InsightsNewsletterRenatus’ Weekly M&A Newsletter – 18/10/2020

Renatus’ Weekly M&A Newsletter – 18/10/2020

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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.

The Real Deal 2020

Renatus along with our Real Deal Partners Fitzgerald Power and Bank of Ireland were delighted that so many of you tuned in to The Real Deal 2020 live webinar with Pat McCann and Matt Cooper, which took place on Thursday, October 15th. It was brilliant to see Pat show so much honesty and positivity which no doubt resonated with you all.

There were many meaningful insights discussed ranging from leadership, technology innovation, mentoring the next generation, not taking on too much debt, creating a workplace culture, how to scale your business, battling through a crisis, helping those around you in a time of need and much more.

As mentioned at the beginning of the discussion, The Real Deal 2020 live webinar was a placeholder event to showcase that we truly care about SME Ireland and despite these challenging times for us all, we have not gone anywhere. We hope that you came away from the discussion with some knowledgeable insights again this year, especially coming from a leading industry professional such as the legendary Pat McCann.

We hope to see you all back in Goffs next year for The Real Deal 2021!

The 10-minute long highlights video is also available here. Highlights video link

Skip through the first 13 minutes to rewatch the full hour-long webinar.  Full video link.

Shine A Light:

We have also taken part in this year’s Focus Ireland Shine A Light campaign, which was held virtually on Friday night (October 16th). We were glad to raise over €16k last year thanks to your generosity. As we did not charge a fee for this year’s live video broadcast, we would be grateful if you could make a small donation. No contribution is too small and this is a great initiative.

Click here to Donate

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

M&A Activity

Viatel makes a splash with Ripplecom acquisition

VIATEL

Deal Details: The Viatel Group has announced the acquisition of fellow Irish telecoms and security company Ripplecom. The combined business will have 3,500 business customers and 28,000 residential customers.
The deal consideration was not disclosed.

Ripplecom, founded by John McDonnell in Limerick in 2009, provides telecoms and security services to many leading Irish business and public sector organisations, and to residential users. Its 31 staff are the connectivity powerhouse service behind well-known companies such as Glanbia, Barry Group, Regeneron and the Department of Education.

The Viatel Group is comprised of Viatel and Digiweb. Viatel provides connectivity, cloud and security solutions to businesses across Ireland.

Digiweb is a strong independent brand providing broadband and voice services to residential consumers.

In 2021, following the acquisition of Ripplecom, Viatel is forecasting revenues north of €38m.

Advisers: Venture Law, Chirisa Capital Management.
Renatus Comment: This acquisition is a natural bolt-on for Viatel (which incorporates Digiweb) due to the significant overlap in services provided by the two companies.

Adding Ripplecom’s southern networks to Viatel’s national digital infrastructure gives the firm extended reach to connect Enterprise, Government, and Residential customers resiliently. Ripplecom customers will now also be able to avail of Viatel’s domestic and international cloud, voice and SD-WAN services.

This completed a busy fortnight for majority owner Colm Piercy’s Chirisa. We reported on the big exit they had from 365 data centres last week.

Source: The Viatel Group Press Release

Stripe acquires a Nigerian start-up

stripe

Deal Details: Irish online payments giant Stripe is to acquire a Nigerian tech company Paystack.
Terms of the deal were not disclosed, however it is reported to be worth over $200m.

Paystack’s suite, which includes collections, disbursements, identity verification, reporting and commerce tools, is used by 60,000 businesses across Nigeria and Ghana.

Stripe and Paystack have been working closely together since 2018 when Stripe led Paystack’s Series A financing round and has provided ongoing guidance as the company rapidly scaled.

Advisers: None Mentioned

Renatus Comment: The payment processing market is a very fragmented and highly saturated market. In recent years there has been a surge in the number of acquisitions in this space in an attempt to consolidate industry. When Stripe entered the market in 2010, the Collison brother’s aim was to disrupt payment processing market by making online payments processing more accessible to companies around the world. Now, ten years down the line ,  the company has become a true global player majoring on service and managing to keep its prices relatively high.

Source: Stripe Press Release

Bridge Group acquired by MJ Hudson

bridge

Deal Details: MJ Hudson, an international asset management consultancy, has acquired Bridge Group.
The reported initial fixed consideration of €2m would be payable in cash, with deferred and additional earn-out consideration of up to €10m payable over a two-year period.
The consideration would comprise cash and new ordinary shares in MJ Hudson, with the latter representing about 20% of the total.
The deal is subject to regulatory approval.

Dublin-based Bridge Group, founded in 2005, provides specialist support services to the funds sector. It has 27 staff, servicing 100 asset managers, with more than €120bn in assets. In completion, the business will trade under the MJ Hudson brand.

MJ Hudson Group PLC, headquartered in London, offers data and analytics, law, fund solutions, administration, and investment solutions to customers worldwide.

