Axios Pro Rata

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June 09, 2017

Top of the Morning

• Tough day at the office: KKR last month announced an agreement to invest $150 million into Internet radio company Pandora (NYSE: P) and to take a board seat, but that deal is now dead. Instead, Pandora has agreed to a $480 million minority investment from SiriusXM (Nasdaq: SIRI) ― which came after Sirius was rebuffed on a takeover attempt. Pandora also said that it will sell its Ticketfly unit to VC-backed Eventbrite for $200 million.

A more serious lost opportunity for KKR might be in regards to its play for Toshiba Corp.'s $18 billion chips unit, with an overnight report from Reuters that consortium lead Japan Innovation Network Corp. plans to replace KKR with Bain Capital. We've not yet been able to confirm the flip, with one source close to KKR saying that the deal team was "baffled" upon initially reading the Reuters report.

• Park it: Uber is in talks to acquire certain assets and engineering talent of on-demand parking startup Luxe Valet, as first reported by the WSJ and confirmed by Axios. But, according to Kia K, this isn't yet a done deal. Instead, Luxe continues to shop the assets to both Uber and other possible suitors ― including a company called ParkWhiz ― with Luxe also planning to continue at least some of its operations post-sale.

  • Luxe has raised around $75 million in VC funding, from backers that include Venrock and Hertz.
  • Earlier this year we reported that Luxe opted to shut down operations in some cities to adjust its strategy and focus on its main markets. Since then, it also ended its door-to-door valet service (despite saying in January that each transaction is "profitable") and has been working on a new set of services that are expected to be centered on self-service.

• LP speak: Yesterday I heard a couple of institutional investors refer to the likelihood of "returns compression" for private equity. While I'd like to knock them for being unwilling to simply say "worse returns," at least they're being honest about it. Still haven't heard it from the GP side, despite how the capital formation lines are screaming about it.

• Coming UK attractions, per Thomson Reuters: "More M&A deals involving a UK target were announced immediately after the last two UK general elections than immediately before. In 2015, 4% more deals were announced during the 90 day period after the election than in the 90 days before, and in 2010 there was an 8% increase."

• Stacked deck: The vast majority (79%) of Facebook shares not controlled by Mark Zuckerberg were voted in favor of a proposal to eliminate the special class of stock that gives Zuckerberg voting control despite holding just a 14.11% stake, per a Bloomberg analysis. But since that special class of stock also got to vote at a 10:1 ratio, the effort failed.

• Have a great weekend...


SoftBank has agreed to acquire the robotics company Boston Dynamics from Google parent Alphabet, around one year after a possible sale was first reported. No financial terms were disclosed for the deal, which is being done via a SoftBank subsidiary rather than through its new $93 billion private equity fund. We also don't know how much Alphabet (then still Google) paid for its original purchase of Boston Dynamics in late 2013.

  • Why it's the BFD: Depending on your point of view, Boston Dynamics robots are either the coolest thing in the world ― or the most terrifying, due to their Terminator-like ability to both run and get back up after falling down. Possible applications range from military to industrial to consumer, with Amazon originally having been said to have interest as a warehouse tool. Plus, I really wanted to use that GIF.
  • Must watch TV: To fully appreciate Boston Dynamics robots, check out this video. And this one too.
  • Bottom line: "From a business perspective, there was intractable tension between Boston Dynamics engineers who wanted to do super-creative stuff for street cred and Alphabet executives who wanted commercial product on the market." ― Steve LeVine, Axios

Venture Capital Deals

• Houzz, a Palo Alto, Calif.-based home design platform, is in the process of finalizing a $400 million funding round at a $4 billion valuation, as first reported by Fortune. Iconiq Capital is expected to lead, with return backers like GGV Capital and Sequoia Capital also participating.

• Algolia, a San Francisco-based hosted search API company, has raised $53 million in Series B funding. Accel led the round, and was joined by SaaStr and individual angels.

🚑 Eloxx Pharmaceuticals, an Israeli developer of therapeutics to great genetic diseases, has raised $24 million in VC funding. Pontifax led the round, and was joined by Quark Venture and GF Securities.

🚑 Trice Medical, a King of Prussia, Penn.-based developer of micro-invasive technologies for medical diagnostics, has raised $19.3 million in Series C funding from Smith & Nephew, Safeguard Scientifics, HealthQuest Capital and BioStar Ventures.

🚑 Platelet BioGenesis, a Boston-based developer of a process for producing human platelets from stem cells for therapeutic applications, has raised $10 million in Series A funding. Qiming Ventures led the round, and was joined by Vivo Capital, VI Ventures, Adena Partners and eCoast Angels.

• Citrine Informatics, a Redwood City, Calif.-based chemicals and materials intelligence platform that leverages AI, has raised $7.6 million in Series A funding. Innovation Endeavors, Data Collective and Prelude Ventures co-led the round, and were joined by AME Cloud Ventures and XSeed Capital.

