Renatus Weekly M&A & Company Performance Private Equity Newsletter 16/10/2022

Deal Details: Galway Tool & Mould acquired by SyBridge Technologies for an undisclosed amount.

Galway Tool & Moulds design and manufacture injection moulds in the pharmaceutical and medical device industries. The business was founded in 1990 by Padraig Mc Fadden and is based in Galway. The business does not report turnover or EBITDA information.

SyBridge was setup in 2019 by Private Equity firm Crestview Partners. The business is based in Michigan and specialises in acquiring tooling and mould companies. Turnover or EBITDA was not reported for the business.

Advisers:
SyBridge Technologies:
Financial Advisory: CMD Global Partners led by Conor Bary

Galway Tool and Mould:
Corporate Finance: Capnua Corporate Finance with a team of Eamonn Hayes, Jamie McConnell, Sarah Prendergast, Harry Bennett and Henry Dolphin
Legal: Eversheds Sutherland led by Enda Newton and Jonathan Ennis
Tax: Beechwood Partners led by Eoin Magee and Maurice Goodwin
Transaction Services: BDO led by Rory O’Keeffe, Anthony O’Boyle, Andrew Frazer and Angela Fleming

Renatus Comment: Ireland is a global leader for medical device and pharmaceutical manufacturing, with more than 300 manufacturers operating here. Ireland being Europe’s second largest exporter of medical devices which is testament to the disproportionate strength of the sector here in the context of our population. Activity here is dominated by multinationals but within its ecosystem, countless Irish success stories have flourished.

​Serving multinational manufacturers in Ireland makes companies such as Galway Tool & Mould very attractive targets for comparable US-based businesses which may service the same multinational medical device manufacturers in the US.

Source: SyBridge Press Release

Deal Details: RugbyPass has been acquired by World Rugby for an undisclosed amount.

RugbyPass provides online rugby media content globally. The business’s brands include Rugby365, RugbyDump, RugbyOnslaught, RugbyPass, and The Rugby Network. The business is based in Dublin and has a reported combined monthly audience of more than c. 7m people. Hazel Dodd is acting as the Interim CEO. The business reported turnover of c. €4.1m in FY21. RugbyPass was acquired by Sky New Zealand in 2019 as part of a c. $40m deal.

World Rugby is a global governing body for rugby based in Dublin. The business did not report revenue or EBITDA information and employs over 500 staff.

Advisers:
World Rugby:
Financial Due DiIligence: EY led by Ronan Murray, John Canty and Eanna Brennan
Tax Due DiIligence: EY led by  Frank O’Neill
Legal: Onside Law led by Ben Hanglin and Robin Cumming

RugbyPass:
None mentioned.

Renatus Comment: This transaction is part of a wider rights deal in which SKY New Zealand will secure exclusive domestic rights for every World Rugby major event through to 2029. This will include the upcoming men’s and women’s World Cups and the Sevens Series.

This acquisition of RugbyPass is a timely move for the federation ahead of the 2023 Rugby World Cup. Acquiring RugbyPass will expand World Rugby’s direct-to-consumer offering which is an area World Rugby has expressed its intention to grow globally. We will likely see RugbyPass further develop its international offering in countries where rugby has not yet taken hold over the coming years with the support of World Rugby. It is great to see two Irish businesses coming together to further the global engagement of the sport.

Source: World Rugby Press Release

Deal Details: Musgrave has acquired Italicatessen. Deal details have not been disclosed and the deal is subject to CCPC approval.

Musgrave Group is an Irish food retail, wholesale and food service company. Musgrave Group was founded by brothers Thomas and Stuart Musgrave in 1876 in Cork. It now owns 12 food and beverage brands. In FY20 the business had a reported turnover of c. €4.5bn, which converted to an operating profit of c. €192m. The business is owned by a variety of individuals and businesses including Hugh Mackeown, Computershare and the Musgrave family, with the Musgrave family still holding the majority of shares.

Italicatessen is an importer and distributor of Italy’s top-quality food and beverages to the Irish market. It was founded in 2002 and is based in Wicklow, with a UK distribution location in Brentford. The business employs 75 people and is owned by Giorgio Guastalla, Teresa Immacolata Luppino, Giacomo Duranti and Marco De Sanctis . It will continue to run as an independent business following the acquisition. Guastalla and his wife, Teresa, are also known for setting up Keywords Studios, the €2bn UK-listed company. In FY20, the business had a turnover of c. €13.8m, which converted to an EBITDA of c. €1.1m.

