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Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
Deal Details: Lindab has acquired Thor Duct for an undisclosed sum.
Within the deal, Lindab has acquired the IP rights, customer contracts and supplier agreements for Thor Duct ‘s fire ductwork system. The acquisition also includes customer contracts to a value of €2m and is a spin-off from current operations.
Irish-based Thor Duct is the market leader in UK and Ireland for fire & smoke ventilation control systems. The products are certified for use throughout the EU, but due to local fire safety practices and regulations on other markets in the EU, Thor Duct has focused on UK and Ireland, with clients including Lindab.
Advisers: Paddy Dillion and Thomas Roche of Grant Thornton advised the buy side. Sharon Mc Caffrey of Beechcraft acted as legal advisor to the buyside.
Renatus Comment: Thor Duct sits in a strong competitive position due to the dynamics of its market. Long product development times and the regulatory requirements associated with fire safety make bringing a product to market challenging. Additionally, relationships with customers are sticky due to contracted service and how products become embedded in client systems.
As such, getting a foothold in the Irish market for Lindab through acquisition rather than developing their own challenger product makes sense under these conditions.
Source: Lindab
Deal Details: Dublin City University spin-out Iconic Translation Machines has been acquired by London-listed RWS Holdings in a deal worth c. $20m (€17.8m). Iconic is a language technology software company that was founded in 2013. The company specializes in developing best-in-class neural machine translation (NMT) solutions adapted for specific industries and blue-chip clients.
Post acquisition, Iconic will form a new vertical language technology business within RWS and will be led by its co-founders Dr John Tinsley and Dr Páraic Sheridan.
RWS, a leading language, intellectual property support services and localisation provider, said it is to acquire Iconic for an initial payment of $10m with additional deferred consideration of up to $10m in shares after 28 months, subject to future performance.
Advisers: Grant Thornton, led by Kevin Foley acted on financial and tax advisory for Iconic. Kieran Regan and Adam Griffiths from Regan Wall advised on the legals. This is the third week in a row in a quiet market where the fledgling Cork firm advised on a completed transaction.
Renatus Comment: What an incredible journey and great success story this has been for both Dr John Tinsley and Dr Paraic Sheridan who set up the start-up company off the back of research conducted at the Science Foundation Ireland (SFI) Centre for Next Generation Localisation in the DCU School of Computing back in 2013. Prior to this transaction, Iconic Translation Machines had 15 different shareholders, including Enterprise Ireland and DCU. The largest shareholders pre-transaction were John Tinsley and Paraic Sheridan, holding 29.6% of the ordinary shares each.
The deal has been structured with an initial payment upfront followed by a deferred amount which will be received after 28 months based on performance. This structure is becoming a lot more common in M&A transactions which allow the purchaser to delay a portion of the payment until certain targets are achieved and essentially reduces the risk for the buyer. On the other hand, it increases the risk for the seller as they will need to hit certain targets which will be agreed on in the initial transaction. In this case, the deferred consideration is reported to be c. 50% based on future performance. It’s quite clear both Dr Tinsley and Dr Sheridan have full confidence that the company will achieve the future performance targets agreed.
Source: Iconic Translation Machines
Deal Details: Dublin-based software firm Edgescan has received a €10.5m investment from the BGF investment vehicle that’s backed by the Ireland Strategic Investment Fund, AIB, Bank of Ireland and Ulster Bank. The investment gives BGF a minority stake in Edgescan, a leading cybersecurity business.
The BGF investment will be used to accelerate Edgescan’s international expansion and to expedite new product development to continue the company’s strong growth trajectory, as well as other purposes.
This is the fourth funding round in the business in 17 months, bringing the total amount raised in this time to c. €30m.
Advisers: William Darmody & Paddy Quinlan of Maples acted for BGF on this investment. PwC provided financial and tax due diligence for BGF.
Edgescan was advised by Hogan & Associates (financial) and Philip Lee (legal).
Renatus Comment: Edgescan’s software business has been growing at a tremendous pace, growing at an average rate of 40% per annum since 2016. Most recent accounts for BCC Risk Advisory Limited are for the period ending FY18 and show that the business made a net profit of c. €560k for the 12-month period. This is an interesting space that will likely to see continued focus and adoption by corporates as a result of high-profile security breaches.
