Nov 20, 2018

Axios Pro Rata

Dan Primack
Top of the Morning
Source: Giphy

Bain Capital and KKR this morning formally announced the creation of a $20 million fund to compensate thousands of Toys "R" Us employees who lost their jobs when the retailer shut down earlier this year.

  • The fund will be administered by Kenneth Feinberg and Camille Biros, who are best known for their work on funds related to tragedies like 9/11, the BP oil spill and child sex abuse by Catholic priests.
  • Each firm contributed $10 million, none of which will come from limited partners.
  • Bain and KKR continue to seek participation by Vornado — their original buyout partner — and several secured lenders that opted to force Toys "R" Us into liquidation. So far, none of those others has been receptive. Workers' rights groups had initially sought a total of around $50 million.
  • Flashback: My podcast conversation with Carrie Gleason, who has helped represent the workers.

There is little doubt that Bain and KKR are doing the right thing here. Their actions with Toys "R" Us contributed to its collapse, even if they weren't the ones who ultimately turned off the lights.

What will be interesting to see is if this sets any precedents within private equity, including for Bain and KKR. The Toys "R" Us situation was unusual, in terms of both scale and the full liquidation decision, but obviously there will be a future group of fired employees who looks at those compensated by the TRU Financial Assistance Fund and asks, "If them, why not us?"

• New firm alert: It's been nearly a year since Shervin Pishevar left Sherpa Ventures, the San Francisco-based firm he co-founded in 2013, following multiple allegations of sexual harassment (all of which he denied). Now Sherpa's other co-founder, Scott Stanford, has figured out a path forward for what Pishevar left behind:

  • A source familiar with the situation says that Stanford will form a new firm (name not yet known) alongside Hany Nada, a co-founder of GGV Capital who stepped down as a managing partner there in early 2017.
  • The two first got to know each other when Nada was on the board of Gu Mobile, and Stanford was a Goldman Sachs investment banker calling on the company.
  • Nada's deals with GGV included Glu, Athenahealth, Tudou.com, Turbine, DraftKings and Houzz.
  • Axios has learned that the new firm will continue to manage out Sherpa's existing funds, with plans to raise its own vehicle next year focused on Series A and Series B investments. No official target yet, but prospective investors are being told "sub-$500 million."
  • Existing Sherpa staffers also will transition to the new firm, which will remain based in San Francisco.

New firm alert (II): Vab Goel has quietly left Norwest Venture Partners, which he first joined in 2000, in order to lead a new, $500 million Silicon Valley venture capital fund for Japanese telecom company NTT Communications.

Spotify share: Taylor Swift yesterday left the only record label she's ever known, choosing to sign a mega-deal with Universal Music Group. In an Instagram post, Swift said that UMG had agreed to distribute any proceeds from future sales of its shares in Spotify to artists, on a non-recoupable basis.

  • Here's the weird thing: I can't find any information on UMG's current shareholding in Spotify. We know it was a holder for years, but it doesn't turn up in the list of hundreds of active shareholders in either S&P Capital IQ or FactSet. Nor was UMG mentioned in Spotify's IPO docs, outside of some licensing agreements. Trying to get clarification...

Correction: Yesterday's BFD transposed BeyondMeat's net loss and revenue figures for the first nine months of 2018. Apologies. The correct info is a $22 million net loss on $56 million in revenue

🎧 Pro Rata Podcast: Our new episode focuses on Facebook's crisis of confidence, and I'm joined by NY Times tech reporter Mike Isaac. Listen here.

The BFD
Source: Giphy

Campbell Soup is receiving interest from numerous parties for cookie brands Arnott's Biscuits (Australia) and Kelsen Group (Denmark), which could fetch upwards of $3 billion, per Bloomberg. Interested suitors include Mondelez International (Nasdaq: MDLZ), Kraft Heinz (Nasdaq: KHC) and buyout firm Pacific Equity Partners.

  • Why it's the BFD: Because this divestiture is tied to Campbell's proxy fight with Dan Loeb's Third Point, which will get at least some resolution via a shareholder vote next week on new directors. The company this morning might have gotten some advantage, by reporting better-than-expected third quarter earnings and revenue.
  • Bottom line: "Any transaction will add to the $128.7 billion of acquisitions involving food companies this year." — Vinicy Chan, Bloomberg
Venture Capital Deals

🚑 PellePharm, a Menlo Park-based skin cancer therapeutics company, raised $70 million in equity funding and R&D support from Denmark’s LEO Pharma, as part of a strategic deal that also includes up to $690 million in possible milestone payments and an option for LEO to buy PellePharm. Existing PellePharm backers include Aisling Capital and EcoR1 Capital. http://axios.link/HlEQ

🚑 Stilla Technologies, a Paris-based provider of digital PCR solutions for genetic analysis, raised €16 million in Series A funding. Illumina Ventures led, and was joined by Kurma Partners, LBO France, BNP Paribas Développement, Paris Saclay Seeds and Idinvest Partners. www.stilllatechnologies.com

