Dear Reader,
You are receiving this mail every week as we see you as a key partner and we look forward to continuing to enjoy our journey with you over the decades ahead.
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
Deal Details: CarTrawler has announced a controlling equity investment reportedly in excess of €100m from TowerBrook Capital Partners L.P.
CarTrawler is the leading B2B provider of car rental and mobility solutions to the global travel industry. Founded in 2004 by Irish brothers Niall and Greg Turley, Dublin-headquartered CarTrawler has offices in Melbourne and New York employing 425 people. Other key people to the success of the business over the years were Bobby Healy and Mike McGearty who led the business through multiple deals and owners. CarTrawler’s customers include Alaska Airlines, EasyJet, KLM and Emirates. CarTrawler had been hit by the collapse in global travel industry due to the spread of the coronavirus.
TowerBrook is an investment management firm with excess of $13.4bn (€10.29bn) under management. The firm is co-headquartered in New York and London.
At €100m, TowerBrook are reportedly acquiring CarTrawler at c. 5x earnings, which have not yet been disclosed. For reference, BC Partners and Insight Venture Partners acquired CarTrawler at c. 20x earnings for €450m in 2014. This deal will see BC Partners and Insight exit with no return.
Prior to the deal, CarTrawler had debt of c. €140m. Some of the €100m of new investment will go towards this but it will also see creditors, which include Bank of Ireland, take a significant write down. Post-deal, the business will be debt free.
Advisers: PJT Partners acted as financial advisor to CarTrawler. Kirkland & Ellis, McCann FitzGerald, Liberty Corporate Finance, PwC and EY provided additional advice to the Company and Management. Matheson and Sidley Austin provided legal advice to TowerBrook, and Morgan Stanley acted as their financial advisers. Alvarez & Marsal and Boston Consulting Group provided additional guidance.
Renatus Comment: Few, if any, industries have been as severely affected as air travel during this pandemic.
While the major airlines consistently get the headlines, there are many related industries, and countless companies, throughout the air travel ecosystem that have seen their markets collapse over the past two months. CarTrawler is one example of this.
However, history has shown that air travel is resilient and that it has quickly bounced back after all previous shocks and pandemics. TowerBrook evidently believe that this pandemic is no different, that CarTrawler still has a compelling value proposition and that it too will bounce back.
Source: CarTrawler, Sunday Times
Deal Details: Flogas Ireland has acquired Northern Ireland’s Budget Energy for an undisclosed sum.
Flogas, A DCC plc subsidiary, is a gas and electricity supplier, which entered the domestic Irish gas market in 2007. The company now supplies gas to almost 40,000 homes in Ireland. Flogas entered the electricity market in 2019 with the acquisition of Energy Ireland.
Budget Energy, which trades as BE Energy in the Republic of Ireland, is the leading independent supplier of pre-pay and bill-pay electricity in Northern Ireland. Derry-headquartered company was established in 2010 and has over 90,000 customers across Ireland. In its financial year to September 2018, Budget Energy recorded revenue of £39.2m and a post-tax loss of £1.4m.
Advisers: Laurence O’Shaughnessy of IBI Corporate Finance led the transaction, assisted by Stephen Beale and Alex Penny.
The shareholders of Budget Energy were advised by James-Paul Galligan and Edward Johnson of Clark Hill PLC on the legals.
Renatus Comment: This deal follows on from the acquisition of Just Energy back in November of last year and marks Flogas’ largest investment into the growth of its energy business to date. This acquisition will enable Flogas’ expansion into the residential and commercial electricity market in Northern Ireland.
Flogas has predominantly been a gas supplier in operation since 1978 and according to the Electricity and Gas Retail Markets Report Q2 2019 by the CRU, the company accounted for c. 3.6% of domestic customer market share with Bord Gais Energy leading the way with c. 45%.
Source: Flogas
Deal Details: Infracapital, the infrastructure equity investment arm of M&G Plc, has agreed to acquire Fibrus, a fibre broadband network provider in Northern Ireland.
Infracapital invests in, builds and manages a diverse range of essential infrastructure across Europe. They invest in unlisted equity positions and hold a portfolio of European infrastructure assets.
Fibrus is a fibre broadband network which was established by local Telecoms entrepreneur Dominic Kearns, and former Enet CEO, Conal Henry. Fibrus focuses on improving connectivity in suburban and semi-rural towns currently suffering with low average broadband speeds. The company plans to roll out Fibre-to-the-Premises (‘FTTP’) to over 145,000 premises across Northern Ireland.
Fibrus, along with BT, are the sole remaining bidders in Northern Ireland’s Project Stratum, a similar initiative to the Republic of Ireland’s National Broadband Plan. Project Stratum aims to bring “superfast” connectivity to an additional 78,500 premises in Northern Ireland.
Advisers: The Corporate teams of Carson McDowell and Tughans acted on elements of the deal for Fibrus while Hogan Lovells acted for Infracapital. A Radius Corporate Finance team led by Brian Loughran and Declan Flynn also acted for Fibrus.
Renatus Comment: There is a now critical and overdue need for high speed broadband across the island of Ireland.
