Renatus’ Weekly M&A Newsletter – 24/07/2022
July 24, 2022Renatus’ Weekly M&A Newsletter – 07/08/2022
August 7, 2022
Renatus Weekly M&A & Company Performance Private Equity Newsletter 31/07/2022
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
There has been a lot said about the top-down carbon emission reduction targets introduced during the week.
The forced switch from fossil fuel to renewable looks and feels like a no-brainer. The vilification of our farmers is less convincing and seems unfair. Generations of Irish, through hard work and a lot of brain power, have maximised the factors of production being land, labour, capital and enterprise to get us to a global market-leading position (Kerrygold is the number one butter brand in Germany for example). A large part of the targeted reduction can be achieved by cleverer production practices which is great. Nonetheless, when the bottom-up plan is done, it could lead to an effective cap on growth and even a forced reduction of production capacity in Agriculture.
What seems plainly unfair is that we are penalised for the food consumption of the countries who purchase our food. We export 90% of what we produce in our two primary sectors – beef and dairy. These other countries are not accountable for the emissions associated with the food they eat but produced in Ireland. We have no doubt if we are forced to reduce or cap production that what we could have sold will be replaced by food from other countries with even higher food miles and carbon footprint than sourcing from Ireland leading to carbon leakage. It feels like the measurement of carbon has not evolved to the sophistication of the measurement of the economy where GNP and GDP capture the difference between what we produce for export.
Anything to reduce the global carbon should be applauded and hopefully the bill will force smarter behaviour for the global good. However, we should be very careful about knee-jerking a cap on production on one of our finest and hardest working industries if the net effect of the actions being introduced by the bill does not lead to a clear net reduction in global emissions.
M&A ACTIVITY
Heitman LLC acquires stake in U Store It
Deal Details: Heitman LLC have acquired a stake in U Store It. Deal details have not been disclosed.
U Store It is a self-storage business that provides storage facilities in six locations across Ireland for a monthly fee. It was founded by Seamus Lonergan in 2001 and is headquartered in Dublin. It also has facilities in Belfast, Cork and Waterford. The company does not publish turnover or EBITDA information. The business was owned entirely by Seamus and Ciara Lonergan.
Heitman LLC is a global real estate investment management firm. It was founded in 1966 and is headquartered in Chicago, Illinois. Maury R. Tognarelli leads the company as CEO. The company does not publish turnover or EBITDA.
Advisers:
U Store It:
Corporate Finance and Tax: Grant Thornton led by Michael Neary, Paul Murray, Adrian McNamee, Kevin Foley, Bernard Doherty and Emer Dowling.
Property: CBRE led by Callum Paddock and Oliver Close and Christian Judd.
Legal: Rennick Solicitors led by Brian Rennick and Brian Foley and DWF led by David McNeice.
Heitman:
Corporate Finance and Tax: EY led by Carthach McCarthy, Cian O’Donovan and Alan Curran.
Property: JJL led by Tom Caines.
Legal: Maples led by Morgan Pierse.
Renatus Comment: The self-storage industry is being partly driven by the increasing rate of urbanisation and more generally by change in people’s lives. Firstly, the increasing urban population means smaller and increasingly expensive living spaces in cities with more renters who move around more frequently, and as a result these people need locations to store their belongings. Secondly, change, including home sales and rental turnover, result in people needing temporary storage solutions. Covid resulted in significant change in peoples’ lives and the self-storage industry benefited as a result.
Public Storage (NYSE: PSA) is one of the largest American self-storage companies. Its share price since March of 2020 has increased by c. 91% from $171 to $326, demonstrating how positive a period it has been for companies in the space.
Source: Heitman Press Release
Thorntons recycling acquires The City Bin Co.
Deal Details: Thorntons Recycling has acquired The City Bin Co. following Carlyle Cardinal Ireland’s exit. Deal details have not been disclosed and the deal is subject to approval by the CCPC.
Thorntons Recycling is an Irish recycling and waste management service that handles over 700,000 tonnes of waste across 11 depots. The company was founded in 1979 and is run and owned by brothers Paul and Shane Thornton. It is headquartered in Dublin and currently employs over 550 staff. The business had a turnover of €86.3m which converted to an EBITDA of €13.8m in FY20.
