CastleGate Investments acquires stake in Gym+Coffee, Premier Sports acquired by Viaplay, and more in our latest weekly Renatus M&A newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 24/07/2022
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
We wrote some months back about a concept, where professional gamblers make money betting against ‘recent form bias’, whereby recent form dictates many punters view of the chance of a horse or football team when more is to be learnt by looking back further than recently.
We gave many examples at the time but another stares us in the face today, with Dublin absent from the All-Ireland Football Final for the second year in a row having been predicted two years ago to dominate the game for the then foreseeable future, on the back of winning the Sam Maguire six times in a row. With a quick google, we pulled out some commentary from some shrewd analysts at the time including Colm O’Rourke:
‘The six-in-a-row champions may not win Sam Maguire every year going forward but they will most years’
‘We could be looking at Dublin going for 10-in-a-row.‘
‘This Dublin team is the greatest of all time. Unfortunately, they’re now so far ahead of every other county that the integrity of the All-Ireland Championship is in question.’
We write this to counter some thinking that says energy prices are staying this high forever and inflation at current rates is going to stay. We have no insightful view on the catalyst to a correction but we think too much weight is given to current rates when predicting future rates and reversion to mean is more likely over time than the status quo.
CastleGate Investments acquires stake in Gym+Coffee
Deal Details: CastleGate Investments has acquired a stake in Gym+Coffee, following a €17m investment.
Gym+Coffee is an Irish athleisure clothing company. It was founded by Niall Horgan, Diarmuid McSweeney and Karl Swaine in 2017. Initially the brand was an online retail store but has since expanded, opening 12 stores across the UK and Ireland. The company does not publish turnover or EBITDA. Earlier investors into Gym+Coffee include Niall Horan, Brian O’Driscoll, and West Ventures. Gym+Coffee has achieved outstanding success in the Irish market since its founding in 2017 and has grown into a household name with eight stores throughout the country.
CastleGate Investments is a private family-owned fund.
Advisers: Gym+Coffee: FDD & Founder Support: BKK Deal Advisory: Houlihan Lokey Legal: Maples led by Will Darmody
Renatus Comment: The business has very much focused on international growth in recent times with great success, having set up four stores in the UK and an e-commerce platform serving Europe, the UK, North America, Australia, and New Zealand as well as pursuing partnerships with various international celebrities and clubs including Joe Wicks and Aston Villa Women’s Football Club.
This is CastleGate’s third sizable transaction in recent months following the purchase of Sherry Fitzgerald and its investment in CWSI. This deal seems more core to the CastleGate team, given its e-commerce achievements, with founder Tommy Kelly having previously founded the billion-euro eShop World.
Source: Irish Independent
Premier Sports acquired by Viaplay
Deal Details: Premier Media Broadcasting Limited has been acquired by Viaplay Group in a deal reported to be worth £30m.
Premier Media Broadcasting Limited is a paid television sports channel that holds exclusive live TV rights to various sports leagues. It was founded in 2010, by Michael O’Rourke, joint CEO and partner of Setanta Sports and is headquartered in Dublin. The business had a turnover of €23.0m which converted to an EBITDA of -€2.9m in FY20.
Viaplay Group is a Nordic entertainment provider, streaming live sports, movies, series’, music and original shows. Viaplay Group is headquartered in Stockholm. It was founded in 2018 as a spinoff from MTG and is currently led by CEO Anders Jensen. The company went public in March 2019. In FY21 the company had a turnover of €1.2bn which converted to an EBITDA of €107m. Viaplay will see Premier Sports rebrand and in time include Viaplay’s film and series offering.
Advisers: Premier Media Sports Broadcasting: Legal: A&L Goodbody
Viaplay: Corporate Finance: Inhouse FDD: EY (Fredrik Steenberg, Maurice Kennedy, Sean O’Brien and Michael Mills) TDD: EY (Dave Barry and Rachel Harvey) Legal: Dentons
Renatus Comment: Premier Sports is an extension of the Setanta story having been founded by Mickey O’Rourke.
O’Rourke and his partners in Setanta were probably too early in the UK with their big bet on that market as the price they paid per Premiership game was a fraction of what they now trade for.
Premier Sports, while serving the same inauspicious UK market, competed away from the English Premier League. It has built up a highly attractive offering in recent years, with football rights including La Liga, the Coppa Italia, Scottish Cup and 60 UEFA European Qualifiers and UEFA Nations League Games from 2022. It also holds the rights to Top 14 rugby coverage in the UK. Premier has 220,000 paying subscribers at present.
This exit adds to O’Rourke’s/Setanta’s successful exits of other channels, namely Australian, Irish, Canadian, African and amazingly Setanta Ukraine in January this year (what timing).
Source: Viaplay Group Press Release
Grant Thornton acquires majority stake in Valid8me
Deal Details: Cork based regtech Valid8Me has received a €12.5m capital investment from Grant Thornton.
