Renatus’ Weekly M&A Newsletter – 11/06/2023
June 12, 2023Renatus’ Weekly M&A Newsletter – 25/06/2023
June 25, 2023
Renatus Weekly M&A & Company Performance Private Equity Newsletter 11/06/2023
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
RENATUS PODCAST – PADDY BLANEY
In this latest Renatus podcast, host Greg Dilger talks to former GPA (Guinness Peat Aviation) Chief Executive, Paddy Blaney about all things GPA – the ambition, the rise, the fall, the restructuring and of course, its legendary founder the late Tony Ryan, who Paddy mentions intercepting his possible path to partnership in KPMG.
Several former GPA staff subsequently founded and worked for other Irish-based aircraft lessors, such as Avalon, Pembroke, SMBC and Aergo. Indeed, the world’s largest aircraft leasing company Aercap is currently led by another GPA alumnus – Aengus Kelly.
Listen on the Renatus website here
Listen on Spotify here
Listen on Apple here
THOUGHT FOR THE WEEK
Our dependence on the US and UK for exports and FDI is huge and when you think that both countries elected Donald Trump and Boris Johnson as their respective leaders it is worrying for us trusting both countries to do the right thing by their own people and economy in the years ahead. Two paragraphs in the international press brought it home to us recently….
“The charge sheet against Donald Trump keeps getting longer. After the 34-count indictment against him in late March for falsifying records of hush money paid to a porn star, we can now add his 37-count indictment for hiding classified documents. Those will be read out in a Miami court on Tuesday. In August, Trump is likely to be indicted for attempting to overturn the results of the presidential election in Georgia. At any point, he could also be charged for his role in the January 6th 2021 mob attack of Capitol Hill. Each one of these cases breaks precedent. Never has a former US president been charged with a crime, let alone one who is seeking to become president again.”
followed by this:
“A rogue prime minister has been found guilty of lying to parliament, by a committee containing a majority of his own party. The UK has seen nothing like this in 300 years — since the role was created. This is our Watergate: and the attempts to trivialise it demonstrate what was wrong with the Johnson regime.”
M&A Activity
Herdwatch acquires Kingswood Computing
Deal Details: Renatus portfolio company Herdwatch has acquired Kingswood Computing. Deal consideration was reported to be in the range of seven figures.
Herdwatch was founded by Fabien Peyaud in Roscrea, Tipperary. It is a true success story in the Agtech sector, having become the leading provider of livestock management software across the UK and Ireland since the app launched in 2014. The company now has ambitions to bring its solutions to a global customer base. The app saves farmers an average of 3 hours a week on paperwork, according to a recent member survey by the company (1,600 responses). It is used on over 18,000 farms in Ireland and the UK at present. The app is fully approved and integrated with the Department of Agriculture and fully compliant with ICBF and Bord Bia. Herdwatch received an investment from Renatus Capital Partners in November 2022
Kingswood Computing was founded in 1987 by Gerry and Nora Lynskey and it has a customer base of over 5,000 farmers. For 35 years, Kingswood’s team of dedicated experts have proudly supported farmers with comprehensive and trusted farm management software solutions, with a particular focus on dairy operations. It offers a wide range of solutions including Kingswood Herd, VetLink and Kingswood Mobile (HerdHub), a field app and a billing app for farm contractors. Following the deal Gerry Lynskey stated: “Really this is the perfect match for our businesses and our customers and I’m really excited to see how the larger business evolves and thrives, delivering even better service for farmers in Ireland and far beyond,”
Advisers:
Herdwatch:
Legal: Wallace Corporate Counsel led by Gar Smyth and Kathryn Mitchell
Financial Due Diligence: Hogan and Associates led by David O’Neill
Other: Creva International led Noel Kelly
Kingswood Computing:
None mentioned.
Renatus Comment: This is the second acquisition recently completed by Renatus portfolio company Herdwatch, having acquired Farmplan’s software customers two weeks ago. Renatus believe there is significant further potential for Herdwatch to grow internationally, both organically and through acquisition. Herdwatch expects the Kingswood acquisition to grow its customer base and complement its tech offerings to farmers, cementing its position as an invaluable tool to the majority of large farms in Ireland and the UK. Fabien Peyaud, CEO and co-founder of Herdwatch said: “Gerry has been a pioneer in the agtech field, and his innovative leadership resulted in some of the earliest tech solutions for farmers. For this reason, we are proud that Herdwatch is the new home for Kingswood’s great products, dedicated team, and thousands of loyal customers, and look forward to taking them and their legacy to the next level within the Herdwatch platform.”
