Synopsis of Sunday business pages
Sunday Business Post JP Morgan is the most progressed of all international banks in the post Brexit move to Ireland with plans to double its workforce here to c.1k staff. Barclays, Morgan Stanley and Bank of America Merrill Lynch have also engaged with estate agents exploring their options. Legal firms DLA Piper, Pinsent Masons and Hogan Lovells are also understood to be exploring what options are available to them in Dublin. Not surprisingly, it is reported that Cerberus has written off €5.6bn worth of loans. Given that it bought loan books at such discounts, this was inevitable. It is understood that 80% of settlements are consensual. "Abercrombie & Fitch has launched a High Court action against a Co Mayo clothes shop owner in relation to an alleged counterfeit goods claim." AIB is claiming it will be hard to retain senior staff if there is an influx of banks as a result of Brexit offering big pay packages and bonuses, which AIB will be prohibited from matching under the existing caps. "Bouncers, security guards and private investigators are to be targeted in a new crackdown on social welfare fraud." The Business Post and Sunday Times report that the shareholders of Monex, Frank Murphy and Michael Crowley, received €9m in dividends last year. Frank Murphy owns 85% and Michael Crowley 15%. It exceeded €100m turnover for the first time in 2016 (€108m) and an IPO is likely in the next two years. It is a crucial supplier to Ryanair and it also runs rapid currency exchange software on 68k ATMs across 48 countries. There is coverage of the Ardagh IPO in all of the papers this morning. The Sunday Independent reports that Ardagh completed its IPO last week, raising $307.8m. Shares listed at $19 per share and closed on Friday at $22 per share, valuing the whole company’s market capital at $5.4bn. Dublin-based advisor Davy was one of the company’s underwriters and will share in fees of between €17.1m and €19.1m for the IPO. Paul Coulson is quoted in the Business Post saying that he has no plans to sell any more shares now that he has an option to sell partial shares now that they are listed on the New York Stock Exchange. Coulson said, "I've had my share distributions. I'm quite happy with what I've got. It's a fantastic business. I know no better way to deploy my own capital and have my own personal assets involved in it. I've no interest in selling shares at all". Brian Carey in the Sunday Times thinks the Ardagh float was a very smart move by Paul Coulson. The float sought not to raise money or expansion or allow the shareholders to take money of the table, but rather reduce debt in the business. The success of the listing should mean that Ardagh can, in the future, both raise money for expansion and provide liquidity for shareholders. Applegreen reported revenues of €1.18bn and earnings of €32m in 2016. It intends to continue to open 40/50 sites a year and expect a lot of its growth to come from the US. Recent accounts show that the Kilkenny-based shower enclosure manufacturer Merlyn Industries reported profits of €4.9m last year, up from €2.6m in 2015, with over 80% of its turnover coming from across the water. The company was founded in 2009 and is now backed by Pete Smyth's Broadlake. The group of Irish developers who are bringing a case to the European Commission against NAMA for distorting the market are adding the fact that NAMA have availed of the S.110 loophole to their case. The complaint argues that NAMA has a number of competitive advantages, including access to cheaper finance, and also the potential of tax advantages under S.110 when it existed. Niall Harbison has appointed Trevor Daly as managing director of his Lovin Group. Hugh O'Flanagan will join as head of strategy. Harbison will stay on the content side of the business. The business, which boasts Emmet O'Neill and Jamie Heaslip as shareholders, has significant global ambitions. "Whirlpool, the world’s largest home appliance maker, is preparing to close its European shared services centre in East Wall in Dublin." VHI is set to buy out Áras Sláinte's stake in the VHI Swiftcare clinics. Maurice Cox and Ray Power founded Áras Sláinte in 2003 and recorded €37.5m turnover and €3.8m profit in 2015. It is said to be focusing on opening primary care centres. The Competition and Consumer Protection Commissions is requiring more info before it clears the deal. Charities and sporting bodies are calling for a change to the Garda vetting procedures to be more like the Australian model whereby somebody gets a three-year passport. Currently somebody has to apply for each organisation they are involved in. There is lots written on Enda Kenny's trip to the US and general Irish/US relations. Analysts are expected to question INM during the week about the pace of acquisitions. Since