Renatus’ Weekly M&A Newsletter – 09/07/2023
July 13, 2023Renatus’ Weekly M&A Newsletter – 23/07/2023
July 23, 2023
Renatus Weekly M&A & Company Performance Private Equity Newsletter 16/07/2023
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
One of our first and wisest investors is a very successful Mayo ex-pat in the UK. He has always advised us when hiring, to strongly consider the children of both publicans and farmers. This is because these candidates often have a fantastic work ethic along with common sense from years being immersed in family businesses in tough environments.
It was interesting to hear Denis O’Brien endorsing the thesis during the week when talking about what he found successful over the years in hiring (as reported in the Irish Times). He explained why people with farming backgrounds do well:
“It’s because anybody who has worked on a farm knows commerce and is reared in a kind of commerce…If you are living with your parents on a farm trying to eke out a living, it’s a different world”
We have seen the thesis confirmed many times at top, middle and entry-level positions e.g.
- When we look at the first ten guests of our podcast series a disproportionate amount meet the criteria – Brian O’Sullivan, Jimmy Martin and Will Prendergast all worked a lot on their own or other farms when young.
- When we look at various legends who inspired at our Real Deal conference – Breege O’Donoghue, Gene Murtagh, PJ Flanagan, Tony McEntee, Mike Flanagan and many more did their time on the farm!
- Furthermore, we know of 3 of the 9 CEOs of the deals quoted below all earned their stripes working on the farm also supporting the thesis – Brian O’Sullivan (Zeus), Carmel Owens (Sidero) and John Harrington (Propylon) (there could well be more that we are unaware of).
While it is a narrow criteria and would never be a pre-qualification to a role, we do give bonus points for it when hiring across our portfolio. We even advertise our graduate scheme in the Farmers Journal to get such applicants into the system. It is just one piece of a wider implicit algorithm, but we are always looking for ways to hire smarter.
The lesson from this is that when we are hiring we all need to focus on delving into both background and experience, going beyond just the headlines of a CV. By probing deeply you can lift out the underlying work ethic, curiosity, hunger and ability to get things done well. We are always trying to learn and hire smarter across the board and if anyone has any other tricks of what to look for at the interview stage please feel free to share them with us.
M&A Activity
Propylon acquired by RWS Holdings
Deal Details: Propylon has been acquired by RWS Holdings. Deal consideration was reported to be c. €30m as well as deferred payments of €6.45m in each of the next two years, conditional on the management team remaining in place.
Propylon is a Dublin-based technology company that provides solutions for clients to solve legal, compliance and regulatory challenges. It was founded in 1999 by Paul McKeon, Declan Hogan, and Sean McGrath. In FY Dec 21 it reported turnover of c. €10.5m which converted to EBITDA of c. €3.5m. Other Shareholders included the Company CEO John Harrington and COO Dan Murphy.
RWS Holdings is a UK-based provider of technology-enabled language, content management, and intellectual property (IP) services. It was founded in 1958 and is listed on London’s AIM.
Advisers:
Propylon:
Legal: Philip Lee led by Eoghan Doyle and Keelin Gavagan, supported by Inez Cullen, Patrick Butler, Patrick Egan and Simon O’Neill.
RWS Holdings:
Legal: Slaughter and May.
Renatus Comment: Propylon is a pioneering firm in the content creation, management and publishing services industry. The company has helped to modernise legacy processes surrounding the drafting and publishing of legal and regulatory documentation. Digitalisation has now been embraced in almost every industry and tasks that were historically tedious and paper-based have been streamlined to allow speed and collaboration. This is massively valuable in terms of efficiency and time saved, making it clear to see why Propylon is so highly regarded by global government departments and multinational organisations.
RWS Holdings has been active in pursuing global M&A opportunities in recent years. having purchased UK-based SDL in 2020 for c. $817m, Japan-based Horn & Uchida in 2021 and Dutch firm Liones in 2022. RWS said that this deal was “in line with [its] strategy to actively pursue acquisitions”.
Source: Business Post
Zeus Packaging acquires NIPS Ordnungssysteme GmbH
Deal Details: Zeus Packaging has acquired NIPS Ordnungssysteme GmbH (“NIPS”). Deal consideration was not disclosed.
Zeus Packaging is a Cork-based packaging company that supplies the retail and food industries with products including coffee cups, salad containers, deli trays, cutlery and more. It is owned by Brian O’Sullivan. In FY Dec 21 it reported turnover of c. €287.5m which converted to EBITDA of c. €21.9m.
