Alchemy eyes Noonan Services sale for up to €200m

UK private equity firm bought Irish facilities management group in 2008 for €90 million

Established in 1977, Noonan’s latest annual report shows that revenues surged almost 50 per cent last year to €303.9 million, boosted by new contracts and a series of acquisitions

Established in 1977, Noonan’s latest annual report shows that revenues surged almost 50 per cent last year to €303.9 million, boosted by new contracts and a series of acquisitions

 

Noonan Services, the facilities management and contract cleaning group, is being prepared for potential sale by its UK private equity owner Alchemy Partners, with a transaction likely to be worth as much as €200 million.

The London-based firm, which acquired Noonan Services in 2008 for €90 million, is likely to move to sell the business next year, according to sources. While one source indicated that US financial services firm Baird may advise Alchemy on the matter, it is understood that no appointment has been made.

Alchemy, which specialises, according to its own website, in investing in distressed and undervalued companies in Europe, bought a majority stake in Noonan Services from the company’s founder, Limerick native Noel Noonan and six other members of his family, eight years ago.

Management in the business, including group chief executive John O’Donoghue, chief financial officer Declan Doyle and corporate development director Fintan Connolly, also own shares in the business.

Spokesmen for Noonan Services and Alchemy Partners declined to comment. Representatives for Baird didn’t respond to a request for comment.

New contracts

Established in 1977, the company had an annual turnover of more than €100 million and some 5,500 staff at the time of the 2008 deal. The company’s latest annual report shows that revenues surged almost 50 per cent last year to €303.9 million, boosted by new contracts and a series of acquisitions.

In 2014, Noonan Services bought Resource Group, a Northern Irish company employing more than 6,000 people across the UK that was in administration at the time. More recently, the group acquired the security business of Brinks’ in Ireland last year, while it snapped up the business and assets of UK security firm Shield Guarding earlier this year from Indian company Topsgrup.

The group, whose clients include various hospitals, universities, the police services in Northern Ireland and England, and AIB, now has more than 15,000 employees.

Earnings before interest, tax, depreciation and amortisation rose to €15.8 million for the year from €12.2 million for 2014. The group’s overall margin narrowed last year as some of the business it bought during 2015 “included high volume, lower margin, accounts,” according to the annual report.

Service requirements

“Overall growth within existing accounts has been a key contributor to our growth in 2015. Clients have begun investing in their assets following years of underinvestment,” the annual report said. “Clients are now increasing their spend on services with many now reverting to pre-recession levels of service requirements. We expect this to continue in 2016.”

While one source said, based on expected earnings growth, Noonan Services may achieve between €150 million to €200 million in a sale, another pointed to a figure at the top end of that range.

Net bank debt at the group fell to 0.7 times ebitda last year from 2.3 times in 2014.

“The directors are very pleased with the speed at which the bank debt is being paid down and expect this trend to continue in 2016,” according to the report.

Aramark, the US group which entered the Irish market with the 2004 purchase of Campbell Catering, was in talks to buy Noonan Services before the Alchemy deal. The company, which bought Avoca Handweavers last year for more than €50 million, may count among potential bidders for the business should it be put on the market.