The City Bin Co. is a waste management company that provides refuse collections, servicing homes and businesses between Galway and Dublin. It is headquartered in Galway and was founded and led by Gene Browne since 1997.
Advisers:
Thorntons Recycling:
Deal advisory: Crowe Ireland.
Legals: Ogier Leman acted for Thorntons Recycling.
The City Bin Co:
Deal advisory: PwC Ireland.
Legal: William Fry LLP and Flynn O’Driscoll LLP.
Corporate Finance: IBI Corporate Finance led by David Lyons.
Renatus Comment: Thorntons’ acquisition of The City Bin Co. represents a combination of two of the top 10 waste collection businesses in the greater Dublin area, according to a CCPC filing by Thorntons in 2018.
This is an interesting acquisition which continues consolidation in the waste collection industry in Ireland. A CCPC report in 2016 noted there were 63 active household waste collection operators in Ireland and that the 20 main operators serviced 90% of households that availed of a collection service. The total number of operators active in the market is declining. In the period 2012 to 2016, the number decreased from 82 to 63. Since that time, there have been acquisitions in the space including PandaGreen (owned by Beauparc) acquiring McElvaney’s Waste and Recycling, which served Louth, Monaghan and Cavan.
Source: Carlyle Press Release
Takumi acquired by Acrotec Group
Deal Details: Takumi has been acquired by Acrotec Group. Deal details have not been disclosed.
Takumi is a CNC precision engineering firm that specialises in bespoke medical, aerospace and industrial component assembly and manufacturing. The business was founded by Gerry Reynolds in 1998 and is based in Limerick. Donal Galligan has led the company as CEO since last year. Shareholders inlcuded Gerard Reynolds, Junko Ihata, Fiona Carmody, Declan Carmody and Edward Byrne. In FY20 it had a turnover of €6.8m which converted to an EBITDA of €1.5m.
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: Takumi is a good example of a business which has capitalised on the abundance of medical device companies in its geography. As an engineering business, its core set of services would not traditionally be aimed at the medical sector. However, by targeting the sector and working with global brands who preferred to nearsource elements of its supply chain, Takumi achieved a higher value proposition and ultimately became an attractive target.
Source: Acrotec Press Release
Lucey Transport Logistics acquired by DFDS
Deal Details: Lucey Transport Logistics has been acquired by a European shipping and logistics company, DFDS. Deal consideration has not been disclosed.
Lucey Transport Logistics is a Cork-based logistics solutions company offering warehousing, inventory management, bonded storage as well as product rework and labelling. It provides its services primarily to consumer goods companies and has distribution operations in Dublin, Clonmel, Cork and Lurgan. The company was established in 1932 and is currently led and owned by Kevin Lucey and the Lucey family. In FY20 it had a turnover of c. €11.7m.
DFDS is a ferry transport and logistics services company. It was founded in 1866 by Carl Frederik Tietgen and is headquartered in Copenhagen, Denmark where it is listed on Nasdaq Copenhagen. In FY21 the company had a turnover of €2.4bn and an EBITDA of €327.2m.
Advisers:
Lucey Transport Logistics:
Deal advisory: Grant Thornton led by Gareth Cosgrove and Paddy Dillon supported by David Kealy and Anita Mulligan were advisor to the selling shareholders.
Legal: Aidan Lawlor and Jerome Kennedy from McCann Fitzgerald were sell-side legal advisors.
DFDS:
None mentioned
Renatus Comment: Over the past 90 years, Lucey Transport Logistics has expanded from one truck distributing tea, sugar, and animal feedstuffs around the Cork region to employing over 250 staff and having a fleet of over 100 vehicles and 400 trailers.
DFDS’ stock price increased slightly following the announcement. The share price has performed well during July increasing from a low of c. €28.10 on 6 July to its current c. €33.42 at close of trading on Friday.
Source: Irish Examiner
Arachas acquires Glennon Insurances
Deal Details: Arachas has acquired Glennon Insurances. Deal consideration has not been disclosed and the deal is subject to approval by the CCPC.