it sold its stake in APN, it has been sitting on a cash pile but apart from agreeing a small acquisition of Celtic Media Group which is awaiting clearance from the competition authority, it has not agreed any other acquisitions. "Sean O'Sullivan's accelerator based venture capital firm, SOSV, will double its annual investment in start-ups from $50m to $100m by 2019." Irish firms account for about 20% of the firms it has invested in. Ebioss, a Spanish energy company, has taken a controlling stake in AIM-listed Irish biomass firm React Energy (formerly called Kedco). Ian Guider writes about Aryzta and how Gary McGann has steadied the ship but still has a big task of finding a CEO to lead the firm to pastures greener. The Sunday Times reports that Gary McGann has told analysts that Aryzta is undertaking an overhaul of its board and a review of its business model. Aryzta is also putting plans in place to reduce its debt by €1bn over the next four years. Brian Carey also covers Gary McGann and Aryzta for the Sunday Times. There is a special on how competitive we are vis-a-vis Luxembourg for winning firms who are looking for a new post-Brexit home. There is a special on rising insurance costs, particularly in Irish retail. There is also a special on where Ireland stands as Britain leaves the EU, Le Pen rises and Merkel looks shaky. Tina-Marie O'Neill has an interview with fascinating brothers Tommy and Paddy Redmond. They have built and run two four star hotels, they are successful beef farmers, developers and they are building a state-of-the-art business campus on the M11 in Gorey. Ed Micheau reflects on Ireland's success in Cheltenham and highlights a mini FDI success story in that all of Jessica Harrington's three winners and five of Willie Mullins six winners were not owned by Irish people. Graham Ross in now leading online lottery player Lottoland and it is about to embark on a €1m marketing campaign. There is a special focus in the Business Post on Corporate Governance, Company Law and Company Secretarial Services and the Irish Institute of Training and Development National Training awards. Michael Colgan is stepping down from the Gate Theatre after 34 years and is working with Sean Mulryan in Ballymore to bring a cultural dimension to many of Ballymore's developments. A property partnership which took a case against the IBRC liquidators in relation to interest swaps it entered into for an Anglo loan were granted discovery in its case, which augurs well for its chances of success. Sunday Independent IT services company Version 1 is reported to be seeking to raise private equity funding for a potential acquisition. The company, founded by Justin Keatinge and John Mullen, is expected to generate revenues of €100m in 2017. Isolde Goggin, chairwoman of the Competition and Consumer Protection Commission (CCPC), has called for more powers for the agency to detect and deter anti-competitive behaviours. Its current powers are reportedly limited to court orders with no ability to seek financial fines as a deterrent. Omega Air’s Ulick McEvaddy and his brother Des have secured funding from Tricap Investments, a Dubai-based investment group, for the development of a potential third terminal at Dublin airport on 130 acres of land owned by the McEvaddy brothers. The pair have held talks with government officials and ministers about their plan and the potential to bring additional services and employment to Dublin airport. Richard Curran’s piece contains the following this week: - Ireland has tough competition in attracting the financial services firms looking to set up European offices after the Brexit vote. One area of strong competition is the industry’s stringent regulation with Minister of State for financial services Eoghan Murphy claiming that some states were using “regulatory arbitrage” to secure investment. - The PAC’s findings in its investigation into NAMA’s sale of its Northern Ireland loan book, Project Eagle, were published last week. It concluded that NAMA could have gotten better value for the portfolio, however Curran sees it as uncertain that a significantly better price could have been achieved. Also, if the portfolio had been sold piecemeal, the timing to wind it down would be prolonged and the political complications along with it could have large. The Business Post also has a profile piece on Project Eagle and Brian Carey also discusses in the Sunday Times. - Dawn Meats’ offer to acquire Dunbia will give it additional capacity in the UK. With the uncertainty of Brexit and possible border tariffs, Dawn Meats’ acquisition of Dunbia would improve its ability to service its UK contracts from UK-based factories and rely less on imports from Ireland, assuming it goes ahead. Meat processing business Kepak and pork processing business Oliver Carty have formed a joint