€160m a year in state money is provided to homeless charities, with nine hundred employees on the payroll of the four largest charities alone. There are over 75 state-funded organisations and service providers in the housing and homeless sector and Conor Skehan, the departing chairman of the government-backed Housing Agency, suggests that there appears to be excessive duplication in the sector. The Business Post has learned that the government is set to launch a major value-for-money audit on the use of state money in housing charities in the New Year. Skehan is interviewed in the Business Post.
The Minister for Employment Affairs and Social Protection, Regina Doherty, is planning to crackdown on people in quasi-employment claiming they are self-employed in order to avoid paying PRSI contributions, according to an interview in the Business Post. This is expected to fund the increased cost of self-employed workers getting the same benefits as PAYE workers which was promised in the most recent budget.
The opening paragraph from the lead article on the front page in the Business Post reads as follows, “The “culture of contempt” in Irish banks is in sharp focus this weekend, with new evidence about how financial institutions have used their veto to block personal debt settlements with 1,700 struggling borrowers. Fresh revelations have also emerged of how the banks used legal loopholes to thwart customers. According to new figures, banks have turned down 45% of debt proposals put forward under Ireland’s insolvency regime.”
Taoiseach Leo Varadkar will meet senior executives from a number of US business with operations in Ireland, including Apple, on his visit to the US west coast this week as part of an IDA and Enterprise Ireland trade mission.
Lone Star is selling the 36-hotel Jurys Inn business and has a price expectation in the region of €1bn. Swedish hotel company Pandox is said to be a frontrunner. The business is largely UK-based; the business is benefiting from increased tourist numbers to the UK, who are taking advantage of weaker sterling.
Ian Guider examines the stock register of AIB and reveals that sovereign wealth funds of Kuwait and Singaporean governments were among the top five investors in the IPO during the summer. The shares listed at €4.40 and are now trading at €5.
Initial bidding for the Irish arm of Barchester Healthcare closed last week. The business contains a nursing home, primary care centre with ancillary offerings and a number of housing units in Trim, Co Meath. Among those who are reported to have bid on the Barchester business and assets are French investor InfraVia Capital Partners which bought Munster nursing home group CareChoice earlier in the year, Mervyn Smith’s First Care Group, former Beacon investors UPMC, a UK healthcare REIT, Glencar fund, US group Passage Healthcare and Anne Hearty’s Trinity Care. KPMG Corporate Finance is running the sales process.
The Department of Justice is said to be reviewing the Immigrant Investment Programme. A surge in applications last year resulted in the minimum threshold rising from €500k to €1m. There were 65 sanctioned in 2015, 273 in 2016 and more are expected this year.
Munich-headquartered Aurelius Equity Opportunities is said to be in the running to buy La Rousse Foods, along with the Carlyle Cardinal Ireland fund and others. Aurelius acquired plastics business Wellman here in 2007, which they turned around and sold for €42m. Its current Irish holding includes Viking Direct and Turas Nua. In her Ergo piece in the Sunday Indo, Samantha McCaughren reports on rumours that food services company Pallas Foods and wholesaler Musgrave are frontrunners to purchase La Rousse, while a management buy-out is also a possibility. It is suggested that the price could reach €40m, compared to the mooted €25m paid for it two years ago.
“Clarington Primary Care, a partnership between Centric Health and Leading Edge, is exploring its funding options as it seeks to expand.”
Stephen Kinsella has a special on the tracker mortgage scandal.
Brian McGettigan has invested €20m in his new boutique hotel, The Address on Amiens Street, which is contained within the North Star Hotel. It is expected to launch in the next few weeks. He is also planning to invest €15m and add 87 rooms to Kingswood, his hotel in Citywest.
Cathal Gaffney, co-founder of Brown Bag Films, claims RTE’s reluctance to invest in more indigenous kids programming is resulting in many children having English or US accents. He claims that 25% of the population is under 16, yet only 5% of RTE’s budget is spent on under 16 programming.
Serial entrepreneur and Roscommon man John Stapleton is looking to invest in fledgling Irish food companies.
Susan Mitchell writes an article questioning what this government has achieved with the health system.
