Renatus Weekly M&A & Company Performance Private Equity Newsletter 19/11/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
Figures released by Eurostat highlight that EU unemployment was at a record low of 5.9% as of August 2023. This figure was 4.8% in Ireland as of October, per CSO figures. For context, this figure stood at 16% at the height of the financial crisis in Ireland.
With unemployment at historically low rates, sourcing talent from within the EU has become an increasingly difficult challenge for employers. A survey released by Hays Ireland has reported that 85% of employers plan to hire over the next 12 months, with 66% of these aiming to hire permanent staff. The availability of skilled labour looks to be the critical factor in achieving these aims. The European Commission has now reported that labour shortages were a key factor limiting growth in Q1 for 28% of manufacturing employers and 31% of services and construction employers.
These shortages have likely been exacerbated by the green and digital transition, with shortages in manufacturing and construction standing at three times the levels observed 10 years ago. The UK without free access to European labour is clearly struggling even more, with construction roles now added to its ‘shortage occupation list’ of jobs that are heavily in need of workers. Germany needs 400,000 workers to make up its shortfall every year. The EU has tried to respond to these challenges for its member states by easing regulations around the movement of workers within member states and easing visa restrictions for non-EU workers entering the bloc. The impact of these moves remains to be seen and even when labour is available from further pools, the vicious circle of a lack of housing kicks in.
Despite interest rates remaining at historical highs, it is clear that an undersupply of labour may be the key limiting factor for productivity growth over the next year. The data shows that Irish employers want to keep hiring over the next year, but 53% continue to anticipate that access to the right talent will be their most significant external challenge in the coming months.
DCC plc acquires Progas
Deal Details: DCC plc has acquired Progas for an enterprise value of €160m. The deal is subject to regulatory approval.
DCC plc is an international sales, marketing, and support services group, based in Dublin. It operates through three divisions: Energy, Healthcare and Technology. DCC was founded by Jim Flavin in 1976 and was listed on the Dublin and London Stock Exchange in 1994. The group is led by CEO Donal Murphy. DCC operates in 22 countries and employs over 16,000 people. In FY Mar’23 the business reported turnover of c. €25.7bn, which converted to EBITDA of c. €912m.
Progas is a leading distributor of liquefied petroleum gas based in Germany. The business was founded in 1949 and has grown to serve a customer base of over 70,000 domestic and commercial customers.
Advisers: None mentioned. Renatus Comment: This is DCC Energy’s largest acquisition to date in Germany and is expected to increase its customer base to over 100,000 in Europe’s largest energy market – Germany generates and consumes the most electricity in Europe. The deal also reaffirms DCC’s commitment to grow its LPG offering by 50% by 2030 with this being its second acquisition in this space already this year. CEO Donal Murphy has also confirmed that the Energy Division has committed £310.5m to acquisitions in H1 this year with five of the seven acquisitions focusing on energy management services.
DCC’s shares rose c. 13% on the announcement of this acquisition and its interim results on Tuesday.
Bryan Meehan acquires Kenmare Park Hotel
Deal Details: The Kenmare Park Hotel has been acquired by Bryan Meehan. Deal consideration was not disclosed.
The Kenmare Park Hotel is a five-star hotel in Co. Kerry. It was owned by Francis & John Brennan. The business has not reported recent turnover or EBITDA information. It had been put up for sale in May with a price tag of €17m.
Bryan Meehan is an Irish, US-based entrepreneur. He previously sold his business, Blue Bottle Coffee, to Nestle for €420m in 2017. He also founded Fresh & Wild, a chain of organic supermarkets, which was sold to Whole Foods.
Advisers: Kenmare Park Hotel: Corporate Finance: CBRE led by Alex Sheeran, John Hughes and Paul Collins. Legal: Gore & Grimes Solicitors LLP led by Brian O’Neill, Sally Alford and Emmet Martin. FDD: Thomas Goodall & Son Accountants led by Con O’Donoghue.
Bryan Meehan: Legal: Denis McSweeney Solicitors led by Denis McSweeney and Paul Lett.
Renatus Comment: This is Meehan’s second deal in the Irish luxury hospitality space following his acquisition of Dromgarriff Rainforest estate in Cork last year. The Landsdowne, the sister hotel of the Kenmare Park, is not being included as part of the deal and remains on the market for c. €3.5m. Meehan has stated that it is not his plan to follow on with further acquisitions of hotels in Ireland, with the aim being to focus on putting his stamp on the Kenmare Park Hotel over the coming months. Sustainability is expected to be a key focus, with Meehan’s previous business, Blue Bottle Coffee making its name as an ethical chain in the US.
Source: CBRE Press Release
Melior acquires stake in NRG Panel
Deal Details: Melior Equity Partners has acquired a stake in NRG Panel. Deal consideration was not disclosed.
NRG Panel is an installer of solar panels and heat pumps to residential and commercial properties across Ireland. The company is based in Monaghan and was co-founded by Conal O’Reilly and Oliver Hughes in 2015. The business does not report turnover or EBITDA information.
Melior Equity Partners is a Dublin-based private equity firm founded by Peter Garvey and Jonathan Cosgrave.
Advisers: NRG Panel: Legal: The ByrneWallace LLP team was led by Eamonn Carey, Emmet Connolly, Yaser Rezaee, Zelda Deasy, Anthony Smyth, Fergal McConnon, John Campbell, Laura Greene, Liam Connellan and Robert McDermott. Corporate Finance: BDO
Melior: None mentioned.