• Carmera, a Brooklyn, N.Y.-based developer of street-level mapping solutions for self-driving cars, has raised $6.4 million in Series A funding. Matrix Partners led the round, and was joined by Resolute Ventures and Notaton Capital.

• Jodel, a Germany-based local social app that lets users post anonymously, has raised €6 million in new VC funding from Floodgate Fund, Global Founders Network, Atlantic Internet, Rubylight and Adam D'Angelo.

• Shedul, a Dubai-based provider of booking software for salons and spas, has raised $6 million in Series A funding co-led by Middle East Venture Partners and Lumia Capital.

• Cognata, an Israeli provider of autonomous car testing solutions, has raised $5 million in VC funding from Emerge Innovation Capital, Maniv Mobility and Airbus Ventures.

• Supr Daily, a dairy and grocery delivery service in India, has raised $1.5 million in VC funding from backers like Soma Capital, Great Oaks Ventures and 122 West Ventures.

Private Equity Deals

• Brookfield Asset Management and Onex Corp. reportedly are among several firms to make preliminary takeover offers for Home Capital Group (TSX: HCG), a Canadian alternative mortgage lender whose market cap shot up to around C$700 million.

• Nordstrom (NYSE: JWN), the luxury retailer with a market cap of around $7.4 billion, said that it will consider a sale process.

• Sovos Brands, a new food and beverage acquisition platform sponsored by Advent International, has acquired Rao's Specialty Foods, a tomato sauce brand spinoff of Rao's Italian restaurant in Harlem. No financial terms were disclosed, although prior reporting was that the company generated more than $20 million in 2016 EBITDA.

🚑 TA Associates has invested in Biocomposites, a UK-based maker of calcium compound biologics. No financial terms were disclosed, except that Barings provided leveraged financing.

🚑 Tivity Health (Nasdaq: TVTY), a Franklin, Tenn.-based provider of fitness and health improvement programs, is considering a sale after receiving private equity interest, according to Reuters. Company shares climbed on the news, giving it a market cap of nearly $1.5 billion.

Public Offerings

• Plymouth Industrial REIT, a Boston-based REIT that owns industrial buildings, raised $55 million in its IPO. The company priced 2.9 million shares at $19 per share (low end of $19-$21 range), and will trade on the NYSE MKT under ticker symbol PLYM.

More M&A

• Digital Realty Trust (NYSE: DLR) has agreed to acquire rival data center operator DuPont Fabros Technology (NYSE: DFT) in an all-stock deal that values DuPont Fabros at around $7.6 billion.

• L'Oreal (Paris: OREP) has entered into exclusive talks to sell The Body Shop to listed Brazilian makeup company Natura Cosmeticos for around $1.1 billion.

• Surf Air, a subscription-based "all you can fly" airline for business travelers, has acquired Texas-based rival RISE for an undisclosed amount. Surf Air has raised over $80 million in VC funding from firms like Velos Partners, Institutional Venture Partners, NEA, ff Venture Capital and Base Ventures.


• All-Stars Investment is targeting $800 million for a new fund to be focused on later-stage Chinese startups, according to the WSJ.

• First Analysis of Chicago is raising up to $115 million for its twelfth VC fund, per an SEC filing.

• The Geekdom Fund, an investor in early-stage IT startups in San Antonio, has raised $20 million for its second fund, per an SEC filing.

• ICV Partners, a New York-based private equity firm, is raising up to $500 million for its fourth fund, per an SEC filing.

• Morgan Stanley is pre-marketing a $2 billion Asia-focused private equity fund, according to the WSJ.

• Newbury Partners has held a $700 million first close on its fourth private equity secondaries fund, with a final close on $1.2 billion set for the end of June, per Private Equity International.

It's Personnel

• Paul Best reportedly has stepped down as a London-based managing director with Warburg Pincus, in order to join Elliott Management to lead a new European private equity unit.

• Carter Cast, former CEO of e-commerce company Hayneedle and current venture partner at Pritzker Group Venture Capital, has been named to the board of Kellogg Co. (NYSE: K).

• Sam Green is stepping down as a private equity investment officer at the $73 billion Oregon State Treasury, which has a 19.5% allocation to the asset class.

• Steven Peikin and Stephanie Avakian have been named co-directors of the SEC's Enforcement Division. Peikin is a former federal prosecutor who last worked with new SEC chair Jay Clayton at Sullivan & Cromwell, while Avakian was the unit's acting director.

President Trump is expected to name Anthony Scaramucci, founder of hedge fund SkyBridge Capital, as ambassador to the Paris-based Organization for Economic Cooperation and Development (OECD), according to Bloomberg.

Matt Zames is stepping down as chief operating officer of J.P. Morgan Chase. No word yet on future plans for Zames, who was viewed as a possible successor to CEO Jamie Dimon.