Aug 7, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

SoftBank Group this morning provided more info on Vision Fund 2, while reporting second-quarter earnings that smashed analyst expectations.

The big news was that SVF2 could begin investing as early as next month, with the trigger being when the original Vision Fund is 85% invested. It was at 68% through the end of June.

  • We also learned that quarterly operating income for SVF1 climbed 66% year-over-year to around $3.8 billion, largely on valuation increases for portfolio companies like OYO, Slack, and DoorDash. But it also recorded $1.8 billion in unrealized losses from its stake in Uber, which continues to trade below its IPO price.

SoftBank chairman and CEO Masa Son also was asked about the murder of Jamal Khashoggi, and basically pulled the old "hand-over-eyes, fingers-in-years" routine:

"[I'm] not in a position to know all the details of the incident and, on the other hand, we have to continue with the efforts of AI and the technological evolution to bring benefits to the people, and we are going to make steady steps to achieve that goal."

Son also said he has no plans to comment further on the topic, except that SoftBank continues to be in talks with Saudi's sovereign wealth fund for a commitment into SVF2.

  • Word is that Saudi and UAE infusions could bring in a combined $60 billion, which theoretically could be on top of the $108 billion already announced.
  • But remember that the announced money are just memoranda of understanding, and could be pared back if the Middle East money comes through. One source close to the talks says he wouldn't be surprised if SVF2 isn't ultimately sized close to the original's $100 billion.
  • One big question remains who the big, unnamed investors are in that $108 billion of MOUs. They likely represent a very large chunk, given that I hear at least one of the announced names committed to invest less than $1 billion.
Also...

Next act: Yesterday we scooped that former top Twitter execs Dick Costolo and Adam Bain have formed a tech startup advisory and investment firm called 01 Advisors. Then came an SEC filing showing that they've secured $135 million of a $200 million-targeted debut fund.

  • Costolo and Bain have been angel investing and advising together for the past couple of years, including in companies like TripActions, but are now formalizing their efforts.
  • 01 Advisors is said to be raising the fund so that it can get equity beyond "advisory shares," similar to how Tusk Ventures operates, and plans to invest in expansion-stage sorts of rounds.

Today is the 1-year anniversary of Elon Musk's infamous "funding secured" tweet.

PE consolidation: One day after The Blackstone Group bought into BC Partners, our inbox shows that AE Industrial Partners has sold minority ownership stakes to both Wafra and Bonaccord Capital Partners (a unit of Aberdeen Standard Investments).

Disclosure: In the pre-unicorn age, VC-backed startups almost never wanted to discuss valuation, let alone put it in a press release. But now we've had two companies within the past week — Wish and Ibotta — that have announced valuations without disclosing the actual amount raised.

🎧 Pro Rata Podcast talks with Scott Kupor, managing partner of Andreessen Horowitz, about his new book and why the VC boom hasn't moved the national needle on new business formation. Listen here.

The BFD

Illustration: Axios Visuals

Snap (NYSE: SNAP) priced $1.1 billion of convertible notes, due in 2026. This is slightly up-sized from a $1 billion offering size, and expectations are that it will close by Friday.

  • Why it's the BFD: Because it reflects how Snap has become tech's comeback kid. The "camera company" was valued at $29 billion in its first day of post-IPO trading in early 2017 — or $26.05 per share — before bottoming out at less than $5 per share at year-end 2018. Last week it briefly regained its $17 IPO price on better-than-expected Q2 earnings, and the $1.1 billion infusion should help it invest more in both content and features.
  • Bottom line: "Snap's story is yet another example of the harsh realities of going public and facing comparisons to expansive rivals—in this case, Facebook. Now that Snap is regaining momentum, investors' enthusiasm for the company's long-term potential is also creeping back."— Sara Fischer & Kia Kokalitcheva, Axios
Venture Capital Deals

Klarna, a Sweden-based online payments platform, raised $460 million at a $5.5 billion post-money valuation. Dragoneer led, and was joined by Commonwealth Bank of Australia, HMI Capital and Merian Chrysalis Investment Co. http://axios.link/jUSQ

C2FO, a Kansas City-based online marketplace for working capital, raised $200 million. SoftBank Vision Fund led, and was joined by return backers Temasek and Union Square Ventures. www.c2fo.com

Jollychic, a Chinese e-commerce company focused on the Middle East, raised $65 million in Series C funding from G42 Group. http://axios.link/6WQG

Ezoic, a Carlsbad, Calif.-based provider of ad revenue optimization software for digital publishers, raised $33 million from Sageview Capital. http://axios.link/txZ9

Awfis, an Indian co-working space operator, raised $30 million in Series D funding. ChrysCapital led, and was joined by return backers Sequoia Capital India and the Three Sisters Institutional Office. http://axios.link/KEEQ

BlockFi, a New York-based lender to cryptocurrency holders, raised $18.3 million in Series A funding. Valar Ventures led, and was joined by Winklevoss Capital, Morgan Creek Digital, Akuna Capital, Galaxy Digital Ventures, and ConsenSys Ventures. http://axios.link/ji18

🚑 Sidecar Health, an El Segundo, Calif.-based health insurance startup, raised $18 million from GreatPoint Ventures and Morpheus Ventures. http://axios.link/YyFV

Anzu, an Israeli 3D in-game advertising platform, raised $6.5 million in Series A funding. Bitkraft Esports Ventures led, and was joined by WPP and Axel Springer. www.anzu.io

• FinMkt, a New York-based provider of online marketplace tech for the financial services industry, raised $5 million in Series B funding. Fintop Capital led, cand was joined by return backers ManchestorStory Group and West Loop Ventures. www.finmkt.com

