Renatus Weekly M&A & Company Performance Private Equity Newsletter 12/11/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
The increasing prevalence at which some of Ireland’s largest public companies are looking to delist from the Euronext Dublin exchange has drawn valid cause for concern from many quarters.
After CRH’s exit from the exchange in September, Paddy Power owner Flutter was the largest company left on the exchange. This week, it too has announced plans to delist. The reasons for delisting have been consistent, citing greater trading volumes in US markets meaning greater access to investors, along with higher stamp duty costs on shares in Ireland. CRH and Flutter have also flagged regulatory complexities arising from maintaining two listings as a factor.
Despite this, Euronext itself has not been as concerned by the exits, seeing them as a foregone conclusion for some time, and drawing the majority of media attention despite not being the primary focus of the exchange itself. Euronext Dublin is the largest bonds listing venue globally, with 80% of bonds listed on Euronext exchanges being in Dublin. In supporting the global ESG drive, sustainable bonds traded on the exchange now account for over €238bn.
While there are obvious challenges stemming from indigenous businesses not viewing the Irish exchange as the most optimal way of raising capital, it is worth noting that it is not all doom, with Euronext itself proving to be a commercial success despite the increasingly difficult conditions in which it operates.
IBI Corporate Finance acquired by DC Advisory
Deal Details: IBI Corporate Finance has been acquired by DC Advisory. Deal consideration was not disclosed.
IBI Corporate Finance is a corporate finance advisor located in Dublin. The business has 28 employees and is led by joint CEO’s Tom Godfrey and Ted Webb. The company does not report turnover or EBITDA information.
DC Advisory is an international investment bank with expertise in 11 core industries. The company is owned by Japan’s Daiwa Securities Group and has c.700 professionals employed across 23 countries around the world. The business does not report turnover or EBITDA information.
Advisers: DC Advisory: Legal: Simmons & Simmons led by David Brangam, Jason Daniel, Martin Phelan, Christine Quigley and Harry McCarthy. FDD & TDD: PwC team of David Connolly, Aodhan Cannon, Tim Kiely and the PwC UK Deals team.
IBI Corporate Finance: None Mentioned.
Renatus Comment: IBI was originally established in 1966 as a joint venture between Bank of Ireland, Morgan Grenfell and Schroders before being solely owned by Bank of Ireland. A 2017 MBO saw the business spun out from Bank of Ireland. The decision for the existing management team to pursue a second transaction during their tenure will increase IBI’s access to international markets as it becomes part of a global group. In capitalising on this opportunity, IBI executives have stated that they are aiming to double its revenues over the coming years with a medium-term goal of €25m.
Source: IBI Press Release
Keaney Insurance Brokers acquired by Arthur J. Gallagher & Co
Deal Details: Keaney Insurance Brokers has been acquired by Arthur J. Gallagher & Co for an undisclosed consideration.
Keaney Insurance Brokers offers insurance and risk management solutions to businesses across Ireland. The Dublin-based business is owned by Terence Keaney and Zita Erdis. In FY Feb’23, the business reported turnover of c. €2.8m which converted to an EBITDA of c. €1.4m.
Gallagher is a NASDAQ-listed US multinational insurance brokerage, risk management and consulting firm. The business is based in Chicago.
Advisers: Keaney Insurance Brokers: Corporate Finance: Mazars led by John Bowe, Seán Damery. Tax: Mazars led by Gerry Vahey, Aisling O’Carroll and Sarah Colfer. Legal: LK Shields led by Emmet Scully, supported by Paul Dineen and Jennifer Dineen. Accounting: BKR led by Andrew Broderick.
Gallagher: Financial: Deloitte led by Conor Cullen. Legal: McCann Fitzgerald led by John Neeson and Donncha Sexton.
