May 3, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

Breaking: SoftBank is considering an IPO for its $100 billion Vision Fund, according to the WSJ.

  • This comes as SoftBank prepares to raise a successor fund, and portfolio companies Uber and Slack prepare to go public themselves.
  • SoftBank Vision Fund partner Akshay Naheta was a panelist on my Milken Global Conference panel earlier this week, focused on the Year of Unicorns. The full video is here (fast forward to 43:30 for our conversation on U.S. startups taking money from governments like Saudi and UAE).
Top of the Morning

Illustration: Aïda Amer/Axios

Beyond Meat shares popped 163% yesterday on their first day of trading, marking the best IPO day performance since before the financial crisis.

  • The bull case: Beyond Meat rival Impossible Foods recently got onto Burger King's menu, and there is widespread speculation that Beyond Meat will strike a similar deal with McDonald's or Wendy's.
    • Former McDonald's CEO Don Thompson is on the Beyond Meat board, having invested through his VC firm Cleveland Avenue.
    • These products aren't just for vegetarians and vegans, with Impossible CFO David Lee telling me Monday that around 90% of his company's customers consider themselves to be carnivores.
  • The bear case: More than a dozen states are considering legislation that would make it illegal for companies to use the word "meat" to describe burgers or sausages that are made from plant-based materials or in labs.
    • This is the cattle ranchers lobby vs. the grocery lobby, and could present a particular challenge for a company with "meat" in its actual name.
    • There have been similar legal skirmishes over words like "egg" and "milk," with "chicken" most likely to follow as Tyson prepares to launch its own alternative protein product this summer.

Stephen Moore explains it all: "What went wrong here was the vetting process."

Timing is everything: Earlier this week we marveled at how WeWork's confidential IPO filing hadn't previously leaked, despite having submitted it last December. One thing we didn't note was the actual reason WeWork filed in December: Because that was the last month in which WeWork could qualify as an emerging growth company.

  • Any company is now allowed to file IPO papers confidentially, but EGCs still get certain benefits like more limited disclosure requirements. Kia goes deeper.

Today in Abraaj: Former Abraaj Group CEO Arif Naqvi has been granted $20 million bail, as he awaits possible extradition to the U.S. on fraud charges. He also must give up his passports, wear an ankle monitor and remain in his London home.

  • Bloomberg's Dinesh Nair and Matthew Martin report that two senior execs at Abraaj investor Hamilton Lane received an anonymous letter warning about troubles, about five months before the firm collapsed.
  • It read, in part: “The governance is not what it appears but employees are afraid to speak or partners entrenched so don’t speak. There is no smoke without fire. Be the hero in your firm and uncover the truth by asking simple questions.”

The Carlyle Group remains the only large, publicly-traded private equity firm to not have yet converted into a C-corp, following recent moves by Apollo and Blackstone. In an earnings call, Carlyle co-CEO Kewsong Lee said:

“The benefits we see from the conversion have not gone unnoticed. There are many complex operational moving parts in connection with the conversion and we intend to conclude our thinking with a decision in the not-too-distant future.”

🚀 Pro Rata Podcast digs into the Space Coast's revival, and the prospect of local startups becoming part of an ecosystem increasingly dominated by outside companies like SpaceX, OneWeb and Blue Origin. I'm joined by Axios' Kim Hart, who just returned from a reporting trip to Cape Canaveral. Listen here.

Source: Giphy

Verizon (NYSE: VZ) is seeking to unload Tumblr, the social network acquired by Yahoo for $1.1 billion back in 2013, per the WSJ.

  • Why it's the BFD: Because Tumblr, while unprofitable, remains home to over 450 million blogs and once was at the vanguard of social media.
  • $$$: No word yet on a possible sale price. Yahoo wrote the value of Tumblr down by $230 million before being acquired by Verizon, which subsequently hired a new CEO (Hans Vestberg) who has emphasized networking over media.
  • Tumblr founder and former CEO David Karp didn't return an emailed request for comment about Verizon's plans, or if he'd consider trying to repurchase the company. He left shortly after Verizon completes its Yahoo purchase.
  • Bottom line: Tumblr in its later years became known largely for personal pornography, until Verizon banned such content late last year. That may have been an effort to get the platform ready for auction but, as Buzzfeed reports, the only bidder to publicly express interest so far has been Pornhub.
Venture Capital Deals, a London-based provider of digital payment solutions, raised $230 million in Series A funding at a post-money valuation just shy of $2 billion. Insight Partners and DST Global co-led.

Indio Technologies, a San Francisco-based startup that streamlines the insurance application process, raised $20 million in Series B funding led by Menlo Ventures.

InCountry, a San Francisco-based provider of “data residency-as-a-service,” raised $7 million in seed funding from Caffeinated Capital , Felicis Ventures, Ridge Ventures, Bloomberg Beta, Charles River Ventures, Global Founders Capital.

CirrusMD, a Denver-based chat-first telemedicine startup, raised $15 million in Series B funding from Drive Capital and Colorado Impact Fund.

Confident Cannabis, a Palo Alto-based maker of tools to let businesses buy, sell and test wholesale cannabis, raised $12 million in Series A funding. Poseidon Asset Management led, and was joined by FJLabs, Bullpen Capital, YC and Base Ventures.

Awair, a San Francisco-based provider of air quality monitoring solutions, raised $10 million in Series B funding. The Westly Group led, and was joined by Altos Ventures, Emerson Electric, iRobot and Nuovo Capital.

Kitab Sawti, an Arabic audiobook platform, raised $6 million in Series A funding from Bonnier Ventures, Paltel Group and Kaaf Investments.

WorldCover, a provider of climate insurance to small farms in Africa, raised $6 million in Series A funding. MS&AD Ventures led, and was joined by EchoVC, YC, Western Technology Investment.

TransitScreen, a Washington, D.C.-based provider of real-time transportation data software, raised $3 million from firms like Timia Capital.

Private Equity Deals

BBH Capital Partners acquired a majority stake in 700 Valve Supply, a Stafford, Texas-based distributor of specialty valves for industrial and energy applications.

ClearCourse, a London-based portfolio company of Aquiline Capital Partners, acquired Crafty Clicks, a UK-based specialist data provider and address validation platform.

Clearlake Capital agreed to buy Dude Solutions, a Cary, N.C.-based provider of operations management SaaS, from Warburg Pincus.

Fiat Chrysler completed its previously-announced sale of car parts maker Magneti Marelli to KKR portfolio company Calsonic Kansei for $7.1 billion.

Midwest Industrial Rubber, a St. Louis-based portfolio company of Incline Equity Partners, acquired The Atlanta Belting Co., a fabricator and distributor of lightweight conveyor belting.

Pamlico Capital invested in Business Network International, an Upland, Calif.-based business development platform.

Tex Tech Industries, a Portland, Me.-based portfolio company of Arlington Capital, acquired the coating, laminating and U.S. defense-related operations of Highland Industries.

Public Offerings

SciPlay, an Las Vegas-based social gaming company being spun out of Scientific Games (Nasdaq: SGMS), raised $352 million in its IPO. The company priced 22 million shares at $16 (high end of range), for an initial market cap of $2 billion. It will trade on the Nasdaq (SCPL) with BAML as lead underwriter, and reports $73 million of net income on $416 million in revenue for 2018.

Tristar Group, a Riyadh-based logistics firm, picked BAML and Citigroup to lead a London IPO that could raise upwards of $400 million at a $1 billion valuation, per Bloomberg.

Liquidity Events

Comcast (Nasdaq: CMCSA) acquired Deep Blue Communications, a Latham, N.Y.-based provider of hotel guest WiFi, from backers like GPB Capital.

CVC Capital Partners entered exclusive talks to sell French soups and sauces business Continental Foods to Spain’s Gbfoods.

Neiman Marcus Group, a portfolio companies of Ares Management and CPPIB, hired Lazard to help it find a buyer for German luxury apparel e-commerce site MyTheresa, which could fetch over €500 million, per Bloomberg.

Patria Investments of Brazil is seeking to sell power transmission company Argo for around $1.5 billion (including debt), per a local newspaper.

More M&A

Elevate Security, a Berkeley, Calif.-based cybersecurity startup backed by Defy VC and Costanoa Ventures, acquired Phish5, a provider of phishing simulation software.

Sinclair Broadcasting (Nasdaq: SBGI) has reached a $10 billion agreement to purchase 21 regional sports networks from Walt Disney Co. (NYSE: DIS), according to The Wall Street Journal, with a formal announcement coming as early as today. Disney had originally sought upwards of $20 billion.

  • Axios also has confirmed prior reporting that Disney will sell the YES Network to a consortium led by the New York Yankees. Other buyers, in order of ownership, will include Sinclair, RedBird Capital Partners and Amazon. Expect the Yankees to hold editorial control.

Unshackled Ventures, a Palo Alto-based VC firm focused on immigrant founders, raised $20 million for its second fund.

It's Personnel

Credit Suisse hired Aaron Wolf, an oil and gas investment banker who previously spent eight years with Barclays, per Bloomberg.

Greg Olson, former chief development officer for Ichor Systems, joined private equity firm Graycliff Partners as an operating partner.

Richard Seline, managing partner of Resiliency Capital Partners, joined Houston-based private equity firm Cimbria Capital as a senior advisor.

Eric Whittman joined real estate-focused VC firm JLL Spark as chief growth officer. He previously was COO at Figma.

Final Numbers
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Data: Bureau of Labor Statistics; Chart: Axios Visuals
Dan Primack