Advisers:
Musgrave Group:
Legal: Arthur Cox led by Maeve Moran and Sinéad McDonagh (Corporate M&A)

Italicatessen:
None mentioned

Renatus Comment: Market research firm, Kantar, has been reporting grocery price inflation at record levels, with the latest Irish figures showing 11% inflation in the 12 weeks to September 4th. Its research shows that the average annual grocery bill could increase by as much as 10%. Sales of supermarkets’ own-label lines have increased as a result.

Musgrave, which owns the Supervalu brand, will undoubtedly be focused on minimising growth in its input costs in a bid to maintain competitiveness in the market. As of August, Dunnes and Tesco held the largest share of the Irish market, with Dunnes showing the strongest growth among retailers. As such, acquisitions such as Italicatessen will enable Musgrave to gain greater control over its supply chain, which should in turn enhance the company’s ability to control its input costs and pass on these savings to increasingly cost-conscious consumers.

Source: Business Post

Deal Details: Alternus Energy merges with Clean Earth in a deal that will create a combined entity with an equity value of c. €887m and will own c. 64% of Clean Earth once the deal closes.

Alternus Energy installs, owns, and operates mid-sized utility-scale solar parks. The business is based in Dublin and is listed on Euronext Growth Oslo. The business reported c. €20.6m of turnover in its most recent FY21 financials which converted to an EBITDA of c. €9.6m. The combined business is being valued at 6.6x its FY24 EBITDA projection. As of H1 ’22, the consolidated entity has c. $30m in ARR, with Alternus’ lifetime revenues currently operational assets estimated to be c. $450m. Alternus has c. $355m in capital available for new investments, with c. $300m of this being debt.

Clean Earth is US-based blank cheque company that focuses on acquiring companies in the clean and renewable energy industry. The business did not report turnover or EBITDA information.

Advisers:
Alternus:
Legal: Carmel, Milazzo & Feil LLP

Clean Earth:
Legal: Proskauer, Rose LLP
Deal Advisory: JonesTrading Institutional Services

Renatus Comment: The Minister for the Environment, Climate and Communications, Eamon Ryan, announced new government supports of up to c. €2,400 for the installation of new solar PV panels. As energy prices continue to hike, the number of commercial and domestic solar installations continues to rise.

4,078 installations were carried out in 2021, with the SEAI, up to February this year, having supported the installation of Solar PV for 9,674 homes. Applications for solar grants by domestic households in Ireland increased by 300% in Q1 2022 versus the same period last year. 4,926 installations have been supported so far this year by the SEAI.

With the current cost of living crisis showing no immediate signs of abating, this trend will very likely continue as the winter period approaches.

Source: Alternus Energy Press Release

Deal Details: Development Capital has acquired a significant stake in Wogan Building Centre. Deal details have not been disclosed.

Wogan Build Centre provides building and home improvement materials to specialist contractors, and general trade and retail customers throughout Leinster. The business was founded over 40 years ago and is now led by Derek and Garrett Wogan. It is based in Drogheda and currently employs 81 people. In FY20 the business had a turnover of c. €24.3m, which converted to an EBITDA of c. €3.2m.

Development Capital is an Irish development and growth capital fund.

Advisers:
Development Capital:
Financial Due Dilligence: PwC led by Ronan Sommers and Séamus Conaty
Tax Due Dilligence: PwC led by John Murphy and Alanna O’Doherty
Legal: Eversheds Sutherland led by Enda Cullivan and Tara O’Donoghue
Commercial Due Dilligence: KPMG led by Chris RB Brown

Wogan Build Centre:
Corporate Finance: BHSM
Accounting JW Accountants Ireland led by Joseph Walsh
Legal: John C Kieran & Sons led by John Kieran

Renatus Comment: While the construction sector is currently experiencing headwinds such as supply chain issues and raw material price inflation, research by BNP Paribas Real Estate reported that there was a growth in activity in the sector in September, following three months of decline. Demand post-pandemic has resulted in employment levels growing for 17 of the last 18 months, but it will be interesting to see whether this trend continues.

Despite growing economic uncertainty, particularly in the UK, suppliers to the building trade are likely less exposed than in 2008. The level of construction activity has not been exceptional in recent years, and despite the potential for a shock over the coming months, we would expect volumes over the coming years to be relatively in-line with the long-run average.