Prior to the transaction, BCC Risk Advisory Limited was majority owned by Eoin Keary (51%) with other shareholders including Rahim Jina (20%), Alan Connolly (12.5%), Sandra Clarke (12.5%) and Owen Mooney (3.75%).
Source: Irish Times
Deal Details: BGF UK has invested £10m into Lisburn blinds firm Decora.
Founded in 1979, Decora is an established leader in the design, engineering, manufacturing and distribution of window coverings across the UK and Ireland.
The business, which employs 1,000 people in Lisburn and Birmingham, will use the investment to further it’s strong growth via expansion into European markets, strategic M&A, and continued investment in product development and infrastructure.
Marking its initial entry into Europe, Decora has recently completed the acquisition of Domus Lumina, a €10m turnover Lithuanian-headquartered manufacturing partner.
Advisers: The investment was led for BGF by Paddy Graham, David Gammie and Euan Baxter, and the advisers to the transaction were, for BGF, Tughans (legal) and Grant Thornton (financial due diligence).
Decora was advised by Peter Stafford of A&L Goodbody (legal), Chris Donnelly of KPMG (financial) and RSM (tax).
Renatus Comment: It has been reported that Decora’s management identified a number of strategic acquisitions prior to the investment that they are now to pursue, with a Lithuanian manufacturer having already been acquired earlier this year.
Bringing on a private equity partner for that journey should help management achieve this. BGF have already introduced a Chairman and the capital, deal sourcing and deal execution abilities that a private equity partner can bring which should leave Decora well positioned to pursue targets.
Decora was owned by the Dickson family prior to the transaction with the shareholdings split as follows: Lynda (38%), William (38%), Stuart (13%) and Russell Dickson (13%). For the period ending December 2018, Decora generated revenues of c. £72.7m and an EBITDA of c. £4.7m.
Source: BGF, BBC, Irish News
Deal Details: Livingbridge, a UK mid-market private equity firm, has invested into TitanHQ, a Galway-headquartered cloud security vendor TitanHQ. Deal details were not disclosed.
Titan HQ is led by CEO Ronan Kavanagh and provides Managed Services Providers and businesses with advanced web filtering, email security and email archiving solutions. Titan HQ has been operating for over 20 years and works with over 8,500 businesses, 2,500 MSPs across 150 countries including Virgin, O2 and Pepsi.
Advisers: LivingBridge were advised by GCA Altium (Lead Corporate Finance Advisory), Addleshaw Goddard (Legal), Fairgrove (Commercial), and BDO (Financial). TitanHQ shareholders were advised by Oppenheimer & Co.
Renatus Comment: Bill McCabe’s Oyster Technology Investments backed Titan HQ at inception and holds a significant stake in the business. The latest accounts for the company are for the period ending FY2018 and state that company has been cashflow and EBITDA positive since October 2018. In FY18 the business generated c. €7.9m in revenue and an EBITDA of c. €230k. At the end of the period, the business had contracted future revenue of c. €11.6m.
Source: TitanHQ website
East Cost Bakehouse, an Irish biscuit manufacturer of its own line of branded products as well as private-label goods for other retailers, is reported to be close to raising between €1m and €2m. The business was founded by husband and wife team Michael Carey and Alison Cowzer.
The funding is reported to be coming from new and existing investors as well as Enterprise Ireland. Roughly €23m has been invested into the business since its founding with backers including Stephen Twaddell (Kelloggs), Neil O’Leary (Ion Equity) and Mary Ann O’Brien (Lily O’Brien’s)
Source: Sunday Times
Mayo-based CMS Distribution is reported to be planning an IPO on the London Stock Exchange in 2022. CMS Distribution is a specialist distributor of business and consumer technologies to customers in Ireland, the UK, Europe as well as the US and China.
CMS is led by CEO and Founder Frank Salmon who acquired the business in 1988. Today, it has client base of roughly 3,000 resellers and retail partners worldwide and most recent accounts to the year end of March 2019 show revenues of €488m and EBITDA of €20.7m. CMS is majority-owned by Frank Salmon.
