Jul 9, 2018

Axios Pro Rata

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

Congress is now getting involved in the Toys "R" Us bankruptcy, and the push to secure severance for tens of thousands of fired employees.

  • 19 Democrats, including Bernie Sanders, last Thursday issued a public letter to the heads of Bain Capital, KKR and Vornado, which basically accuses the private equity firms of deliberately pushing the company into liquidation, and asking what plans (if any) they have to provide severance for tens of thousands of laid-off workers.
  • The letter contains no mention of the creditors who actually are profiting from the liquidation, which takes some wind out of its seriousness sail.
  • Neither Bain nor Vornado appear to have formally replied yet.
  • But KKR has, arguing that Toys' troubles were more secular than structural (read: blame Amazon), and that it was surprised by the lenders choosing liquidation over maintaining scaled-back operations.
  • Key lines from KKR's reply: "We have been in touch with representatives of the Toys' employees, and expressed our desire to help them. We believe we have found a path outside of the bankruptcy process to help those who need it most, and we are committed to supporting this."

KKR isn't yet sharing the specifics of that path — and it sounds like the focus is on those who remain unemployed — but this is certainly a welcome development. A source also says that Bain is working with KKR on the plan, and also has held its own talks with the worker advocacy groups.

The questions now are if this actually gets put into action, whether creditors object via the bankruptcy process this is intended to avoid and if Vornado steps up (I'd also add the creditors, but they've already demonstrated their indifference).

Source: Giphy

Sonos, a Santa Barbara, Calif.-based maker of smart speaker systems, filed for a $100 million IPO. It plans to trade on the Nasdaq (SONO) with Morgan Stanley as lead underwriter. Shareholders include KKR (25.7% stake), Index Ventures (13%) and Redpoint Ventures (5.2%).

  • Why it's the BFD: Because this will be a test of market appetite for a pure-play hardware maker, at a time when service providers (and Sonos "partners") like Apple, Amazon and Google are also offering smart speakers.
  • Financials: Sonos reports $13 million in net income on $655 million in revenue for the six months ending March 31, compared to $15 million on $555 million for the year-earlier period.
  • Notable risk factor: "We have historically maintained, and we believe our customers have grown to expect, extensive backward compatibility for our older products and the software that supports them, allowing older products to continue to benefit from new software updates. We expect that in the near to intermediate term, this backward compatibility will no longer be practical or cost-effective, and we may decrease or discontinue service for our older products."
Venture Capital Deals

• Exiger, a New York-based provider of governance, risk and compliance software, raised $80 million from Carrick Capital Partners. www.exiger.com

🚑 Dynacure, a French developer of an antisense oligonucleotide therapy, raised €47 million ($55 million) in new VC funding. Andera Partners led, and was joined by Pontifax, Bpifrance, Kurma Partners and IdInvest Partners. http://axios.link/GP9d

• Moneybox, a London-based micro-investment app, raised £14m in Series B funding. Eight Roads led, and was joined by Oxford Capital Partners and Samos Investments. http://axios.link/wy9q

• Booksy, a Polish booking platform for beauty companies, raised $13.2 million in Series B funding from Piton Capital, OpenOcean and Kulczyk Investments. http://axios.link/zAUk

• DaWanda, a German rival to Etsy, is shutting down. It had raised VC funding from firms like Global Founders Capital and Insight Venture Partners. http://axios.link/iKZu

Private Equity Deals

⛽ Branford Castle Partners has acquired a control stake in Titan Production Equipment, a manufacturer of oil and gas production equipment, from Exterran Corp. (NYSE: EXTN).

• Carolina Color, a Sailsbury, N.C.-based portfolio company of Arsenal Capital Partners, acquired Chroma, a McHenry, Ill.-based specialty color and additive concentrate business. www.carolinacolor.com

• EQT agreed to buy Banking Circle, a European B2B payments transfer company, from Saxo Bank for around $300 million. http://axios.link/tzAC

• PAI Partners has sweetened its takeover offer for listed Belgian diaper-maker Ontex Group to €27.50 per share, after Ontex rejected its initial approach. http://axios.link/Kjrg

Public Offerings

• No IPOs are expected this week on U.S. exchanges, but up to a dozen companies could launch road-shows. http://axios.link/Nfux

⛽ Bloom Energy, a Sunnyvale, Calif.-based fuel cell company that provides on-site power generation to large facilities, set its IPO terms to 18 million shares at $13-$15. It would have an initial market cap just south of $1.5 billion, were it to price in the middle. For context, it has raised around $1 billion in private funding and received a $3 billion valuation back in 2014. Major backers include Kleiner Perkins and NEA.

• Camposol, a Peruvian supplier of off-season produce and seafood, withdrew registration for a $345 million IPO on the NYSE. http://axios.link/cr1C

• OC Oerlikon, a listed Swedish industrials group, has dropped IPO plans for its drives unit. http://axios.link/YoBA

• SoftBank (Tokyo: 9984) has filed papers for a Tokyo listing of its Japanese telecom unit. http://axios.link/gILL

• Xiaomi, the Chinese smartphone maker, saw its shares close down 1.2% on its first day of trading in Hong Kong, following what was already a disappointing IPO. http://axios.link/0Vt1

Liquidity Events

• Silver Lake has hired Credit Suisse to find a buyer for Quorum Business Solutions, a Houston-based provider of software to the energy market, per the WSJ. http://axios.link/4bNr

More M&A

⛽ BP (LSE: BP) is the frontrunner for the U.S. onshore oil and gas operations of BHP Billiton (ASX: BHP), which may be valued at around $9 billion, according to Bloomberg. http://axios.link/MBrr

🛰 EchoStar (Nasdaq: SATS) has abandoned its $3.2 billion takeover efforts for British satellite operator Inmarsat (LSE: ISA). http://axios.link/Z9jR

Groupon (Nasdaq: GRPN) is seeking a buyer, per Recode. http://axios.link/Lopj

Rolls-Royce (LSE: RR) agreed to sell its commercial marine business to Norway’s Kongsberg Gruppen (Oslo: KOG) for £500 million. http://axios.link/5iw7

⛽ Total (Paris: FP) is preparing to sell $1.5 billion of oil and gas assets in the North Sea, per Reuters. http://axios.link/ZZ14

Univision is exploring a sale of Fusion, a digital media unit whose brands include Gizmodo, Deadspin and a stake in The Onion, per WSJ. Univision shareholders include Madison Dearborn, Thomas H. Lee Partners, Haim Saban, Providence Equity Partners and TPG. http://axios.link/bapD


🚑 Abingworth raised $315 million for its latest biotech VC fund. http://axios.link/aWdm

ECI raised £700 million for its eleventh fund focused on mid-market UK buyouts. http://axios.link/7sdg

Index Ventures raised $650 million for its ninth flagship VC fund, and another $1 billion for its fourth growth equity fund. http://axios.link/j1uP

• Lakestar, a Germany-based VC firm, is targeting $800 million for what would be the largest-ever VC fund focused on European startups, per Bloomberg. http://axios.link/RBMf

• Triton raised €448 million for its first lower mid-market buyout fund, per PE News. http://axios.link/PkRN

It's Personnel

• Jane Dietze has been named chief investment officer of Brown University’s endowment, with former CIO Joseph Dowling moving into a new CEO position. http://axios.link/6XFM

• Anant Vashi has rejoined investment bank Capstone Headwaters as a director focused on the transportation and logistics sectors. He previously led business development for Vanguard Dealer Services.

Final Numbers: Sovereign Wealth Funds
Source: Invesco Global Sovereign Asset Management Survey 2018
Dan Primack

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