The government manifesto intended to reduce waiting times, which has not happened. Another commitment was to establish an Oireachtas all-party committee to develop a single long-term vision/plan for the health service, the current status of which is unclear. She also lists five other promises that have not been kept by this government in relation to health.
Róisín Burke interviews Jo Fairley, co-founder of Green and Black’s chocolate.
Self-storage company Nesta, which has 240k sq ft in existing storage, is adding 100k sq ft in space.
Justin Owens has sold his Commtech business to US multinational Arrow for between €25 and €30m and is expected to close the deal in November. Commtech distributes a lot of hardware and related services for 20+ companies, including Dell and EMC, and the winners in the transition to the cloud are going to be the bigger operators who can invest in the transitioning. Commtech has turnover in excess of €100m and 40% of its business is from Britain. Arrow is ranked 118 in the Forbes top 500 and the acquisition makes sense for them as Arrow needs a platform in Europe.
There is a supplement on pension and stock investment and tax advice in the Business Post with contributions from many experts including Andrew Fahy, head of tax and financial planning at Investec Wealth and Investment.
Frank Connolly previews his book “Nama Land”. His concluding line is that the book might “be of interest to those concerned, and damaged, by the disposal of billions-worth of publicly-owned assets over the past eight years”.
Dave O’Flanagan, Alan Giles and Dermot O’Connor’s Boxever is raising €6m via Cantor Fitzgerald through an EIIS Investment scheme.
Ian Guider writes on the possibility that Ryanair may have to recognise a union.
Wellman International had profits of €6m in 2016, up from €3.6m in 2015.
United Products, a manufacturing firm based in Ireland and owned by an Italian company, recorded pre-tax profits of €2.7m in 2016, up from €2.3m in 2015.
The accumulated losses of Carluccio’s Irish arm rose from €688k to €1.2m in 2016.
Arnotts, the department store now owned by the Selfridges Group, saw its sales increase 5.3% last year to €75.3m. Arnotts invested €2.5m in capital projects last year, an increase of over €1m from the previous year. Although gross profit increased by 3.5% to €35.1m, there was an operating loss of €523k, with this figure being impacted by costs associated with the increased investment, the hiring of additional staff and other one-off expenditures.
The Sunday Independent reports that “Independent News & Media (INM) is interested in acquiring the Sunday Business Post, which is for sale.”
Designer Group, a Blanchardstown-based mechanical and electrical contracting firm, has bought Kansas and Missouri-based energy-consultancy business PPS as part of its plans for rapid global expansion. The Designer Group plans to more than double group turnover from €160m this year to €350m by 2020. It is reported that the group paid €5m for PPS which has a turnover of almost €12m. This week’s interview is with Michael Stone, chief executive of the Designer Group.
It has been reported in specialist publication Buyouts that US investment bank Moelis & Co has been enlisted by the Irish Stock Exchange to help it find a buyer. It is thought that another stock market is a likely buyer, with the London Stock Exchange being mooted as an exchange which may be interested as it would allow it to keep a foothold in the EU after Brexit. The Irish Stock Exchange has operating profits of €9.2m last year and is owned by a number of stockbroking firms, including Davy, Goodbody, Investec, Cantor Fitzgerald and Campbell O’Connor.
Richard Curran’s pieces this week:
- Curran argues that the government’s decision to conduct a report into the “culture of banking” in Ireland following the tracker mortgage scandal is a “complete waste of time”. He believes that this exercise should be skipped in favour of immediate changes. Measures suggested include: greater incentives for whistleblowing, stronger consumer protection, larger penalties and mechanisms to ensure that where wrongdoing takes place, individuals are held accountable.
- Following NAMA announcing during the week that it had paid down the last of its senior debt, bringing the total debt repayment to €30.2bn and achieving this three years ahead of schedule, Curran points out that the remaining assets are “the real basket case stuff” and that NAMA has focused on the low-hanging fruit to date. NAMA now has €3.7bn of assets on its books, which represents loans with an original value of €26.7bn. This valuation represents a discount of over 86% on the original value, compared to the estimated overall discount of 32% on the loans which have been sold by NAMA thus far. The Sunday Times reports on new analysis from stockbroker Davy that NAMA could make an ultimate profit of €5bn, up sharply from previous estimates.
