Saturday 24 March 2018

Financial services leads way as private equity M&A hits high

There were 60 mergers and acquisitions (M&As) in the first half of 2017 in Ireland. Photo: iStock
There were 60 mergers and acquisitions (M&As) in the first half of 2017 in Ireland. Photo: iStock
Ellie Donnelly

Ellie Donnelly

Private equity firms spent €7.5bn buying a record 18 Irish businesses in the first half of the year.

The tally of private equity-backed deals clocked up in the period is a new high, and well up on the same period last year.

Half of the top 10 transactions in the first half of the year were private-equity related, according to the William Fry Mergers & Acquisitions Review 2017.

Included in the private equity transactions was French investment firm InfraVia's €70m acquisition of Dublin-based retirement and nursing home Carechoice from UK private equity firm Emerald Investment partners.

In total there were 60 mergers and acquisitions (M&As) in the first half of 2017 in Ireland, down from 73 in the same period in 2016, according to the data - which is based on research by information provider Mergermarket.

The total value of the M&A carried out in the six months to June 30 was €8.2bn, down from €18.9bn in the first six months of 2016.

However, the Johnson Control acquisition of Tyco International - valued at €15bn - took place in the first six months of 2016.

In addition, speaking to the Irish Independent, Eavan Saunders, corporate partner William Fry, said that excluding so-called inversion deals in 2016, involving mainly US corporations, there has been an underlying growth both in the volume and value of domestically focused activity.

The vast majority of M&A in 2017 were 'mid-market' deals - valued at under €250m - and accounting for 92pc of the total activity. This is up 10pc on the same period last year.

Over the six months, inbound activity was at a record high, with 44 such deals taking place in the six-month period.

Despite the ongoing volatility across the Continent, there was an influx from European corporates.

One of the more high-profile takeovers was German insurance firm Allianz acquiring its remaining 33.5pc stake in Allianz-Irish Life Holdings for €160m.

"The companies being acquired are real Irish companies with significant operations and staff here, being bought by international companies -attracting global interest," Ms Saunders said.

There were also domestic mid-market deals, with Dublin-based Applegreen acquiring a 50pc stake in the Joint Fuels Terminal in Dublin port from Topaz Energy Group for €16m, while Glanbia was one of the more prominent Irish companies to restructure during the six months.

In March Glanbia shares hit a record high after it announced a €112m plan to spin off its dairy division .

In terms of cross-border activity, William Fry said that they have seen growth. "This activity has been driven by a large extent by Brexit, financial service business are looking to establish a footprint in Ireland as a gateway to the EU," Ms Saunders said.

In a sign of continued consolidation in the gambling industry, Netherlands-based Fortuna Entertainment purchased sports betting software company Hattrick Sports Group for €85m during the period, as it continues its expansion across Europe.

The consumer sector accounted for the largest increase in value to 15pc of the total in the first six months of 2017, compared to 8pc last year.

Ms Saunders said that the sector is very "GDP correlated", "as economic indicators predict that Ireland's GDP growth is expected to continue, it is not surprising to see activity in this space," Ms Saunders said.

The financial service sector continued to attract the greatest volume of M&A deals, at 15pc up from 12pc in the same period in 2016. This sector also had the bulk of deals in terms of sector split by value, with €7.1bn being spent across nine deals in the six-month period.

Irish Independent

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