Synopsis of Sunday business pages

Sunday Business Post Tenants in two of the country’s largest shopping centres, Blanchardstown (owned by US private equity firm Blackstone) and Dundrum (owned by UK real estate business Hammerson and German insurer Allianz Real Estate), are likely to face rental hikes from the new owners. Fears are that increased rent will lead to vacancies or expected price rises by retailers. The Sunday Independent reports that, according to lobby group Retail Excellence Ireland, "a raft of new examinerships are likely among retailers due to renewed implementation of upward-only rent reviews". In evidence given to the House of Lords Brexit Committee last year, AIB chairman Richard Pim expressed his concern that a reversion to stringent WTO trading rules for Britain would hurt Ireland the hardest. He also put fuel to the argument that London bankers factor Dublin’s shortage of Michelin star restaurants in their relocation decision, saying that maybe the restaurants would follow if bankers could be convinced of the lifestyle and child rearing benefits. Ryanair has launched a new airline, “Ryanair Sun”, to operate in the holiday charter market. It will initially launch in Eastern Europe and may roll-out into other European countries. The new airline will be based from Poland and will initially operate five Boeing 737-800 aircraft. Fourteen Ninety Two, a business controlled by Blake O’Donnell, son of property investors Brian and Mary Patricia O’Donnell who went bankrupt last year with debts of €71.5m, made a £15m profit on the sale of a property in Canary Wharf. The company made an overall operating profit of £26.5m in 2016, up from £6.4m the previous year. A senior Fianna Fáil source has said that it may support a Fine Gael scheme to charge households for excessive water waste. The charge would apply to usage over a certain quota. Capitalflow, the Dublin-based lender run by Ronan Horgan and Harry Parkinson, has plans to triple its funds available to lend to €300m over the next three years. The lender provides invoice finance, asset finance and asset based lending to Irish SMEs. The business is backed by UK private equity firm, Pollen Street Capital. Real estate lender, BBF Capital, has raised €20m of new funding from a German investment bank. This adds to the €30m which BBF Capital has already deployed into the Irish market. The business was founded by Colum Breslin, Philip Browne and Shane Flood in March 2015 and aims to provide bridging loans for the Irish commercial real estate sector. Octopus Investments, a £6bn London-based investment fund, has opened a new €13m primary care centre in Mullingar, Co. Westmeath. It’s currently constructing its second centre in Dublin city and has secured its third site in Dublin city also. The fund plans to develop up to nine more in Ireland. Patrick Crean and Johnny Ronan’s disputes are in the paper again this week. A new dispute has emerged over the rights to develop a site at Sir John Rogerson’s Quay known as the Hickey site; a Crean-controlled company acquired the leasehold interest in the site and subsequently, through statutory order, purchased the freehold interests of two lots of the site from a Ronan-controlled company for €40k. Ronan believed these lots to be valued at closer to €20m and will appeal the decision to the High Court. Separately, Ronan is reported to have successfully refinanced his Dublin 4 home with the support of Latvian bank, Rietumu Banka. The Latvian bank is one-third owned by Dermot Desmond. The Sunday Times also covers this story. Economist Stephen Kinsella has caught out Minister Simon Coveney on his choice of statistics when referring to house completions. His department determines the number of house completions by counting the new connections to the ESB, while Kinsella argues that some of the new connections are for houses aren’t new builds but may have been sitting vacant for some time. CSO figures say some 2,883 new homes were built last year, while the department says it’s closer to 14,000. Property developer David Kennedy has been revealed as the purchaser of the €8.2m, 50-acre Magee Barracks site in Kildare town. No plans have been lodged yet for the redevelopment of the site. Irish sports retails, Sports Savers, closed down its ten stores last week with the loss of 80 jobs. All three papers have considerable space dedicated to the recent developments in the ongoing dispute between Frank Gleeson and the owners of the Mercantile Group, Maurice Regan and Michael Breslin. The new owners of Phibsboro Shopping Centre, MM Capital, are close to buying a €16.5m office block on Golden Lane, Dublin 8. MM Capital is run by former Morgan Stanley banker, Derek Poppinge, and Peter Leonard, son of Clarendon Property’s Tony Leonard. Róisín Burke has an excellent two-page