Renatus’ Weekly M&A Newsletter – 12/07/2020
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.
Boojum Launches Home Meal Kits
This week Boojum launched their Home Meal Kits (https://go.renatus.ie/e/
There has been great interest thus far and interestingly we are seeing a lot of demand from employers wanting to reward their teams. The kits can be delivered direct to employee homes right across the island of Ireland in sustainable, eco friendly packaging.
Get yours here: https://go.renatus.ie/e/
M&A Activity
KN Circet to acquire ARCC Communications
Deal Details: KN Circet is to reportedly acquire ARCC Communications for an undisclosed sum.
KN Circet, led by Donagh Kelly, is a leading provider to the telecommunications, transport infrastructure and power sectors in Ireland, the UK and internationally. It serves the major infrastructure companies such as 3, Eir, Vodafone, BT and others with last mile services.
Birmingham-based ARCC Communications is a fast-growing company specialized in wireless telecommunications networks providing design, rigging, construction, installation and commissioning and maintenance services. ARCC is active on a variety of networks (2G, 3G, 4G, 5G) and activities (upgrades, new builds, swaps, decommissioning, etc.).
Advisers: None mentioned
Renatus Comment: KN Circet has experienced exceptional growth in recent times under the leadership of Donagh Kelly and seeing their operators and vehicles on Dublin streets is now a very common sight. For context, in February of 2013, KN Network Services Holdings Ltd (T/A KN Circet) reported revenue of €88.6m and EBITDA of €4.0m. In the 10 months to December 2018, revenue and EBITDA have surged to €279.3m and €19.8m, respectively.
This acquisition will deepen its geographical presence in a key market to the KN Circet group and from a services point of view, it looks to be a good fit.
Two windfalls coming down the line for this industry are the roll-out of 5G across the UK&I in the coming years and the expansion of the broadband network, particularly in Ireland. KN will be looking to position themselves as beneficiaries as a market leader in the UK&I.
Source: The Sunday Times
Joe Media acquired by Greencastle Capital
Deal Details: Greencastle Capital has purchased Joe Media UK from administration. The financial consideration has not yet been disclosed and the deal, subject to regulatory approval, is expected to be signed within the next two months.
Iconic Labs, a London-based multi-divisional new media and technology firm will oversee Joe Media businesses as per a management contract with Greencastle.
Under the terms of the contract Iconic Labs will be paid a £50k monthly management fee and will receive 25% of all profits if targets are met. On completion, Iconic Labs will manage all operational and commercial aspects of Joe media.
It has also been reported that Greencastle Capital, which is led by Paul O’Donohoe, is now targeting the Irish entity with a view to merging the two businesses.
Advisers: None mentioned
Renatus Comment: This is an interesting structure whereby Greencastle have full equity ownership but a management services fee and profit sharing agreement is in place with Iconic. This is akin to a hotel management deal, a very common structure in that sector but less prevalent in media.
Greencastle retain all of the equity while they have an incentivised specialist operator drive the growth of Joe.
For Iconic, they did not have to pay any cash consideration upfront and they have the carrot of 25% of profits if certain targets are met, a potentially very lucrative sum given the well established customer base on social media in the UK&I.
Source: Irish Times, Independent
DMS Group acquires Oligo Swiss Fund Services
Deal Details: DMS Group, with its European headquarters in Ireland, has acquired Oligo Swiss Fund Services. The financial consideration of the transaction was not disclosed.
The DMS Group is a governance, risk and compliance services provider to investment funds and managers with more than $350bn AUM. It offers AIFM, UCITS management company and MiFID services to some of the largest institutional investors and asset managers worldwide.
Oligo is a Swiss Financial Market Supervisory Authority (FINMA) accredited fund services firm authorised to represent foreign funds in Switzerland. Clients include Private Equity Funds, Hedge Funds and Alternative Investment funds.
Advisers: Dara Kelly and Rachel Wong of Grant Thornton advised on the Financial and Tax Due Diligence in this transaction.
The Dillon Eustace team, led by Philip Lea, Partner in Corporate and M&A department, advised the owners of Oligo.
