Renatus’ Weekly M&A Newsletter – 21/03/2021
March 21, 2021Renatus’ Weekly M&A Newsletter – 04/04/2021
April 4, 2021
Renatus Weekly M&A & Company Performance Newsletter 28/03/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
Lonsdale completes exit of Amerplast
Deal Details: Lonsdale Capital Partners, the UK based mid-market private equity group, has announced its exit from Bright Maze Oy (trading as “Amerplast”).
The business has been sold to the British group Hanmere Polythene Limited. It is reported that the sale produced a return of 3x on Lonsdale’s investment.
Amerplast is a flexible plastic packaging group located in Finland and Poland.
Advisors: Conor Barry of CMD Global Partners and Bastion Group advised Lonsdale on the sale of Amerplast. Burness Paull advised Lonsdale on the legals.
Renatus Comment: Since purchasing Amerplast in 2014, Lonsdale has invested significantly in the business to allow Amerplast to have market leading positions in the Hygiene, Bakery and Food end markets. Amerplast is now one of the biggest recycled material users in flexible packaging in Europe. The group’s profitability has increased in tandem, more than doubling over the past two years.
Source: Lonsdale Capital Partners
Alternus acquires solar parks in Romania
Deal Details: Alternus Energy Group Plc (“Alternus” or “AEG”) has completed the acquisition of 2 solar parks in Romania from Renesola Power. The deal consideration was not disclosed.
Alternus Energy Group, headquartered in Ireland, is a fast-growing pan-European independent power producer (“IPP”).
Having started in 2016 with two parks and 6 MWp capacity, the current portfolio consists of 39 owned or contracted parks in Germany, Italy, Netherlands, Romania and Poland in excess of 140 MWp capacity.
Renesola Power is a leading international developer of solar parks.
The two new parks (Lucas Est SRL and Ecosfer Energy S.r.l.) have a combined capacity of 15.4 MWp.
Advisers: A Simmons & Simmons team of David Brangam, Ciara Drayne and Andrew Fullen provided legal support to Alternus.
Renatus Comment: With clean energy being a key pillar of governments’ climate action plans globally, this is a sector that has seen, and will continue to see, huge investment activity. To get to a net zero carbon emissions world, we need to change how we generate our energy and we need to continue to investment in the infrastructure needed to do this.
Source: Alternus Energy
Bidvest Noonan acquires Interact and H2O Solutions
Deal Details: Bidvest Noonan has signed an agreement to acquire Interact, a leading M&E engineering services provider, and H2O Solutions, Interact’s water treatment business. Deal terms were not disclosed. The deal is subject to CCPC approval.
Bidvest Noonan, with operations in UK & Ireland, is a provider of outsourced services including, facilities management, cleaning and security.
Dublin-based Interact was part of the Leo Lynch Group, first founded in 1956. In 2002, H2O Solutions was established as Interact’s own Water Treatment company. Interact employs 80 people in Ireland and has revenues of approximately €15m. Interact is majority owned by Leo Lynch Group, which in turn, looks to be majority owned by MD Sean Smith and Commercial Director Conor Lynch.
Advisers: Wallace Corporate Counsel advised Interact/H20 Solutions while A&L Goodbody advised Bidvest Noonan.
Renatus Comment: Bidvest Noonan is no stranger to M&A growth. The original family-owned Noonan Services business was sold for c. €90m to private equity fund Alchemy in 2008. Under Alchemy’s ownership the business expanded from c. €100m revenue in 2008 to c. €300m in 2017 when it was sold to Bidvest for c. €175m. Earlier this year, Bidvest Noonan made a bolt-on acquisition in the UK of Axis Group, which was reported would increase group revenues to over £500m.
Source: Bidvest Noonan; Interact
Kingspan to acquire Logstor
Deal Details: Cavan-based insulation and building materials manufacturer Kingspan has agreed a deal with Langley Co-Invest to acquire Logstor International Holding for a reported €253m.
The deal is conditional on regulatory clearance, and is expected to complete around the middle of the year. It will be fully funded from Kingspan’s existing credit facilities,.
Logstor, headquartered in Denmark, supplies technical insulation solutions encompassing complete pre-insulated pipe systems for district energy and associated applications.
It has seven manufacturing facilities in Denmark, Finland, Poland and Sweden, and employs around 1,100 people in 14 different countries.
In 2020 Logstor recorded trading profit of DKK210 million (€28m), on DKK1.82 bn (€244m) turnover.
Langley Co-Invest Sarl is part of Triton Fund III LP.
Triton reportedly has made 2.4x return through this transaction.
Advisers: None mentioned.
