Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
The traditional social contract between employer and employees on low to minimum wage seems very challenged currently for both parties. There is a growing risk that this system is broken following the cost-of-living crisis. Employers too are struggling to recruit staff at this level.
According to research by the Organisation for Economic Co-operation and Development (OECD). Most OECD countries have increased their minimum wages to try to keep up with inflation. They reported an increase in minimum wages of c. 29% between December 2020 and May 2023, while prices increased by c. 25%. Even with the rising minimum wage, the dilemma of supply and demand has forced a pay increase for people in lower-paid jobs. The UK Association of Convenience Stores, for example, reported that its members “‘tend to employ store colleagues at or just above” the minimum wage but it had proved “increasingly difficult to recruit staff at this level”.
In the US, there is a federal wage floor of $7.25 that has not increased since 2009 and there is currently an unemployment rate of under 2%. Noticeably, there is a lack of demand for minimum wage-paying jobs, with only c. 68,000 people earning minimum wage in the first seven months of 2023, according to a New York Times analysis of government data. Therefore, the minimum wage in the US is not as applied as it is in Europe and market forces mean the real minimum wage is significantly higher. Consumer behaviour can change drastically with the implementation of government support. A KKR report on consumer trade-offs shows that consumer spending growth in 2020 was initially driven by middle-income and lower-income consumers who benefitted from fiscal stimulus. However, with the removal of this stimulus, the ability of lower-income workers to live and spend normally is challenged.
This is not a simple problem to solve. Some believe that a labour shortage is causing a critical adjustment in the relationship between capital and labour, and that wages should increase to deal with the cost-of-living crisis. However, due to the current tightness of labour markets around the world, employees are frequently in a strong position to successfully bargain for a pay increase. Any further significant increases in pay will add further fuel to the fire of inflation which would then necessitate increased interest rates. But if left alone, it is still a problem for those in lower-paid middle-class jobs as well. It is very difficult to see how the dilemma can be solved without any big trade-offs and it seems to be as much a global problem as it is a local one, with no simple solution. It is likely the reason that any political party that presents itself as a vote for change seems to succeed, but none appear to have a magic wand for this critical dilemma.
Deal Details: Pheonix Equity Partners has taken a stake in Nostra. Deal consideration was not disclosed.
Nostra is a Dublin-based IT services provider, with other offices located in Galway and Cork. The business is majority owned by Kevin O’Loughlin, CEO, who co-founded the business with his brother Barry, Gary Byrne and Senan Finucane. Nostra is reportedly forecasting 2023 revenue of c. €50m.
Phoenix Equity Partners is a London-based private equity firm targeting businesses valued at up to £200m.
Advisers:
Nostra:
M&A Lead Advisory Services led by EY Corporate Finance Partner Ronan Murray and supported by Martin Treacy, Natalie Bright and Conor Corcoran.
Vendor Due Diligence: EY led by Tara Hynes and Eanna Brennan.
Modelling: EY led by Simon McAllister and Kevin Kelly.
Tax: EY led by Frank O’Neill, Aileen Daly and Ronan Dunne.
Legal: McCann FitzGerald led by John Neeson, Rory O’Malley, John Neeson and Anya Gleichmann.
Phoenix Equity Partners:
Corporate Finance: Clearwater Corporate Finance led by Sam Nolan, Richard Clark, Ben Crowe, Daniel Lavelle, Michael Quinlivan, and Arush Manchanda.
FDD: EY led by Ian Kelly and Conor McVeigh.
Tax DD: EY led by Dave Barry and Niall Lideadha.
Renatus Comment: Having founded Nostra in 2006, Kevin and Barry O’Loughlin, Gary Byrne and Senan Finucane have seen the business go from strength to strength, completing a flurry of acquisitions. This has established it as a market-leading IT services provider, with Kevin being nominated for EY’s Entrepreneur of the Year in 2017.
