Renatus Weekly M&A & Company Performance Private Equity Newsletter 19/03/2023

Deal Details: MTM Engineering has acquired CET Connect for an undisclosed amount.

MTM Engineering is a Specialist Electrical and Mechanical Contracting business that was founded in 1997 by Martin & Patricia Mee. The business is now a second-generation family company, headed by Brendan Mee. In FY21, the business reported turnover of c. €40.2m which converted to an EBITDA of c. €4.2m.

CET Connect is a Dublin-based provider of structured cabling and data centre infrastructure services in Ireland, the UK, and France. The business was established in 1999 and in FY22, the business reported turnover of c. €9.7m which converted to an EBITDA of c. €833k.

Advisers:
CET Connect:
Corporate Finance: Novacies Capital led by Ciaran McGloin.
Legal: Eversheds led by Enda Newton, Tara O’Donoghue (Corporate), Emile Mullan (Corporate), Robert Dever (Tax), Gillian Blanche (Real Estate) Ellie Cater (IP/Technology) and Conor Fynes (Employment).
Tax: Grant Thornton led by Liam Kenny which consisted of Caroline Kennedy, Lorcan O’Rourke and Elaine Flynn.

MTM Engineering:
​​​​​Legal: Matheson led by Robert Maloney-Derham, Jenny Keenan, Donal Feehan and Ciarán Murray

Renatus Comment: It is truly astonishing how Irish companies are building the global cloud. This includes CET Connect, MTM Engineering, and other increasingly global Irish based players such as Mercury, KN Networks subsumed into Circet, Winthrop, Dornan, H&MV, E and I and many more. The acquisition of CET Connect supports a buy-and-build strategy that will help expand MTM Engineering’s customer offerings. CET Connect’s client base consists of a variety of IT infrastructure projects across diverse sectors including Data Centres, Pharmaceutical, Healthcare, and Commercial. The acquisition will bring MTM Engineering’s total headcount to over 650.

Source: Matheson Press Release

Deal Details: LC Financial Holdings (LCFH) has acquired Link Group’s Banking and Credit Management Division subject to approval for a reported c. €30m.

LCFH is based in Dublin and is the parent to four businesses including LCM Partners, a credit investment business. LC Financial has been in operation for 25 years with 14 offices in 9 countries. In FY21, the business reported turnover of c. €84.6m which converted to an EBITDA of c €13.8m.

Link Group is an Australia-based pensions administrator which services the fourth-largest pension pool in the world based on funds under management.

Advisers:
LC Financial Holdings:
FDD: Deloitte led by Derek Murphy and Daniel McCrea
Tax DD: Deloitte led by Shane Wallace and John Fitzgibbon.
Legal: Dentons led by Shane O’Donnell and Michael McDonald.

Link Group:
None Mentioned.

Renatus Comment: This deal will add a new roster of banking and investor clients in Ireland, UK, Italy and the Netherlands for LCFH as the business continues to expand. In 2021, it was reported that LCFH had made a €65m bid for the business. However, the reported terms indicate that Link Group will receive €20m cash consideration at completion – expected in the second half of 2023 – plus deferred cash consideration of €5m payable within 12 months of completion and cash earn out of €5m subject to the divested business meeting certain financial targets by the second anniversary of the sale.

Source: Business News Australia

Deal Details: Farm Week has been acquired by National World PLC for an undisclosed amount.

Farm Week is a farming coverage newspaper that has been in operation in Northern Ireland since 1961. The business does not report turnover or EBITDA information.

National World PLC is a UK-based operator of national news brands. In FY22, the business reported a turnover of c. £84.1m, which converted to an EBITDA of c. £9.8m.

Advisers:
None Mentioned.

Renatus Comment: The acquisition of Farm Week will further enhance National World PLC’s Agri exposure which already consists of the publication Farming Life. Farm Week’s first issue was published in 1961 at a time when Northern Ireland had a reported 46k farm businesses with an average farm size of 37 acres. There has been a lot of consolidation in farming and newspapers since then.  The business was then acquired by the Irish News in July 2006. This marks National World PLC’s third acquisition in the Northern Irish market this year as it acquired The Newry Reporter in January 2023 and Banbridge Chronicle in February 2023.

Source: Belfast Telegraph

Deal Details: Responsible has acquired fashion re-commerce provider Haru for an undisclosed amount.

Responsible is a Belfast-based business that focuses on refurbishing streetwear. It is majority owned by Mark Dowds and Mitchell Doust and it does not report turnover or EBITDA information.

Haru is a Belfast-based eCommerce provider focused in on the second-hand fashion industry that has supported over 550 charity shops across the UK and Ireland. The business was founded by childhood school friends Jacques Hill and Sam Lynas. The business does not report turnover or EBITDA information.

Advisers:
None Mentioned.

Renatus Comment: In 2022, Responsible raised $6.6m in a seed funding round led by Barclays to help support growth ambitions. The integration of both platforms will help to increase market share  in the global second-hand apparel market. In August 2022, data from Revolut showed a 60% increase in the number of people buying second-hand clothes. Many aspects are driving a boom in the Irish pre-loved market including ESG conscious individuals opting to buy clothes that are local and sustainable. There is also a cost of living crisis that has many consumers looking for cost saving options.

Source: Irish News

Ørsted acquires second Irish solar project

Deal Details: Ørsted has completed its second Irish solar project acquisition. The new project is with developer Terra Sola and includes Garreenleen solar farm in Carlow which has the ability to add 160MW, powering up to 56,000 homes. Ørsted ranks as the world’s most sustainable energy company in Corporate Knights’ 2021 index of the Global 100 most sustainable corporations in the world and is recognised on the CDP Climate Change A List as a global leader in climate action.

Source: Irish Examiner

Lunn’s Jewellers (“John H. Lunn Jewellers Limited”) is a family run  jewellery business based in Belfast. The business has been in operation for over 60 years and it is majority owned by Peter and Jacqueline Lunn.

In its financial year to February 2022, the business generated a turnover of c. £27.1m, an increase of c. 75% year-on-year. This converted to an EBITDA of c. £2.9m, an increase of c. 54% year-on-year. EBITDA improvements are due to increased gross margins and reduced overheads as a proportion of revenue.

Significant post-EBITDA cash movements include payments to acquire tangible assets of c. £1.1m and loan repayments of c. £0.9m. The business finished the year with a cash balance of c. £1.3m, a £0.8m year-on-year increase.

The business employed an average of 93 people in FY22 at a total cost of c. £4.4m.

Parklands Holiday Park (“O’Loughlin Holiday Park Ltd”). is an operator of a holiday park and seller of mobile homes in Co. Wexford. It is principally owned by Thomas O’Loughlin and Yasmin O’Loughlin.

In its financial year to December 2021 the business generated a turnover of c. €8.0m, an increase of 8% year-on-year. This converted to c. €3.4m EBITDA, an increase of 133% year-on-year. The increase in EBITDA was driven by improved gross margin and the realisation of operating leverage in the business.

The business finished the year with a cash balance of c. €1.2m, a c. €1.0m increase on FY20. Significant post-EBITDA cash movements included working capital investment and payments to acquire tangible assets.

The business employed an average of 112 people during the period at a total cost of c. €0.9m.