Arachas Insurance is an insurance broker offering insurance services to both businesses and individuals. It was originally founded in Cork in 1969 and is led by CEO, Conor Brennan. The business became part of the Ardonagh group in 2020. In FY20 the business had a turnover of €46.5m, which converted to an EBITDA of €16.3m.
Glennon Insurances is a Dublin-based insurance broker that offers business insurance, risk management, motor insurance, home insurance, life insurance and pensions. The business was founded in 1948 by Frank Glennon and has been led by chairman David Glennon for the last number of years. It does not publish turnover or EBITDA information.
Advisers:
Arachas:
Legal: Eversheds Sutherland LLP led by Gavin O’Flaherty.
Glennon Insurances:
Deal advisory: A Deloitte team including Anya Cummins, Denis Murphy, Gareth Sullivan and Patrick McInerney.
Renatus Comment: This is Arachas’ ninth acquisition in the last three years, with the most recent being Cork-based Apex Insurance and Dublin-based Stuart Insurances, as the broker industry consolidates at a rapid rate.
Source: The Ardonagh Group Press Release
Kitchenmaster Holdings completes MBO
Deal Details: Kitchenmaster’s management has completed a management buyout with Cordovan Capital exiting the business. The MBO team consisted of Colin Stanley, Jacqui Walsh and Binu Sivan supported by fellow shareholders Beltrae Partners. Deal consideration has not been disclosed.
Kitchenmaster is a Belfast-based hygiene and cleaning solutions developer and manufacturer that operates in the food service, healthcare, hospitality and industrial sectors both in Ireland and abroad. The company was founded in 1975. The company does not publish turnover or EBITDA information.
Cordovan Capital is a micro-cap private equity firm based in Belfast.
Advisers: None mentioned
Renatus Comment: Kitchenmaster has grown from initially offering a small range of cleaning products for the local hospitality market to offering a wide range of full hygiene solutions with distribution channels throughout Ireland, the UK, Europe, and a base in Dubai that serves the Middle East. Management has led the growth to date with the backing of Cordovan Capital with this MBO showing management’s confidence in the continued success and growth of the business.
Source: LinkedIn
Mayo Hoteliers purchase The Gateway Hotel
Deal Details: It has been reported that hoteliers, Trish Egan and PJ Staide, have acquired The Gateway Hotel in Swinford, Co. Mayo. The sale also included an adjoining building. The deal consideration was not disclosed but it was reported to be in excess of €1.0m according to CBRE agents.
The Gateway Hotel is a three-star hotel located on the main street of Swinford. The Hotel has 22 rooms, a bar that seats 50 people, a dining room that seats a further 50 people, and a function room that seats over 200 people. The business was owned entirely by Charles Kelly and employed c. 25 staff in FY20.
Trish Egan and PJ Staide already own Cill Aodáin Court Hotel in nearby Kiltimagh, Co. Mayo. Their plans for the hotel post-acquisition were not disclosed.
Advisers:
The Gateway Hotel:
Property: CBRE Hotels handled the sale of The Gateway Hotel.
Renatus Comment: While the hospitality industry is still facing many challenges, the recovery of the sector appears to be driving M&A activity with a number of Irish hotel-related acquisition in 2022 following the FBD’s acquisition of Killashee Hotel, Talbot Hotel Group’s acquisition of the Clonmel Park Hotel, and Wirefox’s acquisition of Bushmills Inn.
Source: Independent
The Electric Storage Company increases its investment in KX
Deal Details: The Electric Storage Company (TESC) has increased its investment in KX, an analytics platform owned by FD Technology. Deal details have not been disclosed.
TESC is a Belfast-based company that uses smart batteries to harness the energy created from renewable resources. It was founded in 2017 by Eddie McGoldrick and is headquartered in Belfast. It does not publish turnover or EBITDA information. The business is owned by a variety of individuals including Paul Burns, Bronagh McGoldrick, Fionnuala McGoldrick, Kathleen Burns, and founder Eddie McGoldrick.
KX is a data analysis software developer and vendor. It provides the data management and analytics technology underpinning TESC’s Predictive Analytical Renewables Integration System (PARIS) platform. The business is headquartered in Newry and was founded by Arthur Whitney in 1993. It is a subsidiary of FD Technologies plc.