Renatus Comment: The acquisition follows other recent activity in the solar panel space, with Cordovan Capital having acquired Solmatrix Renewables and Activ8 acquiring Allbrite. Acquisition activity in the space is not unexpected with government-led initiatives driving demand for solar panels in Ireland. Almost 22,000 retrofits were completed in the second quarter of this year, a 150% increase on last year. The SEAI has highlighted the government’s recent move to cut VAT on solar panels as being a key demand factor in the space, with a target of 500,000 homes achieving a B2 BER rating by 2030.
Source: Irish Times
Datajan Holdings acquires Century Fasteners
Deal Details: Datajan Holdings has acquired Century Fasteners for an undisclosed consideration.
Datajan Holdings is a non-trading holding company for 6 automotive and industrial distributors in the UK and Ireland. The company was established in 1998 and is owned by David MacNeaney, Tara Gowrie, Andrew MacNeaney, Jacqueline Cobbe, Jennifer Healion and Carol MacNeaney. The business reported a turnover of €18.6m which converted to an EBITDA of €1m in FY Oct 2022.
Century Fasteners is a supplier of steel nuts and bolts to the structural steel building industry in Ireland. The business, based in Dublin, is owned by Canice McGovern and Barbara Blake. The company does not report turnover or EBITDA information.
Advisers: Datajan Holdings: Corporate Finance: PKF led by Jack Swinburne, Ben Pentony and Patrick Keane. Tax: PKF led by Kevin Quinn. Legal: McCartan & Burke Solicitors led by Noel McCartan and Mark McCartan.
Century Fasteners: Corporate Finance: McInerney Saunders led by Neal Morrison. Legal: Gleeson McGrath Baldwin Solicitors led by David Larney.
Renatus Comment: The acquisition of Century Fasteners adds to Datajan’s existing portfolio of consumables suppliers to the automotive and construction space, with the obvious benefit of consolidation being the pooling of buying power to allow smaller operators to remain competitive. Consolidation has also been evident at the higher end of the market, with HPC Group having acquired HandyHardware.ie in September and Irish International Trading Corporation (IITC) acquiring Curust Industries in March.
DEAL UPDATES & OTHER NEWS
Kingspan considering takeover of Conqueror
Deal Details: New Zealand’s Commerce Commission issued a statement on Monday stating that Kingspan had applied for clearance to acquire Conqueror. Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. In FY 22, the group reported turnover of c. €8.3bn and EBITDA of c. €1bn. The Commission will decide on the application by December 18th.
Source: Irish Times
Quarrytech Limited t/a Harpscreen is a Tyrone-based manufacturer of screening media and conveyor parts for the quarrying and recycling sectors. The business is 100% owned by Kevin McCabe.
In its financial year to December 2022, the business generated a turnover of c. £16.2m, an increase of 25.9% year-on-year. This converted to an EBITDA of c. £4.7m, an increase of 56.2% year-on-year. EBITDA improvements can be attributed to revenue growth and gross margin improvements of c. 3.6%.
The business finished the year with a cash balance of c. £3.7m, a decrease of c. £1.0m year-on-year. This was driven by working capital investment, the payment of tax and the purchase of tangible fixed assets.
The business employed an average of 47 people over the period at a total cost of c. £1.9m.
Who: Imprint, an Irish co-founded branded payment and rewards provider.
What: The company has raised €70m in a funding round led by Ribbit Capital.
Why: The funding will be used to strengthen the company’s balance sheet.
Who: Keychain, a platform for supply chains into consumer packaged goods (CPG) in supermarkets and retailers founded by Oisin Hanrahan.
What: The company has raised $18m in seed funding.
Why: The funding will be used to accelerate the growth of the platform.
Who: AuriGen Medical, a Galway-based med-tech company which has developed an innovative minimally-invasive heart implant to revolutionise how doctors treat and manage millions of heart disease patients.
What: The business has raised €1m from private investors through Spark Crowdfunding to co-fund alongside a €1m follow on investment from WDC.
Advisors: Legal: Denovo Legal
Why: The money will be used to increase the size of the First-in-Human trials planned for Dec’23/ Jan’24 that will be carried out in New Zealand and the UK.
Who: Sensoteq, a Belfast-based wireless sensor start-up.
What: The company has raised £3.1m in a funding round led by Maven Capital Partners.
Advisors: Maven Capital Partners: Due Diligence: HNH led by Rodney McCaughey and Chris Coates.
Why: The funding will be used to commercialise and accelerate the worldwide rollout of its existing suite of wireless sensors.
Source: Tech Funding News
Who: British Business Bank, an economic development bank owned by the Department for Business and Trade.
What: The bank has announced a £70m investment fund for small businesses in Northern Ireland.
Why: The funding will be used to tackle the funding gap within Northern Ireland supporting businesses in a range of development stages, with a particular focus on start-ups that struggle to access finance.
Who: Sweepr, a Dublin-based AI-powered digital care platform for service providers and smart home providers.
What: The business has raised an additional $4m in Series A funding taking total funding to $13m.
Why: The funding will be used to bring Sweepr’s services to new markets, while also scaling its R&D efforts.
Who: Sons, an Irish company providing hair loss treatments for men.
What: The business has raised €6.75m in funding led by the Davy EIIS Fund, along with debt financing from Wayflyer and AIB.
Why: The funding will be used to scale its operations across Europe.
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.