Renatus’ Weekly M&A Newsletter – 30/05/2021
May 31, 2021Renatus’ Weekly M&A Newsletter – 06/06/2021
June 6, 2021
Renatus Weekly M&A & Company Performance Private Equity Newsletter 13/06/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
TOM BYRNE RIP
It is with huge sadness that we write this note.
Tom Byrne, chairman of our first Renatus fund passed away last week. Tom was a proud Mayo and family man. He was also one of the most respected Irish corporate financiers of his generation.
He was a huge support to Renatus getting off the ground and we will miss him greatly and hold very fond memories. Our thoughts are with his wife Phil, sons Stephen, Andrew and David, extended family and friends.
May Tom rest in peace.
M&A ACTIVITY
CMI acquires Brookland Computer Services
Deal Details: Belfast-based CMI has acquired London-based Brookland Computer Services for an undisclosed sum.
CMI create, design, deliver and support informed & intelligent strategies to navigate shifting technology, keeping organisations effective & secure.
The acquisition of Brookland takes CMI to a turnover in excess of £13m with a staff of 100, based in four sites across the UK – Belfast, London, Cheam and Reading.
Brookland offers a range of cloud hosting services, utilising its own data centre capability combined with extensive use of the Microsoft Azure platform. It has 20 employees and a client base of 150 from financial, manufacturing, and professional services sectors amongst others.
Advisers: HNH acted as lead advisor to CMI and also carried out FDD and Tax DD on Brooklands. Edwards & Co. acted as legal advisers.
Renatus Comment: CMI have been utilising acquisitions as part of its expansion strategy for a number of years. In 2019, it partnered with UK private equity firm Panoramic Growth Equity to acquire London-based BTA Limited which doubled the size of the business at the time. Prior to that, CMI acquired Solsis.
CMI is a good case study of how strategic acquisitions can be used not only to scale a business but to also internationalise it and penetrate new markets.
Source: CMI
Crotty acquires Martin Insurance
Deal Details: Dublin-based Crotty Insurance has acquired Martin Insurance for an undisclosed amount.
Crotty Insurance is one of Ireland’s leading brokers, offering commercial insurance cover with the best prices to a large range of business sectors. Crotty was acquired by Global Risk Partners in September 2020.
Martin Insurance is a Cavan-based family business established in 1980 by Seamus Martin and now led by son James Martin. Its clients include some of Ireland’s largest firms but it also caters for sole traders and private individuals.
Advisers:
Martin Insurance:
RBK team consisting of Chris Ball (Corporate Finance) and Jackie Masterson (Tax), KBG (Auditors) and Adrian Burke (Legals).
Crotty Insurance:
Crowe and Wallace Corporate Counsel.
Renatus Comment: The insurance broker space continues to be one of the most active pockets for M&A activity in the Irish market. Crotty was acquired by UK insurance company Global Risk Partners less than a year ago. Private equity firm Searchlight Capital Partners acquired a majority stake in Global Risk Partners in June 2020 and it is likely that they will be seeking to do further acquisitions in the space to build market share.
In its latest set of accounts to the period ending April FY20, Martin Insurances made a reported operating profit of c. €208k and revenue of €1.17m. Pre-transaction, Martin Insurance was owned by James and Aileen Martin.
Source: InsuranceBusinessMag.
Aston Lark acquires McMahon Galvin
Deal Details: Aston Lark has completed the acquisition of McMahon Galvin Limited for an undisclosed amount.
Aston Lark is a Goldman Sachs and Bowmark Capital backed chartered insurance broker formed in 2018 when two of the UK’s largest independent insurance brokers came together: Aston Scott Group and Lark Group. It employs 1000+ staff in over 45 regional locations across the UK and Ireland.
Founded in 1970, McMahon Galvin provides home and car insurance to individuals as well as a full range of insurance services to businesses.
Advisers:
McMahon Galvin were advised by Gareth Cosgrove from Grant Thornton (Corporate Finance) and George Kennedy from Holmes (legals).
Renatus Comment: Aston Lark is a key player in the consolidation activity going on in the insurance brokerage sector. This is the fourth acquisition made by Aston Lark in Ireland in 2021, having already completed three acquisitions this year – North County Brokers, O’Loughlin Insurance Group and Brady Burns & Associates.
