Big Story of the Week
NAMA is the big story this week and the sale of the Northern loan book in particular. It is also the big story today.
Michael McDowell in Bus Post: “Try as it might NAMA can’t wriggle its way out of this one.”
Michel Somers, the highly respected former head of the NTMA, said to the Business Post that all of NAMA’s loan sales should be suspended.
Brendan McDonagh defends the negative comments on NAMA, saying: “Had we collapsed the sale, it would have been extremely difficult to bring it back to market.” He writes a piece in the Business Post today and said any impropriety to do with alleged payments to Frank Cushnahan were on the buy-side.
Ian Kehoe editor of the Business Post has a succinct summary and he thinks that, “NAMA proceeded with the sale against its own better instincts, purely to exit the North as quickly as it could.” He also comments on the fact that the two state-formed institutions, NAMA and IBRC, are both subject to formal state investigations.
The Times reports that Cerberus, the US property group that acquired NAMA’s contentious Project Eagle Loan portfolio, tried to reduce more than £150m off its £1.2bn bid just before the deal closed in 2014, citing security issues on certain loans. NAMA resisted, however it is understood Cerberus is seeking a refund of £20m regarding Project Eagle.
Brian Carey also covers Project Eagle and struggles to see what a statutory enquiry will achieve if it gets off the ground. While it would appease public disquiet, it may not achieve anything over and above what could be achieved through a grilling by the Public Accounts Committee of the NAMA top brass concerning valuations, sale process, alleged fees and inappropriate behaviour between NAMA representatives and various third parties.
Sunday Business Post
The Business Post report that Paul Coulson said during the week that he would not have got his business going without Anglo Irish Bank and he paid his €450m loans back in full on refinance. He thinks that issuing the Quinn Group an insurance license was loose and it was the demise of Quinn Insurance that hastened the demise of Anglo. He compared the demise of Quinn to the demise of PMPA which had six main problems:
1. Charging uneconomically low premiums.
2. Was materially underproviding for claims.
3. The handling of claims was done in a way designed to delay their settlement.
4. It had an investment strategy completely out of line with industry norms.
5. Control was predominantly in the hands of one person.
6. Inadequate regulation of the operation.
Aidan Flynn of Duff & Phelps is close to finalising a €5m fundraising round for Nephin Whiskey.
“The surgeon Jimmy Sheehan plans to sell his shares in the Blackrock Clinic, the Dublin private hospital he co-founded, for €16m to beef baron Larry Goodman.” Goodman is also an investor in the Mater Private and Hermitage Clinic.
“Farmflo, the Irish farming software company, is set to raise €3m by 2017 to fund an expansion into Britain and mainland Europe.”
The Irish on-demand laundry app Laundrie has introduced a clever alliance with Unilever. Customers can determine what Persil fragrance their clothes are washed in and can buy detergent directly.
Brazil last week named Ireland as a tax haven, much to the surprise of the Department of Finance, who said in defence that, “Ireland is fully compliant with all international best practices in the areas of tax transparency and exchange of information.”
There is less pre-budget lobbying than usual four weeks away from budget day.
We are seeing much greater deal-flow from the North as Vendors selling their businesses are liable to a much lower CGT rate there via a much more generous Entrepreneur’s Relief scheme. If Mr. Noonan has good economists doing the cost-benefit analysis, they will surely reduce the CGT rate in the upcoming budget.
The Minister was said to have met the British Growth Fund last week to see if any lessons could be learnt for the deployment of capital to SMEs.
Voya Healthcare, who supplies spas and hotels with its seaweed-based skincare products to 38 countries, is looking to invest in more logistics and warehousing facilities as it expands in the US.
Michael Stone, chairman of the Construction Industry Federation, is interviewed in the Business Post. Interestingly, he said the industry had 7,000 apprentices in 2007, 700 in 2011 and 2,800 today.
Irish family business CityPOST, a private delivery service, is investing €3.5m in sorting equipment and staff. Last year’s accounts showed profits of €1.4m. He is targeting the top 100 business mailers in Ireland who account for an estimated €200m of a €700m-€800m postal market.
Joe Healy, president of the IFA, and Simon Harris, Minister for Health, are both interviewed in the Business Post. Both interviews are worth a read. In a country where big posts are normally reserved for elder statesmen, it is refreshing to see two young-guns filling such influential roles. There is also a profile of Dee Forbes, the new Director General of RTE.
