Renatus’ Private Equity M&A Newsletter - 01/09/2024 - Renatus Capital Partners - Private Equity Firm - Dublin, Ireland. (2024)

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It was a big week for career choices with thepublication of the annual CAO third level course offers. Not coincidentally,A number of articlesthis week focused on apprenticeships as a career choice.In 2023 there was a record number of 9,000 apprentice registrations across a wide array of disciplines, potentially suggesting that the perceived stigma against this career route may be fading. This represents an increase of more than 60% over the prior three years and is no doubt welcome news to many entrepreneurs of all scales, who are crying out for skilled young workers to address labour shortages.

Many people will currently be familiar with the pain of trying to source skilled tradespeople to carry out work such as home repairs or improvements with operators such as plumbers, electricians and carpenters often having work backlogs of weeks or even months to fill.A lot of talk aboutincreased housing supply, retrofitting and other infrastructure improvements are academic without the skilled people to execute the work.

With demand for these services at such high levels, it’s great that there is a viable and potentially lucrativealternative outsideof university that many young people today can pursue. The pursuit of a trade/ apprenticeship is often far better suited for many people to the often-vaunted college or university path, which can sometimes lead to scarcer job opportunities upon graduation.

For a long time, many Western European countries such as Germany have offered strong vocational training systems to their students aged 16-18 and it is much more culturally accepted as a common career path in these places. Given that there appears to be a growing interest among Ireland’s latest school leavers for similar career development options, we shouldcontinue to make these paths more readily available to our young people and have less snobbery around this route as a career path.

Deal Details:AQF Medical, one of our portfolio companies,has been acquired by UFP Technologies.

AQF Medical is an Irish-based specialist in the area of technical foam conversion and thermoplastic polyurethane (TPU) packaging solutions, primarily for the medical industry. Based in Co. Meath, the business now exports to countries around the world and participates in a successful technical foam joint venture in Singapore. Its product offering requires technical expertise and its parts are used in applications such as woundcare, orthopaedic packaging and life-saving medical devices. In 2021, Renatus partnered with the management team of Tom Lane and Seamus fa*gan along with fellow shareholders Michael, Aidan and Colin Moran.

UFP Technologies is a designer and custom manufacturer of comprehensive solutions for medical devices, sterile packaging, TPU and other highly engineered custom products. The company is publicly listed, with an Enterprise Value of c. $2.6bn. In the peiod LTM Jun’24it generated EBITDA of c. $75m.UFP is an important link in the medical device supply chain and a valued outsource partner to most of the top medical device manufacturers in the world. The company’s single-use and single-patient devices and components are used in a wide range of medical devices and packaging for minimally invasive surgery, infection prevention, wound care, wearables, orthopaedic soft goods, and orthopaedic implants.

Renatus Deal Team:led by Tom Sheils and Brian Quinn.

Advisers:
AQF Medical:
Legal: Kearney Solicitors led by Colm Kearney and Christian Carroll.
Financial Support: Crowley & Co. Chartered Accountants & Registered Auditors led by Kevin Crowley and Colm Gallagher.

Renatus:
Legal: LK Shields led by Emmet Scully & Lisa McEllin.
Tax: KPMG led by Kevin Corcoran andMarie O’Keeffe.

UFP Technologies:
Legal: Arthur Cox led by Connor Manning, Susan O’Leary, Chris Feighan, Sinéad Corbett and Rebecca O’Shaughnessy.
FDD: Grant Thornton led by Ann-Marie Costello, Mark Holst and Dylan McCoy.
TDD: Grant Thornton led by Una Ryan, Aoife Keaney, Claire Coen, James O’Rourke and Joseph McWeeney.

Renatus Comment:There are two very different and amazing Irish entrepreneurial journeys woven into the AQF Medical story and we feel lucky to have been alongfor some of the ride.

In one shareholder group (the Moran brothers) you had a traditional Irish family furniture business which spawned a new venture alongside its core focus of producing foam directly and vertically integrating, long before the MBAclasses invented such a term. This evolved to ultimately supplying medical-grade foam and packaging.