NIPS is a packaging business based in Germany. It specialises in paper and corrugated board products. It was founded by Matthias Röder over 40 years ago. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Zeus Packaging’s frantic M&A spree continues with this deal following the acquisitions of Polpack, James Hamilton Group and Cima Paper already this year. This acquisition complements its existing industrial and food packaging offering and will boost the mainland European business revenues to c. €200m. Following each of these recent deals the company has emphasised its commitment to delivering sustainable packaging products which will be crucial in the coming decade, as legislators in the EU aim to make all packaging recyclable by 2030.
Founder Brian O’Sullivan continues to show the incredible global scale that can be achieved through consolidation in a fragmented industry if target companies are integrated efficiently. Anyone who missed Brian’s appearance on the Renatus podcast last year can listen to it here.
Source: Zeus Packaging Press Release
GridBeyond acquires the energy business of Veritone
Deal Details: GridBeyond has acquired the energy business of Veritone. Deal consideration was not disclosed.
GridBeyond is a technology platform for managing energy resources. It was founded by Michael Phelan in 2007. In FY Dec 21 it reported turnover of c. €9.4m which converted to EBITDA of c. €0.3m.
Veritone is a Nasdaq-listed artificial intelligence company based in California. The company was founded in 2014 but only launched its energy business in 2019. In FY Dec 22 it reported turnover of c. $149.7m. Its share price was $4.08 as of the 14th July, down 22.0% YTD.
Advisers: None mentioned.
Renatus Comment: As we all know, the world continues to move away from fossil fuels in favour of renewable energies such as wind and solar. One consequence of this trend is that there is much greater variation in the level of energy output to the grid, depending on weather and other factors. Paddy Finn, of Limerick-based VIOTAS, discussed these challenges on the Renatus podcast last year. You can listen to it here.
By acquiring Veritone’s AI-driven software platform, GridBeyond will enable customers to forecast and optimise energy consumption in real-time. This positions it well to take on the growing distributed energy resource (DER) industry. On the flip side of the deal, it is an interesting decision from Veritone to dispose of this loss-making unit. It said that energy technology was non-core to its future plans as it focuses its activities on end users in the media, advertising, government and legal sectors.
Source: The Currency
Enicity acquired by Utility Innovation Group
Deal Details: Enicity has been acquired by Utility Innovation Group (“UIG”). Deal consideration was not disclosed.
Enicity is an energy technology advisory firm based in Dublin. It was founded by Alan McHugh. It does not report turnover or EBITDA information.
UIG is a provider of utility and energy solutions based in the USA. The business does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Similar to GridBeyond discussed above, Enicity is another growing Irish firm that is providing solutions to deal with the uncertainty presented by intermittent energy sources. The company’s technology allows for the storage of energy in special batteries that can then be used to respond quickly to any interruptions to the grid. This technology is of even more importance in Ireland due to the high number of large energy consumers such as data centres which place extra pressure on the country’s grid. Founder Alan McHugh discussed the deal this week on Newstalk’s Breakfast Business with Joe Lynam. One of the interesting points he raised was the need for new regulations to allow energy users of all types to make the best use of these fast-changing technologies in order to best manage the country’s energy resources. You can listen to it here.
Source: Business Plus
Sidero acquired by GlobalLogic
Deal Details: Sidero has been acquired by GlobalLogic. Deal consideration was not disclosed. The deal is subject to CCPC approval.
Sidero is a cloud service company based in Westmeath. It was founded by Oliver Heaney, John Mee, Kevin Rice and Santanu Mazumdar in 2013. It has been led by CEO Carmel Owens since 2020. In FY Mar 22 it reported turnover of c. €16.2m.
GlobalLogic is a US-based software product design and development company. It was founded in 2000 and is now owned by the Japanese conglomerate Hitachi, following a 2021 acquisition. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Athlone may not be immediately recognisable as a tech or innovation hub but in fact, it is home to giants like Ericsson and also has a strong biopharma industry. It is a good example of how smaller towns and cities can offer benefits like cheaper cost of living and shorter commute times to attract top talent away from larger hubs. This has been key to Sidero’s success with the business now employing people of 25+ different nationalities. CEO Carmel Owens has supercharged Sidero’s growth since she joined in 2020 to focus on strategy and sales, winning Company of the Year at the Tech Excellence Awards last year. It is a remarkable success story having grown to become the largest privately-owned indigenous software business in the country, prior to this sale. It is a testament to the quality of its offering that many international companies in financial services, telecoms and utilities trust it with their mission-critical systems and software development.
Source: Business Plus
JB Roche acquired by Amplex
Deal Details: JB Roche has been acquired by Amplex. Deal consideration was not disclosed.
JB Roche is a Cork-based supplier of inflatable shelters and hangars for the aviation and defence industries. The business was owned by Eileen Roche and Ian Nagle. In FY Sep 22, the business reported turnover of c. €4.0m.
Amplex is a privately owned Swedish corporate group that acquires, owns, and develops technology companies in selected niches.