Source: Herdwatch Press Release
Zeus Packaging acquires James Hamilton Group
Deal Details: Zeus Packaging has acquired James Hamilton Group. 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.
James Hamilton Group is an Armagh-based print and packaging business. The business was majority-owned by Keith and Alan Hamilton. In FY Mar 2022 it reported turnover of c. £13.6m which converted to EBITDA of c. £1.4m.
Advisers: None mentioned.
Renatus Comment: Zeus continues to make regular appearances in this newsletter as it pursues its acquisition-led growth strategy. In February this year it acquired Polish packaging distributor Polpack, following deals to acquire Canadian firm Agri-Flex and two UK-based companies, Swanline Group and BoxMart. This deal will expand its current offering in the food and retail packaging sector and should yield operational efficiencies. Brian O’Sullivan’s story is truly remarkable and the opening of Zeus’ new 70,000 sq ft logistics facility in Cork earlier this year was somewhat of a crowning moment for him. The firm employs c. 1,000 people and has come a long way from the one-man operation that began in a shed back in 1998. You can listen to the Renatus podcast where he discusses his remarkable journey here.
Source: Business Post
Kingspan acquires LRM
Deal Details: Kingpsan has acquired waterproofing distribution specialist LRM. Deal consideration was not disclosed.
Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. Kingspan Group reported FY Dec 22 turnover of c. €8.3bn and EBITDA of c. €1bn. The business is led by CEO Gene Murtagh.
LRM is a Paris-based waterproofing distribution specialist. Products include fixings and accessories for roofs, waterproofing and facade products, lifelines, crinoline ladders and security railings. The business does not report turnover or EBITDA information.
Deal Details: Kingpsan has acquired waterproofing distribution specialist LRM. Deal consideration was not disclosed.
Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. Kingspan Group reported FY Dec 22 turnover of c. €8.3bn and EBITDA of c. €1bn. The business is led by CEO Gene Murtagh.
LRM is a Paris-based waterproofing distribution specialist. Products include fixings and accessories for roofs, waterproofing and facade products, lifelines, crinoline ladders and security railings. The business does not report turnover or EBITDA information.
Deal Details: Kingpsan has acquired waterproofing distribution specialist LRM. Deal consideration was not disclosed.
Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. Kingspan Group reported FY Dec 22 turnover of c. €8.3bn and EBITDA of c. €1bn. The business is led by CEO Gene Murtagh.
LRM is a Paris-based waterproofing distribution specialist. Products include fixings and accessories for roofs, waterproofing and facade products, lifelines, crinoline ladders and security railings. The business does not report turnover or EBITDA information.
TEKenable acquires Tether
Deal Details: TEKenable has acquired Tether. Deal consideration was not disclosed.
TEKenable is a Dublin-based IT and digital transformation company. In FY Dec 21 it reported turnover of c. €10.2m which converted to EBITDA of c. €1.1m. It is owned by Nick Connors, Peter Rose and Noel Walsh.
Tether is a Salesforce specialist implementation firm established in 2016. It is based in Dublin and was owned by Michael Corr and John Hennessy. It does not report turnover or EBITDA information
Advisers:
TEKenable:
Legal: Wallace Corporate Counsel led by Gar Smyth and Sean Hiney.
Deal Advisory: Capnua Corporate Finance led by Paul Keenan.
Tether:
None mentioned.
Renatus Comment: Salesforce remains the clear number 1 player in the global CRM space with a market share of 22.9% in 2022, according to IDC’s Worldwide Semi-annual Software Tracker. This ranks well clear of the other leading players including Microsoft, Oracle and SAP.
Accessing Tether’s UK customer base was cited as a key rationale for the deal and by aligning itself to the global leader in the CRM space, TEKenable should be positioned well to drive international growth.