Source: Development Capital Press Release

Deal Details: Castlebridge Manor has been acquired by Evergreen Care for an undisclosed amount.

Castlebridge Manor is a is a purpose-built nursing home based in Wexford. The business reported revenue of c. €3.6m in its FY20. Castlebridge Manor is owned by John Hobson, Martina Hobson, Turlough Considine, Mary Mccormack and Rena Galvin.

Evergreen Care has 9 nursing homes in its group with Castlebridge Manor being the 10th addition.​​​​

Advisers:
Evergreen Care:
Legal: Philip Lee led by Rebecca McEvoy.
Corporate Finance & Tax: Baker Tilly.

Castlebridge Manor:
Legal: Dillon Eustace LLP, led by Adrian Benson and including Mark Thorne, Martin Colman, Nessa Ryan and Emer Travers.

Renatus Comment: There has been significant consolidation in Ireland’s nursing home sector. We have frequently written about international operators and investors such as Orpea, Aedifica and IMMAC acquiring Irish nursing homes.

By 2036, there will be c. 340k more people over 80 in Ireland than there were in 2020. The ESRI predicts a c. 39% increase in demand for long-term residential care along with a c. 70% increase in demand for homecare services.

Further consolidation is likely in the space, with large operators having greater scale than smaller standalone care facilities to deal with increasing regulatory and cost pressures in the sector, with 12 nursing homes having already closed in Ireland this year as a result.

As the supply crisis worsens in the sector across Europe, focused investment is needed to supplement increasing the supply of beds, such as investment in healthy ageing, better access to healthcare and greater prevention.

Source: Philip Lee

Deal Details: Brian and Ciara McGettigan have acquired the former Pocotel in Glasgow.

The McGettigans will operate this hotel under their recently launched Address Collective brand, under which they run three other hotels in Ireland.They also own the McGettigan Hotel Group which operates nine hotels. The business does not report turnover or EBITDA information.

The Pocotel was operated by Bracknell Property LLP and its subsidiary Bracknell Property Subco Limited which went into administration in April this year. These companies are owned by Harcourt Capital, an independent finance house, specialising in bespoke investment opportunities for high net worth individuals. The Bracknell Property companies did not report financial information prior to being placed into administration.

Advisers: None Mentioned

Renatus Comment: Despite the economic headwinds facing the hospitality sector, such as rising labour and energy costs, a trend is emerging of consolidation in the space. Last week, we reported on the acquisition of the Eglantine Inn by the Clover Group, while the Press Up group also acquired the Butler Arms in Kerry. This move sees an Irish acquirer in the Address Collective look to expand overseas, adding to three existing hotels in Ireland.

Despite the recent activity, the wider hotel market is extremely fragmented, meaning that further consolidation is likely as operators continue to battle significant headwinds, having already weathered the Covid-storm.

Source: Savills (McGettigans) Press Release

Deal Details: Fscom td has been acquired by Bridgepoint. Deal details have not been disclosed.

Fscom Ltd is a specialist consulting firm providing governance, risk and compliance solutions to financial services institutions in the UK and Ireland. It specialises in payments and e-money, crypto, retail banking, asset management and trading and broking firms. The business was founded in 2011 by Jamie Cooke and Philip Creed. It is headquartered in Belfast. The business does not report turnover or EBITDA.

Bridgepoint is a UK-based private asset growth investor.

Advisers:
Fscom:
Financial: NovitasFCL, led by Bruce McIntyre

Renatus Comment: The pandemic forced financial organisations to adopt remote and hybrid working models, amplify digitisation efforts, pivot towards cloud computing, and increased dependency on third-party service providers. This, together with increased regulatory scrutiny and evolving risk profiles, especially in crypto and e-money where FSCom specialises, has refocused attention on governance, regulation and compliance. This trend, along with the backing of a significant player in the alternative asset space, positions Fscom perfectly to take advantage of tailwinds in the space.

Source: Irish News

Deal Details: US-based Panacea Technologies has acquired a Stake in CXV Global, a strategic alliance comprised of Crest Solutions, Xyntek and VistaLink. The deal consideration was not disclosed.

