We share our thoughts on the Euronext Dublin Exchange, Premier Lotteries Ireland acquired by La Française des Jeux and more in our latest newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 30/07/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
This week in Renatus we met a founder who ran their business for years before subsequently stepping back and hiring a successor. However, as is often the case, this simply didn’t work out and they were forced to return to the fold to run the business once again.
We have seen this a lot since we started our journey nearly ten years ago. People, including the entrepreneur in question, often think this is an issue confined to the world of SMEs because of the fact that they can sometimes struggle to attract talent vs. larger companies with bigger budgets. However, it is not as simple as that.
There are countless high-profile examples of leading executives of giant multinational companies having been pulled back into a business following a failed transition. These include Steve Jobs (Apple), Jerry Yang (Yahoo), Jack Dorsey (Twitter), Richard Branson (Virgin), Phil Knight (Nike) as well as Howard Hughes, Henry Ford, Michael Dell and Michael Bloomberg, all of whom struggled to walk away from their respective eponymous ventures.
It is an interesting phenomenon and there will be rainforests cut down to print academic theses dedicated to the subject. The simple lesson we take away from the above is that the skillset of a successful entrepreneurial leader is very hard to emulate and weave into the DNA of a company in such a way that it carries on when they are no longer around. Appointing a successor is not a simple thing and it needs plenty of planning and consideration to increase the probability of success.
BRAY AIR DISPLAY
There have been recent reports of some larger names on the Euronext Dublin Exchange signalling their intentions to move their primary listings elsewhere, with CRH announcing plans to de-list by September and Diageo de-listing back in May. Despite this negativity, the exchange has just reached its highest level in over 15 years, breaking the 9,000 mark for the first time since 2007.
With so much uncertainty over the global economy at present, it is worth taking stock and appreciating the extremely strong performance of Ireland’s biggest hitters during such a turbulent time. Kingspan, the biggest mover, has seen its share price rise over 40% this year, with Ireland’s two biggest banks, AIB and Bank of Ireland, on course to record their largest ever profits. Ryanair also reported record passenger levels as of June, continuing its impressive post-Covid performance.
While concern around the potential exit of some of Ireland’s larger Plc’s from the domestic exchange remains, huge positivity remains around the performance of these big players and emphasises the strength of the Irish business landscape.
Premier Lotteries Ireland acquired by La Française des Jeux
Deal Details: Premier Lotteries Ireland (“PLI”), the National Lottery operator, has been acquired by La Française des Jeux (“FDJ”). The deal is reported to be worth c. €350m. The National Lottery will continue to be owned by the Irish state and regulated by the Regulator of the National Lottery, while PLI, which has the license to operate the National Lottery, is now owned by FDJ.
During 2021, it was reported that The National Lottery made sales of c. €1bn. The shareholders of PLI: Ontario Teachers’ Pension Plan (OTPP), An Post, and An Post Pension Fund will all be selling their stakes. PLI is led by CEO, Andrew Algeo, who played a large role in Paddy Power pre-Flutter. PLI itself had FY Dec 21 sales of €163.8m, converting to an EBITDA of €55.1m.
FDJ is the operator of France’s national lottery games. In FY Dec 22, the business reported revenue of c. €2.5bn, converting to an EBITDA of €539.8m.
Advisers: PLI: Legal: A Philip Lee team led by Andreas McConnell and Keelin Gavagan, supported by Anna Hickey, Inez Cullen, Sean McElligott, Deirdre Brannigan, Claudia Macklin, Rebecca Flanagan and Sorcha Brady.
An Post (PLI Shareholder): Financial: Goodbody led by John Flynn and Bruce Waldron. Legal: Matheson.
Ontario Teachers (PLI Shareholder): M&A: Freshfields Bruckhaus Deringer led by Richard Johnson and Patrick Ko.
FDJ: None mentioned.
Renatus Comment: The Government put The National Lottery up for sale in 2012 and awarded a 20-year contract to PLI in 2014. In 2014, OTPP acquired a majority stake in PLI for a reported c. €405m and the operator currently holds exclusive rights to operate the Irish National Lottery until 2034. The acquisition by FDJ means that there is now no state involvement in PLI following the exit of An Post as a minority shareholder.
It is interesting to see PLI acquired by one of the biggest gambling players in Europe, with nearly all of its customers located in France. FDJ also operates the French national lottery, with its expertise likely to be hugely beneficial to the future of the Irish operation.