Renatus Comment: This looks like a great deal for Kingspan. Not only will the acquisition enhance Kingspan’s technical insulation offering, complementing its core building insulation business, but the deal terms also look attractive for the group. Kingspan currently trades at c. 26x EV/EBIT and, based on reported numbers, is acquiring Logstor c. 9x EV/EBIT, giving it immediate value arbitrage when earnings are integrated into the core business.
Source: Kingspan; PE Insights
Lonsdale acquires significant stake in Horseware
Deal Details: Ireland-based global producer of branded equestrian and pet products Horseware Ireland has attracted a significant investment from Lonsdale Partners, the London based private equity firm with strong Irish links. Deal terms were not disclosed.
Louth-based Horseware was founded in 1985 by Tom MacGuinness and his wife Carol. It employs over 500 people globally with annual revenues in excess of €40m.
Lonsdale Capital Partners was co-founded in 2010 by Dubliners Ross Finegan and Alan Dargan, and UK executive David Gasparro. The company makes majority and minority investments in companies across the UK and Europe.
Advisers: Louis O’Neill and Martin Treacy of EY Corporate Finance and David Ryan & Declan Cunningham of Flynn O’Driscoll (legal) acted for the shareholders of Horseware Products Limited.
Burness Paull & RDJ Solicitors (legal), EY (Financial & Tax Diligence), Alvarez & Marsal (Financial & Operational Diligence), LEK (Commercial Diligence), Willis Towers Watson (Insurance Diligence) and BDO (Tax advice) supported Lonsdale Capital Partners on this transaction.
Renatus Comment: Tom McGuiness epitomises an entrepreneur. From humble beginnings in 1985, he developed a product to solve a problem of providing a waterproof, breathable non slip rug for horses. This well branded “Rambo” rug put the company on the map and they grew to become probably the most worn equine rug in the world, with manufacturing operation in Asia, Ireland and US. The business has very little of its own online sales and this looks like the huge opportunity for growth for the business.
Source: Horseware Press Release
Totalmobile acquires Cognito iQ
Deal Details: Totalmobile has announced the acquisition of Cognito iQ for an undisclosed sum.
Belfast-based Totalmobile is the market leader in field service and mobile workforce management technology, helping organisations deliver more service, of the highest quality and at reduced cost.
Cognito iQ’s real-time analytics software enables organisations with extensive field-based operatives to transform the way they operate.
Advisers: None mentioned.
Renatus Comment: This is Totalmobile’s second acquisition so far in 2021 and suggests a continuance of its buy-and-build strategy for the Belfast-based business with its private equity partners Bowmark Capital. Totalmobile had been previously backed by Horizon Capital, who exited their investment in October 2020, after trebling Totalmobile’s profits. During the period of partnership its Horizon, Totalmobile completed four bolt-on acquisitions, which help accelerate its growth and added to its capabilities.
Source: Totalmobile
Weir & Sons acquires McDowell’s Jewellers
Deal Details: The iconic Grafton St jewellers Weir & Sons has acquired O’Connell St based jewellers McDowell’s for an undisclosed sum.
It is reported that McDowell’s is the longest established business on O’Connell St, surviving the 1916 Easter Rising, though the building was destroyed and looted during the rebellion.
Advisers: None mentioned.
Renatus Comment: First established in 1869, Weir & Sons has remained a family business, with the fourth and fifth generation Weirs working in the store. McDowell’s Jewellers has a similar family heritage, founded one year later in 1870, it too passed down the generations, prior to its sale to Weir & Sons.
Source: The Sunday Times.
DEALS IN THE MAKING
Aqua Comms to be sold
Dublin-headquartered Aqua Comms is reportedly to be acquired by newly-formed investment trust Digital 9 Infrastructure in a $215m (€181m) deal. Digital 9 Infrastructure intends to buy the company after listing its shares later this week as part of a £400 million initial public offering (IPO) in London.
Backed by ISIF, Aqua Comms operates a sub-sea transatlantic fibre-optic cable that link the US to Europe via the Republic.
The deal for Aqua is conditional on the flotation with Triple Point Investment Management, an investment group that has more than £1.8bn of capital under management set, to oversee the new trust.
Edon Byrnes in DWF Dublin and Laurence Applegate in DWF London provided legal advice to the Pangaea entities, who are shareholders in Aqua Comms, and Conor O’Dwyer and Eva Giblin (McCann Fitzgerald) advised ISIF.
Source: Irish Times
Open Orphan considering spin-off
It is reported that Open Orphan, a clinical trial company headed by Irish dealmaker Cathal Friel, is considering a move to spin-off its 49% stake in vaccine developer Imutex via a Nasdaq listing later this year. Imutex develops vaccines for influenza and mosquito-borne diseases.