Valid8Me has developed a SaaS platform that is transforming customer onboarding, making the Know Your Client (“KYC”) processes more user friendly, streamlined and efficient.
Grant Thornton is a professional services firm that provides assurance, tax and advisory services to privately held businesses, public interest entities and public sector entities. Grant Thornton Ireland is led by managing partner, Mick McAteer.
Advisers: Valid8Me: Legal: Ronan Daly Jermyn
Grant Thornton: Legal: A McCann Fitzgerald team led by Aidan Lawlor and Louise Flanagan Renatus Comment: This investment by Grant Thornton is another example of how Financial Services firms are enhancing their service offering and customer experience through complementary tech platforms that both simplify the customer experience and save time and money.
The Valid8Me technology reduces KYC onboarding costs by 50% and can reduce the onboarding time by up to 90%. It also reduces risk and exposure for businesses around data privacy.
The Valida8Me technology will fit very well with key service verticals within Grant Thornton Financial Services, Legal, Tax, Wealth Management and Real Estate.
Follow Leisure acquires District
Deal Details: Follow Leisure has acquired coffee chain District. Deal consideration has not been disclosed.
Follow Leisure is a multi-venue hospitality operator with a portfolio including Canteen, Output, Morning Martha and the multi-venue restaurant brand Slim’s Healthy Kitchen. The business is headquartered in London. It was founded by Gary McIldowney in 2017 and has expanded across Northern Ireland since. The company does not report turnover or EBITDA.
District is a Belfast-based coffee-shop chain that serves breakfast, lunch and homemade treats. It was set up in 2016 by David Rea and operated by hospitality professional Richard Stitt. It is headquartered in Belfast and currently operates in four locations across the city and employs 30 staff. The company does not report turnover or EBITDA.
Advisers: None mentioned.
Renatus Comment: The acquisition of District sees Follow Leisure expand its portfolio, bringing the total number brands being managed and franchised to 11.The addition of District will see Follow Leisure double its footprint in Northern Ireland. Having weathered the immediate Covid-impact, businesses such as District should begin to benefit from a shift to people returning to the office, which in combination with the delivery offering it has developed, should provide solid value to Follow Leisure’s portfolio.
Source: Belfast Telegraph
Eclair Group acquired by Digital Work Services Plc
Deal Details: Eclair Group Ltd (Ireland) has been acquired by Digital Workforce Services Plc in a deal reported to be worth up to €2.1m.
Eclair Group Ltd is a boutique automation company, providing consulting and delivery services in the establishment, implementation and scaling of automation practices and solutions. It is headquartered in Dublin and was founded by Kevin O’Donnell and Barry Conlon in 2017. Kevin O’Donnell will now become country manager for Digital Workforce Ireland. The business does not report turnover or EBITDA.
Digital Workforce Services Plc is a robotic process automation service provider, offering services to a range of industries. The company was founded in 2015 by Mika Vainio-Mattila, Jukka Virkkunen and Heikki Lansisyrja in Finland. . The company reported a turnover of €22.4m and an EBITDA of -€1.0m in FY21.
Advisers: Digital Workforce Services Limited: Advisory: Jason Bradshaw from JPA Brenson Lawlor led the acquisition. Brenson Lawlor also provided Tax and Financial due diligence services. Legal: Griana O’Kelly from Lavelle Solicitors provided legal advice.
Eclair Group: None mentioned
Renatus Comment: Since its IPO in December, Digital Workforce Services has experienced rapid growth, and it intends to accelerate this through mergers and acquisitions. The acquisition of The Eclair Group is the first move in its updated strategy and strengthens its position in the UK and Irish markets, following a number of deals with the NHS earlier this year.
Source: Digital Workforce Press Release
Stryve acquires Atticus
Deal Details: Stryve has acquired London-based Atticus in a deal reported to be worth up to €1m.
Stryve, based in Carlow, is a cybersecurity and private cloud company. It has data centres in both Ireland and Poland. The business is led by CEO Andrew Tobin who is also the largest shareholder. It does not report turnover or EBITDA information.
Atticus is a creative design agency specialising in brand, website design, email campaigns, video, print and marketing campaigns. The business is based in London and will rebrand to Stratticus following the acquisition. The business is majority owned by David Roland. It does not report turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: This is one of a number of deals linked to the cybersecurity space in recent months. However, the focus of Stryve’s acquisition is on ensuring it can offer a more holistic solution to complement its existing cybersecurity expertise, given Atticus’ focus on website design.
The acquisition of Atticus provides Stryve with immediate access to the UK market and added clients, while furthering the business’ ambition of becoming Europe’s largest private cloud market.
