Renatus’ Weekly M&A Newsletter – 21/05/2023
May 21, 2023Renatus’ Weekly M&A Newsletter – 04/06/2023
June 4, 2023
Renatus Weekly M&A & Company Performance Private Equity Newsletter 28/05/2023
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
Is NVIDIA selling picks and shovels?
There is an intuitive sense that AI will change the world – but it is not yet exactly clear as to how. Text-to-image generators are being used by advertisers, game designers and film producers. Chatbots are being integrated into search engines and other enterprise software companies are trying to integrate AI into their products/solutions in some way, shape or form. Unsurprisingly, this has led to a lot of money chasing the promise of AI as investors try to pick the likely winners in the space.
One winner has been NVIDIA with its share price up 172% year-to-date (at May 26th). NVIDIA is now the 6th most valuable company in the world after recently overtaking Berkshire Hathaway, Meta (Facebook) and Tesla. NVIDIA designs and manufactures graphics processing units (GPUs). These GPUs were initially used for gaming, but they also run machine learning algorithms used to train AI models. Most AI supercomputers don’t just utilise one or two GPUs, instead they have arrays consisting of thousands of GPUs. For example, Meta’s Research Super Computer contains 16,000 NVIDIA A100 GPUs which cost $10,000 each. NVIDIA is effectively selling the “picks and shovels” required for this technological evolution.
There are parallels that can be drawn here in the Irish market particularly in the pharmaceutical, electrical, medical and technology industries. Many Irish companies have been created to support these ecosystems supplying the “picks and shovels” into these global companies. A direct example of this is how Irish businesses are building the global cloud. H&MV is following in the footsteps of companies such as Mercury Engineering, Winthrop, E and I, Dornan, Circet / KN Group and PM Group. It is becoming a global leader in its space, focused on supplying into a growing market. H&MV announced this week how it pledges to create 700 jobs at a new Limerick headquarters, driven by a growing market need.
M&A Activity
Kingspan acquires a stake in TreeTrops A/S
Deal Details: Kingspan Group plc has announced the acquisition of TreeTops A/S. Deal details were not disclosed and it is subject to regulatory approval.
Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. Kingspan Group reported FY22 turnover of c. €8.3bn and EBITDA of c. €1bn. The business is led by CEO Gene Murtagh.
TreeTops is a Denmark-based supplier of FibroTech acoustic solutions. The business was established in 2011 by Ricki Kjeldsen who will remain CEO post-transaction.
Advisers:
Kingspan plc:
FDD: Grant Thornton led by Patrick Dillon, Tom Roche and Grant Thornton Denmark.
TreeTops A/S:
None Mentioned.
Renatus Comment: Gene Murtagh spoke on Kingspan’s M&A growth to date at The Real Deal 2023. He highlighted how “faster entry into a market” is a key strategy explored when looking at potential acquisition Video Link. Kingspan is aiming to accelerate its global sales of acoustic solutions as it completes its second recent acquisition in the space. In 2022, the business acquired Troldtekt, a Denmark-based manufacturer of acoustic panels.
Kingspan has addressed its ambition to reduce the environmental impacts of its key products whilst also focusing on acquisitions that will help accelerate a net-zero emissions future. Kingspan reported in its 2022 Planet Passionate Report that the insulation products sold by the business in 2022 were estimated to save 173 million tonnes of CO2 emissions over their lifetime.
Source: TreeTops A/S Press Release
Compass Ireland to acquire Glanmore Foods
Deal Details: Compass Ireland has agreed to acquire Glanmore Foods for an undisclosed amount. The deal is subject to CCPC approval.
Glanmore Foods is a Dublin-based supplier of school lunches. The business is owned by John and Jennifer Mooney. In FY22, the business reported turnover of c. €20m which converted to an EBITDA of c. €3.7m. Post-deal, the business will operate under its own brand name as well as retaining its employees, management team and operational facilities.
Compass Ireland is part of the Compass Group, a publicly listed UK catering business. The half year 2023 results for the Group showed revenue of c. £15.8bn which converted to an EBITDA of c. £1.5bn
Advisers:
Glanmore Foods:
Corporate Finance: Crowe led by Naoise Cosgrove and Colm Sheehan.
Tax: Crowe led by Lisa Kinsella and Michael O’Scathaill.
Legal (Corporate): Addleshaw Goddard led by Leonora Malone, Lorna Osborne and Caoimhe Hickey.
Legal (Property): M&B Ceillier.
Compass Ireland:
Legal: Arthur Cox led by Maeve Moran, Ellen Gaffney and Elaine Caulfield.
Tax: PwC.
Renatus Comment: The Compass Group has been active in the Irish market recently. In 2022, Levy UK + Ireland (part of the Compass Group) merged with Fitzers Catering. With the acquistion of Glanmore Foods, the Group will gain more exposure across the island of Ireland, specifically around school catering.
Glanmore Foods currently serves over 400 primary and secondary schools, which are part of the DEIS programme. The DEIS programme (Delivering Equality of Opportunity in Schools) was launched in 2005, and the government provided c. €170m to support these schools in 2022. The business is likely to experience government driven tailwinds as Minister for Social Protection, Heather Humphreys, has indicated that every child in DEIS primary school will receive a hot meal from September 2023.
