InsightsNewsletterRenatus’ Weekly M&A Newsletter – 15/11/2020

Renatus’ Weekly M&A Newsletter – 15/11/2020

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Dear Reader,

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

Simtech Launches New Aircraft Simulator

One of Renatus’ investee companies Simtech Aviation, a European leader in the provision of flight training services to airlines and pilots, has launched a state-of-the-art ATR pilot training simulator at Dublin Airport.

The €10m ATR 72-600 Simulator is the first of its kind in Ireland and UK.

Congratulations to all the team in Simtech and the contractors for onboarding the machine during a heavily constrained lockdown.

Renatus Graduate Recruitment – Final Call

Applications for our graduate programme will close next Sunday the 22nd of November

We’re looking for individuals with ambition, tenacity and a love of entrepreneurs and SMEs to join our team as an Associate.

Our small, tight-knit team means that Associates play an integral role in our activities and receive a high-degree of exposure and responsibility from day one.

This role is open to final year and graduate students available to start full-time in September 2021, or earlier if applicable.

If you, or someone you know, is interested in applying, please visit Renatus.ie

You can learn more about Renatus and the role in this video: An Introduction to Renatus Video

M&A Activity

Bowmark Capital backs buy-out of Totalmobile

totalmobile

Deal Details: Belfast-headquartered Totalmobile has secured investment in excess of £100m (c.€111.5m) from Bowmark Capital LLP.

This investment marks an exit for Horizon Capital LLP who partnered with the company in 2015.

Totalmobile, led by Jim Darragh, is the UK’s leading Field Service Management (FSM) software provider. It has more than 700 customers and 250,000 mobile-workforce users across a range of sectors. It has been reported that the funding will be used to accelerate Totalmobile’s investment in R&D and to allow it to pursue acquisitions.

The business recently reported a growth of 70% in FY19 and is forecasting £26m of revenues to December FY20, despite the Global Pandemic.

Bowmark Capital is a leading private equity firm that specialises in UK growth companies.

Advisers: Anya Cummins, Corporate finance Partner at Deloitte led the financial advisory on the deal. Multinational law firm Pinsent Masons advised Totalmobile.

Renatus Comment: Over the last few years, Totalmobile have become leaders in the field services management market, through organic growth and through a number of strategic acquisitions. Not only, will this investment allow them to focus heavily on R&D, but it will also enable them to engage in larger-scale acquisitions and hopefully add new verticals to their existing business model.

Source: Totalmobile Press Release, Insider Media

CJ Sheeran acquires Coolrain Sawmills

cj sheeran

Deal Details: CJ Sheeran, Ieland’s largest pallet manufacturer, have announced the purchase of Coolrain Sawmills for an undisclosed sum.

Laois-based CJ Sheeran, which is led by Mark Sheeran, supplies a range pallets to F&B, Pharma, Medical Device, Technology, Engineering and General Manufacturing sectors. The business also has ancillary businesses including gates, fencing, equine bedding, garden mulch and biomass. In their financial year to December 2019, CJ Sheeran reported revenue of c. €30.2m and EBITDA of c. €2.9m.

Coolrain Sawmills, also based in Laois, is one of Ireland’s leading timber manufacturers for import and export markets. It began trading in 1984 and has been led by Managing Director, Declan Hutchinson since 1986. Mr. Hutchinson will remain in place as MD of Coolrain post-transaction. In their financial year to June 2019, Coolrain reported revenue of €17.2m and EBITDA of c. €1.4m

Advisers: Bank of Ireland, Mason Hayes Curran, Stephen Lynn and PP Ryan & Co.

Renatus Comment: Mark Sheeran and his team have built their core business out very impressively over the years adding plants locally in Laois and also in Mayo, North Leinster, entering new revenue lines in equine bedding and garden furniture. Going deeper into his supply chain and acquiring a sawmill was an obvious growth angle particularly one neighbouring his own HQ.

