Feb 2, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Repeat greetings from a section of LA that doesn't have a 24-hour coffee shop, so if you're looking for a business opportunity... Later today I'll be on stage interviewing corp dev execs from Salesforce and NetSuite, so please be sure to send over questions. Here we go:

Top of the Morning

• Closed doors: Lots of buzz about tomorrow's first meeting of the President's Council on Jobs and Competitiveness, which is the Steve Schwarzman-led CEO group that will meet with President Trump at the White House. Particularly in terms of what people like Travis Kalanick, Jamie Dimon, Bob Iger and others will say about the recent immigration ban. Unfortunately, sources say that the meeting will be off-the-record (something the WH has not responded to requests for comment on).

I know what you may be thinking: "Of course it's off-the-record. How else could the President get candid feedback?"

Two replies to that: (1) It puts folks like Kalanick in a no-win situation. He can speak his truth to power without his critics ever knowing (or believing) it happened, or he can cower without his advocates ever knowing (or believing) it happened. (2) President Obama had a similar group led by Jeff Immelt, and those meetings were public. In fact, while researching a story about that group (which I still need to write), several participants said that the transparency was essential. "The big risk you get is a bunch of people just trying to talk their book and influence the President," one of them said. "Keeping it open meant that the focus remained on improving the economy and jobs markets, because doing anything else would have been a very bad look."

• Spectacle: Snap has not allowed most of its IPO co-underwriters to actually view the S-1 document that is expected to be filed publicly either today or tomorrow, in an (apparently failed) attempt to prevent leaks, according to Reuters. Par for the course, I guess, since I know of at least one established VC firm that once was told it couldn't have Snap's underlying financials or user metrics when considering whether or not to invest....

• VC stuff: Three takeaways from a VC panel yesterday at the Upfront Summit: (1) Many Silicon Valley firms have begun spending significant time outside of traditional tech hotbeds; (2) Sovereign wealth funds have slowed down their startup investment pace; (3) There has been a major uptick in non-tech companies seeking to buy tech startups. On that last one: It would seem that the "staying private longer" trend has artificially reduced the number of potential tech startup acquirers, since the next-gen of tech buyers doesn't yet have a public currency.

• Business obsession: WSJ reports that 242 companies in the S&P 500 held earnings calls or other investor events in January, of which around half mentioned President Trump either directly or indirectly.

• Speaking of which: Earlier this week we discussed hedge fund manager Anthony Scaramucci's lucrative deal to sell SkyBridge Capital to an investor group led by Chinese conglomerate HNA Group. We also mentioned that the transaction wouldn't close for three months, and ethics vetting issues related to that lag reportedly has cost "The Mooch" his expected White House job as a director in the Office of Public Liaison. His future Trump Administration role, if any, remains up in the air.

• We have a website: One thing I learned yesterday is that some Pro Rata readers don't realize that these morning missives are just a small part of what we're doing at Axios. Not only do we have two other newsletters (Axios AM focused on politics by Mike Allen, and Vitals focused on healthcare by David Nather), but an entire website with lots of plugged-in reporters. Please take www.Axios.com for a spin if you haven't already.

The BFD: Hamilton Lane going public

Hamilton Lane, an alternative asset manager and consultant, has filed for a $200 million IPO. It plans to trade on the Nasdaq under ticker symbol HLNE, with J.P. Morgan and Morgan Stanley serving as lead underwriters. The firm reports $40 billion in AUM and around $274 billion in assets under advisement, which translated into around $181 million in revenue for its last fiscal year (only $23m of which were incentive fees).

• Why it's the BFD: There has been talk about Hamilton Lane preparing to go public back in 2008, but those plans were scuttled by the financial crisis. Yesterday's filing, however, took the private equity markets by surprise, as Hamilton Lane had done a remarkable job keeping quiet (perhaps Snap should be taking notes). Now the Pennsylvania-based firm will become the biggest alternative asset offering in years, giving the public markets access to a firm that acts as a quasi proxy for the broader private markets.

• Bottom line: "As the private equity industry continues to mature, its a natural progression for firms the age of Hamilton Lane who have concentrated ownership and owners looking for liquidity." ― Rival fund-of-funds manager to Axios

Venture Capital Deals

• Kinestral Technologies, a South San Francisco-based developer of glass-tinting technology, has raised $65 million in Series C funding. Japanese glass-maker AGC led the round, and was joined by Hermes-Epitek and return backers 5AM Ventures, Alexandria Venture Investments, Capricorn Investment Group, Mitsubishi UFJ Capital and Versant Ventures. http://bit.ly/2k3imRZ

• Vividion Therapeutics, a San Diego-based biotech spinout from Scripps Research Institute, has raised $50 million in Series A funding. Arch Venture Partners led the round, and was joined by Cardinal Partners. http://bit.ly/2kkGwWt