A recent trend which may exacerbate this need is the recent mass transition to working from home. It looks like this will turn out to be a permanent change for many, whether 100% or somewhat more than pre-COVID, as we found in our recent Renatus COVID-19 survey and as has been touted by some of the big tech companies in recent days.
Private sector investment, entrepreneurship and de-centralised solutions such as Fibrus’ and Infracapital’s offering should be encouraged and incentivised north and south to help achieve this goal. Let’s hope both schemes achieve the necessary goal of getting fast broadband to all ASAP – it is as necessary as the road network.
Source: Infracapital
Deal Details: Shareholders of AWD Waste Solutions have agreed to buy out Oxigen Environmental’s stake in the business for an undisclosed sum. This agreement comes after months of legal disputes between the parties. Oxigen previously held a 51% stake.
AWD Waste Solutions is a Wexford-based provider of domestic and commercial waste collection and management. The business is run by former Irish rugby player Shane Byrne, who is managing director, and his brother William. AWD was originally founded by the pair’s father.
Oxigen Environmental is a waste solutions group which had revenue of €31.9m and EBITDA of €2.4m in its financial year to March 2018. The group comprises of Oxigen Environmental, Oxigen Commercial, Oxigen Water and Oxigen Power. Between these four companies Oxigen manages waste and material streams, water supply and waste-water treatment, and energy generation.
Advisers: Gerald Kean provided legal advice to the shareholders of AWD Waste Solutions.
Renatus Comment: Outside investment in family businesses can often prove challenging due to the justifiable attachment and fear of losing control that family shareholders feel.
However, this should not act as a barrier to ambitious family businesses taking in equity or force them down the route of taking on excess debt. Choosing an aligned equity partner is critical and agreeing exit terms up-front can bring certainty and comfort.
With many of us in Renatus coming from family businesses ourselves, we respect and understand this dilemma. Renatus works with family shareholders to agree exit mechanisms at the start of negotiations. This removes any ambiguity and ensures that family shareholders know when and how exactly they can regain full control, if they wish to do so.
If you or someone you know is currently facing this dilemma, please feel free to reach out to us confidentially.
Source: Business Post
Artemis Investment Managers, a Scottish investment company, has reportedly taken a c. 12% stake in C&C Group PLC.
C&C Group PLC has been heavily effected by the onset of covid-19. C&C manufacture drinks such as Magners, Bulmers, Tipperary Water, Finches, among others. The Group is headquartered in Dublin and in its financial year to February 2019, it reported revenue of c. €2bn and EBITDA of c. €112m. The Group’s shares, which trade on the London Stock Exchange, were £300.5 on March 2nd and at the close on Friday May 22nd traded at £179.0.
The group recently raised €140m in new debt from the US private placement market, froze dividends and cut its CapEx and marketing spend for this year. In addition, directors and staff have reportedly taken significant pay cuts.
Source: Business Post
An interim examiner has been appointed by the High Court to Joe.ie parent company Maximum Media Network Ltd. The company also owns the SportsJoe, Her, and HerFamily platforms. In its financial year to December 2018, the company recorded turnover of €6.0m, a post-tax loss of -€1.0m and bank loans of c. €3.9m. Niall McGarry owns 68% of the Irish entity and 80% of the UK entity, JOE Media Limited.
Its creditor Beech Point Capital and an independent expert consider Maximum Media as having a reasonable prospect of survival for reasons including its very significant following among its target demographics, with traffic on the company’s sites running at about 42m a month.
It has been reported that RTE made a bid of €10-12m for a 49% stake in the business in 2018. The bid was rejected by Maximum Media shareholders due to RTE being seen as rivals.
Source: Irish Times, Business Post
Dublin-based office products wholesaler Spicers has had liquidators appointed by the High Court. The court heard the board had unanimously passed a winding up resolution after the UK group got into difficulties which were exacerbated by the Covid-19 crisis. In its financial year to December 2018, the business reported revenues of c. €16.6m and EBITDA of c. €483k.
It had proven impossible to find a buyer for the Irish company resulting in the loss of 42 jobs.
Source: Irish Examiner
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 businesses EBIT or EBITDA less average Capital Expenditure are often better measures. YoY is an acronym for the year-on-year movement in turnover, EBITDA, etc.
Sonoma Technologies Ltd is the holding company of Dwyers, an electrical appliances retailer based in Cork. This group also manages commercial rental properties and sells electric cables.
In the Sonoma Technologies’ financial year to June 2019, revenue and EBITDA by decreased 1% to €14.6m and 3.0% to €2.2m respectively. Cash at hand rose by €107k to €118k.
Dwyers employed 65 people during the year at a cost of €2.1m. Sonoma Technologies is wholly owned by John and Dolores Dwyer.
Wilson’s Country Limited is one of Ireland’s leading potato packers and processors. Operating from a 6-acre site in Co. Armagh, the company supplies retailers, foodservice and food manufacturers with own label and branded prepack, peeled and convenience potatoes.
