New Speaker Announcement – PJ Flanagan on “Growth by Private Equity”
PJ will join Gene Murtagh, Tom Lane, Jacqueline O’Donovan, Vicki O’Toole and our two growth-by-acquisition guests to be announced this week.
Having joined H&MV Engineering as the company’s first electrical apprentice, PJ Flanagan is now CEO of the Limerick-based business. H&MV is a leading specialist in high-voltage (HV) electrical engineering, serving blue-chip data centres, renewables and utilities clients across EMEA and beyond.
PJ, a former EY Entrepreneur of the Year finalist, will be joining the ‘Raising Private Equity’ panel where he will discuss his journey of growing H&MV, along with taking on two private equity investments, most recently having been backed by UK-headquartered Exponent just last year.
Thank you to all sponsors, The Currency, ByrneWallace LLP, Davy and The Panel, for their continued support of The Real Deal event this year.
The final two speakers will be announced in the coming week.
THOUGHT FOR THE WEEK
Our friends in Biograph Wealth Advisors published a newsletter this week with staggering figures using the current series of Succession as a segway into a serious topic.
According to the Forbes article quoted, a recent study showed that 58% of business owners lacked a succession plan, and 47% of those over the age of 65 did not have a specific transition plan.
This is somewhat reckless for all stakeholders as the company and all stakeholders’ relatives, employees etc may suffer as a result. It is clearly not simple. We have done a few deals in Renatus involving CEOs with no succession plan, and we have managed to achieve this succession plan during our investment. It is not simple and hence many people fail to grasp the nettle. The flagbearers of most businesses are straddling many functions and have so much embedded corporate memory. In many cases one person may not be able to emulate the incumbent – hence it takes so much to plan.
Our only advice to all around the table is to turn this from important and not urgent to important and urgent and not leave all stakeholders exposed.
Enva acquired by I Squared Capital
Deal Details: Enva has been acquired by I Squared Capital in a deal reportedly worth in excess of £600m (€678m).
Enva is a recycling and resource recovery business with over 1,600 employees across its 34 operational facilities in the UK and Ireland. It provides a range of services to customers in the industrial, commercial, construction and public sectors, with a particular focus on managing hazardous and specialist waste. The business was formed in 2017 through Exponent’s acquisition of the Environmental Division of DCC Plc. The business is led by CEO, Tom Walsh, and Executive Chair, Niall Wall, who partnered with Exponent as part of the transaction. Enva reported FY March 2022 turnover of c. £294m, converting to an EBITDA of c. £57.3m.
I Squared Capital is a Miami-based private equity firm with over $37bn in assets under management.
Renatus Comment: The deal represents a significant return for Exponent, which acquired the business from DCC for a reported c. £219m in 2017. DCC originally decided to sell the business as part of a strategic shift, allowing the business to focus on its energy, healthcare and technology divisions.
Despite DCC’s decision to exit, there was still significant growth to be realised in the business, backed up by Exponent’s decision to acquire the business. Since 2017, the business has grown through a mixture of organic and acquisition-led growth, completing 10 transactions across Ireland & the UK, growing revenues from c. £156m at the end of its first full financial year in March 2018, to c. £294m as of March 2022. While investing heavily in growth over the past few years, Enva has still seen an EBITDA CAGR from 2017-2023 of c. 12%, securing a market-leading position in the process.
Source: Enva Press Release
Nostra acquires Passax Business Systems
Deal Details: Nostra has acquired Passax Business Systems. Deal consideration has not been disclosed.
Nostra is a Dublin-based IT services provider, with other offices in Galway and Cork. The business is majority owned by Kevin O’Loughlin, CEO, who co-founded the business with his brother Barry, Gary Byrne and Senan Finucane. The business’ 2022 turnover is reported to be c. €33m.
Passax Business Systems is an IT support provider based in Galway. The business is owned by Padraic Murphy and Liam McCallion. It does not report turnover or EBITDA information.
