InsightsNewsletterRenatus’ Weekly M&A Newsletter – 19/07/2020

Renatus’ Weekly M&A Newsletter – 19/07/2020

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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.

M&A Activity

Technimark acquires Tool & Plastics

TP

Deal Details: Global plastics company Technimark, which is backed by Pritzker Private Capital, has acquired Longford based Tool & Plastics Industries Ltd. The financial terms of the transaction were not disclosed.

Tool & Plastics Industries Ltd specialises in manufacturing injection moulded product for the medical devices  and pharmaceutical sector.
The company operates from a number of ISO Class 8 Cleanroom environments in its facility in Ireland and from an IATF 16949 compliant facility in the Czech Republic.

Technimark is a leading global provider of custom rigid plastic packaging and components. Family-founded and led for more than 30 years, it has facilities in the United Kingdom, United States, Mexico, China and Germany.

The combined company will have 13 facilities and over 4,400 employees worldwide.

Pritzker Private Capital partners with middle-market companies based in North America with leading positions in the manufactured products, services and healthcare sectors.

Advisers: RBK’s corporate finance partner Chris Ball, Fiona Murphy (tax) and Colm O’Grady (advisory) led this transaction. LK Shield’s team led by Ruairi Mulrean (commercial) and Cathal Hester (property) advised on the legals.
Arthur Cox team led by Michael Coyle (Partner, Corporate and M&A) with Amy McDermott, Lyndsey McGinn and Sinead McDonagh (Associates, Corporate and M&A) acted for Pritzker Private Capital and its portfolio company, Technimark LLC.

Renatus Comment: Downstream Suppliers to medical device and pharmaceutical companies are in general performing well in spite of the current climate and are in demand by investors trade and otherwise. The well documented shift to near-sourcing should also favour companies such as Tool and Plastics.

Previous to this transaction, Tool and Plastic Industries Ltd was owned by Colm Cuffe (50%) and Declan O’Rourke (50%).

Source: PR Newswire

INM acquires Cartell.ie

CARTELL

Deal Details: Independent News & Media, owned by Dutch company Mediahuis, has acquired motoring data company Cartell.ie for an undisclosed sum.

Cartell.ie will merge with CarsIreland, a motoring subsidiary INM acquired 9 years ago.

Nicola Ahearne, Managing director of Cartell.ie believes that the combination of the two motor companies will enable them to scale and grow.

INM Chief executive Mark Vangeel sees this acquisition as an important step in a market they already have strong foundations in.

Advisers: Niall Flood and Megan Smythe of KPMG corporate finance acted as the financial advisors for Cartell shareholders while Alan O’Driscoll and John Troute of Flynn O’Driscoll provided legal advice.

Arthur Cox team, led by Cian McCourt (Partner, Corporate and M&A) with Andrea Bowdren and Amina Flynn (Associates, Corporate and M&A) assisted INM with legal advice and PwC with the financials.

Renatus Comment: The combination of Cartell.ie and Carslreland will create synergetic benefits that will no doubt lead to long term growth under a single entity. The motor data capability of cartel.ie will complement and add value to the online marketplace of  CarsIreland. Recently we have seen Mediahuis be an active player in the European M&A Market as they attempt to diversify away  from their main business line of media. This deal is just another Investment apart of an ever-growing diversified portfolio.

Source: The Irish Times

Glenamaddy and St Jarlath’s Credit Unions merge

ST J

Deal Details: Galway-based Glenamaddy and St Jarlath’s Credit Unions have merged, the new entity will have combined assets amounting to €260m.

Glenamaddy Credit Union which is located in East Galway, has 5,000 members and €27m worth of assets. St Jarlath’s is considerably larger with 50,000 members and over €230m in assets.

The merger will ensure that members of the Glenamaddy Credit Union will be able to access a broader range of financial services. The Central Bank requires a minimum asset value of €75m in order to offer a fully functional current account.

The merger marks the beginning of a move towards wider consolidation in the sector.
It is reported that St Jarlath’s will merge with two other Credit Unions in 2021 with total assets amounting to c. €500m.

Advisers: None mentioned

Renatus Comment: Scale is important in any retail financial services offering and this applies to not-for-profit entities as well as private enterprises.

