Renatus welcomes Tom Shiels, we share our thoughts on new dwelling completions across Ireland and multiple M&A deals in our latest weekly newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 15/01/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
WELCOME THOMAS SHIELS
We at Renatus are delighted to welcome Thomas Sheils to the Renatus team as an Associate and announce his appointment in our appointments section below.
Prior to joining Renatus, Thomas spent three years in Lincoln International as a Vice President. Before Lincoln International, Thomas worked in Deloitte’s UK corporate finance department and KPMG Dublin.
We are delighted to be welcoming someone of Thomas’s calibre to our team in Renatus.
THOUGHT OF THE WEEK
We found it interesting to read an article during the week saying there need to be c. 300k houses built in England each year, and they are falling short.
Most things in Ireland/England are 10x by proxy of population, and it is the same narrative here that we should be hitting c. 30k houses a year.
We have analysed below the relative completions. It is fair to say that while we should be completing 30k on a long-run average, we are likely to fall short based on the well-documented supply/demand dynamics. Still, it is hard to see it going below 20k, remembering that we peaked at nearly 90k completions in 2006.
Amryt Pharma to be acquired by Chiesi Pharma
Deal Details: Amryt Pharma has entered into a definitive agreement to be acquired by Chiesi Pharma in a deal worth a reported €1.38bn.
Founded in 2015, Amryt Pharma is an Irish-based pharmaceutical company that focuses on developing and delivering treatments to help improve the lives of patients with rare and orphan diseases. Established by Cathal Friel’s Raglan Capital, Amryt Pharma, is also listed on the London AIM, Dublin Euronext, and NASDAQ exchanges. The business reported revenue of $188.8m for the first three quarters of 2022 and reaffirmed its full-year forecast for revenue of between $260m and $270m.
Chiesi Pharma is an Italian family-controlled global pharmaceutical company based in Parma, Emilia-Romagna. The group reported revenue of c. €2.4bn in FY21.
Amryt Pharma: Financial Adviser: Moelis & Company LLC. Legal Advisers: Cooley LLP and Gibson Dunn & Crutcher LLP.
Renatus Comment: Cathal Friel has been a force in Dublin Corporate Finance for many decades, having been a co-founder of Merrion Stockbrokers before setting up his own Raglan. He has had a few shots at big prizes over the years, from Regional newspapers to betting to Oil exploration. He has indeed hit the jackpot with this and his other pharma ventures. While a small firm in terms of employees, Raglan alumni are very influential across Dublin finance. Some notable graduates of the Raglan Acadamy include John Bowe, head of Corporate Finance Mazars; Stephen Casey, Financial Director DCC Energy; Michael Lynch, Investment Director Irelandia and Mark O’Carroll, Accenture, to name a few.
Source: Chiesi Farmaceutici Press Release
Irish Drilling acquired by RSK
Deal Details: Irish Drilling has been acquired by RSK for an undisclosed amount.
Irish Drilling is a Galway-based mineral exploration and ground investigation contractor. The business has been in operation for over 50 years and its clients include Irish Water, SSE Renewables, Bord na Móna, and various public sector organisations. Irish Drilling did not report turnover or EBITDA information. The business was owned by Herbert Stanley, Emily Stanley, Ronan Killeen and Declan Joyce.
UK-based RSK is a sustainable solutions provider with operations in Europe, Africa, and the Middle East. In FY21, the business reported a turnover of c. £350.5m which converted to an EBITDA of c. £32.5m. The business was owned by a wide variety of individuals and investors.
Advisers: Irish Drilling: Corporate Finance: DHKN led by Mark Gibbs.
Renatus Comment: Mineral exploration is the process of investigating the subsurface to discover if there are economic quantities of minerals present. The island of Ireland has a diverse geology and a range of rich mineral deposits. Irish Drilling has a team of 40 and has recently completed a drilling programme for Parys Mountain (Anglesey Mining plc). This marks RSK’s 23rd acquisition as it anticipates furthering Irish Drilling’s capability in support of existing and new clients.
Source: Business Plus
Snigel acquired by CBPE
Deal Details: Snigel has been acquired by CBPE for an undisclosed amount.
Snigel is a Dublin-based global advertising technology business. In FY21, the business reported a turnover of c. €33.4m which converted to an EBITDA of c. €5.2m. The business was owned by Christopher Krischnig, Ida Krischnig and Peter Gallagher.