Advisers: Nostra: EY led by Ronan Murray & Martin Treacy.
Passax: None mentioned.
Renatus Comment: Nostra’s growth journey has accelerated in recent years, having been founded in 2006. Nostra acquired 4 companies between 2016 and 2022, the Tech Department, EMIT, Brandon and Enclave for a reported combined figure of c. €7m. The business has seen significant growth over this period with revenues growing from c. €4m in 2016 to €33m in 2022. Kevin O’Loughlin, CEO, has stated that the business is aiming to reach €50m in turnover by the end of 2023, with acquisitions expected to form the backbone of this growth. This strategy is no surprise, given the obvious synergies among businesses that provide outsourced IT services to businesses, with Nostra planning four more acquisitions over the rest of this year alone.
Source: Nostra Press Release
Waystone acquires Link Fund Solutions
Deal Details: Waystone has acquired Link Fund Solutions. Deal consideration was reported to be c. £140m.
Waystone is a Dublin provider of institutional governance, risk, and compliance services to the asset management industry. The current group was formed in 2021 following the merger of MontLake, MDO and DMS in a deal backed by Montagu Private Equity and Hg Capital. In FY Dec 21 it reported turnover of €147.7m. Waystone previously acquired KB Associates and T. Bailey Fund Services in 2022, along with Centaur Fund Administration in January of this year.
Link Fund Solutions is a UK-based provider of fund administration services. It is part of the wider Link Group, a publicly listed Australian Company and led by CEO Paul Gardiner. In FY Jun 22 it reported turnover of c. £40.8m which converted to EBITDA of c. £5.7m. The business has c. £160bn of assets under oversight and administration.
Advisers: Waystone: Legal: Simmons & Simmons led by Ania Rontaler and Raghav Ghai (London) and David Brangam and James McKnight (Dublin). IT & Cyber DD: An EY team of Niall McCarthy, Jim McGovern, Mariusz Kopec and Noel Burke.
Link Fund Solutions: Legal: Herbert Smith (James Kay) Clifford Chance (Alanna Hunter) and McCann Fitzgerald (Iain Ferguson).
Renatus Comment: Prior to its most recent acquisitions, Waystone spent c. $45 million to acquire a total of ten firms in 2021, with the business now serving clients with over $2tn in AUM, with this deal having added in excess of $190bn. Its acquisition strategy has focused on expanding both its geographical presence and diversifying its service offering. The acquisition of Link Fund Solutions will expand the company’s offering to include transfer agency and alternative administration, similar to its acquisition of T. Bailey Fund Services last year. The acquisition of Centaur, while expanding the business’ capabilities, gave it increased access to additional global locations such as New Jersey, Bermuda and Canada.
Notably, Waystone is not the only Irish-based fund administration business to be backed by private equity, emphasising the scalability of the sector, with DM Financial having been backed by Synova and Carne receiving investment from Vitruvian Partners.
Source: Waystone Press Release
Trinity Biotech’s Fitzgerald Industries acquired by Biosynth
Deal Details: Trinity Biotech PLC has agreed to sell its life sciences supply business, Fitzgerald Industries, to Biosynth for a reported consideration of c. $30m.
Trinity Biotech PLC is a Wicklow-based medical diagnostics company. Fitzgerald Industries International is the biological reagents division of Trinity Biotech PLC. In FY22, Fitzgerald Industries generated reported revenue of c. $12m, with the wider Trinity Biotech Group reporting FY Dec 22 revenue of $74.8m. Trinity Biotech PLC initially acquired Fitzgerald Industries in 2004 for a reported $16m.
Biosynth is a Switzerland-based life sciences reagents, custom synthesis, and manufacturing services company. The business is owned by KKR, Ampersand, and senior management and it does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: The sale of this division is a strategic step towards becoming a leading innovator in diabetes care and decentralized monitoring and diagnostic solutions, aligning with its growth objective with life sciences supply no longer being core to its model. The business’ key growth lever at present will be its diabetes diagnostic instrument, which has a planned launch for Q3 2023. The diabetes diagnostic market is forecast to grow at a CAGR of 8.6% from 2022-2030 to $59bn, reinforcing Trinity Biotech’s focus on it as a key accelerant of near-term growth.
This deal will help to ensure the business is sufficiently capitalised to pursue its immediate growth objectives, with the business planning to use the funding to repay an existing senior debt facility of c. $10m owed to Perceptive Advisors. This is in addition to last year’s investment from MiCo Group, a South Korean medical equipment manufacturer, which was to be used to part repay an existing $81m loan facility at that point.
Source: Trinity Biotech PLC Press Release
Neueda has acquired Conygre
Deal Details: Neueda has acquired Conygre. Deal consideration was not disclosed.
Neueda is a training and consultancy business for the information technology sector. It is based in Belfast and was owned by David Bole before being acquired by Version 1 in 2021. It does not report turnover or EBITDA information. Neueda has an existing relationship with Conygre as part of a 10-year partnership to deliver training programmes.
Conygre is a UK-based technical training and consultancy provider. It is owned by Nick and Sarah Todd. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Cloud technology adoption continues to accelerate with the percentage of companies who have most or all of their IT infrastructure in the cloud expected to increase from 41% last year to 63% by the end of 2023, according to Foundry’s 2022 Cloud Computing Report. It will be paramount that organisations have workforces that are suitably equipped to utilise these internal systems.
When Version1 bought Neueda its focus appeared to be on capital markets with clients like JP Morgan, Citi, Liberty IT, and Credit Suisse on its books. By acquiring Conygre, the company is diversifying its customer base across a wider range of sectors including companies like the BBC, Rolls Royce, Jaguar Land Rover and the NHS.
Source: Belfast Telegraph
McKenzies acquires Peak Environmental
Deal Details: McKenzies Ltd has acquired Peak Environmental (UK) Ltd for an undisclosed amount.
McKenzies Ltd is a metal recycler and operates from depots in Belfast and Larne. The business is owned by Sergio McKenzie and was founded over fifty years ago by Michael McKenzie. In FY Mar 2022, the business reported turnover of c. £30.6m which converted to an EBITDA of c. £3.9m.
Peak Environmental (UK) Ltd is a Derry-based recycling business owned by the Corry family. The business does not report turnover or EBITDA information.
Advisers: Peak Environmental (UK) Ltd: Legal: Caldwell & Robinson led by Philip Gilliland. Corporate Finance: Grant Thornton led by Paul Prenter.
Mckenzies (Ni).Limited: Legal: Turley Legal led by John Turley.
Renatus Comment: We have seen increased consolidation of the wider recycling space in Ireland in recent times, with Thornton’s Recycling’s acquisition of The City Bin Co and ADN Materials’ acquisition by Enva (which has now been acquired by I Squared Capital) last year springing to mind. Interestingly, however, we have not seen such prominent consolidation in the metal recycling space. Consolidation in either space should have the knock-on effect of more efficient business operations which can go some way to lower costs. This sustainability of these operations will inevitably benefit the environment, with EU figures indicating that using recycled raw materials cuts CO2 emissions by c. 200 million tonnes every year. Metal recycling also requires significantly less energy compared to primary metal production and contributes to protecting the environment, conserving resources, and mitigating the impacts of climate change.
Source: McKenzies Ltd Press Release
Kingfood acquired by OrderYOYO A/S
Deal Details: Kingfood has been acquired by OrderYOYO A/S for a reported 13.4m Danish Krones (c. €1.8m) split between 8.9m DKK in newly issued shares and 4.5m DKK in cash
Kingfood is a Dublin-based developer of apps, websites and software solutions for online food ordering. It was established in 2010 and was owned by Bing Chen, Yan Zhou, Tie Jun Hui and Jingli Li. It does not report turnover or EBITDA information.
OrderYOYO A/S is a Danish provider of online ordering, payment, and marketing software solutions. It was established in 2015 and is listed on the Copenhagen Stock Exchange. In FY Dec 22 it reported turnover of c. 149.0m DKK (c. €20.0m).
Advisers: None mentioned.
Renatus Comment: While third-party food delivery apps such as Deliveroo, JustEat, Uber Eats and DoorDash immediately spring to mind as dominating this space, providers such as OrderYOYO, Flipdish and Kingfood offer restaurants an important differentiator, by ensuring the restaurant retains control of its order data.
Apps such as Deliveroo and JustEat collect huge volumes of customer data, much of which remains unseen by the restaurant. In an era where data has become perhaps the most important commodity in business, products offered by Kingfood allow restaurants to truly understand their target markets and tailor their offering and marketing to the customer. Simple factors such as enabling a restaurant to note the age-range of the customer provides powerful insight which may give them the final 1% in a highly competitive market. Another benefit is the fact that these services allow restaurant owners to avoid significant commission fees charged by aggregators, thus reducing the prices faced by consumers.
DEAL UPDATES & OTHER NEWS
Irish Life spins out wealth management business
Deal Details: Irish Life, the life assurance and pensions company, has spun out Invesco, Acumen & Trust and APT into a new unit specialising in financial advice and wealth management. The new unit is called Unio and will remain as part of the Irish Life Group, which is itself owned by Great-West Lifeco Group. The new unit will have c. €14bn in assets under advice
Source: Irish Times
Stafford Lynch (Lynfare Holdings Limited) is a Dublin-based multi-channel sales, marketing and distribution business. The business is owned by Eimear, Una, Kevin and Garrett Lynch.
In its financial year to March 2022, the business generated a turnover of c. €44.1m, an increase of 0.1% year-on-year. This converted to an EBITDA of c. €1.5m, an increase of 5.8% year-on-year. EBITDA improvements largely be attributed to an increase in commission fees earned by the business in 2022, up from c. €635k to €1.0m.
Significant post-EBITDA cash movements working capital investment of c. €1.8m, with all drivers of working capital drawing on cash during the year, and repayment of a loan of c. €0.8m. The business finished the year with a cash balance of c. (€2.3m).
The business employed an average of 108 people in FY22 at a total cost of c. €6.1m.
Loane Transport Ltd. is a road haulage business founded in 1928. The business focuses on general haulage between Ireland and the United Kingdom and also offers trailer rental services. It is based in Kesh, Co. Fermanagh and is owned by Mark and Blakely Loane.
In its financial year to May 2022 the business generated a turnover of c. £20.6m, an increase of 13.9% year-on-year. This converted to EBITDA of c. £3.8m, an increase of 11.9% year-on-year. The increase in EBITDA was primarily driven by revenue growth.
The business finished the year with a cash balance of c. £1.2m, a c. £0.8m decrease on FY21. This was largely driven by a significant investment to acquire tangible fixed assets.
The business employed an average of 136 people during the period at a total cost of c. £4.1m.
Who: Oblivious, a privacy technology business founded by Robert Pisarczyk and Jack Fitzsimons in 2020.
What: The business raised €5.35m in a funding round led by Berlin-based Cavalry Ventures and including Act VC, Atlantic Bridge, Firestreak Ventures, Expeditions Fund and Hustle Fund.
Why: The company will use the funding to make seven new hires and to continue to develop its product offering which ensures that data remains confidential while being worked on by data scientists and computer engineers
Who: Gilde Healthcare Fund VI, a global investment fund that will back MedTech and therapeutics companies.
What: ISIF has invested €40m in the new €600m fund, with other investors including KfW (Germany’s development bank), Philips Healthcare and Icon Plc.
Why: ISIF has stated that investing in the fund will increase the availability of venture capital in the Irish market and help to underpin Ireland’s competitiveness in life sciences.
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.