Squad, a San Francisco-based social screen sharing and group video chat app, raised $5 million in seed funding led by First Round Capital. http://axios.link/55EI

EnjoyHQ, a London-based customer feedback platform for research teams, raised $2 million in seed funding led by Point Nine Capital. http://axios.link/QxXZ

Private Equity Deals

🥫 Arcline Investment Management acquired Pride Engineering, a Minneapolis-based provider of equipment and specialty machine components for can manufacturers, from May River Capital. www.pridecan.com

Defi Solutions of Texas is merging with Wisconsin-based Sagent Auto, a fellow provider of auto lending tech and services. Shareholders in the combined company include Bain Capital Ventures, Warburg Pincus, and Finserv. www.defisolutions.com

DG3 Group, a British printing group owned by Resilience Capital Partners, acquired the print assets of UK-based commercial printer Newnorth Print. www.dg3.com

Genstar Capital agreed to buy Worldwide Facilities, a Los Angeles-based wholesale insurance broker, from Lovell Minnick Partners. www.wwfi.com

Hackman Capital Partners acquired MBS Group, a TV studio real estate and production services platform, for $650 million from The Carlyle Group.

🚑 NavaDerm, a dermatology acquisition platform sponsored by BelHealth Investment Partners, acquired Laser & Skin Surgery Center of New York. www.navaderm.com

Navex Global, a portfolio company of BC Partners, acquired Lockpath, an Overland Park, Kan.-based provider integrated risk management software. Lockpath raised around $8 million from El Dorado Ventures, Vesbridge Partners, Rally Ventures, and Webb Investment Network. www.navexglobal.com

🚑 Permira agreed to buy New Jersey-based life sciences contract manufacturer Cambrex (NYSE: CBM) for $2.4 billion, or $60 per share (47% premium to yesterday’s closing price). http://axios.link/4XAZ

Vista Equity agreed to buy Miami, Fla.-based fund administrator AltaReturn for around $500 million, per PE Hub. http://axios.link/nWcI

Public Offerings

Helios Towers, a pan-African mobile towers operator, is reviving IPO plans after shelving a London listing earlier this year, per Bloomberg. Shareholders include IFC and Providence Equity Partners. http://axios.link/5p64

Steinhoff International of South Africa (JSE: SNH) is considering an IPO for its Pepkor Europe retail business, which owns the Pepkor, Dealz, and Poundland chains, per Bloomberg. http://axios.link/LvSJ

Liquidity Events

Glovo, a Spain-based food delivery company that’s raised $350 million in VC funding, has held early-stage takeover talks with both Uber (NYSE: UBER) and Deliveroo, per Bloomberg. http://axios.link/DZv3

Nike (NYSE: NKE) bought Celect, a Boston-based provider of predictive analytics for retailers. Celect had raised around $30 million from August Capital, Fung Capital, NGP Capital, In-Q-Tel, and Activant Capital Group. http://axios.link/yAhd

TopFunnel, an angel-backed recruiting automation platform, acquired Clara Labs, a San-Francisco-based scheduling platform. Clara had raised around $20 million from firms like Basis Set Ventures, Sequoia Capital, and First Round Capital. www.topfunnel.co

More M&A

Adtalem Global Education (NYSE: ATGE), a Chicago-based for-profit professional education company, is seeking a buyer for its Brazilian assets, per Reuters. A deal could be worth more than $500 million. http://axios.link/LX12

Diageo (LSE: DGE) acquired a majority stake in Seedlip, a London-based non-alcoholic spirits brand in which it already had a minority position. http://axios.link/jOLK

DuPont de Nemours (NYSE: DD) is considering a sale of spin-off of its nutrition and biosciences unit, which could be valued at around $20 billion, per Bloomberg. http://axios.link/GpWB

Macquarie Infrastructure and Real Assets agreed to buy German chemical site operator Currenta from Bayer and Lanxess for €3.5 billion. http://axios.link/NPPq

Sprott (TSX: SII) agreed to buy the gold strategy asset management business of Tocqueville Asset Management. www.sprott.com

Walmart (NYSE: WMT) confirmed that it’s seeking a buyer for Modcloth, a women’s apparel site it acquired two years ago for just over $40 million. http://axios.link/Uyub

Winfield Energy offered to buy Australia’s Stanmore Coal (ASX: SRM) for upwards of A$435 million. http://axios.link/3n49

It's Personnel

Jessica Mandel stepped down as head of legislative affairs at Credit Suisse, to join D.C. lobbying firm Miller Strategies as a principal.

Leith Moghli joined law firm Proskauer as a London-based partner in its private funds practice. He previously was with Reed Smith. www.proskauer.com

J.P. Sanday joined Menlo Ventures as a partner, focused on “inflection-stage” companies. He previously was a VP with Summit Partners. www.menlovc.com

Steven Westerback joined placement agent Atlantic-Pacific Capital as a partner. He previously was president and head of Americas for Cebile Capital. www.apcap.com

Final Numbers
Expand chart
Data: Money.net; Chart: Axios Visuals

Shares of three major drug distributors plunged yesterday on a Bloomberg report that they made a $10 billion opening offer to settle their portion of the national opioids lawsuit.

  • Axios' Bob Herman writes that the figure was a lot higher than Wall Street had expected, indicating that other defendants — including opioid manufacturers — may pay tens of billions of dollars to avoid going to trial.
  • Among those manufacturers could be Mallinckrodt, which yesterday was our BFD after blaming the opioids lawsuit for its decision to suspend the planned spin-off of its specialty generics business.
Dan Primack

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