UK-based CBPE invests in businesses in the UK mid-market with an Enterprise Value of up to £150m.
Advisers: Snigel: Legal: Philip Lee led by George Kennedy. M&A: Deloitte.
Rolling Shareholders / Management: Legal: Philip Lee led by Andreas McConnell. M&A: Deloitte.
CBPE: M&A and Debt: JEGI Clarity. Legal: Proskauer Rose and William Fry. Financial & Tax: BDO. Commercial: PwC. IT: Intechnica. Insurance: Howdens.
Renatus Comment: Snigel was founded in 2012 by former Google executives and has been featured in Deloitte’s fast 50 lists as one of Ireland’s fastest-growing tech companies for three times. It is an excellent example of the halo effect of Google spawning SMEs like this, which we wrote about before Christmas. We look forward to seeing more tech SMEs originate from the many global tech forces in Ireland.
CBPE’s investment will enable Snigel to grow in its core markets of Europe and the US whilst expanding its market offerings. Post-transaction, the founders will reportedly remain the most significant private shareholders.
Source: Snigel Press Release
Delta-P Monitoring Technology acquired by Trescal
Deal Details: Delta-P Monitoring Technology has been acquired by Trescal. The deal consideration was not disclosed.
Delta-P Monitoring Technology specialsies in cleanroom validation, HVAC commissioning, HVAC/refrigeration maintenance and environmental monitoring. It was established in 2001 and was owned by Brian & Laura Waldron. It does not report turnover or EBITDA information.
Trescal is a global provider of calibration services established in 2004 and based in France. In FY Dec 20, it reported a turnover of c. €75.6m, which converted to an EBITDA of c. €11.5m. It is owned by Canadian private equity firm OMERS who announced in November 2022 that they have entered into exclusive negotiations to sell a majority stake in the business to EQT infrastructure.
Advisers: Trescal: FDD: Mazars led by Mark Mulcahy, Michael Smollen and Antoine Brunner.
Delta-P: None mentioned.
Renatus Comment: This deal was one of five announced by Trescal across Europe, Asia and Australia this week. It follows the company’s acquisition of another Irish-based calibration services firm, Classic Technology, in January 2022. This deal brings Trescal’s turnover to c. €7m in Ireland. Like Classic Technology, Delta-P also specialises in the life sciences sector. It makes sense that a large international player like Trescal would target this space in Ireland, given the large number of pharma and MedTech MNCs that operate here in Ireland.
Source: Trescal Press Release
McGivern Insurance Brokers acquired by PIB Group
Deal Details: McGivern Insurance Brokers has been acquired by PIB Group through its Irish subsidiary Campion Insurance.
McGivern Insurance Brokers is a Dublin-based insurance brokerage founded by Hugh McGivern in 1982. It specialises in niche insurance products in the legal, financial, aviation, technology, retail and construction sectors. In FY Dec 21, it reported a turnover of c. €1.9m, which converted to EBITDA of c. €0.4m.
PIB Group Limited is a group of insurance advisory businesses providing advisory, analytics, claims management, premium funding, and risk management solutions. The business was founded in 2015 by Brendan McManus and is backed by private equity firms Apax Funds and The Carlyle Group. It is headquartered in London. In FY21, it recorded a turnover of c. £230.9m, which converted to an EBITDA of c. £44.5m.
Advisers: PIB Group: FDD: Mazars led by Mark Mulcahy, Anthony Shiel and Kevin Hogan. Tax: Mazars led by Gerry Vahey and Nicole Hanlon. Legal: DLA Piper led by Matt Cole and Blayre Mcbride.
McGivern: Legal: Gore & Grimes led by Brian O’Neill.
Renatus Comment: 2023 has picked up where 2022 left off with regard to the consolidation trend in the Irish insurance industry. Last year, PIB Group acquired 6 insurance businesses in Ireland, most recently Dublin-based BHP Insurance and Wicklow-based Sheridan-Colohan. It announcd that it intends to continue to actively pursue acquisitions this year. This deal to acquire McGivern Insurance rounds out Campion’s product offering with McGivern specialising in niche products like indemnity insurance and portfolio protection for mortgage lenders.
Source: Business Plus
LWA acquires majority stake in Bloom
Deal Details: A majority stake in Bloom is reported to have been acquired by LWA Group. Deal consideration was not disclosed.
