David Zahn, head of European Fixed income at Franklin Templeton, has told the Sunday Business Post he thinks Irish bonds are overvalued. They have sold down all of their Irish bond positions.
The tiered pay system between public sector workers in their role less than six years and those more senior is highlighted in the Business Post. The division came from government cuts to pay scales for new hires only in the public sector from 2011 which were never brought back in line with existing pay scales for pre-2011 hires. The government has no plans to bridge this gap in the current pay talks, as there is no evidence to suggest it is affecting demand for those jobs from graduates. The key facts on public sector workers are interesting:
- 306k employees
- €15.6bn wage bill
- €3.3bn annual estimated cost of pensions
- €1.4bn the cost of reversing the cuts implemented in the downturn
Simon Coveney has promised to introduce a Minister for Infrastructure and really try and develop the cities and transport links of the other major Irish cities. Currently, over half of Ireland's urban population live in Dublin. He believes we should be calling on a lot of available EU funds for such projects. Enda Kenny is expected to stand aside in the coming weeks and leave Coveney and Varadkar fight out the leadership seat.
Neil Woodford's Preston Clinic is looking to spend €50m building a "cutting-edge proton beam cancer treatment clinic" on the site of the former Magee Barracks in Kildare town.
The McGettigan family have regained control of the Regency hotel with backing from Broadhaven Credit Partners. It is understood they have refinanced the debts at par. Oaktree tried to put the hotel into receivership but examinership protection was granted to the incumbents. McGettigans own nine hotels in Ireland and the five star Bonnington Jumeirah Lakes Towers in Dubai and many pubs across the world.
The IBRC commission has assembled 20,000 pages relevant to the sale of Siteserv to Denis O'Brien for €45m in 2012. The commission has cost €1.5m since inception, it could cost multiples of that figure to conclude the work. It is mandated to look at any deals with a €10m loss or more, any transaction set to be of public concern and how interest rates were set.
The government currently has an option to exercise warrants over AIB shares for 10% of the company. It is expected a tidy-up deal will have to be done before the IPO to clear this position. The Government spent €21bn bailing out the bank, has received €6bn back to-date and last year the ISIF/NTMA valued the remaining shares at €11.3bn.
Neil Hughes of Baker Tilly Hughes Blake has been appointed examiner of Rathmond Ireland Ltd trading as Aussie BBQ.
Coillte's wind farm portfolio is probably en route to being worth €1.5bn and CEO Fergal Leamy said he and his board have to decide whether to keep and develop or to sell.
Irish-based Dell Bank increased loans on its balance sheet by €157m to €845m in 2016. 145 people work for the unit in Cherrywood Dublin.
Rents in Dublin are nearly 16% higher than the previous peak and 66% higher than when they hit the bottom. Additionally, there is the lowest amount of housing stock available. UCD professor Aidan Regan writes that with 8k people employed between Google and Facebook alone, the rental squeeze is a by-product of this investment in Ireland by FDIs as a large number of these workers have come to Ireland to work for these companies. The solution is clearly housing supply.
Brian Larkin, CEO of Ireland's most recent listed company United Oil and Gas, would not be drawn on how much it intends to raise on the London Stock Exchange in the coming months. They acquired a 20% stake in an Italian oil field last week. The reverse takeover made sense according to Larkin as Senterra had a listing and his company had assets and a pipeline of projects.
Mainstay Medical shares jumped from €16.40 to €17 on foot of the announcement that the first ReActive8 implant was successfully implanted in St Joseph's Hospital Raheny to treat chronic lower back pain. Fountain Healthcare and Sofanova are among the backers of the company.
HomeCare direct is looking to raise €1.5m to €3m to help develop its platform which connects carers to those in need of care. It is designed to address the gap between the €10/12 paid to carers and the €25 charged to those needing care by agencies.
Ornua's turnover in 2016 was up 9% to €1.8bn and EBITDA was up 18% to €43m. Kevin Lane is obviously highlighting the risks of Brexit to his stakeholders. Kerrygold sales are just shy of €1bn.
John Hannon and John Lacy in FinRes negotiated iCabbi's recent €1.5m debt raise from BMS finance topping up the €1m they lent late last year. According to Darren Hough of BMS Finance, the money will be used to fund future growth as iCabbi continues to attract a strong pipeline of customers and develops its relationships and markets.