Separately, Tom Lane and Seamus fa*gan, like a few of their Smurfit colleagues at the time, left well-paid senior leadership roles to back themselves to run their own business which subsequently merged equally with the Moran family’s foam business to form AQF in 2005.

One story shows what is possible when family businesses ‘stick to the knitting’ and expand sensibly in adjacent spaces which they know. The other shows the halo/ ripple effect of companies like Smurfit and what is possible for ambitious operators with Management buy-ins.

We have no doubt that the business will continue tothrive under its new stewardship as part of UFP.

Deal Details:Mannok has sold 94.7% of its share capital to Cimsa with the management team retaining the remaining 5.3% stake. The deal is reported to be worth c. €330m.

Mannok (formerly Quinn Group), is a Fermanagh-based company specialising in cement and concrete products, container glass, radiators, plastics and other building products. The business was acquired in 2014 by an investor group led by Brigade Capital Management. In FY Dec’23 it reported turnover of c. €311.9m which converted to EBITDA of c. €44.9m.

Cimsa is a Turkish-based building materials company. It is a subsidiary of Sabanci which employs over 60,000 people in 14 countries. Sabanci reported total revenue of c. €31.5bn in 2023.

Renatus Comment:The rise and fall of Sean Quinn’s business empire has been well covered in recent times. When you look at the components of his various businesses it really was a unicorn. His glass business was sold to Vidrala for €400m over a decade ago. The former Quinn Health insurance business (now Laya Healthcare)traded at c. €650m to Axa last year while this building products and packaging unit is valued at over €330m based on this transaction.

What is the lesson for Irish business scholars? Debt totalling over a billion euro proved to be too much for the above ventures to bear. As Buffet always says, debt is like a dagger at the steering wheel, it can kill you if you hit a bump in the road.

The other lesson is probably focus. The exit values mentioned above did need focused industry expert management to crystalise. Focus is crucial to maximising value and getting the balance between entrepreneurial expansion and focus is more of an art than a science.

Deal Details:Integrity360 has acquired Grove Group. 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. In FY Dec’22 the business generated revenue of c. €85.0m and it said it is expecting revenue this year of c. €130.0m.

Grove Group is a South African-based provider of cybersecurity and cloud services. The business was established in 2005 and is reported to have generated revenue of c. €17.0m in 2023.

Deal Details:Envirobead has been acquired by Net Zero Group. Deal consideration was not disclosed.

Envirobead is a Cork-based distributor & installer of a wide range of insulation products. In FY Dec’22it reported turnover of c. €17.0m which converted to EBITDA of c. €2.4m. It was majority owned by Brian McHugh with other shareholders including Cathal McHugh, Majella McCarthy and Niall McCarthy.

Net Zero Group is a decarbonisation platform founded by Waterland Private Equity in 2024. The current Group comprises Gaffney Mechanical, O’Connor Heating & Plumbing, Caldor Solar and Zetta Home Services. The business does not report turnover or EBITDA information.

Advisers:
Net Zero Group/ Waterland:
Legal: Flynn O’Driscoll led by David Ryan, Alison Kenny, Paddy Jordan, Danny Heffernan, Kate Duffy, Dara Kinnane andEliza O’Grady.
Tax: EY led by Richard O’Dwyer.
Financial: EY led by Éanna Brennan, Clare Cronin and Caoimhe Brennan.
Structuring: PWC led by Colm O’Callaghan, Conor Meaney and Sarah Cahill.

Envirobead:
Financial / Tax: MC2 led by James Loughrey, Sean McSweeney and Kathy Leahy.
Legal: Regan Wall led by Kieran Regan, Deirdre Potenzand Sarah Connolly.

Renatus Comment:We have seen a significant ramp up in M&A activity in the insulation, solar and heat pump installation spaces, with Northern Irish companyBlueBuild also receivinginvestmentthis week. Both trade and financial players continue to seek to build scale platforms with holistic service offerings. Retrofits are not isolated projects and require multiple trades to execute. This supports the thesis of acquiring variousdisciplinesunder one group.

