Jun 14, 2017

Axios Pro Rata

Early delivery this morning, as I have tickets to a kindergarten farewell concert for their beloved principal (the reworked arrangement of Zip-a-Dee-Doo-Dah is said to be particularly poignant). Here we go...

Top of the Morning

Today's plan was to sidestep the Uber drama, and instead just link you to our awesome recap of the investigation's findings and some related actions (including CEO Travis Kalanick's decision to take a leave of absence). But then TPG Capital founding partner David Bonderman said something sexist during an all-hands meeting called to address the company's problems with, among other things, sexism. And the audio was leaked. So the plan was scrapped, and here we are:

  • The comment: "Actually, what it shows is that it's much more likely to be more talking," Bonderman said to fellow board member Arianna Huffington as she was telling employees that having a female director has been shown to lead to the addition to more women.
  • The result: Bonderman initially sent out a four-line note of apology to Uber employees. But that didn't cut it and, by around 6pm PT last night, Bonderman had resigned from Uber's board of directors. You can read his second, and lengthier, apology by going here.
  • What's next: TPG and Uber already are in talks about a replacement for Bonderman, although no final decisions have been made. The smart money might be on TPG partner David Trujillo, who sourced TPG's original investment in 2013, but who didn't take the seat because Travis Kalanick preferred Bonderman (in part due to his experience on the General Motors board, in part due to gravitas).
  • Notable: Uber's first giant fundraise was that investment from TPG, which also included Google Ventures. Kalanick's blog post announcing the deal was titled Bits and Atoms, with Google representing the digital and TPG the analog ― both of which are integral to a company that delivers cars via mobile app. Now the original "bit" is gone, while the original "atom" (Alphabet's David Drummond) stepped down last summer.
  • Stock stuff: Don't pay much heed to stories about Uber's value on secondary stock markets, as the supply is negligible due to the company's strict transfer controls. But if you think that this is the time to buy low, your best bet is to acquire indirect stakes via LP interests in venture funds with Uber exposure ― as the ride-hail giant accounts for the vast majority of those funds' NAV.
  • More stock stuff: Katie Benner has a fascinating piece about Uber's tender offer program for employees, whereby sellers are obligated to vote all of their shares with Kalanick, thus increasing his voting grip on the company.

• What we would have talked about: The U.S. government is considering greater scrutiny of Chinese investments into American tech companies involved in artificial intelligence and machine learning, according to an unreleased Pentagon report viewed by Reuters.

The main worry seems to be that China could gain access to AI technology that could have military benefit, as opposed to the U.S. getting first dibs. One outcome could be much more stringent CFIUS involvement on national security grounds, perhaps even on venture capital deals. Axios breaks it down here.


Neiman Marcus, a luxury retailer owned by Ares Management and Canada Pension Plan Investment Board, said that it is no longer exploring either a full or partial sale of the company. A strategic review had been launched three months ago, in large part to help Neiman Marcus deal with $4.8 billion debt load.

  • Why it's the BFD: Because there was a pretty widespread belief that Neiman Marcus and its serial suitor, Hudson's Bay Co., would work something out this time around. But Hudson's Bay is also struggling and now Neiman Marcus is just crossing its fingers that offering more exclusives and personalized options can turn the tide -- based on arguments that commoditization is what's killing many other physical retailers. If Neiman Marcus cannot rebound, however, it could be devastating to already-struggling shopping malls where it is an anchor tenant.
  • Key number: 4, which is the current streak of consecutive quarterly losses for Neiman Marcus.
Venture Capital Deals

• Element AI, a Montreal-based platform for companies to build AI solutions, has raised US$102 million in Series A funding. Data Collective led the round, and was joined by Real Ventures, BDC, Fidelity Investments Canada, Hanwha Investment, Intel Capital, Microsoft Ventures, National Bank of Canada, NVIDIA, Tencent and unidentified sovereign wealth funds. http://tcrn.ch/2rv7nBb

• AEye, a Pleasanton, Calif.-based robotic vision startup, has raised $16 million in Series A funding from Kleiner Perkins Caufield & Byers, Airbus Ventures, Intel Capital, Tyche Partners. www.aeye.ai

• Snapsheet, a Chicago-based provider of virtual claims software for the personal and commercial insurance industry, has raised $12 million in Series D funding led by Tola Capital. http://bit.ly/2ro7148