The Business Post interviews an analyst who covers Digicel and they are keeping a close eye on the $6.5bn debt pile in light of slow growth and significant currency exposures. Digicel raised over $1.2bn during the week which gives it more breathing space to repay the debt pile it has. Alvin Kim of Fitch claims that established ex-growth telco players are normally valued at 5.5x EBITDA which would leave very little equity in Digicel if this is the basis of the valuation. If it can reposition itself to a wider communications company it would achieve a higher valuation and create significant equity should it look to sell or IPO.
Three Supervalu supermarkets and a Centra connected with the Nestor Group in Galway are expected to be sold soon. AIB appointed David Kealy as the receiver after they reached an impasse with the incumbents.
Róisín Burke reflects on the recovery in hotel prices and how five stars in Dublin, in particular, are now trading close to their replacement costs having traded at nearly half at the bottom. Although Damien Gaffney, head of Tetrarch's hotel operations who swept up a number of prized hotels at the bottom, said it still does not stack to build a five star from scratch. Burke reports that increasing number of American tourists is replacing a decline in British visitors.
Cillian Jones' Playon is advertising their presentation to potential EIIS Investors in the Westbury this Thursday at 6:30 pm. Following their recent announcement as official partners to the NBA for their fantasy offerings, they seem to be gathering momentum.
Dave McLaughlin, head of AIB private banking, is pictured presenting Law Firm of the year to Richard Martin of Ronan Daly Jermyn.
Mike Quinn, CEO of Bord na Mona, is interviewed. The semi-state company recorded turnover of €433m in the year to March 2016 and an operating profit pre-exceptional items of €51m.
Quotes of the week include one from Prince Charles that says "I hope and pray that during the rest of my life before I drop dead, I might have the chance to visit as many counties as possible of this great country."
Pure Power Systems, a Dublin-based distributor company that sells uninterruptible power supply systems with sales of €2m, has been acquired by the US-owned Kohler Company. Post-acquisition the company will continue to be led by founder Ian Jackson and will become part of Kohler’s British sales and services company, Uninterruptible Power Supplies Ltd. Consideration for the acquisition wasn’t disclosed.
Private equity fund Cardinal Carlyle Ireland is reported to be in talks to acquire a majority stake in pharmacy chain Sam McCauley in a deal believed to be in excess of €50m.
Finance Ireland boss Billy Kane is interviewed in today’s paper. The company recently announced an almost doubling profit growth last year, with pre-tax profit rising to €6.3m. Kane is targeting to lend €400m this coming year and has ambitions of an IPO within the next three to five years.
Richard Curran’s piece this week:
- With Apple’s valuation topping $800bn last week, Curran notes that there will be plenty of happy employees in Apple. Apple employees can spend up to 10% of their salary each year buying Apple shares at a 15% market discount. Apple also gifted employees free shares in late 2015. Since 2013, Apple’s share price has almost tripled, from c. $55 per share in May 2013 to $156 per share at closing on Friday.
- Curran highlights the move away from the “Trump Premium” on companies expected to benefit from Trump’s policies, from financial deregulation, oil companies and building companies.
- A direct beneficiary of all the office building taking place in Dublin are the crane hire companies, with the current count of between 70 and 90 cranes in the capital at the moment. Curran points out one well-known crane company, Crane Hire, run by Dermot and Jarlith O’Leary. The company shows nearly €10m in retained profit to 2015 and had €3m in cash on its balance sheet. The two directors shared nearly €740k in remuneration in 2015.
- Michael Noonan is expected to bring the decision on the timing of the IPO of AIB to the cabinet in the coming weeks. With the buoyancy in the markets, positive results from Irish banks (KBC reported €70m first quarter profit, double the same period last year) and a good result in the vote in France, Curran reckons there should be no hanging about.
- In the latest set of Census 2016 figures released Curran highlights the shift in population to the east coast. Of the 41 towns (excludes cities) with populations over 10,000, 27 are in Leinster, nine are in Munster and only five are in Connacht and Ulster. The three largest towns in the provinces outside of Leinster, Ennis, Sligo and Letterkenny all experienced population declines for the period 2011-2016.
Mike Lynch, founder of the $11bn software company Autonomy and a $1bn investment fund, Invoke Capital, believes that Ireland should position itself as a “middleman between the EU and UK” with a view to protecting our interests and possibly providing reasoning for the UK to pursue a soft Brexit.
