, testing and production solutions serving the life science and speciality industrial end markets. It focuses on automating high-precision processes, leveraging its capabilities in microfluidics, optical design, additive manufacturing, motion control and software to develop solutions tailored to its customers’ needs. The business was founded in 1953 and is headquartered in Michigan. It does not publish turnover or EBITDA information.

Advisers:
Burke Porter Group:
Deal advisory: Benchmark International.

Quantum 3:
None mentioned.

Renatus Comment: This is the second acquisition Burke Porter Group has made since receiving backing from AEA Investors, a US-based private equity company, in July 2022. This acquisition expands BPG’s footprint to Ireland.

Ireland’s life sciences sector has a global reputation for operational and innovational excellence. According to Enterprise Ireland, the Life Science sector, across medical devices, pharma and bio in Ireland exports more than €45 billion annually and directly employs over 50,000 people.

Source: Burke Porter Press Release

Spearline acquires Callstats

Spearline

Deal Details: Spearline has acquired Callstats from US-based 8×8. Deal details have not been disclosed.

Spearline is a communication testing technology company that monitors enterprise customers’ phone lines to diagnose, escalate and resolve issues. The business was founded in 2003 by Kevin Buckley and Matthew Lawlor and is headquartered in Cork. The business does not publish turnover or EBITDA information.

Callstats is a WebRTC call quality tool that improves productivity and enhances customer experiences, reducing agent downtime and boosting operational efficiency. It was ultimately owned by 8×8, a publicly listed provider of voice-over IP products. The business was founded in 2014 and is headquartered in California. The business does not publish turnover or EBITDA.

Advisers: None mentioned.

Renatus Comment: The acquisition of Callstats follows Spearlines’ 2021 acquisition of Israeli company, TestRTC. The acquisition was worth over €10m and triggered plans for US expansion. The business has scaled massively over the past year with plans announced at the beginning of the year to increase its global workforce by 106, to a total of 250. This acquisition positions it well to fulfil its ambitions of becoming the world’s number one provider of communication technology.

Source: Spearline Press Release

Midland Tyre Services acquires Meyler’s truck and bus tyre division

Midland tyres

Deal Details: Midland Tyre Services has acquired Meyler’s truck and bus tyre division for an undisclosed amount.

Midland Tyre Services is a supplier of truck, agri, and off-the-road (OTR) tyres based in Laois with operations in Dublin and Limerick too. The business is owned by Noel Kingston and Christopher Parle. In FY21 the business reported turnover of c. €35.7m, which converted to EBITDA of c. €2.8m.

Meyler’s Tyres is a family-run supplier of tyres based in Wexford. The business was founded in 1993 by Paddy Meyler and is currently owned by his son Patsy Meyler. The business did not report turnover or EBITDA information.

Advisers: None mentioned.

Renatus Comment: Noel Kingston’s company Vaslyn acquired Midland Tyre Services in 2019. The acquisition followed Valsyn’s initial investment in the company in 2017, which saw it restructured with a debt deal agreed with Close Brothers. Due to the non-discretionary nature of the commercial tyre industry, it is well protected from macroeconomic instability. The acquisition will strengthen Midland’s market position as the business can further expand its nationwide reach.

Source: Tyre Trade

ECC Group acquires McDonald Surveys

ecc

Deal Details: ECC Group has acquired McDonald Surveys.

ECC Group is an engineering services firm based in Louth. It is owned by Colm Holmes and John Mc Goey. The business does report turnover or EBITDA information.

McDonald Surveys is a Louth-based provider of engineering surveying services to the construction sector. It was previously owned by Andrew and Sallyann McDonald. The business does not report turnover or EBITDA information.

Advisers: None mentioned.

Renatus Comment: The deal makes a lot of sense for two engineering services firms both based in the Dundalk area. It will allow McDonald Surveys to offer a wider range of engineering services to its existing tier-one clients while ECC Group will now expand its offering of surveying services in Europe, the United States and Australia (topographic, hydrographic and drone surveys as well as laser scanning and boundary mapping). The combined entity will employ over 70 people, making it one the country’s largest engineering firms.

Source: Dundalk Democrat

Riskhandler Solutions acquired by Applied Systems

Riskhandler Solutions

Deal Details: Riskhandler Solutions has been acquired by Applied Systems. Deal consideration has not been disclosed.

Riskhandler Solutions is an insurance software solution that enables an efficient digital distribution experience at each stage of the insurance life cycle. The SaaS platform enables rapid insurance product innovation and powerful underwriting controls for full-cycle rate, quote, and bind. The business is headquartered in Dublin. It was founded by Brendan Keenan and Martin Kennedy in 2012. It does not publish turnover or EBITDA information.