Advisers:  Arthur Cox team, led by Kevin Murphy and Michael Coyle, acted for MJ Hudson on the legal side of this transaction.

Renatus Comment: The global Alternatives market is expected to grow to US$21.1 trillion by 2025, an increase of 109%. This growth, should correspond with an increase in demand for fund administration and consultancy services.  This acquisition positions MJ Hudson to build on its specialist fund operations division. Strategically positioning themselves in an important Irish market will no doubt provide opportunities to scale its fund admin division  as institutions turn to Ireland as a new European hubs amid the Brexit concerns.

Pre-transaction, Bridge Group was owned by equally by David Dillon and Paul McNaughton. It’s reported that the company generated €4m in revenue and c. €500k in EBITDA for the year ending in September.

Source: MJ Hudson Press Release, ShareCast

Deal Updates & Other News

Blackstone considers sale of stake in Beauparc

Blackstone, the American private equity group, is reported to be considering the possible sale of its interest in Beauparc Utilities, Ireland’s largest waste operator and the owner of the Greenstar and Panda waste companies. The deal would reportedly value Beauparc at close to €1bn.

Blackstone took a 37.6% stake in Beauparc in February 2019 as part of a deal that valued the group in the “hundreds of millions”.

Source: Sunday Times

LCC proposes acquisition of Campus Oil

Northern Ireland’s LCC Group is aiming for further expansion after proposing to take over three directly owned filling stations from the Stafford Group’s Campus Oil business. Details of the transaction have not been disclosed.

The CCPC has been notified of the proposed acquisition of Campus Oil Retail Limited by Lissan Coal Company (Ireland).

LCC group, owned by the Loughran family, operates a forecourt business under the Go brand name is a sister brand to energy provider Go Power.

The deal is expected to complete by the end of this month.

Source: CCPC

High Court approves rescue package for Compu b

In June 2020, the Irish High Court confirmed Examinership for Compu b and David O’Connor of BDO was appointed as Examiner.
A rescue scheme for the company was approved this week, on foot of evidence showing the companies had a good prospect of survival if certain conditions, including implementation of a restructuring programme, were to be met. The company employs 395 people, of which 110 are based in Ireland.

Dillon Eustace team, led by Jamie Ensor with support from Lorcan Tiernan, acted for the new owner of Compu b.

Source: Dillon Eustace

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.

jp

Founded in 1810, Johnson & Perrott Motor Group is one of Ireland’s leading motor retailers. The Group has interests in vehicle hire, motor dealerships and fleet management. The Group has three car dealerships, all of which are based in Cork.

In its latest fiscal year, the company saw revenue increase by 13.0% to c. €108.0m while EBITDA also increased by 6.0% to c. €18.6m. Gross margins increased slightly by 1% to 15.7% in FY19. Administrative expenses increased 33% to c. €12.3m.

The company had a net cash decrease of c. €6.2 in FY19 leaving the company with an overdrawn cash position of c. €1.2m. The most significant movements in cash were the c. €23.3m spent on Fixed asset purchases mainly directed at Motor Vehicles and Land & Buildings, the c.€4.2m in loan repayments and the c.€4.3m in proceeds from sales of fixed assets

The company hired an extra 34 people in FY19 bringing the total headcount to 185 at a total cost of c. €8.9m. The business is majority owned by the Whitaker family with Enid Ann Oakley and Lynne McCarthy also owning some shares.

jp figs
power city

Power City is an Irish electrical retailer of consumer and electronic goods, with branches in Blanchardstown, Coolock, Tallaght, Finglas, Fonthill, Sallynoggin, Drogheda, Bray, Naas, Carrickmines and in the Airside Retail Park, Swords.

In its latest fiscal year, the company saw revenue increase by a marginal 1.5% to c. €89.1m while EBITDA  decreased slightly by 1.6% to c.€8.3m. Gross margins remained at a stready c.24% year-on-year.

The company had a net cash decrease of c.€8.9m in FY19 leaving an ending cash balance of c.€32.7m. The most significant cash movements were Pension fund contribution of c.€10m , a c.€3.0m in dividends paid out and the c.€1.4m spent on fixed asset purchases, mainly on on Freehold Property and Fixtures & Fittings.

The company employed an average of 255 people in FY19 at a total cost of c.€8.0m. Power City is owned by McKenna family.

power city figs
radison

Luxor Leisure Limited principally operates as the Radisson Blu Hotel in Golden Lane, Dublin 8.

In its latest fiscal year, the company saw revenue decrease by 4.1% to c. €12.3m while EBITDA also decreased 26.2% to c. €1.4m. The revenue mix for FY19 was c. 68% accomodation, c. 24% food and beverage, c. 7% conference and 1% other. Gross margins remained at a high c. 92%. Administrative expenses remained virtually flat year-on-year at €10.2m.

The company had a net cash decrease of c. €2m in FY19 leaving an ending cash balance of c. €2.8m. The most significant drain on cash was the fixed asset purchases of c.€2.7 mainly spent on Fixtures & Fittings.