Bloom is a Dublin-based creative agency. It was established in 2000 by David Quinn and Damian Penco. It does not report turnover or EBITDA information. The business was owned by founders David Quinn and Damian Penco.
LWA Group is a group of marketing communications companies based in Dublin. Its brands include Pluto, TapCreative, Zest Product Solutions and VAAS. It is owned by Colin & Fiona Culliton. In FY Oct21, it reported a turnover of c. €6.8m.
Advisers: LWA Group: Legal: Crowley Millar Solicitors LLP led by Bryan Sweeney.
Renatus Comment: This is the second sale of a Dublin-based creative marketing business since the beginning of 2023, following the acquisition of Verve Marketing by The Opus Group last week. This might be a trend to watch as larger groups acquire specialists in each marketing niche to sit under a single entity. All of LWA’s subsidiaries operate under their own brand but benefit from shared resources, tools and synergies.
Hume Brophy acquired by Penta
Deal Details: Hume Brophy has been acquired by Penta. Deal consideration was not disclosed.
Hume Brophy is an Irish-based integrated communications and government relations firm with offices in London, Brussels, Dublin, Frankfurt, Paris, Hong Kong, and Singapore. It was owned by John Hume and Eoin Brophy, who established the business in 2005. In FY Dec 20, the business reported a turnover of c. €10.5m which converted to an EBITDA of c. €2.4m.
Penta was established in September 2022 following the merger of market-leading firms Ballast Research, Hamilton Place Strategies, Flag Media Analytics, Alva, Gotham Research Group, and Decode_M. It is owned by US private equity firm Falfurrias Capital Partners. The business did not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Hume Brophy has expanded its sector focus to agri food, energy and transport in recent years having initially concentrated its efforts on financial services. This deal is an interesting add-on to the newly formed Penta Group which aims to become the world’s ‘first comprehensive stakeholder solutions firm’ by bringing a focus on analytics and research to integrated communications. With operations around the world and experienced principals who will remain active in the business, Hume Brophy looks to be an ideal company to integrate into this strategy.
There is a shift whereby services companies, which historically struggled to separate the goodwill from the principal fee earners, are beginning to get paid for their global goodwill and creating equity for founders and leaders of professional services firms.
Source: Penta Press Release
Swrve acquired by MessageGears
Deal Details: Swrve has been acquired by MessageGears. Deal consideration was not disclosed.
Swrve is a mobile marketing platform based in San Francisco with offices in Dublin and London. It was established in 2010 by Hugh Reynolds and Steve Collins. It delivers mobile experiences that drive customer engagement for clients like Emirates and Ryanair. The business previously raised $76m in funding from investors, including Atlantic Bridge, Act Venture Capital, Summit Bridge Capital, Spectre, Enterprise Ireland and the Ireland Strategic Investment Fund. The business reported FY21 revenue of c. €7.5m.
MessageGears is a marketing platform based in Atlanta, Georgia, that allows users to use data to engage with customers across email, SMS and mobile apps. The company recently announced a $62m growth funding round led by US-based growth investor Long Ridge Equity. The business does not report turnover or EBITDA information.
Advisers: Long Ridge: Corporate Finance: Clearwater led by John Curtin and Jonathan McDonnell.
Swrve: None mentioned.
Renatus Comment: Swrve founders, Hugh Reynolds and Steve Collins, previously set up software developer Havok back in 1998. This business was subsequently sold to Intel in 2007 for $110m. Reynolds and Collins have once again exited to a significant US player. This deal will increase MessageGears’ global presence as well as expand the digital channels through which it can grow the brand reach of its clients.
Source: Clearwater International Press Release
Skibbereen Residential Care acquired by Care Property Invest
Deal Details: Skibbereen Residential Care has been acquired by Care Property Invest. The deal consideration was not disclosed.
Skibbereen Residential Care is a Cork-based Residential Care Centre & Retirement Village. The business is owned by Colette Moyles and Norbert Eames, and it did not report Turnover or EBITDA information. The project will accommodate 51 residents and has a reported total conventional value of approximately c. €7.5m.
Care Property Invest is a Belgian-based public care home REIT with a market capitalisation of c. €423m. It has a portfolio of 142 healthcare projects spread across Belgium, The Netherlands, Spain and Ireland. In FY21, the business reported revenue of c. €43.7m, which converted to EBITDA of c. €38.0m.
