Renatus’ Weekly M&A Newsletter – 17/01/2021
January 17, 2021Renatus’ Weekly M&A Newsletter – 03/01/2021
January 3, 2021
Renatus Weekly M&A & Company Performance Newsletter 24/01/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
Mainstream agrees €1 billion equity investment deal
Deal Details: Global wind and solar company, Mainstream Renewable Power, has signed an equity investment agreement with Norwegian renewable energy investment company Aker Horizons.
The deal will see Aker Horizons take a 75% equity stake in the company, valuing Mainstream at a reported €1 billion including earn-out and subject to customary adjustments.
The agreement enables Mainstream to accelerate its global expansion plan to bring 5.5 Gigawatts (GW) of assets to financial close by 2023 ahead of a planned IPO.
Established in 2008, Dublin-based Mainstream has significant interests across Latin America, Asia-Pacific and Africa, as well as in the global offshore wind sector, with over 1.2 GW of major capital projects currently under construction.
Following the transaction, Mainstream will continue to operate under its existing brand, led by its current CEO Mary Quaney, management team and founder Dr Eddie O’Connor as Chairman.
Advisers: Investment bank Rothschild advised Mainstream.
KPMG acted as tax advisors to Maintsream, led by the Global Renewable Head Mike Hayes and Paul O’Brien.
Philip Lee’s M&A team, led by John Given and Andreas McConnell, advised Mainstream.
A multi-disciplinary team from ByrneWallace LLP, including partners Neil Keenan, Gavin Blake, Michael Kennedy, Emmet Whelan, Liam Connellan, Darren Daly, senior associates Zelda Deasy and Kenny McArdle, and solicitors Kelly Mackey and Philip O’ Leary acted as an Irish legal adviser for Mainstream.
The Linklaters team, who also advised mainstream, was led by partners Jeremy Gewirtz, Michael Honan with managing associates Nicholas Howarth, Thomas Ford, associates Catherine Yuen and Bella Sullivan.
Renatus Comment: The story of Mainstream Renewables and Eddie O’Connor is an incredible one. Mr. O’Connor established the business in 2008 having led Bord na Mona and founded and exited Airtricity. He is reported in the Times today to have netted €45m from the Airtricity exit and invested €33m in Mainstream. In 2014 the business had not clicked and he was forced to dip deeper into his back pocket to keep it alive. Since then, Mainstream has grown to become a developer of significant wind and solar projects globally. It was not an easy ride and the company reportedly looked to be on the brink a number of times, being forced to sell off assets in development to keep the lights on.
In the end, the reported €1bn valuation marks a tremendous return for Eddie O’Connor (owns 55% according to Reports), his partners and management.
O’Connor’s Shakespeare quote in today’s Sunday Times is brilliant and all entrepreneurs can relate to it regarding the times when the going was tough during the journey
‘I am in blood / steeped in so far, that, should I wade no more, / returning was as tedious as go o’er’
Source: Mainstream
Trinity Care nursing home group is acquired
Deal Details: Irish nursing home group, Trinity Care, has been sold to Belgian healthcare property investment specialist Cofinimmo for €93 million.
However, the overall deal for the Trinity Care Group business is speculated to be worth more than €150 million.
The properties are still listed as being operated by Trinity Care. Cofinimmo confirmed it had bought six nursing homes in Cavan, Louth, Meath, Dublin and Kildare and one rehab clinic in Dublin and will lease them to DomusVi, which will run the operations for an initial 15 years each. They have a total of 491 beds.
Advisers: The Arthur Cox team, who advised Cofinimmo, was led by Deirdre Barrett (Real Estate), Elizabeth Bothwell (Corporate and M&A) and Joanelle O’Cleirigh (Healthcare) and included Niav O’Higgins (Construction and Engineering), Elaine Caulfield, Zoe Ennis and Gillian Beechinor (Real Estate), James Cotter (Corporate and M&A) and Grace-Ann Meghen (Healthcare).
Mason Hayes & Curran, led by Robert Dickson on the corporate side and Vanessa Byrne on the Real Estate side acted for DomusVi on the acquisition.
William Fry acted for the sellers. Myra Garrett and Barbara Kenny led on the Corporate side and Lisa McCarthy led on the Real Estate side.