A large portion of Ireland’s housing stock has low Building Energy Ratings (BER), a reported 35% of heat escapes through walls and gaps, underscoring the importance of insulation alongside energy and heat efficientecosystem. Retrofitting is one of the few levers available to reduce Ireland’s carbon footprint.The SEAI has been providing grants to encourage retrofits and assuming the market reducesthe complexityof finance and executionit should be a growth area for yearsto come.

Deal Details:Xenon Building Technology acquires Park 100 Fire and Security. Deal consideration was not disclosed.

Xenon Building Technology is a Leinster-based provider of electrical and electronic security and building technology solutions across Ireland. It isled by CEO Justin Owens and COO Dermot Ryan who recently completed an MBO. The company does not report turnover or EBITDA information.

Park 100 Fire and Security is a Wexford-based Security and Life Safety Specialist. The Company was founded in 2009 and was owned by Richard and Majella Cotter. The company does not report turnover or EBITDA information.

Advisers:
Xenon Building Technology:
Corporate Finance: Montanum Advisory led by Jim Mulqueen.
FDD & TDD: Fitzgerald Power led by Noel Winters and Raj Kumar.
Legal: AMOSS led by Andrea de Courcey.

Park 100 Fire and Security:
None mentioned.

Deal Details:BlueBuild Group has received investment from Cordovan Capital Management

BlueBuild Group is an insulation and solar PV installation provider with operations in Newtownards and Dublin. The business was founded in 2011 and was led by Gavin Logan and Ewan Melvin. The business does not report turnover or EBITDA information.

Cordovan Capital Management is a Northern Ireland-focused private equity firm, established in 2016.

Advisers:
BlueBuild Group:
Legal: Wilson Nesbitt Solicitors led by Max Nesbitt
Corporate Finance: HNH Deal Advisory led by Paul Gleghorne, Connor McAnallen and Eamonn Donaghy.

Cordovan Capital Management:
Legal: Tughans Solicitors led by Paul O’Brien and Ben Sims.
Corporate Finance: LGF Capital Partners led by Bill Holwell.
FDD: EY led by Matt Owens

ThinCats provided acquisition and working capital debt finance, led by Simon Dixon.

Deal Details: Entegro has sold a majority stake to KYNTUS. Deal consideration was not disclosed.

Entegro is a Kilkenny-based telecoms business that designs and deploys gigabit networks. It was formed in 2019 following the merger of ipOne and Syncom and was owned by Jim Doyle, Fintan Shortall, Aisling Murphy and James Murphy. In FY Aug’23 the business reported turnover of c. €35.0m which converted to EBITDA of c. €5.1m.

KYNTUS is a french-basedleaderin B2B services to digital network infrastructure. The business was set up in 2018 through the combination of four medium-sized players in the segments of services to telecommunication operators and to digital infrastructure operators. In FY’23 the business reported a turnover c. €235.0m.

Advisers:
Entegro:
Corporate Finance: Clearwater led by John Curtin, John Devine, Jonathan McDonnell and Chris Finnegan.
Legal: Mullany Walsh Maxwells Solicitors led by Conor Mullany, Elaine Keane, Conor Mullins, and Clodagh O’Hagan.
FDD: PwC led by Paul O’Connor, Brian Delaney and Peter Mullane.
TDD: PwC led by John Murphy and Stephanie Curtin.
VDD: PwC

KYNTUS:
None mentioned

Renatus Comment:The acquisition of Entegro will offer KYNTUS a strong presence in Ireland and the United Kingdom where fibre coverage remains largely below that of the more mature European markets. There is an ever increasing need for connectivity as Ireland’s network infrastructure is upgraded and demand fromvarious user types, including data centres, continues to rise.The State’s National Broadband Plan i.e. the roll-out of high-speed fibre is reported to be on schedule with the project set to be completed by the end of 2026, having recently passed the 250,000 premises milestone.