Advisers: None mentioned.
Renatus Comment: Anyone in this space who sold in the last two years is likely to have achieved a peak price. This is due to margin compression, top-line revenue remaining static, costs from staff to energy and food increasing, and the fact that money-chasing deals such as the above was primarily institutional packaged money getting low yields on the property element of the homes when interest rates were negative.
Source: Care Property Invest Press Release
Jeffrey Leo agrees to acquire Altada Technology Solutions
Deal Details: A receiver appointed to artificial intelligence company Altada Technology Solutions has agreed to sell the business for an undisclosed amount. The receiver has expressed a preference for a sale of Altada Technology Solutions to Jeffrey Leo who fronted the Datech bid.
Altada Technology Solutions is a Cork-based provider of clients’ data supply chains using ingestion, indexing, data remediations, and inference. The business was founded in 2017 by Allan Beechinor and Niamh Parker. It raised €8.75m in October 2021 from investors in a funding round led by Elkstone, which invested €4.3m in the round along with Rocktop.
BayWa r.e. is a leading global renewable energy developer, service provider, distributor and energy solutions provider based in Germany. Two of the solar projects in this deal are located in Castilla la Mancha and the third in Andalusia. Collectively they produce 115 MWp and will commence operation later this year.
Advisers: None mentioned.
Renatus Comment: Jeffrey Leo, a founding investor in Altada has agreed to acquire the business. Jeffrey Leo is working alongside Rocktop Partners to acquire Altada from receivership.
Source: Business Post
Graphic & Paper Merchants Ireland acquired by Premier Paper Group
Deal Details: Graphic & Paper Merchants Ireland (GPMI) has been acquired by Premier Paper Group for an undisclosed sum.
GPMI is a Dublin-based independent supplier to the commercial print and signage trade in Ireland. GPMI is owned by Michael Brophy and Dermot Smurfit. During FY22, the business reported a turnover of c. €27.5m.
Premier Paper Group is a UK-based independent paper merchant. The business reported a turnover of c. £187m which converted to an EBITDA of c. £7.2m.
Advisers: Premier Paper: Deal Advisory: BDO led by Rory O’Keeffe, Anthony O’Boyle. Tax: BDO led by Angela Fleming.
GPMI: None mentioned.
Renatus Comment: GPMI has a strong position in the Irish market, supplying the Irish commercial print and sign and display sectors. It follows Premier Paper’s acquisitions of retail display company WBC and packaging and lamination films supplier Zulu Packaging last year. Post-transaction, GPMI will gain additional resources, logistics support and expertise provided by Premier Paper.
Deal Details: Galway-based Neylons facilities management has reportedly acquired the entire issued share capital of Accent Facilities Solutions Limited. Deal consideration was not disclosed.
Neylons Facility Management provides a full range of Facilities Management services to its clients across various sectors, including Healthcare, Residential/Nursing Homes, Corporate, Pharmaceutical and Education. The business reported an FY21 turnover of c. €29.9m which converted to an EBITDA of c. €2.0m. The business is majority owned by Sylvester and Maureen Neylon.
Accent Solutions is a specialist Facilities, Asset Management and Energy Management business, providing services to investor, institutional and corporate clients. The business did not report turnover or EBITDA information and was already partly owned by Neylon Facilities Management. The business listed Martin McMahon and Ann Treacy as the sole owners in 2021.
Advisers: Accent Solutions: Legal: LK Shields led by Emmet Scully, Lester Sosa-Villatoro and Daniel Keegan.
Renatus Comment: With the introduction of Covid and resulting higher cleaning standards in offices coupled with a large influx of people returning to the office, the facilities management sector has seen a significant increase in revenue over the past months. This industry is highly fragmented, with a recent report released by the British Cleaning Council (BCC) estimating that over 69k companies are operating in the sector in the UK and a level of fragmentation in the Irish market is likely.
Neylons may join the likes of Bidvest Noonan as a consolidator in the space over the coming months if they continue this M&A strategy.
Source: LK Shields Press Release
DEAL UPDATES & OTHER NEWS
Ireland raises €3.5bn from sale of 20-year Green Bond
Deal Details: The National Treasury Management Agency (NTMA) raised €3.5 billion through the syndicated sale of a new 20-year Irish Sovereign Green Bond (ISGB) maturing in October 2043.