Source: Irish Times

Philips PathXL acquired by Cirdan

CIRDAN

Deal Details: Cirdan, a medical diagnostics company has acquired Belfast-based Philips digital and computation pathology business PathXL. The financial consideration of the transaction was not disclosed.

Headquartered in Northern Ireland, Cirdan, with offices also in Canada and Australia specialises in the development of technology that supports and speeds up diagnosis, primarily in the pathology space.

PathXL was established in 2004 as a Queens University Belfast spin-out company and was purchased by Philips in 2016. It offers a range of digital pathology software applications for research and education.

Advisers: KPMG team with Niall Flood, Naomh O’Neill and Philip Maxwell advised Philips PLC on this transaction

Renatus Comment: Medtech is an interesting and growing space as digital solutions continue to disrupt the healthcare industry. Industry reports project new cancer cases to rise 70% within the next two decades, and with PathXL specialising  in digital pathology, there will no doubt be a surge in demand  for their services over the coming years. Their services combined with Cirdans have the ability and capacity to reduce the pressure on pathologists by streamlining and speeding up the diagnostic process.

Cirdan is owned by Stephen Dunniece (50%) and Hugh Cormican (50%).

Source: Cirdan

ESB have acquired a number of solar projects

ESB

Deal Details: ESB has acquired a number of solar development projects from Terra Solar II for an undisclosed sum.

ESB is majority owned by the Irish Government and this acquisition will add up to 200MW to its growing solar pipeline. The assets have been purchased in advance of the upcoming renewable electricity support scheme (Ress-1) auction process with the projects labelled “auction ready”.

Terra Solar II is a renewable developer founded by Andre Fernon and David Fewer. This sale represents less than a quarter of its portfolio and it is reported that the funds from the sale will be used to continue to develop the remainder of its portfolio.

Advisers: IBI Corporate Finance and solicitors Beauchamps advised Terra Solar II on the sale.

Source: Sunday Times

Greencoat Renewables acquires 50% of Carrickallen Wind Farm

greencoat

Deal Details: ISEQ-listed Greencoat Renewables has acquired 50% of Carrickallen Wind Farm, a 20.5MW wind farm located in County Cavan.
Irish wind developer Galetech Group will continue to own the remaining 50% of the operation. The financial consideration of the deal was not disclosed.

Greencoat Renewables is an Irish investment company that focuses on Irish and Euro dominated European wind farms and renewable energy infrastructure. With this acquisition, its portfolio of operational wind assets now has an aggregate capacity of 538MW.

The acquisition is being funded by the Company’s existing credit facility. Following completion, total borrowings will represent 44% of Gross Asset Value.

Greencoat will receive a minimum floor price for the electricity generated until 2032 as the farm’s revenues are contracted under the REFIT 2 scheme.

Advisors: Paul Cantwell of Cantwell Corporate Finance acted for the Galetech Group in buying out the BVP investors in Carrickallen Wind and the subsequent sale of a 50% interest in the project to Greencoat Renewables plc.
Fieldfisher were legal advisers to Galetech and McCann Fitzgerald acted for Greencoat.

Renatus Comment: ESG Investing is an interesting space at the moment, both here and across Europe where shifts in public sentiment have resulted in a political green wave. It is likely we will see more incentives to invest into renewable energy and it will be interesting to see how quickly our reliance on carbon emitting power sources becomes unstuck.

The Galetech Group is owned by Donald (50%) and Darren (50%) Sherry.

Source: Shares Magazine

Deal Updates & Other News

Open Orphan signs an option to acquire CHIMagnets

Open Orphan, a Dublin-listed pharmaceutical services company has signed an option to acquire drug trial support company CHIMagnets. Under the terms of the contract they will have 3 months to acquire the company.

CHIMagnets assists in the design, manufacture and testing of products known as challenge agents. These agents are used in clinical trial challenge studies.

Cathal Friel, executive chairman of Open Orphan believes that CHIMagnets work in undertaking Covid-19 challenge agents would very much complement their own work.

Source: The Irish Times

CVC Capital halves its offer in the Six nations deal

In light of the Covid-19 pandemic, CVC Capital Partners has halved its offer to acquire a 14.5% stake in the Six Nations from €330m to €165m.