Source: TEKenable Press Release
Bewley’s UK business acquired by Cafédirect
Deal Details: Bewley’s UK business has been acquired by Cafédirect. Deal consideration was not disclosed. As part of the deal, Cafédirect has agreed to give Bewley’s exclusive rights to manufacture and supply all of Cafédirect’s retail products.
Bewley’s is a tea and coffee company based in Dublin. It was established in 1840. It is majority owned by Patrick Campbell. In FY Dec 21 it reported turnover of c. €66.2m which converted to EBITDA of €5.0m.
Cafédirect is a UK-based alternative coffee and tea trading company. It was established in 1991 by Oxfam, Traidcraft, Equal Exchange Trading and Twin Trading. In FY Dec 22 it reported turnover of c. £17.6m which converted to EBITDA of c. £0.2m.
Advisers:
Bewley’s:
Corproate Finance: IBI led by Eoin McGuinness, Michael Murray, Stephen Crossan and Emmett Minch.
Cafédirect:
None mentioned.
Renatus Comment: The global supply of coffee beans looks set to face major challenges over the coming years with many in the industry predicting significant shortages. Fairtrade Ireland recently warned that by 2050 up to half of the world’s land currently used to farm coffee may be unusable due to extreme weather caused by climate change. The coffee fungus La Roya is also a major threat to the crop, having caused more than $3 billion in damage between 2012 and 2017.
This deal marks a strategic move by Cafédirect to expand its presence in the out-of-home sector. Bewley’s is an iconic, family-owned brand with over 180 years in business. It has faced many challenges in its history and now seems to be making a clear decision to keep Ireland as its core focus.
Source: Business Plus
Shelbourne F.C. receives investment from Acun Ilıcalı
Deal Details: Shelbourne F.C. has received investment from Acun Ilıcalı. Deal consideration was not disclosed.
Shelbourne F.C. is an Irish football club based in Drumcondra. It was established in 1895 and has won the Irish league 13 times.
Acun Ilıcalı is a Turkish broadcaster, entrepreneur and TV producer. He is also the owner of Hull City football club.
Advisers: None mentioned.
Renatus Comment: This is another equity investment in a League of Ireland club and follows the acquisition of Cork City FC by Dermot Usher back in February. The league’s clubs have historically battled with financial difficulties and Shelbourne was itself relegated in 2007 due to financial distress. However, the club and the wider league are now in a much stronger place with attendances up 23% on last year. Damien Duff’s side are now well positioned to challenge for participation in European competition, following this investment from Acun Ilıcalı. He will work alongside existing shareholders including Andrew Doyle, Brian McGovern, Mickey O’Rourke and others.
Source: Shelbourne F.C. Press Release
Sayers Insurances acquired by AssuredPartners
Deal Details: Kerry-based Sayers Insurances has been acquired by AssuredPartners. Deal consideration was not disclosed.
Sayers Insurance is a family-run insurance broker founded over 40 years ago. The business is owned by Garry and Noreen Sayers and it does not report turnover or EBITDA information.
AssuredPartners is a Florida-based insurance firm established in 2011. Since inception, it has acquired over 400 brokers. The business is owned by Chicago-based PE firm GTCR. GTCR previously owned AssuredPartners from its inception in 2011 until its sale to Apax VIII in 2015, it then acquired Apax VIII’s stake in 2019. AssuredPartners is reported to have revenue exceeding c. $1bn.
Advisers: None mentioned.
Renatus Comment: This marks AssuredPartner’s fourth acquisition in the Irish market this year. Last week, we reported on transactions completed in the space in double-digit EBITDA multiple territory. Private equity firms are looking for predictable cash flows, high margins, and downside protection with these businesses. We are seeing a significant amount of PE-backed insurance brokers implementing a strategy whereby they acquire small brokers to grow the business and drive market share. Smaller companies may also trade at lower multiples than bigger ones, offering an opportunity for multiple arbitrage in the insurance broker space.
Source: Independent
Dawn Meats to sell 49% Elivia stake to Terrena
Deal Details: Dawn Meats is to sell its stake in French beef and veal processor Elivia to Terrena for an undisclosed sum. The sale is expected to complete at the end of July 2023.
Dawn Meats is a Waterford-based meat supplier with ten Irish facilities and twelve in the UK. Dawn Meats was founded by John & Peter Queally and Dan Browne. The business is reported to have over €2bn in annual revenue and employs 7,200 staff in eight countries.
