Investor interest in Northern Irish firms growing

Belfast start-up SaltDNA specialises in helping commercial and government organisations keep their secrets and sensitive information safe.

Set up in 2013 by three tech veterans and entrepreneurs – all Queen’s University graduates – it develops products that employ multilayered encryption techniques to keep mobile communications secure.

Its early success in helping clients protect confidential information, whether sent via smartphones or tablets, has made sure that SaltDNA’s growing profile in its chosen field is anything but discreet.

It secured venture capital from two American firms – Accomplice and Stonehammer Capital. And the business, which has headquarters in both Belfast and in Cambridge, Massachusetts, also scored high on the top-10 list of corporate deals in the North in the first quarter of this year.

According to the information services company Experian, SaltDNA raised a further £1 million last month after winning new investment from local organisations Co-Investment Fund and US based investors.

Experian says the Belfast firm’s latest financing round is one of 36 deals it has recorded with a “Northern Irish element” since the beginning of January. The volume of deals may have slipped in 2016 compared to the first quarter last year but in terms of value, this year’s transactions are worth 90.7 per cent more.

Worth £392.3m

In the first quarter of 2015, there were 42 deals valued at £205.7 million (€256.6m): this year, in the same period, just 36 deals were concluded but at a combined worth of £392.3 million. The jump, Experian says, is down to one deal – the £340 million acquisition by Australian group Wesfarmers’ of Belfast-based Hampden Group, which trades under the brand Homebase, from the Home Retail Group.

The next biggest transaction was a venture capital injection secured by Strabane based Glenmore Generation, which raised £23 million in funding for the development of a new power generation facility.

Of the top-10 deals in the first quarter of 2016, half relate to venture capital transactions – like the £3.5 million secured by Lisburn based Cirdan Imaging – and just one rights issue involving Capital Gearing Trust plc, a company established in the North in 1963 which operates as an investment trust. Experian says Belfast-based law firm Tughans was the “most active” legal adviser – advising on 13 transactions – with Belfast law firm Carson McDowell coming a close second.

Michael Johnston, managing partner of Carson McDowell, which advised on nine transactions worth £35 million in the first quarter, believes the latest research shows growing investor interest in the North.

“Over the last two years, we have definitely seen an increase in the number of mergers/acquisitions and deals taking place in Northern Ireland. Some of this stems from a pent-up transaction demand and also, generally speaking, because it is good value – the cost of doing business in Northern Ireland is very competitive.

Family businesses

“There are other sectoral issues, such as new regulation coming into the financial services sector, which has resulted in some deals such as the purchase of Open and Direct by Abbey Insurance. And there is likely to be more in the financial services sector,” Johnston said.

Carson McDowell was also involved in the merger between Chain Reaction Cycles and Wiggle, and Johnston believes that successful Northern family businesses are attractive propositions.

“Locally owned firms are also looking for opportunities. Businesses are a lot more confident than they were two to three years ago. We’ve seen an increase in local businesses considering mergers and acquisitions. There is a lot of talk about potential acquisitions in the agri-food sectors and there are a lot investment opportunities particularly when it comes to the energy sector,” Johnston added. “We expect the pace to continue.”