Renatus’ Weekly M&A Newsletter – 16/05/2021
May 16, 2021Renatus’ Weekly M&A Newsletter – 30/05/2021
May 31, 2021
Renatus Weekly M&A & Company Performance Newsletter 23/05/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
Fenergo is acquired by Astorg and Bridgepoint
Deal Details: Private equity firms Astorg and Bridgepoint, alongside Fenergo’s management team, have announced a definitive agreement to acquire Fenergo from Insight Partners. Financial terms of the deal were not disclosed, however according to recent reports in The Irish Times, Fenergo had sold a majority stake in the business for $600m, valuing the company at more than $1bn.
The company, which was spun out of Irish tech veteran John Purdy’s Ergo Group, was established in 2009 by CEO Marc Muprhy. Fenergo’s award winning SaaS platform provides solutions to the world’s largest and most complex financial institutions, helping to fight financial crime and to enhance customer journeys while being compliant every step of the way.
Paris-based Astorg is a global private equity firm with over €10bn of assets under management. Bridgepoint, based in London, is a major international alternative asset fund management.
Advisers: Fenergo: UBS, Willkie Farr & Gallagher, William Fry, and PwC
Bridgepoint and Astorg: Credit Suisse, William Blair, Torch Partners, Arma Partners, Paul Hastings, Allen & Overy, Ernst & Young, and GreySpark Partners
Renatus Comment: It was just last month that we noted eShopWorld’s sale to Asendia created another Irish unicorn, following Intercom, Stripe and Workhuman. This deal has created a fifth, valuing Fenergo at more than $1bn. It is an amazing achievement for the 11-year-old business.
Source: Fenergo Press Release
Welltel acquires Strencom
Deal Details: Ireland’s largest dedicated business communications provider Welltel has acquired Strencom for an undisclosed sum.
Dublin-based Welltel is a growing communications company, currently employing over 100 people and providing cloud and on-site IT managed services to over 3,000 business customers in Ireland and internationally. Services include phone system solutions, call recording, cabling, broadband, and cyber security, among others. Weltell is owned by Ross Murray (CEO), John Quinn (Executive Chairman & Co-Founder), and JP Crilly (Sales Director).
Strencom are experts in providing managed connectivity, and managed cloud solutions. The company has been in operation for over 15 years and provides services across a broad number of sectors, including; retail, financial services, healthcare, construction, and engineering. Prior to the transaction, Fulnett Ltd which trades as Strencom, was owned by Tim Murphy (CEO) and Linda Murphy.
Advisors: Patrick Quinlan and Morgan Pierce of Maples (legals), Mark McEnroe and Laura Gilbride of PwC (Financial & Tax DD), Fairgrove Partners (CDD) and Deloitte acted for Welltel.
Clearwater International team comprising John Curtin, John Sheridan, John Devine and Daniel Lavelle supported Welltel Head of M&A Nicky Brennan on this acquisition.
Renatus Comment: This is the second major acquisition for Welltel in as many months following its acquisition of Gapstone in April. Welltel acquired a further three businesses in 2020.
In Strencom, it is acquiring a business which fits well in its current suite of services and one which will likely bring with it an established customer base that will open up cross-selling opportunities.
Source: Welltel Press Release
Fincovi is acquired by SkySpecs
Deal Details: Athlone-based Fincovi, along with Danish Vertikal AI is acquired by SkySpecs Inc, a US provider of digital asset management for the wind energy sector. The deal terms were not disclosed.
Fincovi was founded to make renewable energy the best managed and most sustainable real asset class. Its “intelligent middle-office” platform gives CFOs the edge and keeps financial controllers in control of scaling portfolios. Shareholders of Fincovi included Ray O’Neill (CEO), John Harney (CFO), Damian Malone (COO), Barry Gavin (chair) the NDRC, Western Development Fund and a consortium led by Maurice O’Gorman.