Source: Irish Independent
Bidvest Noonan acquires Robinson Services and Sword Security
Deal Details: Bidvest Noonan has acquired Robinson Services and Sword Security. Deal consideration was not disclosed.
Bidvest Noonan is a provider of services such as cleaning and security in the UK and Ireland, with offices in Dublin and London. In FY Jun 22, the UK business reported turnover of c. £397.2m which converted to an EBITDA of c. £22.1m. The original family-owned Noonan Services business was sold for a reported c. €90m to private equity fund Alchemy in 2008. Under Alchemy’s ownership the business expanded from a reported c. €100m revenue in 2008 to c. €300m in 2017 when it was sold to Bidvest for c. €175m.
Robinson Services and its specialist security business, Sword Security (NI) Ltd, provide cleaning and security services across Northern Ireland. In FY Jun 22, the business reported turnover of c. £13.8m. The business is owned by David Robinson and Gillian Robinson.
Advisers: Bidvest Noonan: Legal: A&L Goodbody.Robinson Services and Sword Security: Corporate Finance and Tax: HNH led by Wayne Horwood, Eamonn Donaghy, Lucas Batchelor, Connor McAnallen. Legal: Tughans led by James Donnelly, Cassie McCormick, Fearghal O’Loan, Gavin Robinson, Aimee Bullock and Olivia Lewis. Renatus Comment: After completing four acquisitions in 2021 (Amber Support Solutions, Cordant Services, Interact and H2O Solutions), Bidvest Noonan is back on its acquisition spree by adding Robinson Services and Sword Security to its group. Cormac Sheils (CEO) of Bidvest Noonan commented on how the business was impacted by Covid during an interview with Fingal Network Magazine in 2021. Many customers in education, aviation, transport, and retail sectors closed their doors but other customers in critical sectors such as healthcare and life sciences remained open with increased demand for Bidvest Noonan’s services. The business remained extremely agile during this time, moving staff between contracts to support these essential sectors, with the business maintaining its performance during the Covid period. This agility, combined with a number of successful acquisitions, has seen Bidvest Noonan emerge strongly in recent years, with group revenues reportedly in excess of €800m.
Source: Irish News
Integrity360 acquires Advantio
Deal Details: Integrity360 has acquired Advantio. Deal consideration was not disclosed.
Integrity360 is a Dublin-based IT security business. It was founded by Eoin Goulding in 2005. In 2021 it was acquired by UK-based private equity firm August Equity. The company had FY Dec 2022 revenue of c. €85m and is expecting revenues this year of €115m.
Advantio is a Dublin-based cybersecurity company founded in 2009. It is owned by Marco Borza, Martin Petrov, Francesco Consiglio and Ciaran Mcgloin. It does not report turnover or EBITDA information.
Advisers: Integrity 360: None mentioned.
Advantio: Corporate Finance: A Novacies Capital team led by Ciaran McGloin. Tax: Liam Kenny and Caroline Kennedy from Grant Thornton. Legal: A team led by Enda Newton, Partner at Eversheds Sutherland.
Renatus Comment: This deal sees Integrity360 continue its pan-Euopean expansion following its acquisition of UK & Bulgaria-based Caretower in February 2022 and Sweden-based Netsecure in May this year. By acquiring Advantio it extends its presence in Italy, Spain, UK, Lithuania, and Ukraine. It is part of Integrity360’s strategy to build out its service offering in PCI (Payment Card Industry) compliance. According to McKinsey, damage from cyberattacks will amount to c. $10.5 trillion annually by 2025, a 300% increase from 2015. This deal will see Integrity360 continue to grow as one of Europe’s leading players in cyber assurance and cyber security testing.
Source: Integrity360 Press Release
First Choice Purchasing acquired by Aramark
Deal Details: First Choice Purchasing has been acquired by Aramark. Deal consideration was reported to be in excess of €15m.
First Choice Purchasing is a procurement business established in 2008 by Frankie Whelehan. Its shares are majority owned by Josephine O’Regan and Antoinette Lambe. The business does not report turnover or EBITDA information.
Aramark is a US-based food service, facilities, and uniform services provider. The Irish-arm of Aramark reported FY Oct 21 turnover of €198.8m.
