Unicorn bonanza: Private equity is now a boon to help smaller firms flourish

Flipdish co-founders Conor McCarthy (left) and his brother James whose company is still thriving

Flor Kassai, partner at private equity firm Inflexion, and leader of the company's buyout fund

thumbnail: Flipdish co-founders Conor McCarthy (left) and his brother James whose company is still thriving
thumbnail: Flor Kassai, partner at private equity firm Inflexion, and leader of the company's buyout fund
Flor Kassai

Few European countries have enjoyed as much popularity as an investment location as Ireland has over the last five years.

The country has been a hotspot for businesses looking to base themselves in the European Union, enjoying the export benefits that brings, but without moving to the Continent.

Partly, as a result, the country recorded the EU’s highest GDP growth last year, at almost 14pc.

Ireland’s popularity with corporate investors isn’t new, with its long history of entrepreneurship and ambition leading to the foundation of many scaled, global businesses.

The Celtic Tiger brought a wave of blue-chip businesses to the country.

Even after Ireland’s debt crisis, foreign direct investment continued, helping to pull the economy out of recession.

The UK’s Brexit referendum, despite the many challenges it has created, has actually put Ireland in a positive light, globally.

It’s clear the country is resilient, and investment figures bear that out. Last year’s stellar GDP growth was accompanied by a 33pc rise in mergers and acquisitions (M&A) activity – the highest level of deal volume on record. The uptick in private equity activity within that was notable, with volumes up 16pc year-on-year, at 66 deals.

Nine of the year’s largest 20 M&A transactions involved private equity, with the €3.4bn UDG Healthcare buyout by a US investor a prime example.

While Ireland has a variety of successful sectors, healthcare and technology have stood out for investors of late. The business-friendly environment of the late noughties attracted a high number of companies, initially large corporates and latterly pharmaceuticals, fund managers, and tech giants Google and Facebook.

What’s good for investors is also good for Ireland’s economy

This influx of some of the world’s most important companies fostered innovation and entrepreneurship, helping catapult Ireland into being a global leader in tech and healthcare. The legacy of this is today’s thriving ecosystem of businesses in these sectors, with many erstwhile start-ups now ripe for investment to accelerate growth.

A case in point is SteriPack, a leading global contract manufacturer serving the medical device, pharmaceutical and diagnostic markets.

Founded over 25 years ago, the company is based in the National Science Park in Co Westmeath and has operations in 50 countries.

SteriPack currently employs more than 650 people in its locations in Ireland, Poland, Malaysia and the US, and has over 100 global clients, including the US Department of Defence, which last year awarded SteriPack a nearly $15m contract to develop domestic production capability for XpressCollect used for Covid testing. In 2021 the company acquired two US businesses, and in 2022 chose Inflexion Private Equity to lead its buyout.

The funding from Inflexion will support SteriPack to continue to scale globally as it benefits from strong market growth and further international expansion opportunities.

SteriPack is also well placed to undertake further acquisitions with the support of Inflexion, having acquired New Jersey-based HS Design in February 2021, and Colorado-based Halleck-Willard in October 2021.

Private equity is no longer merely about buyouts of large businesses. Inflexion, for example, has a dedicated fund for minority investing, Partnership Capital, to appeal to owners who wish to retain control, as well as an Enterprise Fund dedicated to smaller businesses. There is also a thriving venture capital (VC) community in Ireland, which is home to at least half a dozen tech unicorns and even a decacorn, a firm valued at more than $10bn.

For example, Fenergo, a SaaS (software as a service) business and one of Ireland’s unicorns, was set up in 2009 in Ireland and was acquired by private equity in 2021.

Flipdish, a tech firm that allows diners to order and pay at tables using QR codes, is another unicorn backed by VCs, with nearly $150m raised in the first half of 2022 across two funding rounds.

What’s good for investors is also good for Ireland’s economy: following its 2021 private equity partnership, Fenergo announced it would create 100 new jobs in Dublin, while Flipdish intends to hire 700 people in tech and commercial roles this year as a result of capital injections.

All of these experienced houses provide more than capital, with growth typically accelerated through hands-on investing and support for leadership teams in areas such as sales, team build-outs, international expansion, M&A and tech enhancement.

Flor Kassai is a partner at Inflexion and leads its buyout fund. She is also a member of the company’s executive committee and investment committee.