Open Orphan is listed on London’s AIM, and its shares have risen from c. £5.90 to c. £34.50 in the past 12-months.
Source: The Sunday 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
Lake Hotel Ltd trades as The Lake Hotel Killarney, located in Co. Kerry. The 4-star hotel was established in the 1940s by Ms Hilda Huggard who passed it to her four nephews in the late 1990’s. The Huggard family still own the business today.
In its financial year to December 2019, the business recognised revenue of c. €7.2m (up 7.2% YoY) and EBITDA of €0.9m, which was a decrease of c. €234k versus the prior year. EBITDA converted to a net cash decrease of c. €17k after €736k was invested in fixed assets. The primary reason for the EBITDA decrease was an increase in administrative expenses of c. €700k. Gross margins were flat YoY at c. 84%.
The Lake Hotel employed an average of 99 people during the year at a cost of c. €2.8m.
Breen’s Farm Machinery Ltd. was established by Philip and Teresa Breen in March 1977. It is today led by their son Conor Breen. The business stocks a comprehensive range of new and used farm machinery and operates from two offices, one in Ennis, Co. Clare and the other in Cashel, Co. Tipperary.
In its financial year to September 2019, the business recorded revenue of c. €15.5m (up 10.8% YoY) and EBITDA of c. €0.7m (up 211.3% YoY). The EBITDA growth was enabled by gross margins moving from 11.1% in FY18 to 12.3% in FY19. EBITDA converted to a net cash increase of c. €257k.
Breen’s Farm Machinery is owned by Philip, Teresa and Conor Breen
RECENT FUNDRAISINGS
Who: Wrightbus secures funding under government green funding scheme.
What: £11.2m has been allocated to Wrightbus as part of £54m innovative green projects funding scheme.
Why: The funding will be used to develop and manufacture low-cost hydrogen fuel cell technology for buses and create a local hydrogen centre of excellence. Collectively, the scheme will see the reduction of 45 million tonnes of carbon emissions, equal to the total amount of emissions produced by 1.8 million cars over their lifetimes.
Source: Belfast Telegraph
Who: Strike a start-up, founded by Oli Cavanagh and Charles Dowd, that has developed a contact-free solution for tips and charitable donations. Strike has come up with patent-pending technology that seeks to resolve issues that have arisen from the demise of cash, such as the inability to tip workers or make donations to charities.
What: The business has raised €625,000 and intends to seek a further €6.5 million in investment before the end of 2021.
Why: Funding is to be used for the continued development and expansion of the business.
Source: The Irish Times
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
Paul O’Donovan and associates landed a coup to get fellow Cork man Jim Barry, Chief Investment Officer of BlackRock Alternatives Investors & Global Head of BlackRock Real Assets, to speak at the virtual conference they held during the week.
The biggest takeout for me was that in his view is inflation is almost certain, but that it will be flanked with benign interest rate movement which flies in face of what we were all thought in school and college: where there is inflation, interest rate rises, like thunder following lightning. However, Japan did prove that they can diverge. Does it mean we could be in for stagflation like the 70s and early 80s, where inflation raced on and growth was low? It’s one to keep an eye on as we all implicitly in our business lives take 5-10 year bets on companies, interest rates, currencies etc.
Here is a youtube link to the talk: https://go.renatus.ie/e/
Also, during the week our colleague Philip Gardiner joined Conall O’Móraín on his excellent podcast, This Great Business Show. Philip and Conall spoke about private equity, fundraising in Ireland and Renatus. Each week, Conall is joined by top-class guests from all sides of the business community in Ireland. His podcast is essential listening for us. This week’s podcast can be found here. Go to 61 mins for Philip’s interview.
All previous episodes can be found here: https://go.renatus.ie/e/
@RenatusCapital Tweets
14%
The year-on-year decrease in the Irish manufacturing prices for February 2021, according to @CSOIreland
20.5%
The year-on-year increase in the public spending in Ireland for 2020 accounting for 12.2% of the economy. The increase is mostly affected by Covid-related expenditure amounting to €26.4bn, according to the report by the Central Bank. @IrishTimes
2.7% & 2.1%
The year-on-year increase in the average cost of renting a home nationally and in Dublin, respectively, for 2020 amounting to €1,256 & €1,745 per month, according to Residential Tenancies Board (RTB). @IrishTimes
77.1
The KBC Bank Ireland consumer sentiment for March 2021, the highest level in 12 months, according to @RTEbusiness
3.9% & 9.4%
The year-on-year increase in the Irish mortgage approvals volume and value, respectively, for February 2021 amounting to 3,651 mortgages valued at €902m, according to the report by @BPFINews
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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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