Source: Laois Today

Cardinal Capital to acquire Mowlam Healthcare

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Deal Details: Private equity firm Cardinal Capital Group are reportedly set to acquire one of Ireland’s largest nursing home operators Mowlam Healthcare. It has been reported that the consideration is in excess of €50m.

Mowlam Healthcare operates c. 1,600 beds across 27 locations. It offers a range of services including MemoryCare, a specialist service for people living with Dementia and a respite and convalescence for recovering hospital patients. It is reported that this transaction will result in a significant share sale by the existing shareholders which are led by Pat Shanahan.

Cardinal Capital was established by Nick Corcoran and Nigel McDermott and is currently investing a €175m fund.

Advisers: Deloitte’s Anya Cummins and Laura McCoy advised Cardinal on the deal along with their tax and TS colleagues.

Ger O’Mahoney and Brian O’Brien of PWC Cork office were Corporate Finance advisor to the vendor. Senan Burke of Adams Law also advised the Vendor.

A Maples team, led by Patrick Quinlan and Colm Rafferty, acted for Cardinal Capital on this transaction.

Source: Independent

Flynn O’Driscoll acquires the Litigation practice of O’Callaghan Legal

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Deal Details: Flynn O’Driscoll Business Lawyers has acquired the litigation practice of O’Callaghan Legal for an undisclosed sum.

The litigation clients transferring to Flynn O’Driscoll will continue to be advised by Maurice O’Callaghan, who has joined Flynn O’Driscoll as Consultant, and Billy Brick, who has joined Flynn O’Driscoll as a Senior Associate.

Flynn O’Driscoll is a full service business law firm with a domestic and international client base comprising multinational companies, owner-managed businesses, public bodies, as well as private clients.

O’Callaghan Legal, led by Maurice O’Callaghan, is an independent firm of highly qualified Solicitors with over 30 years of professional experience.

O’Callaghan Legal will continue to operate as a private client practice, led by Maurice O’Callaghan.

Advisers: None mentioned.

Renatus Comment: Flynn O’Driscoll are a real challenger firm but probably had more power in other departments, particularly in commercial. This will allow Flynn O’Driscoll to strengthen its litigation arm and provides a succession solution for Maurice O’Callaghan.

Source: Flynn O’Driscoll Press Release

Greencastle Capital to acquire Lovin Media Group

lovin

Deal Details: Greencastle Capital is reportedly set to acquire Lovin Media Group for an undisclosed sum.

This acquisition follows on the heels of Greencastle’s acquisition of Maximum Media which owns the Joe.ie and Her.ie brands. As with that deal, Greencastle has once more engaged Iconic Labs to manage the Lovin Media Group.

Lovin Media is best known for its lifestyle and entertainment content which it publishes mainly via social media, including Lovin Dublin. The business was founded by Niall Harbison. The business was owned by shareholders including Emmet O’Neill, Greg Lynch, Jamie Heaslip, Graham Kinsella, Trevor Daly and Edward O’Riordan.

Greencastle is a venture capital company led by David Sefton and Paul O’Donoghue.

Advisers: None mentioned

Renatus Comment: Greencastle is focused on technology and media investments and appear intent on becoming a leading player in the digital publishing market through the rolling up of different brands with an established following. They now claim to be the largest digital media house in the Republic of Ireland after this acquisition.

They have achieved this with a neat model of outsourcing the management of the brands meaning that they have less of an operational management requirement, allowing them to focus on the identification and acquisition of new brands.

Source: Irish Times

MBO Partners acquires its UK & Ireland affiliates

mbo

Deal Details: USA-based MBO Partners has announced its acquisition of its UK and Ireland-based fulfillment partners which collectively trade as MBO Partners Limited. The deal details were not disclosed.

MBO Partners is a deep jobs platform that connects and enables independent contractors and micro businesses to do business safely and effectively with enterprise organisations.

The UK and Ireland teams will remain in place under the leadership of founder Fergal Lennon. Services provided by the UK and Ireland operations were the same as those provided by MBO in the US.

