Renatus’ Weekly M&A Newsletter – 19/06/2022
June 19, 2022Renatus’ Weekly M&A Newsletter – 03/07/2022
July 3, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 26/06/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
Global markets are in official bear territory (>20% off-peak). But they are still nearly 5x what they were in 2009. People assume bear markets and recessions are like thunder and lightning. While likely it is not inevitable, there have been 27 bear markets since 1929 and 83% have been followed by or flanked by a recession. Interestingly, the FT yesterday said the average duration of a bear market with a recession is 24 months and without one is just under 8 months.
In the last week, the price of oil has come off its peak, copper has hit a 16-month low, while marginal on the oil front, at least the direction of travel is positive.
As seen with the UK train strike this week and German unions’ demand for a 7-8% pay rise, a winter of discontent is very possible if energy prices stay high. Let’s hope something can happen to mute the effect of the energy cost increases as it feels like without them economic life in non-war-stricken countries could be normal enough and it is the inflationary effect of it that is doing the damage. It is probably too simplistic to cancel global taxes on energy and support with some warlike bonds, but it feels like if the energy prices could revert to the mean everything would be fine, as all surveys suggest that customers, while worried about running out of money, will spend if they have it. We just need to make sure everybody has the money to spend to keep the wheels turning.
M&A ACTIVITY
Hibernia REIT acquired by Brookfield Asset Management
Deal Details: Hibernia REIT has delisted from Euronext Dublin following its acquisition by Brookfield Asset Management, in a deal reported to be worth €1.1bn.
Hibernia REIT PLC, owns and develops property in Dublin, specialising in city centre offices. The company was founded by Kevin Nowlan in 2013 and is based in Dublin. In FY21 it recorded €66.5m in rental income.
Toronto-based Brookfield Asset Management Inc. is one of the world’s largest owners and operators of real estate, with more than $25bn of property assets. It was founded in 1997 and is led by CEO James Bruce Flatt. In FY22 it had a turnover of CA$112.3m.
Advisers:
Brookfield Asset Management:
Legal: An Arthur Cox team led by Connor Manning, Cian McCourt and Sarah McDermott (Corporate and M&A) and included Ellen Gaffney and Sinéad McDonagh (Corporate and M&A), Deirdre Sheehan, Deirdre Barrett and Sarah O’Mahony (Real Estate) and David Molloy, Ben Rayner and Jennifer White (Finance).
Financial: JP Morgan Cazenove and Societe Generale.
Hibernia REIT:
Deal advisory: Credit Suisse and Goodbody Stockbrokers.
Renatus Comment: Hibernia is the latest REIT to be taken private in recent years following the privatisation of Green REIT and Yew Grove under similar circumstances. Ires REIT is the final Irish REIT to remain a publicly listed company. Hibernia was founded by Kevin and Bill Nowlan with Kevin previously working as a portfolio manager with Nama, specialising in acquiring properties with under realised value.
Brookfield made an offer to acquire Hibernia REIT back in March. The valuation represented a >30% premium to the share price at the time.
Source: Irish Times
ProAdjust acquired by Davies
Deal Details: Dublin-based ProAdjust has been acquired by Davies Group Limited. Deal details have not been disclosed.
ProAdjust specialises in personal and commercial property claims and deploys loss adjusting solutions during claim surges and catastrophic events. The Dublin-based company was founded in 2004 and, prior to the transaction, was majority-owned by managing director Martin Carway. The business does not report turnover or EBITDA but latest accounts show it made a net profit of c. c. €640k for the period ending FY Jan’21.
Davies is a specialist professional services and technology firm, working in partnership with leading insurance, highly regulated and global businesses in the UK and Ireland. The business is based in Stoke-on-Trent, Staffordshire. The business was established in 1968 and is led by CEO Daniel Saulter. BC Partners holds the majority stake in the business. In FY21 it had turnover of £310.2m, which converted to an EBITDA of £36.5m.
Advisers:
ProAdjust
Corporate Finance: Capnua led by Paul Keenan and supported by Tracy McNulty and Conor Hoban.
Legal: LK Shields led by Jennifer McGuire, supported by James Byrne, Jennifer O’Neill and Gerry Halpenny.
