Renatus Weekly M&A & Company Performance Private Equity Newsletter 25/09/2022
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
All indicators are reflecting poorly on the economic and financial health of our neighbours across the water.
The Sterling slide, the fact that the two-year cost of borrowing has hit 4% from effective zero and the pending budget deficits all point to an economy in a very bad place.
The amazing thing is the lack of narrative pointing to Brexit as a catalyst for this malaise. One of our favourite writers Camila Cavendish broke rank with her counterparts in the FT yesterday and said ‘Ministers clearly want to gain political momentum, and boost business and consumer confidence, in what feels like an overdue acknowledgement that Brexit has shackled our economy.
Uniphar PLC acquires McCauley Pharmacy Group
Deal Details: Uniphar PLC has acquired the McCauley Pharmacy Group. The deal is subject to approval by the CCPC and is reported to be worth c. €50m.
Uniphar Group is an international healthcare services business that services over 200 pharmaceutical and MedTech manufacturers. The supply chain and retail division currently support a network of 381 owned, franchised, and symbol group pharmacies. Uniphar was established following a merger between United Pharmacies Co-Op and Allied Pharmaceutical Distributors in 1994. The business is headquartered in Dublin and was listed on Euronext Dublin and the London Stock Exchange in 2019. In FY21 the business had a turnover of c. €1.9bn, which converted to an EBITDA of c. €68.2m. The business has a workforce of over 2,900 staff dispersed throughout Ireland, the UK, Benelux, Nordics, Germany, Switzerland, and the USA.
McCauley Pharmacy Group is a retail pharmacy group in Ireland that owns 37 pharmacies around the country. G.B McCauley founded the pharmacy in Enniscorthy in 1953, Sam McCauley and his wife Leslie joined the business in 1978 and have grown it to become one of the largest retail pharmacy groups in Ireland. Carlyle Cardinal Ireland acquired a majority stake in the business in 2017. In FY20 the group had a turnover of c. €83.1m, which converted to an EBITDA of c. €2.9m.
Advisers: McCauley Group: Corporate Finance: Focus Capital Partners led by Alan Kelly, Brian Barrett, Paddy Dooley and Robbie Allen. Legal: McCann FitzGerald LLP led by Garreth O’Brien, Ciara O’Herlihy, Charlotte Blackmore, Grace McKnight, Donal O’Raghallaigh, Iryna O’Connell, Catherine Austin, Philip Andrews, Sean Kehoe and Tom Ó Maolagáin. Other: PwC and A&L Goodbody.
Uniphar PLC: Legal: William Fry led by Barbara Kenny, Alex Byrne, Brian O’Callaghan and Aisling O’Gorman. Corporate Finance: A Capnua team of Eamonn Hayes, Jamie McConnell and Conor Guerin.
Renatus Comment: Uniphar’s acquisition strategy in recent years has been focused on solidifying its dominance in the Irish Pharma and MedTech value chain from pre-wholesale to retail and extending this dominance throughout Europe.
This McCauley acquisition will go a long way in increasing the business’s retail presence in the Irish market and is estimated to boost Uniphar’s market share of owned pharmacies in Ireland from 5 per cent to 7 per cent adding 37 retail outlets to its total (now 140 pharmacies). This deal is comparable to the company’s purchase of the Hickey’s chain of pharmacies in 2020 which saw the group acquire 36 Hickey’s Pharmacies.
Uniphar is one of the largest players in the Irish pharmacy market, along with the merged Totalhealth and Haven group of independent pharmacies, which makes up c. 127 Irish pharmacies and McKesson (acquired by PHOENIX Group in 2021) which owns c. 94 pharmacies under the Lloyds Pharmacy brand.
Source: Uniphar Press Release
Keywords studios acquires Smoking Gun Interactive Inc.
Deal Details: Keywords Studios has acquired Smoking Gun Interactive Inc. The acquisition is based on a conditional agreement and Keywords Studios will pay a maximum of CAD$40m.