Advisers: None mentioned
Renatus Comment: This announcement follows Heron Bro’s seven-figure investment and strategic partnership with TESC which was announced last month. As well as investing in KX, Heron Bro’s funding will go toward doubling TESG’s team of power and software engineers, and data scientists, to 35.
Source: The Irish News
Walco Foods acquired by Neste
Deal Details: Walco Foods has been acquired by Neste. Deal details have not been disclosed.
Walco Foods is an Irish animal fats and by-products trading firm. It was founded in 1996 in Tramore, Co. Waterford and is led by Kevin Walshe. The business does not report turnover or EBITDA. The business is owned entirely by Kevin and Mary Walshe.
Neste is a refining and marketing company concentrating on low-emission, high-quality traffic fuels. It produces renewable diesel and aviation fuel using waste and residue raw materials. The company was founded in 1948 in Finland and is led by CEO Peter Vanacker. In FY21 the business had a turnover of c. €13.0bn and an EBITDA of c. €2.7bn.
Advisers: None mentioned.
Renatus Comment: The acquisition of Walco Foods is part of a wider M&A growth strategy by Neste, following acquisitions in the US and Netherlands. Waterford-based Walco Foods is an example of an Irish company primely positioned to benefit from the growth of the animal fats industry globally.
Source: Neste Press Release
Broadway Gaming acquires 888’s bingo business
Deal Details: Talivest, a Cork-based employee analytics software company, has been acquired by Australian tech unicorn Go1 for an undisclosed sum.
Formerly known as KonnectAgain, Talivest, was founded by Laura Belyea and Jayne Ronayne. Its backers include Dan and Linda Kiely, the Voxpro founders, PCH chief executive Liam Casey, Google Ireland managing director Ronan Harris and Anne Heraty, the CPL founder. The company does not report turnover or EBITDA.
Go1 is one of the world’s largest corporate education content hubs for on-demand training and resources. Go1 announced a $100 million fundraise last month at a $2 billion valuation.
Advisers: None Mentioned
Renatus Comment: Originally focused on helping companies engage with corporate alumni, Talivest has in recent years shifted focus towards assisting firms in the area of employee engagement. Workhuman, a company with a similar focus reached unicorn status in 2020. Listen to the Workhuman story with Barry Moloney on our first Podcast. Barry is Chairman of Workhuman and founder of Balderton Captial.
Source: Business Post
DEAL UPDATES & OTHER NEWS
Security Matters Ltd. announces business combination with Lionheart III Corp
Deal Details: Security Matters Ltd., an Australian technology company have announced a business combination with Lionheart III Corp, a special acquisition purpose company. The combined entity will be an Irish company listed on the NASDAQ as SMX Public Limited Company (SMX Ireland). The combined group is projected to have a combined value of $360m.
Advisors:
Security Matters:
Legal: Arthur Cox led by Connor Manning and Niamh O’Toole (Corporate and M&A).
Source: PS Newswire
COMPANY PERFORMANCE
Founded in 1961 by John Walsh, the Irish School of Motoring Limited (ISM) offers services such as driving lessons through ISM Driving School, forklift and truck training through ISM Training, and recruitment services through ISM Recruitment. The business is headquartered in Dublin and is led by Managing Director, Karl Walsh.
ISM reported an FY21 turnover of c. €13.0m which converted to an EBITDA of c. €1.1m. Turnover increased c. 14.4% while EBITDA increased by 56.1% year-on-year. Gross margin increased from c. 25% in FY20 to c. 28% in FY21.
Significant post EBITDA cash movements included a working capital investment of c. €1.1m and the sale of investments amounting to c. €900k. The business is owned by John, Patrick, and Karl Walsh.
ISM employed an average of 497 staff throughout FY21 at a cost of c. €9.7m. 437 employees were in the recruitment division.
Benners Garage Limited (T/A Kerry Motor Works) is a car dealership offering sales, repairs and servicing. The business is based in Tralee, Co. Kerry and owned by Nicky, Simon and Stephen Benner.