interview with Richard Burrows. Borrows is former CEO of Irish Distillers, was a director and subsequently Governor of the Bank of Ireland between 2000 and 2009 and is now chairman of tobacco giant, British American Tobacco. Brian Heavey, former head of life sciences, engineering and industrial tech with the IDA, is leaving the state agency to join Accenture. Flipdish, an Irish business which builds restaurant takeaway apps for restaurants, has raised €500k to fund its expansion into the UK. The business was founded by Conor and James McCarthy. Dublin-based call centre software company Capstone has raised €2m, which will see an additional c. 15 staff in Ireland. Hub Controls, a device which tracks energy usage in homes, has entered into a partnership with Airsynergy which will see the device enter the US market. Hub Controls was founded by Oliver Hynes in 2014 and is currently raising €4.2m to fund expansion – it has raised €2.8m to date. Endecco, an energy management technology company founded by Michael Phelan, is planning expansion into the US and European markets this year and aims to raise €3m - €4m to support its expansion plans. The business’ technology helps large industrial energy users reduce their power consumption. Harpoon Connect, a business founded by Kerryman Derek Counihan and which creates apps for digital advertising for radio stations, is planning expansion into the UK and US. The business has backing from heavy hitters including technology entrepreneur Jerry Kennelly, Monex founder Frank Murphy and Ryanair director Howard Millar. Dr. Johnny Walker, founder of Global Diagnostics, which merged with Centric Health in 2007, has raised €1.1m for his new venture, Jinga Life, an electronic health record curation tool. The roster of investors is impressive and includes Hostelworld’s Ray Nolan, CPL’s Anne Heraty and ATA Group’s Peter Cosgrove. Despite his success in Dublin, Walker cited a number of challenges running a start-up from Dublin including high capital gains tax and a lack of incentives to take risks for early stage ventures. Kingspan has opened a new €25m insulation materials factory in North Melbourne, Australia, from which it plans to supply a major portion of its Asian customers. Tayto Park is planning on opening a new €5.5m Viking-themed water ride this June. The park, owned by Ray Coyle and run by son Charles Coyle, had 750k visitors last year and hopes to see a 10% increase this year. DIT’s Grangegorman campus is facing a €30m increase in its cost due to a 2.5 year delay as a result of a legal case over the awarding of the construction contract; the contractors are seeking a €30m increase in the €200m cost due to construction price inflation over the 2.5 year period. The new campus will see DIT close down its exiting 15 locations across the city and bring its 10,000 students onto the one campus. A spokesman for the National Development Finance Agency said that contract closure for the Grangegorman site is expected in the coming months and completion is projected for autumn 2019. Stephen Kinsella, Matt Cooper and Constantin Gurdgiev have a three-page special report titled “Ireland’s property time bomb”. Kinsella addresses the economic and policy issues, Gurdgiev looks at NAMA’s lost opportunity and Cooper looks at the planning landscape. Colette Sexton’s interview this week is with Peter Nicholson, CEO of Windsor Motors. There are focus pieces on the Chief Information Officer (CIO) Summit, Pensions and ERP 2017. Róisín Burke also covers: - J1 Ireland, a Roscommon and Chicago firm that helps Irish students secure summer work visas to the US, has hired former peace process veteran Bruce Morrison to lobby for J1 visas in the US over fears that the Trump administration may not retain the visas. - Sad news on the recent passing of former Ardagh chairman Peter Murray RIP. - Colm Long, former global head of operations at Facebook, has been made a director of Facebook Payment International, Facebook’s new payments business. This week, Long also joined the board of Anne Heraty’s CPL. - Property investor Deirdre Foley received close to €1m in fees from a company set up to hold One Warrington Place. The property, purchased by investment fund Northwood in 2012 for €27m from NAMA, was later sold at a profit of €13.25m. - Ray Curry and Jake Gottesman are opening a Chilli Shack store in Stoneybatter. The pair already have a store in Galway which had turnover of €600k last year. Sunday Independent Emovis, a subsidiary of Spain's Abertis Group that delivers electronic tolling and smart mobility solutions, is reported to be suing the National Roads Authority. This follows similar legal action already taken by TransCore LP, a subsidiary of Roper Technologies. Both companies are challenging the evaluation methodology employed by the