Jan 10, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Yesterday I broke the cardinal rule of newsletter launches, which is to include a sign-up link. In my defense, I only had one giant piece of paper hung on my wall reminding me to include a sign-up link, and I can't see it without craning my neck at an uncomfortable angle. Anyway, please forward this on and ask your friends and colleagues to sign up by going here.

Top of the Morning

• Proprietary deal: Lots of tech buzz yesterday about Atlassian agreeing to buy Trello for around $425 million. Not only because it's a huge VC return multiple – Trello had only raised a single round of funding at around a $40 million pre-money valuation – but also because of how Silicon Valley got shut out. Both directly (Atlassian is Australian and Trello is NYC), and indirectly in that longtime Trello partner Slack didn't get a shot at the deal (Trello never hired a banker after receiving Atlassian's offer). Got to sting a bit, given that Slack competes directly with Atlassian product Hipchat, and that Slack and Trello share a couple of major investors (Spark Capital and Index Ventures).

• Speaking of Slack: The red-hot workplace collaboration company quietly did a large secondary/liquidity round for employees and early investors. Among those to participate on the buy-side was existing Slack backer Social Capital, whose founder Chamath Palihapitiya obliquely referenced the round during an October conference interview in India, saying that his firm had just invested "nearly $100 million" in new capital.

• I'm bad at subtlety: SoftBank's $100 billion Vision Fund is not a venture capital fund. SoftBank's $100 billion Vision Fund is not a venture capital fund. SoftBank's $100 billion Vision Fund is not a venture capital fund. SoftBank's $100 billion Vision Fund is not a venture capital fund.

• Energy PE consensus: Drill, baby, drill. Trump's industry-friendly EPA and Interior picks, coupled with several months of friendly debt capital markets, should equal brisk business. Particularly when it comes to something like midstream volumetric plays. But locking in current prices will be key, given the Econ 101 consequences of massively increased domestic supply. Still zero interest in coal and deep concerns about domestic renewables.

• That's So Mavens: Yahoo CEO Marissa Mayer will be among six board members who will step down once the operating company is acquired by Verizon (assuming, of course, that the deal actually closes). To be clear, the board I'm referring to is of the assets Verizon isn't purchasing ― basically its stakes in Yahoo Japan and Alibaba Group ― which will be renamed Altaba. It's entirely possible (albeit unlikely) that Mayer will stay on with Verizon but, if not, expect a VC feeding frenzy for her services.

• New fund alert: JMK Consumer Growth Partners just started raising its debut vehicle, with a $75 million target and a $100 million hard cap, per a source familiar with the situation. This is a branded consumer-focused private equity firm co-founded in 2014 by John Kenney (ex-TSG Consumer Partners) and Sarah Woelfel (ex-Audax Group), which did its first two deals ― Babo Botanicals and SuperGoop ― via a fundless sponsor model.

• Another new fund alert: San Francisco-based hardware incubator Highway1 is said to be raising its first official venture capital fund, with a $100 million target. Highway1, which did not return requests for comment, was launched in 2013 by Irish electronic device development and testing company PCH International.

• Unoffer letters: My colleague Mike Allen has detailed Hillary Clinton's "ghost cabinet" (i.e., her team in waiting), via his excellent Axios AM newsletter (get it at www.axios.com). Among the most interesting listings for Pro Rata readers were Sheryl Sandberg over Lael Brainard for Treasury, Howard Schultz for Labor, Gary Gensler for SEC, Ron Klain for Chief of Staff and Marc Lasry for France Ambassador.

• Where in the World? Next Friday I'll be interviewing Oak HC/FT managing partner Annie Lamont, on stage at the Wharton PE & VC Conference in New York.


General Electric (NYSE: GE) has welcomed The Blackstone Group, Bain Capital and Clayton Dubilier & Rice into the final round of bidding for GE Water, which is expected to be sold for around $3 billion, according to The NY Post.