• Figure 1, a sort of Instagram for physicians, has raised $10 million in Series B funding. Kensington Capital Partners led the round, and was joined by Samsung NEXT, John Hancock/Manulife, WTI, Hedgewood and return backers Union Square Ventures, Rho Canada Ventures and Version One Ventures. http://tcrn.ch/2sk3tzr

• WhiteSource, an Israel-based provider of software security and compliance management solutions, has raised $10 million in Series B funding. 83North led the round, and was joined by Microsoft Ventures and Greylock's David Strohm (as an individual). www.whitesourcesoftware.com

• Submittable, a cloud-based submission management platform based in Montana, has raised $5 million in Series A funding from True Ventures. http://tcrn.ch/2soPZD4

• Yofumo Technologies, developer of a post-harvest system for the cannabis industry, has raised $1.5 million in seed funding led by MedScience Ventures. http://mjm.ag/2skZ2UY

• Actility, a French machine-to-machine communications platform focused on the industrial and physical infrastructure sectors, said that Cisco Systems was part of a previously-announced $75 million Series D round. http://bit.ly/2sZgJHq

Private Equity Deals

• Audax Private Equity has acquired Altasciences, a Canadian contract research organization, from Kilmer Capital Partners for an undisclosed amount. www.altasciences.com

• Fosun International of China has made a takeover bid for British gemstone miner Gemfields (LSE AIM: GEM), the owner of Faberge which has a current market cap of around £225 million. This rivals an existing offer from existing Gemfields shareholder Pallinghurs, a South African private equity firm. http://on.ft.com/2szC64C

🚑 Great Hill Partners has sponsored a recapitalization of Quantum Health, a Columbus, Ohio-based provider of consumer navigation and healthcare coordination solutions. No financial terms were disclosed. Selling shareholders include Altaris Capital Partners and GE Ventures. www.quantum-health.com

🍺 Heineken has until June 20 to offer concessions to British antitrust regulators, related to Heineken and Patron Capital's £403 million agreement to purchase Punch Taverns (LSE: PUB). https://bloom.bg/2rcZMbd

• J.F. Lehman & Co. has led a recapitalization of NorthStar Group, a provider of environmental and technical solutions to the commercial and government end markets. No financial terms were disclosed. www.jflpartners.com

• Peak 10 Holding, a Charlotte-based portfolio company of GI Partners, has agreed to acquire data center group ViaWest from Shaw Communications for US$1.675 billion. http://reut.rs/2slc4lp

• SK Hynix, a South Korean chipmaker, is partnering with Japanese government-backed INJC and private equity firm KKR in their bid for Toshiba's semiconductors business, according to Reuters. http://reut.rs/2snGtPK

Public Offerings

• Canada Goose Holdings (NYSE/TSX: GOOS), a Toronto-based outdoor apparel maker, has filed for a secondary public offering of 12.5 million shares (current value of $280m). Around 10.5 million of the sales are being offered by majority shareholder Bain Capital.

Liquidity Events

• Amazon (Nasdaq: AMZN) is in talks to acquire Indian online grocery site BigBasket, according to Bloomberg. Sellers would include Abraaj Group. https://bloom.bg/2swSkM7

More M&A

• Hexagon AB (Oslo: HEXA), a Swedish industrial technology company, has held early talks on a sale to a U.S. or European rival that could be worth around $20 billion, according to the WSJ. http://on.wsj.com/2s81vju

• Sears Canada (TSX: SCC) said that it is exploring strategic options, including a possible sale. http://reut.rs/2sxZzDx

• Verizon has completed its $4.5 billion purchase of Yahoo's core Internet assets, which basically means it bought all of Yahoo except for its equity holdings in Alibaba and Yahoo Japan. http://bit.ly/2sp9Fa8

• Zhonghong Zhuoye Group, a Chinese conglomerate, is in talks to acquire Brookdale Senior Living (NYSE: BKD), a Brentwood, Tenn.-based owner and operator of senior living communities that has a current market cap of around $2.7 billion, per Reuters. http://reut.rs/2rmYEpA


• Hamilton Lane has closed its latest credit-focused fund with around $435 million in capital commitments. www.hamiltonlane.com

It's Personnel

• Dylan Morris has joined venture firm CRV as part of its new bioengineering practice. He previously was with Innovation Endeavors. www.crv.com

Final Numbers