The business announced its acquisition of Voice & Data Solutions just last week, marking its seventh acquisition since 2016 and third in 2023 alone. At the Real Deal 2023, Kevin O’Loughlin highlighted that Nostra has primarily relied on bank funding in completing these acquisitions. With the business aiming to invest a further €30-€50m in acquisitions, partnering with a private equity firm that can add additional capital and expertise makes sense. Nostra will no doubt continue on its impressive trajectory over the coming years, with Kevin highlighting the business aims to grow organically in tandem with this acquisition growth, with the ultimate aim of positioning itself as the IT services player of choice across the UK and Irish markets.
Source: Business Post
Deal Details: IP Telecom has received a €6m investment from Development Capital.
IP Telecom is a Dublin-based provider of unified communications and Voice over Internet Protocol (“VoIP”) telephone services. It was established in 2010 by Shena Brien and Brian Chamberlain. The business does not report turnover or EBITDA information. It was owned by Brian Chamberlain, Shena Brien, Anthony Tattan, David MacNeaney.
Development Capital is an Irish development and growth capital fund manager that was founded in 2013 by Andrew Bourg and Sinead Heaney.
Advisers:
IP Telecom:
Corporate Finance: PKF led by David Lucas, Patrick Keane, Ben Pentony and Oísin Weber-Hall.
Tax: PKF led by Kevin Quinn.
Legal: Philip Lee led by Eoghan Doyle and Hugo Grattirola.
Development Capital:
FDD: Deloitte led by Marc Rogers and Kirstie O’Flanagan.
Tax: PwC led by John Murphy and Alanna O’Doherty.
Commercial DD: EY-Parthenon led by Helena O’Dwyer and Diarmuid Maguire.
IT DD: EY-Parthenon led by Niall McCarthy and Jim McGovern.
Legal: Eversheds led by Enda Cullivan.
Renatus Comment: VoIP first came to the market in 1995 and has since surpassed legacy ‘public switched’ telephone communication networks. VoIP allows the transfer of voice and video between many types of devices. It is also much cheaper than traditional communication systems which can cost a business in excess of €250 per user as VoIP typically costs just a fraction of this. In its press release, IP Telecom said that it will use this funding to finance several acquisitions to drive growth. Other active players in the space include Viatel, who have completed c. 8 acquisitions in two years and Welltel, who have completed c. 5 acquisitions.
Source: Irish Times
Deal Details: Activ8 has acquired 50% of Allbrite. Deal consideration has not been disclosed.
Activ8 is a residential and commercial solar panel company founded in 2007 by Ciaran Marron. In 2018, SSE Airtricity acquired c. 50% of the business. The business reports to have over 17k customers and it does not report turnover or EBITDA information.
Allbrite is a heat pump installation business based in Monaghan. It is reported that the business completes c. 500 installations every year. The business is owned by Alan Duffy and it does not report turnover or EBITDA information.
Advisers:
Activ8 Solar Energies:
Legal: Clark Hill Solicitors led by Edward Johnston, Cathal Byrne and Aine Quinn.
Finance: Blackthorn Capital led by Ann-Marie Reddy.
Allbrite:
None mentioned.
Renatus Comment: As part of the National Retrofit Plan, there is a government goal of installing 400,000 heat pumps and 250,000 solar panels in homes by 2030. As such, there is a need for providers to service this demand of energy efficient heating controls. It is reported that Allbrite projects to be installing 1,100 heat pumps in the next two years as it targets becoming the largest heat pump installer in Ireland within the next twelve months.
Source: Independent
Deal Details: KineMatik has been acquired by OpenText. Deal consideration was not disclosed.
KineMatik is a Cork-based provider of workflow automations, document change control, project management and electronic lab notebook solutions. The company has partnered with OpenText for over 19 years, developing solutions for OpenText Content Suite. It does not disclose revenue or EBITDA information.
OpenText is a Canadian software company that develops and sells enterprise information management software. The company has over 120,000 customers in 180 countries with over 9 trillion in annual commerce occurring on their network. In FY Jun 23, it reported turnover of c. $4.5bn which converted to an EBITDA of c. $1.5bn.
