InsightsNewsletterRenatus’ Weekly M&A Newsletter – 15/03/2020

Renatus’ Weekly M&A Newsletter – 15/03/2020

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Dear Reader,

You are receiving this mail every week as we see you as a key partner and we look forward to continuing to enjoy our journey with you over the decades ahead.

Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.

M&A Activity

Kingspan acquires Colt Group

Kingspan

Deal Details: Kingspan, a Cavan-headquartered insulation giant, is to acquire Colt Group for an undisclosed sum.

Colt Group is a UK-headquartered smoke control, solar shading, ventilation and climate tech products company. Founded in 1931, Colt has c. 1,000 employees in 15 countries and an annual revenue of £180m (€202.35m).

The deal, subject to clearance by the competition authorities.

Following completion of the acquisition, the Colt Group will become part of the Kingspan Light +Air (KLA) division.

Advisers: None mentioned

Renatus Comment: Kingspan grew to be a dominant force in the pan-European insulation industry through a series of well executed acquisitions and a successful track record of integration. In recent times, Kingspan’s Light + Air (KLA) division was established for vertical integration and to capture additional share of its value chain. This acquisition of Colt sees Kingspan push further into this light & air niche. It was reported that the division’s pre-acquisition revenue was c. €300m while Colt’s was c.£180m. While £180m may be small in the context of Kingspan’s €4.4bn of revenue, it is c. 65% the Light + Air division’s revenue which is far from insignificant. Kingspan are employing a strategy that has served them well throughout their history, this time in a new niche, and not many would be surprised to see it be successful once more.

Source: Colt Group Press Release

Cicero acquired by Havas Group

Cicero

Deal Details: Cicero Group becomes part of AMO – Havas Group’s global strategic advisory network – and will rebrand as Cicero/AMO. Financial details of the deal were not disclosed.

In 2019, the AMO Network, with presence in 11 countries, advised on 237 M&A deals with a value of $354bn (€318.74bn).

Cicero/AMO will focus on corporate PR, public affairs, market research and digital communication from its offices in London, Brussels and Dublin.

Advisers: None mentioned

Renatus Comment: AMO has consistently ranked as one of the top global M&A communications consultancies and this acquisition will further enhance its position as a leading international strategic advisory network with the Cicero Group bringing a full-service communications and market research agency to the business.

Back in 2018, Havas Group announced an ambitious plan to invest €100m over the course of 5 years to turn AMO into a ‘real’ global communications network.

Prior to this transaction the main shareholders in Cicero were Executive Chairman Iain Anderson (c. 34%), Chief Executive Jeremy Swan (c. 23%) and Executive Director Mark Twigg (c. 15%).

Source: Cicero Group Press Release

Patisserie Valerie and Bakers + Baristas merge

Bakers + Baristas

Deal Details: Patisserie Valerie and Bakers + Baristas are merging to form a group with more than 125 locations across the UK and Republic of Ireland.

Limerick-headquartered Bakers + Baristas, a Causeway Capital platform company since 2015, has about 300 employees in 65 cafés throughout UK & Ireland.

Advisers: None mentioned

Renatus Comment: Causeway Capital acquired 96 of Patisserie Valerie’s sites back in 2019 as the former parent, Patisserie Holdings, collapsed and have since taken the business through a revamp of sorts closing down 14 under performing cafes and introducing new branding and packaging in the past year.

Source: Big Hospitality

Draper Esprit buys out Encore Ventures

Draper Esprit

Deal Details: Draper Esprit, a Dublin-listed venture capital firm has acquired 28% interest in Encore Ventures for £4m (€4.5m).

Encore Ventures manages Draper Esprit’s enterprise investor scheme (EIS) funds which have around £160m (€180m) of assets under management.

Tech industry focused Draper Esprit invests between £2m (€2.25m) and £50m (€56m) within businesses and makes about 10 to 20 new investments a year, including follow-on investments.

Advisers: None mentioned

Renatus Comment: Since its founding in 2006, Draper Esprit has made over 120 investments.

Source: Independent Business

We Got Pop acquired by LA-based firm

Pop

Deal details: Irish-founded entertainment tech company We Got Pop has been acquired by Entertainment Partners, a leading LA-based company in a multimillion dollar deal.
Financial consideration of the deal was not disclosed.

We Got Pop, founded by Dubliner Kate McLaughlin 6 years ago, developed a software platform for the entertainment industry. Its platform was used to find cast and crew for over 60% of UK productions in 2019.

Entertainment Partners, founded in 1976, is the owner of the legendary Central Casting company.

Advisers: None mentioned

Renatus Comment: In Feb 2018, We Got POP completed a £2m fundraising round which was led by Octopus Ventures, a UK VC firm. Although the financial consideration for this transaction wasn’t disclosed Octopus Ventures’ press release indicates the acquisition by Entertainment Partners represents a “significant multiple on original investment”.