David McWilliams comments on the fact that over the past 30 years, the “natural interest rate” has fallen from 6-7% globally to 1.5% in Britain, near zero in the US and below zero for the Eurozone. The anomaly is that these rates normally pertain during a recession and there is no recession. With yields so low, he fears that pension funds are chasing yields in the wrong places and there could be a big hangover coming. He concludes: “Be wary when the man in a Hugo Boss suit promises you over-the-odds returns on a pension product. And remember, he takes his fee first whether the investment goes up or down and, by the way, his fee is your money.”
There is a focus on Graduate Talent Acquisition. Mark Butler of HLB Sheehan is expanding his firm with the announcement of ten graduate positions at his Sandyford business.
Walter Hobbs, who is now on the Enterprise Ireland board, celebrates the Movidius and Brite:Bill exits and comments on the work being done by EI to groom the next ones.
There is a focus on FDI, Health Summit, Fintech and ICT security.
Róisín Burke highlights the fact that the Limerick economy is on the rise. She said there are cranes in the sky and unemployment is falling. Both Denis Brosnan and John Moran are very active in reviving the city centre.
She also gives us more information on Thomas Roeggla, the Austrian who is buying €80m worth of Irish property, including: the Quayside shopping centre in Sligo, apartment blocks in Limerick, office buildings in Dublin and Cork and hotels such as Farnaham in Cavan, Aghadoe Heights in Kerry, Cavan Crystal, Fitzwilton in Waterford, the Diamond Coast in Sligo and Clarion in Limerick.
Burke also hears that the Loyola Group, headed by Stephen Cooney and Bryan O’Malley, has bought the house next door to The Bath Pub. One of their backers, Enda O’Coineen of Kilcullen Capital, is getting ready to head around the world on a yacht.
Sunday Indo
Croke Park’s “meetings and events” and catering operations saw its gross profits rise to €3.2m last year, up from €2.6m in 2014. Revenues from the stadium’s premium corporate suites rose 4% to €11.4m, enjoying close to 100% occupancy in 2015. Consolidated financial statements for the group show that net profit fell to €1.5m, down from €3.9m in 2014, while group turnover fell by 4% to €36.6m.
Lincor Solutions, an Irish-founded medtech business, is set to float on the Australian Stock Exchange as part of its merger with the healthcare arm of Australian-listed tech company Hills. “Lincor makes TV-style devices to entertain patients as well as provide them with information about their treatment.” Lincor was set up in 2003 by a group of former employees of Apple in Cork, with the business moving to Nashville in 2013 following an investment of over €7m from VC firm Edison Ventures (now Edison Partners).
Developer Greg Kavanagh’s plans to deliver a commercial and residential development on the so-called Hickey site in Dublin’s docklands have hit an obstacle from Dublin City Council. The Council has initiated enforcement procedures “in response to a complaint from a third party that Balark Investments has failed to comply with the conditions set down for the development of the site, which is located between Sir John Rogerson’s Quay, Lime Street and Hannover Street East.” Kavanagh appears unperturbed, with a spokesperson saying: “This is a simple letter from Dublin City Council asking us to respond to claims made by a third party, which we will do. It will have no impact on us and we are not in the slightest bit concerned.”
RTE believes that up to 500 homes could be built on the part of its Donnybrook site which is currently being readied for sale. The sale of the land is expected to net the broadcaster up to €50m, with the proceeds proposed to be used for significant investment in digital infrastructure and other capital projects.
“The Department of Finance has insisted that there will be “no watering down” of emergency legislation drafted to close off a loophole that allowed so-called ‘vulture funds’ to pay little or no tax on income from their Irish profits.”
A London borough has asked the US government to intervene in a “bitter row over rival proposals from Datalex chairman Paschal Taggart and Galliard Homes for a site in London.” The site is on the boundary between Merton and Wandsworth boroughs.
Richard Curran notes that the Competition and Consumer Protection Authority is launching an investigation into whether insurers were signalling price increases in an anti-competitive way. The enquiry is seeking to establish whether announcements, for example, by one company that prices will rise by 10% this year are being noted by competitors who then decide to do likewise.
Curran also covers the mooted $1bn flotation of PR and corporate advisory company Teneo. The company was set up in 2011 by former Nenagh Guardian reporter Declan Kelly, Galway man Paul Keary and former Bill Clinton aide Doug Band. The company has completed numerous acquisitions in the UK and elsewhere in the past 18 months.
Dan White has an interesting article highlighting that although mortgage arrears are down, they are still at notably high levels. Having peaked at 183,000 (143,000 loans on principal private dwellings and 40,000 buy-to-lets) in June 2013, the number of mortgages in arrears has fallen by over 40% to 109,000 at the end of June this year. However, one in nine of all mortgages on principal private dwellings were in arrears at the end of June and a fifth of buy-to-let mortgages were in arrears. White also points out that one-sixth of the Irish banks’ mortgages are still in arrears, with 11% more than 12 months in arrears.
