Boojum acquired by the Azzurri Group, MCO to acquire Fairwords, Packaging Holdings to merge with Grafham Holdings and much more in our latest newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 25/06/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
During the week, the UK 2-year government bond yields rose to a 15-year high of 5%. The Office for National Statistics claimed public sector net debt in May exceeded 100% of the nation’s GDP for the first time since 1961.
This came after a surprise inflation report from the Office for National Statistics, reporting inflation to be 7.9% in May 2023. Worryingly, Truflation indicates that the UK Inflation Rate appears to be closer to 13%. Truflation automatically fetches over 10m data points and delivers real-time price data daily.
The below graphs echo a concerned sentiment when looking at the picture being painted for the US vs the UK:
This raises pressure on the Bank of England to increase interest rates even further, which will have a dampening effect on economic activity. Paul Dales, chief UK economist at Capital Economics recently commented “the acceleration in core inflation leaves the UK looking increasingly like the global outlier and the stagflation nation”.
Much of the British Media’s attention has been sucked up by the ongoing soap drama that is Boris Johnson. We hope to see sensible monetary and fiscal policies implemented to guide a key Irish trading partner through this difficult period.
Boojum is a Mexican-themed fast-casual restaurant chain that operates from 14 sites in the Republic of Ireland and Northern Ireland. Boojum first opened in Belfast in 2007. In 2015, Renatus partnered with brothers David and Andrew Maxwell to acquire the business when there were 5 locations in total. Today, Boojum employs over 300 staff across the island of Ireland. In FY Apr 22, the business reported turnover of c. €27.1m.
The Azzurri Group is one of the UK’s largest and most successful casual dining businesses. Azzurri operate two leading national Italian brands, Zizzi and ASK Italian, and the UK’s leading quick-service Italian, Coco di Mama. The group employs nearly 5,500 people and serves over 13 million meals annually across 200 restaurants and shops.
Advisers: Renatus & Boojum: Corporate Finance: PwC Corporate Finance led by Mark McEnroe, Laura Kilbride and David Booth Legal: Byrne Wallace led by Eamonn Carey, Emmet Connolly and Michelle McVeigh Mills Selig led by Darren Marley and Chris Guy Tughans led by John McGuckian and Cassie McCormick Vendor Due Diligence: BDO led by Rory O’Keeffe, Andrew Frazer and Angela Fleming Tax: KPMG Dublin led by Caoimhe McLoughlin and Claire Waters KPMG Belfast led by Paddy Doherty and Harriet Porter Commercial Due Diligence: PwC led by Eleanor Scott
Azzurri Group: None Mentioned.
Renatus Comment: We are delighted to have worked closely with Boojum over the past 8 years and we exit with a heavy heart. Boojum is a trailblazing brand, and this transaction marks another exciting milestone in the company’s growth trajectory.
We would like to thank David Maxwell and his team for the outstanding work, drive and creativity in developing the business and culture of Boojum and wish Azzurri and Boojum every success in the future. The defining moment for us was in the eye of the Covid storm in March 2020 when other food brands small, medium and large were shutting their doors, David and his brilliant team found a way to stay open. No MBA teaches that, and no investment algorithm spots that in a management team. This proves that our game of investing is all about backing and supporting management teams.
Both ourselves, David and team are overwhelmed with the good wishes we received in the past week and it proves we are playing in such a great business community with great people and so privileged to be doing so.
Source: Boojum Press Release
MCO to acquire Fairwords
Deal Details: MyComplianceOffice (MCO) is to acquire Fairwords for an undisclosed amount.
MCO is a Dublin-based developer of compliance software solutions to manage governance, risk, and compliance responsibilities. The business is led by CEO, Brian Fahey. In FY Dec 21, the business reported turnover of c. €20.4m.
Fairwords is a US-based AI-powered training software that provides compliance leaders and teams with proactive training, analytics, and archiving to mitigate communications risks and prevent compliance crises and lawsuits. In 2022, the business received c. $5.2m Series A funding led by Fintop Capital.
Advisers: None Mentioned.
Renatus Comment: MCO received €10m in debt financing from Accel-KKR in October of 2021, with a second round of financing raised in 2022. It has been active in the M&A space since, acquiring an employee monitoring service company in 2022 (Schwab Compliance Technologies), and a compliance governance and oversight solution provider in 2021 (Governor Software).