Keywords Studios is an international technical and creative services provider to the global video games industry. It was founded in 1998 by Giorgio Guastalla and Teresa Luppino, and is headquartered in Dublin. The company went public in 2013, and is currently led by Brendan Bodson. The business had FY21 revenues of c. £432.7m, which converted to an EBITDA of c. £72.8m.
Smoking Gun is a video game development studio based in Vancouver, Canada. It develops, enhances and supports highly rated, cross platform games for mobile, PC and console devices and works for publishers including Microsoft and Netflix Games. It was founded in 2007 by John Johnson, Drew Dunlop and Angie Pytlewski. The business does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: Keywords Studios has been on an aggressive acquisition spree in recent years, acquiring companies of all types including code testing specialists, media companies, development studios, and more.
Smoking Gun has emerged as one of the leaders across all categories of mobile gaming with titles such as Age of Empires, Phobies, and Freefall Racers. This is an area in which Keywords had not placed a huge focus on prior, and will likely unlock further growth for the business. A recent report published by Data.ai and IDC forecasted mobile gaming to make up 61% market share of the total gaming industry reaching a value of c. $136bn.
Source: Keywords Studios Press Release
Alltrans acquired by Carousel Logistics
Deal Details: Alltrans has been acquired by Carousel Logistics. Deal details have not been disclosed.
Alltrans is an Irish transport business that offers wholesale distribution services, specialising in the pharmaceutical and healthcare sectors. The business is led by CEO and founder Paul Touhy who set up the business in 1995. He owns the business alongside Karena Maguire. The business is headquartered in Dublin but also has a location in Cork and employs c. 120 staff. The business does not report turnover or EBITDA information. Paul Tuohy will remain post-deal to facilitate a smooth transition. The company will then be headed up by its current Managing Director, Lochlann Doherty.
Carousel Logistics is a European critical service logistics specialist that delivers high-value parts and products for performance and life-critical industries. The business was founded in 1986 by Graham and Michael Martin and is headquartered in the UK. Axcel, a Danish private equity company acquired both Carousel Logistics and DANX at the beginning of the year and subsequently merged the two. In FY20 the business had a turnover of c. £51.3m, which converted to an EBITDA of c. £3.7m.
Advisers: Alltrans: Corporate Finance: PwC led by Bryan Tighe and David Tynan. Legal: Beauchamps led by Damian Maloney and Julia Drennan. Tax: Bradley Tax Consulting led by Marie Bradley Accounting: Dempsey Mullen led by Eric Daly.
Carousel: Legal: Eversheds led by Jonathan Ennis and Gavin O’Flaherty. Financial & Tax Due Diligence: KPMG led by Brian Egan and Brigid Doherty.
Renatus Comment: Private equity activity, which has been seen in the European logistics space for many years now, appears to be entering the Irish market with this week’s newsletter featuring two separate transport and logistics deals, both of which involve private equity.
Other recent activity in the Irish transport and logistics market include names we would be used to seeing on the motorway including Dixon International Logistics’, Carna Transport, DFDS’ and Lucey Transport Logistics.
Source: Carousel Press Release
MML Capital acquires stake in Virginia International Logistics
Deal Details: MML Capital Partners has acquired a stake in Virginia International Logistics.
Virginia International Logistics is a family-owned transport logistics company that specialises in temperature controlled, dry freight and containerised transport. The business is headquartered in Cavan but has locations in Dublin, Meath and the UK. The business was founded by Johnny and Bridie Cole as Ramor Transport in 1982. Their sons Raymond, Sean, James and Eamon Cole now own the business. In FY20 the business had a turnover of c. €25.4m, which converted to an EBITDA of c. €4.1m.
Advisers: MML Capital: FDD: Mazars including Mark Mulcahy, Des O’Brien, Antoine Brunner, Kevin Hogan, Kevin Boyd and Robbie Graham. Tax: Mazars including Gerry Vahey and Nicole Hanlon. Legal: Dillon Eustace LLP led by Philip Lea and including David Lawless
Virginia International Logistics: Corporate Finance: Key Capital led by Colin Morgan. Legal: Wallace Corporate Counsel LLP. Tax: Bradley Tax Consulting. Financial: Vico Advisory led by Donal O’Sullivan. Accounting: DBASS Chartered Accountants.
