Renatus’ Weekly M&A Newsletter – 18/04/2021
April 18, 2021Renatus’ Weekly M&A Newsletter – 02/05/2021
May 2, 2021
Renatus Weekly M&A & Company Performance Newsletter 25/04/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
Kitchen World acquired by consortium of investors
Deal Details: A consortium of investors has acquired Kitchen World from Francis Kearney and Paul Begley. Transaction details were not disclosed.
Kitchen World is one of Ireland’s leading branded fitted kitchen designers, manufacturers and suppliers. The business has a retail store network and supplies the residential development sector for new homes as well.
Former Davy executive, Ed O’Dea has taken the role of Managing Director.
Advisers: BDO Corporate Finance, led by Richard Duffy, and Philip Lee, led by Eoghan Doyle, advised the shareholders of Kitchen World.
Gerry Halpenny from LK Shields acted for the buyers
Renatus Comment: The most recent accounts for Kitchen World show a profit of €727k for 2019. Kitchen World is likely to benefit from the construction sector reopening and the tailwind of home improvement driven by people working from home and increased savings. The Central Bank economists estimated that Irish households put away €10bn in excess deposits, or 8pc of disposable income, between the first quarter of 2020 and the first quarter of this year.
Source: BDO
Elkstone invests in Altada
Deal Details: Cork-based AI company Altada Technology Solutions received primary investment from Elkstone Partners. The investment amount was not disclosed.
Altada, founded by Allan F. Beechinor and Niamh Parker in 2017, is a solutions provider for creating operational transformation through AI.
Altada employs 50 people in its offices in Cork, Dublin and New York. Its customer base includes Rocktop Partners, Waterfall Asset Management, Wells Fargo, the NFL, the NBA, and the WHO.
Elkstone Partners supports disruptive and high growth Irish and international venture opportunities via its network of entrepreneurial and high net worth clients.
Advisers: Clearwater International, led by John Curtin, advised Altada Technology Solutions. ReganWall also advised the company.
Renatus Comment: In September of last year, Altada completed a reported €1.3m fundraise receiving backing from Enterprise Ireland and Rocktop Partners. At the time, it was reported the company had raised a total €4m since inception.
Altada is planning a larger funding round, which will be managed by John Curtin in Clearwater, and is expected to complete in Q4 this year or Q1 2022.
Source: Clearwater International
iheed is acquired by CEG
Deal Details: Irish online medical education specialist iheed has been acquired by Cambridge Education Group (CEG) for an undisclosed sum.
Founded in 2014, iheed partners with world leading medical universities including the University of Warwick and the Royal College of Physicians of Ireland to reimagine and transform the delivery of postgraduate medical education.
CEG, backed by international PE firm Bridgepoint, delivers the highest quality academic, creative and English Language programmes, preparing thousands of students to progress onto the world’s leading universities.
Advisers: Grant Thornton team led by Rick Gillan and David Kealy acted as buy side advisors for Cambridge.
Renatus Comment: Iheed raised a reported €3m of investment from backers in 2017 which included Atlantic Bridge, ACT Venture Partners, Oman Technology fund and Enterprise Ireland. It also had a number of private backers including Anne Heraty, Pat McDonagh among others.
The deal with CEG will mark an exit for these backers and is a significant validation of the innovative education model iheed has pioneered in the medical space.
Source: Cambridge Education Group
Welltel acquires Capstone
Deal Details: Irish communications company Welltel has acquired Capstone Intelligent Solutions for an undisclosed amount.
Capstone, headquartered in Sandyford, Dublin, is a leading provider of cloud contact centre services. It designs, implements and manages bespoke unified communications solutions using advanced voice, video, data, recording, and customer interaction tools.
Capstone supports more than 250,000 people in 327 sites across 38 countries. In its last financial year ended, Capstone reported a turnover of €8.5m.
Welltel is a rapidly growing Irish communications company, employing 150 people and providing managed services to over 3,000 business customers in Ireland and internationally. Winner of 6 x Deloitte Fast 50 awards, the company has experienced fast growth year-on-year since 2015.
Advisers: BHSM’s Corporate Team, led by Joe McVeigh and Eimear Grealy, acted for Welltel.
The LK Shields team comprising Gerry Halpenny (Partner, Corporate) and Stephen Gamble (Associate, Corporate) acted for the shareholders of F&M Heather Holdings Limited on the sale of the Capstone group of companies.
Renatus Comment: Welltel has been an active acquirer in the ICT space completing a number of acquisitions over the last couple of years (Intellicom, Invishtech, Novi, etc.). Livingbridge invested into the company at the end of 2020 and is backing it to consolidate the space further.
Source: Welltel Group
Keywords acquires Climax Studios
Deal Details: Dublin-based Keywords Studios has completed its second acquisition this year with the purchase of Climax Studios in a deal reportedly worth up to €50m.
UK-based Climax provides full game development, co-development, porting and technical consulting services to some of the world’s largest games publishers including Sony, Microsoft, 2K, Codemasters and Electronic Arts.
Established in 1998, Keywords now has over 65 facilities in 22 countries located in Asia, the Americas and Europe.