The theme of compliance AI M&A deals is being seen on a global level. This year, CUBE, a UK-based provider of AI regulatory software acquired The Hub, a RegTech firm in January, and RQM+, a US-based MedTech service provider announced the acquisition of Giotto Compliance in February. We live in a time where we are experiencing the rapid digitization of the world and it is becoming increasingly easier to ensure real-time compliance with automation tools on the horizon. AI’s predictive features can help detect anomalies and automate compliance documentation to help mitigate issues – an area of key focus for MCO. Brian Fahey, CEO of MCO stated “With this acquisition, we will further augment our solution for exceptional integrated surveillance capability across all transactions, employees, and third-party entities”.
Packaging Holdings to merge with Grafham Holdings
Deal Details: Packaging Holdings is to merge with Grafham Holdings for an undisclosed amount.
Packaging Holdings is a packaging business that was incorporated in June 2022. It has since raised €40m in a mixture of debt and equity. Its investors and shareholders include IFP Investments Limited chaired by Barry O’Brien, Martello Group (family office) headed by Tom Reynolds, Staunch Limited headed by Declan Cassidy, and the former owners of Ace Corrugated and Craftpak Packaging. Grafham Holdings was founded in 2001 and is owned by Kevin Beamon and Bill Habergham. The group is based in the UK and the structure consists of Delta Pack (Bag Manufacturer), Hovat (Bag & Self-Adhesive Label Manufacturing), Advance (Label Supplier), PH Labels (Label & Packaging Supplier), and Retail Packaging Solutions (Disposable Food Packaging Supplier). Clients include Tesco, Aldi, Lidl, Marks and Spencer, Waitrose, Sainsbury, and ASDA. In FY Dec 21, the business reported turnover of c. £23.3m which converted to an EBITDA of c. £2.6m.
Advisers: Packaging Holdings: Legal: OCWM Law led by Edel Conway and Michael Walsh Financial Due Diligence: RBK led by Aidan Heavey and John Donohoe
Grafham Holdings: None Mentioned.
Renatus Comment: This deal follows two months after Packaging Holdings announced the acquisition of both Ace Corrugated and Craftpak Packaging. It is reported that the group now spans ten packaging companies in Ireland with a combined turnover of c. €50m.
Packaging Holdings has been an active consolidator focused on sustainability. Plastic straws are becoming a thing of the past as companies are having to focus on the environmental impact of disposable plastic products. The revision of the EU Packaging legislation in 2022 is focused on making all packaging recyclable by 2030, as packaging is currently one of the main users of virgin materials (c. 40% of plastics and c. 50% of paper used in the EU are destined for packaging according to the European Commission). Supported by increased regulation, we anticipate seeing more Irish deals in the sustainable packaging space.
Source: Irish Examiner
Deal Details: Kingpsan has acquired waterproofing distribution specialist LRM. Deal consideration was not disclosed.
Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. Kingspan Group reported FY Dec 22 turnover of c. €8.3bn and EBITDA of c. €1bn. The business is led by CEO Gene Murtagh.
LRM is a Paris-based waterproofing distribution specialist. Products include fixings and accessories for roofs, waterproofing and facade products, lifelines, crinoline ladders and security railings. The business does not report turnover or EBITDA information.
Azets receives investment from PAI Partners
Deal Details: Azets has received investment from PAI Partners. Deal consideration was not disclosed. PAI Partners will hold an equal and co-controlling stake in Azets alongside current owners Hg Capital.
Azets is a Norway-based professional services group that offers audit, accounting, outsourcing, compliance, and advisory services. It was formed by Hg Capital as part of a 2016 merger. In March this year, Azets acquired Irish firm Baker Tilly which was re-branded as Azets Ireland. The group is reported to have revenue of c. £700m.
PAI Partners is a Paris-based private equity firm established in 1872. It currently has over €26bn AUM and operates from 8 global offices.
Advisers: Azets: Legal: Travers Smith LLP led by Adam Orr, Jessica Kolhorn, Eilidh Morrison, Ollie Creamer and Joseph Gitata. Tax: Travers Smith LLP led by Russell Warren and Hugh Brooks. Corpoate Finance: Liberty Corporate Finance.