Source: Irish Independent
DEAL UPDATES & OTHER NEWS
Permanent TSB’s acquisition of Ulster Bank assets approved by the CPCC
Deal Details: Following a €7.6bn deal last December, the Competition and Consumer Protection Commission (CPCC) has approved the acquisition of Ulster Bank assets including performing non-tracker mortgages, non-performing non-tracker mortgages, the entire micro-SME business direct loan book and its asset finance loan business by Permanent TSB. It also includes 25 of Ulster Bank’s properties.
Source: Irish Independent
Filecloud aims to raise $50m
Deal Details: Filecloud, an enterprise file sharing, sync and backup solution that offers private, public and hybrid content services, is aiming to raise funding.
The business is aiming to raise $40m-$50m in a Series B funding round to help fuel new M&A growth for the business. The business has a number of blue-chip businesses including Disney. It has its European headquarters in Limerick. The business is led by CEO Ray Downes. The business does not report turnover or EBITDA information.
Source: Irish Independent
Headquartered in Duleek, county Meath, Leinster Farm Machines is a supplier of high-quality agricultural machinery, equipment, spare parts, and services. The business was established in 1979.
Leinster Farm Machines reported a turnover of c. €20.8m in FY21 which converted to an EBITDA of c. €2.5m. This represented a c. 40% increase in revenue and an over 80% increase in EBITDA. This margin improvement was driven by administrative expenses remaining relatively flat over the period while turnover increased significantly.
Significant post EBITDA cash movements included a working capital investment of c. €1.0m, dividends paid of over €11.0m, and the sale of assets amounting to c. €2.7m.
The business is majority owned by Philip O’Hara who is the ultimate controlling party. Leinster Farm Machines employed an average of 24 staff throughout FY21 at a cost of c. €1.2m.
E. McIntyre & Sons Limited/ t/a McIntyre’s Tools & Equipment and Frenstar Valves, imports and distributes tools and related equipment, with 3 retail stores. The business is based in Derry and owned by Fergal McIntyre.
In its financial year to October 2021, E. McIntyre & Sons Limited had turnover of c. £17.3m, a c. 24% rise YoY. This converted to an EBITDA of c. £3.6m, a c. 38% rise YoY. This increased EBITDA figure is largely attributable to the business’ increased revenues, with gross margins remaining relatively flat YoY.
The business finished the year with a cash balance of c. £3.0m, a c. 4% rise YoY. Significant cash movements included a tax payment of c. £707k, a loan repayment of c. £420k, and an asset acquisition of c. £295k.
E. McIntyre & Sons Limited employed an average of 76 people over the year at an annual cost of c. £3.1m.
Who: Beach Point Capital, a multi-billion dollar investment manager with major presence in the US and Europe.
What: Beach point capital have secured £10m funding from British Business Investors.
Why: This funding will be used to support SMEs in Northern Ireland and allow them to realise higher growth potential.
Who: Fonoa, a digital tax automation platform that calculates and reports taxes to authorities on behalf of digital first companies.
What: The business has raised $60m in a series B funding round led by investment firm Coatue with Dawn Capital, Index ventures, Omers Ventures, FJ Labs and Moving Capital also participating.
Advisors: A Taylor Wessing team including Adam Griffiths, Ameer Gazder, Howard Palmer and Jack Turner advised Dawn Capial on its participation in the funding round.
Why: The funding will be used to help the company double in size this year and will also support the roll out of a number of new products.
Who: Xunison, a software and hardware provider that offers smart-home solutions including all-in-one broadband and digital in-home services, to the telecommunications market.
What: The business has raised seed capital of €3.35m.
Why: It will now expand its presence in the Middle East, open an office in the United States expanding its marketing sales and customer support operations, grow its European and UK sales teams, launch a 5G device to the market and attend trade shows in the US and Europe.
Who: Impedans, a deep-tech company that specialise in plasma diagnostic instruments which are supplied to customers in research and industry.
What: In a series B funding round, Impedans secured €3.5 million from investors that included Enterprise Ireland and SOSV.
Why: The funding will be a key for driving the company’s strategy of continuous innovation and will help consolidate its position as a leader in the field.
Who: The White Hag Brewing Company, the Irish craft beer brewer.
What: The business has raised funding from Enterprise Ireland and AIB.
Why: The business is investing €1m into a new warehouse, as it looks to grow to more than 60 staff.
Source: Irish Independent
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.
The increase in tender prices for Irish commercial construction projects in H1 2022. This marks the largest six-month increase since @SCSISurveyors in Ireland began tracking construction inflation 24 years ago. @RTEbusiness
The increase in Ireland’s carbon emissions in 2021. Ireland emitted over 61.5m tons of C02 equivalent, which is even higher than pre-pandemic levels. Ireland has now used 23.5% of its 5-year carbon budget from 2021-2025. According to the EPA. @businessposthq
The increase in used car prices compared to pre-pandemic figures. Asking prices for used cars rose 29% in the year to the end of June 2022. According to @DoneDeal
The increase in interest rates across the eurozone. According to @ecb
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Renatuswas 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:
Growth financing – both organic and acquisition growth financing