Advisers: None Mentioned.
Renatus Comment: A report by Gartner states that “the global cloud computing market size is growing with more than 45% of IT spending to shift from traditional solutions to the cloud by 2024”. The key benefits KineMatik’s services provide are business process efficiencies in regulated industries. OpenText CEO & CTO Mark J. Barrenechea stated “we look forward to bringing the KineMatik solution to our entire install base of content management customers”. The business has several big name customers including Abbott, TechnipFMC, ZOLL, Wells Fargo and Canadian Nuclear Laboratories.
Source: KineMatik Press Release
Deal Details: ORS Group has acquired GSP Fire. Deal consideration was not disclosed.
ORS Group is a multidisciplinary firm that offers nine core areas of civil and structural engineering, project management, infrastructure, health and safety, building surveying, assigned certifier, fire safety, energy management and environmental services. The firm was established in 1991 by Paul O’Reilly and Finbarr Stuart, and is currently led by managing director John Brennan. The company is headquartered in Mullingar and received Investment from Irish private equity firm Erisbeg earlier this year. The firm does not disclose revenue or EBITDA information.
Founded by Gerry Sexton in 1995, GSP Fire provides a wide range of fire safety services. The business is based in Waterford and works with every Local Authority in Ireland and is internationally recognised having worked on a vast array of projects globally. The business does not report revenue or EBITDA information.
Advisers:
ORS Group:
Legal: LK Shields led by Lester Sosa-Villatoro, Emmet Scully and Jonathan Braden.
Tax: EY led by Richard O’Dwyer and John Kennelly.
Corporate Finance: RBK led by Donnacha Lynch and Chris Ball.
GSP Fire:
None mentioned.
Renatus Comment: This marks the first acquisition for ORS as it expands its workplace offerings. The recurring nature of fire safety services and regulatory-driven demand makes it an attractive area. There is also a critical aspect to these services that make it unlikely to disappear in a recessionary period.
Source: ORS Group Press Release
Deal Details: National Insurance Ltd has been acquired by PIB Group. Deal consideration was not disclosed.
National Insurance Ltd is an Irish insurance broker with offices in Dublin, Carlow and Limerick. The business is family-owned, with Kenneth Dunne owning the majority of the business. In FY Mar 22, the business reported turnover of c. €1.3m which converted to an EBITDA of c. €270k.
PIB Group offers insurance brokerage services, providing advisory, analytics, claims management, premium funding, and risk management solutions. The business was founded in 2015 by Brendan McManus and is backed by private equity firm Apax Funds. It is headquartered in London and in FY Dec 22, the business reported turnover of c. £345m which converted to an EBITDA of c. £91m
Advisers:
PIB Group:
FDD & TDD: Mazars led by Mark Mulcahy, Anthony Shiel, Kevin Hogan and Robbie Graham.
Tax: Mazars led by Gerry Vahey and Nicole Hanlon.
Legal: DLA Piper led by Matthew Cole and Jack Kelly.
National Insurance:
Corporate Finance: Mazars led by John Bowe, Daniel Gallery and Megan Duffy.
Legal: Crowley Millar led by Emma Cafferky and Catherine Keane.
Renatus Comment: PIB Group continues to consolidate the Irish insurance broker space, making over 14 acquisitions in Ireland. The market remains fragmented as Aston Lark, Clear Group and Arachas continue to make acquisitions on the island. Even in times of economic downturns insurance broking remains attractive as an asset light fee-based model that delivers steady revenues.
Source: Mazars Press Release
Deal Details: Statkraft has acquired a wind farm portfolio from TRIG. The farms have a combined capacity of 35 megawatts. Deal consideration was not disclosed but it was reported that the price paid represented a 26% premium to the assets’ valuation at the end of 2022.
Statkraft is a renewable energy company owned by the Norwegian government. It is Europe’s largest generator of renewable energy. In FY Dec 22, it reported turnover of c. €16bn which converted to EBITDA of c. €6bn.