Advisers:
JB Roche:
Legal: ReganWall LLP led by Adrian Wall, Sarah Connolly and Chris Murray.
Corporate Finance: Coombes Corporate Finance led by Frank Coombes.
Tax: SYS Tax led by Monica Walsh.
Amplex:
Legal: Lindahl Sweden and McCann FitzGerald led by Niall Best.
Renatus Comment: JB Roche has expanded its offerings from initially manufacturing tarpaulins for haulage companies in the late 90s to becoming a supplier of inflatable shelters and hangars for leading airlines, militaries, and MROs. Hangars are used for protection from the weather, direct sunlight and for maintenance, repair, manufacture, assembly, and storage of aircraft. According to Aviation International News, there is a shortage of hangar space among the top 200 or so airports frequented by business aviation passengers. The market is seeing several trends including the development of green hangars that use renewable energy sources.
Source: Amplex Press Release
Enviroguide Consulting acquired by DNV AS
Deal Details: Enviroguide Consulting has been acquired by DNV AS. Deal consideration was not disclosed.
Enviroguide Consulting is a Dublin-based provider of environmental and sustainability consultancy services. It was founded in 2010 by Jim Dowdall and Gillian Free. The business does not report turnover or EBITDA information.
DNV AS is headquartered in Norway and specialises in assurance and risk management services for maritime, gas, energy and other industries. It was founded in Oslo in 1864, and now operates in more than 100 countries. In 2017 the Foundation Det Norske Veritas became the 100% owner of the company. In FY Dec 22 it reported turnover of c. €2.5bn which converted to EBITDA of c. €412m.
Advisers:
Enviroguide:
Corporate Finance: IBI led by James Doody and Robert Jordan.
Legal: A&L Goodbody led by Laura Kennedy.
DNV AS:
None mentioned.
Renatus Comment: Demand for external expertise specialising in ESG is forecast to more than double over the next five years to $16 billion as environmental and social challenges cause companies to rework their business models. This deal strengthens DNV AS’ foothold in the UK and Ireland and further expands its extensive range of environmental solutions. With new regulatory frameworks and legislation being introduced across the UK & EU later this year, DNV AS believes this move will enable them to better support customers navigating increased regulations specifically within biodiversity and waste management. This is the company’s fifth acquisition already in 2023 after the acquisition of Akerbla Group, Nixu Oyj, Solcast, and Proxima Solutions.
Source: Cap IQ
Moore Ireland acquired by Moore Kingston Smith
Deal Details: Moore Ireland has been acquired by its London-based affiliate Moore Kingston Smith. Private equity firm Waterland provided funding for the deal. Deal consideration was not disclosed.
Moore Ireland is a Cork-based accounting and advisory firm led by managing partner Ned Murphy. It was founded in 1970 and now has 135 employees between its Cork and Dublin offices. It does not report turnover or EBITDA information.
Moore Kingston Smith is a London-based accounting and advisory firm and is a leading member of the Moore Global Network which is made up of over 30,000 people across more than 100 countries. The business was established in 1923 and has over 75 partners and more than 700 employees. It received investment from Waterland in June this year. In FY Apr 22 the business reported turnover of c. £75.9m which converted to an EBITDA of c. £23.0m.
Advisers: None mentioned.
Renatus Comment: The acquisition of Moore Ireland continues the trend of private equity-backed consolidation in the professional services space. Nordic firm Azets is reported to have acquired over 16 companies in 3 years, including Baker Tilly in March before receiving a major investment itself from PAI Partners last month. Exponent-backed Xeinadin is also active in the space, having reportedly made several acquisitions this year. Deal activity in the professional services space continues as these PE-back consolidators seek to increase both their geographic and strategic capabilities. The sectors’ stability, positive cash flows and low debt levels are among the reasons it is attractive to buyers.
This move will enable Moore Ireland to invest in a buy-and-build strategy as managing partner Ned Murphy emphasised the company’s desire to make strategic acquisitions in the Irish marketplace. The firm plans to potentially triple in size via bolt-on acquisitions.
Source: Irish Times
Park Nursing Home acquired by Cofinimmo
Deal Details: Park Nursing Home in Limerick has been acquired by Belgian property investor Confinimmo for c. €7m.
Confinimmo is the largest listed property company in Belgium, with operations stretching across Europe. It specialises in rental properties, with a particular focus on healthcare properties. The business has been operating for 40 years and has accumulated a property portfolio of over €4bn. In FY Dec 22, the business reported turnover of c. €367m.
Park Nursing Home is a modern, purpose-built care home constructed in 2008 with 56 rooms. A 25-year lease has been signed with the nursing home’s operator Mowlam Healthcare following the deal.
Advisers: None mentioned.