Advisers: None Mentioned

Renatus Comment: MBO Partners specialise in the bridging the gap between independent contractors and companies by providing a technology platform to manage workflows, compliance, payroll and more. This is an expanding market with the the penetration of tech and the onset of remote working reducing the friction to people working independently.

The UK is set to introduce legislation titled IR35 which is designed to combat tax avoidance by independent workers, and the firms hiring them, who are supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.

Such regulatory changes always present opportunities for new or existing market niches, such as MBO Partners here who’s services will give both contractors and companies certainty around tax compliance.

Source: PR Newswire

Step Investments increases stake in CEG

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Deal Details: Step Investments has increased its stake in City Education and Learning Group (CEG) from 38% to 85% following a €2.25m investment.

CEG is the company behind four private educational facilities in Dublin: Ashfield College in Dundrum, City Language School, Progressive College and City Colleges.

Step Investments is a holding company for businesses in advertising, education and hospitality. It is backed by UK-listed Duke Royalty, an investment group that, among other Irish businesses, backs Irish telecoms firm Welltel.

Advisers: None mentioned

Renatus Comment: Education has shown itself to be a defensive sector which should see CEG be able to trade through the current economic downturn. They have a diversified offering under their umbrella, targeting distinct end-markets and customers.

CEG currently serve customers taking the leaving certificate (Ashfield College), learning the English language (City Language School), pursuing further professional development (City Colleges) and those looking to break into childcare, healthcare and SNA (Progressive Colleges).

However, this year and next will likely present challenges and there is now an imperative for education providers to shift their delivery to partially or wholly online, a challenge that CEG will have to meet.

Source: Independent

Clevernet acquires Connect2Fi

cleve

Deal Details: It has been reported this morning that Clevernet has acquired Connect2Fi for an undisclosed sum.

Cleverent, which was founded and is wholly owned by Shane Deasy, enables businesses to turn their properties into “smart” buildings by providing tech-enabled software, sensors, energy dashboards and more. They have three primary solutions: “CLEVERcloud”; “CLEVEREnergy”; and “SMARTBuildings”.

Connect2Fi is a Wi-FI specialist which was previously owned by Mainline Group, a Cork-based utility company. The business had a focus on supplying Wi-Fi solutions to educational and commercial customers.

Advisers: None mentioned

Renatus Comment: Clevernet founder Shane Deasy was previously with Mainline Group. He was involved in the creation of Connect2Fi and subsequently led the business before leaving the start Clevernet. With such a history, an acquisition of this type appears to be a great fit. Mr. Deasy will be extremely familiar with the products, customers and staff in Connect2Fi and will now be able to offer an extended suite of services to those customers under the Clevernet umbrella.

Source: Business Post

Whiterock Finance backs Artemis Human Capital

artemis

Deal Details: Whiterock Finance has made its first investment into specialist recruitment company Artemis Human Capital for an undisclosed sum.

Artemis Human Capital is a value-add recruitment firm, founded in 2014 and led by Sarah Orange. Artemis has a team of 8 which help businesses place permanent, interim and temporary positions. Artemis aims to add value to the recruitment process by building long-term strategic partnerships and understanding the commercial and personal objectives of its clients.

Whiterock is a growth finance fund which provides loans to SMEs across Northern Ireland.

Advisers: None mentioned

Source: The Irish News

Deal Updates & Other News

Tata Consultancy to acquire Pramerica

India’s Tata Consultancy Services (TCS) has agreed to buy Letterkenny-based Pramerica Systems from insurance powerhouse Prudential Financial. Although the financial consideration of the deal has not yet been disclosed, Bloomberg highlights that this will be an all-stock deal. As part of the deal, Pramerica employees will transfer to TCS.

The deal will allow New-Jersey based Prudential to cut its costs and divest its non-core assets amid the Covid-19 uncertainty.