Advisers: First Choice Purchasing: Legal: ReganWall, led by Kieran Regan and Christopher Murray. Tax: Quintas, led by Dave O’Brien and Alice Keating.
Aramark: None mentioned.
Renatus Comment: Having operated as a hotelier with a portfolio at one point of 26 hotels and 2,500 staff, Frankie Whelehan was one of many exposed to the Global Financial Crisis, selling 11 hotels to Pat McCann of Dalata. Born out of the challenges faced by hoteliers during this period, Whelehan set up First Choice Purchasing with the aim of offering procurement services to hotels, generating significant savings for customers. The success of the business is emphasised by its growth from an initial twelve hotels to now representing over 800 businesses and expanding into healthcare and leisure.
The business is an ideal fit for Aramark, which will use the business to further expand its group purchasing organisation (GPO) business in Ireland following its acquisition of several small firms, including Trinity Purchasing in 2019.
Source: The Currency
Mackin Group acquires Greybridge Search & Selection
Deal Details: Mackin Group has acquired Greybridge Search & Selection. Deal consideration was reported to be c. €1.5m.
Mackin Group is a Cork-based consulting and recruitment firm. It was established in 2004 and is fully owned by Andy Mackin. The business reported FY Dec 20 turnover of c. €1.9m and EBITDA of c. €240k.
Greybridge Search & Selection is a UK-based recruitment specialist firm. It was owned by Thomas Husselby, Richard Adams, Matthew Neale, Leah Heppell. The business does not report turnover or EBITDA information.
Advisers: Mackin Group Irish Legal: Regan Wall led by Kieran Regan and Kevin O’Driscoll. UK Legal: Seven Legal led by Bill Cogan. Financial Due Diligence: O’Connor & Co Chartered Accountants and Forensic Tax Consultants led by David O’Connor. Finance: AIB.
Greybridge Search & Selection: None mentioned.
Renatus Comment: Mackin Group began life as a health-and-safety advisory company before expanding into recruitment, not just for roles in that industry but in several others as well. This acquisition broadens its base in the growing areas of health sciences, data & AI as well as expanding its presence in the UK. The job market continues to favour those seeking work with the seasonally adjusted unemployment rate sitting close to record lows at just 4.2% in June, according to the CSO. Despite this, there has been a recent slowdown in hiring across more senior roles. However, the consulting side of the business continues to perform strongly and the outlook for the company as it expands both operationally and gepgraphically is promising.
Source: Irish Times
Dawnlough acquired by Acrotec Group
Deal Details: Dawnlough has been acquired by the Acrotec Group. Deal consideration was not disclosed.
Dawnlough is a Galway-based medical equipment manufacturer. Founded in 1987, the company has grown steadily since, employing over 80 people in its 50,000 ft² manufacturing facility. In FY Dec 21, the business reported turnover of c. €8.8m which converted to an EBITDA of c. €2.6m. The business is led by Brian McKeon.
Acrotec Group is an independent micro-mechanics group that serves the watchmaking-jewellery, MedTech and precision high-tech industries. It is headquartered in Switzerland and was founded by François Billig in 2006. The company does not publish turnover or EBITDA information.
Advisers: None mentioned.
Renatus Comment: This deal is Acrotec’s second acquisition in Ireland in as many years, following its acquisition of Takumi, a Limerick-based precision engineering firm in July 2022. Located at the heart of the Atlantic MedTech cluster, Dawnlough is yet another example of a company capitalising on its geographic location with eight of the world’s top ten medical technology companies operating in the North West of Ireland. These companies employ over 8,000 people locally and generate a highly-skilled and experienced workforce for new MedTech start-ups thus driving continued innovation. Acrotec is not the only overseas company to invest significantly in the Irish medical devices market, with Dexcom recently announcing plans to invest €300m in its Galway site over the next five years and Eli Lilly announcing plans to invest €927m in a new Limerick site.
Source: MedTech Innovation
Greencore sells Trilby to KTC (Edibles)
Deal Details: Trilby, a subsidiary of Greencore, has been acquired by KTC (Edibles) for €9.8m.
Trilby is the Irish vegetable oil importing arm of Greenore. The business is based in Drogheda, Co. Louth. The business’ financials are not independently published, but Greencore has stated that pre-tax profits for FY Sep 22 were €2.9m.