The Spanish investor was advised by CBRE’s Real Estate Banking team in Spain headed by Pablo Callejo, a National Director.
Trinity Care was advised by Cormac Megannety, Director and Head of the Healthcare division in CBRE in Dublin.
Renatus Comment: This is yet another incredible result for Anne Heraty and Paul Carroll having agreed in November to sell CPL Resources to Japanese HR firm Outsourcing Inc for €318m. Ms Heraty and Mr Carroll originally bought into Trinity Care in 2012, backing the acquisition of the former Guardian Healthcare business by its ex-CEO, Keith Robinson. Mr Robinson is still listed as CEO of Trinity Care and is thought to have owned about 30% of the business. This is one of the multiple nursing homes deals reported on our newsletter in recent months, with this transaction being yet another indication of the continuing consolidation of the nursing and care home sector across Europe.
Hearty and Carroll stayed the journey and a good example of being flexible with investments as between the time they got in and out, other highly accomplished financiers came in, expected consolidation and valuations to mirror hotels not operating companies and ran out of patience. Hearty and Carroll waited until such valuations emerge and are getting well rewarded for their patience.
Source: Irish Independent
Trinity Motor Group acquires Sinnott Motor Group
Deal Details: Trinity Motor Group has acquired Wicklow-based Sinnott Autos for an undisclosed sum.
As part of the transaction Trinity Motor Group has acquired both sites located on the Dublin Road, with the Volkswagen & ŠKODA brands joining the Trinity Motor Group. All the staff will also transfer over from Sinnott Autos.
Established in 1995 with five well-known motor franchises across the South-East, the Trinity Motor Group which was founded by Edward Murphy still has four family members active in the business today.
Sinnott Motor Group, which includes Sinnott Volkswagen and Sinnott ŠKODA, is a family-owned and run Volkswagen and ŠKODA main dealer in Wicklow since 1987.
Advisers: IBI Corporate Finance advised Sinnott Motor Group (Sinnott Volkswagen and Sinnott Skoda) on its sale to Trinity Motor Group.
Renatus Comment: The auto industry has suffered as a result of Covid-19 and may take a while to recover as uncertainty weighs on people’s large capital expenditure purchasing decisions. According to the CSO, the total number of new private cars licenced in Ireland in 2020 decreased by 25.6% when compared with 2019. That being said, car sales held up better than what would have been expected in April of last year.
Such a drastic change in market demand means that it is unlikely that all market participants will survive and that consolidation may take place, with the stronger players taking share from the weaker ones either through acquisition or organic means.
Source: IBI Corporate Finance
Arachas acquires MCM
Deal Details: Nationwide insurance broker Arachas has acquired MCM Insurance Brokers (MCM) for an undisclosed sum.
MCM, which was initially founded in 1996 by Eugene Nelson is a well-known commercial lines broker with offices in Ballina, Co. Mayo and Enniskillen, Co Fermanagh. In its financial year to February 2020, MCM Insurance Broker Ltd reported revenues of c. €981k.
Advisers: An Eversheds Sutherland team of Gavin O’Flaherty and Maria O’Brien provided legal advice to Arachas.
Renatus Comment: MCM has a well-established expertise in the Construction, Hospitality and Professional Indemnity sectors. The addition of MCM to the group enhances Arachas’ position as the broker of choice for small and medium Irish businesses with deep expertise in key sectors including construction, childcare and hospitality.
Source: Arachas
Wide Eye Outdoor and Adtower merge
Deal Details: Wide Eye Outdoor, which is part of Wide Eye Media, and Adtower have merged to create Ireland’s largest digital out-of-home network, with close to 1,000 digital screens.
Established in 2014, Wide Eye Outdoor has developed a national footprint of c. 400 high-definition digital screens in cinemas, convenience stores, shopping centres, pubs and gyms.
Operating since 2011, Adtower has a nationwide presence in many SuperValu, Centra, Eurospar, Spar, Mace and Londis stores in addition to forecourts owned by Maxol.
Advisers: Crowe provided advice to Adtower and its management team on the merger.
Renatus Comment: The digital out-of-home (“DOOH”) media market isn’t too dissimilar to the more traditional outdoor billboard and signage market (“OOH”) that has existed for centuries. The key differentiator between the two markets is that the digital displays allow for moving imagery and interactivity, allowing for greater advertising flexibility and for more eye-catching media and ultimately a greater impact on the target audience. Digital displays also remove the need to incur printing and installation costs for each new add. These factors are likely the reason as to why the DOOH market overtook the traditional OOH market in the UK in 2019.