Why it's the BFD: GE Water is on the block so that its parent company can get regulatory approval for its massive Baker Hughes purchase, but also perhaps because it is heavily involved in a business ― filtering fracking water ― that GE is elsewhere seeking to disrupt via big research partnership with Statoil, aimed at reducing the amount of water needed in the fracking process.

Bottom line: "Blackstone and Wells Fargo in April 2015 teamed up to buy most of GE Capital Real Estate for about $23 billion. Also, Blackstone last decade made big profits from a company similar to GE Water. It led an investor group in 2003 that acquired Ondeo Nalco, a water treatment company, for $4.2 billion from Suez and exited in 2007, making a big return." -- Josh Kosman, NY Post.

Venture Capital Deals

• Kaminario, a Newton, Mass.-based provider of all-flash array storage for "midrange enterprises," has raised $75 million in new private funding. Waterwood Group led the round, and was joined by return backers Sequoia Capital, Pitango Venture Capital, Lazarus Hedge Fund, Globespan Capital Partners and Silicon Valley Bank. http://tcrn.ch/2jpVQj4

• Lalamove (f.k.a.EasyVan), a Hong Kong-based provider of on-demand logistics, has raised $30 million in Series B funding. Xianghe Capital led the round, and was joined by Blackhole Capital and return backers MindWorks Ventures and Crystal Stream. http://tcrn.ch/2j2HAjC

• Ivantis, an Irvine, Calif.-based developer of a device to lower eye pressure for glaucoma patients,, has raised $25 million in Series B funding. RA Capital Management led the round, and was joined by Mérieux Développement and unidentified return backers. http://bit.ly/2iWhE70

• Activehours, a Palo Alto, Calif.-based, has raised $22 million in Series A funding. Matrix Partners led the round, and was joined by March Capital Partners and return backers like Ribbit Capital and Felicis Ventures. http://tcrn.ch/2jaUFor

• Aledade Inc., a Bethesda, Md.-based provider of "value-based healthcare" solutions, has raised $20 million in new VC funding. Biomatics Capital led the round, and was joined by GV, Maryland Venture Fund and return backers Venrock and Arch Venture Partners. www.aledade.com

• Lola Travel, a Boston-based travel startup led by Kayak co-founder Paul English, has raised $15 million in Series B funding. CRV led the round, and was joined by return backers Accel and General Catalyst. The round remains open, and could expand to $25 million. http://bit.ly/2iXNhwZ

• Mighty AI (f.k.a. Spare5), a Seattle-based developer of human insights AI engines, has raised $14 million in Series A1 funding. Intel Capital led the round, and was joined by GV, Accenture Ventures and return backers Foundry Group, Madrona Venture Group and NEA. www.mty.ai

• Phantom, a Palo Alto, Calif.-based security automation and orchestration platform, has raised $13.5 million in Series B funding. Kleiner Perkins Caufield & Byers led the round, and was joined by return backers TechOperators Venture Capital, Blackstone Group, In-Q-Tel, Rein Capital, Zach Nelson and John W. Thompson. www.phantom.us

• Logtrust, a Sunnyvale, Calif.-based big data analytics platform, has raised $11 million in new VC funding from Kibo Ventures, IPW and Atlantic Bridge Capital. www.logtrust.com

• QikServe, a UK-based B2B cloud platform for hospitality operators, has raised £2.7 million in new VC funding led by Maven Capital Partners. http://bit.ly/2ie7IHe

• SiteOne Therapeutics, a Bozeman, Mon.-based developer of pain therapeutics and diagnostics, has raised $15 million in Series B funding. Amgen (NYSE: AMG) led the round, and was joined by return backers Next Frontier Capital, 2M Companies, Mission Bay Capital, Sears Capital Management, Biobrit and Z Investments. The company also signed a new R&D agreement with Amgen. http://bit.ly/2iW0NmH

• Cloud Elements, a Denver-based provider of API integration tools, has raised $13 million in Series B funding. Harbert Partners led the round, and was joined by Rally Ventures, Access Ventures and Grotech Ventures. http://tcrn.ch/2iUOQMb