Renatus Comment: The trend of consolidation within the Irish insurance space shows no signs of abating, with this deal following Gallagher’s recent acquisitions of Allied Risk Management and Doyle Mahon Insurances. Gallagher initially established its physical presence in Ireland through the acquisition of INNOVU in June 2022. While readers of our newsletter will be well aware of the consolidation trend in the Irish market, Gallagher has placed a huge emphasis on global consolidation, with Ireland forming one small part of this strategy. In 2023 alone, Gallagher has made over 40 acquisitions across the Group, with just 3 of these being in Ireland.
Source: Business Post
8 West Consulting sells stake to Washington Dental Service
Deal Details: A 50% stake in 8 West Consulting has been acquired by Washington Dental Service.
8 West Consulting is a Cork-based consulting and software development company founded in 1998. It serves clients in the Healthcare and Retail sectors. The business was owned by Eamonn Franklin and John Murphy. The business reported FY Dec’21 turnover of c. €24.6m which converted to an EBITDA of c. €3.7m.
Washington Dental Service (“WDS”) is a US-based organisation offering dental care plans. Its subsidiaries include Delta Dental of Washington and the Institute for Oral Health. It does not report financial information.
Advisers: 8 West Consulting: Legal: Arthur Cox Tax: Grant Thornton Financial: Grant Thornton
Washington Dental Service: Legal: DLA Piper Ireland LLP (Corporate – Micheál Mulvey, Blayre McBride and Des Cooke / IPT – Conor McEneaney, Claire O’Brien and Eilis McDonald / Competition – Darach Connolly / Employment – Ciara McLoughlin, Scott Traynor and Owen Pettigrew / Real Estate – Lorcan Doocey and Joseph Horan) with assistance from DLA Piper Seattle, DLA Piper Romania and DLA Piper Italy. Tax: DLA Piper Ireland LLP (Declan Lavelle, Laura O’Malley, Cathal Barrett and Roisin Cronin). Financial: KPMG Renatus Comment: 8 West Consulting was originally formed via a management buyout from its former parent, Anthem, initially as DeCare Systems, before rebranding. Over the years the business has developed an expertise in providing software solutions to US Healthcare organisations in areas such as claims adjudication, payment systems and data management. Its acquisition comes as WDS looks to collaborate with the business to develop further products and capabilities for clients and partners across the healthcare space.
Source:DLA Piper Press Release
NBM acquires Total Office Solutions, North East
Deal Details: National Business Machines (NBM) has acquired Total Office Solutions, North East (“TOS NE”) for an undisclosed amount.
TOS NE provides a selection of printers, scanners and managed print services along with a range of office supplies in Ireland. The company employs 6 people and is owned by Niall and Paula Watters. The business does not report turnover or EBITDA information.
NBM is a document management specialist offering managed print services and printer products. The company is owned by Managing Director, Michael Galvin, with headquarters in Cork and further offices in Waterford and Limerick. The company has 27 employees and does not report turnover or EBITDA information.
Advisers: TOS NE: Corporate Finance: UHY FDW led by Derek Dervan, supported by Mairead Rooney, Amy Hayes and Alan Farrelly.
NBM: None Mentioned.
Renatus Comment: NBM is the largest supplier of Xerox products in Ireland and the acquisition of TOS NE is part of a broader strategy to expand its portfolio offering in Ireland. NBM plans to invest in excess of €10m into developing its workplace and IT solutions over the coming years, with this acquisition specifically enhancing its digital infrastructure and technology offering. Prior to this, NBM had also invested c. £1.8m in launching its Northern Irish subsidiary, Innovative Workplace Solutions.
Siga Hydro sells equity stake in Pumped Storage Hydro project
Deal Details: Foresight Energy Infrastructure Partners has acquired an equity stake in a Pumped Storage Hydro project from Siga Hydro. Deal consideration was not disclosed.
Siga Hydro is an Irish-based company focused on strategic asset development in the clean energy and renewable sector. The company and its partners have experience developing, designing, constructing and operating safe and innovative energy technologies and infrastructure investments. It is majority-owned by Darren Quinn. The business does not report revenue or EBITDA information.
