This year hasn’t been so much a year of two halves but more like a story of two economies. Businesses in leisure, hospitality, travel and events were crucified by extended lockdowns and a stop/start economy.
On the other hand, other sectors, primarily exporting businesses absolutely thrived. Of course there were those caught in the middle. Retail had a bad year but then when it re-opened things bounced back because people were keen to spend some of their new savings.
Retailers who managed their online presence continued to do well. Grocery multiples made an absolute killing.
When it comes to identifying firms and business people who had a good year, there are lots of candidates. It is just as easy to find business that were hit with bad news. What is most peculiar about 2021 is the number of people who had a good financial year, but got hit with some other piece of bad news.
This was also a year in which the richest Irish people in the world, the Collison brothers of Stripe, got even richer, while also committing further investment to Ireland. Lots of Irish entrepreneurs sold their businesses at what were surprisingly high valuations, reflecting the large wads of cash generated by low interest rates, a benign bond market, and an international stock market boom.
Here are my picks for good year/bad year.
The Collisons and Stripe
It is hard to criticise the two brightest boys in the class. They have built up an extraordinary global payments business which was valued at $95bn (€84bn) earlier this year when it raised an additional $600m in new funding.
The new fund-raising pushed up the value of John and Patrick Collison’s stake to a staggering $23bn. The Collisons have said before that they could not have built up this company to this scale at this speed if they had stayed in Dublin. Yet, they have definitely not forgotten their roots on this side of the Atlantic. In March, the company said it was committed to creating a further 1,000 jobs in Ireland. Since then they have been doing all kinds of acquisitions as they branch out both within online payments and beyond.
The only issue for me is when are they going to go public? They don’t have to, of course, and they said they are quite comfortable being a private company at this valuation. Great. But how comfortable are their other shareholders? At this stage they have to have a very diverse shareholder base. Some of them might like to cash in some of their gains some time.
Philip O’Doherty E&I Engineering
What a year it was for E&I Engineering founder Philip O’Doherty. The Derryman sold his electrical switching business based in Donegal to US group Vertiv, in a deal that valued it at $2bn. O’Doherty is believed to own around 60pc of the company, which enabled him to join the ranks of Irish dollar billionaires.
Timing is everything in business. O’Doherty got a fantastic price for something he built up from scratch, starting in 1987 with a credit union loan. E&I has been providing more equipment for data centres and has been able to benefit from the continued expansion and need for massive investment in data backup around the world.
He bags around $800m in cash and receives a stake in Vertiv worth another $400m. Good news for the manager of Derry City Football Club if he wants to buy new players. O’Doherty is chairman.
Drug trial company Icon
One of the silent giants of the Irish corporate world is drug trial company Icon. It was founded in Dublin in 1990 by two doctors – Ronan Lambe and John Climax. They listed on the Nasdaq and haven’t looked back since. The firm is now valued at $22.9bn and employs over 30,000 people around the world. It is still headquarterd in Dublin.
This was a big year for Icon, because it completed the acquisition of American drug trial group PRA Health Sciences in a $12bn deal. This gives Icon massive new scale and a job of work to do with integration of the new purchase. It is well poised to maximize the opportunity that new vaccine trials will bring. Its share price climbed a massive 46pc this year.
Paschal Donohoe, Minister for Finance
This has been a good year for Paschal Donohoe. He navigated the finances of the pandemic, the challenge of changes to the global corporate tax regime and all the while he chaired the euro group of finance ministers. Given that several of our EU counterparts were gunning for us on the corporate tax issue, Donohoe played tough when he had to, managed those relationships and also moved on the issue when he knew he had to.
The outcome of a minimum effective 15pc corporate tax rate looks pretty good for Ireland. But Donohoe has also been lucky with the Irish economy and exchequer finances. Imagine finding yourself in a global pandemic and the three strongest parts of the economy are tech, pharma and food.
Yes, the very three things that are likely to boom in an otherwise uncertain world, are major planks of the Irish export story. That is why the exchequer, despite generous pandemic supports and pumping billions into the health service, will still produce one of the lowest exchequer deficit to GDP ratios of a developed economy anywhere in the world this year.
