Increase in private equity activity among Irish firms

News this week that Cavan-based telecoms infrastructure company the Obelisk Group has secured a €6 million investment is just the latest indication of the growth in private equity activity here.

On Monday BDO Development Capital Fund announced it would invest €3 million in Obelisk, a provider of services to the telecommunications and utilities sectors. The investment is backed by matching bank funding which, together, will drive expansion in the telecommunications and power infrastructure sectors in both Britain and South Africa where Obelisk is already established.

The Obelisk Group was founded in 1996 by Cavan-based entrepreneurs Colm Murphy and Padraig Brady, to serve the then newly emerging Irish mobile telecommunications market. Since then it has delivered approximately 40 per cent of that sector’s infrastructure.

The group, which employs 250 staff and has annual revenues of more than €20 million, expanded into power infrastructure here in 2008, followed by the UK in 2009 and South Africa in 2010.

The BDO Development Capital Fund provides development and growth capital for established, mid-sized and profitable companies to assist them to achieve and accelerate their export-led growth plans.

“The Obelisk Group is a great example of the sort of best-in-class Irish companies that Development Capital looks to support,” said Andrew Bourg, its investment director.

“It has grown profitably over a 20-year period and has built a strong reputation and team in a range of complementary markets. It is now poised for exceptional growth with strong macro-economic conditions and positive investment climates in large markets outside of Ireland.”

The fund forms part of the Government’s Development Capital Scheme through which a total of €225 million is being made available to mid-sized Irish companies with significant growth potential.

Drive exports

As part of this scheme, €75 million in funds from the Department of Jobs through Enterprise Ireland will be matched with €150 million of private sector funding for investments in Irish companies through a series of different funds.

Julie Sinnamon, Enterprise Ireland chief executive, said: “In an increasingly digital society, the Obelisk Group is a great example of an Irish company using its telecommunications and renewable energy expertise to meet customer demands and drive exports to international markets.

“This investment demonstrates how the Development Capital Funds can be used to fund ambitious management teams and help them reach their growth potential.”

Obelisk is the latest in a series of privately owned Irish companies to receive investment from the private equity funds now operating here. These include the €292 million Carlyle Cardinal Ireland Fund and the €125 million MML Growth Capital Ireland Fund.

Earlier this year Prim-Ed, a Wexford-based publisher of teaching resources, announced a €15 million investment from MML Growth Capital Ireland Fund designed to enable it to double its workforce and extend operations across five continents.

Other private equity recipients include chocolatier Lily O’Brien’s, food company Carroll Cuisine and payments company Payzone Ireland, all of which CCI has invested in.

The funds’ activities support the Government’s aim to break Irish business’s over-reliance on bank finance while, in the equity spectrum, private equity typically sits in between angel investment and venture capital.

In the UK, where private equity houses have been active since the 1990s, they have proven popular among founder- or family-owned businesses wishing to facilitate growth, consolidate the shareholder register in advance of growth or simply to enable founders to take cash out of a business.

Through their extensive global networks such funds bring with them strong sectoral expertise. As James Murphy, founder of Galway-based health firm Lifes2Good put it last year when it secured a €5 million investment from BDO Development Capital: “We have hugely ambitious expansion plans and we are now positioned to implement them.”