Applied Systems is a global cloud-based software company that provides agency and brokerage management systems across the US, Canada, the Republic of Ireland and the UK. Private equity firm Hellman & Friedman has been Applied’s majority shareholder since 2014, alongside minority shareholders Stone Point Capital, JMI Equity, and CapitalG. The business is headquartered in University Park, Illinois and was founded in 1980 by Robert Eustace. The business does not publish turnover or EBITDA information.

Advisers: None mentioned.

Renatus Comment: This is the second private equity-backed InsurTech deal in the past month with Deposify, backed by Sunriver Ventures, being acquired by Rhino at the end of last month. Private equity firms have shown interest in InsurTech as the insurance industry is well poised to take advantage of disruptive and innovative technology. InsurTech helps large insurance companies explore new options outside of traditional human efforts. These businesses are now beginning to consolidate in an effort to drive continued product innovation and expand distribution channels.

Source: Applied Solutions Press Release

Allied POS has been acquired by HL Display

Allied POS

Deal Details: Allied POS has been acquired by HL Display. Deal consideration was not disclosed.

Allied POS is a provider of Point-of-Sale solutions in Ireland, established in 2004. It was owned by John and Tracey Byrne. The business reportedly generates c. €2m of revenue annually.

HL Display is a global provider of in-store merchandising and communication solutions, based in Sweden. The company has net sales of c. 1,700 MSEK. It was acquired by the Ratos Group in 2010.

Advisers: None mentioned.

Renatus Comment: HL Display is the largest player in European merchandising and POS solutions. It has been active in pursuing consolidation of the European market in recent years, having acquired Italian company Display Italia and Dutch company Cool Presentation in 2021. HL has an exisiting Irish presence through its partner Shop Equipment Limited who sells to major retail groups like Musgraves and BWG. Allied POS will further expand the Group’s product offering in Ireland.

Source: HL Display Press Release

Encavis acquires Irish wind farm

Encavis

Deal Details: Encavis Asset Management AG has acquired a 27.6-MW wind farm project in Ireland for an undisclosed amount.

The wind farm is located off the west coast of Ireland and consists of a total of eight turbines. Five turbines are ready for construction and commissioning is currently planned for the end of 2023.

Encavis Asset Management AG is based in Hamburg and offers institutional fund solutions for investments in the growth market of Renewable Energies.

Advisers: None mentioned.

Renatus Comment: Once operational, the wind farm will be capable of producing electricity for c. 24,400 homes per year. This investment will aid Ireland’s policy aim to generate 70% of the country’s electricity from renewable sources by 2030.

Source: Renewables Now

D&D Insurances Ltd acquired by Arachas

D&D Insurances Ltd
Deal Details: Arachas has acquired D&D Insurances Ltd. Deal consideration was not disclosed.

Arachas Insurance is a nationwide insurance brokerage. Originally established in Cork in 1969, it has grown into a countrywide insurance provider with over 500 employees in Ireland. It is led by CEO Conor Brennan. Arachas was acquired by Ardonagh, an international insurance group with more than 100 offices and 9,000 employees, in 2020. In FY21, the business reportedly had a turnover of c. €61.0m, which converted to an EBITDA of c. €26.1m.

D&D Insurances is a specialist marine insurance broker based in Dublin. The business was owned by Barry & Cara Donnellan

Advisers:
Arachas:
FDD: Mazars led by Mark Mulcahy and Anthony Shiel.
Tax: Mazars led by Gerry Vahey & Nicole Hanlon.

D&D Insurances:
None mentioned.

Renatus Comment: Last week we covered Arachas’ acqusition of O’Malley-Griffin Insurances. This deal with D&D brings to eleven, the total number of acqusitions the company has made since it was acquired by Ardonagh in 2020. By acquiring a marine insurance specialist Arachas continues to strengthen its offering in each niche of the industry as it pursues its aggressive consolidation strategy.

Source: Arachas Press Release

Briggs Equipment acquires Blulift

blulift

Deal Details: Blulift has been acquireed by Briggs Equipment. Deal consideration was not disclosed.

Blulift is one of Ireland’s leading providers of powered access equipment and also offers training and maintenance services. It is based in Limerick and was owned by John Cusack. It does not report turnover or EBITDA information.

Briggs Equipment Ireland is a supplier of material handling equipment and machinery. It has sites in Lisburn and Dublin and is part of the wider Briggs Group. In FY20 the Irish entity reported turnover of c. €8.5m, which converted to EBITDA of c. €2.1m.

Advisers:
Briggs :
Legal: Pinsent Masons led by Oisín McLoughlin and inluding Sarah Hope and Maeve O’Brien.

Blulift:
None mentioned.

