Renatus’ Weekly M&A Newsletter – 15/08/2021
August 15, 2021Renatus’ Weekly M&A Newsletter – 29/08/2021
August 29, 2021
Renatus Weekly M&A & Company Performance Private Equity Newsletter 22/08/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
SONAS completes MBO
Deal Details: The management team of Sonas Bathrooms, led by its managing director Richard Sloan, has acquired a majority stake in the business.
SONAS is one of the largest suppliers of bathroom products in Ireland, and has developed a model of asset-light manufacturing of bathroom products distributed under its own brand. The company, which employs almost 90 full time staff has a current year trading on target to reach €45m sales. SONAS supplies a range of bathroom products through a network of trade resellers around the country, including most retail bathroom showrooms and builders’ merchants.
SONAS received backing from private equity firm MML Growth Capital Partners Ireland in 2017. It is reported that MML will retain a share in the business after this transaction. SONAS management reportedly received debt and equity support from Muzinich & Co. Muzinich is a privately owned, institutionally focused investment firm specialising in public and private corporate credit.
Advisers: A Clearwater International Ireland team of John Sheridan, John Devine, and Daniel Lavelle provided corporate finance and debt advisory advice.
A Grant Thornton team led by Michael Neary and Paul Murray assisted Muzinich & Co. with financial due diligence.
Renatus Comment: This deal is a good case study for the potential benefits of private equity investment. SONAS has reportedly doubled in size since its investment. The original owners were able to realise the value they had created at the time of investment and the management team today have now taken the reigns and become the primary owners of a bigger business.
Source: Irish Times
US joint venture acquires Ardmore and Troy studios
Deal Details: A joint venture of California-based Hackman Capital Partners and Square Mile Capital Management have acquired both the Ardmore and Troy studios.
Established in 2017, following an initiative from Innovate Limerick and Limerick City & County Council to develop film production in the city, Limerick-based Troy Studios is Ireland’s largest studio offering 100,000 sq ft of stage space and a further 250,000 sq ft for production support.
Wicklow-based Ardmore Studios is Ireland’s best-known movie and TV facility, with a long history of film and TV hits including recent productions ranging from Dancing with the Stars for RTE to the Tudors.
Both Irish studios will continue to operate with their existing branding, with CEO Elaine Geraghty and the staff at both facilities remaining unchanged.
No financial consideration was disclosed, but the reported value of the combined businesses, including properties, is between €60m and €80m.
Advisers: None mentioned
Renatus Comment: The owners of Troy Studios and Ardmore Studios, led by Ion Equity partner Joe Devine, began this journey in 2016, and had ambitious plans to establish world class production facilities in Ireland while also becoming the market leader through acquisition and development. They have no doubt gone a long way in achieving those plans.
Ardmore Studios and Troy Studios will join Hackman’s and Square Miles’ global studio portfolio, and lets hope it leads to further international productions being created on these shores.
Source: Troy Studios & Ardmore Studios
Genuity Science acquired by US biotech firm
Deal Details: Genuity Science, which is leading a programme to gather the DNA of one tenth of the Irish population for private research, has been acquired by New York headquartered biotech firm HiberCell.
Now headquartered in Boston, but with significant operations still in Dublin, Genuity Science is involved in a 15-year partnership with multinational pharma group Abbvie to map the genomes of Irish people in an effort to develop new drugs and to find cures for disease.
Under the deal, HiberCell has acquired Genuity’s human genome analytics technology and computational platform, along with high-quality genomic datasets in cancer as well as cardiometabolic, autoimmune, and neurological disorders.
In Genuity Science (Ireland) Limited’s accounts to December 2019, its most recent, it reported revenue of c. €21.0m.
No financial consideration was disclosed, however, it is reported to be an all-stock deal worth c. $100m (€85m).
Advisers: None mentioned.
Renatus Comment: Healthcare advancements from using M.L. & A.I. techniques are set to be a major trend over the coming years and decades. It is great to see an Irish business pioneering in this space.
The Irish Strategic Investment Fund (ISIF) is remaining as a shareholder having backed the company in 2018 alongside Chinese company WuXi NextCode. ISIF is also now a shareholder in HiberCell following the transaction.
Source: Genuity Science
ARYZTA sells Brazilian business & agrees new revolving credit facility
Deal Details: Food group Aryzta, best known in Ireland as the baker of Cuisine de France-branded goods, has agreed to sell its Brazil businesses to Grupo Bimbo SAB de CV.
The Swiss-headquartered Arytza has also entered into an agreement for a new €500m revolving credit facility.
The facility, which is expected to be utilised by October, is underwritten by Credit Suisse, Rabobank and UBS and will replace the current €800m revolving credit facility that matures in September next year.
Advisers: The company was advised on the Brazil transaction by Houlihan Lokey and Alantra, PinheiroNeto and KPMG.
