Development Capital Fund Assessing New Investment Opportunities Following Seventh Exit Through Sale

Development Capital Fund Assessing New Investment Opportunities Following Seventh Exit Through Sale

Following the announcement, on Tuesday (3 May), of the exit of its minority stake in Obelisk International Group Holdings Limited (Obelisk) as part of a majority sale of the company to Constructel Visabeira, Development Capital has confirmed that it expects to make a number of new investments this year. It is currently assessing potential investment opportunities between €2m and €12m across a variety of industry sectors. Obelisk was the seventh exit from the nine investments originally made by its Development Capital Fund I.  

Founded in 2002, Constructel Visabeira is a Portugal-based provider of engineering services for telecommunications and energy networks across Europe. In 2020, Group Visabeira (Constructel Visabeira’s parent company) generated €960 million of revenues.  In 2021, Constructel Visabeira announced a €200 million growth equity investment from Goldman Sachs Asset Management to accelerate its organic growth and fund mergers & acquisitions.

Development Capital made a €3 million investment in Obelisk, in April 2016, to accelerate and support its international expansion plans. The return achieved is in-line with the Fund’s expectations when it invested in 2016.

Highlights of Development Capital’s Investment in Obelisk Include:

  • Revenue growth of c. 69%, driven by a c. 400% increase in export revenues; and
  • Significant contract completions and new contract wins with blue-chip customers across the telecommunications, infrastructure and energy sectors in the UK, Ireland & South Africa.

Obelisk is the seventh exit for the Fund to date following: Lifes2Good, Version 1, Netwatch, Blueface Perigord and Ina’s Kitchen Desserts. The remaining two companies in Development Capital Fund I are ATA Group and Multihog.

Following a €12 million investment in Spotlight Oral Care in July 2021, last November Development Capital announced its second investment by the Development Capital Fund II through the €6.3 million co-investment with BiaVest in Nomadic Dairy.

Padraig Brady, Co-Founder & Director of Obelisk commended Development Capital for their support and counsel during the period of their investment: “Development Capital have shown themselves to be constructive and good partners. I thank them in helping Obelisk achieve this next step in our development.

Commenting on the exit, Anthony O’Driscoll, Investment Director of Development Capital, said: "It is satisfying to see Obelisk attract a company of Constructel Visabeira’s calibre. The vision of Colm and Padraig to set up Obelisk some 25 years ago at the infancy of the mobile telecoms sector is true testimony to their entrepreneurial skills, we wish them, the management team, and everyone at Obelisk all the best for the future.

Addressing future investment plans, Development Capital Partner and Co-Founder Andrew Bourg said: “We are currently invested in four great companies and are currently looking at potential new investments by Development Capital Fund II in the construction, ICT and manufacturing sectors. We are looking to invest between €2-12 million in established Irish SMEs across all industry sectors that have significant growth opportunities, primarily in export markets. Subject to successful completion of diligence we anticipate making further investment announcements during 2022”.

Remarking on how the market for SME funding has evolved since Development Capital was established by Mr Bourg and Sinead Heaney in 2013, Bourg said: “The SME funding landscape has developed and matured positively since 2013.  When we originally launched Fund I in 2013, there were very few later-stage SME funding sources to assist such companies grow.  There was also a reluctance among certain SME owners to “give away” equity in return for funding.  However, since then, SME owners have seen the benefits of other SMEs taking on such funding and seeing their success stories like Version 1, Netwatch, Blueface and other similar SMEs.  As a result, there is now a much greater openness and willingness by SME owners to take-on equity investment.  Equity dilution is no longer a taboo phrase.  As a result, the Fund’s offering as minority investor is an important factor for them in considering an investment partner which is driving our deal flow.  All SME’s owners are looking for an investor to assist them accelerate their growth plan and the Fund’s track record with its investees demonstrates that.”