Apr 18, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

Last September we bought tickets for Frozen on Broadway as a school vacation surprise for E, and then forgot about it until two weeks ago. So greetings from NYC, where I'm on a bit of a working vacation. Here we go...

Top of the Morning
Source: Giphy

Mommas, don't let your babies grow up to be secured lenders.

The group now controlling Toys "R" Us reportedly has rejected an $890 million offer from billionaire Isaac Larian that would have involved over 200 U.S. stores and more than 80 Canadian stores.

  • Larian, who founded the company that makes Bratz dolls, had worked for the past month on his offer, which envisioned a revised store concept that he described as "a mini-Disneyland in each neighborhood." It had included both a crowdfunding campaign and involvement from banks UBS and BofA.

Why it matters: A lot of jobs are at stake here, and the lenders seem uninterested in saving any of them. Tunnel vision toward liquidation. And before you email me about fiduciary duty, know that Larian says he wasn't even informed his bid was being rejected, thus not giving him the opportunity to make it more attractive.

No, private equity still isn't off the hook here. It helped cause this mess in the first place, but is no longer calling the shots.

What's next: A bankruptcy court auction is expected to take place today, but there is no word yet on if there are any other viable offers that would maintain the portfolio of performing U.S. stores.

Never mind? Trump last night tweeted some cold water over the U.S. trying to rejoin TPP.

• Biotech ROI: Axios' Bob Herman reports that cancer hospital lobbyists are urging Medicare officials to create a set of payments for new, expensive CAR-T treatments.

Courtroom: Next up in the DoJ vs. AT&T trial are a series of top AT&T and Time Warner executives, which could be the final witnesses before closing arguments.

  • Axios' David McCabe says DoJ lawyers likely will press AT&T its central claim that it needs Time Warner to compete with big Silicon Valley tech companies like Google, and press Time Warner to admit that its content is "must-have." (a lynchpin of the government's case).

Cryptography: IMF chief Christine Lagarde last month blogged about the "dark side" of cryptocurrencies. Yesterday she offered a more "even-handed" take:

"The fintech revolution will not eliminate the need for trusted intermediaries, such as brokers and bankers. There is hope, however, that decentralized applications spurred by crypto-assets will lead to a diversification of the financial landscape, a better balance between centralized and de-centralized service providers, and a financial ecosystem that is more efficient and potentially more robust in resisting threats."
The BFD
Photo by Brian Ach/WireImage for BWR Public Relations.

Carl Icahn has amassed a stake in VMware, the cloud computing and virtualization software company majority-owned by Dell Technologies, according to CNBC. The position is below 5%, thus not triggering reporting requirements.

  • Why it's the BFD: Because Icahn is no stranger to throwing a monkey wrench into Michael Dell's plans. No word yet on his intentions for VMWare, but in 2013 he engaged in a contentious (and ultimately unsuccessful) battle to stop Dell from taking his eponymous company private.
  • Bottom line: "Dell is considering a reverse-merger with VMware, where Dell and its tracker stock, DVMT, would be rolled into one publicly-traded company... A deal remains tricky because VMware shareholders will need to be convinced a transaction is in the company's best interest." — Alex Sherman, CNBC
Venture Capital Deals

100Credit, a Chinese provider of credit services, raised around $159 million in Series C funding. State-owned China Reform led, and was joined by return backer Sequoia Capital China. http://axios.link/XM6W

Drift, a Boston-based conversational sales and marketing platform, raised $60 million in new funding. Sequoia Capital led, and was joined by return backers CRV and General Catalyst. http://axios.link/HfWF

Tala, a Santa Monica, Calif.-based provider of “mobile-first financial services for underserved consumers,” raised $50 million in Series C funding. Revolution Growth led, and was joined by return backers IVP, Data Collective, Lowercase Capital, Ribbit Capital and Female Founders Fund. www.tala.co

Project44, a Chicago-based provider of supply chain visibility solutions, raised $35 million in new funding. OpenView led, and was joined by 8VC and return backers Emergence Capital, Omidyar Technology Ventures, Chicago Ventures and Pritzker Group Venture Capital. http://axios.link/g418

🚑 LimFlow, a Paris-based developer of peripheral endovascular technology for the treatment of critical limb ischemia, raised around $33 million in Series C funding. Sofinnnova Partners led and was joined by return backers Bpifrance and Balestier. www.limflow.com

Qapital, a Stockholm-based personal finance app focused on savings, raised $30 million from Swedbank Robur and Northzone. www.qapital.com

Funding Societies, a P2P lending platform in Southeast Asia, raised $25 million in Series B funding. SoftBank Ventures Korea led, and was joined by Qualgro, LINE Ventures and return backers Sequoia India, Golden Gate Ventures and JWC Ventures. http://axios.link/tTyi

Eightfold.ai, a Mountain View, Calif.-based machine learning startup focused on employee recruiting and retention, raised $18 million in Series B funding co-led by Foundation Capital and Lightspeed Venture Partners. www.eightfold.ai

Green Bits, a maker of point-of-sale software for cannabis retailers, has raised $17 million in Series A funding led by Tiger Global, with Snoop Dogg's Casa Verde Capital also participating. http://axios.link/33rC