Source: Sunday Independent
Mothercare Ireland has been placed into liquidation with the loss of 197 jobs. The announcement comes after the directors stated they can no longer see a viable future for the company, which has operated 14 stores across Cork, Drogheda, Dublin, Dundalk, Galway, Limerick, Newbridge, Portlaoise, Sligo and Tralee.
Mothercare Ireland has been a separately owned, family-run business started by David Ward in 1992. It was currently being run by his children.
Source: Irish Independent
Supreme Deliveries, the operator of the sole DPD depot in Galway has exited examinership. Neil Hughes of Baker Tilly was appointed as the examiner to the business in March following continuous losses since trading commenced in 2018.
In recent months, the business experienced a huge amount of growth in the volume of parcel deliveries and has hired an additional 14 staff. It is one of the first companies to successfully exit examinership during the Covid-19 crisis. The business is equally owned by John Daly and Richard Holland.
Source: Sunday Independent
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.
Antrim-based precision engineers Dontaur supply components, assemblies and kits to primarily aerospace customers. Group accounts represent the activities of subsidiaries Aerospace Metal FInishers Ltd and Aerospace Metal FInishers Ireland Ltd.
Turnover over the year increased by 3.5% to c. £13.0m while EBITDA jumped by 37.4% to c. £4.7m due to gross margins increasing from 53% to 61% and administrative expenses decreasing by c. £546k. Cash increased by c. £3.4m over the year to stand at c. £5.6m at year end.
Dontaur is owned by Nicklin family members Paul, Brenda and Donald.
Based in Belfast, Conexpo (NI) Limited is a supplier of High Polished Stone Value (PSV 65/68+) aggregates products from company owned and operated quarries. The company also operates a 7-hectare terminal in the port of Belfast for loading and discharging vessels with aggregates.
In its latest fiscal year, the company saw revenue increase by 8.9% to c. £25.6m while EBITDA also increased by 11.3% to c. £4.3m. Net cashed increased by c. £1.3m during the following a new loan drawdown of c. £9.7m being partially offset by £5.9m in loan repayments and £6.3m in capital expenditures
The company is owned by Jonathan (32%), Stephen (32%), Beryl Anne (18%) and Robert John (18%) McCluskey.
Established in 2010, 3 Interiors Contracts Limited is a Lisburn-based fit out company that has experience in the residential, commercial, retail, hotels and bars sectors among others.
Despite a c. 23% decline in revenue in to c. £27.1m FY19, EBITDA rose by c. 25% to c. £2.1m. The growth in EBITDA can be traced to the doubling in gross margin to c. 13%. The closing cash balance increased by £900k to c. £2.5m. The main cash outflow during the year was a £2.3m dividend.
The business is owned by the nine directors with the largest single shareholder holding 13%.
Who: Irish smart-kitchen company Drop has secured funding. Drop has developed a dedicated platform that connects appliance manufacturers, recipe publishers and food stores together.
What: The company has raised $13.3m (€11.85m). The Series A funding round was led by Alpha Edison and Morpheus Ventures, whose previous investments include Jawbone, Skype and Fanduel. Dublin-based Act Venture Capital also participated.
The fundraise brings to more than $20m the amount raised by Drop to date. Early backers of the company include Dublin VC Frontline, Chapter One owner Ross Lewis and Domini Kemp of Itsa.
Why: The new investment will be used partly to increase headcount, with new roles opening in HR, machine learning, back-end development and Android and iOS development.
Source: The Irish Times
Who: Privacy technology start-up, Ethyca, founded by Dubliner Cillian Kieran has secured funding.
What: The company has raised €12m. This round of funding was led by IA Ventures and joined by several exceptional investors and data privacy advocates: Max Levchin’s SciFi VC, Scott Belsky, Lachy Groom and DJ Patil.
Ethyca has now raised a total of €18m in two years.
Why: The specific purpose of the funding was not disclosed however, the company is looking to further develop their technology, tools and infrastructure that let engineers add frictionless data privacy to their tech stack.
Source: Ethyca
Who: The Naked Collective, a new healthy drinks company based in Co Kildare, is seeking to raise funding.
What: The company, which has already secured about €1m in funding, is seeking to raise a further €10m from investors.
Why: The Naked Collective is to invest €2m in marketing between July and December with plans to ramp this up further in 2021. The company expects to be in 3,000 Irish stores and a similar number of bars, restaurants and hotels locally by the end of 2020.