Sports Direct will open its new store in the old Boyers’ building on North Earl St in Dublin city centre. The new store will be over six floors and cover some 37k sq ft.
The sale of NAMA portfolio Project Tolka to Colony Capital may face examination by the Comptroller and Auditor General after concerns raised by Fianna Fail finance spokesman Michael McGrath over the marketing approach of the portfolio and the “level of consultation” with debtors on the selection of bidders for the loan book.
CBRE is calling for the government to “facilitate the delivery of the Build to Rent (BTR) concept, which is common in other jurisdictions and which has the ability to deliver scale quickly.” In the UK there is estimated to be c. £27.7bn of equity targeting investments into BTR schemes and CBRE believes that a number of these investors are considering opportunities in Ireland.
Cityjet is expecting to report 2016 revenue of c. €280m, up from €165m Profit levels are not disclosed yet as accounts are yet to be approved by the board.
The DAA’s retail arm Aer Rinta International has opened a new toy store concept, Kids’ Kingdom, which it plans to roll out to airports in nine countries. This follows its success with its candy store concept, Candy Cloud, which it now operates in a number of its international locations, including Bahrain and Auckland.
Musgrave recently started selling its own-brand products in China through listings on Tmall, a Global Chinese internet retailer owned by Alibaba. Since March, it has gained an estimated 40,000 customers in China. Musgrave is the first Irish firm with a presence on the platform.
Listed travel-software firm Datalex, which provides software to airlines to enable them to sell products online, has engaged advisors Evercore to “help explore its strategic options for growth.” Datalex, run by CEO Aidan Brogan, has seen its share price more than double over the last two years to a current market cap of just under €280m. Dermot Desmond’s IIU is its largest shareholder.
A recent report by GS1 UK shows that only 6% of British businesses want the UK to prioritise controlling immigration during Brexit talks, while 74% want the focus on barrier-free trade.
Cardinal Capital founders, Nick Corcoran and Nigel McDermott are reported to be considering a €200m credit fund targeted at Irish SMEs. If launched, the fund could target sub-€5m loans for SMEs.
Simon Rowe gives a full page to the growing opportunity for Irish businesses in Asia, and in particular, China.
Lidl is to launch a €250k fund to help kick-start new Irish food businesses. The programme is supported by Bord Bia.
EngageSmith, a new company aimed at providing training and e-learning products to companies with high levels of millennial staff, has raised €400k in private funding and aims to hire 20 new staff.
Dan O’Brien considers Ireland’s trade in services. In 2016, Ireland made sales of €133bn in services to parties in other countries, of this €24bn of sales of services was made to the UK. In contrast, Ireland’s export of goods to the UK was only €14bn. The vast majority of the firms exporting services from Ireland are foreign owned, with only 1.5% of services exports being carried out by Irish firms.
This week, Sean Gallagher interviews Samuel Dennigan, founder of Strong Roots. Strong Roots is a frozen foods business launched in 2015. Its employs 13 staff and has turnover of over €2m.
The 2,850 passenger cruise ship Celebrity Eclipse will use Dublin as a stop in 2018 and is expected to bring in €6m in tourist spending. A record 130 cruise ships will stop in Dublin this summer.
In the wake of controversy over the closure of pension plans at Independent News & Media, social protection minister Leo Varadkar has moved to ban employers from unilaterally winding up insolvent pension schemes. Measures in Varadkar’s proposed bill will allow pension watchdogs to force employers to plug financial shortfalls before a scheme can be closed. It is unclear whether the increased protections will apply to schemes already in the process of being wound up.
Gavin Daly’s agenda piece:
- Daly points out the recent escalation in shareholder advisory groups’ opposition to executive remuneration packages and bonuses may be somewhat harsh and reflective of a “faraway committee or worse, algorithm”. One of the examples he uses to support executives is Pat McCann of Dalata. Dalata was worth €40m in 2014 and is valued at €1bn today, while McCann has been paid well, shareholders have also been rewarded for his performance.
- AIB’s Grafton Street branch is back on the market after being bought for GLL Real Estate Partners in 2010 for €28m. It is now on the market at €48m, a c. 3.75% rental yield based on the current market rent of €1.8m p.a. The low yield may suggest the property is under-rented.