Davies
None mentioned.
Renatus Comment:
Given the level of acquisitions in the insurance space in Ireland in recent times, which have been primarily consolidation plays, it is unsurprising to see this trend traverse to the auxiliary services portion of the space. The attractiveness of ProAdjust’s offering lies in the scalability of its loss adjusting solution which can prove invaluable during claim surges and catastrophic events. The deal will benefit ProAdjust by giving it access to Davies’ global client base, allowing it to both strengthen and expand its existing offering.
Source: ProAdjust Press Release
Cainthus acquired by Ever.Ag
Deal Details: Ever.Ag has acquired Dublin-based Cainthus. Deal details were not disclosed.
Cainthus Ireland Limited, t/a Cainthus, is an artificial intelligence company that turns visual information into actionable insights for farmers. It was founded in 2016 by David Hunt, Ross Hunt and Richard Johnston. Ross Hunt is the business’ largest shareholder, with Cargill also holding a significant stake. The business is headquartered in Dublin and has an office in California.
Vault AG Holding Company LLC, t/a Ever.Ag, offers innovative AgTech solutions and services that empower agriculture, food and beverage supply chains to feed a growing world. The business is based in Chicago, IL and was founded in 2002. It is owned by PE fund Banneker Partners.
Advisers: None mentioned.
Renatus Comment: There has been a boom in agritech in Ireland in recent years with similar businesses FarmWizard and HerdInsights both being acquired by large foreign rivals. This comes as no surprise given the size of Ireland’s agricultural sector with a total of 135,037 farms throughout the island. The 2020 agricultural census recorded a total of 1,567,681 dairy cows in Ireland, representing a 46% increase from 2010 figures.
Source: CapitalIQ
Sullivan Insurances acquired by PIB Group Limited
Deal Details: Sullivan Insurances Limited has been acquired by PIB Group Limited. Deal details have not been disclosed.
Sullivan Insurances is one of Munster’s leading insurance brokers offering personal, commercial and life insurance services to clients. The company is headquartered in Limerick but also has offices in Ennis, Nenagh and Athlone. It was founded by Denis Sullivan in 1983 and has expanded both organically and through acquisition. In FY21 Sullivan Insurance recorded a turnover of €2.7m, which converted to an EBITDA of €0.7m.
PIB Group Limited is a group of insurance advisory businesses. The business was founded in 2015 by Brendan McManus and has rapidly expanded since. It is headquartered in Nottinghamshire, UK. In FY20 it recorded turnover of €151.5m which converted to an EBITDA of €23.6m.
Advisers:
PIB
Legal: DLA Piper team of Matt Cole and Maria Hickey.
FDD: A Mazars team led by Mark Mulcahy.
Tax: Mazars led by Gerry Vahey.
Sullivan Insurances
Legal: A Holmes team of George Kennedy, Shane Costelloe, Ciara Downes and Rachel Jones.
Renatus Comment: PIB has played a major role in the Irish insurance M&A plays referenced in the Innovu comment, with this deal marking its 8th in 2022, following the acquisitions of Alan Tierney and Partners, Brokers Union, Exito Consulting, Baily Garner, Guest Krieger, Tractio Risk, and Fingal Insurance Group.
Source: PIB Group Press Release
VisionID acquired by Peak Technologies
Deal Details: VisionID has been acquired by Sole Source Capital Portfolio Company Peak Technologies. Details of the deal have not been disclosed.
VisionID Limited is a systems integrator of Automatic Identification and Data Capture (AIDC) hardware, labels, software and services primarily to the healthcare, food and beverage, and industrial end markets. The company is headquartered in Tipperary and is owned by Robert and Isabell Jones. The business does not publish turnover or EBITDA information.
Peak Technologies is a leading system integrator of digital supply chain, retail and mobile workforce solutions. It is headquartered in Columbia, Maryland. The business does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: This acquisition marks Sole Source Capital’s 15th acquisition in the Automatic Identification and Data Capture (AIDC) market following the acquisition of Dalosy, Optical Phusion, Inovity, Bar Code Direct, DBK Concepts, Avalon Integration, and Graphic Label to name a few. This is a great exit for majority shareholder and current MD Robert Jones who founded the business in 2000 and has seen it grow into an Irish market leader employing c. 30 people.