Elon Musk – Tesla
The tech billionaire has undoubtedly had a good year. I don’t just mean the 30pc increase in the Tesla share price which has brought the group back towards a $1 trillion valuation. Musk’s stake in the company is valued at north of $200bn. That is all very well but what if it is all tied up in stock and not cash? Musk decided to cash in 10pc of his stake and has bagged $13.6bn through share sales after selling three quarters of that promised 10pc.
If ever you wanted a sign that Tesla is grossly overvalued, its founder cashing in $13.6bn worth of stock is it. But Musk turned his share sale into a social media event by asking his followers whether he should sell or not. The social media circus distracted from the fact that he was cashing out. With $13bn in the bank, he won’t be too perturbed about what happens the share price now. When he was declared the world’s richest man, he said he didn’t see it that way. He said he had shares which placed a number beside his name. Now he has $13.6bn big ones to make it all seem quite real.
The year 2021 could not have been any worse for airlines than 2020 was. And in many ways it was an improvement on the version of commercial hell that reined last year. With the arrival of vaccines, EU Covid certs and a greater understanding of the virus, things improved this year. The level of bounce back among people who wanted to fly was very positive. But the latter part of this year has seen a massive hit once again to the fortunes of the industry.
Ryanair went into the pandemic with a balance sheet that was better equipped than most to soak up the pressure. Its presence in short haul was also an advantage as Europe began flying again. The fourth wave and now the uncertainty over Omicron has taken some of the shine off that otherwise good year of recovery.
In November its share price was trading at €18.11, compared to €16.10 just before Covid hit in 2020. Happy days! Since then it has fallen back to €14.40 wiping over €4.1bn off the market cap since early November. Next year should be a lot better. Aer Lingus parent IAG has found it all a lot tougher. A slower bounce back in long haul has left it struggling. Just before the pandemic its shares were trading at 452p and are now languishing at 131.7p.
The Davy boys
I know that it doesn’t seem like a bad year when you sell a company for over €600m. But sometimes money isn’t everything. Reputation and not being pointed at in restaurants matter a lot too. This year saw the implosion of the Davy broking machine when it was fined over €4m by the Central Bank.
The scandal triggered a quick sale of the firm which saw several high-profile exits and an acquisition by Bank of Ireland for a pretty big price. The real losers here are staff, most of whom did not have a shareholding in the firm and yet faced all of the uncertainty from the scandal brought about by a handful of former senior executives.
Eddie O’Connor Mainstream Renewable Power
How do I classify Eddie O’Connor founder and former chairman of Mainstream Renewable Power as having a bad year? After all he sold the company to Norwegian giant Aker in a €900m deal from which he would have received around 55pc of the sale price. He bagged several hundred million euro, yet had a bad year. Sometimes having to go before you are ready to go really hurts. O’Connor resigned as chairman in May – the same month the sale of the company went through – after controversial remarks regarding investment in Africa that were dubbed “climate colonialism”.
The well-known businessman was at the Dublin Climate Dialogues series where he spoke briefly about dealing with leaders of “tribal societies”, referring to a lack of a tradition of democracy in Africa. He apologised afterwards but he was gone as chairman, despite retaining a stake in the company.
What a strange year building products group Kingspan had? The share price was up 58pc as it continued to push ahead in its acquisition and financial performance. With a market cap of €18bn, the shareholding of its chairman Eugene Murtagh is valued at €2.7bn. But right in the middle of it all was Grenfell and the inquiry into the tower fire there.
The controversy for Kingspan was resurrected in recent weeks when very soon after announcing a partnership with Mercedes F1 racing team, it ended. British cabinet secretary Michael Gove had a pop at the Cavan firm for the sponsorship after families of those who perished in the tower also complained. This is an issue that is likely to dog Kingspan for some time to come.
This year saw the announcement that KBC and Ulster Bank were pulling out of the Irish market. The retreat of two retail banks, one of whom has been here since 1836, is bad news for bank consumers and businesses. Less choice and consolidation of market share is really not good, no matter what might be spun about stronger domestic banks.