Based in Cork, CXV Global provides technology solutions in the areas of IT, real-time automation, machine vision, serialisation, digital transformation, and professional and managed services to manufacturing sites. The business is owned equally by Pennsylvania-based Xyntek Incorporated and Cork-based Crest Solutions, which is majority owned by Frank Madden. CXV did not report revenue or turnover information, but Crest Solutions reported FY20 revenues of over €23.4m and an EBITDA of over €3m.

Founded in 1996, Panacea Technologies is a process control and automation solutions company headquartered in Pennsylvania with offices throughout the East Coast of the USA. The business did not report turnover or EBITDA information. Water Street Healthcare Partners, a US specialist healthcare investor, has also invested an undisclosed amount into the new combined entity.

Advisers: None mentioned.

Renatus Comment: While no specific financial information was disclosed regarding the above deal, Water Street said it had ‘committed significant capital’ to the new entity to expand its global footprint further. Both Panacea Technologies and CXV work primarily with customers in the life sciences industry. Therefore, it is no surprise that Panacea’s first move outside the US was into Ireland, given the strength of Ireland’s medical sector. While Panacea has global ambitions for the new entity, we would not be surprised to see further acquisitions in the Irish market in the near future.

Source: CVX Global Press Release

BNRG and Impax Asset Management announce Joint Venture

Deal Details: BNRG has announced a transformative joint venture with Impax Asset Management to develop over 1GW of solar projects in Ireland and the United States.

BNRG is a developer and operator of dollar projects that work alongside development, technology and investment partners to finance, build, manage and own solar farms that today produce more than 150,000 MWh of clean electricity, with more than 1.5 GW of active projects in the development pipeline. The business was founded in 2007 by David McGuire. It is headquartered in Dublin with operations in the US, the United Kingdom, Europe and Australia. In FY21 the business had a turnover of c. €5.3m.

Impax Asset Management is a specialist asset manager that invests in opportunities arising from the transition to a more sustainable global economy. The business was founded by Ian R Simm in 1998 and is headquartered in the UK. In FY21 the business had a turnover of c. €93.9m.

Advisers: 
BNRG
Legal: Simmons & Simmons including David Brangam, Patricia McCarvill, Lev Gantly and Andrew Fullen.

Source: Simmons & Simmons Press Release

Olleco and Bunge announce Joint Venture

Deal Details: Olleco, the renewables division of ABP, is entering a 50:50 joint venture with Bunge.

Olleco collects food waste and used cooking oil which is converted into renewable sources including electricity and organic fertilizer. The business is based in Louth and employs c. 1,000 people in Ireland and the UK. The business did not report turnover or EBITDA.

Bunge (NYSE: BG) is an American agribusiness and food company based in Missouri. The business was founded in 1818 and has c. 23,000 employees working in more than 40 countries. The business reported turnover of c. €50m which converted to an EBITDA of c. €2.4m.

Source: Bunge Press Release

J.L. Smallman Limited, trading as Smallmans, is a provider of heating and plumbing products to tradespeople. The business was founded in Dublin by John L Smallman and has been in operation for over 100 years. The business is based in Ranelagh, Dublin, where it relocated to in 2005.

In the business’ financial year to December 2021, Smallmans generated a turnover of c. €29.2m, an increase of 24.3% year-on-year. This converted to a c. €2.0m EBITDA, an increase of c. 39.6% year-on-year. Gross margin improved during this period from c. 24% in FY20 to c. 26% in FY21.

Significant post-EBITDA cash movements include an increase in long-term loans of c. €1.5m and payments to acquire tangible fixed assets of c. €470k. The business finished the year with a cash balance of c. €0.3m.

J.L Smallman employed an average of 54 people during the year at a total cost of c. €4.0m. The business is owned by Kevin Hicks, Roy Moore and Elizabeth Moore.

Niall Gaffney Heating & Plumbing Limited is a mechanical engineering company based in Kells, Co. Meath. The business recently changed its name to Gaffney Mechanical Limited. It is owned by Niall and Deirdre Gaffney.

In its financial year to June 2021, Gaffney Mechanical had turnover of c. €31.7m, which converted to an EBITDA of c. €2.8m. This represents a rise of c. 19.8% and 28.7% year-on-year, respectively. The business gross margin improved year-on-year as the business realised operating leverage.

The business finished the year with a cash balance of c. €5.3m, a rise of c. €3.5m on the previous year. A working capital movement of c. €715k helped significantly with cash generation.

The business employed an average 132 people during the year at an annual cost of c. €4.8m