Negotiations, which were suspended at the beginning of March have restarted. According to the French Federation President, Bernard Laporte, the deal is expected to close in the next two months.
A final agreement is likely to be finalised at a valuation between €200m-€220m.

Source: Irish Times

Shabra Plastics planning €4m investment in recycling plant

Shabra Plastics is planning a €4m investment into its Monaghan-based recycling plant which will increase its capacity to recycle 35,000 tons of plastic bottles and also create 30 new jobs.

Shabra Plastics is a recycler and re-processor of waste plastic (PET/HD/LDPE). The company currently has plastic recycling plant in Monaghan with a capacity of 12,000 tons of polyethylene terephthalate (PET) bottles a year and employs 70 staff. The existing plastic bottle sorting plant was built back in 2010 at a cost of €3.5m.

It is reported that Shabra already have planning permission for the expansion but Covid-19 has put a delay on the construction.

Source: Sunday Business Post

MOWI planning €22m investment

Norwegian seafood company, Mowi, is reportedly planning to invest €22m in the Irish fish-farm sector to create up to four new fish farms.

The Irish subsidiary recently added 46 new staff to its 13 operations in Ireland and this year it is anticipating exceeding €80m in sales.

Source: Irish Independent

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.

NOVO

Based in Co. Limerick, Novostrat is a European Independent leader in polyethylene foams for the packaging and building industries.

In FY19, Novostrat saw revenue decrease by 1.4% to c. €27.4m while EBITDA increased by 47.4% to c. €4.3m. Of that revenue figure, only c.0.6% of sales were from Ireland, with the majority coming from the rest of Europe. Gross margins were up c.3% in FY19, due to a significant reduction in the cost of sales. Net cash decreased by c. €1.6m to leave and ending balance of c. €3.37m. The most significant drain on cash was the c. €4.0m spent on fixed assets and the c. €1.2m in loan repayments.

The company hired an extra 28 people in FY19, bringing the total headcount to 264 employed at a total cost of c. €5.16m. Lionel Junique is the 100% owner of Novostrat.

NOVO FIGS
N CONLAN AND SONS

Based in Kildare, N. Conlan & Sons is a motor vehicle dealership that sells new and used BMW, Jaguar, Land Rover, Mini and Peugeot car models. It also provides related services such as servicing and financing.

In FY19, the company saw revenue increase by 11.5% to c. €65.2m while EBITDA decreased marginally by 3.9% to c. €2.9m. This decrease was largely due to an increase in administrative expenses.  There was a net cash decrease of c. €580k. The primary drain on cash resulted from movements in working capital, specifically, stocks. The company also spent c. €835k on fixed assets.

The company employed an average of 109 employees during the year at a cost of c. €4.0m. The company is 100% owned by the Conlan family.

N CONLON FIGS
DEMESNE

Based in Tallaght, Demesne Electrical Sales Ltd is one of Ireland’s leading independent distributor, importer and supplier of industrial electrical components.

In its latest fiscal year, the company saw revenue increase by 5.4% to c. €16.7m while EBITDA decreased by 7.7% to c. €1.1m. There was a net cash decrease of c. €110k after movements in working capital of c. €185k and loan repayments of c. €365k.

The company employed an average of 54 employees during the year at a cost of c. €3.2m. The company is owned by David Williamson, Paul Fitzsimons and Chris McKenna.

DEMESNE FIGS

Fundraisings

Who: BDO has announced the launch of its Development Capital Fund II.

What: €75m has been raised from the European Investment Fund (EIF), Ireland Strategic Investment Fund (ISIF) and Bank of Ireland.

Why: The funds will be invested into later-stage SMEs with an annual turnover between €5m and €80m in the ICT/Software, industrial/engineering, food and agribusiness; life sciences and clean tech sectors. Within these sectors, companies with significant job and export opportunities will be targeted.

Source: Irish Times

Who: Enterprise Ireland (EI) has announced plans to allocate €180m Covid Fund.

What: EI had previously allocated €20m of a special EU-approved Covid rescue fund to troubled Irish companies although it is reported that Chief Executive Julie Sinnamon has announced the entire Sustaining Enterprise Fund of €180m wILL be allocated before the end of the year. The EU has approved a temporary framework for the €180m fund.

Why: The fund will be used to help companies through the recovery phase. EI has identified 300 client companies that have been significantly affected by both Covid and Brexit and a further 5,000 companies have also made contact, many who are not EI clients.