Source: Businesswire
INNOVU acquired by Gallagher UK
Deal Details: INNOVU Insurance has been acquired by Gallagher UK. The terms of the transaction have not been disclosed.
INNOVU Group Holding Company Limited, t/a INNOVU Insurance, offers a wide range of commercial and personal insurance products and financial services, serving a customer base of c. 45,000 across Ireland. The company was established in 2018 by Ronan Foley and is headquartered in Wexford. It also has offices in Dublin, Kilkenny, Limerick, Tipperary and Kerry. In FY20 it recorded a turnover of €7.9m, which converted to an EBITDA of €1.6m.
Gallagher UK is a leading insurance brokerage, risk management and human capital consulting company with significant international reach. The company was established in 1927 by Arthur J. Gallagher and is headquartered in Chicago. In FY21 it recorded a turnover of €8.2bn.
Advisers:
INNOVU
Corporate Finance: PwC led by Mark McEnroe, Billy Sweetman, Brendan French and Dean McKenna
Legal: John Neeson and Donncha Sexton of McCann Fitzgerald
Tax: PwC led by John Murphy and Stephanie Curtin
Financial: Deloitte led by Marc Rogers and Conor Cullen
Gallagher
None mentioned.
Renatus Comment: The consolidation within the insurance broker space shows no sign of slowing down with yet another insurance-related deal. INNOVU Insurance has a strong track record of successful M&A having acquired five Irish brokers since 2019, including Sheridan Insurances, Wexford Insurances, Goggin Insurance Brokers, Cullen Insurances, and PE Kelly Insurances. This acquisition is Gallaghers first in the Irish market and will give the business an on-the-ground presence in the ROI. This is a great result for MML Capital who co-founded INNOVU with current CEO Ronan Foley after acquiring Sheridan Insurance and using the business as a platform for consolidation.
Source: Gallagher UK Press Release
Kontex Security acquired by Ekco Cloud Limited
Deal Details: Kontex Security has been acquired by Ekco Cloud Limited. Deal details have not been disclosed.
Kontex is a well-established Irish cyber security company, that has grown to become a leading supplier of security technology and services to organisations around the world. It was founded in 2015 by Patrick O’Callaghan and is based in Dublin. The company does not report turnover or EBITDA.
Ekco Cloud Limited is an Irish-owned company with headquarters in Dublin. Ekco has hundreds of security, business continuity, cloud and infrastructure specialists across Europe. It was founded by Eoin Blacklock and Jonathan Crowe in 2017. The company does not report turnover or EBITDA. The business’ largest shareholders are Pageant Holdings and Act Venture Capital, along with Eoin Blackrock and Jonathan Crowe.
Advisers:
Ekco
Legal: General Counsel, Niall McCooey and a Dentons Ireland team of Ciaran O’Boyle and Sarah Holland .
Kontex
Legal:A Flynn O’Driscoll team of Alan O’Driscoll, Jonathan O’Beirne and Anna Vaughan.
Renatus Comment: Cyber security is a hot space at the moment given the exponential rise in cyber threats and criminal activity on the internet. This is the sixth cybersecurity related deal we’ve come across in 2022 following the acquisitions of Cyber Risk Aware, Ansec, Riverlite, Gary IT and Caretower. Grant Thornton Ireland estimates that cybercrime cost the Irish economy c. €9.6bn in 2020 with ransomware attacks alone and the cost of remedying such attacks reaching over €2bn.
Source: Ecko Press Release
Gscience acquired by Adamas Esports
Deal Details: Gscience has been acquired by Adamas Esports. Deal details have not been disclosed.
Gscience is an esports performance company, providing sports science and data analytics aimed at developing healthier, happier, and more successful gamers. It is headquartered in Belfast, Northern Ireland and was founded by Ryan Scollan in 2018. The company do not report turnover or EBITDA.
Adamas Esports is an esports performance company who works with teams, coaches and players to improve individual performance, working on both mental and physical training regimes for a holistic approach, not just improving how well they play. Adamas launched in 2018 and is headquartered in Burnaby, British Columbia. Turnover or EBITDA information was not available.