Source: Irish Times

KFC Franchise acquired by EG Group

Herbert

Deal details:  UK’s largest Kentucky Fried chicken (KFC) franchise, built by Northern Irish couple Michael and Lesley Herbert, has been sold to Blackburn-based EG Group for an undisclosed sum.

In addition to 146 KFC outlets in Ireland and the UK, the deal also includes one Pizza Hut Store, a development pipeline and a small number of non-trading sites.

EG Group, which is run by the billionaire brothers Mohsin and Zuber Issa, now operates a network of about 1,500 sites across 10 European countries including Ireland, a new market for the group.

Advisers:
Paddy Quinlan of Maples advised CoreHR on the sale of the business.

Renatus Comment:
In 2016 Murphy sold an 80% share his business to two private equity investors for a reported €80m. He retained 20% and stayed on the growth journey of the business over following four years up to its full acquisition by the Access Group. In this second sale Murphy netted c. €45m for his 20% stake, valuing the business at more than twice what it was worth in 2016.

This is a great success story of private equity partnering with founders of businesses to allow them monetise some of the value they have built while still staying on the journey and together working towards a continued growth and a second big payout.

Source: Irish Times

Deal Updates & Other News

Unity Technologies creating 100 jobs following Artomatix acquisition

Artomatix’s new parent Unity Technologies has announced it indents to immediately triple Artomatix 20-strong head count. Over the next 2 years, Unity is to create 100 new jobs in Dublin and open a new office in the docklands area.

Source: Irish Times

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.

Bartra Capital appoints new Chief Brand Officer
Property development group, Bartra Capital, has appointed Nigel McGuire at its Chief Brand Officer.  Mr McGuire will assume responsibility for Bartra’s PR, communications and stakeholder engagement across the group.  Mr McGuire is a former senior executive at Circle-K Europe and previously served as Director of Property and Supply Chain at McDonalds.  In his earlier career, Mr McGuire worked for P. Elliott & Co and at Lidl Ireland in property management roles.  He is a business graduate of the University of Limerick.

Law Reform Commission appoints new Director of Research
The Law Reform Commission has announced the appointment of former prosecutor Rebecca Coen as its new director of research. Ms Coen, a graduate of University College Cork who was called to the Bar in 2005, has worked in several prosecutorial positions since 2008.  She was a senior prosecutor and deputy head of the prosecution policy unit at the Office of the Director of Public Prosecutions from February 2008 to October 2009.  She subsequently worked until February 2020 in the directing division of the DPP’s office, where she was a principal prosecutor managing indictable cases at every level and stage of the criminal process.

Matheson appoints four new Partners
Matheson has announced the appointment of four new partners.  The appointment of David JonesKimberley MasudaSusanne McMenamin and Philip Tully follows four other partner appointments in the past six months.  Mr Jones and Ms McMenamin have become partners in the firm’s corporate M&A team, while Ms Masuda has become a commercial real estate partner and Mr Tully has become a tax partner.  The firm now comprise 96 partners across its Dublin, Cork, New York, London, Palo Alto and San Francisco offices.

New appointment at the Pensions Council
Mason Hayes & Curran has announced the appointment of Stephen Gillick, head of the firm’s pensions team, to the Pensions Council.  The body was established in 2013 to advise ministers on pensions issues and has 11 members, including chairman Jim Murray and Pensions Authority chief executive Brendan Kenny.  Mr Gillick is a partner at Mason Hayes & Curran and leads its pensions practice.  He joined the firm in 2015 having previously worked at McCann Fitzgerald.

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 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.

The Front Door
unnamed-5

Based in Galway, Highcross Holdings Limited is an operator of licensed premises in Galway which includes The Front Door, Sonny Molloy’s, among others. In FY18, the company experienced marginal growth with revenue up 2.0% to c. €15.9m with EBITDA up 4.8% to c. €3.4m. The company employed an average of 214 staff members throughout FY18 at a cost of c. €5.6m. There was a slight net cash increase of c. €45k during the year after working capital movements freed up c. €690k of cash while the company paid interest of c. €620k and tax of c. €415k. The company had a Capex spend of c. €1.6m (which included a c. €645k on acquiring tangible fixed assets and c. €955k to acquire new investment properties) and made a c. €870k short-term loan repayment as well as a c. €370k long-term repayment. Cash on the balance sheet stood at c. €1.9m against a debt balance of c. €19.4m. Net assets were up by 9.5% to c. €16.7m. The company is 100% owned by John Mannion.