Foresight Energy Infrastructure Partners is the energy transition fund of Foresight Group. This is the fund’s second investment in Ireland after backing the Mares Interconnector last year. Foresight Group was founded in 1984 and is a listed infrastructure and private equity investment manager based in the UK. The company operates in eight countries across Europe, Australia and United States with AUM of c. £12.1bn as of September 2023.
Advisers: Siga Hydro: Legal: Holmes Law team led by Stephen Walker and Susan O’Reilly (Corporate) and Sandra Egan (Property).
Foresight: None mentioned.
Renatus Comment: Pumped storage hydropower (PSH) is one of the most common energy storage technologies and currently accounts for c. 93% of all utility-scale energy storage capacity in the US. Despite this, there is currently only one facility in Ireland in Turlough Hill, Co. Wicklow. This project in County Tipperary, which is expected to cost c. €1bn will involve repurposing a disused mine site and is expected to add in excess of 300MW of flexible storage capacity to the grid. This project is expected play an essential role in balancing the grid and will play its part in reducing Ireland’s fossil fuel dependency and allowing the integration of more variable renewable generation on the grid.
Source: Foresight Group Press Release
RSM Ireland acquired by RSM UK
Deal Details: RSM Ireland has been acquired by its UK sister firm, RSM UK, for a reported consideration of c. €20m.
RSM is an assurance, tax and consulting services firm. RSM Ireland was set up in 1987 and has grown to become a top 10 accountancy firm in Ireland. The founding management team consists of John Glennon, Catherine Corcoran Gearty and Niall May who will all remain in leadership roles, with Niall May succeeding John Glennon as Managing Partner in January 2024. The business reported a turnover of €18.8m which converted to EBITDA of €2.5m in FY Dec 2022.
RSM UK employs c.4,700 staff and is led by CEO, Rob Donaldson. In FY Mar 2023 the company reported a turnover of £486.3m and an EBITDA of £32.6m.
Advisers: None mentioned.
Renatus Comment: The continued consolidation of accountancy firms across Ireland follows the acquisition of Jackson Andrews Chartered Accountants by GMcG Chartered Accountants and DMB Chartered Accountants by ETL in recent weeks. Azets also acquired Baker Tilly Ireland back in March, while Exponent-backed Xeinadin has also been active this year, acquiring Cork-based Quintas to expand its Irish presence.
The rationale for RSM consolidating the two firms is to allow the combined entity to capture a larger market share and enable it to remain competitive as a major player in the Irish market. The investment is expected to create at least 200 jobs at RSM Ireland in the next three years, doubling its current size.
Source: RSM Press Release
GAN acquired by SEGA Sammy
Deal Details: GAN has been acquired by SEGA Sammy for €78.4m.
GAN is an Irish-founded gaming technology company. It primarily focuses on software for casino operators and B2C online gaming. GAN was founded by Dermot Smurfit Jnr, with early backers including Dermot Desmond, Michael Smurfit Snr and Tony Smurfit. The business had FY Dec’22 revenue of €134.6m, converting to an EBITDA loss of €7.2m.
SEGA Sammy is a Japanese gaming developer, whose portfolio includes Sonic the Hedgehog. The business was formed in 2004 through the merger of SEGA and Sammy Corporation. The business had FY Mar’23 revenue of €2.8bn, which converted to an EBITDA of €424m.
Advisers: None mentioned.
Renatus Comment: GAN’s share price had seen turbulent movements since its 2020 listing, reaching highs of near €25 in 2020 and 2021, before sliding below €1 per share in October 2023. The deal to acquire GAN represents a 120 per cent premium on its share price before the announcement and comes off the back of a long strategic review by the business, with interim CEO, Seamus McGill, citing slower-than-expected adoption of regulated online gaming in the US and the significant capital resources required as a key reason for the sale. Despite the expected growth in the US sports betting and iGaming markets of c. 15% and 11% per year to 2027, to a cumulative market value of $27.1bn, SEGA has highlighted increasing competition and high customer acquisition costs as key factors in the US market.