PAI Partners: None Mentioned.
Renatus Comment: Azets was formed to assist SMEs with the growing digitalisation of financial compliance processes. The roll-up plays in professional services have gained momentum as platform companies like Azets use bolt-ons to acquire and expand into new verticals and geographies. A key risk relates to the fact that much of the value of these firms is tied to its key senior employees and their client relationships. For this reason deferred considerations and strong employee incentive schemes are often key to the successful implementation of this strategy.
It is notable to see two of Europe’s largest private equity firms co-sponsoring a deal and it will be interesting to see what strategic approach the joint managment bring. Azets has said that it will use its newly bolstered balance sheet to continue to pursue acquisition-led growth.
Source: Azets Press Release
HLB Ireland merges with John McCarrick & Associates
Deal Details: HLB Ireland has merged with John McCarrick & Associates. Deal consideration was not disclosed.
HLB Ireland is a Dublin-based accounting & advisory firm led by Managing Director, Mark Butler. The business was established in 1976 and is a member of HLB International, an advisory network of over 27,485 professionals across 153 countries. HLB Ireland does not report turnover or EBITDA information.
John McCarrick & Associates is a Dublin-based accountancy firm. The business was established in 1990 and it serves small to medium-sized businesses. The business does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: Accountants are accustomed to serving as advisers in M&A transactions. It is only in recent years; these professional services are finding themselves at the centre of the deal. Most accountancy firms in Ireland tend to be small in size, and the pace of consolidation has increased. Smaller firms can struggle with succession issues, resources, and the opportunity to realise a capital gain may prove to be appealing.
Mark Butler admits to The Currency his firm has been approached regarding consolidation. “Absolutely not,” he said when asked if such approaches were considered. “We will continue to build the firm as an independent firm.”
Private Equity backed companies are at the forefront of consolidation, with Azets being a serial acquirer in the space. They are reported to have acquired over 16 companies in 3 years, including Baker Tilly in March. Exponent backed Xeinadin is also active in the space, having reportedly made four acquisitions this year. Tilney Smith & Williamson (Wealth Manager) is to be listed or sold by its private equity owners, according to the Financial Times. There is no shortage of activity for these Private Equity backed companies with Interpath Advisory also becoming a real player in the space.
Source: Business Plus
E.A. Martin acquired by Troy UK
Deal Details: E.A. Martin has been acquired by Troy UK. Deal consideration was not disclosed.
E.A. Martin & Son Ltd. is a hardware wholesaler to builders, agriculture, plumbing, electrical merchants and hardware traders. It is based in Kilrea, Co. Derry. It was owned by James, Pauline & Emily Martin, Pyper Lyle, and Catherine & Rachael Coull. The business does not report turnover or EBITDA information.
Troy UK is the largest independent distributor of industrial and engineering supplies in the UK. It is owned by Paul Kilbride, Alexandra Kilbride, David Jackson, Richard Pymm, Wayne Hobbs, Jason Chance, Oliver Kilbride, Alexander Kilbride, Daniel Cornish, Edwin Thomas, Christopher Taylor and Stefan Sumner. Just last week it announced a £15.5m investment from BGF. In FY Dec 21, it reported turnover of c. €255.8m which converted to EBITDA of c. €4.2m.
Advisers: None Mentioned.
Renatus Comment: E.A. Martin is the second Derry firm acquired by Troy UK in the past two years following its acquisition of Maghera-based MOL Tools and Abrasives Ltd in 2021. The deal brings the number of businesses it has invested in throughout the UK to 17 over the last 5 years. These deals have spanned a variety of sectors including industrial consumables and PPE, Precision Cutting Tools, VMI and supply chain management.
Construction activity in the North has remained low in recent months with the Royal Institution of Chartered Surveyors (RICS) Construction Monitor falling into negative territory for the 4th consecutive quarter in Q1 2023. The lack of a functioning government in the North has also contributed to the general lack of optimism around the space as public sector work has slowed. Hopefully, this deal will represent a vote of confidence in the trade industry going forward.
Source: Irish News
Vita Actives acquired by Dairygold Health and Nutrition
Deal Details: Vita Actives has been acquired by Dairygold Health and Nutrition. Deal consideration was not disclosed.