The funds were raised at a yield of 3.106%.This is the country’s second sovereign green bond, following the first issuance in October 2018. The NTMA said there was strong demand for the offering with an order book of over €35bn split across 300 accounts of varying geographies and investor type.
Advisors: NTMA: Legal: Arthur Cox led by Cormac Kissane and Sinead Williams.
Source: NTMA Press Release
Kerry Group agrees to sell sweet ingredients division to Advent International
Deal Details: Kerry Group has entered exclusive negotiations with IRCA to sell its sweet ingredients division for c. €500m.
The division employs c. 1,100 staff across 10 manufacturing plants, six in Europe and four in the US. It makes a range of ingredients, from sweet particulates and chocolate confections to baked inclusions and fruit purées. The division’s expected attributable financial results for FY22 include revenue of c. €405m and EBITDA of c. €41m. Kerry Group has said that if the sale to Advent’s IRCA portfolio company proceeds, it will use the money raised for “general corporate purposes” and the development of its taste and nutrition (T&N) business.
Source: Irish Examiner
Poolbeg Pharma to list on Nasdaq in €1bn sale
Deal Details: Infectious disease specialist Poolbeg Pharma is aiming to list on the New York Nasdaq exchange. It has been reported that the company is aiming for an IPO before the end of the year. This is a move from the same playbook that saw Amryt Pharma sold to Chiesi this week. Dublin-based firm Raglan Capital backs both companies.
Source: The Independent
Rossmore Civils Limited is a building and civil engineering company, based in Cork, with a second office in Dublin. The business is owned by Martin Fagan and John Curtin.
In its financial year to March 2022, the business generated a turnover of c. €24.5m, an increase of 7.7% year-on-year. This converted to an EBITDA of c. €1.6m, an increase of 14.5% year-on-year. The rise in EBITDA is primarily attributable to the increased revenue figure, with administrative expenses (excluding depreciation charges) remaining flat year-on-year.
Significant post-EBITDA cash movements include payments to acquire tangible assets of c. €0.8m and a c. €0.2m investment in working capital. The business finished the year with a cash balance of c. €2.5m.
The business employed an average of 134 people in FY22 at a total cost of c. €7.3m.
Great Northern Distillery Limited is a whiskey distillery in Dundalk, Co. Louth. It was opened in 2015 at the site of the old Great Northern Brewery which dates back to 1896. The business is owned by Jack, Stephen & John Teeling, James Finn and David Hynes.
In its financial year to April 2022 the business generated turnover of c. €44.5m, an increase of 34.1% year-on-year. This converted to c. €24.3m EBITDA, an increase of 29.0%. The increase in EBITDA was driven by revenue growth, with gross margin falling slightly year-on-year.
The business finished the year with a cash balance of c. €1.3m, a c. €0.2m decrease on FY21. The primary cash outflows were associated with debt repayments and the acquistion of tangible assets.
The business employed a total of 49 people during the period at a total cost of c. €3.3m.
Who: HR Duo, a human resources technology company based in Dunshaughlin.
What: The company raised €4.5 million in a Series A funding round led by UK-based Puma Private Equity.
Why: The funding will be used to help drive revenue growth and international expansion.
The total amount spent by the Irish state on social protection in 2021. The most significant areas of expenditure within social protection were sickness and healthcare (€23.6 billion) and old age (€15.9 billion). According to @CSOIreland.
The increase in Irish manufacturing output for September, October and November 2022 in comparison to the same period in 2021. pharmaceutical, computer, electronic and medical instrumentation were among the main drivers. According to @CSOIreland.
The additional spending of Irish consumers on groceries during the Christmas period compared to the previous year. Irish grocery sales in Ireland hit a record €1.3bn in the run-up to Christmas. According to @Kantar_UKI.
The increase in people employed by Enterprise Ireland-backed firms from 2021 to 2022. Firms backed by Enterprise Ireland employed a total of 218,178 people in 2022. According to @Entirl.
The occupancy level of the Irish Residential Properties Reit’s various sites as of December 31st 2022. This figure increased from 99.1% in 2021. According to @iresreit.
The total value of food, drink and horticulture products exported from the Republic of Ireland in 2022. This figure is up 22% (€3bn) on the previous year. According to @Bordbia
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Renatuswas 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:
Growth financing – both organic and acquisition growth financing