Renatus Comment: Aryzta has made a number of disposals over the last year aimed at focusing the business on the European and Asian markets. The expectations were to realise €600m – €800m from its disposal programmes.
In June, Aryzta completed the sale of its North American business in the USA and Canada to an affiliate of Lindsay Goldberg LLC. That transaction had a price tag of $850m (€706m)
Source: Aryzta
UK-based insurance broker acquires Brassington Insurance
Deal Details: Aston Lark Ireland, the UK-based chartered insurance broker backed by Goldman Sachs, is continuing its expansion in Ireland with the acquisition of Dublin-based brokers Brassington Insurance.
Established and founded by Arthur Rochelle-Brassington in 1929, Brassington, a subsidiary of the ARB Group, is one of Ireland’s oldest insurance brokerages.
In its financial year to December 2020, A. R. Brassington & Co. Limited, reported revenue of c. €753k and EBITDA of c. €319k.
No financial consideration was disclosed.
Advisers: Eversheds Sutherland provided legal advice to Aston Lark through a Dublin team led by Gavin O’Flaherty and Sophie Dudley alongside a Birmingham team led by Catherine Eley and James Finney.
Renatus Comment: Frequently featuring in our newsletter, Aston Lark is one of the main protagonists in the consolidation activity going on in the insurance brokerage sector.
By our count, this is Aston Lark’s 6th acquisition of 2021 after acquiring North County Brokers, O’Loughlin Insurance Goup, Brady Burns & Associates, McMahon Galvin and most recently Dublin-based Principal Insurance Ireland in June.
Source: Aston Lark
Digital Motorsports acquired by ESE
Deal Details: Digital Motorsport, a Kildare-based provider of advanced simulation racing infrastructure, technology, and support has been acquired by ESE Entertainment Inc.
Digital Motorsports is an award-winning organization and one of the leading sim racing solutions providers in Europe, specializing in building bespoke simulators and offering turnkey simulator packages. Included in the transaction is Digital Motorsports’ portfolio of intellectual property related to racing simulator solutions, components, and cloud-based racing services.
ESE is a Europe-based entertainment and technology company focused on esports and gaming. ESE’s assets consist of multiple world-class operators in the gaming and esports industries.
Advisers: Digital Motorsports shareholders received legal advice from Flynn O’Driscoll.
Grant Thornton acted as financial and tax advisors on the transaction.
ESE Entertainment Inc. received legal advice from Arthur Cox and Segev LLP (Canada).
Renatus Comment: Digital Motorsport, led by CEO & Founder Niall Maher, has a great opportunity to own this growing niche and become a global brand. By combining the resources of ESE and Digital Motorsports, there should be excellent opportunities ahead Digital Motorsports.
Source: Digital Motorsports
LegitFit acquires GoFyt
Deal Details: Irish-based fitness software company LegitFyt has reportedly acquired Belfast-based GoFyt which is a fitness marketplace company. The consideration was not disclosed.
LegitFit was set up in 2019 by Ryan O’ Neill, Ian O’ Sullivan & Gearoid Collins. Its platform empowers fitness entrepreneurs to succeed by automating their workflows, reducing cancellations and maximising their customers’ experience.
GoFyt (‘Go find your trainer’) is web and mobile marketplace that connects users to health & fitness providers. Typical GoFyt customers are personal trainers, physiotherapists, group trainers, podiatrists, sports masseurs and nutritionists. GoFyt was established by Jason Harvey, Andrew McCracken & Timmy Crowe.
Advisers: None mentioned.
Renatus Comment: LegitFit appears to have experienced significant growth in its two years since inception and claims to be the market leader in Ireland today. The business recently received by backing from Enterprise Ireland and Techstars. This acquisition shows the company’s ambition and we look forward to following its story over the coming years.
Source: Sunday Independent, LegitFit
COMPANY PERFORMANCE
BVP in talks for AIM listing
Deal Details: BVP Investments, which arranges finance for high growth Irish companies, is reportedly working towards a listing on London’s Alternative Investment Market (AIM) exchange. The listing will be executed via a reverse takeover by Pineapple Power, an AIM-listed company. Pineapple Power said it had entered into a non-binding heads of agreement with BVP for the acquisition of BVP Investments with a target closing date in Q4 2021.
BVP Investments is led by Elliot Griffin and David Gavagan and it has reportedly raised and managed 14 business expansion scheme (BES) and employment investment and incentive scheme (EIIS) funds since 2007.
Pineapple Power listed as a cash shell in London just before Christmas last year, raising just £1.3 million.
Source: The Sunday Times
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
Established in Sandyford, Ethos Engineering provides mechanical and electrical consultancy services to the residential, commercial, retail, data centre, sports, leisure, micro-electronic, healthcare, educational, municipal, high tech and pharmaceutical sectors.