TCS is a leading IT services, consulting, and business solutions organisation. TCS has over 450,000 employees around the world and generates $22bn in annual revenue from selling software services and products to customers including Citigroup, BT Group, Panasonic and Qantas.

Source: Irish Times

Irish Life in talks to acquire Harvest Financial Services

It has been reported this morning that Irish Life’s wealth management arm is eyeing up a move for Harvest Financial Services.

Founded in 1993, Harvest Financial Services is one of Ireland’s leading independent wealth managers. Last year, Harvest had €1bn under management, 1,500 clients and 50 staff. They provide retirement planning, financial planning and investment advice. In FY Dec 18, they reported turnover of c. €4.7m.

Irish Life has been an active acquirer in the market as it has turned to acquisitive growth to extend it dominance in the Irish market. To FY Dec ’19, Irish Life Assurance PLC reported revenue of c. €1.2bn.

Source: The Sunday Times

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.

canning

Based in Naas, Granning Group Limited supply axle and suspension solutions to many industries across the UK and Ireland.

In its latest fiscal year,  Grannings’ revenue decreased by 3.6% to c. €24.2m. EBITDA also decreased by 15.6% to c. €1.0m. The continuing cost management exercised the group achieved an increase in Gross profit margin of 2.3% to 26.5% for the period

The company had a net cash increase  of c. €55k in FY19. However, closing cash was still overdrawn by c. €2.0m at the end of the year. The most significant movements in cash were the c.€1.3m of new loans drawn down, the c. 600k spent on tangible fixed assets and the c.€795k in loan repayments. During the period, Granning Group acquired 100% of the share capital of Northern Irish-based Braketech Limited.

The company employed an average of 102 employees in FY19 at a total cost of c.€3.6m, a c.400k increase from the previous year.  The Company is owned by Directors  Patrick Carson, Dereck Whelan, Rosemary Hedigan and Mark Lavery.

canning figs
duggan

Based in Co. Cork , Duggan Steel is a market leader in structural steel and cladding projects. They work with a number of industries including data centres , pharmaceutical and manufacturing. Some clients include, Microsoft, Intel, Google, Eli Lilly, Pfizer and Amgen.

In its latest fiscal year,  Duggan Steel’s  revenue decreased by 19.5% to c.€19.3m, while EBITDA also decreased by 53.7% to c. €2.3m. Administrative expenses increased c.7.2% to c. €2.0m which amplified the downward pressure on operating profit.

The company had a net cash decrease  of c.€6.3m FY19 leaving an ending cash balance of c.€5.9m. The largest drains on cash were c.€1.3m  invested mainly in  Plant & Machinery and Freehold property and the c.€2.0m spent on acquiring group subsidiaries. Shareholders declared c.€268k in dividends during the year.

The company employed an average of 53 people in FY19 at a total cost of c.€2.8m. The Company is a 100% subsidiary of Bestal Holdings Ltd, which is ultimately controlled by directors Bernard Duggan , Stephen Duggan and Alan Duggan.

duggan steel
acr

Based in Co. Louth, ACR Healthcare Limited is an investment holding company operating a number of private nursing homes in Ireland.

In its latest fiscal year,  ACR’s revenue increased by 4.1% to c.€5.5m. However, EBITDA decreased by 2.0% to c. €1.1m. Gross margins remained at c.63% YoY and operating profit fell due to a small increase in administrative expenses. The breakdown of its revenue was; Hazelwood lodge (c.35%), Glencar Lodge( c.34%) and Lisadell Lodge (c.26%).

The company had a net cash decrease  of c.€18k in FY19 leaving an ending cash balance of c.€478k. The largest drain on cash was the c. €487k in loan repayments.

The company hired an extra 13 people  in FY19 bringing the total headcount to 142 people at a total cost of c.€3.4m. Catherine Begley is the ultimate controlling party of ACR Healthcare

acr figs

Fundraisings

Who:  Amarenco, a Cork solar power company, has secured funding. Amarenco began a capital raising process at the beginning of the year to secure a total investment capacity of €3bn to fund its growth in Europe, Asia Pacific, and the Middle East markets.

