Renatus Weekly M&A & Company Performance Private Equity Newsletter 20/02/2022

Deal Details: Kingspan, the Irish-based building materials firm, has agreed to acquire Ondura Group, from Naxicap Capital Partners, for a reported c. €550m.

Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. Kingspan Group had FY21 turnover of c. €6.5bn, which converted to an EBITDA of c. €893m. The business is led by CEO Gene Murtagh.

Ondura is a global provider of roofing membranes and associated roofing solutions. The business is headquartered in France, with 14 manufacturing sites and a distribution network in 100 countries worldwide. The company had FY20 turnover of €424m, which converted to an EBITDA of €63m. Ondura’s existing management team will continue in the business.

Advisers: None mentioned.

Renatus Comment: Kingspan recently published its financial results for the full year ending the 31st of December 2021. It was another stellar year for the business with both revenue (€6.5bn) and EBITDA (€893m), increasing by 42% year-on-year. Kingspan’s growth to date has been supported by an ambitious and continuous M&A strategy which shows no signs of slowing down. In 2021, the business committed €500m to acquisitions and since its year end it has committed a further €800m to three transactions.

Over the past 12 months, Kingspan’s share price is up 46.1%. It peaked at roughly €107.00 per share in December of 2021 and has since retreated to €88.39 by close of trading on Friday (-17.4%).

While business fundamentals remain extremely strong, ongoing challenges from the fall-out of the Grenfell disaster linger for the business and are likely worrying investors.

Source: Kingspan

Deal Details: Kerry Group is to acquire German biotechnology innovation company, c-LEcta, for a reported c. €137m, and Mexican-based Enmex for a reported c. €62m.

Kerry is a leading taste and nutrition partner for the food, beverage and pharmaceutical markets, with its broad range of ingredient solutions reaching over 1 billion consumers around the world. The Irish PLC is led by CEO, Edmond Scanlon. The business had FY21 turnover of €7.4bn, which converted to an EBITDA of €1.1bn.

c-LEcta is a leading biotechnology innovation company specialising in precision fermentation, optimised bioprocessing, and biotransformation for the creation of high-value targeted enzymes and ingredients. Based in Leipzig, Germany, the company employs over 100 people. The company is led by CEO and co-founder Dr Marc Struhalla. The company had FY20 revenue of c. €10.4m, which converted to an EBITDA of c. €2m.

Enmex was founded in 1972 and is a leading enzyme manufacturer based in Mexico, with a broad enzyme portfolio for food, beverage, and animal nutrition markets. The business is led by CEO, Kai Xiong.

Advisers: None mentioned.

Renatus Comment:  These acquisitions further Kerry’s strategy to focus on taste and nutrition, having sold its Consumer Foods’ Meats and Meals division in 2021. The strategy is evidently paying dividends, with the Taste & Nutrition business generating €6.3bn in FY21, an 8.3% increase year-on-year, with an EBITDA margin of 17.5%.

Public markets reacted positively to the news with Kerry Group PLC’s share up 1.6% over the week while the shares are up 7.1% over the past 12 months. The share price peaked at €129.40 in July of 2021 and has since pulled back to €110.25 (-14.8%) at close of trading on Friday.

Source: Kerry Group Press Release

Deal Details: TitanHQ, a Galway-based cybersecurity business has acquired Cyber Risk Aware for an undisclosed sum.

Established in 2016, Cyber Risk Aware is a global leader in security awareness and mitigation of human cyber risk, assisting companies to help their staff protect the company network. The business delivers real-time cyber security awareness training to staff in response to actual staff network behaviour.

TitanHQ is a 20-year-old multi-award-winning cybersecurity business. The business specialises in protecting end-users for over 8,500 businesses and 2,500 MSP partners. Its platform protects business users from malware, ransomware, phishing, viruses, botnets and other end-user risks. The business is led by CEO Ronan Kavanagh.

Advisers: None mentioned.

Renatus Comment:  TitanHQ is a fast-growing business in a growing space. Filed accounts show that revenue was c. €5.1m in its financial year to December 2016 which have since grown to c. €15.6m in December 2020 which were its most recently filed accounts.

TitanHQ was initially backed by Bill McCabe’s Oyster Technology Investments at inception and that entity still holds a significant stake in the business. In June of 2020, TitanHQ received further backing from UK private equity firm Livingbridge.

Source: TitanHQ

Deal Details: IAS Laboratories, the agricultural and environmental testing laboratory, has been acquired by UK-based environmental sciences company, Cawood.

IAS Laboratories is an environmental and agricultural testing laboratory with extensive experience of water, soil, compost, sludge, and silage issues. The business is based in Carlow. Established over 30 years ago, IAS Laboratories was set up as part of the Irish Sugar Factory as a research and development laboratory. As of April 2020, the business had net assets of €526k. The business is led by Managing Director, David O’Connell.

Cawood is one of the UK’s leading independent scientific groups. It provides laboratory analysis to the agriculture, animal feed and environmental sectors. Based in Bracknell, England, the business had FY21 turnover of €27.7m, which converted to an EBITDA of €2.7m. Cawood is led by CEO, Simon Parrington.