In FY20, Ethos Engineering saw revenue increase by 21.5% to c. €14.4m while EBITDA also increased by c. 52.7% to c. €4.0m. Gross margins imrpoved slightly to c. 36% and roughly 63% of revenue came from Ireland during the fiscal period.
Net cash increased by c. €3.0m to leave and ending balance of c. €5.1m. The biggest drain on cash was a c.€300k dividend payment to shareholders.
The company had 92 employees in FY20 at a total cost of c. €6.6m. Gregory Hayden and Alisa Hayden together own 100% of Ethos Premier Holdings which is listed as the ultimate owner of Ethos Engineering Limited.
Established in 1979, Leinster Farm Machines supply high-quality agricultural machinery and equipment, spare parts and services. It is headquartered in New Lanes, Duleek, Co Meath.
For the period ending September FY20, revenues dropped by c. 31% to c. €14.9m while EBITDA dropped by c. 15% to c. €1.4m. Gross margins improved by roughly five percentage points to 21% during the period.
The closing cash balance increased by c. €716k during the year to end at roughly €950k. The largest drains on cash during the year were (1) intercompany loans of c. €863k and (2) c. €405k in hire purchase contract repayments.
The business employed 26 staff during the period at an annual cost of just under €1.1m. The business is wholly owned by Philip and Siobhan O’Hara.
RECENT FUNDRAISINGS
Who: The Climbing Hangar, an Irish-founded chain of indoor rock climbing centres, has secured funding. Founded and led by Ged MacDomhnaill, who hails from Lisburn, Co Antrim, the company already has five centres open across Liverpool, London, Swansea and Plymouth
What: The business has raised £4 million (€4.7m) from Mercia’s Northern Venture Capital Trust Funds, and brings to £10 million the total raised by the company to date.
Why: The funding will help towards building a chain of indoor rock climbing centres throughout Britain, with plans to plans to double in size with economies of scale.
Source: Irish Times
Who: Mynd, a plant-based CBD wellness and recovery drink that contains zero THC, preservatives or added sugar, has secured funding.
What: Former rugby player Alan Quinlan, mixed martial arts fighter Cian Cowley and Cork GAA players Diarmuid O’Sullivan and Brian Hurley are among a number of angel investors who have invested a combined €2 million into Mynd.
Why: The funds will help towards launching Mynd in mainland Europe, Britain and the US shortly.
Source: Irish Times
Who: Carbon Collect which is commercialising and deploying, under exclusive global licence, the passive direct air capture (PDACTM) MechanicalTreeTM technology developed by Dr Klaus Lackner and the Center for Negative Carbon Emissions at Arizona State University. The business was established by Eoin Ryan Pól ó Mórain, and John McKeon.
What: The business has reportedly raised €900,000 from backers including Caroline Keeling and others.
Why: The specific use of the funds was not disclosed.
Source: Business Post
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.
THOUGHT OF THE WEEK
During the week the NTMA raised 750 million euro, at a minus 0.636% rate, maturing next February. It was 2.4 times oversubscribed.
If you were told a few years ago that the Government would make an offer to get paid to hold money and turn away more money than it asked for, you would simply not believe it.
One wonders will history look back and see this as a normal part of the succesful quantitive easing experiment. Conversely, might history look at it as a sign that if it doesn’t feel right it might not be right like the famous Ted Kenneddy philosophy of saying when the shoe shine boy is giving stock tips it is time to be careful.
@RenatusCapital Tweets
6%
The year-on-year increase in the unadjusted value of goods exports for June 2021, which amounted to €14,435m representing an increase of €794m. According to @CSOIreland
9.2%
The year-on-year rise in the average house price in Northern Ireland between Q2 2020 and the same period this year, indicating an average price of £195,242. According to The Ulster University House Price Index @BelTel_Business
37%
The number of businesses surveyed during the first six months of the year indicated longer lead times in supply chains because of Brexit. According to the Grant Thornton Ireland’s International Business Report. @RTEbusiness
4%
The month-on-month increase in seasonally adjusted goods imports in June 2021, which amounted to €9,044m representing an increase of €320m. According to @CSOIreland
SIGN UP TO OUR NEWSLETTER
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 INVESTMENTS
LEARN MORE…
Renatus’ Knowledge Centre
Our Knowledge Centre is filled with insights from some of Ireland’s top business leaders on Succession Planning, Management Buyouts / Buy-Ins, Growth Financing and much more.
Subscribe to our Podcast
The Renatus Podcast, hosted by Renatus advisor and investor Greg Dilger, is a series of conversations with people in business – owners, operators, and investors.
Receive this Newsletter Direct to your Inbox
To receive the Renatus Weekly M&A & Company Performance Newsletter directly to your inbox, click the button below and subscribe.
