€54.3m of Capital Returned To Investors in 2022
Despite the inflationary pressures of 2022, it was a successful year for the Cantor Fitzgerald Ireland Corporate Finance team deploying over €45m in new capital across a range of projects in the renewable energy, social housing and technology sectors while also delivering successful exits with a return of capital to investors totalling €54.3m.
Successful exits were achieved from both Lough Gill Distillery and West Cork Distillers within the Irish whiskey sector. Investors in Lough Gill Distillery received a €13.6m return of capital while investors in West Cork Distillers received a €9.5m return of capital. Both investments were structured under the Employment and Investment Incentive Scheme (EIIS) and delivered an investment return in excess of 1.5x.
Within the renewable energy space, we completed an exit from two investments in Elgin Energy – delivering a return to investors of over €15m of capital – an average return on investment of 1.6x. This exit was achieved within 2 years of the expected exit timeframe. Investors also retain an equity participation on the remaining assets still to be sold from the portfolio – an excellent result in a sector where we see continued opportunities. We also saw significant growth in Amarenco, which doubled its revenue and EBITDA over recent years and saw the company take in a new equity investment of over €200m in late 2022.
Market conditions made for a challenging year in terms of new funding across all sectors, however the Corporate Finance team was involved in securing over €45m in new capital. This capital was deployed across a number of projects, including Bio-marine Ingredients Ireland, a high growth Irish business that develops protein and mineral ingredients for application in Premium Petfood, Human Nutrition and Nutraceuticals. Operational since 2017, the company has developed Europe’s only human grade marine bio-refinery. In the renewable energy sector we placed an institutional investment of €4m into the development of a 16 MW wind farm located in Tullynamoyle, Co. Leitrim. The investment was structured in a manner whereby we have the right to participate in further projects expected to come online over the coming years.
In the technology sector loan note capital was raised to further the growth of Kubicle, an Irish based B2B online data analytics and financial modelling training company. Kubicle sells its training platform software to global corporations, management consultancies, financial institutions and universities. The capital raised will facilitate investment in sales resources and their content platform.
In December we completed a €5m follow-on investment in Farra Marine under the Employment and Investment Incentive Scheme (EIIS). 2022 was an exciting year for Farra Marine – taking delivery of their first four Crew Transfer Vessels (CTVs) and waiting on delivery of a further three in Q1 2023. The first four vessels have been successfully deployed to blue chip clients such as Scottish Power, Orsted and Siemens. A successful endorsement of the vision of the management team. The €5m EIIS raised in December will be used to order an additional seven CTVs and double its fleet to fourteen vessels within the next two years.
2022 was also the first full year of operation for the New Haven Social Housing Fund which was established at the end of 2021. The fund raised an initial €20m in seed capital from an institutional partner and over the course of 2022 deployed this capital acquiring 67 homes which are now providing a housing solution in the market. The fund and Cantor Fitzgerald clients also invested €11m into a project to build out 95 apartment units in Carrigtwohill in Cork. The €11m was used to complete the partially-built development that had been vacant for a number of years. Originally forecast to take two years to complete, the promoters successfully completed the build within 12 months and delivered an investment return of 5% for investors. The capital being returned from the project will be recycled into the fund and will be re-invested into similar housing projects over the coming 12 months and continue to generate a positive social impact.
We expect the inflationary pressures of 2022 coupled with the ongoing war in Ukraine and the uncertainty around future commodity and energy prices to continue in 2023, however we are now seeing signs of inflation regressing which could take pressure off central bank interest rate hikes towards the latter half of the year. In the current environment, securing traditional forms of finance is more difficult for businesses and the market has recognised that the cost of finance has risen across the board and is unlikely to return to the levels of the past decade any time soon. We believe this will unearth opportunities for alternative financing solutions in the equity, mezzanine and debt spaces as businesses and promoters alike seek to navigate the challenges of sourcing best-fit funding for their needs.
Despite the immediate cost inflationary environment and increased cost of financing, the direction of travel in protecting the environment and driving sustainable business is on a steadfast course set out by numerous global agreements including COP21 and the Taxonomy in Europe. We expect to see continued growth in investment in renewable energy and sustainable development as these regulations and targets solidify further. We believe we will see a level of activity return to the real estate market albeit that risk adjusted returns have increased. Opportunities will be scrutinised to an even higher degree by professional and institutional investors as they navigate this period of price discovery with property yields moving out gradually. As real estate and corporate refinancings approach, we believe there will be restructurings and receivership appointments in some instances as distress impacts some promoters, corporates and investors. We will again be aiming to provide capital solutions for Irish businesses at various stages of development with a particular focus in the Renewable, Food & Beverage and Property sectors. If there is more visibility on interest rates coming into Q2 2023, we believe investors will be more comfortable to re-enter the market and take positions in riskier asset classes.