• Housing Anywhere, an international housing platform for exchange and internship students, has raised €5 million in Series A funding from Real Web and return backer henQ. http://bit.ly/2i93MJc

• Resy, a New York-based provider of reservations and operational software to fine dining restaurants, has raised an undisclosed amount of Series A funding. Airbnb led the round, and was joined by First Data Corp. and return backers RSE Ventures and Lerer Hippeau Ventures. www.resy.com

• Avalon Healthcare Solutions, a Tampa, Fla.-based provider of laboratory benefit management solutions, has raised an undisclosed amount of third-round funding from Mosaic Health Solutions, BlueCross BlueShield of South Carolina and Francisco Partners. www.avalonhcs.com

Private Equity Deals

• Blue Sage Capital has acquired Broken Arrow Communications, an Albuquerque-based provider of installation and maintenance services for wireless communication facilities and related infrastructure. No financial terms were disclosed. www.bacom-inc.com

• Cerberus Capital Management has agreed to acquire the assets of Garden Fresh Restaurant Corp., a San Diego-based restaurant chain that filed for Chapter 11 bankruptcy back in October. http://reut.rs/2iZXDya

• Enfusion Systems, a Chicago-based cloud platform for investment managers, has secured an undisclosed amount of minority equity funding from FTV Capital. http://bit.ly/1oQl4Ke

• Milk Makeup, a color cosmetics line, has secured a minority equity investment from Main Post Partners. www.milkmakeup.com

• Palladium Equity Partners has made a "significant investment" in CircusTrix, owner and operator of indoor extreme recreation partners. http://bit.ly/2j06iRm

• Premia Holdings, a new property and casualty insurance and reinsurance platform focused on runoff solutions, has secured $510 million in funding from firms like Kelso & Co. and an affiliate of Arch Capital Group Ltd. The Bermuda-based company is led by Bill O'Farrell, who until recently served as chief reinsurance officer at Chubb. http://bit.ly/2iyl3aZ

• Ohio Transmission Corp., a Columbus, Ohio-based portfolio company of Irving Place Capital, has acquired Midway Industrial Supply, a Mounds View, Minn.-based provider of spray finishing systems, from Generation Growth Capital. No financial terms were disclosed. http://bit.ly/2jdJone

• The Riverside Company has invested in Xcentric Mold & Engineering, a Clinton Township, Mich.-based provider of quick-turn injection molding, rapid prototyping, and CNC machining services. No financial terms were disclosed. http://bit.ly/2jdMqrC

• Vitalus, a British Columbia-based supplier of specialty cream and milk protein ingredients to the food/beverage and nutraceutical markets, has raised an undisclosed amount of growth equity funding from Fulcrum Capital Partners. www.vitalus.com

• Wicks Group of Companies has acquired Invo HealthCare Associates, a Jamison, Penn.-based provider of therapeutic services for individuals and families with autism and special needs. No financial terms were disclosed. Existing IHA shareholder Post Capital Partners will remain as a minority investor. www.invohealthcare.com

• Yixing Capital and Luolai Lifestyle Technology have acquired Lexington Home Brands, a Thomasville, N.C.-based maker of residential and contract furnishings, from Sun Capital Partners. No financial terms were disclosed. http://bit.ly/2jv5Ew6

Public Offerings

• Keane Group, a Houston-based provider of well completion services for the hydraulic fracturing industry, has set its IPO terms to 16.7 million shares being offered at between $17 and $19 per share. It would have an initial market cap of around $1.85 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol FRAC, with Citigroup leading a group of 10 underwriters. Keane Group is owned by Cerberus Capital Management.

More M&A

• Mars has agreed to acquire animal hospital chain VCA (Nasdaq: WOOF) for approximately $7.7 billion (not including assumed debt). The deal is valued at $93 per share in cash, which represents a 31% premium over Friday's closing price.

