Renatus’ Weekly M&A Newsletter – 14/08/2022
August 14, 2022Renatus’ Weekly M&A Newsletter – 28/08/2022
August 29, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 14/08/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
While there is a mood of negativity around the economy with the various headwinds, it is notable that there have been a lot of positive movements in recent weeks in the public markets.
We have plotted the movements of Ireland’s, the UK’s and the USA’s primary indices. They are all up from a recent correction – ranging from 8% to 15% increases.
It should also be noted that the Irish and UK indices are broadly on par with where they were in the calm waters pre-Covid while the US’ S&P500 is 27% ahead.
There is a quote that says “If you don’t follow the stock market, you’re missing some amazing drama” – that has certainly been true in recent times. It has been a rollercoaster. Our takeaway is that the net position is that the markets say the world is in at least as good a place as it was pre covid.
P.S. – shares may fall as well as rise!
M&A ACTIVITY
Three Rock Group acquire Chrome Insurance
Deal Details: Three Rock Group has acquired Chrome Insurance. The deal details have not been disclosed.
Three Rock Group is a private equity-backed insurance company. The business was formed in 2020 following Livingbridge’s investment in Chill Insurance. Chill Insurance was founded by Seamus and Padraig Lynch in 2006 and grew to be Ireland’s largest independent intermediary, with a c. 6% market share. Since the investment, Three Rock has added Ivernia and Quote Devil to the Group. The group raised €5.0m from an issue of share capital in 2020.
Chrome Insurance is an Irish-owned insurance brokerage that offers home, motor and travel insurance. The business was founded in 2009 by Barry Sheridan, Gerard McCann and Emmet Graham. It is headquartered in Dublin and currently employs 10 staff. In FY21 the business had a turnover of c. €1.6m, which converted to an EBITDA of c. €563k.
Advisers:
Three Rock Group:
FDD: BDO, led by Rory O’Keeffe.
Tax: BDO, led by Angela Fleming.
Legal: Flynn O’Driscoll, led by Alan O’Driscoll and supported by Deirdre Walsh.
Chrome Insurance:
None mentioned.
Renatus Comment: Consolidation plays in the insurance market are showing no signs of slowing down this year. This is the fourth insurance deal in the last month with Arachas acquiring Glennon Insurance, Aviva acquiring Azur Underwriting and Aston Lark acquiring Sparrow Insurances.
Financial services continue to be one of the busiest sectors for M&A in Ireland, continuing the trend highlighted in the Renatus H1 Deals Review.
Source: CapitalIQ
Press Up Group has acquired the Butler Arms Hotel
Deal Details: Press Up Group has acquired the Butler Arms Hotel in Waterville, Kerry. Deal details have not been disclosed.
Press Up Group is an Irish hospitality company that owns over 115 restaurants, bars, hotels, cinemas, golf clubs and gyms. The group was founded by Paddy McKillen Jr and Matt Ryan in 2009 and is headquartered in Dublin. In FY20, its most recently filed accounts, the group reported a turnover of c. €99.6m, which converted to an EBITDA of c. €9.1m. The Butler Arms Hotel is the fourth acquisition Press Up Group has made outside of Dublin, with it already owning the Dean hotels in Galway and Cork as well as Glasson Lakehouse in Westmeath.
The Butler Arms Hotel in Waterville is a 60-bedroom hotel located on the Ring of Kerry coastline. The business was founded in 1884. It was taken over by the Huggard family in 1915 and has been run by four generations of the family since. The business does not publish turnover or EBITDA information.
Advisers:
Press Up Group:
None mentioned
The Butler Arms Hotel:
Real Estate: JLL led by Daniel O’Connor
Renatus Comment: The hospitality sector was one of the most severely affected by the pandemic, particularly those with exposure to the city centre and not benefiting from the staycation. The sector is certainly recovering, but tourism numbers for July were still down 11% from the same month in 2019, according to the Irish Tourism Industry Confederation. However, there are some headwinds emerging with rapid inflation, shortage of key staff, the loss of the wage subsidy scheme and the temporary cut to a 9% VAT level for the sector expiring in February 2023.