venture to acquire Greene Farm Foods, one of Ireland’s largest chicken meat producers. The parties have submitted their proposal to Ireland’s competition watchdog for approval. Greene Farm Foods had turnover of €28.1m and profit of €310k in 2015. Last month, Grant Thornton was appointed as receiver over certain assets of Greene Farm Foods. Harry Parkinson and Ronan Horgan’s Capitalflow has raised an additional €100m for lending into the Irish SME market. Capitalflow has already made loans of over €50m, primarily through invoice discounting, hire purchase and asset-based lending. Tullow Oil’s new CEO Paul McDade has confirmed that the company’s recent announcement to raise $750m via a rights issue was not a reaction to pressure from its bankers. The funds will be used to pay down debt and save the company c. $100m a year in finance costs. The Sunday Times reports that the company has issued a warning that it may breach its loan covenants if a plan for a €700m rights offering are not approved by shareholders. Tullow surprised the stock markets on Friday last with the plan to issue almost 467m new shares at £1.30 each, a 45% discount to their price before the announcement. WElink Group, a Dublin-headquartered modular home builder and solar energy developer, is to develop a 220MW solar farm in Portugal. The €220m project will generate enough energy to service 200k homes and will be the largest privately-funded solar project in the country. Dublin Chamber of Commerce has made its submission to the government as part of the public consultation on the new national planning framework. In its submission, among other things, it calls for the government to overcome "anti-urban bias", increased investment in urban infrastructure and higher buildings in certain areas. Construction of the Dublin Liberties Distillery and visitor centre began last week. The €15m project at Mill Street will employ 50 jobs throughout construction and 19 permanent positions, once complete. The distillery and brand are owned by UK-based company Quintessential which is owned by former investment banker Warren Scott. Samantha McCaughren interviews Chanelle McCoy, director of Chanelle Pharmaceutical Group. McCoy runs the €100m per annum human generic drugs division of the family business set up by her father Michael Burke. McCoy has recently joined the panel on RTE’s Dragons’ Den and is married to retired legendary jockey AP McCoy. Sunday Times The government has proposed paying private investors 95% of the market rent to encourage them to buy homes of families with unsustainable mortgages and lease the properties back to local authorities for use as social housing. Under the terms of the proposed lease, private investors would not be liable for local property tax and would be guaranteed that ownership would not revert to the state at the end of the lease term which would be up to 20 years. They would, however be liable for repairs, maintenance and insurance. Cormac Lucey compares the approach taken by Ireland and Iceland to the economic crisis, with Iceland letting its banks go bankrupt, whereas Ireland almost let its state go bankrupt in efforts to save its lenders. Lucey doesn’t delve too deeply into which approach was most successful but rather analyses the reasons we adopted different approaches. He thinks “Ireland prattles on about independence but, subconsciously, we prefer to sink into the bosom of a large, international organisation, however patchy its record. The liberation we really think we crave is freedom from having to think for ourselves”. Brian Carey suggests Tullow may be a takeover candidate given the likely impact the proposed rights issue may have on its share price. Niall Brady reports on the Dublin property market. First-time buyers required an average deposit of €49k to get on the Dublin property market in the final months of last year. 15 banks could be facing regulatory sanctions for wrongly removing cheaper tracker mortgages from up to 15k customers, according to Jeremy Masding, the chief executive of Permanent TSB. The Marker Hotel in Dublin’s Silicon Docks is planning a €10m investment that will add a new floor and upgraded roof bar to the property. The expansion will include about 30 bedrooms on the new floor, bringing the hotel up to 217 rooms, and also involves moving the main restaurant to the top floor. Klas Telecom, a Dublin-based company that supplies secure communications equipment to the US military, made €4m profit last year. Revenues were up to €28.7m in the financial year ended March 2016, from €18.1m the previous year. Argosy, the country’s largest independent book wholesaler, has been sold to management five years after the Competition Authority blocked its takeover by Eason & Son. Managing director Larry MacHale is to lead the buyout of the company from the