Waterland Ireland, the Irish arm of the Dutch private equity group, is anticipating a further slowdown in overall deal-making activity next year but expects new opportunities to emerge amid shifting market dynamics in the Republic.
The group has seen strong demand for its offering in 2023 despite a wider slump in deal values and volume against the backdrop of rising interest rates and cooling economic sentiment. This year the firm hit a milestone, with the companies in which it has invested generating combined annual revenues of €350 million. Between them, the businesses employ more than 2,000 people in the Republic.
One of Waterland Ireland’s tentpole investments is Mullingar-based fire safety business Writech. Headed by chief executive Ted Wright, the family-owned business recently added Dublin and Cavan-based SRS Alert Fire to its growing stable, Writech’s eighth acquisition since the Dutch-founded firm took a stake in the business in 2021.
Waterland Ireland, which has partnered with 20 companies here since entering the market in 2019, is focused on small to medium-sized family-owned businesses across a range of sectors, including healthcare, manufacturing and engineering. In 2023 alone, Waterland has invested in Meath-based data centre cable specialist MTM Engineering and structured cabling providers CET Connect and ATSS Ventures.
The firm expects these businesses to service the growing demand for data centre expertise across Europe, despite concerns domestically about the pressure the sector is putting on the State’s energy supply.
Laura Dillon, partner at Waterland Ireland, said the firm has been particularly busy this year despite a notable deterioration in overall M&A conditions.
“There is definitely a sense of things are taking longer to do and there’s not as much happening,” she said. However, Waterland has managed to buck the trend given that many family-run companies are looking to “de-risk and cash out” to some extent while still wanting to “drive the business forward”, she said.
“I think Covid, coupled with potential challenges in the economy, has made people think: ‘Do you know what? Actually, do I want all of my wealth just in this business?’” Ms Dillon said.
[ Writech acquires three businesses as it eyes €124m revenue markOpens in new window ]
Waterland announced its entrance into the market here with the acquisition of nursing home operator Silver Stream in 2019, going on to open 11 new units across the State. However, its focus has shifted away from the sector in recent times towards engineering and data centre-adjacent companies. “The economics don’t really work that well any more,” Ms Dillon said. “About 80 per cent of the people in Ireland are on the Fair Deal scheme, and I think it’s been well documented that the scheme is not keeping pace with inflation. That means that the operators are really struggling.”
She said a 119-bed home in Kilmacanogue, Co Wicklow that the group is due to open next year was likely to be its last investment in nursing homes for the foreseeable future.
Looking ahead, Ms Dillon said 2024 is likely to be a challenging year for dealmakers in some sectors. “I think some of the property sectors are going to have slightly tougher times next year and I think there is a bit of uncertainty out there in the market ... So I do think everyone still needs to be cautious”
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