Source: Aston Lark press release
Erisberg acquires HCI
Deal Details: Erisberg has made a significant investment in Health Care Informed (HCI). The deal consideration was not disclosed.
The investment is designed to support HCI’s continued growth and expansion both in Ireland and international markets.
John Sweeney, Founder and CEO of HCI will continue to lead the business in his current role, alongside HCI’s highly experienced team.
Advisers:
Erisberg:
L.K. Shields (Legal), EY (Tax) and BCA (Finance)
Health Care Informed:
Ronan Daly Jermyn (Legal), and O’Malley Accountants (Finance)
Renatus Comment: The Healthcare Quality Management sector is an interesting space that is likely seeing an uptick in activity linked an aging population, rising costs of healthcare and the costs associated with medical errors. Ensuring a standard level of care is crucial for operators in the healthcare space.
Source: Health Care Informed
Deals in the Making & Other News
DCC acquistion of Jones Oil is approved by regulators
Deal Details: DCC Energy Limited, a wholly-owned subsidiary of DCC plc, acquisition of sole control of Jones Oil Limited and subsidiaries has been cleared by the Competition and Consumer Protection Commission.
Source: CCPC
Brown Thomas and Arnotts’ parent reportedly considering a bid
Deal Details: It is reported that the Weston family have been approached with a surprise offer of €4.66bn for the Selfridges Group, including Dublin premier department stores Arnotts and Brown Thomas.
Selfridges have not confirmed the report however real estate bulletin React News reported that it has appointed investment bank Credit Suisse to advise on the offer.
Source: Irish Times
Irish Life considering bid for Davy
Deal Details: Irish Life, Ireland’s largest life and pensions company, is reported to be considering to make a bid to buy stockbroker Davy.
Final bids for Davy are due for submission this Friday and the company is reportedly worth €400m. It’s reported that six interested parties have emerged from the first round of bidding. Cited participants include Bank of Ireland, Tilney Smith & Williamson and a potential joint bid from Melior Equity Partners and Carlyle.
Source: Sunday Times
Brookfield Renewable Partners completes sale of windfarms
Deal Details: Brookfield Renewable Partners, a Canadian Asset manager, completed the sale of its Irish wind farms to Danish company Orsted for €571m last week.
Brookfield acquired the wind energy assets of Bord Gais for €700m in 2014 and built the portfolio to more than 700 megawatts of operating assets and expanded the development pipeline to 1,000 megawatts.
Source: Sunday Times
Stobart Air to appoint liquidator
Deal Details: Regional aviation operator Stobart Air is to appoint a liquidator to wind up the company after its net liabilities tripled to €68.5m over the last year. Stobart operates all regional flights for Aer Lingus.
Source: Sunday Business Post
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
M & J McGowans Limited, trading as McGowans Print, is a specialist print operator with offices in Dublin and Belfast.
For the period ending December FY 19 the business grew turnover by c. 7% to €19.0m and grew EBITDA by c. 14% to €2.0m.
Cash balance remained largely flat year-on-year at c. €1.2m. Cashflow generated from operations during the period was predominantly used on debt repayments (€1.2m) and fixed asst purchases (c. €390k)
The business employed a total of 186 staff during the year at a total cost of c. €7m. McGowans Print is owned equally by Janice O’Hare and Malcolm McGowan.
McElvaney Motors is a seller and repairer of new and used trucks and vans. The company has operations in Monaghan and Dublin and also carries out ancilliary activities such as truck/van hire, part sales and servicing.
For the period ending FY April 20, the business reported a revenue of c. €51.9m and an EBITDA of €1.7m, a year-on-year drop of c. 4% and c. 24%, respectively.
Cash slightly decreased by c. €260k during the period to end at c. €5.28m. The big drains on cash during the period was fixed asset purchases of c. €970k and a c. €680k investment into working capital. These were partially offset by a new loans drawn amounting to €200k during the period.
The business is wholly owned by Adrian McElvaney.
RECENT FUNDRAISINGS
Who: LetsGetChecked, a virtual care company founded by Peter Foley in 2015, closes a series D funding round.