This week’s interview is with Dublin-born Ronan Dunne, the former CEO of O2 who is set to take over the reins of US telecoms giant Verizon’s wireless division. It is an interesting piece and well worth a read.
Ahead of the All-Ireland final, Simon Rowe has a feature on the commercial and marketing powerhouse that Dublin GAA has become.
Dan O’Brien discusses the latest GDP numbers, which he notes may be the hardest to interpret yet. Aside from the headline 0.6% quarterly growth, O’Brien notes that the second quarter of 2016 saw a record level of investment spending, coming in slightly over €16bn. More worryingly, however, O’Brien points out that figures published during the week showed that the value of Irish exports to the UK were 7.5% lower in July, the first full month since the Brexit referendum, than the same month last year.
Sean Gallagher’s interview is with Tony Judge, the CEO of Clubs to Hire, a golf club rental business which employs 40 staff and has an annual turnover of over €3m.
Fred Klinkenberg of Enterprise Ireland has a piece highlighting the growth in Irish exports to Nigeria. Nigeria is the seventh most populous country in the world, with its current population of 180m expected to reach 450m by 2050, while annual economic growth has averaged 6.5% over the past decade.
Louise McBride has a piece with Dutch woman Astrid van Gelder-Fitzpatrick who co-founded The Dutch Bike Shop with her Irish husband, Frank, in 2011.
Samantha McCaughren notes that Ronan McNamee, the co-founder of Cuisine de France, which was sold to IAWS for €50m, has put his so-called Grafton Street Collection portfolio of properties up for sale for €40m, as well as the headquarters of his business ECA Capital on Clyde Road, Dublin 4.
Adrian Weckler discusses the recent sales of Brite:bill and Movidius. Weckler acknowledges that although both stories were undoubted successes, he questions when an Irish business will take the next step and bring the business to another level before selling up. He points out that Israel has a population only half as big as Ireland, yet has 93 companies listed on the Nasdaq.
Sunday Times
The old Michael Smurfit adage “equity is blood” may not be as ingrained these days. Last week Madison Dearborn Partners (MDP) offered to buy Powerflute for 90p a share. The Smurfit brothers, who own 27.5%, accepted 80p a share to get a deal away.
The IRFU will receive a €1m windfall when Ireland play the All Blacks in Chicago this autumn. The rugby body will be paid the match fee by TLA Worldwide, a sports promotion agency that has organised the contest.
The Government is lining up former attorney-general Paul Gallagher to head its legal challenge to the European Commission’s state aid ruling on Apple’s tax affairs.
Cormac Lucey covers the growing public worker industrial action challenge facing the Government but sees no real evidence that compared to our EU neighbours Irish public sector workers are getting a raw deal.
Insurance Ireland, the industry trade body, has moved to dismantle a hurdle to new entrants from overseas entering the Irish market. The body is to offer associate membership to the local agents of overseas players. The move comes as the industry faces an investigation into suspected breaches of competition law in setting monetary premiums.
ESB lost €135m over the past two years on two UK power stations due to lower British wholesale electricity prices and reduced demand in Northern Ireland. The state energy company wrote down the value of plants in Corby in the English midlands and Coolkeeragh in Co. Derry, booking an impairments of €89m and €46m, respectively, on the plants.
The former Fianna Fail TD and senator Donie Cassidy is selling three Georgian buildings in Dublin city centre for €5m to Pat McCann’s Dalata, the country’s biggest hotel group. Dalata plans to expand its Maldron hotel on Parnell Square into the adjoining buildings at numbers 3-5 Granby Row, which are currently in use as apartments.
CarTrawler, which provides rental and rail booking engines to airlines, travel agents and hotels, has added to its senior management team by bringing in Paddy Power’s former head of online and chief product officer, Peter O’Donovan. O’Donovan will join the recently appointed former Petroceltic chief operations officer Tom Hickey who was appointed finance director in August. Hickey and O’Donovan join chief executive Mike McGearty and chief technology officer Bobby Healy on the senior management team. Former Paddy Power chief executive Patrick Kennedy is chairman of the company. O’Donovan left Paddy Power earlier this year following its merger with Betfair. CarTrawler is majority-owned by private equity companies BC Partners and Insight, which purchased the business for €450m two years ago.