Vertikal AI is a Denmark-based startup pioneering in predictive maintenance for wind energy.
Advisers: Fincovi received legal advice from Paddy O’Shea of Wallace Corporate Counsel.
Renatus Comment: With the massive investments already in the renewables space, and this set to mushroom over the coming decades, platform management assets like this will be in demand and it looks like the Fincovi team has positioned the business really well to make life easy for the finance heads managing these assets.
Source: SkySpecs Press Release
Intuity Technologies merges with My IT Department
Deal Details: Managed IT provider Intuity Technologies has merged with Roscommon-based My IT Department. The terms of the deal were not disclosed.
Galway-based Intuity Technologies partners with clients in the Financial Services, Legal, Production & Manufacturing, MedTech & Bio Pharma, and Construction & Engineering sectors and has offices in Galway, Dublin, Sligo and Roscommon. Intuity looks to be ultimately controlled by Thomas, David and Gerard Cox.
Managed services provider My IT Department delivers independent IT services from desktop to data centre. The business was founded by Seamus Quinn.
Together, the businesses will deliver Managed IT, Managed Print, Business Solutions and Cyber Security solutions for SMEs throughout Ireland within multiple sectors.
Advisers: None mentioned.
Renatus Comment: Managed services is a sector that continues to go through significant consolidation as companies merge or acquire as a way to quickly acquire new customers or bolt on new capabilities. This is Intuity’s fourth acquisition. Its first was in 2004 when it acquired Infosciene, followed by the merger with TecSupport in 2014 and a rebranding of the business to Intuity. It acquired Office Technology in 2019 and has now completed its fourth deal now with MY IT Department.
Source: Intuity
Glennon Brothers to acquire Balcas
Deal Details: Longford-based sawmill group Glennon Brothers has agreed to acquire Balcas from SHV Energy for an undisclosed amount. The deal is subject to regulatory approval.
Glennon Brothers has been operating since 1913 and has five facilities in counties Cork and Longford and Troon in Scotland, which supply the Irish and British markets. Glennon Brothers is owned by Michael, Patrick and William Glennon.
Balcas operates a sawmill near Enniskillen, Co Fermanagh which makes timber products used in building, farming and packaging. It also operates two renewable energy plants at its Co Fermanagh base and in Invergordon in Scotland. The major shareholder in Balcas is Dutch-based SHV Energy, a global distributor of off-grid energy.
Advisers: KPMG provided Commercial, Financial and Tax Due Diligence to Glennon Brothers.
Anya Cummins, Sam Nolan, Richard Dineen and Andrew Johnston of Deloitte provided advisory support to Balcas.
Renatus Comment: Glennon Brothers is a fifth generation family business, having been first founded in 1913. Not many business survive through the generations and fewer thrive. It’s a fantastic success to see the business continuing to expand with the ambition of the current generation leading the business. This new deal will create a combined entity with c. €263m revenue, of which c. €147m comes from Glennons and c. €116m comes from Balcas. Prior to the acquisition Glennon was generating an EBITDA of c. €20.5m
Source: Irish Times
Medray has acquired Morris Dental
Deal Details: Medray Imaging Systems Group (‘Medray’) has completed the strategic acquisition of Morris Dental. The deal consideration was not disclosed.
Dublin-based Medray, founded in 1979, is a leading and trusted specialised healthcare equipment and consumables sales and service business serving radiology, dental, veterinary and associated sectors.
Morris Dental Company, founded in 1968 by Gerry Morris and Andrew Shirran, provides top-class service to dentists in private practice, in the HSE and Ireland teaching hospitals.
Advisers: ReganWall (Kieran Regan and Neil Nolan) acted for Medray.
Renatus Comment: This is Medray’s second bolt on acquisition since it took in a private equity partner in 2019. With the support of its PE partners, Medray is executing a buy and build strategy, acquiring complementary businesses.
