Renatus’ Weekly M&A Newsletter – 24/10/2021
October 24, 2021Renatus’ Weekly M&A Newsletter – 07/11/2021
November 7, 2021
Renatus Weekly M&A & Company Performance Private Equity Newsletter 31/10/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
RAISING CAPITAL SUMMIT
Raising Capital Summit 2-for-1 ticket offer
Renatus is delighted to offer you a 2-for-1 ticket deal to The Business Post’s Raising Capital Summit on Tuesday, November 9th.
The Summit has been relocated to the Radisson Blu Hotel, Golden Lane, Dublin to allow for more networking space between attendees. On the day discussions will include funding options and future growth pathways with a great line-up of speakers from capital sources, CEOs, CFOs, entrepreneurs, advisors and dealmakers.
Check out the great speaker line-up and agenda here.
To book your tickets and avail of the 2-for-1 offer just input the offer code RENATUS when you book online.
M&A ACTIVITY
Australia’s Telstra to acquire Digicel Pacific
Deal Details: Australian telecommunications firm Telstra will buy Digicel Pacific for a reported $1.6 billion (€1.4 billion). Telstra is an Australian telecommunications company which builds and operates telecommunications networks and markets voice, mobile, internet access, pay television and other products and services.
It is reported that Telstra’s move to acquire the business is widely seen as a geopolitical move heavily backed by the Australian government, which will reportedly contribute $1.3 billion of taxpayers money to finance the deal.
Digicel’s Pacific business, which generates annual revenues of $450 million and makes profits (Ebitda) of $222 million, employs 1,700 people and operates in six markets in the south Pacific: Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru.
It is reported that O’Brien will use the proceeds to reduce the debt in the business. According to the credit rating agency Fitch, Digicel’s leverage is 5.5 to 6 times earnings, but Digicel’s financial flexibility will improve as a result of this transaction.
Advisers: None mentioned
Renatus Comment: This deal potentially positions the company to make a second attempt to tap US stock markets with an initial public offering (IPO) of Digicel in the coming years, having failed to publicly list the company back in 2015. Over the last couple of years Digicel will have knocked off close to $3 billion of debt whilst enduring significant pressure from creditors. O’Briens resilience and dealmaking looks to have paid dividends as the company is in a much better position post this deal which has reportedly secured O’Brien’s control of the group.
O’Brien recently sold his stake in Independent News & Media, Communicorp and CTI Global. O’Brien’s portfolio currently includes Digicel, the Beacon Hospital, Quinta do Lago, Actavo, Ballynahinch Castle, significant property interests and is likely to have other assets which are not widely reported in the public domain.
Source: Rte news
M.O.L is acquired by United Tooling Solutions
Deal Details: Northern Ireland-based M.O.L Tools and Abrasives has been acquired by United Tooling Solutions (UTS). The deal consideration was not disclosed.
M.O.L, founded in 1994 by Michael O’Loughlin, is a power tool and abrasives wholesaler supplying brands such as Bosch, Makita, Panasonic, Hitachi & Milwaukee. M.O.L joined the THS buying group in 2006, which was acquired by Troy Group in 2018. M.O.L had net assets of £4.4m at June 2021.
UTS is a subsidiary of The Troy Group UK and is a provider of industrial tools and related supplies through its nationwide branch network in the UK.
Advisers: MOL received financial advice from Keenan CF (Emma-Louise Gilroy, John Reynolds, and Tom Keenan) and legal advice from Shean Dickson Merrick.
UTS was advised by Gateley Legal and Mazars (Financial Due Diligence).
Renatus Comment: M.O.L has experienced rapid growth since 2018. Much of which came because of a warehouse extension, doubling capacity, and the implementation of next-day delivery. In addition, the pandemic is likely to have increased demand for MOL products. In H1, Grafton group announced record profits for the period stating that the Chadwicks business experienced exceptional demand in the residential RMI and new build markets. With significant savings and the volume of demand, MOL is in a strong position to deliver future growth for the new owner.
