Renatus’ Weekly M&A Newsletter – 05/09/2021
September 6, 2021Renatus’ Weekly M&A Newsletter – 19/09/2021
September 19, 2021
Renatus Weekly M&A & Company Performance Private Equity Newsletter 12/09/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
WELCOME NEW TEAM MEMBERS
We would like to welcome Bronagh Kearns, Alan Manning and Tiernan O’Hagan to the Renatus team who started their graduate programme this week. Renatus is built on a hardworking team, with a love for business and SMEs. Bronagh, Alan and Tiernan embody these values and we are privileged that they chose Renatus to launch their careers. We look forward to their contribution in helping to drive Renatus forward over the coming years.
M&A ACTIVITY
E+I to be acquired by Vertiv
Deal Details: E+I Engineering group is to be acquired by US integration giant Vertiv in a deal reportedly valued at €1.7bn. The deal, which is subject to customary closing conditions, is expected to close in Q4.
E+I, founded in 1986 by Philip O’Doherty and based in Co Donegal, is a global provider of electrical switchgear and power distribution solutions. The company employs c. 2,100 people across its facilities in Ireland, USA and United Arab Emirates.
The key shareholders of the business were Philip O’Doherty, and the key senior management Damian McCauley, Cathal McLaughlin, Paul Connolly, and Adrian Sheridan.
NYSE-listed Vertiv is a provider of equipment and services for data centres, with a portfolio of power, cooling and IT infrastructure solutions and services that extends from the cloud to the edge of the network. Its 21,000 employees serve customers in more than 130 countries.
Advisers: None mentioned
Renatus Comment: Philip O’Doherty really took on global brands like ABB, Siemens, Schnieder and others in this space and this eighteen minute video from the 2013 MacGill Summer School gives a great insight into O’Doherty. In its Dec 19 financial statements, E+I reported group revenue of c. €382m and EBITDA of c. €80m. However, it looks like the business has kicked off significantly since then and is on a strong growth trajectory. The agreed deal sees E+I shareholders receive c. €1.52bn upfront (€990m cash + €533m stock in Vertiv), with an earnout of up to an additional €169m if Dec 22 EBITDA is in excess of €132m. While not a tech start up, this is another Irish “Unicorn” and is a fantastic exit for the shareholders. Market’s did not share our enthusiasm – Vertiv’s stock is trading down c. 14% since the announcement.
Source: E+I Engineering press release
IMMAC acquires two Irish nursing homes
Deal Details: Healthcare investor IMMAC Group has acquired Beechwood Nursing Home in Carlow and Woodlands House Nursing Home in Navan, Co Meath for an undisclosed amount.
Both Beechwood and Woodlands House are private nursing homes with strong reputations for providing high quality care in a homely setting designed to promote health and well-being for its residents.
These latest acquisitions increase IMMAC’s investment portfolio in Ireland to seven nursing homes.
IMMAC, founded in 1997, is one of Europe’s leading companies for real estate investments in the healthcare sector. To date IMMAC group has invested c. €1.7bn in more than 160 social real estate assets.
Advisers:
Advisors to IMMAC Ireland on this transaction were:
Beechwood
Baker Tilly – Financial
Simmons & Simmons – Legal
Woodlands House
Brenson Lawlor – Financial
McCann Fitzgerald – Legal
Renatus Comment: IMMAC has been a regular in our newsletter since it first entered the Irish nursing home market in 2017, when they acquired Beechfield Care Group. The nursing home sector has been undergoing significant consolidation and capacity expansion in recent years, driven by our growing population, aging demographics and shortage of beds. Along with insurance companies, veterinary surgeons and other sectors, nursing homes really have been revalued and are commanding much higher multiples than historically, driven by macro factors pushing up global demand for the end offering.
Source: IMMAC Press Release
Circle K acquires 10 Londis stores
Deal Details: Filling station group Circle K is acquiring 10 convenience stores, currently operating under the Londis banner, all located in Dublin. The deal includes a number of in-store food franchises for Subway and Chopped. The financial details of the transaction, which is subject to regulatory approval, were not disclosed.
The Griffin Retail Group was established in 1997 by Seamus Griffin when he opened his first store in O’Connell street. It has since grown to 15 convenience retail stores nationwide.
Circle K, currently owned by Canada’s Couche-Tard, currently has about 420 garage forecourts in Ireland. It has reportedly invested more than €150m in the Irish market since it took over the Topaz network in 2016, previously owned by Denis O’Brien.