Source: Medray
DCC to acquire Azenn
Deal Details: DCC Plc is to acquire French IT and telecom infrastructure equipment wholesaler Azenn for an undisclosed amount. The deal is subject to French regulatory approval.
London-listed DCC is the Irish diversified (LPG, Retail & Oil, Healthcare and Technology) group employing c. 13,500 people in 20 countries.
Azenn is a leading French distributor of structured cabling solutions and provision of logistics, refurbishment and staging services for network devices.
According to its annual accounts, Azenn turned over €59.7m in 2020.
Advisers: None mentioned.
Renatus Comment: DCC is a regular name in our newsletter and has built its business through strategic acquisitions. Since 1994, it has completed +280 acquisitions spending a total of c. £3.3bn on these. We’d expect this deal to go into their technology division. Its technology division delivered c. £4.5bn of revenue and c. £72.4m of net operating profit for the financial year ended March 21. The technology division, representing c. 14% of the group’s profit, delivers sales, marketing & distribution for over 2,400 tech brands into 50,000+ retailers & resellers across Europe, US and the Middle East.
Source: DCC
CleverCards announces acquisition of ExpendiaSmart®
Deal Details: CleverCards has entered into a definite agreement to Acquire ExpendiaSmart®, a market leader in Europe of Spend Management Solutions and Smart Corporate Cards, along with the related Italian Licensed Electronic Money Institution, subject to regulatory approval. The deal consideration has not been disclosed.
Dublin-headquartered CleverCards, founded in 2011 by Kealan Lennon, is a global payments platform that enables businesses and governments to send digital Mastercards instantly to employees, customers or suppliers by SMS, WhatsApp or email.
ExpendiaSmart® modernises finance for large businesses by combining expense management software and smart corporate cards into a single platform.
Advisers: None mentioned.
Renatus Comment: It is noted in our fundraising section below that CleverCards will this month complete a €10m fundraising round that will support its plan of pursing an aggressive buy and build strategy. Once completed, it is reported that it plans to immediately begin a €50m fundraising drive. The ambition is clear, and Lennon has the track record of scaling businesses through successful M&A.
Source: CleverCards
Alpha Packaging acquires Boxmore
Deal Details: Boxmore Plastics, a Cavan-based plastic products manufacturer, has been acquired by American Alpha Packaging for an undisclosed amount.
Boxmore, founded in 1961 and based in Ballyconnell, Co Cavan, manufacturers high-density polyethylene (HDPE) plastic packaging for the beverage, industrial, concentrates, healthcare and food markets in Ireland.
Alpha Packaging, a portfolio company of Irving Place Capital, is a manufacturer and decorator of bottles and jars for the nutritional, pharmaceutical, personal care, household chemical, automotive, and niche food and beverage markets.
Advisers: None mentioned.
Renatus Comment: Irving Place Capital first invested into Boxmore in 2008 when it was part of a private equity deal, which also included PE giant Oaktree Capital Management, that purchased trading assets from Chesapeake Corporation. At the time Chesapeake was going through Chapter 11 bankruptcy protection in the US and sold all of its non-US subsidiaries, which included a plant in Northern Ireland and four packaging divisions in the Republic.
Source: Alpha Packaging
Arachas acquires BJP Insurance Brokers
Deal Details: Arachas Insurance has acquired Dublin-based BJP Insurance Brokers. The terms of the deal were not disclosed.
Arachas was established 15 years ago through the merger of Cork-based broker Tyrrell Coakley with two Dublin-based peers, Hodgins Percival and Slattery Jermyn. It is Ireland’s largest nationwide broker and was acquired by UK peer Ardonagh Group last summer.
Founded in 1979 by Brian Pierce and his wife, Gabrielle, BJP is the largest provider of insurance to the taxi trade. It is reported that Pierce plans to retire, handing over the transfer of BJP to his son, Terry Pierce, who takes on a senior position in Arachas.
Advisers: None mentioned.