authority, alleging they would have won the bid for the operation of tolls on the M50 had different marks been awarded to their bids. The contract was won by Turas consortium and is estimated to be valued between €200m and €400m. CityJet, the Irish airline, is set to cease its engagement with trade union Unite and will deal with the Irish Airline Pilots’ Association (IALPA) from now on regarding a dispute over pilots' conditions. This follows a recent ballot of its pilots that suggested the IALPA should be their representatives. "Morgan Stanley President and Irishman Colm Kelleher, who runs the firm's investment bank and retail brokerage, received $19.5m for his work last year, a 27% increase." Richard Curran's pieces this week: - In his first piece, Curran discusses the tracker mortgage scandal which saw over 10k people charged the wrong interest rate by multiple banks at a cost of up to €500m and resulting in some people losing their homes. Curran notes that we are none the wiser as to who is to blame, as in what executives and what levels in the bank, and whether they will pay any price. - Outgoing DCC chief executive Tommy Breen delivered a 664% shareholder return during his nine-year tenure at the distribution and service group. During that time, Breen's total earnings amounted to €19.4m. The company has maintained a very low debt profile and Curran thinks that his successor, Donal Murphy, might want to "cut loose just a little". The Sunday Times also reports on Breen’s departure, while the Sunday Business Post’s Barry J Whyte interviews Breen. Within the interview, they discuss strategy, succession and share price. Gayle Killilea, the wife of developer Sean Dunne, has attempted to draw Hibernia REIT into Sean Dunne's US bankruptcy proceedings and is reported to be meeting strong resistance. Killilea is seeking all documents, communications and correspondence that mention a specific email Frank Kenny, Hibernia REIT's senior advisor, sent to Hibernia REIT chief executive Kevin Nowlan on July 17, 2011. This significance being that Nowlan was working as a portfolio manager for NAMA and handling the affairs of Sean Dunne at the time it was sent. Gardaí are investigating hundreds of suspected abuses of the Agri-Environment Options Scheme (AEOS) which entitles farmers to be reimbursed for non-productive capital investments up to a certain maximum limit. Out of a total 400 claims issued by one "private agricultural planner", 290 were found to have inflated invoices. Nick Fletcher, the broadcast director with Core Media, one of the country’s largest advertisement agencies, has described TV3 Group's rebranding of its 3 stations as "disappointing". TV3 Group, now owned by Virgin Media, has been merged with UTV Ireland and 3e. UTV Ireland was subsequently rebranded to be3 and became a female-focused channel. OpenJaw, the Irish travel software business, intends to double its workforce to 450 and increase annual revenues to more than €40m over the next 3 years. The company is developing a large R&D centre in Dalian in China and is hoping to tap into the fast-growing aviation industry in China. OpenJaw was acquired by TravelSky, the Chinese aviation travel firm, last year for just under $40m. Michael Burke Jr, brother of RTE Dragons’ Den investor Chanelle McCoy, is launching a payment solution company, Outsourced Service Solutions, to facilitate trade with Iran for Irish companies and other international businesses. Burke Jr, who is based in Dubai with two existing successful companies there, says there is potential to make trade easier with other post-war or post-sanctioned countries. "The Revenue Commissioners have issued advice to shareholders of Irish fruit company Fyffes regarding the Capital Gains Tax (CGT) implications of the company's takeover.” The formula for establishing tax on the windfall is reported to be complicated and Revenue has issued a document with a detailed breakdown of what CGT will apply. Julie Sinnamon, Enterprise Ireland boss, has issued a fresh appeal to businesses to mitigate the effects of Brexit. More than 37% of the exports from EI-backed companies go to the UK and exposure of certain sectors, such as food and construction, is significant. Bank of England Governor Mark Carney has called for Britain and the EU to reach a sweeping deal to recognise each other's banking rules after Brexit, or risk potentially a damaging hit to financial services across Europe. There are worries that the British economy is slowing after industrial output dipped 0.7% in February, worse than all forecasts in a Reuter’s poll of economists, which pointed to a 0.2% rise. Also, a large trade deficit added to the worries. This week's interview features Tom Barry, the co-founder of construction company Arabtec. Simon Rowe covers the McEvaddy plan to