Renatus Comment: Switzerland represents a massive market for investment funds and consequently complementary fund services. This acquisition will give the Group a foothold into this lucrative market with regards to its existing services while also diversifying its offering to represent foreign funds in Switzerland.
Source: DMS Group Press Release
Irish Wedding blog acquired by BMG Media
Deal Details: DMG media has acquired Irish Wedding website, One Fab Day for an undisclosed sum.
Founded by Naoise McNally and Susan Gallagher, One Fab Day has grown in to one of the world’s leading wedding website with reportedly around 550,000 monthly visitors.
DMG Media Ireland’s portfolio already includes EVOKE, MailOnline, Extra.ie, Rollercoaster.ie, the Irish Daily Mail, The Irish Mail on Sunday and the i Newspaper. DMG Media Ireland is part of the Daily Mail and General Trust PLC group which has revenues of c. £1.3bn and EBITDA of c. £110.9m.
Advisers: Bay Advisory acted on financial advisory for One Fab Day. Joe McVeigh from BHSM provided legal advice.
Dillon Eustace team, led by partner Adrian Benson, advised DMG Media on the legal side.
Renatus Comment: One Fab Day looks to be a good fit in DMG Media’s portfolio and should broaden their customer base. One Fab Day likely suffered as result of wedding cancelations due to Covid. This pent up volume of weddings that will take place over the next year or two will provide a good runway for growth.
Source: Evoke
Evad IT acquires North Dublin Publications Ltd
Deal Details: North Dublin Publications Ltd which trades as The Dublin People Group has been acquired by Evad IT Solutions.
North Dublin Publications Ltd, which publishes titles including Northside People and Southside People, has been in operation for over 30 years before the directors appointed a liquidator earlier this year. The collapse in revenues as a result of Covid was cited as the cause of the downturn in fortunes.
The assets were purchased through an open market process run by Tom Murray of Friel Stafford Liquidators by Evad IT Solutions which is run by David Mahon. Mr. Mahon is reportedly looking to re-launch the titles in print but also develop a digital offering.
Advisers: None mentioned.
Source: Independent
Deal Updates & Other News
Trinity Biotech to raise funds in the US
Bray-based and Nasdaq-listed medical diagnostic firm Trinity Biotech plans to raise $200m (c.€177m) through equity and debt.
In its prospectus, it is stated that any funds raised will be used for several purposes including future acquisitions, repayment of debt and product development.
The company develops and manufactures diagnostic products for the point-of-care and clinical laboratories and its products are used to test a range of infections, diseases, and conditions such a HIV, Lyme and diabetes and have recently developed a Covid-19 test.
Source: Irish Independent
Phoenix Tower acquisition of Emerald Tower gets the go ahead
Eir subsidiary Emerald Tower’s acquisition by US infrastructure company Phoenix Tower International has been cleared by competition watchdog CCPC.
This will position Phoenix as the largest tower infrastructure provider in Ireland.
The total cost of this acquisition is reported to be €300m and as per the terms of the deal, Eir will retain ownership of the base station, antennae and all telecom-related equipment, including fibre.
Phoenix will own and operate an excess of 9,000 towers, 986km of fibre and over 80,000 other wireless infrastructure and related sites, majority of which are in the Americas.
Source: CCPC
Cottages.com exits the Irish home rental market
Cottages.com, one of Europe’s largest holiday rental platforms, has announced that it is exiting the Irish market.
The website arranges the rental of self-catering properties almost solely to customers from the UK, an important market for Irish tourism.
Covid-19 coupled with the emergence of new booking platforms like Airbnb and Booking.com have decreased the number of rentals organised by the company in recent years.
All bookings for 2020 will be honoured before the exit is finalised.
Source: Irish Times
Dalata has agreed amendments to its debt facility
Dalata Hotel Group, the biggest hotel operator in the Republic, has agreed a new debt facility with its banking partners. This will provide additional financial strength and flexibility as the group reopens its 44 hotels.
The previous covenants comprising net debt to EBITDA and interest cover will not be tested again until June 2022.