Source: UTS Press Release
Carl Stuart Group acquired by Calibre Scientific
Deal Details: Carl Stuart Group has been acquired by Calibre Scientific for an undisclosed sum.
Dublin-based Carl Stuart Group, which is led by founder & chairman Stuart Smith, is a distributor of products focused on instrumentation, equipment, consumables, and a critical provider of services across the chromatography, environmental, research lab, and life science verticals.
LA-headquartered Calibre Scientific is a diversified global provider of life science reagents, tools, instruments, and other consumables to the lab research, diagnostics, industrial, and biopharmaceutical communities.
Advisers: An LK Shields team led by Jennifer McGuire (Partner, Corporate/M&A) with assistance from James Byrne, Paul Dineen, Simon Mahon, and Elaine O’Connor acted on the transaction.
Renatus Comment: Calibre Scientific owns a portfolio of 20 life science and diagnostic companies. The acquisition of Carl Stuart Group will enable the business to increase its overall position in the chromatography and laboratory supplies market as well as adding a leading distribution operation to the presence Calibre Scientific has in the UK & Ireland.
Source: Carl Stuart Group, GlobeNewsWire
BIL to acquire Vantage Resources
Deal Details: Vantage Resources has agreed a deal to be acquired by Bakhchysarai (Ireland) Ltd (BIL), subject to regulatory approval. Deal details were not disclosed.
Vantage Resources Limited is an IT contracting and talent acquisition business founded in 2000 that primarily sources specialist IT professionals on medium to long-term contracts to clients. The company’s service offerings include IT contracting, Testing, Quality Assurance and Project Management. Vantage Resources is wholly owned by Simon Martin.
The acquisition will see Vantage Resources continue to operate as an independent business led by managing director Jason McNeill. The company, had reported turnover of c.€22m and EBITDA of c.€1.1m in 2020.
BIL is an Irish-based acquisition holding company that includes both Brightwater Recruitment and PE global in its group companies. BIL’s Capital Partners include Duke Royalty and Bank of Ireland.
Advisers:
Vantage Resources:
IBI Corporate Finance (James Doody & Darragh Jones) acted as corporate finance advisors. Beauchamps Solicitors (Shaun O’Shea, Deirdre Cahill & Emily Harrington) acted as legal advisors.
BIL:
RDJ acted on legals (led by Bryan McCarthy, Sarah Slevin, Diarmaid Gavin and Mark Ludlow). Financial due diligence was completed by KPMG (Mark Collins, Kieran Gee and Michaela Dillon). Tax due diligence and advice was provided by Grant Thornton (Sasha Kerins, Robert Murphy and Ann Marie Haughey).
Principal funders Duke Royalty were advised locally on the legals by Colm Kearney of Kearney Solicitors, whilst Pierce Butler and Warren Power led the Bank of Ireland team who were advised by McCann Fitzgerald (Tom Ó Maolagáin and Romy Redmond).
Renatus Comment: BIL was the company established for the MBO of recruitment agency Brightwater in 2018. There has been significant M&A activity in this sector in recent years, most notably the acquisition of CPL by Japanese group Outsourcing Inc for a reported c. €318m. It is widely reported that there is a labour shortage and attracting and retaining good staff is getting more difficult. Recruitment agencies are likely to be in for a busy 12 months as companies continue recent hiring sprees to keep up with demand for services and products.
Source: IBI Corporate Finance Press Release
GDG acquired by Venterra
Deal Details: Irish engineering group Gavin & Doherty Geosolutions (GDG), has been acquired by Venterra for an undisclosed sum.
GDG, which is led by MD and founder Paul Doherty, specialises in flood defence systems and wind-energy installations, and has worked on major Irish as well as overseas engineering projects, including offshore wind projects in Taiwan, Baltic Sea and China Sea. The business currently employs 120 people, the majority of which are based in Ireland.