• Wealthsimple, a Canadian robo-advisor, has raised C$20 million in new funding from Power Financial Corp. http://reut.rs/2kPCOTW

• Aquilon Energy Services Inc., a Lisle, Ill.-based online platform that lets buyers and sellers automatically settle both physical and financial energy transactions, has raised $19 million in Series B funding. Backers include Citi, Goldman Sachs Principal Strategic Investments, Invenergy and Macquarie Group. http://bit.ly/2jGxHVf

• Reserve, a restaurant concierge and pre-payment app, has raised $10 million in Series B funding. Return backers include Expa, First Round Capital and Human Ventures. http://tcrn.ch/2jXQ7UN

• GAN Integrity, a Brooklyn-based provider of compliance management software to enterprise businesses, has raised $9 million in growth equity funding. Edison Partners led the round, and was joined by NorthCap, Chicago Ventures, MissionOG and Cultivation Capital. www.ganintegrity.com

• OptiRTC, a Boston-based cloud platform for monitoring and controling stormwater infrastructure, has raised $5.5 million in VC funding. Ecosystem Integrity Fund led the round, and was joined by return backers MissionPoint Partners, the Renewal Funds, the Massachusetts Clean Energy Center and Geosyntec Consultants. www.optirtc.com

• Litify, a New York-based provider of software for managing law firms, has raised $5 million in new VC funding led by Fortress Investment Group. www.litify.com

• SIM Partners, a Chicago-based developer of location marketing technology, has raised $5 million in new VC funding led by River Cities Capital Funds. http://trib.in/2fkm2Kz

• Latipay, a New Zealand-based online payments startup, has raised $3 million in Series A funding. Singapore's Jubilee Capital led the round, and was joined by Tuhua Fund and Zino Fund. http://bit.ly/2jGD8Dw

• GoldenKey (f.k.a. SoloPro), an online real estate broker, has raised $1.75 million in new VC funding from firms like Lowe's Ventures and NFX Guild. http://tcrn.ch/2kUe6Cz

• Inmoji, a Boston-based developer of emoji-embedded marketing campaigns, has raised $1.5 million in new VC funding from individual angels. http://tcrn.ch/2jXpnnj

• Klipboard, a London-based developer of mobile field service software, has raised $1.1 million in new seed funding from undisclosed backers. http://bit.ly/2jzXSBO

Private Equity Deals

• BelHealth Investment Partners has acquired American HealthCare Services Association, a Traverse City, Mich.-based hospital and healthcare staffing company. No financial terms were disclosed.

• Berkshire Partners has acquired a minority equity stake in Kendra Scott Designs, an Austin, Texas-based fashion accessories brand. No financial terms were disclosed. www.kendrascott.com

• Crane 1 Services Inc., a Franklin, Ohio-based portfolio company of Pfingsten Partners, has acquired Crane Services & Inspections, a Monroe, Ohio-based provider of overhead crane and below the hook lifting device services and equipment. No financial terms were disclosed. www.crane1services.com

• EQT Mid Market has completed its previously-announced acquisition of a majority stake in Utimaco GnbH, a German provider of cybersecurity and compliance solutions, from Pinova Capital, BIP Investment Partners and company management. No financial terms were disclosed, except that Utimaco generates around €40 million in annual revenue. http://bit.ly/2ktoS5G

• Humanetics Innovative Solutions, a Plymouth, Mich.-based portfolio company of Golden Gate Capital, has acquired Fibercore, a British manufacturer of specialty optical fiber, from H.I.G. Capital. No financial terms were disclosed. www.humaneticsatd.com

• Madison Dearborn Partners has completed its previously-announced acquisition of Intermedia.net Inc., a Mountain View, Calif.-based provider of cloud business applications like Microsoft Exchange email, from shareholders like Oak Hill Capital Partners. No financial terms were disclosed. www.intermedia.net

• Pamlico Capital has led a majority recapitalization of Winsight, a Chicago-based B2B information provider. No financial terms were disclosed. www.winsightmedia.com

• SK Capital Partners has acquired Niacet, a Niagara Falls,. N.Y.-based maker of specialty ingredients for food, feed and pharma applications, from AEA Investors. No financial terms were disclosed. www.niacet.com

• Sovos Brands, a new food and beverage acquisition platform sponsored by Advent International, has acquired Michael Angelo's Gourmet Foods, an Austin, Texas-based maker of frozen Italian entrées. No financial terms were disclosed. www.michaelangelos.com

• TPG Capital has completed its previously-announced acquisitions and merger of regional broadband services providers RCN Telecom Services and Grande Communications Networks from ABRY Partners, via a pair of separate transactions valued at $1.6 billion and $650 million, respectively. http://bloom.bg/2kvpMht