RiverRidge
unnamed-9

RiverRidge is a Northern Irish waste management company providing collection and disposal services to both the commercial and retail markets. Despite a c. 5% decline in turnover to c. £47.4m in FY19, EBITDA grew by 18% to £6.8m. The EBITDA growth can largely be traced to a four percentage point increase in gross margins to c. 41%. RiverRidge operates in a capital-intensive industry and had a CapEx spend of c. £3.4m for the period versus a depreciation charge of c. £3.1m. The business has c. £30.4m in debt on the balance sheet, the interest charge for the period was c. £1.7m with an additional c. £2.6m of capital repayments being made during FY19. Directors remuneration amounted to £800k for the year and a dividend payment of c. £195k was made during the year. RiverRidge received a £10m investment from  BGF in 2016.

H. Murphy
unnamed-11

H. Murphy & Co. (Enniscorthy), Limited was first set up in 1929 by founders Herbert Murphy and Jimmy Griffin and is one of the leading Cash & Carry’s in the South East of Ireland with branches in Enniscorthy, Arklow and New Ross. The company had a solid year in FY19 which saw revenue increase by 5.9% to c. €30.0m while EBITDA decreased marginally by 2.5% to c. €1.1m. The company employed an average of 100 people in FY19 at a cost of c. €3.1m. There was a net cash increase of c. €40k during the year after working capital movements removed c. €450k of cash as well as tax paid of c. €205k. The company also spent c. €355k on Capex requirements throughout the year with most of it attributable to new premises (c. €165k) and new equipment (c. €140k). Cash on the balance sheet stood at c. €4.3m with an overdraft facility of c. €2k and no long-term debt. Net assets were up 5.2% to c. €8.4m. The company is 100% owned by the Murphy family.

Fundraisings

Who: Getvisibility, a Cork-based data security company founded in 2018, has secured investment.

What: €1.25m round was led by Sure Valley Ventures, investing €750,000. Other backers include AIM-listed Pires Investments, which invested €250,000. Pires has a 13% interest in Sure Valley.

Why: The capital raised will be used to accelerate expansion into other markets, particularly in the Middle East.

Source: Irish Times

Who: Irelandia Aviation has participated in a fundraising for Skyports, a London-based company that is developing drone delivery infrastructure.

What: Following Irelandias part in the £6m (€6.9m) investment round, its founder Declan Ryan is to take a seat in Skyports board.

Why: Skyports intends to use the funds to continue its programme of site acquisition for passenger and cargo vertiports in cities around the world, including Singapore and Los Angeles.

Source: Independent Business

Who: Ireland’s largest private landlord, Ires Reit, has raised funds.

What: €200m was raised through a loan note issue. The notes will have a weighted average fixed interest rate of 1.92% and an average maturity of 9.7 years.

Why: The transaction is part of Ires Reit’s financing strategy to reduce the cost and extend the maturity of its debt facilities. This also gives the company access to a broader range of funding options in the future to support its future growth strategy.

Source: Independent Business

Who: Payslip, a Westport-headquartered fintech start-up, has raised funding.

What: €2.7m funding round was led by Frontline Ventures. HBAN Bloom Equity, Tribal VC and Enterprise Ireland also participated. The company secured €1m in a seed round from the same backers two years ago.

Why: The new financing will enable Payslip to take on more employees and to accelerate client acquisition across Europe and the US.

SourceIrish Times

Who: Jinga Life, a digital medical record consolidation platform founded by Johnny Walker. The platform allows for better treatment control and health service interactions.

What: It’s reported that Jinga has raised funds from Tony Gannon, founder of Abbey Capital, Darragh Richardson, who sold Agile Networks, Dan and Linda Kiely, as well as Ray Nolan have invested into the company.

Source: Sunday Times

Thought for the Week

It is hard to think about anything other than the human and economic consequences of Covid-19.

However, we have been amazed at how many people missed the restrictions introduced in the UK budget during the week.

The special 10% entrepreneurs relief rate on Capital Gains Tax in the UK reduced from £10m to £1m. However, the higher rate is at 20% not 33% which prevails in the south of Ireland.

We think gains are far from the minds of many business owners and our thoughts are with all those suffering from these unprecedented times.

@RenatusCapital Tweets

6.5%

The year in year drop in the new private car sales in Ireland for February 2020. 18% of all new cars were hybrid or electric, compared to 6.1% if February 2018, according to @CSOIreland

6.5% & 1.8%

The year-on-year increase in the number of overseas trips made by Irish residents and in the number of overseas trips to Ireland, amounting to 8.8m and 10.8m trips respectively, according to @CSOIreland

2% & 1.6%

The year-on-year decrease in the agricultural price input and increase in the agricultural price output indices, respectively, for January 2020, according to @CSOIreland

1.8%

The year-on-year increase in the residential property prices nationwide for January 2020, according to @CSOIreland

1.1%

The year-on-year increase in the Irish consumer price index for February 2020 with the most notable changes in Education (+4.1%) and Communications (-9.5%), according to @CSOIreland

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 Family of Investments

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