- Curran also discusses Taoiseach Leo Varadkar’s announcement during the week that he planned to reintroduce the long-stalled Public Health (Alcohol) Bill 2015. The Bill contains strict restrictions on the advertising of alcohol, but Curran points out that it does not apply to social media and so will largely miss its targeted effect.
The third quarter saw retail sales grow by almost 2%, with furniture, garden products and large appliances all performing especially strongly.
LK Shields, the corporate and commercial law firm, is opening a new Galway office. The firm already employs over 85 legal professionals in Dublin and will initially base five solicitors in its Galway office, with this planned to rise to 15 in the next 18 months.
An Bord Pleanála has refused planning permission to JBM Developments for an 100-acre solar farm near Dublin Airport, a decision which the company is set to appeal. One of the reasons cited for the refusal of the 23-megawatt project was that the huge amount of glass panels may cause “glint and glare” interference with aircraft using the proposed new northern runway at the airport.
“Delays in the system of processing and deciding on planning applications are impeding the delivery of new homes and serving to drive up the prices of the scarce supply of housing currently on the market, according to developer Michael O’Flynn.” The comments follow the granting of permission for O’Flynn’s company, O’Flynn Capital Partners, for the development of 240 new homes in Cabinteely, but only after a lengthy and costly planning application process.
The Sunday Independent has learned of plans to transform the old ferry terminal in Dun Laoghaire into a “Canary Wharf-style hub for multinational companies as well as technology, design and marine-based enterprises that could support up to 1,000 jobs”. Dublin-based businessman Philip Gannon is behind the scheme which will see Dun Laoghaire Harbour Company lease a total of 75,000 square feet and aims to be the largest co-working space in Ireland, as well as one of the largest in Europe.
Bio-marine Ingredients Ireland, a marine ingredients manufacturer owned by a consortium of Killybegs fishermen, has received an investment of €750,000 from Enterprise Ireland. The company aims to provide an efficient new source of sustainably-produced marine protein ingredients suitable for human consumption.
Dan O’Brien highlights that Ireland’s public debt remains very high, leaving the country particularly vulnerable to an economic shock. Gross government debt as a percentage of GDP is a commonly cited statistic; while Ireland has performed strongly under this criteria over the last few years, in cash terms the country’s national debt stands at over €200bn, the same as five years ago, and will increase for the next few years as the government plans to run deficits until the end of the decade. The bigger flaw when looking at gross government debt as a percentage of GDP in Ireland’s case is the much-publicised artificial inflating of Ireland’s GDP due to the activities of multinational companies. Looking at gross government debt as a percentage of government revenue, Ireland is well above the EU average and is only behind Greece, Portugal and Italy. O’Brien also points out that Ireland has €50bn of debt maturing in the next three years, which will have to be refinanced and thus would be subject to higher interest payments should interest rates begin to rise once more.
Gavin McLoughlin has a feature discussing the challenges facing Bulmers-maker C&C, in particular, increased competition and the effects of Brexit. The increased prevalence of Heineken-owned Orchard Thieves is cited as one of the reasons for Bulmers volumes declining 5%, compared to the overall Irish cider market which only fell by 1%. C&C’s share price has fallen 21% this year, with the company turning to new avenues for growth, such as its purchase of a 47% in UK pub group Admiral Taverns.
Sean Gallagher’s interview this week is with Paul Merriman of PAX Financial Planning. The company, which provides “a fresh approach to financial planning products and services”, was set up in 2011 and is expected to generate turnover of €1.4m this year. The company has offices in Sandyford, Limerick and Cork and now employs 18 people.
The recent increase in stamp duty from 2%-6%, which was announced in finance minister Paschal Donohoe’s Budget speech, has been seen by some tax advisers as an underhanded attempt to reach budget targets of a €376m increase in stamp duty receipts in 2018. The increase applies to all business assets and not just commercial property.
Brian Carey in his Agenda piece discusses his belief that the Central Bank, which has now taken centre stage in the mortgage tracker scandal, was slow to act and should have realised that this was a systemic problem within the banks much earlier.