KTC edibles is an independent distributor and manufacturer of edible oils. It is based in the UK and majority owned by private equity firm, Endless LLP. The business had FY Dec 22 turnover of €591.8m, converting to an EBITDA of €22.8m.
Advisers: None mentioned.
Renatus Comment: Greencore has stated that the disposal is part of a wider strategy by Greencore to refocus on the UK market. This is not the first disposal by Greencore for this rationale, nor is it the largest. Back in 2018, Greencore agreed to sell its US business for c. $1bn. Despite the obvious risks around Brexit, Greencore is actually somewhat insulated within the UK market, with 100% of the products it sells in the UK being made in the UK. While the original decision to sell its US decision may have seemed a step backwards for the businesses, Greencore realised a healthy return, recovering its entire US investment plus a small return. The UK business has also been highlighted as representing lower growth but yielding a higher return on capital for the business.
Source: Greencore Presss Release
Musgrave acquires Ritter Courivaud
Deal Details: Musgrave has acquired Ritter Courivaud. Deal details were not disclosed.
Musgrave is an Irish food retail, wholesale and food service company founded by brothers Thomas and Stuart Musgrave in Cork. In FY Jan 22, the business reported a turnover of c. €4.5bn, which converted to an EBITDA of c. €176.2m. The business is owned by a variety of individuals and businesses including Hugh McKeown, Computershare and the Musgrave family, with the Musgrave family still holding the majority of shares.
Ritter Courivaud is a food distributor serving the upmarket sector the UK’s food service industry. Based in Leeds, England, it was owned by Tesco prior to the sale. In FY Feb 2022, the business had turnover of £34.6m, converting to an EBITDA of £5.1m.
Advisers: None mentioned.
Renatus Comment: Musgrave has completed three acquisitions since the start of 2022, with its acquisition strategy focusing on two areas: retail stores; and distributors to niche aspects of the foodservice market. The acquisitions of McCambridge’s and Caulfield Supermarket saw Musgrave add a number of retail grocery stores to its portfolio, while the acquisition of Italicatessen saw Musgrave acquire a niche importer and distributor within the Italian food and beverage market in Ireland. The acquisition of Ritter Courivaud mirrors this, with the business providing fine food ingredients to the premium segment of the UK foodservice market and emphasises Musgrave’s strategy of becoming a ‘world-class food and beverage business on the island of Ireland and beyond.’
Source: Irish Independent
Matthews Coach Hire is a Monaghan-based coach service provider across commuter, private hire and corporate hire services. The business is majority owned by Patrick Matthews.
In its financial year to August 2022, the business generated a turnover of c. €7.6m, an increase of 3.1% year-on-year. This converted to an EBITDA of c. €1.1m, an increase of c. €841k year-on-year. EBITDA improvements can be attributed to increased gross margins.
Significant post-EBITDA cash movements include working capital movement of c. €134k, the purchase of tangible fixed assets of c. €78k, the sale of tangible fixed assets of c. €260k and the payment of capital elements of finance lease contracts of c. €874k. The business finished the year with a cash balance of c. €1.6m, an increase of c. €1.2m year-on-year.
The business employed an average of 78 people in FY22 at a total cost of c. €2.5m.
Who: Tailr, a Dublin-based sustainable fashion software business.
What: The business has raised €700k from Delta Partners, UK-based Haatch and Enterprise Ireland.
Why: The funding will be used to drive sustainable fashion in the garment industry.
Who: Nuada, a Belfast-based CleanTech business.
What: The business has raised c. £3.4m in investment from BGF in an extension to its £4.5m Series A round it announced last year.
Why: The new investment will allow the company to further develop its technology and scale its operations.
Who: Power Capital Renewable Energy, a renewable energy solar farm developer based in Dublin.
What: The business has raised €125m in funding from AIB and La Banque Postale.
Why: The funding will be used to deliver solar projects in Cork, Louth, Meath and Wexford.
Who: Baby Academy, the online parent educator and help group.
What: The business has raised €3m from investors including Paddy Holahan, Ken Keating and Tom Kennedy.
Why: The funding will be used to help the business move towards the US market.
Who:Molten Ventures, the Dublin and London-listed tech venture capital firm.
What: Its new fund has raised funding from the Ireland Strategic Investment Fund (ISIF), while also contributing the majority of funds itself.
Why: Molten is launching a €50m Irish-focused fund.
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.