These two covenants have been replaced, until that date, by a net debt to value covenant and a minimum liquidity test whereby Dalata must have a minimum of €50m available in cash and/or an unutilised amount of the revolving credit facility (RCF). Additionally, the RCF has been increased by €30m to €364m until September 2022 as part of the agreement.
Deloitte Debt & Capital Advisory team led by John Doddy and Rebecca Cuffe advised Dalata on this transaction.
Source: Irish Times
Examinerships/Receivership
House of Ireland to be liquidated
Irish gift retailer House of Ireland is reported to be shutting down.
The group, operated for 45 years by the Galligan family, employs c. 50 people across its outlets in Dublin and Belfast.
Before the coronavirus hit, House of Ireland had been planning an expansion of the business, with inbound tourism to Ireland at record highs in recent years.
Source: Irish Times
Interim examiner appointed to Compu b
David O’Connor of BDO has been appointed by the High court as interim examiner to Irish-headquartered Apple reseller Compu b retail Ltd.
Compu b retail Ltd acquired the loss-making Stormfront group in late 2019 with a view of increasing market dominance in the UK. However with Covid-19-related closures this has delayed the synergy and cost reduction implementation leaving the company exposed.
Compu b is a premium seller of Apple products which has 6 stores in Ireland and 24 stores in the UK. The company employs 395 people, 110 of whom are in Ireland.
Source: Irish Examiner
Your Smile Direct placed into liquidation
Your Smile Direct, which sells clear teeth-straightening aligners, toothpastes and other related products, has been placed into liquidation.
It has been reported that the company had accumulated losses of €4.4m at the end of 2018 and that an American supplier of aligners, Clear Correct, had petitioned the High Court to place the business into liquidation.
Tom O’Brien of Mazars has been appointed as liquidators while separately Aidan Brophy of Brophy Gillespie was appointed a receiver on behalf of BPC Ireland Lending DAC, a fund managed by Beach Point Capital.
Source: The Sunday Times
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.
JMW Farms is a group of companies concentrating on pig production within Northern Ireland, Republic of Ireland and Britain. They are also a feed miller and renewable energy producer.
In FY19, JMW Farms saw revenue increase by 6.3% to c. £43.1m while EBITDA decreased by 9.7% to c. £7.4m. Of that revenue figure, c. 86% was generated through UK sales and c. 82% of revenues were derived from the selling of pigs. EBITDA decreased primarily due to gross margins moving from 28.3% to 23.6% between FY18 and FY19.
Net cash increased marginally by c. £34.9k to leave an ending negative balance of c. £780.6k in FY19. Significant movements were the c. £3.1m spent on fixed asset purchases and c. £3.5m spent on intangible assets from the investment into pig facilities and internal development costs.
The company had 114 employees in FY19 at a total cost of c. £2.23m.
Based in Limerick , John O’Connell Crecora Mills is a family owned Animal feed company established in the early 1980’s. They serve the Mid West and Munster regions.
In FY19, Crecora Mills saw revenue increase by 8.4% to c. €19.9m while EBITDA also increased by 14.9% to c. €1.6m. Cost of sales increased in proportion to the spike in sales, therefore gross margins stayed at c. 20% YoY.
Net cash increased by €1.12m leaving an ending net cash balance of c. €1.45m. Significant cash movements were the investment in working capital of c. €682k and the fixed asset purchase of c. €531k.
Crecora Mills is owned equally by John (50%) and Kathleen O’Connell (50%).
Fundraisings
Who: Dublin-based software company iQuate has secured funding.
What: The $15m (c. €13.4m) funding round was led by Atlantic Bridge Capital and other iQuate’s existing private investors.
Why: The money will be used to fund the iQuate’s merger with Californian cloud management and governance solutions start-up HyperGrid. The merged entity, named CloudSphere, will provide a cloud governance platform for enterprise and cloud service provider clients.
Source: Irish Independent
Who: DCU Alpha-headquartered Wellair has secured funding.
What: The group, which manufactures air purification devices has raised $8m (c. €7m) in funding round led by existing investor F-Prime Capital.