- Mountain Provence Diamonds group, which is owned 23% by Dermot Desmond, has declared it first set of numbers since it commenced commercial production. It sold $37.7m worth of diamonds in the quarter to March. It is projecting sales proceeds of between c. $150 and c. $200m for the full fiscal year.
Marathon Asset Management, a New York investment group, is lining up the sale of more than 340 apartments at the South Quarter development in Dublin. The scheme, close to Hueston train station, is set to fetch €100m.
PIRC, an influential shareholder advisory group at PaddyPower Betfair, has raised concerns about exit packages for departing executives and questioned the company’s share repurchase plans.
Despite the election of Macron, Cormac Lucey believes many of Frances’ economic problems will remain as they lie in weak public finances and high unemployment, which won’t change much in the short-term.
Cairn Homes, the listed homebuilder, is selling off several small residential sites in a job lot that is expected to sell for €30m.
Bank of China is to establish a base in Dublin which could herald an influx of Chinese investment into Ireland.
Kildare Village is set for further expansion. It has plans to add 29 more shops, two restaurants and 460 additional parking spaces.
AMCS, a venture-backed developer of software for the waste sector, has acquired Senddr Software, a Dublin tech group in a small acquisition, the consideration was not disclosed.
Up to 10% of the country’s ophthalmologists are boycotting health insurer Laya Healthcare in a dispute that has hit elderly customers of the insurance company who need eye surgery.
Philip Connolly reports that the Canadian parent of insurer Irish Life pumped €200m in cash into the Irish business to bolster its finances ahead of paying back borrowings.
Susquehanna International Group lobbied the Fine Gael MEP Brian Hayes over a new EU directive designed to cap staff bonuses and risk-taking at trading firms, according to an EU lobbying register.
Michael O’Leary, Ryanair’s chief executive, has branded Scandinavian pension providers as “idiots” for refusing to invest in the airlines over objections to their work practices.
The Revenue has paid $3.6m to Forest Laboratories, a US drug group that routes billions in revenues through Ireland, in relation to a settlement in relation to corporation tax paid by the company.
Kingspan has signed a multi-year sponsorship deal with golfer Shane Lowry.
Investment group Blackrock has reduced its stake in Green REIT by c. 1%. It continues to hold a stake of 3.3%, worth just over €33m.
A UK private equity fund, Queensgate Investments, has agreed to pay €450m to buy Generator Hostels, whose properties include a hostel in Smithfield in Dublin.
The Irish operation of fashion retailer Monsoon Accessorize was back in the black last year and recorded a €1m profit.
Nick Webb’s inside track:
- Liam Dwyer is back in business after teaming up with his former commercial director at Capital Bars. They are now advising owners of new restaurants and pubs. They are supposedly working closely with Eamonn Waters, the founder of Panda waste who has bought a number of high profile hospitality assets in recent years including No. 8 Dawson Street and the Grafton Capital hotel.
- Ronan Lambe and John Climax, the founders of clinical trials group Icon which they left as executives some time ago, have reunited to found a new venture called DS Biopharma, a drug discovery and development company.
- The Cairn share price has risen 20% since the start of the year and it is on track to build 1,200 homes a year by 2019.
- Lucinda Kelly, the former head of strategy for marketing communications at PaddyPower Betfair, is close to raising €1m for Popertee, her property meets technology group. Propertee is a data play; it provides analytics to help brands find the right locations for their shops.
- Europcar chief executive Colm Menton has made a small investment into Dynamic Res, a travel booking system developed by former American Holidays tech-person Darren Cantwell and business partner Darragh O’Shea.
Renowned landscape gardener Diarmuid Gavin is interviewed this week.
Vodafone is set to announce weak trading in the UK, a 4% fall in revenue is anticipated. Vodafone now derives only 15% of its annual income from the UK in what is seen as its most competitive market. There is speculation that Vodafone may look to exit the UK market.
Sandra O’Connell has an interesting piece on succession planning for family businesses. The focus of the article is passing the family business from one family generation to the next. In circumstances, where families are looking at other succession opportunities and options e.g an MBO including continuing family members and senior management, a partial sale of the business to facilitate liquidity and estate planning or indeed an outright sale of the business, private equity is a great potential solution. We in Renatus are currently working with a family business to facilitate an MBO by second generation family members, which maintains the family's interest in the business while facilitating a major liquidity event for the family.
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