Advisers:
Buy Side:
Legal: John Kelly, Pat Flynn and Daniel Hackett, of Flynn O Driscoll, provided legal advice to Cawood.
Property & Employment: Gemma Casey provided property advice and Caoimhe Heery provided employment advice.
Tax: Deloitte UK and Ireland provided tax advice for Cawood.

Sell Side:
Legal: OCWM Law, led by Edel Conway, provided legal advice for IAS.

Renatus Comment: Given IAS’ agricultural focus, the deal should prove synergistic for both parties, with IAS helping to complement Cawood’s existing Agriculture and Environmental units.

The deal furthers a clear growth by M&A strategy by Cawood, having acquired Express Microbiology Ltd and Chemtech Environmental, who both operate in similar laboratory testing capacities to IAS. Both of those acquisitions followed Cawood itself being acquired by Ensign Bickford Industries in November 2021.

Source: Cawood Press Release

Deal Details: Greencoat Renewables has acquired the Tullahennel windfarm from funds managed by affiliates of Apollo Global Management. No financial consideration was disclosed but it was noted that the acquisition is being funded by the Company’s existing credit facility.

The windfarm is in County Kerry and consists of 13 GE 2.85MW turbines that have been operational since September 2018. Following the acquisition, Greencoat Renewables’ total borrowings will represent 43% of Gross Asset Value.

Advisers:
Sellers:
Deal Advisory: James Delahunt of KPMG Corporate Finanace,
Tax: A KPMG tax team of James Kelly, Claire Waters and Holly Minihan provided advice.
Legals: McCann FitzGerald LLP advised the sellers with a team of David Lydon, Ciara O’Herlihy and Valerie Lawlor.

Renatus Comment: According to our newsletter database, Greencoat completed four acquisitions in 2021, along with seeking to raise capital by issuing up to 400 million shares through an initial placing price of €1.11 per share. The goal of the share issue program was to enable further growth through continuing expansion into the European continental markets. According to the London Stock Exchange, Greencoat Renewables PLC is currently trading at €1.16, and year to date returns are 2.2%.

Source: Greencoat Renewables Press Release

Deal Details: GLIL Infrastructure has acquired a majority investment in Invis Energy’s portfolio of 11 onshore wind farms.

GLIL is an Alternative Investment Fund with £2.5 billion of committed capital, supported by a number of UK Local Government Pension Funds.

The Invis Energy portfolio was established in 2011 and operates 453MW of installed wind capacity. The wind farms are in Galway, Kerry, Donegal, Cork, and Mayo. Invis Energy will continue to operate the portfolio following the investment. Invis Energy was established in 2011 as a joint venture between funds managed by UK-based Asper Investment Management Limited and Irish-based Craydel Group.

Advisers: None mentioned.

Renatus Comment: Ireland will have a key role to play in the EU Green Deal, which aims to make Europe the world’s first climate-neutral continent by 2050. As of 2020, no country provided a greater share of its electricity from onshore wind than Ireland. As such, onshore wind energy is likely to be a key factor in Ireland achieving its climate targets by 2050, meaning we should expect to more deals in the onshore wind space here.

The growth of the sector should create significant opportunities for local SMEs involved in the maintenance, servicing and other related services to this market.

Source: GLIL Press Release

Deal Details: FBD Hotels & Resorts have agreed a deal to acquire the Killashee Hotel for a reported consideration of €25m from Tetrarch Capital. The deal remains subject to contract / contract denied.

Established in the early 2000s and located in County Kildare, the Killashee Hotel is a 141-bedroom hotel with conference, wedding, spa and leisure facilities.

Founded in 2011, Tetrarch Capital is a leading player in Irish real estate with assets under management of c. €500 million. Other portfolio hotels include the Citywest Hotel and the Mount Juliet Estate.

This acquisition will see FBD Hotels & Resorts add a sixth hotel to its portfolio and bring the total number of hotel rooms to 1,078. The group also owns owns the Faithlegg Hotel in Waterford, the Heritage Hotel and Spa in Laois and Castleknock Hotel in Dublin, as well as two four-star resorts in Spain.

Advisers:
Buyers:
FBDH&R was advised on the transaction by Paul Collins and Dave Murray of CBRE.
Sellers:
Tetrarch Capital was advised by Tom Barrett of Savills.

Renatus Comment: FBD Hotels & Resorts is owned by Farmer Business Developments PLC which both trace their roots back to the late 1960’s when members of the National Farmers’ Association set about raising capital to establish new businesses on behalf of farmers. This led to the establishment of the FBD Holdings PLC and its prominent subsidiary FBD Insurance. Farmer Business Developments PLC was later separated from the FBD Group.

Farmer Business Developments PLC is an investment vehicle which acquired full control of FBD Hotels & Resorts in 2015 which added to its portfolio of other assets, which includes a 24.3% stake in FBD Holdings PLC, making it the largest single shareholder.