In FY19, the company saw revenue increase by 29.2% to c. £19.5 while EBITDA decreased slightly by 5.3% to c. £1.4m. Cash decreased during the year by 21.9% to negative £1.0m as can be seen in the adjacent table.
The main reason for the drop in EBITDA can be attributed to the challenging trading year the company had with regard to gross margins. The summer of 2018 experienced one of the hottest and prolonged dry seasons in recent years which resulted in raw material prices almost doubling at harvest time due to poor harvest yields off the impact of the lack of moisture on the growing crop.
Capital Reinforcing, is a UK-based retailer of steel rebar and steel reinforcing products.
In the group’s financial year to December 2019, revenue and EBITDA by decreased c. 3% to £29.0m and 2% to £1.3m respectively. Cash at hand rose by £1.5m to c. £1.7m.
Capital Reinforcing employed 72 people during the year at a cost of £2.1m. The business is wholly owned by managing director Demot Owens.
Who: Evervault, a data privacy start-up founded by Young Scientist winner Shane Curran in 2018, has raised funding.
What: The $16m (€14.6m) funding round is led by Index Ventures, a leading London and San Francisco-based venture capital firm. New investors include former Facebook chief security officer Alex Stamos, Eventbrite co-founder Kevin Hartz and the chief executives of Datadog and Figma, Oliver Pomel and Dylan Field.
Dublin-based Frontline Ventures, along with Sequoia Capital and Kleiner Perkins, who initially backed a $3.2m (€2.93m) fundraising last October, also took part.
Why: The new funding will be used for further development of its technology, which is not currently publicly available, and for recruitment of additional staff.
Source: Irish Times
Who: Waterford-based virtual reality company VR Education secures investment. Founded by David and Sandra Whelan, the company aims to provde novel, immersive education mediums.
What: The €3m investment is provided by Taiwanese consumer electronics group HTC under a strategic partnership agreement.
Why: The company said it would use the investment to further develop its Engage platform and build its sales and marketing capability.
Source: Irish Times
Who: Northern Irish plumbing merchant Stevenson and Reid secures a loan.
What: The £1.5m (€1.67m) loan comes from Ulster Bank under the Coronavirus Business Interruption Loan Scheme (CBILS).
Why: The funds will provide the cashflow required to take the business through this crisis and safeguard it for the future.
Source: Belfast Telegraph
Who: Northern Ireland’s public transport provider Translink receives funding.
What: A £100m (€111.66m) bailout fund is being provided by the Executive on top of £20m (€22.33m) given to help clear the company’s deficit prior to the coronavirus emergency.
Why: Revenues have slumped after passenger numbers reduced by over 90% due to the lockdown. Translink is continuing to run buses on underused routes, as it is obliged to under the terms of its subsidy from government.
Source: Belfast Telegraph
Who: Open Orphan has raised finance to fund a development of a covid-19 test. The business is a contract research organisation (CRO) pharmaceutical services company, specialising in the provision of virology and vaccine challenge study services and viral laboratory services.
What: The business has reportedly raised £12m.
Why: The product will be an antibody test which will help employers, etc. assess the immunity of people to the disease. The tests can reportedly detect whether someone has developed covid-19 antibodies by drawing blood and testing it.
Source: Sunday Times
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.
The estimated deficit this year as a result of currently committed Covid-19 measures is estimated to be up to a staggering €30bn.
However, to put this into context, the bail-out of Ireland’s banks during the financial crisis is now estimated to have cost the State €41.7 billion, according to the latest estimate from the Comptroller & Auditor General (C&AG) report last year.
At the time of the banking crisis the cost of borrowing was multiples of what it was and we were the bold kid in the EU room. Now our costs of borrowing are at record lows and we are probably better placed than our EU counterparts so we should get helped by EU bailout measures such as those announced last week. For reference, in March of this year, the NTMA issued €1bn of 10-year bonds at a yield of -0.156%, while during the height of the financial crisis, yields were near highs of 14%.
Clearly this all depends on 2021 outturn and how normality is resumed but at this stage the macro economic consequences seem less worse than our banking crisis and we came through that which should give cause for hope.
6.1%
The year-on-year decrease in the factory gate prices for April 2020, according to @CSOIreland
39%
The y-o-y increase in the Irish goods exports for March 2020 amounting to €16.247bn – the highest monthly level of exports on record. Chemicals, including Medical and pharmaceutical products and Organic chemicals, exports accounted for 63% of our total exports. @CSOIreland
52.3
The KBC Bank Ireland Consumer Sentiment Index for May 2020, a 9.7 point increase month-on-month. @IrishTimesBiz
9%
The y-o-y decrease for goods imports into Ireland for March 2020 amounting to €6.95bn with the most notable changes in Other transport equipment, including aircraft (-54%) and Organic chemicals (+91%), according to @CSOIreland
585K
The number of people in Ireland in receipt of the Covid-19 Pandemic Unemployment Payment as of 18 May, down by 5000 week-on-week, according to the Department of Employment Affairs and Social Protection. @irishexaminer
6%
The year-on-year increase in the reported donations and fund raising in the non-profit sector for 2019 amounting to €955m raised, according to the Benefacts group. @RTEbusiness
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