The company employed an average of 150 employees in FY19 at a total cost of c.€3.3m.  The company is ultimately owned by Fieldhouse Finance Holdings, a British Virgin Islands registered company. Padraic and Sandra Rhatigan as well as Gerard Kelly are listed as the active directors in the company.

radisson figs

Fundraisings

Who: Cork-headquartered Wisetek, a global leader in IT asset disposal (ITAD) secures financing.

What: €8m financing is provided by HSBC.
Ronan Daly Jermyn Banking and Finance Partner, Cian Fenton advised on the transaction supported by Aisling O’Donovan.

Why: The funding will be used to fuel Wisetek’s next phase of growth.

Source: Ronan Daly Jermyn

Who: Energy-saving lighting specialist UrbanVolt secures funding.

What: UrbanVolt has reportedly raised €7m in funding from Stephen Vernon and the Irish Strategic Investment Fund (“ISIF”). It’s reported that Stephen Vernon has taken a 10% stake in the company and will become chairman. ISIF is reported to have taken a 25% stake in the company.

Why: UrbanVolt will use the cash raised to fund continued growth in the US and Europe, where the Irish company has been trading for more than two years.

Source: Irish Times

Who: Game of Thrones Studio Tour at Linen Mill Studios secures funding.

What: £3.5m (€3.85m) funding comes through Whiterock Finance’s Growth Finance Fund and Growth Loan Fund II.

Why: The financing will go towards the cost of new Game of Thrones Studio Tour visitor attraction.

Source: Belfast Telegraph

Who: Irish co-founded cybersecurity company Sonrai Security has secured investment.

What: $20m (€17.05m) Series B funding round was led by Menlo Ventures with full participation from founding investor Polaris Partners, of which Mr Hannigan was formerly a partner. Ten Eleven Ventures, which led the previous investment, also participated this time around.

Why: The new funding would be used to accelerate research and development along with global sales and marketing activities for Sonrai Dig, its identity and data governance platform.

Source: Irish Times

Who: iNua Hospitality, the hospitality group made up of a collection of 4 and 5 star hotels across Ireland.

What: The Group has secured €5m of funding from existing investors. The Group has also reached an agreement with its senior lender.

Why: The funds will be used to support the Group’s hotels through what is likely to be a tough Winter trading period due to lockdown measures.

Source: Sunday Business Post

Who: Flexa, an Irish-founded technology start-up that only allows companies with flexible working environments to advertise jobs on its job listings platform. Based in London, the company was founded by Maurice O’Brien, Molly Johnson-Jones and Tim Leppard.

What: The company has raised €250k from a collection of angel investors and a venture capital fund. QVentures led the funding round.

Why: Funds will be used to acquire more clients and towards consumer marketing.

Source: Sunday Business Post

Who: Accelerated Payments, an invoice financing company based in Dublin. The business is led by CEO Ian Duffy.

What: The business has secured a €20m senior debt line arranged by UK asset manager Channel Capital Advisors.

Why: The funding line allows Accelerated Payments to more than double its invoice financing capability for clients and the business hopes to grow its loan book from c. €25m to €50m over the next 6 months.

Source: Sunday Independent

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.

Catherine O’Connor

catherine o connor

Source:
(Google Images & LinkedIn)

gilead
catherine bio

Sean Doyle

sean doyle

Source:
(Google Images & LinkedIn)

BA
BA BIO

Deirdre Somers

DS

Source:
​​​​​​
(Google Images & LinkedIn)

AQUIS
DS BIO

Simon Montgomery

SIMON

Source:
(Google Images & LinkedIn)

ID PAL
SM BIO

Emmet Browne

EB

Source:
(Google Images & LinkedIn)

NORBROOK
EB BIO

@RenatusCapital Tweets

3.7%

The NI unemployment rate for September 2020, an increase of 1.2% on Q1, according to the Labour Force Survey @BelTel_Business

65%

The year-on-year decline in the number of flights handled by the IAA in the Irish air space for September 2020 amounting to 38,172 flights, according to the Irish Aviation Authority (IAA). @IrishTimesBiz

0.6%

The year-on-year decrease in the Irish residential property prices for August 2020, according to @CSOIreland

0.9% & 0.1%

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

1.6%

The year-to-date decrease in residential property prices in Dublin. The highest house price growth in Dublin was in Fingal at 1.7%, while Dublin City saw a decline of 3.4%, according to @CSOIreland

9% & -10%

The year-on-year increase and decrease for Irish exports and imports, respectively, for August 2020 with the most notable changes in Exports of Organic chemicals (+59%) and Imports of Other transport equipment, including aircraft (-63%), according to @CSOIreland

c. €10bn-€11bn

The Central Bank of Ireland’s estimated revenue shortfall across the Irish SME sector as result of economic disruption caused by Covid-19. @IndoBusiness

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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