What: €150m capital raise was subscribed to by the co-founders themselves, by IDIA Capital Investissement and by Tikehau Capital through its Energy transition fund.
Stephen Walker of Holmes O’Malley Sexton acted as advisor for Amarenco.

Why: The investment will be used to convert current pipeline of mergers and acquisitions into ‘value-generating assets’.

Source:  Irish Times, RDJ

Who: Healthy meal-kit delivery service DropChef, founded in 2015 by Ryan Scott, Roman Grogan and Sam O’Byrne, has raised funding.

What: €2m investment round is led by VentureWave Capital. The investment marks the first investment of VentureWave’s Impact Ireland €100m fund.

Tom Roche and Patrick Dillon of Grant Thornton provided financial advisory to DropChef while Sarah Connolly and Kieran Regan of ReganWall advised DropChef on the legals.

Why: The investment will be used to increase the company’s menu offerings and to expanding its educational outreach programme which is aimed at steering people away from processed food and towards healthier eating.

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.

Michael Veale

MV

Source:
(Google Images & LinkedIn)

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John Gilvarry

JG

Source:
(Google Images & LinkedIn)

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John Moloney

JM

Source:
  (Google Images & Media)

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Caoimhe McLoughlin

CAOIMHE

Source:
(Google Images & LinkedIn)

KPMG
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Thought for the Week

Paul Duggan and Rebecca Brennan released a superb publication in conjunction with KPMG this week titled “Tenets of Adaption“.

Paul and Rebecca back in April, in the height of the Pandemic, decided to capture a picture of how a diverse group of businesses were adapting  to the Covid-19 juggernaut that hit the global economy. After conversations with more than 40 businesses in Ireland and the UK, in depth interviews with 24 and more than 200 hours of research, their report, supported by David O’Kelly and KPMG Ireland – Tenets of Adaption – has been published. The companies range in scale from 12 to 15,000 employees and one to more than 80 countries of operation.

One of our investee companies, Boojum, is featured and our MD David Maxwell tells how Boojum stabilised and pivoted its business from a largely footfall/in-store business to a digital model  driven by a new click & collect app and the successful delivery model that had been established in the business.

The research identified 11 consistent behaviours amongst companies which decided to follow Charles Darwin’s law of nature: it is not the strongest or most intelligent species which survives – the species which survives is the one that adapts best to the circumstances it finds itself in. The report is designed to be easily accessible and as well as describing the 11 Tenets of Adaption includes 11 case studies.

Tenets of Adaption and a Podcast is available to download from the KPMG Website:   KPMG – Tenets of Adaptions

@RenatusCapital Tweets

6.5%

The NI unemployment rate for October 2020 amounting to 60,200 persons unemployed, according to the figures by the Labour Force Survey. @BelTel

30.3% & -12.8%

The year-on-year increase and decrease in the number of new and used private cars licenced, respectively, for October 2020 amounting to 4,189 new and 9,543 used (imported) cars, according to @CSOIreland

10.5%

The year-on-year decrease in the volume of goods handled by the main Irish ports for Q2 2020 amounting to 11.0 million tonnes of goods, according to @CSOIreland

88.3%

The year-on-year decrease in the number of passengers travelling through the main Irish ports for Q2 2020 amounting to 88K passengers, Dublin port accounted for 96.6% of all passenger journeys, according to @ CSOIreland

9.4%

The year-on-year reduction in the number of residential property completions for Q3 2020 amounting to 5,118 dwellings including single homes (1,467), scheme dwellings (2,877) & apartments (774), according to @CSOIreland

1.5%

The year-on-year decrease in the Consumer Price Index for October 2020 with the most notable changes Communications (-7.9%) and Health (+4.2%), according to @CSOIreland

5.5 & -2.8%

The year-on-year increase and decrease in the Irish agricultural price output and input indices, respectively, for September 2020, 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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