Renatus Comment: Supply chain resilience has been a key theme coming out of the pandemic. A McKinsey report found that funding for logistics start-ups almost doubled in 2021 versus 2020, with many companies realising the value of an optimised supply chain, rather than seeing it as simply another cost on the P&L. Businesses such as Virginia International Logistics, which offer temperature-controlled solutions, have become increasingly in-demand, with some shifting consumer preferences towards services such as at-home grocery delivery.
Source: Virginia International Logistics Press Release
IMMAC Group acquires Bethany House
Deal Details: German-headquartered IMMAC Group has acquired Bethany House Nursing Home for an undisclosed sum.
IMMAC is a Healthcare investment company in Ireland, Austria and Germany with investments totaling €1.8bn to-date. The Group now own eight nursing homes / 498 residential beds in Ireland across Dublin, Meath, Westmeath, Kildare and Carlow. IMMAC’s Irish operations are led by Managing Director Noel Boyle.
Bethany House Nursing Home, located in Westmeath, is a 90-bed newly extended private nursing home. Prior to the transaction, it was owned by David Corby and Madeline Corby. The business does not report turnover or EBITDA information.
Advisers: IMMAC Legal: A McCann Fitzgerald team of Garreth O’Brien, Shane Sweeney, Donal Hamilton, Catherine Austin, Ciara O’Herlihy, Siobhan Lafferty, Charlotte Blackmore, Catherine Walsh, India McGirr and Mark Aherne. Finance / Tax: A JPA Brenson Lawlor team of Jason Bradshaw, Kevin Hendricken and Michael O’Leary.
Bethany House Legal: Flynn O’Driscoll, led by David Ryan. Finance/ Tax: BCA, led by Caroline McGrath.
Renatus Comment: Healthcare investments have accounted for 63% of the investments made by IMMAC. Market dynamics such as a shortage of beds and an ageing population have led to increased demand for nursing homes in Ireland, which has commanded higher multiples as players such as IMMAC seek to consolidate the space.
According to JPA Brenson Lawler, EBITDAR multiples for top-tier nursing homes in Dublin have reached 15-16x. This demand is showing no signs of abating, with CBRE reporting that Ireland needs to build 1,600 beds per year until 2030 to meet demand, with only 1,000 of these beds forecast to be delivered in total between 2021 and 2024.
Money chasing this space was often linked to money chasing yield. with interest rates rising, this money may not be as aggressive in the future and clearly the EBITDARs would be under pressure with increased energy costs and wider inflationary pressures.
Anyone who exited in recent years is probably very happy to have crystalised their positions in cash.
Source: IMMAC Press Release
DEALS IN THE MAKING
Smarttech247 plans direct listing on AIM
Deal Details: Smarttech247, an IT security firm founded in 2012 and based in Cork, plans to list on London’s alternative investment market (“AIM”) next month at an estimated valuation of c. £40m.
It’s reported that roughly £4m worth of shares will be sold to retail and institutional investors as part of the listing. Smarttech247 is led by CEO Ronan Murphy who is currently the sole shareholder in the company.
Prior to its planned direct listing, Smarttech247 was in negotiations with Conduity Capital to complete a reverse takeover which would have given it a listing on the AIM market.
Source: Business Post
DEAL UPDATES & OTHER NEWS
Quintas launches new fund
Deal Details: Quintas has announced that it will be launching a start-up investment fund through its new investment entity, Quintas Capital. The micro fund is looking to raise between €5m – €10m from private investors and will be regulated through the Vauban platform. The fund will target Enterprise Ireland-backed high-potential start-ups and be led by director, Kevin Canning. Special advisors to the fund will include John Riordan (ex-Shopify) and Gary Fox (The Entrepreneur Experiment Podcast). The fund is a crossover between an Angel Syndicate and a VC fund.