In its financial year to September 2021, the business reported turnover of c. €29.5m, an increase of 36.0% year-on-year. This converted to an EBITDA of c. €1.4m, an increase of 16.6% year-on-year. Benners Garage Limited finished the year with a cash balance of c. €3.0m.
Significant cash movements included the acquiistion of fixed assets for €140k and a loan repayment of €350k. The business employed an average of 27 people over the period at an annual cost of c. €2.0m.
RECENT FUNDRAISINGS
Who: Synova, a growth capital and private equity company focusing on businesses in the technology, health, education, business services and financial services sectors that are valued between £20m and £250m.
What: Synova LLP has closed Synova V having raised £875m, surpassing it’s £750m target.
Why: Synova V will address the full spectrum of mid-market opportunities and will aim to support companies through their growth trajectory with £250m of the capital reserved for investments in smaller companies.
Source: Synova Press Release
Who: Phoenix recruitment, a Dublin-based recruitment agency that specialises in the recruitment of senior leadership positions within the professional services sector.
What: The company has announced a €1m funding round.
Why: It plans to establish an office in the US this year, which will accelerate its global expansion and it also plans to increase the company’s headcount by 20 people before the end of this year.
Source: Business Plus
Who: CropBiome, an agtech company that uses microbes to treat crop seeds and produce healthier plants and reduce the amount of fertiliser required. It is a joint TCD and UCD spin-out company.
What: The company has raised €1.3m in funding from HBAN.
Why: It aims to accelerate the commercial development of its products, scale its team and begin trials with major seed distributors in order to bring its products to market by mid-2025.
Source: Business Post
Who: BloXmove, a shared B2B mobility blockchain platform focusing on making mobility accessible for its customers and powering this through renewable energy.
What: The company has received a seed funding round of €5m, the identity of the investors has not been disclosed.
Why: The funding will be used to scale the mobility alliance beyond Europe and become the decentralised ledger for power and mobility globally.
Source: CapitalIQ
Who: Furthr VC, an Irish venture capital investor. The venture arm of Furthr was rebranded from the Dublin Business Innovation Centre.
What: The business has announced the final close of its fund at €32m.
Why: The reported aim of the fund is to invest in up to 30 globally scalable Irish software and medical device companies.
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
70.2
The Bank of Ireland Economic Pulse this month. This 8.5 point drop since June represents a fall in both consumer and business confidence. This is the second monthly decline and a 17-month low as the effects of inflation continue to impact the economy. @bankofireland
50%
The fall in Northern Irish job vacancies in June in comparison to March 2022. According to @APSCo_org
9.2%
The increase in new tenancy rent prices in Q1 2022 in comparison to the same period in 2021. The national average rent in new tenancies is now €1,460 per month and the average in Dublin is €2,015 per month. @Independent_ie
43%
The decrease in domestic travel figures for business-related travel in Q1 2022. The CSO recorded 78,000 domestic overnight business trips during the period, in comparison to c. 111,500 in the same period in 2020. @CSOIreland
3.2%
The International Monetary Funds revised forecast for economic growth. The IMF has cut its economic growth predictions for the third time in 2022 expecting the economy to grow by 3.2% in 2022 and 2.9% in 2023. This represents a respective 0.4% and 0.7% drop. @IMFNews
18.4%
The increase in residential construction activity in the first half of 2022 in comparison to the same period last year. The report showed 22,390 residential buildings under construction with 17.4% of these in Dublin, 14.2% in Kildare, and 12% in Cork. @GeoDirectory_ie
SIGN UP TO OUR NEWSLETTER
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.
OUR INVESTMENTS
LEARN MORE…
Renatus’ Knowledge Centre
Our Knowledge Centre is filled with insights from some of Ireland’s top business leaders on Succession Planning, Management Buyouts / Buy-Ins, Growth Financing and much more.
Subscribe to our Podcast
The Renatus Podcast, hosted by Renatus advisor and investor Greg Dilger, is a series of conversations with people in business – owners, operators, and investors.
Receive this Newsletter Direct to your Inbox
To receive the Renatus Weekly M&A & Company Performance Newsletter directly to your inbox, click the button below and subscribe.
