Deal of the Month August 2018: Agritech firm Devenish secured €118m in funding in a landmark deal

Pictured L-R: Richard Kennedy, Group CEO, Devenish; Andrew McDowell, vice-president of the European Investment Bank; Owen Brennan, Chairman, Devenish.

Devenish’s new deal is a landmark with the European Investment Bank financing an agritech for the first time under the Investment Plan for Europe.

Belfast-based agritech company Devenish Nutrition secured €118 million in long-term funding in a refinancing deal which includes a pioneering €40 million investment from the European Investment Bank (EIB), along with additional financial support from Ulster Bank and Danske Bank.

Devenish, which was founded in 1952, develops products for the animal feed and food industries, supplying quality animal feeds for the pig, poultry and ruminant sectors, and trades in over 30 countries.

The company reported a £1.4 million pretax loss in 2016, the last year for which accounts are publicly available. Turnover that year totalled £82.5 million. It is projected that the new refinancing deal should allow it to raise turnover by more than £100 million (€111.7m) to around £315m by 2021. It is aiming to boost R&D plans, growth and add 100 new jobs internationally to its current 450-strong international employee base.Devenish Nutrition is in talks to acquire at least seven companies in Europe, Africa, Asia, the US, the UK and Central America following the deal.

The loan will also enable Devenish to develop a new purpose-built global innovation centre in Dowth, Co Meath, from where it will develop and showcase its ‘One Health – from Soil to Society’ research, development and innovation programme. It will also fund innovation related capital projects and research into optimised animal nutrition, food innovation, health and sustainability. Devenish is currently directing much of its R&D towards markets in the US, Africa, Asia and the Middle East. 

“This major financial boost marks a most significant milestone for Devenish as we seek to realise our vision of becoming the world’s leading provider of integrated animal, human and environmental health solutions,” said chief executive Richard Kennedy.

“This funding will be invested in the business to build and grow our research and development and manufacturing capabilities as well as facilitate our mergers and acquisitions activity,” he added.

He also noted how the impact of Brexit nearly scuppered the deal, revealing, “”It faltered and stuttered around Brexit, because of the EIB being a European bank and because of the uncertainty around Brexit.”

European investment

The EIB investment is the largest support for agri-business in Ireland made by the organisation to date and is also the first support for the sector under the Investment Plan for Europe—more commonly known as the Juncker Plan—in which the European Commission and EIB are strategic partners.

European Commissioner Phil Hogan, responsible for Agriculture, said: “The Irish agri-business sector contributes enormously to the Irish economy and particularly to the rural economy.

“There are huge opportunities for companies like Devenish who have a vision for the future, but they are operating in a highly competitive environment, where investment, particularly in research and innovation, is essential to maintain a competitive edge.

He said the announcement by the EIB under the Investment Plan for Europe is “very welcome, coming at a time of some uncertainty for the Irish agri-business sector.

“It is a strong statement of confidence in the resilience of the sector and its capacity to grow and reach its full potential.

“The EIB’s investment is an obvious statement of confidence in Devenish’s ambition, but it is also a very tangible vote of confidence in Irish agri-business and its potential to benefit from new and emerging global opportunities, particularly given the important emphasis that Devenish places on sustainability.” 

EIB vice president Andrew McDowell echoed the Commissioner’s sentiments, noting this investment came at a time when agri-businesses were facing “increasing competitiveness” as well as economic and political pressures.

“Devenish has been involved in animal nutrition for more than 60 years and their continuous investment in research and development of new products is crucial in addressing these pressures.

“This is a landmark deal for the EIB in Ireland and in the agri-business sector.

The EIB loan will strengthen innovation activities in centres of excellence across the company and enable Devenish to thrive across the world, from its base in Europe.

“Development of new animal nutrition products and research into improving soil health, animal health, human health and environmental sustainability are crucial components for the success of agriculture and food production across the world.

“This new loan demonstrates how the EIB is working directly with businesses here in Ireland and supporting transformational agri-business innovation under the Investment Plan for Europe,” said McDowell.