Source: SEGA Sammy Press Release
Village Vets receives investment from Inflexion
Deal Details: Village Vets has received investment from Inflexion.
Village Vets is a group of 19 veterinary practices across the greater Dublin area. It is headquartered in Meath and owned by Charles Cosgrave and Julianne Moriarty. Last year, the group had turnover of c. €16.4m.
Inflexion is a UK-based investment firm.
Advisers: Village Vets: Corporate Finance: Deloitte led by Anya Cummins and Denis Murphy. Legal: Squire Patton Boggs led by George Kennedy, Ciara Downes and James Fitzgibbon. Branigan Cosgrove Finnegan led by Gerard Cosgrove. Tax: Focus led by David Brophy.
Inflexion: None mentioned.
Renatus Comment: The investment by Inflexion marks an exciting stage in the growth journey of Village Vets, with Charles Cosgrave having taken over the running of the family business back in 2003. Under Charles and Julianne’s leadership, the Group expanded to its current scale of 19 veterinary practices, becoming one of the largest organically grown small animal vet chains in Ireland. The business is well-placed to continue with its current pace of growth, with Inflexion also having previous experience in the space, having partnered with Medivet, a UK-based practice, which was sold for c. £1bn back in 2021.
Source: Sunday Times
DEAL UPDATES & OTHER NEWS
Flutter Entertainment set to delist from the Dublin stock exchange
Deal Details: Flutter Entertainment, the parent company of betting platform Paddy Power, is set to delist from the Euronext Dublin early next year. The news comes after CRH completed its delisting and Smurfit Kappa announced its intention to delist from the Irish Exchange.
Flutter is a global sports betting, gaming and entertainment provider. CEO, Peter Jackson, plans to add the company to the New York Stock Exchange after its exit from the Euronext Dublin so that the company will be listed in both New York and London. As of FY Dec 2022, the company reported a turnover of €9.0bn which converted to EBITDA of €820m.
Hannon Transport Limited, headquartered in Armagh, is a provider of temperature-controlled transportation of fresh and frozen produce to and from Ireland, Great Britain and the Benelux countries. The business is 100% owned by the Hannon family.
In its financial year to January 2023, the business generated a turnover of c. £65.1m, an increase of 16.9% year-on-year. This converted to an EBITDA of c. £8.0m, an increase of 14.7% year-on-year. Revenue growth outstripping EBITDA growth is primarily attributable to a decline in opex margins of c. 0.3%.
Significant post-EBITDA cash movements include working capital investment of c. £3.3m, the capital element of hire purchase contracts of c. £5.6m and dividends paid of c. £1.5m. The business finished the year with a cash balance of negative c. £1.8m.
The business employed an average of 295 people over the period at a total cost of c. £11.3m.
Who: Onate, a residential property bridge finance company based in Dublin.
What: The business secured a €50m funding line from NatWest.
Why: The funding line will be used to meet Onate’s growth ambitions.
Who: Positive Carbon, a tech solution for businesses to track, manage and reduce food waste.
What: The company raised €2.3m in a funding round led by Business Venture Partners’ EIIS Fund, with participation from Heartfelt, Gateway Ventures and Enterprise Ireland.
Why: The funds will be used to boost research and development of the product and support marketing of the business in the UK and EU.
Who: GreyScout, a SaaS platform for online brand protection.
What: The company has received €890,000 in funding from a number of private investors.
Why: The funds will be used to expand its product and platform teams in response to the increased demand.
Who: Creagh Concrete, one of the largest producers of precast concrete products in Ireland & the UK with a particular focus on Modern Methods of Construction.
What: The company has raised new Asset-Based Lending (ABL) facilities from Close Brothers.
Advisors: Creagh Concrete: Deloitte Debt & Capital Advisory led by Brian Fennelly, Ross O’Donovan, Mark O’Shaughnessy and Liam Farrelly.
Why: The funding will be used to support the continued growth of the business.
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.