Source: Business Plus
RiverRidge jointly acquired by Cube Infrastructure Managers and Equitix Investment Management
Deal Details: RiverRidge has been jointly acquired by Cube Infrastructure Managers and Equitix Investment Management. Deal consideration was not disclosed.
RiverRidge is a Belfast-based fully-integrated waste management business led by CEO Brett Ross. The business was founded in 2011 and began operating as a skip hire and landfill business. BGF invested c. £10m in the business in 2016. In FY22, the business reported turnover of c. £60.4m which converted to an EBITDA of c. £11.4m. It was also reported the business made a c. £2m pre-tax profit in FY22.
Cube Infrastructure Managers is an independent Luxembourgian management company focusing on investments in the European infrastructure space. Cube Infrastructure Fund II had its final close in June 2019, with total commitments of c. €1bn.
Equitix Investment Management is an infrastructure investor with an AUM of c. $12bn with assets across 21 countries internationally.
Advisers:
RiverRidge:
Corporate Finance: KPMG led by Russell Smyth, Chris Donnelly and Alia Ebrahim.
Transaction Services: KPMG led by Neil O’Hare and Gavin Early.
Tax: KPMG led by Paddy Doherty, Harriet Porter, Sara Hamill and Alex Gourley.
Legal: Carson McDowell & A&L Goodbody.
Cube & Equitix:
Legal: Eversheds Sutherland
Others Mentioned: PwC.
Renatus Comment: There is a distinct consolidation play in the waste management industry due to its prior fragmented nature. This has changed considerably in recent years as a 2016 CCPC report noted that the 20 main waste operators in Ireland serviced 90% of households that availed of a collection service. Big deals in the space include Thorntons Recycling acquiring The City Bin Co in 2022, and Blackstone acquiring a stake in Panda in 2018. Long gone are the days when waste was collected and processed by hundreds of small businesses in Ireland.
This deal focuses on an acquisition of an infrastructure asset with a pivot toward generating renewable energy from waste. Equitix has been working in collaboration with RiverRidge for c. 10 years and is looking to extend this. Under the European Commission’s Packaging and Packaging Waste Directive, at least 65% of all packaging waste must be recycled by December 2025. As part of this, Ireland continues to make strides in waste management specifically focusing on the environmental importance of landfill diversion.
Source: Business Plus
SpaceOS acquired by Equiem
Deal Details: SpaceOS has been acquired by Equiem for an undisclosed amount. The acquisition includes investment from Hitachi Ventures, BeyondBuild, German developer MOMENI, Caleus, and others.
SpaceOS is a Dublin-based proptech company that helps its users manage workspaces. It’s solution has been described as an “operating system for buildings” allowing users to do everything from opening doors via their smartphones to booking parking spaces, registering guests and sendiung out invoices. The business was founded by Marley Fabisiewicz and Maciej Markowsk. The business raised c. €5m of funding in May 2021, and it is reported that SpaceOS doubled recurring revenue over the past 12 months. Post-deal, SpaceOS founders will join Equiem’s executive leadership in global roles – Chief Strategy Officer and Chief Growth Officer, respectively.
Equiem is an Australia-based PropTech business that brings data, tenant experience, and space management on its platform. It is reported that Equiem has increased the number of buildings using its platform by c. 2.5 times over the past 12 months. Clients include Dexus, Lendlease, Knight Frank, Nuveen, and Brookfield. The business does not report turnover or EBITDA information.
Advisers:
SpaceOS:
Legal: Mason Hayes & Curran led by Conall Geraghty (Corporate) and included Angela Freeman (Corporate), Niamh Caffrey (Tax) and Alan Burns (Financial Services).
Equiem:
None Mentioned.
Renatus Comment: Equiem is leveraging acquisitions as a way to scale and bolt-on features to its platform to position itself as a leader in the tenant services space. It previously acquired UK-based Vicinitee in 2021 which brought additional scale and added property operations functionality to its platform.
Similarly, the SpaceOS acquisition allows Equiem to expand its suite of offerings to better serve flex space operators, hybrid workplaces and deepen its access control and integration capabilities. It will also expand Equiem’s footprint to over 25 countries.
Source: Equiem Press Release
Erisbeg acquires PageOne Communications
Deal Details: Erisbeg has acquired PageOne Communications from Capita, a BPO (Business Process Outsourcing) business. Deal consideration was not disclosed.
Erisbeg is an Irish Private Equity firm set up in 2017, and it was founded by Alan Kerr and Thomas Davy.
PageOne is a London-based critical communication solutions provider. The business has been awarded several public sector clients including the National Health Service (NHS), Emergency Services, and the Ministry of Defence. In FY21, the business reported turnover of c. £12.1m which converted to an EBITDA of c. £3.4m.
Advisers:
Erisbeg:
Legal: Pinsent Masons led by Andrew Kerr and Rachel Brennan.