Newly founded UK group Venterra is a coming-together of British businessman Ayman Asfari and other climate technology investors hoping to capitalise on the demand for offshore wind energy.
Advisers: None mentioned.
Renatus Comment: This week at COP26 (2021 United Nations climate change conference), Countries are being asked to come forward with ambitious 2030 emissions reductions targets that align with reaching net zero by the middle of the century. To do this, countries will have to reduce dependence on coal and invest heavily in renewable energy. In addition to renewable energy, governments are spending more on the impact of climate change with the UK committing £5.2bn in the 2020 budget for flood defence systems. Ireland is developing significant expertise in this field and there has been several notable transactions including Aker’s investment in to Mainstream and influx of investors such as Greencoat, Carlyle and Strafkraft investing heavily in Irish renewables projects.
Source: Irish Times
VoiceSage acquires 2sms
Deal Details: Irish headquartered VoiceSage has acquired 2sms for an undisclosed sum.
VoiceSage is a cloud communication platform providing conversational messaging solutions for various industries. Using machine learning and artificial intelligence techniques, the business helps companies increase customer engagement and enhance brand-customer communications.
2sms is a mobile messaging company with offices both in the UK and USA. Offering customer-centric enterprise solutions, 2sms focus on delivering mission-critical messages securely and quickly.
Advisers: None mentioned.
Renatus Comment: This deal marks VoiceSage’s first strategic acquisition, giving the business a bigger foothold in the U.S. market while also enabling international expansion and growth. VoiceSage is majority owned by Charles Carroll and James Kett. VoiceSage had net assets of (€1.4m) at 30 June 20.
Source: Business Wire
Beauparc acquires JWS
Deal Details: Beauparc Group has acquired Manchester-based JWS Waste & Recycling Services for an undisclosed sum.
Irish headquartered Beauparc is one of the UK and Ireland’s leading utility corporations. Its businesses serve over 340,000 residential, commercial, electricity and gas customers across a portfolio of 40 waste facilities.
Established in 1983 and independently owned since, JWS provides waste management in both the commercial and construction sectors. The business employs a workforce of 90 and operates from a Salford-based material recovery facility (MRF), with all senior management remaining post acquisition.
Advisers: None mentioned.
Renatus Comment: Beauparc, founded by Eamon Waters in 1990, is once again showcasing how a business can leverage strategic acquisitions to achieve strong growth, with this acquisition seeing the business further expand it’s portfolio in the north of England. The move comes after Beauparc was acquired by Macquarie Asset Management from Eamon Waters and Blackstone in June in a deal which reportedly valued the company at close to €1bn.
Source: JWS
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
Glenstal Foods Ltd, based in Munroe, Co. Limerick is a supplier of dairy food products and ingredients into the retail and food service sectors. In operation since 1995, the business has formed partnerships with multinational companies with its products being distributed worldwide.
In the financial year to December 2020, Glenstal Foods generated turnover of c. €35.8m, which converted to EBITDA of c. €1.0m. Gross margins remained flat year-on-year at 7.3%.
The business ended the year with a cash balance of c. €600k up c. 100k from the prior year. Big cash outflows into working capital (c. €1.2m) and dividends (c. €790k) were partially offset by new short term financing (c. €940k) and an intercompany loan (c. €435k).
In 2020, the business employed an average of 17 people, at a cost of c. €1m. Glenstal Foods UK Limited is the ultimate parent company which is owned by Richard and Antoinette Walsh.
Skibereen-based West Cork Distillers Limited was formed in 2003 by John O’Connell, Ger McCarthy and Denis McCarthy. The business operates out of a 12.5-acre site on Marsh Road, with a distillation capacity of 4m litres. Its brands include West Cork Irish Whiskey, Garnish Island Gin and Two Trees Vodka.