Vita Actives is a Dublin-based nutrition and ingredients business established in 2006. It was fully owned by Deepak Sharma. It does not report turnover or EBITDA information.
Dairygold is a Cork-based co-operative that was formed in 1990 following the merger of the Mitchelstown and Ballyclough co-ops. It formed its Health and Nutrition business in 2020. In FY Dec 22, the group reported turnover of c. €1.7bn which converted to EBITDA of c. €68.5m.
Advisers: Vita Actives: Corporate Finance: Grant Thornton led by Michael Neary and Stuart Mellon Tax: Grant Thornton led by Peter Vale Legal: Dillon Eustace led by Mark Thorne, Adrian Benson and Emer Travers
Dairygold: FDD: Deloitte led by Marc Rogers and Claire Grimes Legal: Arthur Cox led by Colin Kavanagh, Graham Murtagh, Laura Haddigan and Omotola IIori
Renatus Comment: Following the launch of its Health and Nutrition division several years ago, ex-CEO Jim Woulfe said that the business had c. €100m available to pursue acquisitions. The rationale for the unit was to separate and focus on higher-margin products, downstream from milk in the value chain such as protein powders, baby formula and other ingredients products. This has long been a strategy of other Irish dairy businesses such as Kerry Group and Glanbia who have enjoyed global success. Dairygold also stated that the Asian market presents a significant growth opportunity for this division, so it is likely that it will target bolt-ons here in the coming years.
Source: The Examiner
Cora Systems receives equity investment from Scottish Equity Partners
Deal Details: Cora Systems has received a “significant growth equity investment” from Scottish Equity Partners.
Cora Systems is a Leitrim-based enterprise project and portfolio management solution provider. The business manages a reported $100bn worth of projects on its platform daily. The business was founded by Philip Martin in 1999 and is headquartered in Carrick-On-Shannon, with offices in USA and UK. In a 2022 article by the Business Post, the business had “passed €60 million of sales in its current financial year”.
Scottish Equity Partners (SEP) is a growth equity firm, operating across the UK and Europe, with a technology focus.
Advisers: Cora Systems: Financial: IA Global Capital Legal: Eversheds Sutherland led by Corporate Partner Enda Newton and included Gerard Ryan (Partner, Corporate), Jonathan Ennis (Senior Associate, Corporate), Vanessa Lawlor (Associate, Corporate), Aoife Ryan (Solicitor, Corporate), Robert Dever (Partner, Tax), Marie McGinley (Partner, IP/IT), Ellie Cater (Senior Associate, IP/IT), and Julie Galbraith (Partner, Employment)
Scottish Equity Partners: None Mentioned. Renatus Comment: Cora serves several clients across the manufacturing, aerospace & defence, healthcare, and life sciences sectors, including Abbvie, Honeywell, Irish Rail, and the UK’s NHS. The business has experienced impressive growth in recent years with expansion into the US. John Fitzgerald (CFO) stated that during the “hardcore part of the pandemic”, Cora invested more than €10m in its team. The investment appears to be paying off with Cora reporting growth of c. 330% in the 12 months to June 2022.
Source: Cora Systems Press Release
Bevcraft Group acquires Tripod Canning
Deal Details: Bevcraft Group has acquired Tripod Canning for an undisclosed amount.
Bevcraft Group is a specialist process and packaging business primarily focused on craft & artisan beverage producers. The business was founded in Mullingar by Darren Fenton and Ciarán Gorman in 2016. Bevcraft Group does not report turnover or EBITDA information.
Tripod Canning is a US-based mobile canning business. The business offers a range of services including can filling, materials procurement, cans, labels, date coding, seam checking, dissolved oxygen testing, and logistics management. The business does not report turnover or EBTIDA information.