Advisers: None Mentioned
Renatus Comment: Another month, another acquisition for Keyword studios. Just last month, the serial acquirer entered the Australian with its acquisition of Tantalus.
Keywords continues to use acquisitions as a way to drive drive growth, enter into new markets and expand its service offering to its customers.
Source: Keywords Studios
CareChoice acquires Elm Hall Nursing home
Deal Details: Nursing home group CareChoice has acquired Elm Hall Nursing home in Celbridge, Co. Kildare. The speculated value of the deal is about €10m.
CareChoice now owns and runs 13 nursing homes across Dublin, Cork, Meath, Kildare and Waterford.
Elm Hall facility is a purpose-built retirement village on 3 hectares (7.5 acres), which house a social centre, 26 one-bedroom bungalows and two two-bedroom homes.
Advisers: Rob Adams and Paddy Dooley of Focus Capital Partners led the financial advisory and Gerard Cosgrove from Branigan Cosgrove Finnegan provided legal advice to the directors of Elm Hall.
PwC, led by John Murphy, provided diligence and structuring advice to CareChoice.
Renatus Comment: This follows a string of acquisitions and consolidation that has been taking place in the nursing home space.
CareChoice was acquired by French investment fund InfraVia Capital Partners for a reported €70m in 2017 and since then has completed a number of acquisitions. In 2019, CareChoice announced its goal to treble the size of its business by 2023 by way of a €100m investment plan which involves building and acquiring new nursing homes.
Acquisitions continue to form a key part of the toolkit for nursing home operators looking to grow and win market share in the space.
Source: Irish Times
dyjaho acquires Binate Digital
Deal Details: Cork marketing group dyjaho has acquired Binate Digital for an undisclosed amount.
Dublin-based Binate Digital, founded in 2018, has won a suite of digital agency awards, including Best Web Development Start-Up in the 2020 Technology Innovator Awards.
Marketing communications agency dyaho was founded in 2016 by Pat Kierans. Its clients include Laya Healthcare, Harris Group, Maxus, Dairygold and Demesne Electrical.
Advisers: None Mentioned
Renatus Comment: These two operators look to be quite complementary with both companies having a lot of overlapping capabilities. There may be synergy-related opportunities for them on the revenue side through potential cross selling of services across customer bases and on the cost side through leveraging overhead and physical infrastructure.
Prior to the transaction, Binate Digital was owned by Adam Hetherington, Mark Condon and Paul Condon.
Source: dyjaho
Orpea acquires remaining shares in Brindley
Deal Details: French care home group Orpea Groupe has completed the buyout of the remaining 50% of shares Donegal headquartered Brindley Healthcare for an undisclosed sum.
Brindley Healthcare, founded by Amanda Torrens, is an active player in the nursing home and residential care markets in Ireland and has 10 nursing homes across Donegal, Galway, Tipperary, Mayo, Kildare and Laois.
Orpea operates more than 1,000 nursing home facilities in 22 countries and had revenue of €3.9bn last year.
Advisers: None Mentioned.
Renatus Comment: This deal follows Brindley’s acquisition of Belmont Care Limited that was announced last week.
Prior to the transaction, Brindley was 50:50 owned by Orpea and Amanda Torrens through her Drumineney Investment Holdings vehicle. Orpea acquired its initial 50% stake in the company in July of last year and had the option to acquire the remaining the 50% by 2022.
The most recent set of financials for Brindley are for the period ending December 2019 and show that the company generated revenues of €24m and an EBITDA of c. €5.6m.
Source: Sunday Business Post
DunPort supports Horizon Capital in its acquisition of Modern Networks
Deal Details: Horizon Capital, the UK technology services Buy & Build specialist, has backed Modern Networks in a £40m deal with debt facilities provided by DunPort Capital.
Modern Networks provides IT Support, connectivity, and communications in an easy to consume integrated solution to over 2,000 sites across the UK.
Horizon Capital LLP invests between £10m and £75m in fast-growing, UK-headquartered companies, focusing on B2B services and technology to deliver growth.
DunPort is an established provider of non-bank corporate and SME debt capital in the Irish market and an emerging player in the UK lower mid market.
Advisers: Clearwater International provided corporate finance support to Horizon.
Addleshaw Goddard’s Alex Dumphy, Cerys Poolis and Amy Taggart provided legal advice to DunPort while Harrison Clark Rickerbys provided advice to Horizon and the company.
Renatus Comment: Modern Networks is the 28th company to have been supported by the Elm Corporate Credit Fund, Dunport’s €283m lending vehicle.
Source: DunPort Capital
DEALS IN THE MAKING
Exergyn in a possible buyout
Dublin-based clean-tech company Exergyn is reportedly at loggerheads with its investors over the possible sale to US heating giant Carrier Global.
The company attracted global attention by developing and patenting an emissions-free heat pump that contains no refrigerant gases, one of the main causes of global warming.
Exergyn has teamed up with Carrier in an attempt to bring its technology to market and is understood to be in talks with the US company about a possible buyout.