build a new terminal beside Dublin Airport. Ulick and Des McEvaddy first unveiled their plan for an independent terminal 20 years ago but the duo have recently secured €2bn backing from a Dubai-based investment group for the scheme which leads Rowe to suggest that "their dream may be approaching lift-off". If the project were to go ahead, it would cater for an estimated 10m passengers a year and contribute thousands of jobs, both during the construction phase and when operational. Tom Maguire, a tax partner in Deloitte, has a piece this week discussing Ireland's corporate tax system and the importance of designing the right system to entice foreign direct investment (FDI). Deals of the week: - Dr Coy's Health Foods, founded by Alison Stroh and Aaron O'Donohue three years ago, has won a deal to supply its patented nutritional chocolate bars as an in-flight snack to up to 130m Ryanair passengers per annum. - Infravia, a French-based investment fund, is to acquire CareChoice, one of Ireland's leading nursing home operators. CareChoice operates 6 care centres across Dublin, Cork and Waterford, providing 500 long-term residential beds and the new transaction will facilitate an expansion of CareChoice locations. Sunday Times Top tier management at AIB are unlikely to receive share-based rewards when the bank floats on the stock market in the coming weeks, because the government fears igniting a public backlash over bankers’ pay. Potential investors are very keen to see some form of long-term incentive plan in place for key employees and also see the €500k pay cap as a factor that will inhibit the bank’s ability to secure top tier management. The Sunday Independent’s Richard Curran also discusses the pay cap and argues that it disincentives international bankers from top jobs at Irish banks. Brian Carey’s agenda piece: - Gabriel Fagan, the chief economist with the Irish Central Bank, has described the Irish economy as a phoenix miracle, where economic growth is characterised by growing incomes and business investment, yet declining debt. The “phoenix miracle” is also known as the creditless recovery, and has been largely seen in emerging markets. - Shareholders in Tullow Oil have overwhelmingly backed a rights issue at the company. The funding will be largely used to reduce debt. Mercury Engineering, one of the country’s largest contractors, has appointed IBI Corporate Finance to advise on a potential sale. Mercury is believed to employ 2k people and records annual revenues of c. €400m. Grafton Group is planning to limit pay increases to executives to the same level as staff under new pay structures. The potential rewards under long-term incentive packages at the builders’ merchanting and DIY group are set to be increased by a third, however, from 150% to 200% of salary, for chief executive Gavin Slark. Cormac Lucey believes that the tightening of ECB monetary policy and future interest rates rises will not pose a serious threat to Ireland. The problem is that it could coincide with a botched Brexit or a successful Trump campaign against the export of US jobs abroad. The Irish Farmers’ Association is planning to step in to support farmers who are negotiating with private equity funds who have acquired their debts. It has made a clear statement that there should be no forced sales of farm assets where farmers are engaging meaningfully with the funds. The Irish Stock Exchange will grant Cairn Homes an exemption from its listing rules to allow the London-quoted builder to take a full listing in Dublin by the end of June. Cairn will be given a waiver from the ISEQ’s rule that a company must have a three-year track record of financial performance. Lone Star, one of the most active buyers of Irish debt following the bank crisis, is planning to refinance €420m of non-performing mortgage loans on the bond market. IBEC has warned that plans to reform the American tax system could have dire consequences for Irish exporters. The US plans would see a steep corporate tax rate cut in the US, a lower rate for repatriated offshore earnings and the introduction of a border adjustment tax which levies a tax depending on where a good is consumed rather than where it is produced. Fashion retailer H&M recorded sales of almost €115m at its 23 Irish stores last year, a 7.5% rise on the previous year. Emmet O’Neill, a former chief executive of Topaz, is developing a small apartment scheme in west Dublin. O’Neill is seeking permission to develop 22 two-bedroom apartments on a site in Monastery Road in Clondalkin. In the latest move to clean up its loan book in advance of its pending IPO, AIB is selling an €80m portfolio of unsecured loans in Northern Ireland. Project Rosetta largely comprises the mortgage shortfalls that remained following the voluntary sale of commercial properties