Advisers:
Griffin Retail Group was advised by:
Corporate Finance: John Higgins and Peter Neville (EY)
Commercial Legals: Adrian Burke & Associates
Property Legals: Aideen Hennessey (HOS Partners)
Tax: John Kennelly (EY) and Brenson Lawlor
Financial Advisory: BLG Advisory
Renatus Comment: This is an interesting move by Circle K’s Irish unit, to move out of the petrol station business to the high street. Although, in reality petrol stations are now much more convenience stores that sell fuel than the other way around. In its last set of accounts as a public company, Applegreen’s Ireland business generated 2.1x more gross profit from non-fuel sales vs fuel sales. Circle K certainly has the experience to make a success of this move and challenge the dominance of Centra and Spar. Circle K’s owner, Couche Tard is the largest convenience store operator in North America with 10,000 outlets, in the US it is second only to 7 Eleven.
Source: Checkout.ie
Business Post acquires Red C
Deal Details: The Business Post Group has acquired polling and research consultancy Red C Research in a deal reportedly worth €7m.
Red C, founded in 2003, has counted The Business Post as a long-term client having been conducting political polls on the newspapers behalf. Following the transaction it will remain an independent entity within the group.
Business Post group, led by Enda O’Coineen, includes the Business Post news title and its conference business iQuest & Business Post Live.
The acquisition was funded by the group’s existing capital providers: a shareholder group led by Mr O’Coineen, who is the majority owner, and Beachpoint Capital Partners.
Advisers: Venturewave and a FOD Solicitors team led by David Ryan, Elaine Cully, Ciara Finnan, Cian Mannion and Aoife Brannigan were lead advisers for the Business Post.
LK Shields Solicitors led by Jennifer McGuire (Partner, Corporate/M&A) with assistance from James Byrne and Gillian Dully provided legal advice to Red C.
Renatus Comment: Under the leadership of Enda O’Coineen, the Business Post Group is expanding its vision beyond newspapers and building the business to be a much wider “content” provider, from data through Red C or events through iQuest, or the core Business Post newspaper.
Source: Irish Times
Macquarie’s Green Investment Group (GIG) acquires offshore wind farm
Deal Details: Macquarie’s Green Investment Group (GIG) has acquired Fuinneamh Sceirde Teoranta, the developer of the Sceirde Rocks offshore wind farm, in Galway, Ireland. Sceirde Rocks is a proposed 400 MW offshore wind farm, capable of generating enough energy to power the equivalent of up to 295,000 homes.
Fuinneamh Sceirde Teoranta was owned by a collective of shareholders with Bartley Lee, Padraig Lee and Seosamh O’Laoi being the major shareholders.
Advisers: GIG was advised by EY. Financial DD was provided by James McCarthy, Maeve Fleming, and Kelvin Cummins, while Tax DD was provided by Dave Barry and Niall O Lideadha.
Renatus Comment: The opportunity in the off shore wind market is clear – Ireland has an objective of achieving 70% renewable energy by 2030 and to achieve this, over 5 GW of offshore wind energy is expected to be developed by the end of the decade. Expect to see a lot more transaction activity in this space.
Source: GIG press release
Grant Thornton acquires Signature Financial Planning
Deal Details: Grant Thornton Ireland has announced the acquisition addition of Signature Financial Planning to its Private Client Business service.
Signature Financial Planning Ltd (incorporating Heritage Financial Services Ltd) by industry veteran Brendan Reade. It provides investment and retirement planning financial advice to many professionals, business owners and retirees since its formation in 2009.
Advisers: GIG was advised by EY. Financial DD was provided by James McCarthy, Maeve Fleming, and Kelvin Cummins, while Tax DD was provided by Dave Barry and Niall O Lideadha.
Renatus Comment: The opportunity in the off shore wind market is clear – Ireland has an objective of achieving 70% renewable energy by 2030 and to achieve this, over 5 GW of offshore wind energy is expected to be developed by the end of the decade. Expect to see a lot more transaction activity in this space.
Source: GIG press release
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
Laois-based Jamestown Manufacturing Ltd.’s principal activity is the provision of steel processing services.
In its financial year to February 2020, the business reported revenue of c. €19.0m (an increase of 31.7% YoY) which converted to EBITDA of c. €1.3m (an increase of 13.2% YoY). Distribution costs increased by c. €209k and administrative expenses by c. €594k YoY which prevented the strong revenue growth from fully flowing through to EBITDA growth.
The business ended the year with a cash balance of c. €2.4m, with an advance of c. €1.1m to a subsidiary being the most significant post-EBITDA use of cash.