Its shareholders believe the deal, which has not been disclosed, grossly undervalues the company, and have called on Exergyn’s board to conduct a more transparent auction process.
Source: Irish Times
DEAL UPDATES
Stobart Air under new ownership
Stobart Air’s majority owner Esken, formerly Stobart Group, has reached a deal with Isle of Man group Ettyl to sell the airline.
Stobart will continue to operate the existing Aer Lingus Regional franchise through to 31 December 2022.
Advisers: Flynn O’Driscoll Business Lawyers advised Ettyl on this transaction.
Source: Irish 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
Based in Co. Cork , Duggan Steel is a market leader in structural steel and cladding projects. They work with a number of industries including data centres, pharmaceutical and manufacturing.
In its latest fiscal year, Duggan Steel’s revenue increased by c. 4% to c.€20.1m, while EBITDA also increased by c. 13% to c. €2.6m.
The cash balance increased by c. €453k during the year to end at €6.39m. The largest drains on cash were a €1.64m dividend payout and c. €558k in loan repayments.
The company employed an average of 59 people in FY20 at a total cost of c.€3.1m. The Company is a 100% subsidiary of Bestal Holdings Ltd, which is ultimately controlled by directors Bernard Duggan, Stephen Duggan and Alan Duggan
John Daltons & Sons Ltd is a leading grain and agricultural merchant based in Kilkenny with a branch in Cullahill, Co. Laois. Established in 1870 by John Dalton, the business has been managed by the Dalton family since. Today it is led by Managing Director John Dalton.
In its financial year to March 2020, the business reported revenue of c. €16.9m, up 3.1% YoY, and EBITDA of c. €1.2m which was up 44.5% YoY. EBITDA converted to a net cash increase of c. €1.0m to leave an ending cash balance of c. €1.4m.
John Daltons & Sons Ltd employed an average of 33 people during the year at a cost of c. €1.4m.
RECENT FUNDRAISINGS
Who: Irish tech start-up Rezexe has raised funds in initial funding round. The Rezexe platform can encompass a range of businesses including restaurants, golf tee-time reservations, car servicing to dog groomers and tattoo parlours.
What: €1.7m was raised from Irish, Asian and European investors and includes €250,000 received from Enterprise Ireland.
Why: The purpose of funding was not stated.
Source: Independent
Who: H2 Green Steel (H2GS), a steel manufacturer based in Sweden that replaces coke and coal in its production process with green hydrogen to achieve an almost totally CO2- free steel product
What: Kingspan has participated in H2GS’ Series A funding round which is due to close later this month. Kingspan expects to ultimately be a single-digit minority shareholder.
Why: There was no stated use for the funds raised.
Source: Kingspan
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
This week’s thought is a variation of one from last week but brought to the fore by news during the week.
What we are clear on is that the Global Financial Crisis added over €100bn to Ireland’s debt pile between 2008 and 2013 and what resulted was a very punitive universal social charge. We are also clear that the bill in Ireland for supporting the pandemic will not be as high but will be in excess of €30bn-€40bn depending on estimates.
This is not just an Irish problem but a global one. This can only be paid for by higher taxes and this has two effects on our world:
- capital taxes and any reliefs on same could be under pressure
- when the pent up savings are spent disposable income could be under pressure due to higher taxes
Ireland had an extreme version of the problem from the Global Financial Crisis with Anglo etc. but other countries are in the exact same boat this time and some worse.
UK government debt is the highest it has been since second world war (net borrowing as % GDP).
The below article shows that Joe Biden has signalled Capital Taxes could double while it is more attributed to the healthcare bill there is no doubt any headroom he may have had is eaten up by the pandemic supports
@RenatusCapital Tweets
77.9
The KBC Bank Ireland’s consumer sentiment for April 2021, the strongest level in 13 months. @IrishTimesBiz
53.7
The IHS Markit’s flash Composite Purchasing Managers’ Index for April 2021, the highest in 9 months, marking the euro zone’s recovery from the pandemic-induced economic downturn, according to a Reuters poll. @RTEbusiness
15.2%
The year-on-year decrease in the cargo volumes at Dublin Port for Q1 2021. The main driver was a 29% decline in freight from British ports, according to the Dublin Port Company. @RTEbusiness
10.1%
The year-on-year decrease in the Irish Wholesale Price Index for March 2021, according to
@CSOIreland
69.0%
The employment rate in Northern Ireland, which is the proportion of people aged 16 to 64 in work, decreased by 3.5% YoY. Those aged 16-24 account for two thirds of the decrease in employment. According to Northern Ireland Statistics and Research Agency (Nisra)
3.7%
Northern Ireland’s unemployment rate for the period December to February 2021. This does not include those on furlough payments. January and February daily furlough counts averaged 115,000 persons. According to Northern Ireland Statistics and Research Agency (Nisra)
34%
The year-on-year increase in the Irish jobs postings for Q1 2021, according to e-recruitment platform https://go.renatus.ie/e/512701/2021-04-25/3vp1bz/608092187?h=mAFvbCMDGWF2sBuzguVO_k9SSG0vaoIxkmwd-jL4Fy8 @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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