Source: adworld.ie
DEALS IN THE MAKING
Kerry Co-op eyes PLC share sale
Kerry Co-op, which is Kerry Group plc’s largest shareholder, is reported to be considering raising €240m through a share placing. The money raised is to be used to fund a joint venture between Kerry Group Plc and Kerry Co-op.
The joint venture will include the Kerry Co-op taking a controlling stake in Kerry Group’s dairy business manufacturing facilities and brands including Dairygold Charleville and Kerry Low-Low spreads.
A board decision was made past week by the Co-op to proceed with a bid for a 60% stake in a joint venture which would cost in the region of €480m. The venture is reported to be valued at €800m.
Debt and other funding sources will reportedly fund the other €240m of the estimated bid price.
Source: Irish Times
DEAL UPDATES
CCPC rejects joint venture between AIB, BOI, PTSB and KBC
The CCPC has rejected the merger notification relating to a proposed joint venture of AIB, BOI, PTSB and KBC. The merger was anticipated to create a payment app to rival Revolut and N26.
The CCPC stated it was unable to determine if the banks were planning a merger or an acquisition. The application was deemed invalid as the banks had not provided full details of the proposed joint venture plans under competition law.
Source: CCPC
Brown & Brown completes acquisition of O’Leary Insurances
As reported on our newsletter before Christmas, Brown & Brown has closed its acquisition of O’Leary Insurances for an undisclosed sum.
Founded in 1961 by the late Archie O’Leary, OLI is one of the largest independently owned brokerages in the Republic with 200 employees operating from eight locations.
They recorded turnover of €11.6m for the year ending June 30th, 2019. New York-listed Brown & Brown is the sixth largest independent broker in the US, with more than 10,000 employees and reported revenues of $2.93bn (€2.4bn) last year.
Source: Hines
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
Headquartered in Dublin, Brightstone Trading Limited is a group of a number of different motor dealerships, including Ford, SEAT, Volkswagen Commercial, Citroen and others.
In FY19, the business experienced a rise in turnover of almost 6% to c. €95m while EBITDA dropped by c. 57% to €2.6m. The drop off in EBITDA can be traced to a four percentage point decline in gross margins down to c. 10%. The drop in gross margins is likely linked to the FY18 figures including c. €6m of revenue relating to the sale of development property.
Cash decreased by €4.1m during the period to end in an overdrawn position of just under €700k. The big draws on cash during a period were a c. €5m cash suck into working capital and c. €2.3m in debt-related repayments. These were partially offset by the drawing down of a new €2.5m loan.
The business added 34 employees during the period, bringing total headcount to 159 at a total cost of c. €6.5m per annum. The business is owned equally by Mary and John O’Riordan, Joan and Matthew Smyth, Emer Foy and Henry Flanagan.
Persian Restaurants Limited operates twelve McDonalds franchises in Dublin and Wicklow.
In FY19, revenue remained roughly flat at c. €39m while EBITDA declined by c. 32%. The EBITDA decline was due to a c. a €2m increase in admin expenses, over half of which relates to a c. €1.1m increase in Directors remuneration.
Cash increased by €1.15m during the year bringing the ending balance to c. €7.5m. The main cash outlays during the period was €3.3m in capital expenditure and c. €1.1m of loan repayments. These were partially offset by a €3.5m net cash inflow from working capital movements.
The business is 100% owned by Amir Afsar.
Dunleavy Meats is a family run meat processor based in Ballina, Mayo. Established by Michael Dunleavy in 1961, the business is now run by the third generation of the family.
FY19 was a good year for Dunleavy Meats which saw turnover grow by c. 16% to €24m and EBITDA grow by 44% to €1.0m.
The company’s cash balance decreased by c. €500k during the period to end in an overdrawn position of c. €2.4m. €1m was invested into capital expenditure and another €830k was invested into working capital during the period. These were partially offset by the drawing down of a new €666k loan.
The number of people employed by the company increased by 10 to end at 84 at the period end. The business is owned equally by Michael and Eithne Dunleavy.