Source: The Irish Times
Who: Rockbrook AD is an Anaerobic Digestor plant based in Ballyroan, Co. Laois. The plant generates renewable energy by converting organic waste, including commercial food waste and household brown bin waste, into energy. AES Bord na Móna is a key partner. Electricity generated from the plant is sufficient to supply over 1,000 homes
What: Peter Carey, Rockbrook’s managing director, successfully led the refinance of the company’s debt with AIB Investment Bank, with the transaction led by an AIB team of Adrian Dunne and Timothy McCarthy.
Why: AIB financed the original 2-year development phase and the plant is now fully operational and performing successfully.
Source: Rockbrook
Who: Diona, a mobile healthcare company that has developed an app allowing people to manage healthcare benefits on the go.
What: Paul Palmer, a Director of MJ Flood, and Elliot Griffin of BVP are reported to have invested cash into the company.
Source: Business Post
Who: Zulleon, a kid-tech firm that has developed a kids’ book creator app. The business is led by husband and wife team Noel and Luz Donegan.
What: Zulleon has received investment from Sean Shine, chief executive at Paragon Group and KPMG partners Brian Clavin, Eoghan Quigley and Dave Meagher.
Source: Sunday Times
Who: Buymie, an Irish same-day grocery delivery company led by co-founder and CEO Devan Hughes.
What: Buymie has completed a €5.8m fundraise, bringing the total amount raised this year to over €8m. The latest funding round was led by new investor Wheatsheaf Group with follow on investments coming from existing backers including Act Venture Capital, Sure Valley Ventures, Haatch Ventures and HBAN.
Why: The money raised will be used to fund the business’ continued expansion in Ireland and the UK.
Source: Sunday Independent
Who: Everseen, a Cork-based retail technology firm. The company was founded in 2007 at has developed software that helps retailers combat non-scanning and other irregularities at points of sale.
What: Everseen has raised “significant” investment from Neil Garfinkel, one of the founding partners of investment firm Francisco Partner. As part of the investment, Garfinkel will be joining Everseen’s board. Martin Higgins and the Focus Capital Partners team have been corporate finance advisers to Everseen for the past few rounds.
Why: The funds raised will be used to Everseen’s US and European operations.
Source: Sunday Independent
Who: Soap Story, an Irish manufacturer and seller of hygiene products online and in retail stores.
What: The company has raised £1.9m in financing. Soap Story used Convertibill, a non-bank trade finance platform, to raise the funds.
Why: The company plans to use the funding to replenish stocks of hygiene products following a surge in demand for hand sanitiser and bath bombs.
Source: Business Post
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.
Looking at the betting odds this week as a proxy to see where we are in the world has revealed the following probabilities in two- horse markets.
For the first time Joe Biden has passed out Trump in the betting to be next US president and is 57% versus Trump at 43% in the effective two horse race.
Micheal Martin is 64% to be next Taoiseach and Leo 36% in the effective two-horse race. These odds are interesting in light of an opinion poll that was reported on by the Sunday Times on 862 Irish adults which suggests that 48% of Irish people would prefer to see Leo Varadkar stay in the role while 18% would prefer Michael Martin to take over.
There is no market regarding a no-deal Brexit which is potentially the most worrying political outcome of all in the next 6/7 months.
83.7%
The y-o-y decline in the number of new cars licensed for the first time in May 2020, with just 1,490 new cars licensed compared to 9,126 in May 2019. According to @RTEbusiness. @CSOIreland
19.9
The Ulster Bank’s purchasing managers’ index (PMI) for May 2020, compared to a reading of just 4.5 in April. A reading below 50 signals contraction. @IndoBusiness
3.6% & 3.2%
The seasonally adjusted GDP decrease in the euro area and in the EU during Q1 of 2020, compared with the previous quarter. These were the sharpest declines observed since time series started in 1995. According to an estimate published by @EU_Eurostat.
60%
The y-o-y drop in ferry passenger numbers for the first six months of 2020, primarily due to Covid-19 restrictions. According to ICG, the operator of Irish Ferries. @IndoBusiness
0.5%
The y-o-y decline in consumer prices for May 2020, meaning inflation has hit a five-year low. According to the consumer price index @CSOIreland
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