Cormac Lucey provides some interesting analysis this week on what interest rates should be in the various EU member states if they were in a position to determine their own interest rates, rather than having a standard EU interest rate which applies to all states. His summary analysis is broken down as representative of the eurozone core and the periphery states, Germany (representing the eurozone core) and Ireland, Greece and Spain representing a sample of the periphery states. The analysis indicates that an interest rate mismatch applies: next year, according to the Taylor Rule, an economic theory which estimates what a Central Bank’s interest rate should be, the eurozone should have a zero interest rate but Germany could do with a 5% rate, while Spain could justify -7% and Greece -12% (both these negative rates suggesting that heavy additional quantitative easing would be justified in these countries). In 2014, Ireland moved from needing an interest rate lower than the eurozone average to one that is higher. If national conditions only were taken into account, a central bank interest rate of 2.4% would be justified for Ireland next year. In 2018, the impact of interest rates that are too low is likely to outweigh the impact of Paschal Donohoe’s budget.
The proposed sale of insurer Friends First has entered a make-or-break stage, with frontrunner Aviva reconsidering its bid after reviewing the long-term policies on Friends First’s books, according to sources familiar with the negotiations. While Aviva remains the strongest contender, any significant slippage on price would throw the field open to other bidders.
Talks on French entrepreneur Xavier Niel taking a stake in Eir are reported to have stalled after a failure to agree on a valuation of Ireland’s largest telecoms operator. TMT Finance, an industry news website, last week reported that negotiations between Niel and Eir have fizzled out and the deal was now looking unlikely to reach fruition. Niel, who is being advised by investment bank Lazard, is seeking to buy a significant minority stake in Eir through his personal investment company NJJ Capital, whereas LionTree, a boutique investment bank, is understood to be working with Eir shareholders.
Gowan Group, the motor and home appliance distributor, made €2.9m EBITDA last year (earnings before interest, tax, depreciation and amortisation).
The fast-growing retail technology company eShopWorld made a €7.8m pre-tax profit last year as revenues surged by 245%. The Dublin company had turnover of €211.2m in 2016, up from €61m in 2015 when it made a profit of €411,000. Turnover at eShopWorld, whose technology runs localised websites and logistics for retailers including Victoria’s Secret, will top €300m this year.
High roller investors are queuing up to buy Irish whiskey — by the barrel. Two Irish distilleries have launched cask club schemes in recent months, with more expected to follow in the coming year. Irish Distillers recently launched its Midleton Very Rare Cask Circle Club, with prices ranging from around €75,000 up to €450,000 depending on the age and style of the distillate and cask. Hand selected by master distiller Brian Nation for their quality and rarity, Irish Distillers has already sold four of the 30 casks available, with the first cask snapped up by Dana Brunetti, Oscar-winning producer of movies including The Social Network and Captain Phillips and also the Netflix series House of Cards. Another cask was snapped up by the head of a European royal family.
Telegael, a Galway film and television production company, made almost €1.6m pre-tax profit last year, a sharp turnaround from a loss of €204,365 in 2015.The Spiddal-based company was boosted by production work on the animated film Norm of the North and new television series including police drama Jack Taylor. Telegael was founded in 1988 by Paul Cummins, who is chief executive.
The international property investment group Invesco Real Estate aims to cash in on the housing shortage in Dublin, with plans to build 45 apartments on top of the Frascati shopping centre in the upmarket suburb of Blackrock. The group has sought permission for three floors of apartments over the existing two floors of retail and restaurant space. It is proposing to build three one-bedroom apartments, 36 two-bedroom units and six three-bedders, all with balconies, and two communal terrace areas.
Former shareholders in Flyefit, a Dublin gym chain, are in line for a €2.4m earn-out payment as part of their deal to exit from the business a year ago. The Flyefit parent company will shortly make the payment to business co-founders Jackie Skelly, Mark Tooke and Karen Fallon, according to filings at the Companies Office. The trio held their shares through Liberty Vallance, a Malta-registered company. The payment is the first of two annual deferred payments agreed as part of the buyout deal, which also included an initial payment. The overall terms of the deal have not been disclosed.