Source: Irish Independent

Who: Irish digital pathology start-up Deciphex, founded by Dr Donal O’Shea in 2017, has secured funding.

What: Series A funding of €5.4m was backed by Iruus investments , The HBAN MedTech syndicate , ACT Venture Capital and Enterprise Ireland. Other Investors are US-based NextSteps Capital and GI Partners of Illinois. This brings their total funding to date to nearly €8m.
PJ Kiely of Kiely Solicitors provided legal advice to Deciphex, Gavin Lawlor and Grace Connolly of Flynn O’Driscoll acted for the investors.

Why: The investment will be used to accelerate R&D and to expand into new markets to scale further.

Source: Irish Times

Who: Software company Qualio, founded and led by Irishman Robert Fenton, has secured funding.

What: The software company has raised $11m (€9.6m) in a funding round led by Storm Ventures. Also included were new investors Sorenson Ventures and existing backers Frontline Ventures.

Why: The company, which offers a quality management platform for the life sciences sector, intends on expanding its headcount from fifty to seventy by the end of 2020 and into the hundreds by the close of 2021.

Source: Irish Times

Who: Belfast-based BrainWaveBank has secured funding.

What: The medtech company has raised £1.1m (€1.2m) in a funding round led by Edinburgh-based Par Equity as well as Techstart Ventures, The Angel CoFund and British Business Investments.

Why: The funds will be used to continue the development and commercialization of its ‘Fitbit for the Brain’ technology. The technology measures cognitive fitness using a wireless electroencephalogram (EEG) headset and related proprietary software.

Source: Irish Times

Who: Kerry IT company, Standard Access, plans to raise funds.

What: Standard Access is planning to raise €4.5m.

Why: The funds will be used to help roll-out an artificial intelligence-based system that it has developed to count crowds using CCTV systems. CEO Damien Browne believes the software can be used to monitor enforcement of social distancing in a variety of venues.

Source: Irish Independent

Who: Cork-based solar energy company Amarenco Solar, is set to raise €10m through the issue of loan notes.

What: The company is set to raise €10m through the issue of loan notes which will carry a 7% coupon. Amarenco has retained Cantor Fitzgerald Ireland to raise the funds. The company previously raised €15m in equity from a number of different sources earlier this year.

Why: The funds will be used as part of a refinancing ahead of the forthcoming government incentivised auction process for renewable energy.

Source: Sunday Times

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.

Tom Leahy

TOM LEAHY

Source:
(Google Images & LinkedIn)

PERMANENT
TOM LEAHY STATS

Rosheen McGuckian

ROSHEEN

Source:
(Google Images & LinkedIn)

SISK
ROSHEEN STATS

Dr. Sinead Brennan

SINEAD BREN

Source: 
(Google Images & LinkedIn)

AWARE
SINEAD BREN STATS

David Phelan

DAVID PHELAN

Source:
(Google Images & LinkedIn)

KORN FERYY
DAVID PHELAN STATS

Thought for the Week

It has been a while since we took pulse of the betting markets to see what they think will happen in key upcoming events.

Biden is 62% probable (8/15 odds) to be elected as per the markets to be elected with Trump 34% (7/4 odds) and the other two 4%.

There are no meaningful markets for Brexit outcomes none of which are shaping up to be pretty.

@RenatusCapital Tweets

51.9

The Ulster Bank Construction Purchasing Managers’ Index (PMI) for June 2020, a significant rise from just 19.9 in May which shows that building has activity surged last month. Any reading above 50 signals expansion. According to @IndoBusiness

5% & 4%

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

5%

The year-on-year decrease in the value of goods exports for May 2020 with the most notable changes in the Exports of Organic chemicals (-21%), according to @CSOIreland

20%

The year-on-year decrease in the value of goods imports for May 2020 with the most notable changes in the Imports of Other transport equipment, including aircraft (-89%). @CSOIreland

0.3%

The year-on-year increase in the Irish residential property prices for May 2020, the median price paid for a property in the month was c. €250,000, according to @CSOIreland

€3.3bn

The Irish government deficit for Q1 2020 amounting to 3.7% of quarterly GDP, according to @CSOIreland

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

Our Family of Investments

Current Portfolio:

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