Renatus Comment: Briggs continue to be an active acquirer in the Irish market, having acquired Galway Plant and Tool Hire in September this year as well as Laois Hire and Balloo Hire in 2021. The company continues to strengthen its position in the Irish market by expanding its product offering across the plant hire space. It is a great result for Blulift owner John Cusack, having built his business for over two decades

Source: Briggs Equipment Press Release

Company Performance

CONACK

Conack Construction Ltd. is a construction company based in Limerick. It is owned by Tom O’Connor and Kieran Cusack. Last week the owners were named best established entrepreneurs at the 25th annual EY Entrepreneur of the Year awards.

In its financial year to December 2021 the business generated a turnover of c. €121.9m, an increase of 66.8% year-on-year. This converted to c.€7.2m EBITDA, an increase of 141.6%. The increase in EBITDA was driven by a 2.86% improvement in gross margin and 2% improvement in operating margin.

The business finished the year with a cash balance of c.€25.5m, a c.€14.2m increase on FY20. Significant post-EBITDA cash movements included cash released from working capital and payments to acquire tangible investments.

The business employed a total of 144 people during the period at a total cost of c. €13.2m during the year.

Conack Construction figs

Fundraisings

Who: Peptalk, a Dublin-based wellbeing and team experience platform founded by cousins James and Bernard Brogan.

What: The company has raised €3m in a funding round led by VentureWave Capital.

Why: The business will use the funding to focus on US expansion with CEO James Brogan re-locating to New York.

Advisers:
VentureWave: Grant Thornton led by Paddy Dillon and Thomas Roche.

Source: The Independent  

Who: BLK BOX, a Northern Irish gym company that designs, manufactures and delivers training equipment, accessories and apparel.

What: The company has raised £1.5m in funding from Whiterock Finance’s Growth Loan Fund II.

Why: The business, which has clients including Manchester United, Arsenal and Irish Rugby, will use the investment to scale its operations to meet increased customer demand and new contract wins

Source: Irish News

Who: Vaultree, a Cork-based cybersecurity company that has developed a solution to enable organisations to work with fully encrypted cloud-based data without needing to decrypt that information or surrender the security keys.

What: The business has raised $12.8 million in a Series A funding round co-led by Molton Ventures and Ten Eleven Venture. Other investors included CircleRock Capital, SentinelOne, Elkstone Partners, Cyber Club London and several prominent cybersecurity experts.

Why: Vaultree plans to use proceeds from the new funding round to advance sales, marketing and product development of its data-in-use encryption technology.

Source: Business Post

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.

Aidan Williamson

Aidan Williamson

Source:
(Google Images & LinkedIn)

the clarison group
Aidan Williamson bio

Eoin Kenny

Eoin Kenny

Source:
(Google Images & LinkedIn)

pkf
Eoin Kenny bio

Sinead Cullen

Sinead Cullen

Source:
(Google Images & LinkedIn)

nfp
Sinead Cullen bio

Ian Madden

Ian Madden

Source:
(Google Images & LinkedIn)

uniphar
Ian Madden bio

Mark Degnan

Mark Degnan

Source:
(Google Images & LinkedIn)

interpath
Mark Degnan bio

Conor Gibney

David Moran

Source:
(Google Images & LinkedIn)

pwc
David Moran bio

Caolán Conroy

Caolán Conroy

Source:
(Google Images & LinkedIn)

boi
Caolán Conroy bio

Brendan McAtamney

Brendan McAtamney

Source:
(Google Images & LinkedIn)

CXV-GLOBAL
Brendan McAtamney bio

Will Carmody

Will Carmody

Source:
(Google Images & LinkedIn)

mason hayes curran
Will Carmody bio

@RenatusCapital Tweets

50.8

The AIB S&P Global Purchasing Managers’ Index for the services sector compared to 53.2 in October. The index remains just above 50, separating growth from contraction as customers remain cautious due to rising economic uncertainty and high inflation. @AIBIreland

82%

The average increase in rent prices across Ireland since 2010, compared to an EU average of 18%. Average monthly rent stands at €1,400 on a national level and prices are unlikely to fall unless supply increases substantially, despite the cost of living crisis. @BPFINews

19%

The savings rate of Irish households between July and September, down from 20% earlier in the year. Irish households currently have c. €150bn in savings on deposit, despite getting some of the lowest interest rates in the Eurozone. @CSOIreland

14%

The increase in household’s annual electricity bills in 2021. The median electricity bill in 2021 was €1,268, compared to €1,111 in 2020. Despite the rise in electricity costs, the average annual gas bill was down 4%. According to @CSOIreland

48%

The percentage of Ireland’s electricity generating power supplied by wind farms in November. This makes it the primary source of electricity over the month and means wind has supplied 34% of all electricity in Ireland so far this year. @WindEnergyIRL

4.6%

The annual wage growth rate in November, down from a peak of 5.2% in July and August. The wage tracker records information on 6 euro area counties and overall wage growth fell to 5.1%, the first decline in over 18 months. This may suggest wage growth has peaked. @indeed

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

Our Family of Investments

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