Liberty Insurance, the former Quinn Insurance business, slashed its pre-tax losses to €4.9m last year after a drastic cost-cutting exercise. The loss was down from €69m in 2015 when the company transferred more than 200 call centre workers to a third-party provider and began the process of making 287 other staff redundant. The continuing losses came as the insurer’s gross written premiums slipped by more than 18% to €209.3m in 2016. The directors of Liberty said the company was “working towards achieving a sustainable profitable business model” by focusing on personal insurance products and “refocusing” its commercial business.
Paul Horn has been appointed executive chairman of Marlet Property Group, the developer backed by M&G Investments, the fund's investment arm of Prudential Assurance. Horn, previously a non-executive director at Marlet, will work alongside chief executive Pat Crean as the group moves towards developing out its vast land bank. Marlet, previously New Generation Homes, has been one of the biggest buyers of development land since the financial crash. The group is currently in the process of selling Dublin Living, a portfolio of residential developments to an international developer, believed to be Round Hill Capital, a London-based property company. The portfolio, which has planning permission for over 1,200 apartments, is expected to fetch €450m. The group is also forward selling an office block over eight levels at Cardiff Lane in the Dublin Docklands. CBRE is seeking €153m for the scheme. The Business Post also reports on Horn’s move from non-executive director to executive director.
Danu Investment Partners, a private equity business owned by the founders of Setanta Sports, recorded a €2.8m gain last year after it disposed of stakes in West Cork Distillers and Kodaplay, maker of the Playertek tracking device for sportspeople. Danu is owned by Leonard Ryan, Mickey O’Rourke and Mark O’Meara, and has backed several businesses.
The owners of Kenilworth Motors, a long-established South Dublin car dealership, are weighing up plans to sell their garage premises for property development. The business, on Harold’s Cross Road in Dublin 6, resigned its Opel franchise from close-of-business last Friday. Brian Priestman, a director of Kenilworth Motors, said it would remain open in the near-term but planned to carry out a voluntary liquidation.
The Butlers Chocolates group made €2.6m pre-tax profit last year as turnover rose 7.5% to €35.6m. Owned by the Sorensen family, Butlers has a chocolate-making business, cafes in five countries and runs a visitor centre at its Dublin factory.
Atlantic Bridge Capital, a Dublin venture funder, has led a $25m (€21.5m) investment in AtScale, a London firm working on big data analysis. AtScale was founded four years ago and has 95 employees. It has raised $45m in total to date.
Lifes2Good, the Galway consumer goods company, bought back just over 100,000 shares in the company from its former US managing director Mark Holland for €5.5m. Lifes2Good sold hair restorer brand Viviscal to US company Church & Dwight for €150m last year.
Nick Webb’s Inside Track:
Former Trintech chief executive Cyril McGuire is very active in the property world. The tech entrepreneur is planning on developing a 26.5k sq mt office scheme at the entrance of South County business park, near Leopardstown racetrack.
Paul Maloney, the former executive of the Dublin Docklands Development Authority (DDDA), has recently taken up a role as project operations manager with Pat McCann’s Dalata Hotel Group.
Martin Dunphy, who sold his financial services business €355m to Cabot Credit Management in 2014, is investing in a number of interesting new start-ups. The portfolio includes fintech group WeSwap, which matches up foreign currency with travellers, and The Dip Society, a canapé disruptor that is stocked in Selfridges.
Chopped, the salad bar group, seems to be going from strength to strength and has just started its European roll-out, signing a deal for two stores in Cyprus. It was set up by Brian Lee and Andy Chen back in 2012 and now has 30 salad-serving restaurants, including 20 franchise units.
Initiative Ireland, a new peer-to-peer property lender, has just pre-approved its first €1.5m loan. It’s the largest crowd-lending loan approved to date in Ireland and will fund the development of 10 social housing apartments and a restaurant in Dublin.
Brian Carey provides comprehensive coverage of the court battle involving Panda Waste and Craven House Capital (CHC) which centres on claims by CHC that it had signed a binding heads of agreement with Panda Waste owner Eamonn Waters to buy Panda Waste in 2015 for €78m.
Sandra O’Connell has an interesting piece on how living abroad can stimulate entrepreneurship and cites a number of success stories were living and working abroad has been pivotal to success, including James Murphy of Lifes2Good.
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