Renatus Weekly M&A & Company Performance Private Equity Newsletter 21/05/2023

Deal Details: DCC plc has acquired Alternative Energy Ireland. Deal consideration was not disclosed.

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. In FY Mar 23 the business reported turnover of c. £22.2bn, which converted to EBITDA of c. £800.1m.

Alternative Energy Ireland (‘AEI’) is a Dublin-based renewable energy specialist. The company’s services range from single technology installations to full energy audits and bespoke multi-solution installation. AEI was founded in 2007 by Steven Bray and currently employs c. 20 people. The business does not report turnover or EBITDA information.

Advisers:
Alternative Energy Ireland
Financial Advisor: PKF led by David Lucas and Conor O’Rourke.
Tax: PKF led by Kevin Quinn.
Legal: Philip Lee led by Inez Cullen and Eoghan Doyle.

DCC
Financial Advisor & Tax DD: PWC led by Orla Fisher.
Legal: Eversheds Sutherland, led by Gavin O’Flaherty and Alex Kirwan.

Renatus Comment: As part of its green energy services plan announced last year, DCC is aiming towards a net-zero carbon future and as part of this, the business is employing a clean energy acquisition play. It completed a series of bolt-on acquisitions in 2022, including that of PVO International, a Netherlands-based distributor of solar panels. In its financial results for year-end March 2023, released this week, it announced that the ‘Services and Renewables’ part of its energy division, now accounts for 28% of EBITDA (up from 22%). It will be hoping that by shifting the focus of the business away from oil and gas, it will improve the sub-8x EBITDA mutliple that it currently trades at, which lags most of its peers.

Source: PKF Press Release

Deal Details: MCR Group has received investment from Freshstream. Deal consideration was not disclosed.

MCR Group is a Dublin-based outsourced services provider. It was founded in 1996 by Douglas Taylor. The two other principal shareholders are Kealan Turley and Donall Barrett. In FY Dec 21 it reported turnover of c. €112.1m which converted to EBITDA of c. €15.2m

Freshstream is a UK-based mid-market investment firm established in September 2015.

Advisers:
MCR Group:
Corporate Finance: Clearwater International led by John Sheridan, Michael Quinlivan, John Devine and Conor Kilgallen.
Due Diligence: KPMG led by Mark Collins (FDD), Alan Bromell (Tax), Gavin Hillery, Darran Woods and Domhnaill Drumm.

Freshstream:
Corporate Finance: Grant Thornton (UK & IRE) led by Usman B Malik, Gareth Cosgrove, Chris Thompson, Safwan Chowdhury, Delphine Diers, Carl Parker, Harry Thorniley-Walker, Chris Sharpe, Jake Troughear and Edward Orme.

Renatus Comment: The Times reported back in February that MCR Group was pursuing a sale and that any deal would likely involve a consideration in excess of €100m. The price tag is warranted given its strong financial performance and blue-chip customer base that includes the likes of RTÉ, Google, Aer Lingus, Amazon and Ikea. Consolidation makes sense in this space as both high staff and borrowing costs continue to strain what is already a low-margin industry. Trade players such as Bidvest Noonan were tipped as likely suitors for the business given their acquisitive recent history. However, having now received fresh equity backing, MCR Group is probably more likely to be the acquirer than the acquired, over the next few years.

Source: Clearwater International Press Release

Deal Details: SPORIFY has been acquired by ArisGlobal for an undisclosed amount.

SPORIFY is a single solution to match, maintain, synchronise, and integrate SPOR (Substances, Products, Organisations, and Referentials). SPORIFY provides ISO IDMP-compliant SPOR data to feed regulatory activities across the health and safety sector. The business is owned by Conor Corr and Gary Wilson. It does not report turnover or EBITDA information.

ArisGlobal is a US-based drug development technology platform. Nordic Capital acquired a stake in the business from the founding Abbhi family in 2021. In FY22, it was reported that its turnover was c. €130m.

Advisers:
SPORIFY:
Legal: LK Shields led by Marco Hickey, Lester Sosa-Villatoro, Ruairi Mulrean, Aideen Burke, Elizabeth Mara, Jane O’Grady, Eimear McCluskey and Emer Wilkie.

ArisGlobal:
None mentioned.

Renatus Comment: The acquisition will provide ArisGlobal with high calibre data capabilities to facilitate data cleanup. IDMP is a suite of five standards developed within the International Organization for Standardization (ISO) to facilitate the unique identification of medicinal products. It is reported that the SPOR data solution is utilised by five of the world’s top 20 largest pharmaceutical companies and by a series of European regulators. With the life sciences industry advocating for the synchronisation of global data standards, SPOR implementation will facilitate the reliable exchange of medicinal product information.

Source: LK Shields Press Release

Deal Details: David Moffitt has led an investment in Solartricity for an undisclosed amount.

Solartricity is a Dublin-based wholesale supplier of solar PV panels and is a subsidiary of Turbotricity Ltd. Quentin Gargan set up a solar division in 2014 and will be retaining a minority stake in the business post-investment. It was reported that the business has tripled its revenue in two years and a new Managing Director is to be appointed.

David Moffitt is an ex-senior Smurfit Kappa executive and experienced entrepreneur who founded Tech Group Europe, a drug delivery device manufacturer that he has successfully exited. David is currently CEO of Kayfoam Woolfson, a Dublin-based mattress manufacturer, and will now assume the role of Chairman at Solartricity.

Advisers:
Solartricity:
Corporate Finance: Solara Corporate Finance led by Karl Cleere.
Legal: BHSM LLP led by Joe McVeigh, Sinead Mannion and Stephen McVeigh.
Tax: McCarthy Tax led by Darragh McCarthy and Jennie Faughnan.