Advisers: None mentioned.
Renatus Comment: Esports has experienced outstanding growth over the last few years, accelerated by the pandemic with more people taking up gaming in their spare time. According to Insider Intelligence, in the US in 2022 there is forecast to be c. 30m esports viewers each month, an increase of c. 11.5% versus 2021. The prize money is also staggering, with the largest e-gaming prize reaching c. $40m in 2021. This deal is the second esports-related deal in Ireland in the past few months after Olympic sprinter Usain Bolt acquired a stake in Dublin-based Wylde in April.
Source: CapitalIQ
NiSoft has been acquired by management
Deal Details: The management team of NiSoft has completed a management buy-out, purchasing all shares previously held by Crescent Capital. Deal details have not been disclosed.
NiSoft provides tailored software solutions to support operations within power generation facilities, oil refineries and other process-intensive industries. NiSoft is headquartered in Belfast and has offices in Singapore, Denver, and Brisbane. It was founded by Doug Deardorf in 1993. The company does not report turnover or EBITDA information.
Crescent Capital is a venture capital fund based in Belfast.
Advisers:
NiSoft
Deal advisory: Beltrae Partners and D.A. Green & Associates
Legal: Mills Sellig
Corporate Banking:- HSBC Belfast
Crescent Capital
Legal: Davidson McDonnell
Renatus Comment: In 2008, Crescent led a buy-in deal into NiSoft, installing a new CEO and helping the business scale to being a global software provider. This deal will see Crescent exit the business with the management, led by Doug Deardorf, buying out Crescent shares.
Source: NiSoft Press Release
COMPANY PERFORMANCE
Ken Black Limited, t/a Ken Black, is a toys and nursery store offering products such as toys, baby products, bikes, scooter, gaming and outdoors. The business is based in Dublin with four stores across the east of Ireland. It is owned by Kenneth Black.
During its financial year to August 2021, Ken Black had turnover of €15.7m, a slight decrease year-on-year. This converted to an EBITDA of €3.2m, a slight decrease year-on-year, but follows a positive EBITDA trend which is 15% above 2019 levels, having risen by c. 22% between 2019 and 2020. This decrease in EBITDA is largely attributable to a 16% rise in administrative expenses compared to the previous year.
The closing cash balance for the year was €5.3m, a €3.0m decrease year-on-year. Significant post-EBITDA cash movements included the purchase of fixed assets and the purchase of other investments for a total of €5.1m. The business employed an average of 55 employees costing c. €1.5m annually.
IGWT Poultry Services Limited, t/a McCaghey Turkeys, is a poultry business supplying major Irish retailers and butchers. It is based in Co. Monaghan and owned by Mary and Raymond McCaghey.
In its financial year to December 2021, the business had turnover of €33.4m, an increase of 14.4% year-on-year. This converted to an EBITDA of €1.6m, an increase of 12.0% year-on-year. The increase in EBITDA is largely attributable to the business’ increased revenues, with gross margins remaining almost flat year-on-year.
McCaghey Turkeys finished the year with a cash balance of €1.1m, an increase of €0.7m year-on-year. This increase is despite significant cash outflows relating to capital expenditure. The business employed an average of 163 people over the year at an annual cost of €4.2m.
RECENT FUNDRAISINGS
Who: Mzuri Group, a global luxury window coverings group that designs, distributes and manufactures window coverings. The window blinds company was founded in 1979 by Lynda and Michael Dickson.
What: The business has raised £10m (€11.7m) from BGF. This marks a follow-on investment for BGF, which first backed Mzuri in April 2020, bringing its total backing for the company to £20m
Why: Mzuri will use the funding for further acquisitions, to boost its growth and build its European sale and distribution.
Source: Irish Times
Who: FlowForma, a business management software company specialising in business process management, automation, workflow and digital transformation. It was founded in 2012 and is a spin-out from Ergo.
What: FlowForma has raised €4m, which was raised from new and existing investors including Fenergo co-founder and CEO Marc Murphy, Ergo co-founder John Purdy and Colm Heffernan former COO of Fenergo.
Why: The funding will be used to develop its next-generation product. It aims to create 70 jobs in the next three years and to focus on further expansion in the US market.