What: The company raised $150m (€123m) bringing its total valuation to over $1bn. The funding round was led by Boston-based Casdin Capital, with further participation from CommonFund Capital, Illumina Ventures, Optum Ventures, Transformation Capital, HLM Venture Partners, and Qiming Venture Partners USA, and professional golfer Rory Mcllroy.
Why: The company said it planned to use the money to invest in and expand its services, including investment in its telehealth services, expand its pharmaceutical services in the US and other markets, and strengthen its commitment to delivering at-home diagnostic test kits directly to customers.
Source: Irish Times
Who: CyGenica, a biotech company using a non-viral, non-toxic platform to develop delivery solutions for drugs, gene editing components and antibiotics. The company has operations in Cork and India.
What: CyGenica has completed a $1.4m fundraise which was led by venture capital firm SOSV.
Why: The funds will be used to accelerate the development and validation of CyGenica’s proprietary technology, which enables safe, targeted and affordable intercellular drug delivery.
Advisers: Kieran Regan of Regan Wall advised CyGenica
Source: CyGenica press release
Who: Irish travel retail software Datalex has launches an equity raise.
What: The company seeks to raise €25m.
Why: The finances are required to repay extensive loans from its main shareholder Dermot Desmond and to ensure the company has enough working capital.
Advisers: Goodbody acted as Sole Financial Advisor, Bookrunner and Sponsor for Datalex.
Source: Irish Times
Who: Assure Hedge, Irish foreign-exchange technology company founded by Barry McCarthy, raises financing.
What: €5m was raised in Series A round valuing the company at €30m.
Why: The funds are to be used hire additional staff and invest in new product development and channels to market.
Advisers: Alan Ryan and Michael Bambrick of Wallace Corporate Counsel provided legal advice to Assure Hedge
Source: Irish Times
Who: Supply chain software company Overhaul, founded by Irishmen David Broe and Barry Conlon in 2016, raises funds.
What: $35m (€28.7m) round was led by Macquarie Capital led the latest fundraise with participation from Edison Partners and Avanta Ventures.
Why: Overhaul intends to use the financing to accelerate the development of solutions. Mr Broe said Overhaul intends to double headcount at the company over the coming year as it focuses on opportunities in Europe.
Source: Irish Times
Who: Bowsy, a Dublin-based technology business that connects graduate students with potential employers.
What: Bowsy has raised €308k in crowdfunding on Spark Crowdfunding which runs until June 18th. The company plans to raise €1.6m in series A funding within the next 18 months.
Why: The funding will be used to hire new developers to help improve the user experience of their product.
Source: Sunday Independent
Who: Irish conversational AI platform Webio has raised funds.
What: €1.5m was secured in pre-Series A funding round.
Why: Webio chief executive Cormac O’Neill said the funding would go towards further product development and increase staff numbers with a plan to double the company’s R&D team.
Advisers: Eoghan Doyle and Hugo Grattirola from Philip Lee acted for Finch Capital and Jerome Maume of OFX for Webio.
Source: Irish Times
Who: Peer-to-peer lending platform Linked Finance receives additional funding under the Covid lending scheme.
What: €5m is secured under the Government’s Covid-19 Credit Guarantee Scheme (CCGS).
Why: The company is launching a ‘Recharge SMEs’ loan, which will provide pubs, restaurants, accommodation businesses, and cafes with a loan of up to €50,000 to help them reopen, restock and rehire as pandemic restrictions are eased.
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 trajectory of the S&P 500 is beyond staggering. When you look at it over time it just looks like trees grow to the sky as it hit another record high on Friday. Is it structural based on the stocks held within in it or is it just a function of all the money that has been printed inflating it?
@RenatusCapital Tweets
31% & 26.9%
The year-on-year increase in the Irish manufacturers industries production and turnover indices, respectively, for April 2021, according to @CSOIreland
23.1%
The year-on-year increase in the Irish services value index for April 2021. The most notable changes were in Accommodation and Food Service Activities (+3.9%) and Administrative and Support Service Activities (-9.2%), according to @CSOIreland
1.7%
The year-on-year increase in the Irish consumer price index for May 2021. The most notable changes were in Housing, Water, Electricity, Gas & Other Fuels (+5.4%) and in Clothing & Footwear (-2.1%), 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.
OUR INVESTMENTS
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