European buyers such as KYNTUS have been active in the Irish telecoms/ connectivity space in recent years with deals such as Phoenix Tower International’s announced acquisition of Cellnex’ Irish business earlier this year for a reported €971m and French company Circet’s merger with KN Networks back in 2018.Belfast-based broadband provider Fibrus also recently announced another debt fundraising bringing its total backing to c. £320m of committed debt alongside c. £200min equity funding and c. £325m of government funding.Strong and steady cashflowsfollow high initial capital expenditure, makingit an interesting sector for players capable of taking longer term views of the market.

Deal Details:City Education Group sells majority stake Planet Education Networks. Deal consideration was reportedly c. €12.0m.

City Education Group is a Dublin-based educational company. City Education Group’s network includes City Colleges, Ashfield College, City Language School, and Progressive College. The business was managed by current CEO and shareholder Philip Burke. The business does not report turnover or EBITDA information.

Planet Education Networks is a London-based education network with multiple schools and colleges across the UK. The business was founded by sole shareholder, Md Ali Akbar Faruki. In FY Aug’23 the business reported a turnover of c. £33.0m which converted to an EBITDA of c. £15.9m.

Advisers:
City Education Group:
Legal: Clerkin Lynch LLP led by Kevin Lynch, Craig Behan, Sean Harrison and Sara Hantash.

Planet Education Networks:
Legal: Wallace Corporate Counsel LLP led by Darragh O’Dea and Alban O’Callaghan.

Deal Details:Tractamotors Tyres has been acquired by European Tyre Enterprise. Deal consideration was not disclosed.

Tractamotors Tyresis a Cavan-based tyre distribution company operating in the Republic of Ireland and Northern Ireland. The business was owned by Niall Murray.It does not report turnover or EBITDA information.

European Tyre Enterprise Ltd (ETEL) is a leading international automotive tyre, servicing, maintenance, and repair company. It was founded in 2011 and is owned by the Japanese ITOCHU Corporation. The company reported a turnover of more than £1bn across five countries in Europe.

Advisers:
Tractamotors Tyres:
Deal Advisory: Grant Thornton led by Michael Neary, Robbie Doddy and Mohindar Kumar.
Tax: Grant Thornton led by Bernard Doherty, Sinead McKeaney and Janette Maxwell.
Legal: Dillon Eustace led by Mark Thorne, Adrian Benson and Philip Lea.
Property: Dillon Eustace led by Martin Colman and Breifne Muldoon.

European Tyre Enterprise:
Legal: Lewis Mathys Emmerson led by Steve Lewis and Oliver Neil.
Property: Mason Hayes and Curran led by Tom Davy and Paul Bassett.
FDD: Alvarez & Marsal led by John Paul Kingston and Alex Saklow.
TDD: EY led by Laura Grimwood, Jonathon Shepherd and Tom Hughes.

Renatus Comment:Tyres is another industry that has seen some consoidation of late, with this announcement coming on the back of Midland Tyre Services’ acquisition of T.A.B. Tyres and Batteries in July.

The acquisition of Tractamotors Tyres represents a significant milestone for ETEL, enhancing its ability to deliver comprehensive tyre solutions and services to a broader customer base as it enters into the Irish market for the first time. This move underscores ETEL’songoing strategy to expand its distribution capabilities in key European markets, having already expanded operations into the UK, the Netherlands and Italy.

Deal Details:Stacked Group acquires Toomey Audio Visual. Deal consideration was not disclosed.

Stacked Group is a provider of AV & Digital Signage, IT Hardware, Managed Print Services and Workplace Supplies. The company was founded in 2002 and headquartered in Dublin, with over 85 local staff members, servicing customers across public, education and corporate sectors. The business does not report turnover or EBITDA information.

Toomey Audio Visual is a supplier of Audio-visual equipment to Schools, Colleges & Educational establishments. The business was founded in Dublin by Kevin D. Toomey over 55 years ago and is one of the oldest AV providers in Ireland. The business does not report turnover or EBITDA information.