PageOne Communications:
None Mentioned.
Renatus Comment: Erisbeg currently owns BP Multipage, a business that provides communication solutions and it is looking to seek opportunities for synergies and growth with the acquisition of PageOne. Emergency Communications have pivoted significantly in recent years from phone calls to SMS messages as the ability to alert thousands in a matter of seconds is a key benefit. According to PageOne Communications “Industry research shows 98% of text messages are read compared to 22% of emails”. Due to this, the use of SMS is growing in the event of a crisis, as timing is everything.
Source: Independent
Flipdish acquires Jinoby
Deal Details: Flipdish has acquired Point-of-Sales (PoS) business Jinoby. It is reported that Flipdish had paid “less than €20 million”.
Flipdish is an Irish digital food-ordering platform that is widely known for its Irish tech unicorn status. Flipdish was co-founded by brothers Conor and James McCarthy. In FY22, the business reported revenue of c. €12m. The business raised $100m in funding during 2022, led by Chinese conglomerate Tencent.
Jinoby is a UK-based PoS operating system for restaurants. The business was owned by Tariq Karim and Bhavesh Busa, and it does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: In 2022, Flipdish reported that it will use its $100m funding to support global expansion efforts and to conduct research and development activities aimed at creating new products, specifically in the hospitality industry. The acquisition of Jinoby will allow for technological synergies. It will also create new business opportunities for Flipdish, as it is expanding its offerings from SaaS ordering solutions to complementary product suites. According to Fortune Business Insights, the PoS market is expected to expand significantly, from c. €25bn in 2022 to c. €71bn by 2029.
Source: Business Post
Rolling Donut acquires Clever Foods
Deal Details: Rolling Donut has acquired Clever Foods for an undisclosed amount.
The original Rolling Donut was set up by Michael Quinlan in 1978, and it is now run by his daughter, Lisa Quinlan. The donut franchise does not report turnover or EBITDA information.
Clever Foods is a clean-treat business with products free from gluten, dairy, and refined sugars. The business was originally set up in 2017 by Gillian Shiels, and it does not report turnover or EBITDA information.
Advisers: None Mentioned.
Renatus Comment: This marks Rolling Donut’s fourth acquisition as it aims to grow its exposure in
the healthy treat market. In an interview with the Business Post, Lisa Quinlan noted “It’s all about innovation and new products. We always have new stuff that we’re trying to work on, we’re always thinking ‘what’s next’”. In recent years, there has been huge growth in health & wellness snacks with the emergence of several Irish brands tapping into the market including Fulfil, Nobo, and Nua Naturals.
Source: Business Post
COMPANY PERFORMANCE
Joyce & Sons (Headford) Limited is a retailer of building supplies, hardware, furniture and farm supplies. It is based in Headford Co. Galway and is owned by James and Breda Joyce.
In its financial year to August 2022, the business generated a turnover of c. €18.3m, an increase of 7% year-on-year. This converted to c. €1.2m EBITDA, an increase of 43% year-on-year. The increase in EBITDA was driven by an improvement in gross margin in tandem with revenue growth.
The business finished the year with a cash balance of c. €1.0m, a c. €1.5m decrease on FY21. The decrease was driven by working capital investment and investment in property, plant & equipment.
The business employed an average of 47 people during the period at a total cost of c. €1.9m.
Johnson Brothers (Belfast) Limited is a Belfast-based coffee selling & distribution business. The business is owned by Dermot and Michael Johnson.
In its financial year to December 2022, the business generated a turnover of c. £29.4m, an increase of c. 15% year-on-year. 17% of revenue in FY22 relates to ROI sales. This converted to an EBITDA of c. £1.3m, an increase of c. 31% year-on-year, with EBITDA outperformance owing largely to gross margin improvement.
Significant post-EBITDA cash movements include payments to acquire tangible assets of c. £0.6m and working capital investment of c. £0.9m. The business finished the year with a cash balance of c. £0.2m.
The business employed an average of 94 people in FY22 at a total cost of c. £3.0m.
RECENT FUNDRAISINGS
Who: EOS IT Solutions, a Down-based IT support and logistics company.
What: The business has received ‘an eight figure funding package’ from HSBC UK.
Why: The company will use the funding to buy new networking and security equipment.
Source: Irish News
Who: RedSky, a Kilkenny-based fulfilment provider founded by Ken Byrne and Karen Ryan in 2017 that is developing a fully automated SaaS Vat / Sales Tax management platform called Taxmatic for e-commerce brands.
What: The business has raised c. €2.4m in funding with Enterprise Ireland investing c. €400k. The company plans to raise a further €12 – €15m in 2024 to further develop the tax management division.
Why: The company will use the funding to scale the software.
Source: Business Post
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%
The decrease in wholesale electricity prices in the 12 months to April 2023. According to @CSO.
€18.8bn
The value of unadjusted goods exported in March 2023. According to @CSO.
74%
The employment rate for people aged 15-64 years as of March 2023.According to @CSO.
236k
The number of flights handled by Ireland’s five main airports in 2022. According to @CSO.
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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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