RECENT FUNDRAISINGS
Who: Neurent Medical, a company pioneering innovative treatments for chronic inflammatory sino-nasal diseases, has secured financing. Neurent is led by Co-founder and CEO Brian Shields.
What: Neurent Medical has raised $25 million (€20.6 million) in Series B financing. The round was led by new Life Science Partners and co-led by Atlantic Bridge. Fountain Healthcare Partners also participated as a returning investor with strong participation in the round. A small group of MedTech industry veterans based in Galway have also participated.
RDJ Corporate Partner JP Gilmartin and Associate, Marie Gavin advised Neurent Medical on the transaction.
Why: The financing will support the expansion of the company’s clinical and commercial operations as it prepares for U.S. FDA clearance and U.S. commercialization of its proprietary device that is an innovative treatment for a chronic runny nose.
Source: Neurent Medical
Who: Ireland-based sports performance and data science company Orreco has secured funding.
What: Orreco has secured $3.6 million (€3 million) in a funding round led by True Ventures, an early investor in both Fitbit and Peloton.
Why: The new investment will enable the company to expand its product, engineering, data science and commercial teams, in addition to accelerating the development of its elite performance solutions, @thlete and FitrWoman.
Source: Orreco
Who: Northern Ireland company, SustainIQ, which has developed a software tool that helps organisations to monitor, measure and report on their social, economic and environmental impacts across the whole organisation has secured funding.
What: SustainIQ has secured a six-figure investment from Halo Business Angel Network (HBAN).
Why: The company, founded by Maria Diffley and Liam McEvoy, will use the new investment to expand its presence in the UK and Irish markets.
Source: SustainIQ
Who: Irish electric scooter company Zeus has raised funding.
What: Zeus has raised €2 million in investment in a funding round led by former Europcar Ireland chief executive Colm Menton. Patrick O’Shea and the team at Wallace Corporate Counsel advised the investors on their investment in Zeus.
Why: The investment will allow the business to continue with its ambitious plans and enter new markets including Ireland when legislation is passed.
Source: Irish Times
Who: SwiftComply, a provider of cloud-based technology that helps water utilities and facility managers work with food businesses to comply with rules on disposals of fats, oils and grease. The business was founded in 2016 by Michael O’Dwyer.
What: The business has just completed a reported $3m (€2.5m) fundraise. The funding round was filled primarily by existing investors such as Enterprise Ireland.
Why: The funds raised will be used to accelerate the company’s growth in the American market by growing its sales team there and launching three new products.
Source: Sunday Times
Who: Evercam, a Dublin-based construction time-lapse camera and project management software company. The business is led by Marco Herbst.
What: Evercam has raised a reported €2.5m in funding from the Davy EIIS fund. This latest fundraise follows a recently completed €600k funding round with DBIC Ventures and Elkstone.
Why: The funds are earmarked toward growing the business in the US and boosting its artificial intelligence capabilities.
Source: Sunday Independent
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
Dave Shanahan is one of the more respected citizens in the life sciences community, having seen it from so many perspectives. His LinkedIn post two weeks ago is the best I have seen this year. Some things have changed in the two weeks but it is nothing near the pace that he sets out as achievable with big thinking. The below assumes that there is no constraint on the supply side from the vaccine manufacturers.
His post went as follows:
“Simple Covid Fact…50 vaccinators (doctor or nurse or pharmacist), each vaccinating one patient every 2 minutes, will vaccinate 36,000 people in 24 hours. 5 centres of this scale working 24/7 can vaccinate 180,000 patients daily – in a week 1.26 million people, or >25% of the Irish population and a much higher % of the clinically indicated target group. When are we going to hear about the vaccination surge? Every minute is important. We have a competent pool of some 50,000 healthcare professionals (including retirees qualified to undertake). Some 2% of the available healthcare professional population, appropriately organised, could deliver the above. Israel has vaccinated 10% of its population already. New thinking and vaccination targets required I suggest.”
Link to post here
@RenatusCapital Tweets
0.2%
The national year-on-year rise in residential property prices as of November 2020, the first annual increase since May. According to @CSOIreland
14.5%
The year-on-year decrease in the monthly factory gate prices in December 2020, when compared to the same month the previous year. According to @CSOIreland
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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:
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- Management buyouts
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- Growth financing – both organic and acquisition growth financing
- Full and partial share sale.
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