Terrena is a cooperative of farmers, based in the Northwest of France. The business reports turnover in excess of €4bn.
Advisers: None Mentioned.
Renatus Comment: Dawn Meats acquired a stake in Elivia in 2015 for a reported price of c. €40m. The acquisition was a joint venture with Terrena. Dawn Meats’ decision to sell comes as the “future strategic direction” of Elivia is no longer aligned between the JV partners, according to Dawn Meats CEO Niall Browne.
Ireland’s beef sector continues to be a huge market with exports worth over €2.5bn to the economy in 2022, according to the Irish Beef Sector Sustainability Report and Roadmap to 2030. Sustainability is a key focus within the industry with “processors aiming to reduce scope one and two emissions by more than 50% and scope three emissions by 30% by 2030”.
Source: Irish Times
Portwest acquires IFR Workwear
Deal Details: Portwest has acquired IFR Workwear. Deal consideration was not disclosed.
Portwest is a Mayo-based international workwear clothing and personal protective equipment manufacturer. The business was founded in 1904 and is led by Cathal, Harry and Owen Hughes. It employs c. 5,300 staff globally. The Irish entity does not report turnover or EBITDA information.
IFR Workwear is a Canadian-based flame resistance brand, who design and manufacture safety clothes. The business was established by Reg Radford and Erin Buckland in 2005. Products are manufactured in North America and sold through distribution partners across Canada and parts of the USA. The business does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Portwest is now run by the fourth generation of the Hughes family and continues to lead the way internationally. This is Portwest’s first entry into the Canadian market with warehousing facilities currently in Ireland, UK, Poland, Spain, Italy, Albania, UAE, China, Australia, New Zealand and the USA. The business has expanded significantly in recent years with acquisitions including Westaro Hosing and Base Footwear. The business has been recognised for its global penetration with Harry Hughes being selected as the EY Entrepreneur of the Year in 2017 and Portwest winning the Family Business Award in Deloitte’s Best Managed Companies awards in 2021.
Source: Business Plus
Tricel acquires Edincare Pumps
Deal Details: Tricel has acquired Edincare Pumps. Deal consideration was not disclosed.
Tricel is a Kerry-based provider of engineering solutions for the water, environmental, construction and distribution industries. It was founded in 1973 by Anne and Con Stack and is still owned by members of the Stack family including Robert, Richard, Michael, Grainne and Cornelius. The company does not report turnover or EBITDA information.
Edincare Pumps is a UK-based provider of pumps and pumping systems as well maintenance, repair, and installation services. It was owned by Richard Collis, Andrew Davies and Michelle Quastel. It does not report turnover or EBITDA information.
Advisers:
Tricel:
Coporate Finance: Heffernan Financial Advisory led by Ger Heffernan.
Edincare Pumps:
None mentioned.
Renatus Comment: Tricel has been highly active in the M&A space in recent times with this deal being it’s fifth reported acquisition over the past 12 months, and now brings the number of companies within the group to 15. Its recent deals have seen it grow its geographical presence across Ireland, the UK and continental Europe. Although the company has a diverse business offering, its acquisition spree has been focused on the pump and wastewater treatment space.
Wastewater management in the UK is currently at crisis point with the number of monitored sewage discharges into rivers, lakes and the sea having risen from about 400 to 865 daily between 2018 and 2022, according to the Environment Agency (EA). The UK government recently estimated that it will take a total of £56bn to solve the crisis. By growing its presence in this market, Tricel is strongly positioned to help contribute to the solution.
Source: Tricel press release
McCabes Pharmacy acquires three pharmacies in Dublin
Deal Details: McCabes Pharmacy has acquired three pharmacies in Dublin. These were Ellis Pharmacy (Woodstown), Ellis Pharmacy (Tallaght) and Stanley’s (Blanchardstown). Deal consideration was not disclosed.
McCabes Pharmacy is an online and community pharmacy business founded by Roy McCabe over 40 years ago. The business has over 40 stores and is owned by Sharen McCabe. In FY Dec 21 it reported turnover of €57.9m which converted to EBITDA of c. €3.7m.
