At the end of last week, the Competition and Consumer Protection Commission cleared the acquisition of Fastway Couriers by London-based private equity firm Elysian Capital. It is now set to complete in the coming days.

Days before the watchdog gave the green light for the takeover of the transport company and its related business Parcel Connect, I sat down with Elysian investment partner Laura McCoy.

The Fastway deal marks one year since Dubliner McCoy set up a permanent Irish presence for the private equity house in what she described as a “fast start”. This time last year, while establishing herself as Elysian’s one-woman-band Dublin office, she was also sealing the acquisition of Cross Rental Services, which completed in August.

McCoy says the Dublin heating and cooling equipment rental firm is split in two parts: “You’ve got the refrigeration and catering rental side of the business, and that’s in both Ireland and the UK. And then you’ve also got larger pieces of equipment – it’s called climate control. That’s boilers, chillers, air conditioners. They’re into a diversified range of other markets.”

And before Cross Rental, Elysian already had a majority stake in a third Irish company. “We had invested in 2019 in an Irish business called Mergon, which is based in Castlepollard in Westmeath. That is a plastics manufacturer focused on blow-moulding pieces. They sell into the automotive, industrial and healthcare industries,” says McCoy.

The businesses in Elysian’s Irish portfolio now employ over 1,100 people here and overseas. While she won’t give exact figures, the acquisition price range she provides suggests that Elysian Capital’s investment in Ireland is in excess of €100 million – a significant portion of the firm’s current £325 million fund. Its growing appetite for Irish companies is just another example of the exponential growth of private equity investment here in recent years.

McCoy has been an inside observer of this trend since long before she set up Elysian Capital Ireland one year ago. In fact, this is not the first time she has worked for the firm. In an in-depth interview at The Currency’s office (Elysian doesn’t currently have a physical location in Dublin), she discussed the reasons for the rising tide of private equity capital reaching Irish shores, how her firm differentiates itself from others and what it is looking for in future deals here.

But to understand all this better, I first asked her where she and Elysian Capital were coming from.

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Elysian was founded in London by its current chief executive Ken Terry in 2007. “He had a long history in private equity and had gotten to the stage where he was doing really large deals,” McCoy says. “He decided he wanted to take a step back from that. The deals were like supertankers, that was financial engineering and he kind of missed working with entrepreneurs on the  nuts and bolts, what he found was the really interesting parts of the businesses and the really interesting parts of the growth journey.”

Terry did not stay away from private equity too long, though. After a few years, he teamed up with Chai Patel, a doctor and private healthcare entrepreneur who had worked with Terry on an investment deal for the UK mental healthcare group Priory where he was chief executive. Patel is now Elysian’s chairman.

“They decided they wanted to go back into private equity to invest their own money, but also to do things slightly differently,” says McCoy. “The key tenets of Elysian’s outlook and approach came from the very beginning, and it was that we’re entrepreneurial. Ken and Chai are entrepreneurs, they set up their own business back then. We have operational people in house. Chai, being our chairman, is somebody who’s run and grown businesses being a CEO. He’s not a financial person. He’s not an accountant. He doesn’t have the typical background of some private equity individuals.”

Throughout the interview, she insists on this focus. “It’s not just financial, it’s not just looking at margins, it’s not just looking at growth rates. It’s the real day-to-day stuff, it’s supply chain, it’s stock,” McCoy says. “We almost have half of our team that do deals who are people who have owned or run businesses themselves.”

She adds that everybody on Elysian’s team has personal funds invested in the firm’s three successive funds of £125 million, £250 million and £325 million for the latest pool now being deployed. “We have 10 per cent, I think, of total funds from us individually. It compares to an industry average of about 2 per cent.”

The final piece of differentiation, McCoy says, is that Elysian has placed full-time partners in the regions where it makes deals away from its London headquarters. One is in Leeds, another in Manchester, and she is now in Dublin. This is where her own background comes in.

“Entrepreneurial vibe”

“I’ve always personally just been fascinated by business. My dad has always run his own business, my husband’s an entrepreneur,” she says “I love working with entrepreneurs and seeing what makes businesses tick, seeing their growth journeys and seeing them grapple creatively with the challenges that invariably come up on a day-to-day basis.”

After accountancy studies, her first professional experience was in corporate finance. “I left Ireland in 2011, primarily because it was in a place where there just wasn’t a huge amount of transactional activity happening. Whereas in the UK, it’s a much bigger market so there is still quite a lot going on.”

There, she cut her teeth working on transactions and developed an interest in the follow-up work of watching businesses through an investment cycle. This led her towards private equity and Elysian. “When I met the team, I knew they were people I wanted to work with. Genuinely, their level of integrity and the level of experience that that team had, I felt it was one of the most interesting in the market.” she says, with the “entrepreneurial vibe” playing a key role in that.

She joined the firm the same year she had left Ireland. “We did a variety of different deals. We’re not sector specialists, we’re sector-agnostic, it’s situation-specific. It’s where we feel that our model can add something, and more importantly where a management team or a founder feels like our model is a good fit for them”, McCoy says. She remembers a fast learning curve among a team of eight people (Elysian has now grown to a total of 19 including support staff, she adds).

“From the top, Ken has always run in a very meritocratic, a very collegial way. Everybody has an opinion, everybody will be listened to,” she says. “And everybody works extremely hard. You don’t have the sort of large team to farm various things out to.”

Over six years, McCoy built up experience following businesses from acquisition through growth and exit and sitting on their boards. “I just loved being involved with the companies and the connections that you made – and working with people in a real partnership way. There are some funds, and I’ve seen it on the other side, where it’s kind of the investors on the outside and the company keeps them at arm’s length with quite formal reporting structures. Elysian has never been like that.”

A measure of success, she says, is when CEOs or finance directors pick up the phone to discuss a problem with her upfront, rather than work through it away from investors’ view to present it once resolved as a fait accompli. 

From London, McCoy also kept an eye on the Irish market for Elysian, though this did not lead to any transactions at the time. Then in 2017, she decided to come home, having observed private equity take off here from a distance. “There had been a number of deals in Ireland at that time, which was really interesting for me because I knew that deals happening, growth journeys and exits happening would feed that familiarity with private equity as an option for business founders and owners,” she says. “Personal life-wise, I decided: I’m Irish, I actually want to be based in Ireland now.”

Upon returning to Dublin, McCoy first held an advisory role in Deloitte’s M&A office. “I wanted to obviously rebuild my networks in Ireland, but also to work independently with entrepreneurs and businesses, and just really get my finger back on the pulse of the Irish market and what was going on,” she says.

Her mind, however, was still set on private equity – and that was the type of deal she mostly advised on. She says she wanted to have worked on both sides of the fence to be able to defend private equity as an option among others available to business owners, just like it had become earlier in the UK. 

She says one of the transactions she worked on was the sale of a majority stake by the family of Mergon founder and chief executive Pat Beirne. “I was working for the advisor that brought the opportunity to Elysian’s attention,” she remembers, which turned out to be a case study in the normalisation of private equity as one of the possibilities on the table. “The CEO of Mergon was exploring his options and he was trying to figure out whether he wanted to do a transaction. Did you want private equity, trade? I was able to introduce them to a couple of friendly private equity funds, one being Elysian, to get a sense of what they do and who they are. There was an immediate connection between himself and the Elysian Team.”

“Another fund had got in there ahead of Elysian… because they had a real Irish connection”

The connection was also between McCoy and her former employer. Following the Mergon deal, she stayed in contact with Terry and re-joined Elysian when the opportunity came up to acquire Cross Rental upon the exit of another UK private equity house, Lonsdale Capital Partners. She says her firm had looked at Cross Rental three years earlier, “but another fund had got in there ahead of Elysian, and one of the reasons I think that they got there ahead of Elysian was because they had a real Irish connection”. 

The year since has been a whirlwind. The Cross Rental deal closed in August and was immediately followed by a bolt-on acquisition in September. McCoy was then introduced to Fastway and began to work on that deal, before transferring it to colleagues during her maternity leave and coming back to get it across the line this spring after the birth of her child.

She says a big part of her day-to-day job consists in networking with professional advisors and lawyers to raise Elysian’s profile and identify opportunities. “I probably thought there was going to be more of this building our market presence amongst the advisors at the start, whereas there was a transaction followed by getting out, pounding the pavement and meeting people, followed by another transaction,” she adds.

The fast pace of the firm’s acquisitions here also means its wider team has quickly become enmeshed with Ireland. McCoy says a roster of colleagues regularly fly in to meet her and attend the board meetings of portfolio companies. 

Although she is on her own in Dublin, just like Elysian’s other regionally-based partners in northern England, she clearly does not feel isolated. “If we’re interested in something, two of my team, probably an operating partner, somebody who’s more of a business person, and somebody else, so probably three of us will be involved from almost day one,” she explains. 

Thanks to Elysian’s relatively flat structure, she adds that this ensures early certainty in the process. “It’s not somebody that’s on the ground by themselves, progressing things, and then they go to an investment committee, and it’s ‘Actually no, we don’t like that’,” she says. “We’ll have the buy-in of the wider team very, very quickly. We like to talk about things every week and make sure everybody knows what’s going on. That’s helpful because then business owners know that if we’re putting things forward, they’ve got the support of the whole firm, as opposed to just one part.”

To find out more about this process, I next ask McCoy a series of questions about the three deals Elysian has now concluded in Ireland. 

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Thomas Hubert (TH): In the three businesses, especially the two that are completed, the management or the founders are still involved in the capital of the business. How and why do you work with founder and former shareholders in the new structure?

Laura McCoy (LMcC): Every situation is different in terms of a capital structure. It will be whatever suits the business and the individuals. Obviously, for us, it needs to be a majority investment so there needs to be a situation where there is enough opportunity to achieve that majority.

Where it can often work quite well is if there is a founder, a shareholder that potentially wants to exit and there’s a management team that have a much smaller amount, if any equity. So private equity naturally provides that opportunity for the team that’s driving the company for the next stage to be able to get more equity as a part of that transaction, and for somebody who is not involved anymore and in the future to exit. That’s one situation that we have seen.

But plenty of other times, there’ll be a mixture. There’ll be a management team that will subscribe for more equity; there’ll be an Elysian investment; and there might be a founder shareholder that rolls back in on an institutional basis alongside us and isn’t involved in the executive management team.

TH: You don’t have a model you want to apply specifically in terms of involvement. You’re open to various options. But I think you seem to like to keep people involved in the equity, if you can?

LMcC: Yes, like most PE funds we’re focused on the future and the growth journey. So ensuring that the key people in the management team are incentivised for that next phase is the most important thing. If there’s somebody that isn’t involved in the executive management anymore but has some strategic input, or has been with the business for a long, long time and can add value, that’s excellent. There might be a role for them in the executive management as well, may it be part-time or however it works for them.

Then there might be somebody that is exiting the management of the business completely, but wants to keep an investment. We’ve seen that in a number of our investments here in Ireland. It’s also a good indication that they believe in the future of the business too, even if they’re not involved in an executive capacity. They see this as a good home for their money that they otherwise could have cashed out with our investment, that they keep in because they want to be part of that next growth journey.

Mergon, for example, is probably a good one. The Beirne family and Pat Beirne would have been a major shareholder, and still is a major shareholder, and he is also the CEO of the business. 

You have other situations where the management team maybe had less equity, and there might be a founder shareholder that is exiting. It just depends, as long as the team that is going to be driving the business forward is incentivised and is aligned with us.

TH: Another common feature is that Cross Rental, just a few months after the acquisition by Elysian, goes to the UK and acquires All Seasons, which is another industrial rental company there. Mergon has just announced in the last few weeks an acquisition, in the UK again, in plastics manufacturing. 

And as soon as the acquisition of Fastway was made, there were already suggestions in the press release of international development, which in Ireland usually means the UK. Is there really leverage of Elysian’s presence in the UK to do those deals and bring those Irish companies up to a level that they immediately go across the water and expand?

LMcC: There’s an interesting angle that we hopefully have here in Ireland, which is that we are a bigger fund than a number of others operating the market. We’re £325 million, and we can therefore offer access to our businesses – if there is a really interesting acquisition, we’ve got the firepower to do it. We’ve got the experience and expertise of doing that over however many years.

We’re always open to a mixture of both organic growth and acquisitions. We don’t have any sort of template that we need to follow, in the sense that there are buy-and-build specialists that will, in every business they buy, have in their business plan to do four or five acquisitions. I think we’re more situation-specific, open-minded. If there are acquisitions that make sense, we’re very open and keen to do them.

Mergon’s acquisition over in the UK gives them access to UK customers, capacity in the factory, and it’s also helpful in terms of where we are with Brexit. There are just different characteristics at play in each opportunity.

Cross Rental – that business is absolutely fascinating and it’s growing on all fronts. It was one where one of the management team in the UK knew that All Seasons Hire business inside out. In fact, some of the team had been involved with it previously. There was an obvious fit between the two. What it did really quickly was create a business of scale that is doing climate control rental. There are some really big players in that market and there is probably a bit of fragmentation in the middle. Doing that acquisition gave you a bit of scale, but we’re still one of the more nimble, less huge, supertanker-type operators in that space.

It’s a mix, not all of our portfolio businesses have made acquisitions. That said, we’re always open to them. When there’s a really good fit, which I think there has been on a number of occasions here, it’s the right next step, but I think there’s always got to be an organic part of the growth plan as well.

TH: The last aspect I want you to examine across the three Irish acquisitions is debt and leverage. I can see that AIB was involved in Fastway’s acquisition just a few days ago, and that was mentioned publicly. There was also a refinance of Cross with Lloyds just at the start of this year, apparently.

That’s always crucial in those kinds of deals. There’s both UK and Irish bank finance being used there. How do you find accessing either side? Is it, again, an advantage of having that UK base to access cheaper and more accessible finance?

LMcC: Having the Irish-UK presence gives us options, which is what’s great. It’s important to us to have the relationships, obviously, with the Irish banks. Similar to private equity, there’s a real mix of debt finance options in Ireland now, between the pillar traditional banks and more with the debt funds. Then you’ve got a similar, but probably larger landscape in the UK.

Similar to most private equity, we will generally introduce an element of debt into a transaction structure. We’re probably relatively modest in that. We want to make sure that it suits the business. The key things for us are that we have a debt repayment structure, and a relationship that suits that particular opportunity.

So, it will depend on what’s the business’s growth trajectory. Is it absorbing quite a lot of cash, and therefore, more of a bullet structure will work? Or is it one that’s got really regular and stable cash flow for the near term that might suit a traditional bank structure better? It’ll just depend on each acquisition we do and I think being in both locations gives us options.

TH: Can you put some figures on the amount of leverage you use? You say it’s probably more modest than elsewhere in PE, what would that mean?

LMcC: I’ll probably be reluctant to give numbers because it can all link into price. But I would say that if you talk to others in the market, you would get a sense that it’s appropriate.

TH: In terms of figures as well, now that you have three different deals agreed, is it possible without identifying individual numbers to give an overall amount invested, or any other metric that would give us the size of your investment in Ireland at this point?

LMcC: What I can say is our focus is on businesses that are valued between €20 and 100 million. We probably have done more towards the middle and larger size of that more recently, so you can probably get a sense. It’s significant.

TH: What kind of time horizon are you looking at in terms of staying with them?

LMcC: I’m going to probably start to sound a bit boring when I say it depends on each situation again. We’re not too dissimilar from a number of private equity funds in that it tends to be between three and five years. That works for various reasons.

We also have investors that are invested in us, so it’s important for them that there is a relative cycle to things. But where we fit within that will depend on the business and on the market. Ultimately, we want to make sure that we find the right next home for the business. It will depend on circumstances at the time, but it tends to be around that timeframe.

Before the interview ends, I ask McCoy what we can expect from her and Elysian in the coming months. “We’re probably not even halfway through our fund so there is a lot of appetite to do more deals and to partner with the best teams. I will be knocking on as many doors as I can and I would love if people knocked on mine too,” she says.

The breakneck pace of acquisitions observed this time last year on the part of private equity firms including Elysian has abated. “I don’t know why that is, but talking to everybody I speak to in the market, there seems to be a slight slowdown compared to last year – but I would say last year was unusually busy for everybody,” McCoy says.

This doesn’t mean she is necessarily planning a long summer holiday after she completes the Fastway deal. “There are a couple of things on my table at the moment,” she says – and leaves it at that.