Zenjob, a Berlin-based platform for on-demand student staffing, raised €15 million in Series B funding. AXA Venture Partners led, and was joined by Acton Capital Partners, Redalpine and Atlantic Labs. www.zenjob.com

Enboarder, a New York-based provider of employee onboarding software, raised $4 million. Greycroft led, and was joined by Australia’s Our Innovation Fund. www.enboarder.com

Private Equity Deals

Audax Private Equity acquired PlayMonster, a Beloit, Wis.-based maker of games and toys like Yeti in My Spaghetti, from TopSpin Partners. http://axios.link/PAB9

🚑 BayMark Health Services, a Lewisville, Texas-based portfolio company of Webster Capital, acquired SpecialCare Hospital Management, a St Louis-based provider of inpatient stabilization and withdrawal management services for those suffering from addiction. www.baymark.com

🚑 Crossroads, a Greenville, S.C.-based portfolio company of Revelstoke Capital Partners, acquired EHC Medical Offices, a Knoxville, Tenn.-based provider of medication-assisted treatment services. www.crossroadstreatmentcenters.com

David's Bridal, a retailer owned since 2012 by Clayton Dubilier & Rice, has filed for Chapter 11 bankruptcy protection. http://axios.link/y6Nh

Diversis Capital bought a majority stake in Tempo, an Icelandic provider of project management solutions, from Origo (which retains a 45% position). www.tempo.io

Golden Gate Capital acquired Active Minerals International, a Sparks, Md.-based maker of kaolin and gel-quality attapulgite clay minerals, from Merit Capital Partners. www.activeminerals.com

GTCR acquired and merged fund administrators Ultimus Fund Solutions (Cincinnati) and The Gemini Companies (Hauppauge, New York). www.gtcr.com

🚑 Pine Tree Equity acquired RevMD, a Westmont, Ill.-based provider of revenue cycle management services for medical insurance claims resolution services and self-pay collections. www.revmd.com

Sun Capital Partners agreed to buy VantaCore Partners, a Philadelphia-based maker of crushed stone, sand and gravel, from Natural Resource Partners (NYSE: NRP). http://axios.link/UVXk

Vespa Capital sponsored a management buyout of Feefo, a UK-based customer reviews and insights company. www.feefo.com

🚑 Visible Body, a Newton, Mass.-based maker of human anatomy apps, raised an undisclosed amount of funding from Capitala Group and Lineage Capital. www.visiblebody.com

Public Offerings

🎲 Gateway Casinos, a Canadian casino operator with 26 properties, filed for a $100 million IPO. It plans to trade on the NYSE (GTWY) with Morgan Stanley as lead underwriter. Shareholders include Catalyst Fund. http://axios.link/7l2q

Liquidity Events

🏍 Bridgepoint hired Lazard to find a buyer for Dorna, a Spanish holding company that owns motorcycle racing series MotoGP and the Superbike World Championship, per the FT. http://axios.link/WRGA

iHeartMedia agreed to buy Jelli, a San Mateo, Callif.-based programmatic ad-buying platform for radio broadcasters. Jelli had raised around $45 million in VC funding from iHeartMedia, Universal Music Group, Relay Ventures, Intel Capital and First Round Capital. http://axios.link/55AN

Microsoft (Nasdaq: MSFT) bought FSLogix, an Alpharetta, Ga.-based virtual desktop startup that raised over $12 million from backers like TDF Ventures and Noro-Moseley Partners. http://axios.link/2DGo

More M&A

🚑 Boston Scientific (NYSE: BSX) agreed to buy London-based interventional medicine company BTG (LSE: BTG) for around £3.3 billion in cash, or 840 pence per share (336.6% premium to Monday close). http://axios.link/r8VW

Tradeshift, a San Francisco-based procure-to-pay platform, made an indicative takeover offer for listed Finnish payment software company Basware, whose market cap rose to over $580 million on the news. Tradeshift has raised over $430 million in VC funding, most recently at a $1.1 billion valuation. http://axios.link/Nqjn

Fundraising

General Catalyst, a bi-coastal VC firm, is considering launching a credit fund for startups, per Recode. http://axios.link/qSFD

Littlejohn & Co. closed its fifth buyout fund with $2.84 billion. www.littlejohnllc.com

Warburg Pincus is seeking to raise up to $4 billion for its second China-focused fund. http://axios.link/4S24

It's Personnel

David Luboff (ex-Macquarie) joined KKR as head of Asia Pacific Infrastructure, while Hadrik Shah (Brookfield Asset Management) joined as a Mumbai-based director focused on infrastructure investing. http://axios.link/Ryyz

Final Numbers
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Data: CoinDesk; Chart: Harry Stevens/Axios
Dan Primack

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