John McQuillan (Contracts) Limited (T/A McQuillan Companies) is a civil engineering and road contracting company. The group consists of John McQuillan Contracts, McQuillan Quarries, McQuillan Environmental and McQuillan Outdoor. The business is based in Co. Antrim and is owned by the McQuillan family, with John and Anthony McQuillan being the largest shareholders.
In its financial year to March 2022, McQuillan Companies had turnover of c. £47.8m, which converted to an EBITDA of c. £3.4m. This represents a rise of 25.7% and 33.2% respectively.
The business finished the year with a cash balance of c. £7.9m, a rise of c. £498k year-on-year. Significant cash outflows included fixed asset purchases of c. £1.0m and share purchases of c. £5.4m.
The business employed an average of 174 people at an annual cost of c. £8.4m.
Good Fish Processing (Carrigaline) Limited (T/A The Good Fish Co), is an award-winning specialty fish processor and store. The business is based in Cork and is owned by Denis F. Good and Denis M. Good.
During the financial year ending in December FY21, year-on-year turnover increased by 9.3%, resulting in a reported turnover of c. €22.5m. This converted to an EBITDA of c. €1.6m, representing a c. 29.4% year-on-year increase.
The business ended the year with a cash balance of c. €1.5m, with significant post-EBITDA cash movements including c. €1.1m used to purchase tangible fixed assets.
The business employed an average of 89 staff throughout FY21 at a cost of c. €3.2m.
Who: Otonomee, a purpose built, remote first BPO, founded by Aidan and Hilary O’Shea in 2020, after seeing an opportunity to build an alternative offering in the $250 billion dollar BPO industry, by harnessing a fully remote working model. Otonomee builds and operates, technology and people solutions for scaling companies.
What: The business has received growth capital from Martello Group, an investment group focused on technology, aviation and hospitality sectors.
Why: This funding will allow Otonomee to deliver its ambitious growth plans, supporting clients globally in solving problems of scale, irrespective of industry.
Source: Martello Finance
Who: Dope Security, a Cork based web security firm that targets the Secure Web Gateway market to stop networks from accessing malicious websites or web traffic.
What: The business has raised €3.9m in funding from US-based Boldstart Ventures.
Why: The company will use the funding to recruit more staff in its Cork HQ in order to roll out further operations.
Source: Business Plus
Who: CIM, a technology company that aims to enable property operation teams to work more efficiently. It was founded by Tipperary native David Walsh and has a location in Cork, despite being headquartered in Australia.
What: The business has received c. €6.7m in a Series A funding round led by Five V Capital and Carthona Capital and included property executives such as Mark Steinert, the former CEO of Stockland.
Advisors: CIM: Financial: Jarden Technology Investment Banking team led by Bryce Thompson Legal: HFW led by Aaron Jordan.
Why: It will be used to expand operations into Asia and North America as well as doubling the headcount over the next 12 months.
Source: CIM Press Release
Who: Studio Ulster, a virtual production facility that integrates with the film, animation, games and broadcast industries as well as having research and development and visual effects capabilities.
What: The business has secured a £25.2m investment through the Belfast Region City Deal.
Why: The investment will allow Studio Ulster to create a 57,000 square foot building that will include various new facilities such as virtual production stages, a 3D scanning stage, an R&D smart stage and more. It will also support 461 direct and indirect jobs.
Source: Belfast Telegraph
Who: Signum Surgical, a medical technology company that develops solutions to treat patients with colorectal diseases.
What: It has raised c. €2.9m in a funding round led by Halo Business Angel Network’s MedTech syndicate, a joint initiative from Enterprise Ireland, InterTrade Ireland and Invest Northern Ireland, Western Development Commission and other angel investors from the medical device industry.
Why: The funding will support its ongoing regulatory and clinical programmes and will allow the company to commercialise its BioHealx device.
Source: Irish Independent
Who: Meditech Expanse, an electric health record (EHR) business that integrates patient records across a groups entire network.
What: The business has received €26m in funding from the Mater Private Network.
Why: The investment will allow Meditech Expanse to roll out its system across the Mater Private Network including its flagship Dublin and Cork hospitals and other sites such as the Mid-Western Radiation Oncology Centre in Limerick and day hospitals and clinics in Limerick, Offaly, Meath and Louth.