• Z Capital Partners completed its previously-announced acquisition of Las Vegas-based casino company Affinity Gaming for around $580 million, or $17.35 per share. http://bloom.bg/2kr8AtY

Public Offerings

• Bioceres SA, an Argentina-based agricultural tech company, has withdrawn its IPO registration. No reason was given. The company originally filed in late 2015 to raise $80.5 million, with Piper Jaffray and Itau BBA serving as lead underwriters. www.bioceres.com.ar

• Endeavor Energy Resources, a Midland, Texas-based oil E&P company focused on the Permian Basin, is considering an IPO, according to Reuters. Endeavor is backed by private equity group Luxe Energy. http://reut.rs/2jGN4gx

• PointClickCare, a Canadian electronic medical records software company, has withdrawn its IPO registration due to "market conditions." The company originally filed in late 2015 to raise $100 million, J.P. Morgan, Goldman Sachs and RBC Capital Markets serving as lead underwriters. Shareholders include JMI Equity (25.8% pre-IPO stake). www.pointclickcare.com

Liquidity Events

• Cabi, a Compton, Calif.-based women's apparel retailer backed by Irving Place Capital, is exploring a sale, according to Dow Jones.

• Hexagon, a listed Swedish software company, has agreed to acquire MSC Software, a Newport Beach, Calif.-based provider of simulation software solutions for engineers, from. The deal is valued at $834 million. Sellers include Elliott Management and Symphony Technology Group. http://bit.ly/2jGOJCx

• The Riverside Company has sold YourMembership, a St. Petersburg, Fla.-based end-to-end member engagement platform, to an undisclosed buyer. http://bit.ly/2kWCTpT

• Sports Direct (LSE: SPD) is in talks to become a stalking horse bidder for U.S. retail Eastern Outfitters (parent company of Bob's Stores and Eastern Mountain Sports), which currently is owned by Versa Capital Management and is expected to file for Chapter 11 bankruptcy, according to Reuters. http://reut.rs/2ktKOxj

• Toutiao, a Chinese online recommendation engine, has acquired Flipagram, a Rolling Hills Estates, Calif.-based app that lets users create short video stories. No financial terms were disclosed. Toutiao backers include Sequoia Capital China, while Flipagram had raised over $70 million in VC funding from Sequoia Capital, Kleiner Perkins and Index Ventures. http://tcrn.ch/2jCXnlL

More M&A

• Air Methods Corp. (Nasdsq: AIRM) is exploring a sale after pressure for activist investor Voce Capital, according to the WSJ. The report boosted the medical helicopter maker's stock by more than 7%, giving it a market cap of approximately $1.4 billion. http://on.wsj.com/2jA6pEK

• Dow Chemical (NYSE: DOW) has agreed to sell its ethylene acrylic acid business to South Korea's SK Innovation for $370 million. http://read.bi/2k3cBnj

• Nordson (Nasdaq: NDSN) has acquired Plas-Pak Industries, a Norwich, Conn.-based maker of injection molded plastic packaging products. No financial terms were disclosed. www.plaspakinc.com

• Salesforce (NYSE: CRM) has acquired Sequence, a user design agency, for an undisclosed amount. http://tcrn.ch/2kUqrH0

• SoFi, a San Francisco-based student loan refinancing company, has acquired Zenbanx, a Del.-based provider of multi-currency mobile banking services. No financial terms were disclosed. SoFi has raised around $1.4 billion in funding from firms like SoftBank and Third Point Ventures, while Zenbanx was backed by DCM. http://tcrn.ch/2kWKbsW

• MSC, a Swiss shipping group, has acquired an 80% stake in Total Terminals International, a Long Beach, Calif.-based ports operator, from Hanjin. Hyundai Merchant Marine will acquire the other 20% position. http://reut.rs/2kZKTp3

• Reckitt Benckiser Group (LSE: RB) is in advanced talks to acquire Glenview, Ill.-based baby formula maker Mead Johnson Nutrition (NYSE: MJN) for around $16.7 billion. The deal would represent around a 29% premium for Mead Johnson shares. http://bloom.bg/2kXLojp


• Scania, a Swedish truck and bus-maker, has launched a corporate venture fund called Scania Growth Capital. It will be led by Lars-Olof Gustavsson. www.scania.com

It's Personnel

• Russell Genet has joined Longford Capital as a director. He previously was a partner with law firm Nixon Peabody. www.longfordcapital.com

• iNovia Capital has added two venture partners in Silicon Valley: Scott Munro, ex-chairman and CEO of Savoir Technology Group, and Todd Simpson, former chief strategy officer of AVG and chief innovation officer at Mozilla. www.inoviavc.com

Final Numbers

Dan Primack