Why: The funding follows a surge in demand for Wellair’s medical grade air-purification products as a result of the coronavirus.
Source: Irish Times
Who: Enterprise Ireland has launched two new funds aimed at entrepreneurs as part of its Competitive Start Fund (CSF).
What: The two CSF €1m funds (“All Sector” and “Women Entrepreneurs”) will offer up to €50,000 to female entrepreneurs, early stage companies or businesses operating in the manufacturing and internationally traded service sectors.
Why: The funds will aim to increase the number of High Potential Start-Up companies as well as the number of women entrepreneurs in Ireland as the country emerges from the economic crisis caused by Covid-19.
Source: Irish Times
Who: Cork-based Eqtec has raised funding. Eqtec is a waste to energy company that specialises in gasification solutions which convert waste and biomass into energy.
What: The company has reportedly raised £10.0m through a combination of a share placing and the subscription of new shares via PrimaryBid.
Why: The funds will reportedly be used to generally fund the growth of the business through investment in working capital, hiring staff and to support projects.
Source: The Sunday Times
Who: Data analytics firm Galytix has secured post-angel investment. The company specialises in risk software for the financial services and insurance industries.
What:The business has reportedly raised €1m from a range of private individuals.
Why: The funds will be used to support the growth of the business.
Source: Independent
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.
Thought for the Week
The British Government has this week taken decisive and strong steps to support its economy by launching a number of schemes as part if its Summer Statement.
All eyes will now to turn to Leinster House as we await our new Government’s first significant milestone in their ‘July Jobs Initiative’ announcement. Let’s hope the stimulus that comes is just as strong as our UK counterparts.
The UK schemes include:
- Furlough Scheme
- This will be extended and gradually wound down by the end of October.
- Kickstart Scheme
- The government will pay the wages of newly hired young people for the first six months of their employment, using a new £2bn fund.
- Training & Jobs
- A doubling of jobcentre work coach numbers and a £2,000 bonus for companies for each apprentice they take on.
- Green Investment
- £3bn for the decarbonising of housing and public buildings. Vouchers of between £5,000 and £10,000 from a £2bn pot to fund the retrofit of homes.
- Stamp Duty
- Increasing the threshold for stamp duty from £125,000 to £500,000.
- Vat Cut for Hospitality
- Reduction in the VAT rate from 20% to 5% for 6 months in food, accommodation and attractions sectors.
- Discounts on Eating Out
- Meals eaten out at any participating businesses, from Mondays to Wednesdays in August, will be 50% off up to a maximum discount of £10 per head
The Guardian have put together a visual of the various schemes:
@RenatusCapital Tweets
11.6%
The y-o-y nationwide decline of production in the Manufacturing Industries for May 2020, with plastics and construction materials the only industries showing a y-o-y increase. According to the @CSOIreland
8.5%
The predicted decline in the Irish economy for 2020, as a result of COVID-19, according to the European Commission. @RTEbusiness
3.3%
The decrease in the Irish house prices in the year to June with the average listed sale price at €253,868, according to https://go.renatus.ie/e/512701/2020-07-12/3h53vv/456585333?h=z76B9E13i7zTuz2YhEIVlZNVl4uEuZTYxBZ1oAMv3Jk Housing Market Report. @RTEbusiness
0.2%
The nationwide increase in the average monthly rent in the year to June. The average monthly rent now stands at €1,402, according to https://go.renatus.ie/e/512701/2020-07-12/3h53vv/456585333?h=z76B9E13i7zTuz2YhEIVlZNVl4uEuZTYxBZ1oAMv3Jk Housing Market Report. @RTEbusiness
36.7%
The year-on-year decrease in the new car registrations in Ireland in the year to June 2020 amounting to 49,184 new private cars licensed, according to @CSOIreland
0.4%
The year-on-year decrease in the Irish consumer price index for June 2020 with the most notable changes in Clothing & Footwear (-5.1%) and in Education (+4.1%), according to @CSOIreland
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
Current Portfolio:
Flew the Nest:
