IBI to raise €500m for early-stage firms as big deals dry up

M&A specialist turns to smaller companies as Brexit hits large transactions

LEADING Irish dealmaker IBI Corporate Finance is expecting to raise more than €500m in debt for early-stage and growing Irish companies as it shifts its focus to smaller transactions.

IBI chief executive Tom Godfrey and managing director Ted Webb said they were changing the business strategy due to Brexit and other “clouds on the horizon”. These challenges have meant there will be fewer very large transactions in Ireland for the foreseeable future, they said.

While Brexit is one of the top reasons for this shift in focus at IBI, a number of other issues have dampened merger and acquisitions (M&A) activity. These include expected interest rate hikes, an end to the stock market bull run, and growing global geopolitical tensions.

IBI, which has advised on high-profile transactions such as the sale of Top Oil to Irving Oil, believes there will be less impact on smaller deals and the firm’s new focus is on debt raisings, growth capital and strategic reviews. IBI has launched debt advisory and equity fundraising divisions.

“All of that stuff goes on, not withstanding Brexit or geo-political issues,” said Godfrey. “And then in circumstances of uncertainty, on the bigger ticket stuff, people sit on their hands and will wait.”

He said there are a huge range of debt options available and IBI will also help companies access that debt.

IBI was acquired from Bank of Ireland in 2017 in a management buyout (MBO) led by Godfrey and Webb. “In our independent ownership we are investing very significantly in the future of this business,” said Godfrey.

“We are very conscious that the next wave of successful Irish businesses doesn’t necessarily come from where our traditional clients are,” said Godfrey “We’re an Irish adviser and we need to be all over the successful businesses in Ireland.”

Webb said that it had seen advisers from the US and UK ‘picking off’ the larger, successful new Irish companies and IBI now plans to “get in” at an earlier stage.

James Doody, who is leading IBI’s equity fundraising division, said the firm is working to identify “the next generation of companies which are agitating to break through”. Companies in tech and life sciences are of particular interest.

Among the companies IBI is working with is ATXA, a drug development company. It is initially focused on Pulmonary Arterial Hypertension (PAH), a disease that results in a narrowing of the arteries. ATXA wants to raise €7m in equity funding.