Jamestown Manufacturing Limited is wholly owned by Maurice Sterling. The business employed an average of 97 people during the year at a total cost of c. €4.0m.
RECENT FUNDRAISINGS
Who: The Naked Collective Limited, an Irish start-up established to produce functional drinks for the health and wellness market under the brands “Mude”, “So.Beer” and “Trainr”. The business is led by co-founders, Niall Phelan (CEO) and Catherina Butler (CFO).
What: The company has raised approximately €6.2m from investors, including BVP Investments. The funds raised were reportedly €1m more than initially targeted. The company raised €6m in a previous round in 2020.
Advisors: DLA Piper Ireland LLP is the legal advisor to The Naked Collective Limited.
Why: The money is to be used to support the company’s global sales and marketing expansion plans, particularly in the US.
Source: RTÉ
Who: Tech consultancy Trilateral Research Ltd has secured funding.
What: €1.23m funding was awarded from the EU’s Green Deal Work Programme and the Internal Security Fund.
Why: The funding will be used for research in climate change, cyber-security and combatting misinformation.
Source: Irish Examiner
Who: Kindora, a platform for premium childrens’ goods founded in 2020 by Sarah Ouellette, raised funding and secured a spot in Techstars London.
What: €500,000 round was led by Heather Morris, who was previously chief strategy officer with student learning platform Chegg and is an advisor to BabyQuip, a US company that offers a similar service to Kindora’s. Other backers include Georgie Smallwood, chief product officer of Tier Mobility, and entrepreneur Desmond Green.
Why: The funding will be used for expansion and product enhancement. The company is also hoping to open a retail premise this year in Dublin.
Source: Irish Times
Who: Irish life sciences venture capital group Fountain Healthcare Partners has invested in Dutch biotech Calypso Biotech.
What: The Irish company participated in the €8m extension to the Series A round along with Gilde Healthcare, Inkef Capital, Johnson & Johnson Innovation and M Ventures bringing the total raised to €28m.
Why: The funding will be used will be used to speed up the development of its monoclonal antibody treatment for auto-immune diseases including coeliac disease, eosinophilic oesophagitis and dermatology.
Source: Irish Times
Who: Chapel Gate Irish Whiskey, a whiskey bonding business founded in 2015 by former Diageo exec Louise McGuane. The company sources whiskey from Irish distilleries and matures it in a purpose build bonded rackhouse.
What: The business has raised €1.3m in from American private investors.
Why: The funding will be used to purchase more whiskey and establish US operations.
Source: SundayTimes
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 OF THE WEEK
Anyone curious about how to grow a unicorn from Ireland in a traditional industry should listen to this interview.
Since this interview in 2013, Philip O’Doherty’s business has grown 4/5x, and this interview gives a great view inside the mind when the business was a golden platform, but not the unicorn it is today.
The lessons we learnt from the video include:
- any aspiring entrepreneurs should get a good chapter or two of professional work under their belt and then give a start up a go – he credited the roots he got working for ESB and subsequently DuPont.
- the business is 99 per cent Derry and Donegal people, and the brains are in Donegal HQ,
- 95/100m turnover at the time, 99% outside the island, proving great businesses can be built in Ireland,
- R&D investment crucial – crucial that sales and R&D and 100% aligned,
- he reinvested almost everything up to that point and he prioritised the business over lifestyle,
- when expanding abroad you the leader, or one of every senior team must go – don’t fool yourself thinking you can grow without feet on the ground, and
- multinationals spawn great talent and entrepreneurs – he said this is a benefit never fully credited to the multinationals here in Ireland.
@RenatusCapital Tweets
19%
The biennial decrease in the Belfast shopper footfall for August 2021 vs pre-pandemic 2019, according to the research by the Northern Ireland Retail Consortium and Sensormatic IQ. @BelTel
€10bn
The Irish households savings for Q1 2021, more than 4x the amount usually saved in the first quarter of the year, according to @CSOIreland
14%
The year-on-year increase in the value of the Irish monthly services index for July 2021. The most notable changes were in the Information and Communication (+20.1%) sector, according to @CSOIreland
26% & 34%
The year-on-year increase in the Irish construction production volume & value indices, respectively, for Q2 2021. @CSOIreland
23.3%
The year-on-year increase in new private car registrations in Ireland for January to August 2021 amounting to 88,618 new cars, according to @CSOIreland
2.8%
The year-on-year increase in the Irish consumer price index for August 2021. The most notable changes were in Transport (+10.2%) and Clothing & Footwear (-5.6%) sectors, according to @CSOIreland
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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.
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