Investors have a lot to think over as we head towards the end of the year. The potential fallout from instablity in Italy at the heart of the euro zone, Brexit and a Trump Presidency all have to be factored in to 2017 plans. Carlyle Cardinal Ireland Fund is a €292m fund which has made seven investments in Ireland to date, including the €156m acquisition of AA Ireland earlier this year.
Jonathan Cosgrave is Managing Director at Carlyle Group and co-head of its Ireland fund. Mr Cosgrave said the company invests equity in growing Irish businesses and seeks to partner with management teams with growth ambitions. Pointing to the company's purchase of chocolate maker Lily O'Brien in 2014, he said CCI invested in a new production line at the company which resulted in sales growing by 50%.
The Carlyle Cardinal Ireland fund is currently about 50% invested across seven companies, including AA Ireland, Abtran, Carroll Cuisine, GSLS, Lily O'Brien, Payzone and Learning Pool in Northern Ireland. These companies employ over 3,500 people in total.
In order for CCI to make a difference, companies have to have growth ambitions and management teams have to have an ambition to see their businesss bigger than they currently are, Mr Cosgrave said. He added that the fund does not invest in property - either commercial or residential - loan books or distressed assets. "We invest in businesses that want to grow, with managements teams that have a desire to either double or triple the size of their businesses," he stated. He added that CCI is not shy of supporting growth.
Mr Cosgrave said that CCI is very pleased with the quality of management teams and companies it has invested in and it is also seeing some very high quality entrepreneurs around the country. But over the last year, CCI has seen a 20% reduction in volumes in the sector it targets - companies valued between €10m and €100m - after what Mr Cosgrave called a "stellar 2015". He said this fall is driven by the tough comparsions with 2015 as well as the Brexit hiccup and the following uncertainty that resulted from the UK vote to leave the European Union.
But Carlyle Cardinal Ireland in planning to make six or seven more investments out of the fund and it is looking to make two to three in 2017, according to Mr Cosgrave. He said that the company has a pipeline of good opportunites for next year. CCI is also very bullish on the Irish economy and is very keen to to hear from firms who require eqity to support their strong growth ambitions, he added.
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MORNING BRIEFS - Time is running out for Italian bank Monte Dei Paschi Di Siena to secure €5 billion in fresh capital and prevent a state bailout. The bank is seeking €1 billion from the sovereign wealth fund of Qatar to shore up its finances. Sunday's referendum result and the resignation of Italian prime minister Matteo Renzi have made it more difficult to get this investment over the line before the end of the week. That is the deadline set for Monte Dei Paschi, which was the worst performer in the most recent stress tests by the European Banking Authority, to complete the capital raising. A failure by the bank to secure the money from the private sector would raise further questions about the prospects for other Italian lenders which, between them, are nursing €360 billion in bad debts. It would also mean bondholders being bailed in, which is politically dangerous in Italy where many small investors own bank bonds and would face having their investments wiped out in this scenario. Italian bank shares fell yesterday as the market reacted to the referendum result.
*** Another deal deadline, one set by Cityjet to complete an acquisition of Stobart Air, passed this morning. The two separately issued statements yesterday evening saying they had decided not to proceed. Cityjet's chief executive Pat Byrne said as terms could not be finalised within the agreed timeline the parties would move on. Stobart, which operates the Aer Lingus Regional Service, said it had concluded the agreement with Cityjet was not in its commercial interest.
*** Food compay Greencore will double the maximum amount which can be awarded to its chief executive under its share based long term performance related bonus plan to amount equivalent to twice his annual salary. Patrick Coveney's annual salary is also being increased by 2% to €804,000, according to the company's annual report.