Source: Irish Times
Who: Sonrai Analytics, a Belfast-based AI data discovery company uniquely positioned to support biotech and pharma in the search for new development and better research. It was founded by Dr Darragh McArt in 2018 as a spin-out from Qubis.
What: It has secured a seed funding round of £2.175m. The round was led by the London-based VC firm Forward Partners.
Why: The investment will accelerate the adoption of Sonrai’s technology globally. It will also lead to the creation of eight new jobs, expanding its data science and engineering teams.
Source: Irish News
Who: &Open, an Irish gifting platform is aimed at making it easier for brands to send curated, responsibly sourced gifts to customers to boost loyalty and engagement and improve consumer retention. It was founded in 2018 by Ciara Flood, Jonathan Legge and Mark Legge and is based in Dublin.
What: The business raised $26m in a Series A funding round led by Molten Ventures (Nicola McClafferty) and supported by CircleRock Capital (Conor Sharpe and Barry O’Neill), First Round Capital, LocalGlobe and other angel investors.
Why: The proceeds will be used to further expand &Open’s sales and engineering team, adding 40 jobs before the end of the year. This will include a sales team to support its New York office that is due to open this year.
Source: Irish Times
Who: Zipp Mobility, a Dublin-based micromobility firm, offering an e-scooter and e-bike rental service in nine cities across Ireland, the UK and Poland. It was founded by Charlie Gleeson in 2019 and has previously attracted angel investment from Brian O’Driscoll and Barry Maloney.
What: Zipp Mobility has raised €6.1m funding in a round made up of debt and equity. The round was led by UK-based company Fasanara Capital, as well as follow-on investment from some existing investors.
Why: The proceeds are expected to be used to further roll out its e-scooter and e-bike operations in Ireland and bring it to new cities.
Source: Irish Independent
Who: Webio, a startup that delivers credit, collections and payment using artificial intelligence. It is based in Dublin and was co-founded by Cormac O’Neill, Mark Oppermann and Paul Sweeney in 2016.
What: Webio has secured a series A funding round worth $4m, which was led by Finch Capital.
Why: Webio are growing at more than 100% year-on-year hence expects to use the proceeds to double the number of staff employed within the next six months.
Source: RTE
Who: InVera Medical, Loci Orthopaedics, Seilo Medical, and Ovagen, four Irish companies in the medical space.
What: They have received a total of €23m between them from the European Innovation Council (EIC).
Why: The purpose of this funding is to support the commercialisation of high-risk, high-impact technologies.
Source: Sunday Business Post
Who: CergenX, a Cork-based company which has developed a brain screening software for newborns.
What: The business has raised €800k in seed funding.
Why: The funding will be used to enable the company to develop a minimum viable product within nine months.
Source: Sunday Business Post
Who: The Electric Storage Company (TESC), the Belfast-based company which uses smart batteries to harness the energy created from renewable sources.
What: The business has received a strategic partnership with and a seven-figure investment from Heron Bros, the Derry construction group.
Advisors:
Corporate Finance: HNH team of Paul Gleghorne and Chris Hayes.
Legal: Mills Selig team of Glenn Waterson and Emma McCloskey.
Why: The funding will allow TESC to fast-track its growth plans, as it seeks to double its team of power and software engineers, and data scientists, to 35 within the next three years.
Source: Irish News
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.
@RenatusCapital Tweets
40%
Irish house prices were running at 40% above the long-term link to household income at the end of last year, a level last seen at the start of the property crash, According to @centralbank_ie
€81,500
The typical income for joint purchasers of homes in Ireland in 2019, with the proportion of properties purchased jointly standing at 62.2% during this period. According to @CSOIreland
40%
The cost of basic goods and services in Ireland was 40% above the EU average in 2021, according to @EU_Eurostat
5th
Ireland has been ranked as the 5th most attractive labour market in Europe to work in. According to a report from @indeed
10.9%
The year-on-year rise in asking prices for houses in Ireland, with the national median asking price in Q2 standing at €320,000. According to @MyHomeProperty
5.1 million
The preliminary Irish population as recorded by the 2022 Census, a rise of 361,671 persons, or 8%, versus the 2016 Census. According to
@CSOIreland
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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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