Renatus Comment: The Irish nursing home sector has experienced significant consolidation in recent years, attracting interest from private equity and international care home groups, as well as French and Belgian funds. A recent audit of the sector found that 15 nursing home groups own 40% of all private nursing home beds in Ireland. The extent of the consolidation has slowed in recent months with inflation, heightened interest rates and regulatory changes making deals more difficult. It is hoped that a stabilisation of macro-economic variables as well as revised Fair Deal rates will see deal activity in this sector returning to early 2022 levels. This expands Cofinimmo’s portfolio in Ireland after previously paying €93m for six nursing homes and a rehabilitation centre operated by Trinity Care in January 2021.
Source: Cap IQ
COMPANY PERFORMANCE
Gallen Hospitality Limited. is the holding company for the Gallen Hotel Group, a family-run hotel group based in Co. Donegal. The group operates the Villa Rose Hotel and Jackson’s Hotel in Ballybofey as well as the An Chúirt Hotel in Gweedore. The business is owned by Thomas and Brigid Gallen.
In its financial year to December 2022 the business generated a turnover of c. €10.3m, an increase of 106.9% year-on-year. This converted to c. €2.3m EBITDA, following a loss the previous year. The increase in EBITDA was driven by revenue growth and improved trading conditions as the hospitality industry emerged from pandemic related disruption.
The business finished the year with a cash balance of c. €0.8m, a c. (€0.6)m decrease on FY21. Payments relating to the capital element of finance lease contracts were the most significant cash movement during the period.
The business employed an average of 212 people during the period at a total cost of c. €4.2m.
RECENT FUNDRAISINGS
Who: Medosync, a Dublin-based developer of medical billing software.
What: The business has raised €1.1m in the first part of a funding round led by existing investors Enrique Curran and JP Sisk.
Why: The funding will be used to target clinicians, healthcare providers and insurers in European markets, primarily Germany.
Advisors:
Legal: Wallace Corporate Counsel LLP led by Alan Ryan, Fran Keogh and Amy Murphy.
Source: Irish Examiner
Who: CergenX, a Cork-based company that creates products to screen newborns for brain injury.
What: The business has raised c. €1.2m from private investors and Enterprise Ireland.
Why: The money will be used to support the development of the newborn brain screener.
Advisors:
Legal: DLA Piper led by Micheál Mulvey with assistance from Dara McDonald.
Source: Irish Examiner
Who: Go Eve, a patent-pending technology for charging electric vehicles at scale.
What: The business has closed a £3m funding round. Among the backers for this round are the Pearl Family Office, Carter Gem, Automotive Ventures, Kero Development Partners and Cur8 Capital.
Why: The funding will be used to secure supply chains and grow production significantly.
Source: Irish Times
Who: StoreHero, a Dublin-based e-commerce analytics platform that gives online retailers insights into how they make money.
What: The business has raised c. €600k from angel investors.
Why: The funding will be used to facilitate growth as the business expands in Ireland, the UK, the US, and Australia.
Source: Irish Times
Who: The Sensible Code Company, a Belfast-based data company that allows census information to be processed quickly while keeping it anonymised. It was founded by Áine and Aidan McGuire in 2009.
What: The business has raised €1m in funding.
Why: The business plans to make five hires over the coming year and is considering expansion to Australia and New Zealand.
Source: Business Post
Who: Spotlight Oral Care, a dental hygiene company founded by sisters Vanessa and Lisa Creaven with Barry Buckley.
What: The business has raised €3.5m from Backed by Dentists, a US-based consortium of Invisalign-providing dentists.
Why: The funding will be used to roll-out the company’s US brand ‘Made by Dentists’ which launched in March.
Source: Sunday Independent
Who: Neart na Gaoithe 450 MW offshore wind project (Scotland) and Raheenleagh 35 MW onshore wind farm (Co. Wicklow).
What: Bank of Ireland has provided financing for both of these renewable energy projects. It has provided €50m for Neart na Gaoithe and has also increased its commitment to Raheenleagh to €40.7m, following a re-financing of the project.
Why: The financing is in line with Bank of Ireland’s renewable energy strategy. It plans to increase its €8bn currently deployed in sustainability-related financing to €15bn by the end of 2025.
Source: Sunday Independent
EXECUTIVE AND BOARD APPOINTMENTS
We in Renatus believe that more important than the deals are the people and we are pleased to provide you with details of key recent executive and board-level appointments.
@RenatusCapital Tweets
45%
The proportion of all medicines impacted by supply chain difficulties in Ireland currently, according to @HPRA
29,500
The updated forecast for total housing completions this year according to @MyHome.ie
79%
The rise in asking prices for used cars vs. pre-pandemic levels, according to @DoneDeal
7.1%
The rate of core inflation in Ireland in June, according to @CSO
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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.
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