Investors:
Legal: Wallace Corporate Counsel LLP led by Darragh O’ Dea and Alban O’Callaghan.
Tax and FDD: PwC led by Paul Tuite and John Finnegan.

​​​​​Senior Debt Provider:
Bank of Ireland led by Pat Purcell.
Legal: Field Fisher led by Paddy Smyth and Jamie Woodcock.

Renatus Comment: Solartrictity is a wholsale supplier of PV panels to both residential and business customers. Solar Photovoltaic (PV) panels convert sunlight into electrical energy. This space in Ireland has grown substantially over the last decade with many new companies having sprung up along the value chain from supply to install to energy management. Gargan described as a ‘game changer’ the recent ability of Irish households to sell electricity back to the grid under the Micro-generation Scheme. When you combine this with the availability of SEAI grants & removal of VAT on solar panel installation, we would expect to see a significant increase in the uptake of solar in the coming years. This has become even more likely given the the energy price volatility experienced by consumers over the past 12 months.

This equity investment will help Solartricity increase its inventory levels which had been a limiting factor that restricted growth, due to the long lead times of c. 6 months involved in importing some devices. The financial backing combined with Moffitt’s extensive experience in scaling operations and growing capacity, should stand the company in good stead going forward.

Source: The Currency

Deal Details: Allied Risk Management has been acquired by Artex Risk Solutions, Inc.

Allied Risk Management is a provider of captive insurance/reinsurance management services estd. in 1990. It was formerly known as Zurich International Services prior to its name change in 2002. It was owned by Larry Sherin and Frank Coyle. In FY Dec 21 it reported turnover of c. €1.2m.

Artex Risk Solutions is a manager of insurance and alternative risk transfer solutions. It was estd. in 1997. It is a subsidiary of US-based insurance giant. Arthur J. Gallagher. In FY Dec 22 Arthur J Gallagher reported turnover of c. $8.3bn which converted to EBITDA of c. $2.4bn.

Advisers:
Allied Risk Management:
Corporate Finance: FinRes led by John Hannon & John Lacy.
Legal: Walkers led by Eoin Ryan

Artex Risk Solutions
Legal: McCann Fitzgerald led by John Neeson.

Renatus Comment: Arthur J Gallagher established an on-the-ground presence in Ireland last year with its acquisition of Innovu in June and subsequent deal to acquire Doyle Mahon Insurances. Its global consolidation play continues having completed 10 bolt-ons in Q1 alone. Unlike some of the insurance roll-up plays we have seen, Gallagher is not just targeting brokers, with this acquisition adding to its captive and alternative risk unit.

The idea of captive insurance is to provide coverage for the risks faced by a parent company by assuming the role of the insurer and retaining the risks within a ‘captive’ entity. Allied Risk Management also provides actuarial services and will bolster Gallagher’s capabilities in this regard.

Source: Cap IQ

Deal Details: Imperial Hotel Cork acquired by The Louis Fitzgerald Group, subject to CCPC approval. Deal consideration was not disclosed.

The Imperial Hotel Cork is an historic 19th century hotel with 123 guest rooms. It has been part of the Flynn collection for the past 15 years. It does not report turnover or EBITDA information.

The Louis Fitzgerald Group is one of the largest family-run hospitality groups in Ireland and has over 19 pubs, restaurants and hotels. It is owned by Louis & Helen Fitzgerald. It does not report turnover or EBITDA information.

Advisers:
The Imperial Hotel:
Legal: RDJ led by Diarmaid Gavin, Maria Walsh, Liam O’Keeffe (Corporate and Commercial), John Dwyer (Real Estate), Cian Fenton (Banking) and Mark Ludlow (Tax).

The Louis Fitzgerald Group:
​​​​​​​None mentioned.

Renatus Comment: The Imperial Hotel is steeped in Cork history and has hosted many famous guests over the past 200+ years including Daniel O’Connell, Frederick Douglass, Charles Dickens and Grace Kelly. Infamously, it is also the place where Michael Collins spent his last night before he was killed in an ambush at Béal na Bláth in 1922.

The iconic hotel now has switched hands to another seasoned hospitality operator in the Louis Fizgerald Group who also operate well-known Dublin pubs Kehoes and Bruxelles, as well as The Louis Fitzgerald Hotel and The Arlington Hotel.

Source: RDJ Press Release

Strathroy Dairy Limited is an Omagh-based provider of private label dairy products. The business is majority owned by Ruairi Cunningham and Patrick Cunningham.

In its financial year to July 2022, the business generated a turnover of c. £118.7m, an increase of c. 25% year-on-year. This converted to an EBITDA of c. £2.2m, an increase of c. 4% year-on-year.

Significant post-EBITDA cash movements include payments to acquire tangible assets of c. £1.2m and working capital investment of c. £2.7m. The business finished the year with a cash balance of c. (£4.3m).

The business employed an average of 154 people in FY22 at a total cost of c. £5.6m.

Impact Ireland (Metals) Limited is a company that specialises in the importation and distribution of steel and other metals. It is based in Tallaght Co. Dublin and also operates facilities in Cork and Belfast. It is owned by Daniel Clarke and Bernard Foley.

In its financial year to Apr 2022 the business generated a turnover of c. €38.9m, an increase of 46.1% year-on-year. This converted to c. €4.5m EBITDA, an increase of 117% year-on-year. The increase in EBITDA was driven by gross margin expansion and operating leverage realised in the business.

The business finished the year with a negative cash balance (overdraft) of c. €2.9m, a c. €2.5m decrease on FY21. This was primarily due to significant working capital investment totalling c. €5.6m.

The business employed an average of 74 people during the period at a total cost of c. €4.9m.