Source: Irish Independent
Who: Gigable, a free management platform where businesses can gain access to networks of freelance workers.
What: It has raised €1.5m in fresh funding and also seen just over €1m in loan notes converted into shares in the business. Gigable’s backers include John Herlihy (former head of Google’s Ireland operation), Dan & Linda Kiely (Voxpro founders), Patrick Joy (Suretank founder), Tom Kennedy and Fergal Mooney (Hostelworld), Enterprise Ireland and Delta Partners.
Why: This funding round will assist Gigable with its UK roll out.
Source: Irish Independent
Who: Amply Discovery, a biotech company that develops biological molecules for anti-infective health and nutrition applications in animal and human health. It is a Queens University spin-out.
What: The business has raised £900k in a mix of equity and grant funding. The equity investment comes from Co-fund NI, the QUBIS Innovation Fund, the Helix Way Partnership, and angel investment from members of the Halo Business Angel Network (HBAN).
Why: This funding will be used to support the development of its platform to help tackle infectious diseases.
Source: Irish Times
Who: Invert Robotics, a Dublin-based technology company that develops proprietary robots that automate the industrial inspection process.
What: The company has received an undisclosed investment from PNK ORLEN S.A., a Polish corporate venture capital fund.
Advisors: Invert Robotics: Corporate Finance: PKF O’Connor Leddy & Holmes Limited led by Jack Swinburne.
PKN ORLEN S.A: None mentioned.
Why: The investment will allow Invert Robotics to further expand following the companies move from New Zealand last year. ORLEN backs technology companies at the expansion stage and value sustainability within a company.
Source: ORLEN Press Release
Who: NTR Plc, an Irish renewable energy company led by CEO Rosheen McGuickian.
What: NTR has raised £38m (€43.5m) in of debt financing from Rabobank to help fund two of its projects.
Why: The funds will be used to help finance its’ Murley Wind Farm and Ockendon Solar Farm projects. Murley Wind Farm is a 21.6MW ready-to-build wind farm in co. Tyrone with construction expected to start in the coming months and Ockendon is a solar situated close to London.
Source: NTR Press Release
Who: Limbo, a health and wellness service co-founded by Irish entrepreneur Pat Phelan that has offices in Cork and New York. Limbo combines continuous glucose monitoring with human and artificial intelligence insights to create a hyper-personalised coaching based on a user’s AI.
What: Limbo has completed a $6m funding round led by Hoxton Ventures. Other participants in the round include Shaquille O’Neal (former basketball player), Des Traynor (Intercom co-founder), Dan and Linda Kiely (Voxpro co-founders), Paddy Cosgrave (Web Summit CEO), Liam Casey (PCH Founder) and Jamie Heaslip (former rugby player).
Why: Funds will be used to invest into building out the team, with the company expecting to double headcount following the fundraise.
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 latest figure from the Bank of Ireland Savings and Investment index which tracks Irish households that are actively saving. This is a 4 point increase from last quarter. According to @bankofireland
The average increase in the cost of rebuilding a home in Ireland since last year. The increase in rebuild costs in Dublin was 14%, this was the lowest increase recorded across the country, however, Dublin still has the overall highest rebuild costs. @SCSISurveyors
The percentage of home loans that were at least 90 days in arrears at the end of June. This compares to 4.5% in March and 5% in June 2021. The figure has continued to fall since the 2013 peak of 12.9%. According to @centralbank_ie
The increase in grocery prices in the 12 weeks to September 4. The price of bread is up by 20%, milk is up by 26% and yoghurt prices have increased by 17%. This is the largest average increase in grocery prices since Kantar began tracking in 2008. @Kantar
The latest key interest rate for The Bank of England as of September 2022, up from 1.75% and the highest level since November 2008. According to @RTEbusiness
The estimated value of outbound Irish M&A activity in Q2 2022, up from c. €2.8bn in Q1 2022 and c. €2.1bn in Q2 2021. According to @PhilipLeeLaw @Kantar
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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