The Renewables Infrastructure Group (TRIG) is a UK-based investment trust, focused on renewable energy assets, established in 2013.
Advisers: None Mentioned.
Renatus Comment: Statkraft first entered the Irish market in 2018 with the strategy of managing wind farm assets from development right through to operation. The company stated that it may ‘repower’ at least some of these newly acquired sites, with some of the assets having been in operation since 2000 and approaching the end of their useful lives. This involves replacing and upgrading the turbines with more modern equipment. Wind remains a growing source for Ireland’s energy demand with c. 1/3 of the country’s requirement in July taking this form according to Wind Energy Ireland.
Source: Business Plus
Deal Details: HBMO Solicitors has been acquired by Clark Hill. Deal consideration was not disclosed.
HBMO Solicitors (formerly Noel Smyth and Partners) is a law firm based in Dublin with c. 40 employees. The business was founded in 1978 and it does not report turnover or EBITDA information.
Clark Hill entered the market through a combination with Galligan Johnston. Clark Hill is a US-based law firm with locations spanning across the United States, Ireland, and Mexico. Kirby Tarrant is currently leading the firm’s Dublin office. The business does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: Clark Hill has recently acquired O’Grady’s Solicitors (2019) and Eames Solicitors (2022) in Ireland, and it seems to be capturing more market share in Ireland. The surge in professional services M&A is a well-documented trend that remains. The UK shows a similar trend with the number of law firm mergers having jumped 23% from 99 in 2021 to 122 in 2022, according to the firm Hazlewoods.
There has been a number of US firms targeting bases in Ireland post-Brexit as a route to the EU. In 2020, the Law Society of Ireland blocked a bid by English and Welsh lawyers to preserve EU access.
Source: Independent
Deal Details: Finance Solutions has been acquired by Aston Lark in a deal reported to be more than €10m.
Finance Solutions is a Dublin-based mortgage broker. The business is owned by Ken and Grace Murray. In FY Dec 21, it reported turnover of c. €3.5m which converted to an EBITDA of c. €94k.
Aston Lark is an insurance broker that entered the Irish market in 2019. In 2022, Howden, an international insurance broking group acquired Aston Lark from Goldman Sachs Asset Management, and it was previously owned by Bowmark Capital. In FY Dec 21, the business reported turnover of c. £160m which converted to an EBITDA of c. £23m.
Advisers:
Finance Solutions:
Transaction: Polaris HD Consulting led by Robert Hughes.
Legal: Flynn O’Driscoll led by Alan O’Driscoll and Deirdre Walsh.
Tax: PwC led by David Moran and Michael O’Brien.
Aston Lark:
Legal and Tax: Eversheds Solicitors Birmingham and Dublin.
Renatus Comment: This marks Aston Lark’s 14th acquisition in Ireland since it has entered the market. Howden acquired Savills Private Finance in 2022, a UK-based business offering mortgage advice, wealth management and insurance broking solutions. As part of this deal, Finance Solutions will work with Savills Private Finance to help develop its offerings. Ken Murray, Founder and Managing Director of Finance Solutions, commented “Our growth over the past 12 years has exceeded expectations, and this acquisition allows us to further accelerate that growth”.
Source: Business Plus
Deal Details: Glen Dimplex has acquired the Hyfra Process Cooling business unit, part of the Lennox Group in deal reported to be worth €40m.
Glen Dimplex is a Dublin-based provider of heating and ventilation, flame, precision cooling and consumer appliances. The company is majority owned by the Naughton family, with manufacturing and development centres in the Republic of Ireland, the United Kingdom, China and other locations around the world. In FY Sep 22, the business reported turnover of c. €944m, converting to an EBITDA of c. €259m.