Source: Business Post
Aspira merges with ProData Consult
Deal Details: Aspira has merged with ProData Consult. Deal details have not been disclosed.
Aspira is a Cork-based consulting and technology business that operates across consulting, resourcing, training, software development and managed IT services. It was founded by Pat Lucey and Colum Horgan in 2007. It currently has offices in Cork, Dublin and Amsterdam and employs c. 225 people. In FY21 the company had a turnover of c. €14.9m, which converted to an EBITDA of c. €1.3m.
Prodata Consult is a business and IT consultant with competencies ranging from software development to business management. It was founded in 1993 and is headquartered in Denmark. Anders Gratte leads the business as CEO. The company had a reported turnover of €452m in 2021.
Advisers:
Aspira:
Corporate Finance: Davy CF, led Michael Hussey and Lauren O’Sullivan
Legal: Flynn O’Driscoll, led by Pat Flynn, Cian O’Leary and Aonghas Keane.
Tax: Mazars, led by Gerry Vahey.
ProData Consult:
None mentioned.
Renatus Comment: Aspira has likely been a beneficiary of the strong demand for digital transformation services in recent times. This deal marks the first major move for Aspira’s new executive team, having appointed Peter Ryan as the business’ new CEO in March of this year.
Founders Pat Lucey and Colum Horgan are now taking more strategic roles in the business, having overseen its growth into an international operation from its founding 15 years ago. Pat Lucey was previously selected as an EY Entrepreneur of the Year finalist in 2020.
Source: Aspira Press Release
Bimeda acquires Afrivet
Deal Details: Bimeda has acquired Afrivet Southern Africa Proprietary Limited. Deal details have not been disclosed.
Bimeda is a global innovator, manufacturer and marketer of veterinary pharmaceuticals and animal health products. It was founded in 1960 by Dr Dan Tierney and is headquartered in Dublin. It has expanded to having a global network of over 800 employees across 11 countries in Europe, America, Africa and Asia. In FY20 the business reported a turnover of c. €40.8m, which converted to an EBITDA of c. €5.7m. Having been acquired by its current owners from the original founders in 1973, Bimeda has grown from being part of a three-company merger which included Constant Chemical Ltd and Osmond & Sons Limited to an international force in the veterinary medicine space.
Afrivet is a provider of animal health products and services for animal owners, farmers and veterinarians in Africa. Following the acquisition, Bimeda will have the largest footprint of any animal health company in Africa. It was founded in 2000 by Peter Oberem and is headquartered in Faerie Glen, South Africa. The business was reported to have a turnover of c. €25.0m last year.
Advisers: None mentioned.
Renatus Comment: Throughout the 1970s to 1990s, the business expanded organically into East Africa, the UK and North America. Bimeda’s more recent growth has been driven by a clear acquisition strategy post-2010, acquiring medical and vaccine businesses in Kenya, Brazil, the US, UK and France.
One of the most significant was the acquisition of the veterinary medicine portfolio of Grupo Unipharm in Central America in 2019, which coincided with a rise in revenues from €19.6m in 2018 to €34.3m in 2019.
Ireland has a strong group of family owned animal pharma companies with a global reach. Norbrook and Chanelle are two others along with Bimeda who are leaders in a space normally dominated by multinationals.
Source: Bimeda Press Release
Connacht Hospitality Group acquires Galway Hooker
Deal Details: The Connacht Hospitality Group has acquired craft brewery, the Galway Hooker. Deal details have not been disclosed.
The Connacht Hospitality Group is a family business that owns The Connacht Hotel, The Hyde Hotel, The Residence Hotel, Galway Bay Golf Resort, An Púcán, 1520 Bar, Hyde Bar and Active 24. The group is owned and run by the Fitzgerald family from Clarinbridge, Galway. In FY20 it reported a turnover of c. €8.6m.