FBD and its entities has been a success story and a very interesting one at that. It has undoubtedly been a fruitful journey for its original shareholders and their successors.

Source: Farmer Business Developments Website

Deal Details: US-based, Professional Datasolutions, Inc. (PDI), a retail and petroleum focused enterprise management software provider has acquired Irish cloud based digital consumer engagement business, Azpiral. The deal consideration was not disclosed.

Azpiral was founded in 2005 as Payback Loyalty Systems. The business provides digital customer engagement for the fuel, convenience and B2B sectors in Ireland, the UK and the Benelux region. The business rebranded as Azpiral in 2016 and is owned by Paul McGowan and Marry Ann McDonagh, who each own 50% of the business.

PDI, which was founded in 1983, provides software to help businesses and brands increase sales, operate more efficiently and securely, and improve critical decision-making. The business targets clients in the convenience retail and petroleum wholesale industries. The business is led by current CEO Jimmy Frangis and serves over 1,500 clients.

Advisers:
Buyers:
FDD: Berenson & Company served as exclusive financial advisors to PDI.
Sellers:
FDD: Corum Group Ltd served as exclusive financial advisors to Azpiral.

Renatus Comment: PDI has been extremely active over the past 5-6 years, acquiring a total of 20 businesses since 2016. PDI’s targets to date have been businesses operating in the same verticals as PDI (convenience, retail, and petroleum wholesale) who offer complementary or adjacent services/solutions to PDI’s existing offering.

Source: PDI Press Release

Deal Details: The NEH Group, a Royal College of Veterinary Surgeons (RCVS) accredited tier three specialist equine hospital providing first opinion and referral services for horses throughout the UK and internationally, has announced its investment and partnership in Sycamore Lodge Equine Hospital based in the Curragh County Kildare.  The RCVS accreditation is an industry standards which ensures practices meet core standards including hygiene, health and safety, clinical governance and quality of facilities.

Sycamore Lodge Equine Hospital is a long established and successful practice on the Curragh, and will join the existing associated practices of Berkshire Equine and NEH Chantilly.

Advisers:
Buyers:
Legal: Bryan Sweeney of J R Sweeney LLP acted for NEH.
Sellers:
Legal: Joe McVeigh of BHSM advised the majority sellers.

Renatus Comment: There has been a theme of consolidation in the veterinary industry for some time now.

According to the Royal College of Veterinary Surgeons (RCVS), c. 51% of veterinary practices in the UK are now owned by six companies while c. 67% of practices belong to a group of three or more. Since 1999 in the UK, non-vets have been allowed to own veterinary practices which enabled this consolidation.

One of the largest players in the UK is IVC Evidensia who own a reported 993 of the UK’s 5,585 vet practices. IVC has 14 practices in Ireland and it spans 11 counties in total.

Independent ownership of veterinary practices is becoming increasingly rare and the move by Sycamore Lodge to join Newmarket Equine Hospital is another step in the consolidation of the industry.

Source: NEH Website

Ad Dynamo acquired by Aleph Group

Deal Details: US-Based digital media business, Aleph Group has acquired Ad Dynamo, a South African digital media operator with subsidiaries in the UK and Ireland.

Aleph Group operates in c.43 countries and was previously valued at $2bn in 2021. Ad Dynamo is one of Africa’s largest digital media businesses and has entered exclusive agreements for the African

Advisors: LK Shields Solicitors LLP acted for Aleph Group on the Irish aspects of the acquisition. Jennifer McGuire, Partner, led the LK Shields team with assistance from James Byrne and Paul Dineen.

Source: LK Shields 

McAuliffe Barry & Collins Ltd, trading as MBC Insurance, is an insurance broker headquartered in Cork City, with a second office in Listowel, Co. Kerry. The business’ largest shareholders are Brian McMahon, Shane Sullivan and Desmond Murphy.

In its financial year to August 2021, the business reported turnover of €2.5m, a marginal decrease year-on-year, which converted to an EBITDA of c. €1.0m, a significant increase of 38.5% year-on-year. The rise in EBITDA was partly driven by a a fall in administrative expenses of c. €261k.

The business finished the year with a cash balance of c. €3.7m, an increase of 64.4% year-on-year, largely driven by the sale of investments and increased profits. The business employed an average of 23 people at an annual cost of c. €966k.

Bawnbua Foods Limited is a suppier of primal, value-add and cooked meat products for the retail, food-service and food-manufacturing sectors. The company is based in Co. Armagh, Northern Ireland. The business is owned by Martin, Gary and David White, as well as Martin White Jnr.

In its financial year to January 2021, the business had turnover of c. £32.9m, an increase of 5.7% year-on-year, which converted to an EBITDA of c. £1.1m, a decrease of 9.3% year-on-year. The decrease in EBITDA was partly driven by the business’ gross margin moving from 11.3% in FY20 to 8.8% in FY21.

The business finished the year with a cash balance of c. £55k, an increase of c. £27k year-on-year, with a c. £1.2m working capital investment being a significant use of cash. The business employed an average of 152 people at an annual cost of c. £3.46m.