The two Ellis pharmacies were previously owned by Mark and Louise Ellis. Their business was established in 1998. It does not report turnover or EBITDA information.
Stanley’s Pharmacy was previously part of the CarePlus group. It does not report turnover or EBITDA information.
Advisers:
Vendors:
Deal advisory: Fitzgerald Power led by Stuart Fitzgerald
McCabes Pharmacy:
None mentioned.
Renatus Comment: Stuart Fitzgerald of Fitzgerald Power, penned a piece this week in the Currency (read it here), outlining the challenges currently faced by the Irish community pharmacy sector. He conducted a study alongside economist Jim Power which found that the average total revenue of community pharmacies in Ireland decreased by 24% between 2009-2012, as a result of reductions to the fees paid through the State’s dispensing scheme. When this is combined with rising input costs, primarily for labour, it is unsurprising to learn that 25 pharmacies went out of business in 2022. We expect to see further consolidation in light of these challenges, as larger consolidators seek to realise synergies by acquiring small, independently owned pharmacies.
Source: Independent
DEAL UPDATES & OTHER NEWS
Envisage announces €1m investment to create 12 jobs
Deal Details: Envisage is a Dublin-based financial software provider and leading Sage partner in Ireland. It has announced that it will create 12 new jobs as part of a three year plan, €1m investment to support its appointment as the first Sage partner in the country that will resell Sage Intacct. This product will allow Envisage to deliver automated solutions and controls for billing, accounting, and reporting for its customers.
Source: Envisage Press Release
COMPANY PERFORMANCE
Corpcat Holdings Limited. is a holding company for Corporate Catering Services Limited, a provider of food and beverage catering services for corporate entities on a contract basis. The company was established in 1991 and has offices in Dublin, Clare and Cork. It is fully owned by Mary Healy.
In its financial year to June 2022 the business generated a turnover of c. €9.3m, an increase of 32.0% year-on-year. This converted to c. €0.7m EBITDA, an increase of 6.3% year-on-year. The increase in EBITDA was driven primarily by revenue growth, with administration costs as a proprtion of revenue remaining constant.
The business finished the year with a cash balance of c. €8.4m, a c. (€0.6)m decrease on the previous year. Working capital investment and a dividend paid were the most significant post-EBITDA cash movements.
The business employed an average of 152 people during the period at a total cost of c. €4.6m.
RECENT FUNDRAISINGS
Who: EdgeTier, the AI-based communication-monitoring and insights company, founded by Shane Lynn, Bert Lehane and Ciarán Tobin in 2015.
What: The company has raised €6m in a funding round led by Smedvig Capital and including Episode 1 and Act Venture Capital.
Why: The company will use the funding to increrase its headcount three-fold as it continues to scale its operations.
Advisers:
Legal: Wallace Corporate Counsel LLP led by Alan Ryan, Graham Coyne and Glynn Ladley.
Source: Business Post
Who: Strong Roots, the Dublin-based provider of plant-based frozen foods, founded in 2015 by Sam Dennigan.
What: The company has raised €20m in venture debt from McCain Foods. This follows McCain Foods’ 2021 minority investment in the business for $55m.
Why: The business will use the funding to fuel US expansion.
Source: Sunday Independent
Who: Splink, the Irish fintech start-up founded by Mark Lyttleton in 2019. The company provides a white-label payments system for financial service providers.
What: The company has raised €1m in funding in a round led by Ed Woodward’s Airstream Ventures which also included Enterprise Ireland and Avar Capital.
Why: The funding will be used to grow the company’s sales team.
Source: Business Post
Who: Riley, a brand of eco-friendly period care products founded by Fiona Parfrey, Aine Kilkenny and Lauren Duggan.
What: The company has raised over €1.5m in crowdfunding on the Seedrs platform.
Why: The funding will be used to grow the company’s headcount and expand into international markets.
Source: The Times
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
43.9
The level of the BNP Paribas Construction PMI for Housing Activity in May. This is based on a benchmark of 50 and represents the eight consecutive month of decline in residential building, according to @BNPParibas
6.6%
The rate of annual inflation in May, down from 7.2% in April, according to @CSO
4.9%
Annual growth in wages in Ireland in the twelve months to May, according to @Indeed
31%
The year-on-year increase in data centre power consumption, 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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