Advisers:
Stacked:
Corporate Finance: Azets Ireland led David Lucas and Conor O’Rourke.
FDD: Azets Ireland led by Jack Swinburne and Dean Buttimer.
TDD: Azets Ireland led by Kevin Quinn.
Legal: Denis I Finn Solicitors.

Toomey Audio Visual:
Corporate Finance: Benchmark led by Sam McNamee, Alex Cregan and Ruth Quinlan.
Financial advisors: Malone & Co. Accountants led by Damien Malone.
Legal: De Burca Greene Solicitors LLP led by Claire O’Sullivan Greene.

Deal Details:Hotels Properties acquires Bellinter House Hotel & Spa. Deal consideration was not disclosed.

Hotels Properties is a hospitality and hotel management group with multiple hotels across Ireland and the UK. The group is owned and managed by Sheila O’Riordan. The group does not report turnover or EBITDA information.

Bellinter House Hotel & Spa is a 18th century mansion turned hotel close to Bective, Navan. The Georgian mansion was built about 1750, designed by Richard Castle for John Preston, grandfather of the first Lord Tara. The business does not report turnover or EBITDA information.

Advisers:
Hotel Properties:
Legal: Mullany Walsh Maxwells Solicitors led by Conor Mullany, Elaine Keane, Conor Mullins, and Clodagh O’Hagan.

Bellinter House Hotel & Spa:
None mentioned

Deal Details:Sleepzone Hostel Galway has been acquired by a consortium of investors. The consideration paid is reported to be c. €5m.

Sleepzone Hostel Galway is located on Bóthar na mBan, close to Eyre Square. The hostel comprises 180 bed spaces distributed across 35 rooms, along with a reception area, a communal kitchen and diningroom. It was previously owned by Ronan Garvey. It does not report turnover or EBITDA information.

The investor group includes Barry McGrath, a former global partner with law firm Maples & Calder.

Advisers:
Sales agent: CBRE led byJohn Hughes.

Legal:McCann Fitzgerald: led by Niall McDowell, Matthew Gregg & Christopher Hennessy.
Legal: AMOSS: led by Alan Adams, Andrea De Courcey &Eimear Rothwell.

Banking: AIB led by Paul Dullaghan, Elizabeth Walsh & Ciara Conneely.

Bank Legal: Byrne Wallace led by Paraic O’ Kennedy, John Crowe & Marion O’Connell.

Deal Details:Winthrop Technologies acquisition by Blackstone has been completed. The deal was originally reported earlier this year. Blackstone has acquired a 50.7% stake that is reported to place a value of more than €800m on the business.

Winthrop Technologies, founded in 1995 by Barry English, is a Dublin-based specialist engineering company focused on the data centre sector. The company is led by CEO Anne Dooley and operates across seven European markets with a portfolio of projects in Dublin, Warsaw, Amsterdam and Munich, among other locations. In FY Apr’23 it reported turnover of c. €1.1bn which converted to an EBITDA of c. €86.8m.

Blackstone is a US-based private equity and asset management firm with over $1 trillion in AUM. The firm has c. 12,500 real estate assets and 230+ portfolio companies.

Kellys Agricultural Machinery Limitedis a Carlow-basedprovider of agricultural and industrial machinery.The company is owned by members of the Kelly family including Gillian, Richard and Eileen.

In its financial year to September 2023, the company reported a turnover of c.€40.3m, a year-on-year increase of 1.6%. This converted to an EBITDA of c.€2.2m, which was flatyear-on-year.

The business finished the year with a cash balance of c.€0.3m, a decrease of c.€0.9mon FY Sep’22. This was largely driven by significant investment in working capital during the period.

The company employed an average of 47 people over the period at a total cost of c.€2.5m.

What:The company has raised c. $16m (€14.6m) in a Series B funding round led by the Medtech and Irrus angel syndicates, along with Atlantic Bridge, Enterprise Ireland, Elkstone and SOSV.

Advisors:
Atlantic Bridge:LK Shields led by Emmet Scully and Lester Sosa-Villatorro.

Renatuswas 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: