Jun 29, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🖥️ You're invited: Axios tomorrow hosts a live virtual event at 1:30pm ET, focused on Black underrepresentation in venture capital. Conversations with Charles Hudson (Precursor Ventures), Sara Kunst (Cleo Capital), and Elliott Robinson (Bessemer Venture Partners). Register here.

🎧 Axios Re:Cap digs into the (theoretical) return of baseball with Boston Red Sox CEO Sam Kennedy, plus Albertsons CEO Vivek Sankaran talks about changing grocery consumer behaviors. Listen via Apple or via Axios.

Top of the Morning

Illustration: Eniola Odetunde/Axios

The largest initial coin offering in history has been voided, with investors to be refunded most of their $1.7 billion.

Driving the news: Encrypted messaging service Telegram settled with the SEC, which had charged the company with failing to register its tokens as securities. In addition to the refunds, it will pay an $18.5 million penalty.

Backstory: Telegram in 2017 decided to develop its own blockchain platform and native cryptocurrency, and in early 2018 raised $1.7 billion via two sales from purchasers like Benchmark, Lightspeed Ventures, Ribbit Capital, and Sequoia Capital.

  • The SEC last October sued Telegram, alleging that the tokens were unregistered securities.
  • Telegram asked purchasers to extend the launch deadline for their blockchain platform from October 23, 2019, to April 30, 2020. A majority of purchasers approved the extension, which also allowed Telegram to spend up to another $80 million in token sale proceeds.
  • A U.S. District Court judge agreed with regulators in March, and issued a preliminary injunction.
  • Telegram publicly abandoned its blockchain platform in May, but not after spending nearly $500 million raised via the ICO.

Settlement: Telegram says it has repaid the remaining $1.22 billion, either in cash or via loans that mature in one year with a 10% coupon.

  • The SEC did not require Telegram to admit or deny liability, which has become par for the course in SEC settlements.

Between the lines: Some very smart investors made a very big miscalculation. Not just in their original purchase, but also in voting to extend Telegram's project.

This is likely the final nail in the coffin for SAFT agreements, whereby crypto project developers sold tokens first and delivered them later.

  • Such structures were designed to bypass securities registration requirements, but regulators and the court felt it was a legal distinction without a difference.
  • If Telegram couldn't adequately defend itself with its massive bankroll, it's hard to see success for small blockchain developers.

The bottom line: RIP SAFTs (2017–2020).

The BFD

Illustration: Aïda Amer/Axios

BP (LSE: BP) agreed to sell its global petrochemicals business to Ineos for $5 billion.

  • Why it's the BFD: This is the first multibillion oil industry deal since the coronavirus pandemic began, and means that BP hit its $15 billion asset sales goal a year ahead of schedule.
  • The bottom line: "It's the latest move in the oil-and-gas giant's strategic overhaul, which includes selling its Alaskan assets and a pledge to reorient its business around low-carbon goals — a transition that will unfold over decades." — Ben Geman, Axios
Venture Capital Deals

Zuoyebang, a Beijing-based online learning app, raised $750 million in Series E funding. Tiger Global and FountainVest Partners co-led, and were joined by return backers SoftBank Vision Fund, Sequoia Capital China, Xiang He Capital, and Qatar Investment Authority. http://axios.link/4Tow

Xingsheng Youxuan, a Chinese grocery delivery startup, is raising around $300 million at a $3 billion valuation from backers like Tencent and Primavera Capital, per Bloomberg. http://axios.link/3NV9

  • Bonus: U.S. peer Instacart announced a $225 million raise earlier this month, but an SEC filing suggests it could be expanded to a total of $325 million. A source confirms that Instacart's round remains open.

TuSimple, a Tucson, Ariz.-based self-driving truck developer, hired Morgan Stanley to help it raise $250 million in Series E funding, per TechCrunch. It previously raised over $400 million from firms like Sina Corp., CDH Investments, Lavender Capital, and Mando Corp. http://axios.link/oSrB

🚑 Artiva Biotherapeutics, a San Diego-based developer of allogeneic natural killer cell therapies, raised $78 million in Series A funding from 5AM Ventures, venBio Partners, RA Capital Management, Medivate Partners, GC LabCell, and GC. http://axios.link/CYmT

Artlist, an Israeli stock digital content platform, raised $48 million. KKR led, and was joined by return backer Elephant Partners. http://axios.link/1zZb

Enko Chem, a Woburn, Mass.-based developer of crop protection solutions, raised $45 million in Series B funding. Bill & Melinda Gates Foundation led, and was joined by Finistere Ventures, Novalis LifeSciences, Germin8 Ventures, TO Ventures Food, and return backers Anterra Capital and Rabo Food & Agri Innovation Fund. http://axios.link/aP4M

🚑 Airvet, a Los Angeles-based telemedicine startup for pets, raised $14 million in Series A funding. Canvas Ventures led, and was joined by e.ventures, Burst Capital, Starting Line, TrueSight Ventures, Hawke Ventures, and Bracket Capital. http://axios.link/PWWy

Prisma, a Berlin-based open-source database toolkit for developers, raised $12 million in Series A funding. Amplify Partners led, and was joined by return backer Kleiner Perkins. www.prisma.io

Thoughtexchange, a Canadian “crowd conversation tool for leaders,” raised C$10 million in new funding from insiders Information Venture Partners, Yaletown Partners, and Voyager Capital (Seattle). www.thoughtexchange.com

Ubble, a Paris-based biometric identification startup, raised €10 million from Partech and Breega. http://axios.link/xniQ

Private Equity Deals

The Carlyle Group acquired Unison, a Dulles, Va.-based provider of procurement and contract management software to federal government agencies and contractors, from Abry Partners. www.unisonglobal.com

🚑 The Carlyle Group will pay $490 million for a 20% stake in Indian drugmaker Piramal Pharma. http://axios.link/Vkly

Cibicom, a Danish broadcast tower company owned by Agilitas, acquired Net1, the Danish subsidiary of ICE Group. www.cibicom.dk

Kinderhook Industries acquired Prairie Dog Pet Products, a Grand Prairie, Texas-based dog treats maker. www.prairiedogpetproducts.com

Kohlberg & Co. acquired a majority stake in GPRS, a Toronto-based provider of scanning services for subsurface infrastructure. from CIVC Partners. www.gprsinccom

KKR will pay $192.2 million for an 11.9% stake in listed Philippines power developer First Gen Group. It’s KKR’s first Philippines investment. http://axios.link/DOoT

MBK Partners will pay $577 million for a portfolio of Japanese golf course stakes from Accordia Golf Trust’s (Singapore: ACCO). http://axios.link/zhB2

Sparton Corp., a Schaumburg, Ill.-based portfolio company of Cerberus Capital Management, agreed to sell its contract manufacturing unit to One Equity Partners. www.sparton.com

VE Partners agreed to buy EQIN, the European professional equipment rental business of Fluor (NYSE: FLR) subsidiary Stork. www.stork.com

Warburg Pincus led a $400 million investment in WEX Inc. (NYSE: WEX), a Portland, Maine-based corporate credit card provider that has a market cap of around $6.7 billion. Warburg previously held WEX shares via the latter’s 2015 acquisition of Electronic Funds Source. www.wexinc.com

Public Offerings

🚑 ALX Oncology, a Burlingame, Calif.-based immuno-oncology biotech, filed for a $100 million IPO. It plans to list on the Nasdaq (ALXO) and raised $128 million from firms like VenBio Partners (30.6% pre-IPO stake), Lightstone Ventures (15%), Vivo Capital (12.9%), and Logos Opportunities Fund (8.6%). http://axios.link/2esD

🚑 Berkeley Lights, an Emeryville, Calif.-based digital cell biology startup, filed for a $100 million IPO. It plans to list on the Nasdaq (BLI), and reports an $8 million net loss on $14 million in revenue for Q1 2020. It raised $245 million in VC funding from Walden-Riverwood Ventures (22.5% pre-IPO stake), Sequoia Capital (15%), Nikon (8.1%), Cota Capital, KTB Network, Atinum Investment, Shangbay Capital, AJS BioTree Healthcare Fund, Varian, Black Diamond Ventures, and Paxion Capital. http://axios.link/HwiF

D8 Holdings, a blank check acquisition company focused regional or global consumer brands, filed for a $250 million IPO. It’s led by Nautica founder David Chu. http://axios.link/I7lv

HPX, a blank-check acquisition company targeting a Brazilian business, filed for a $200 million IPO. It’s led by current and former Kraft Heinz executives. http://axios.link/7AvB

🚑 Pandion Therapeutics, a Phase 1 biotech developing engineered T cells for autoimmune diseases, filed on Friday with the SEC to raise up to $75 million in an initial public offering. It plans to trade on the Nasdaq (PAND), and raised $138 million in VC funding from firms like Versant Ventures (15.9% pre-IPO stake), Polaris Partners (14.7%), Roche (14.2%), S.R. One (8.8%), and Boxer Capital (6.5%). http://axios.link/leJI

Liquidity Events

Empower Retirement, a Colorado-based affiliate of Great-West (TSX: GWO), agreed to buy Personal Capital for upwards of $1 billion (including $825m upfront). Personal Capital is a Redwood City, Calif.-based online wealth management firm that raised around $325 million from Venrock, IGM Financial, Corsair Capital, BBVA Ventures, USAA Ventures, Jump Capital, IVP, Correlation Ventures, New York Life Ventures, BlackRock Private Equity Partners, and Crosslink. http://axios.link/eL8P

More M&A

Amazon (Nasdaq: AMZN) and SoftBank (Tokyo: 9984) have made acquisition approaches for Russian e-commerce company Ozon. http://axios.link/rCd2

Cannae Holdings (NYSE: CNNE) and Senator Investment Group offered to buy real estate analytics firm Corelogic (NYSE: CLGX) for around $7 billion in cash, or $65 per share (23% to Thursday’s closing price). http://axios.link/yatg

Coty (NYSE: COTY) agreed to buy a 20% stake in KKW, Kim Kardashian West’s makeup brand, for around $200 million. http://axios.link/rS1h

Generali (Milan: GASI) approached U.S. asset management firm Brightsphere (NYSE: BSIG) about a possible acquisition, per Reuters. Brightsphere has a market cap just south of $1 billion, and Paulson & Co. is its largest outside shareholder. http://axios.link/RBzH

Singapore Exchange agreed to buy the 80% stake it doesn’t already own in London-based forex trading platform BidFX for $128 million. http://axios.link/3LDS

🚑 Temasek is leading a $251 million ordinary share and convertible note investment in German vaccine developer BioNTech (Nasdaq: BNTX). http://axios.link/ddJB

Fundraising

Scotts Miracle-Gro launched a $50 million corporate venture arm called 1868 Ventures. http://axios.link/xJ3W

It's Personnel

Alexis Ohanian is moving on from Initialized, the venture capital firm he co-founded in 2012, Axios reported on Friday.

CenterOak Partners promoted Lucas Cutler and Jason Sutherland to managing partners. The Dallas-based private equity firm also promoted Carrie Hamilton, Eric Holter, and Blake Richardson to principals, and Mark Izlar to senior associate. www.centeroakpartners.com

Martin Munte joined 17Capital as director of investor relations. He previously was with CVC Credit Partners. www.17capital.com

Garth Ritchie, former investment banking head for Deutsche Bank, joined private equity firm Centricus Asset Management. http://axios.link/PO3y

Final Numbers: Corporate defaults
Source: S&P Global. 2020 data through June 24.

There have been more corporate defaults so far in 2020 than there were in all of 2019, according to S&P Global.

Dan Primack

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