by distressed borrowers in the North. The shortlisted buyers are believed to include Cabot Financial, a British debt purchase company that specialises in unsecured borrowings. Crosslane Property Group, a British student accommodation developer, is planning a move into the Irish market. It is understood the company is negotiating to buy a Dublin site, with a view to launching new student accommodation by the summer of 2019. The Supreme Court has suggested a professional litigation fund could buy equity in a company suing the state and Denis O’Brien for damages, thus bypassing laws prohibiting third-party litigation funding. Persona, which lost out to O’Brien’s Esat Digifone in the 1995 mobile phone license contest, is claiming €500m damages against the state and O’Brien over the allegedly questionable award of the contract. In the Supreme Court last week, a number of the five judges asked why Harbour did not just buy shares in Persona, which is owned by the businessmen Tony Boyle and Michael McGinley. Judge Frank Clark said it appeared “it’s illegal if you buy the right to sue but it’s not illegal if you buy the company”. Turnover at Wasps, the rugby club owned by Irishman Denis Richardson, hit a record high of £17m in the second half of last year. Turnover was up 12% on the previous year and Wasps recorded a profit of £1.5m, an improvement from a £200k loss for the comparable period last year. Workers at a Kerry Foods factory in Cork will each receive a goodwill payment of €1k as part of a settlement of a long-running dispute that caused four work stoppages in recent months. The company will also offer voluntary redundancy to up to 40 staff at its Cheestrings factory in Charleville, following a ruling from the Labour Court. Shukri Shammas, a London-based tech entrepreneur and investor, is reported to be backing plans by property developer Gerry Barrett for a €100m office complex in Galway city. The Irish arm of mytaxi, the recently rebranded Hailo, made an operating profit of €220k in Ireland in 2015. Microsoft paid $165m in tax in Ireland last year after making $1.1bn profit on the back of Irish sales of $21bn. Nick Webb’s inside track this week: - Tony Kilduff, who sold Kindle, the banking software company, in 1992, is planning on building houses just off Ailesbury Road. Kilduff was also involved in the Belfry property funds. - Marissa Carter’s fake tan brand Cocoa Brown is looking to break into the US market after making headway in the UK market. - Sean Mulryan’s right-hand man Paul Keogh and Ballymore’s chief operating officer is stepping down after 10 years. Keogh is starting a “specialist firm working on family business advice”. - Nitro, a San Francisco-based tech firm which provides software that makes working with PDF documents easier, has just raised another $15m, bringing total funds raised to $36.6m. Cavan native Gina O’Reilly is the number two in the business. This week’s chief executive interview is with Liberty Mutual’s Tom McIlduff. Twitter @RenatusCapital tweets this week: c. 200k - Growth in the number of people employed in Ireland since 2012, an average annual growth rate of 2.5%. @centralbank_ie 2% - Percentage of the c. 1.7m occupied homes in Ireland that were built in the last 5 years, according to @CensusIreland. @IrishTimesBiz 4.4% and 3.8% - The projected GDP growth for this year and next year, respectively, according to @MerrionCapital. @examinerbiz 18% - The growth rate of the construction industry in 2016; it is projected to expand by 15% in 2017, according to @wearelinesight. 6.4% - The unemployment rate for March, its lowest level in almost a decade, according to the @CSOIreland. @IrishTimesBiz €282m - The amount by which the government tax take was behind target in March, equivalent to a 2.4% shortfall. @IrishTimesBiz €230k - Average price of a house in Ireland, a year-on-year rise of 10% and a €65k increase from its lowest point, according to @daftmedia 40% - The proportion of Irish-owned firm's exports that are destined for the UK, according to @ESRIDublin. @IndoBusiness 9.5% - The Eurozone jobless rate in February, its lowest rate in almost 8 years, according to @EU_Eurostat. @IndoBusiness €206.5k - Average value of mortgages approved for first-time buyers in February, a year-on-year increase of 15.2%. @IndoBusiness @DavyGroup 4.3% - Average rise in property prices across the country in the first 3 months of 2017, according to @daftmedia. 3.1% & 2.8% - The projected growth in Ireland's GDP for this year and next year, respectively, according to @ibec_irl. @IndoBusiness​

Mark Flood | Director | Renatus Capital Partners T: +35315549269 M: +353868392688 63 Mount Street Lower | Dublin 2 Renatus place €1-3m in cash generative companies with growth potential.

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