Uniphar, the drug wholesaler owned by independent pharmacists, made a profit of €6.2m last year and is forecasting further profitability growth this year. Uniphar has about 1,000 shareholders, mainly pharmacists and their families. It has about 50% of the wholesale drugs market and owns the Allcare pharmacy franchise and a half-share of the Life Pharmacy group. Chairman Maurice Pratt has said a possible flotation “is on the agenda” as a mechanism for shareholders to get true value for their shares.
Pure Gym, the UK low cost fitness company which last week announced plans to float on the London Stock Exchange, is targeting the Irish market for growth. Pure has said it has intended to evaluate acquisitions in certain important strategic local markets. One potential target in the Irish market could be the very successful start-up Flyefit. The chain was put together by Capua and is majority owned by Brendan O’Hagan and Sé Kennedy. Flyefit has 25k members and will shortly open its seventh gym in South Dublin and plans three more in the short-term.
Nolan Transport, the Irish haulage and logistics company, plans to double the size of its UK operation. Nolan plans to buy Welsh firm John Raymond Transport which has 250 staff and turned over €30m last year.
Green Reit, the Dublin-based listed property group, has reduced its annual interest bill by €1.5m having recently negotiated a 2% interest rate on an €150m loan form Bank of Ireland. The low rate reflects the fact the bank has security over the full Central Park complex which is valued at €346m, equating to a loan-to-value ratio of just over 43%.
Investec Ventures, a Dublin-based venture capitalist, will make a return of 5x according to the Business Post and 8x according to the Times on its investment in Brite:Bill. The funder, which manages the Ulster Bank Diageo Venture Fund, held almost 30% of Brite:Bill and will clear about €20m from the sale. The Nasdaq-listed Amdocs is paying €75-80m for the company. Delta also invested €1m. Brite:Bill had to pivot from its original B2C plan to become a much more successful B2B provider. Its clever billing software significantly reduced the amount of queries firms got about bills.
The Times report that online insurance broker 123.ie paid a €15m divided to its troubled parent, RSA Insurance Ireland, last year after making an €8.5m after tax profit last year and €6m the previous year. The strong trading performance at 123.ie comes as RSA returned to profitability, following the discovery of accounting irregularities which resulted in capital injections and commitments of €500m from its UK parent to shore up the company.
The Powerscourt Hotel in Co. Wicklow recorded pre-tax losses of €1.4m last year, despite a 23% growth in revenue.
Landlords are expected to take a hit following the closure of HMV. It is expected there will be enough funds to pay staff and the Revenue at the upcoming creditors meeting on the 26th September, but not all landlord obligations.
The Times publishes an apology this week regarding the 4th of September article “Clean beak for an old laundry” where it was stated that Gerry Deane and Paddy Fitzgerald of Pembroke Partnership had applied for planning permission to redevelop a former Magdalene laundry site in Donnybrook, Dublin. It has now clarified that neither Gerry Deane nor Paddy Fitzgerald have no connection with this entity of the same name or the site.
Nick Webb covers the following this week:
– Declan Ryan of Ryanair fame and his extended family are set to make €500m from the sale of Viva Aerobus, the low cost Mexican airline that they funded.
– A lot of Ireland’s top chief executives turned out for Grant Thornton’s 5k IFSC run, including Brian McKiernan of Davy and Justin Keatinge of Version 1, to name a few.
– Paul Coulson addressed the institute of Directors annual lunch on Friday last.
Niall Brady’s business focus delves into what’s going on in the insurance industry.
Gavin Daly interviews Richard Branwell, chief executive of Dublin-based Digital Game Studios.
20% – The drop in cross-border spending in July and August, according to members of the @RAI_ie. @IrishTimesBiz
€650m – The value of food and drink exported to China in 2015, an increase of 16% year-on-year. @IrishTimesBiz
19% – The total non-performing loans ratio for Ireland at the end of 2015, representing a value of more than €50bn. @IrishTimesBiz
9.3% – The year-on-year increase in the number of passengers that Dublin airport handled in July, according to figures from the @ACI_EUROPE.
7.8% – The percentage of home loans in arrears, as of June 2016, down from 9.3% a year earlier. @examinerbiz
69% – The year-on-year increase in the number of apartments granted planning permission in the second quarter of 2016. @CSOIreland
0.6% – The quarter-on-quarter growth in Irish GDP for Q2 2016, rebounding from a 2.1% contraction in the first three months of 2016.
1.1% – The quarter-on-quarter increase in job creation in Ireland for Q2 2016, the 2nd highest rate of job creation in the EU. @EU_Eurostat.
1% – The percentage the government is planning to get the budget deficit under this year, according to Taoiseach Enda Kenny. @IrishTimesBiz
€1.15bn – The month-on-month decrease in goods exported by Irish businesses in July. @examinerbiz