Advisers: Bevcraft Group: Legal: The McHattie Law Firm led by Michael Gattoni and Chris McHattie Corporate Finance: RBK led by Chris Ball
Tripod Canning: None Mentioned
Renatus Comment: This is the 3rd M&A deal completed by the Bevcraft Group in the last 18 months. During January, Bevcraft Group merged with Heidrun Tapperi to further increase its production capacity. Prior to that, the business acquired Them That Can in 2022 to further its UK presence. This acquisition will be the point of entry for Bevcraft in the US market with Bevcraft already providing mobile canning across Europe from bases in Ireland, Norway, the UK and the Netherlands. While challenges remain and growth may have slowed from covid pace, craft beer brewing is still growing, specifically in the US. Overall U.S. beer volume sales were down 3% in 2022, while craft brewer volume sales remained on par with 2021 (8% sales growth to 24.8m barrels in 2021), according to the US Brewers Association.
Source: Bevcraft Group Press Release
Deal Details: Tricel has acquired Edincare Pumps. Deal consideration was not disclosed.
Tricel is a Kerry-based provider of engineering solutions for the water, environmental, construction and distribution industries. It was founded in 1973 by Anne and Con Stack and is still owned by members of the Stack family including Robert, Richard, Michael, Grainne and Cornelius. The company does not report turnover or EBITDA information.
Edincare Pumps is a UK-based provider of pumps and pumping systems as well maintenance, repair, and installation services. It was owned by Richard Collis, Andrew Davies and Michelle Quastel. It does not report turnover or EBITDA information.
Advisers: AREX Markets Group: Legal: LK Shields led by Emmet Scully, Lester Sosa-Villatoro and Jonathan Braden
Bankable: None Mentioned
Renatus Comment: With over 270k SMEs in Ireland, there is a market for Fintechs and SMEs to form mutually beneficial partnerships. In recent years, there has been a big rise in alternative financing solutions for SMEs with specialist companies such as AREX stepping into the gap left by traditional banks choosing to focus on their core offerings. In 2021, the Irish Times reported that Irish companies are increasingly turning to invoice financing to fund growth, “nearly €1bn was advanced by mid-year from non-bank lenders who extend credit based on customer orders”. Used sensibly, these specialized offerings can be beneficial to a business’s growth.
Source: LK Shields
Gallagher Brothers (Fish Merchants) Limited is a Donegal-based seafood provider. The business was established by brothers Jack and Phil Gallagher in 1919 and it is currently owned by the Gallagher family.
In its financial year to July 2022, the business generated turnover of c. €22.5m, an increase of 35.1% year-on-year. This converted to an EBITDA of c. €2.3m, an increase of 16.8% year-on-year. The realisation of operating leverage was a key driver in EBITDA growth year-on-year.
Significant post-EBITDA cash movements include cash released from working capital movement of c. €2.2m and the repayment of bank borrowings of c. €3.2m. The business finished the year with a cash balance of c. €5.9m, an increase of 6.5% year-on-year.
Who: Mesh, the Dublin-based provider of email security solutions,founded by Brian Byrne, Ralph Casey and Daimhin Kavanagh in 2020.
What: The business has raised €1.55m in a funding round led by Elkstone and Enterprise Ireland.
Why: The business will use the funding to grow globally and create 40 new jobs over the next five years.
Who: Happy Pear, a Wicklow-based plant-based food business.
What: The business has raised €2.5m in an equity crowdfunding campaign.
Why: The business hopes to expand to the UK with 3/4 of the funds reported to be spent there.
Who: Luminate Medical, a Galway-based business that has developed a novel device to prevent hair loss during chemotherapy. Hooke Bio, a Clare-based company who are developing a fully integrated screening system for 3D microtissues. BioSimulytics, a spin-out AI-enhanced molecular modelling company from the School of Chemical and Bioprocess Engineering at University College Dublin (UCD), Ireland. Celtic Biotech, a Dublin-based developer of novel candidate therapies for the treatment of solid cancers in humans.
What: Four Irish medical start-ups, backed by Enterprise Ireland have been granted €18m in EU Funding under the European Commission’s European Innovation Council (EIC) Accelerator Programme.
Why: The funding will be used to further research and innovation.
Who: Cloudcards Aviation Software, a Limerick-based provider of services to both the Aircraft Lessor and Airline markets.
What: The business has raised c. €1.4m in an equity funding round from a group of private investors.
Why: The investment will support the company’s expanding operations and further develop its product offering.
Advisers: Focus Capital Partners led by Martin Higgins and Orla Devlin.
Source:Focus Capital Partners Press Release
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.