Galway Hooker is a well-known brewery based in Oranmore, Galway. Hooker Irish Pale Ale is the brewery’s flagship product. It was founded by Aidan Murphy and Ronan Brennan in 2006 who will remain in the company post-acquisition. The company is undergoing a period of expansion with plans to introduce new product lines, rebrand the business and expand into new export markets. The business does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Ireland is home to 16 of the top 20 global technology businesses as well as the top 3 providers of enterprise software. Irish IT companies are vying to grow and remain competitive which has led to the consolidation trend we have seen in the Irish market recently.
Logicalis reportedly aims to extend its specialist Microsoft and data-centric IT services capabilities across the UK and Ireland through this acquisition. Both companies have a wide variety of strong capabilities and blue-chip business partners hence the acquisition will yield both economies of scale and increased client satisfaction.
Source: Real Wire Press Release
COMPANY PERFORMANCE
McCarthy Plant & Agri-Sales Limited (T/A MCCARTHY) is a family-owned agricultural machinery dealership. It was founded in 1994 by John McCarthy. Its head office is based in Carrigtwohill, Co. Cork. It is owned equally by Timothy McCarthy and Fidelma McCarthy.
In its financial year to September 2021, the business had turnover of c. €18.2m, an increase of 14.7% year-on-year, which converted into EBITDA c. €0.9m, an increase of 18.6% year-on-year. The increase in EBITDA is almost entirely attributable to the business’ increased sales, which arose solely in Ireland.
The business finished the year with a cash balance of c. €0.2m. Significant post-EBITDA cash movements included a working capital investment of c. €342k and a fixed asset purchase of c. €776k.
The business employed an average of 24 people over the year at an annual cost of c. €921k.
Leinster Reinforcements Ltd supplies reinforced steel and prefabricated reinforced cages. It operates out of its premises in Barrowford Industrial Estate, Athy, Co. Kildare. The company is owned by Frank Brazil, Pat Delaney and Eileen Walsh.
In its financial year to December 2021, the business had turnover of c. €101.1m, an increase of 77.3% year-on-year, which converted into an EBITDA of c. €7.0m, an increase of 77.5% year-on-year. This growth in EBITDA is almost entirely attributable to the rise in revenues, with gross margins remaining flat year-on-year.
The business finished the year with a cash balance of c. €1.0m, a fall of c. €0.8m year-on-year. The business employed an average of 183 people at an annual cost of c. €9.3m.
RECENT FUNDRAISINGS
Who: 3D Issue, a Donegal-based software company that assists marketers to distribute their content online through e-publications such as eBooks and digital brochures.
What: The business has reportedly raised €750,000 in a funding round participated in by Furthr VC and Western Development Commissions.
Why: The funding will be used to increase the workforce by 24 before the end of next year, support the development of new products and expand the business in key markets.
Source: Irish Times
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.
@RenatusCapital Tweets
41.8
The BNP Paribas Real Estate Ireland Construction PMI index for July 2022, a decline of 4.6 from June, representing a sharp decline in construction activity. This has been the sharpest fall since March 2020 and is linked to lower demand and higher costs. @RTEbusiness
3%
The decline in Irish retail spending in July 2022 when compared to June. Clothing purchases (10%), grocery purchases (1%) and overall card spending (1%) were all down during this period. According to @bankofireland
33%
The number of Irish employers that are planning to hire fully remote employees. This corresponds to a survey carried out by the NTA which indicated 77.9% of people have a preference to have some capacity to work from home. @HaysIreland @IrishTimesBiz
10%
The year-on-year increase in the demand for Irish gas as of July 2022. This increased demand was mainly attributable to air travel (95%), leisure/sports arenas (39%), retail (35%) and hotel sectors (20%). According to @GasNetIrl. @IrishTimesBiz
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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.
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