In the financial year to December 2020 West Cork Distillers reported a turnover of c. €35.2m and a reported EBITDA of c. €5.3m. This represents an increase of 0.7% and a decrease of 24.4%, respectively. The EBITDA decline can be traced to to an increase in distribution and other overhead costs.
The businesses largest post-EBITDA cash movement was the purchase of tangible fixed assets amounting to c. €9m. The business closed the year with a negative net cash and cash equivalents balance of c. €85.5k.
The business employed an average of 92 people throughout 2020 at a cost of c. €3.8m.
RECENT FUNDRAISINGS
Who: Ostoform, a medical equipment supplier based in Westmeath. The company was founded by current CEO, Kevin Kelleher and specializes in wearable medical seals. Ostoform was awarded a grant of €2.7 million earlier this year via the Disruptive Technologies Innovation Fund to support the development of the company’s product pipeline.
What: The company has raised an additional €3m in a funding round led by BGF bringing total funds raised this year to c. €6m.
Why: The funding will go toward growing the business internationally and advancing its pipeline products to the market.
Source: Ostoform
Who: Fire Financial Services, a Dublin-based supplier of technology aimed at helping businesses manage digital payments.
What: Majority owner, Colm Lyon has injected c. €2.5m into the company through an isle of man holding company.
Why: The intended use of the funding was not disclosed.
Source: The Irish Times
Who: WAM Group Limited t/a Admix, a leading In-Play monetization company that bridges the gap between gaming content and brands, has secured funding.
What: Admix has secured US$25 million in Series B funding led by Sure Valley Ventures.
Why: The business will use the funds raised to scale up its In-Play solution worldwide and establish itself as the content monetization layer for gaming worlds and the formative metaverse.
Advisors: LK Shields acted for Sure Valley Ventures, led by Corporate Finance partner Emmet Scully and assisted by Lester Sosa-Villatoro.
Source: Sure Valley Ventures
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 OF THE WEEK
On the 24th of December 2020, an agreement was reached before the EU transition period deadline of the 31 December 2020.
Given the uncertainty, many companies stockpiled goods. In addition to stockpiling, the pandemic changed consumer trends and supply chains making it hard to determine what impact Brexit had on UK exports. But as the world continues to recover from the pandemic a worrying trend for the UK is developing as its export performance slips behind other developed countries. UK exports at 80-90% of pre-pandemic levels when most countries are back to pre pandemic levels.
It will be a difficult task for the UK to develop trade relations with other countries to compensate for the reduced volumes of trade with the EU post brexit which is likely to lead to downward pressure on jobs, profits and overall economic performance in the medium term. With this challenging background Borris, Rishi and co clearly felt a need to win back the favour of their voters – they are reducing duty on beer and Prosecco in a gesture that might cost them half a billion. It should win millions of votes!
RENATUS GRADUATE RECRUITMENT
We’re hiring a graduate to join our team as an Associate.
We’re looking for an individual with ambition, tenacity and a love of entrepreneurs and SMEs to help us build exceptional businesses across Europe and beyond.
This role is open to final year and graduate students available to start full-time in September 2022, or earlier if applicable.
If you, or someone you know, is interested in applying, please visit Renatus.ie to learn more and apply.
@RenatusCapital Tweets
87.6
The Bank of Ireland Economic Pulse as of October 2021. The index, which combines the results of the Consumer and Business Pulses, was down 0.6 on last month but up 31.1 year-on-year. According to @bankofireland . @RTEbiz
40.9% & 42.3%
The year-on-year rise in the volume and value, respectively, of new mortgages drawn down in Q3 of 2021, totaling 11,479 new mortgages, worth €2.784bn drawn down, according to @BPFINews . @RTEbiz
17.4%
The year-on-year increase in the amount of goods handled by Irish ports up in Q2 2021 when compared with Q2 2020, amounting to nearly 13 million tonnes of goods. According to @CSOIreland
12.6%
The growth in the volume of retail sales for September 2021 when compared with pre-pandemic levels of the same period in 2019. According to @CSOIreland
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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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