Stanley family, which has controlled it for almost 60 years. Gaelectric, a renewable energy group, is set to develop a €90m floating windfarm off the west coast. Festival Republic, the owner of the annual Electric Picnic music and arts festival, is considering launching two new musical events in Ireland next year. It is targeting a location not far from Dublin and one in Cork for the events, according to chief executive, Melvin Benn. Gavin Daly’s chief executive interview is with Melvin Benn this week also. Tadgh Gunnell, a former partner of stockbroker Bloxham, has been reprimanded by the Chartered Accountants of Ireland and disqualified from membership for a year. Blink Innovation, a Cork technology start-up less than six months old, has been bought by a British insurance specialist in a deal worth up to €5m. Adrian Wall of McCullagh Wall Solicitors advised the founders of Blink on the deal. WLR Cardinal, a credit investment fund backed by Wilbur Ross’ investment company, is leading a refinancing at Thomas Thompson Holdings, the engineering and property business owned by the family of TV presenter Kathryn Thomas. The Frank Mortgage, a new non-bank lender, has raised €200m from local pension funds and plans to challenge existing lenders by launching Ireland’s first “crowdfunded” mortgages once it reaches its funding target of €250m. “We will be very competitive in our pricing, based on the fact we’re matching the right capital with the right borrowers”, said chief executive Colin Cunningham. Alex Gersh, the chief financial officer of Paddy Power Betfair, sold £3.6m worth of his shares in the company on March 10th. The Iris O’Brien Foundation, a charitable organisation set up by businessman Denis O’Brien, spent €5.4m on charitable causes last year. Nick Webb’s inside track: - Bizquip founder Jim Leyden is the incoming captain at Sir Michael Smurfit’s K Club in Kildare. - Eason & Son chairman, James Osbourne, has emerged as a backer of the swish Oslo beauty chain; he invested €100k in the business last year. - Former Bank of Ireland governor Richard Burrows earned €861k last year as chairman of British America Tobacco. - Shannon Homes developer Frank Fahy, one of the most successful and prudent boom-time developers, is expanding his bloodstock interests. He is the new owner of Gerrardstown Stud in Meath. - Emma Maye, daughter of the late Liam Maye, who ran Castlethorn Construction with Joe O’Reilly, has taken an interest in Shane Mitchell’s Asador restaurant off Baggot Street. Britain’s largest bookmakers have warned shareholders they expect significant changes to how they operate in the future. The British government has targeted fixed odds betting terminals, electronic gaming machines on which gamblers can lose hundreds of pounds in minutes. There are 34k machines in circulation in the UK. William Hill and Ladbrokes Coral could see their profits hit hard by a clampdown. While Paddy Power shops in Britain would also be hit, its online bias means it will be less affected. Philip Connolly has an article on the rising discontent amongst shareholders regarding chief executives' remuneration packages. Sandra O’Connell’s “How I made it” piece is with Clare Kelly who made the career change from occupational therapist to join the family business Glandore, a serviced office provider. Twitter @RenatusCapital tweets this week: 1.2% - Month-on-month increase in the cost of private renting for February; the year-on-year increase was 8.5%, according to @CSOIreland. €720m - The amount spent on Irish hotel transactions in 2016, according to @CushWakeIRL. @IrishTimesBiz c. 5% - The public-private sector pay differential in 2014, a decrease from the 9.2% differential in 2011, according to @CSOIreland. $19 - The price at which @ArdaghGroup' shares will IPO today on the New York Stock Exchange. @IrishTimesBiz 2% - The growth in average hourly earnings between 2009 and 2015, according to @irishcongress. @IrishTimesBiz €27m - Amount by which new home lending exceeded the amount of money being paid off existing home loans in Q4' 16. @IrishTimesBiz c. 33% - Proportion of Dublin's office stock that has changed hands since the beginning of 2013, according to @SavillsIreland. 59.9% - The percentage of people living in Dublin that owned their home in Q3 of 2016, according to @centralbank_ie. @IrishTimesBiz 4% - The expected decrease in Ireland-UK air capacity this summer as a result of Brexit, according to @TourismIreland. @IrishTimesBiz If you would like to be added to the weekly mailing list, please email me (email@example.com) or send a LinkedIn request https://ie.linkedin.com/in/markflood1
Mark Flood | Director | Renatus Capital Partners www.renatus.ie T: +35315549269 M: +353868392688 63 Mount Street Lower | Dublin 2 Renatus place €1-3m in cash generative companies with growth potential.