Renatus Comment: This is Arachas’ seventh acquisition since 2017, and its third since it was takenover by UK insurance brokerage firm Ardonagh in June 2020. Arachas have been pursuing a consolidation play in the Irish brokerage market since 2017. From 2017 to 2019 (last set of reported accounts), the business has grown revenue from €18.2m to €36.6m (2.2x) and EBITDA from €2.2m to €13.2m (6.0x).
Source: The Sunday Times
Joe Duffy Motors buys out minority investors
Deal Details: Joe Duffy Motors Group, one of the country’s biggest car dealers, has bought out its minority shareholders for an undisclosed sum. Minority investors included software millionaire Pat McDonagh, accountant Pearse Farrell and former government adviser Greg Sparks.
It is reported that Ulster Bank funded the deal and that CEO Gavin Hydes will now control c. 90% of the business.
Advisers: None mentioned.
Renatus Comment: It is reported that McDonagh, Farrell and Sparks bought the dealership from founder Joe Duffy and Bill Thompson in 2003, and hired Hydes to lead the company two years later. In 2019, the business reported group revenues of c. €321m and EBITDA of €12.6m.
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
Dublin Aerospace Ltd is an MRO (maintenance, repair and overhaul) for aircraft and related components, serving international carriers from its base in Dublin Airport. The business is led by its CEO Conor McCarthy.
In its financial year to September 2020, the business recognised revenue of c. €42.8m (a decrease of 16.0% YoY) and EBITDA of c. €2.6m (a decrease of c. 57.6% YoY). The business was severely effected by the onset of Covid in the second six months of its financial year. Directors noted that many customers deferred contracted work in an effort to preserve cash.
EBITDA converted to a net cash decrease of c. €1.2m to leave an ending cash balance of c. €9.1m. The business also received c. €1.8m of government supports via the EWSS and the TWSS which is not reflected in EBITDA.
Despite the pandemic, the business invested c. €5.2m in fixed assets, and the Directors approving a €12m/$15m expansion programme to complete the development of its new Landing Gear facility based in Ashbourne, Co Meath as well as the establishment of an MRO facility in Exeter, UK.
During 2020, the business also bought out minority investor Airbus through a share redemption at a cost of c.€3.7m. Airbus was a founding partner in the business in 2009 and held a 22% share.
Healthcare Ireland (Belfast) Ltd is a provider of nursing and residential care through its four care homes. Two further care homes were in the course of construction at year end, which have now been completed.
In its financial year to April 2020, the business recognised revenue of c. £8.9m (up 16.4% YoY) and EBITDA of c. £1.5m (up 8.9% YoY). EBITDA converted to a net cash decrease of c. £2k. The biggest movements in cash were the purchase of fixed assets totaling c. £3.6m as part of ongoing construction and new loans drawdown of c. £2.5m.
The business is wholly owned by Gilbert Yates and employed an average of 305 persons during the year at a cost of c. £5.6m.
RECENT FUNDRAISINGS
Who: &Open, an Irish gifting platform co-founded by Ciara Flood and Jonathan and Mark Legge in 2017, has raised funding.
What: $7.2m (€5.9m) round was co-led by First Round Capital and LocalGlobe. Other participants include PCH founder Liam Casey, Intercom co-founder Des Traynor and Brian Caulfield, a venture partner at Draper Esprit. Dublin-based Tribal.vc, Andrew Robb, former chief operating officer at listed fashion retail platform FarFetch also participated.
Why: The start-up is to use the new financing to double headcount and further develop the platform.
Source: Irish Times
Who: CleverCards, founded in 2011 by Kealan Lennon, is global payments platform that enables businesses and governments to send digital Mastercards instantly to employees, customers or suppliers by SMS, WhatsApp or email.
What: The business is closing out on a €10m capital raise, which should be completed in the next month. It is reported that once completed, the firm will begin planning for a follow-on, hoped to be in the region of €50m, to be completed in the next year. Investors in the current round include the head of Facebook in Ireland, Gareth Lambe, the founder of Avoca Capital, Dónal Daly and Green REIT co-founder Pat Gunne.
Why: It is reported that the business is currently pursuing an aggressive buy and build strategy. As noted above, it recently completed the acquisition of ExpendiaSmart, a spending management software provider offering smart corporate cards that is a subsidiary of French payments platform Edenred.
Source: RTE
Who: Mayo-based payroll platform Payslip secures financing. The business was founded by Fidelma McGuirk in 2015.
What: €8.3m Series A round was led by MiddleGame Ventures. Mouro Capital and Dublin-based Frontline Ventures and Tribal.vc, both of which previously backed Payslip, also participated along with a number of angel investors, including David Clarke, former chief technology officer of Workday. The latest financing brings total funding to date to €12.2 million.
Why: The funding is to be used for creating more than 150 new jobs.
Advisers: Mark Roberts and Sharon Meaney of Lemans acted for Payslip, William Fry for MiddleGame Ventures and Mouro and ReganWall (Kieran Regan) advised Fidelma McGuirk.
Source: Irish Times
Who: Atlantic Bridge launches its new University Bridge Fund II.
What: The €80m investment is led by European technology fund Atlantic Bridge, in partnership with a number of universities and includes a €20m contribution from Enterprise Ireland.
Advisers: LK Shields Solicitors LLP represented Enterprise Ireland.
Why: The funding will be used to scale and commercialise the research carried out in universities and will focus on areas such as artificial intelligence, robotics and health-tech.
Source: RTE
Who: SpaceOS, a Dublin and Warsaw-headquartered proptech company co-founded by Marley Fabisiewicz, Maciej, Markowski, and Danish Abdullah, has secured investment.
What: €5m financing round was led by New York-based FF Ventures.
Why: SpaceOS intends to use the new financing to continue development of its technology and to expand into other markets.
Source: Irish Times
Who: Northern Ireland med-tech business VascVersa completes its first investment round. The business, a spin-out from Queen’s University, was founded by Dr Christina O’Neill.
What: The six-figure funding round was led by QUBIS with support from Co-Fund NI and HBAN.
Why: VascVersa said it will use the investment to develop its technology for repairing blood vessels.
Source: Belfast Telegraph
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 FOR THE WEEK
As we know, using one indicator or KPI to conclude anything is dangerous. However, it is noteworthy that the Schiller cyclically adjusted ratio of price to average 10-year earnings is trading at 36.9, the second highest level since the late-1999 peak of 44.
45% of the S&P value is in digital stocks, which somewhat justifies its rise versus other countries exchanges which tend not to have the same dominance from tech. Nonetheless, it is hard not to think all the money printed is driving stock prices higher.
@RenatusCapital Tweets
30%
The year-on-year increase in the value of Irish imports for March 2021 amounting to €8.7bn. The most notable changes were in the imports of Other transport equipment, including aircraft (+137%), according to @CSOIreland
17%
The year-on-year decrease in the value of Irish goods exports for March 2021 amounting to €14.65bn. The most notable changes were in the exports of Organic chemicals (-43%) and Electrical machinery, appliances and parts (+19%), according to @CSOIreland
6%
The year-on-year increase in the NI residential property prices for Q1 2021, the largest rise since 2016, according to @BelTel
1.32m
The total number of people who benefitted from the Pandemic Unemployment Payment (PUP), the Temporary Covid-19 Wage Subsidy Scheme (TWSS) or the Employment Wage Subsidy Scheme (EWSS) between March 2020 and March 2021, according to @CSOIreland
56.9
The IHS Markit’s flash Composite Purchasing Managers’ Index for May 2021, up from April’s reading of 53.8 indicating optimism in the Euro zone business growth, according to @IndoBusiness
85.8
The KBC Bank Ireland’s consumer sentiment index for May 2021 – the strongest level since June 2019, according to @RTEbusiness
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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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