Hyfra Process Cooling business unit is part of the US-based Lennox Group. The business does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: Glen Dimplex has been active in the M&A market having acquired Adax, a Norway-based supplier and manufacturer of electrical heating and drying appliances earlier this month. The business already has operations in Germany and the addition of this deal will bring headcount in Germany to a reported c. 1,500 people. Fergal Leamy (Glen Dimplex CEO) said the deal is a strategic acquisition for the Irish group: “Enabling us to further expand our precision cooling business globally, and align with customer needs as we transition to a more sustainable future”.
Source: Independent
Deal Details: Speed Fibre Group has been acquired by Cordiant Digital Infrastructure. The consideration paid was reported to be c. €190.5m. The deal is subject to regulatory approval.
Speed Fibre Group is a Dublin-based fibre network operator. It owns several connectivity assets including Enet, T5 and Magnet+. It was previously owned by the Irish Infrastructure Fund (IIF) and InfraBridge. In FY Dec 21, it reported turnover of c. €71.5m which converted to EBITDA of c. €17.2m.
Cordiant Digital Infrastructure is a London-based specialist digital infrastructure investor.
Advisers:
InfraBridge/IIF:
Corporate Finance: IBI led by Laurence O’Shaughnessy, Eoin McGuinness, Michael Moriarty, Pamela Clarke, Ben Murphy and Stephen Crossan.
Legal: Dentons led by Eavan Saunders and David McGuinness.
Tax: KPMG.
Speed Fibre Group:
Legal: DLA Piper led by Éanna Mellett and Blayre McBride.
Cordiant Digital Infrastructure:
Legal: McCann FitzGerald led by Valerie Lawlor, David Lydon and Laura Treacy along with Jerome Kennedy and Rachel O’Neill.
Renatus Comment: This acquisition concludes InfraBridge’s sale of the IIF’s assets following the €1bn sale of Towercom, the Dublin Convention Centre and Valley Healthcare to John Laing in December last year.
Source: Irish Times
Deeside Agri Services Ltd is located in Dunleer, Co. Louth just off the M1 Motorway. It is a leading agricultural merchant and supplier of agricultural services. The business is owned by Billy and Grainne O’Dea.
In its financial year to November 2022, the business generated a turnover of c. €61.7m, an increase of 43.5% year-on-year. This converted to an EBITDA of c. €1.9m, an increase of 20.2% year-on-year. EBITDA improvement was driven by revenue growth despite a slight deterioration in gross margin of c. 2%.
The business finished the year with a negative cash balance of c. €1.3m. This was primarily driven by c. €4.4m of investment in working capital.
The business employed an average of 23 people in FY22 at a total cost of c. €1.3m.
Who: Spry Finance, a Dublin-based provider of alternative finance for seniors over the age of 60, established in 2021.
What: The business has secured a funding agreement for €100m from Canada Life. This doubles the original €100m commitment that Canada Life had already made to the business.
Why: The funding will be used to launch new loan products and enter new markets.
Source: Business Post
Who: Oriel, a Louth-based seawater mineral company.
What: The business has raised c. €4m in funding.
Why: The business plans on selling its magnesium supplements over the internet in the US in September, with in-store pharmacies targeted next year.
Source: Business Post
Who: Harvest Packaging, a Dublin-based biodegradable packaging start-up.
What: The business has raised funding from Paul and Alan Leamy, who sold their specialist Perigord Life Science Solutions to Indian multinational tech Mahindra two years ago.
Why: The business hopes to develop locally produced, fully compostable plastic alternatives for burger joints, which could help prevent a mountain of landfill rubbish.
Source: The Times
Who: Home Factory, a Sligo-based business that develops factory pods that can be used by homebuilders to construct house components in a factory-like setting.
What: The business has received backing from Mark Pugh, who sold his specialist medical engineering design firm Arrotek to the US group Galt.
Why: The use of the funds has not been disclosed.
Source: The Times
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.
64%
The fall in wholesale electricity prices from this time last year.
88,400
The number of people unemployed according to the latest Labour Force Survey.
€8.4bn
The combined value of the 30,000 mortgages approved in year to end of July.
3.5%
ESRI estimates for growth in domestic economy in June.
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.
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