• Alibaba Group (NYSE: BABA) has agreed to acquire Chinese department store chain Intime Retail Group for upwards of US$2.6 billion. The deal includes Intime founder Shen Guojun, and is priced at HK$10 per share (42% premium over prior close). http://bloom.bg/2jbwBlp

• BRF SA, a Brazilian food processor, has teamed with Qatar Investment Authority to acquire the operations of Turkish poultry producer Banvit at an enterprise value of $470 million. http://bit.ly/2jdxgTl

• Fitbit (NYSE: FIT) has acquired London-based smartwatch startup Vector for an undisclosed amount. http://tcrn.ch/2idMTLU

• L'Oreal (Paris: OR) has agreed to acquire skincare brands Ambi, AcneFree and CeraVe from Valeant Pharmaceuticals (NYSE: VRX) for $1.3 billion in cash. Valeant also said that it would sell its Dendreon cancer business to Chinese conglomerate Sanpower for $819.9 million. http://reut.rs/2i8Y1eN

• Mitsubishi Rayon's U.S. subsidiary has agreed to acquire a Wyoming carbon fiber production plant from Germany's SGL Group for an undisclosed amount. http://bit.ly/2ibIB4A

• PropTiger.com has agreed to merge with fellow Indian online real estate company Housing.com. PropTiger has raised around $48 million in VC funding from News Corp., SAIF Partners, Accel Partners and Horizen Ventures. Housing.com has raised around $140 million from SoftBank, Helion Venture Partners, Qualcomm Ventures, Yuri Milner, Tybourne Capital and Nexus Venture Partners. http://bit.ly/2jcUwkj

• Takeda Pharma (Tokyo: 4502) has agreed to acquire Massachusetts-based cancer drug company Ariad Pharmaceuticals (Nasdaq: ARIA) for $5.2 billion in cash, or $24 per share (75% premium). http://bit.ly/2i8RWil


• Better Ventures of Oakland has closed its second seed-stage fund with $21 million in capital commitments.

• The Carlyle Group is planning to target $5 billion for its eighth U.S. real estate fund, according to Bloomberg. http://bloom.bg/2iWtRbE

• Carousel Capital, a Charlotte-based buyout firm focused on the southeastern U.S., has closed its fifth fund with $400 million in capital commitments. http://bit.ly/2jpHhw0

• Morgan Stanley Capital Partners has raised $1.5 billion for a new mid-market private equity fund, called North Haven Capital Partners VI.

• Vista Equity Partners has closed its third mid-market "Foundation Fund" with $2.75 billion in capital commitments (official close was on 12/30). The tech-focused buyout firm remains in market with its latest flagship vehicle, which is said to have upped its cap to $10 billion.

It's Personnel

• Atomico, a European VC firm, has promoted principals Carolina Brochado and Teddie Wardi to partner. http://tcrn.ch/2j2Ko0d

• Steven Boyd, former CEO of Evolution Healthcare (NYSE: EVHC) subsidiaries Evolution Health and Ascension Health at Home, has joined private equity firm Varsity Healthcare Partners as an operating partner. www.varsityhealthcarepartners.com

• Mike Dempsey has joined Compound (f.k.a. Metamorphic Ventures) as a principal. He previously was with Rothenberg Ventures and, before that, CB Insights. http://bit.ly/2icaARL

• Greg Hughes, David Chung and Bob Pender have joined HGGC as executive directors. Hughes previously was president and CEO of former HGGC portfolio company Serena Software, Chung was an investment partner with Blum Capital Partners and Pender was COO at Serena Software. http://bit.ly/2iWLFnj

• Harvest Partners has promoted Andrew Schoenthal to senior managing director. It also promoted Nick Romano to managing director, Michael Greenman, James Mitchel and David Schwartz to principal and Steve Fessler to vice president. www.harvestpartners.com

• Simon Pooler and Alex Dabbous have both stepped down as directors with British buyout firm Montagu Private Equity, according to LBO Wire. No word yet on their future plans.

• Pritzker Group Private Capital has promoted Brad West from VP to principal of legal.

Final Numbers
Dan Primack