🚑 Vicarious Surgical, a developer of VR-based surgical robotics, raised $16.75 million in Series A funding. Khosla Ventures and Innovation Endeavors, co-led, and were joined by Gates Ventures, AME Cloud Ventures and Marc Benioff. http://axios.link/HANR

RapidSOS, a New York-based startup that provides data for emergency response situations, raised $16 million in new funding. Highland Capital Partners led, and was joined by Microsoft Ventures and CSAA Insurance Group. www.rapidsos.com

AppOnboard, a Los Aneles-based mobile tech platform for app developers, raised $15 million in Series A funding. Korea Investment Partners led, and was joined by Mirae Asset Management, Mantaray, MTG, Runa Capital and return backers London Venture Partners, Troy Capital Partners and Ophir Capital Group. http://axios.link/ALkl

BookingBug, a Boston-based appointment and scheduling platform, raised $13.4 million in Series C funding from PeakSpan Capital and Downing Ventures. www.bookingbug.com

Agentology, a San Diego-based provider of rapid response services for real estate agents, raised $12 million led by Defy.vc. http://axios.link/yS3b

Instant Financial, a Vancouver-based provider of employee payment technologies, raised C$11.4 million in Series A funding. TTV Capital led, and was joined by return backers ITC Partners Fund, Kinetic Ventures and Real Ventures. www.instant.co

🚑 Airway Therapeutics, a Cincinnati-based developer of interventions for acute and chronic lung disease, raised $11 million in Series B funding. Existing backers include CincyTech. www.airwaytherapeutics.com

🚑 Parsley Health, a membership-based personalized healthcare service, raised $10 million in Series A funding. FirstMark Capital led, and was joined by Amplo, Trail Mix Ventures, Combine and The Chernin Group. http://axios.link/jaYj

XpertSea, a Canadian aquaculture startup, raised C$10 million in Series A funding. Obvious Ventures and Aqua-Spark co-led, and were joined by Real Ventures. www.xpertsea.com

Nano-C, a Westwood, Mass.-based developer of nanostructured carbon for energy and electronics applications, raised $3 million in new funding from Ray Stata. www.nano-c.com

Imperative Execution, a dark pool trading platform “designed to counter the impact of certain high-speed trading strategies,” has raised funding from Steve Cohen’s Point72 Ventures, per the WSJ. http://axios.link/68Bb

Cohesity, a Santa Clara, Calif.-based hyperconverged data platform, is in talks to raise at least $150 million in new funding led by SoftBank Vision Fund at around a $1 billion valuation, per Recode. http://axios.link/vChX

Private Equity Deals

Arsenal Capital Partners has agreed to acquire a majority stake in Fralock, a Valencia, Calif.-based maker of components and assemblies for end-markets like semiconductors. www.fralock.com

⛽ Castle Harlan has agreed to acquire the North American production equipment manufacturing assets of Exterran (NYSE: EXTN), and will rename the business Titan Production Equipment. www.titanpeq.com

CVC Capital Partners, EQT Partners and KKR are considering bids for the industrial gas-engines business being sold by General Electric (NYSE: GE), according to Bloomberg. The deal could be valued north of $3 billion, with Cummins (NYSE: CMI) also expressing interest. http://axios.link/NTJ1

DFW Capital Partners has acquired ReSource Pro, a New York-based provider of business process management and outsourcing to the insurance industry. www.resourcepro.com

🦔 Gauge Capital has acquired a majority stake in American Nuts, a Sylmar, Calif.-based supplier and processor of nuts, seeds and dried fruits to bulk retail, industrial and foodservice markets. www.americannuts.com

HighTower, a registered investment advisor backed by Thomas H. Lee Partners, has agreed to acquire the wealth management business of Salient Partners. www.hightoweradvisors.com

May River Capital has acquired Dickson, an Addison, Ill.-based provider of test and measurement instruments. www.dicksondata.com

🚑 Shore Capital Partners has invested in Hulin Health, a provider of urgent care services in the Gulf Coast region. www.hulinhealth.com

Starwood Capital Group is seeking minority stakes in listed Austrian property companies CA Immo and Immofinanz. http://axios.link/yc51

Vista Equity Partners has agreed to acquire LogicMonitor, a Santa Barbara, Calif.-based Saas monitoring platform for hybrid IT infrastructure and cloud services, from Providence Strategic Growth. www.logicmonitor.com

Public Offerings

Flagship Credit, a Chadds Ford, Penn.-based subprime auto lender, withdrew registration for a $50 million IPO it originally filed in April 2015.

More M&A

Imersys (Paris: IMTP) has hired JPMorgan and Rothschild to find a buyer for its roofing tiles business, which could be valued at around €1 billion and is expected to receive private equity interest, per Reuters. http://axios.link/wcnX

Lagardere (Paris: LAGA) is in talks to sell its French magazine titles, including Elle, to Czech Media Invest. http://axios.link/ZRpj

⛽ Total (Paris: TOTF) has agreed to acquire a majority stake in French electricity retailer Direct Energie (Paris: DIREN) for €1.4 billion. http://axios.link/5Vb9

Fundraising

BBH Capital Partners has closed it’s a new mid-market private equity fund with $250 million in capital commitments. www.bbh.com

BlackRock (NYSE: BLK) has agreed to acquire Tennenbaum Capital Partners, a private credit firm focused on middle-market and special situation opportunities. http://axios.link/Qmnl

Pioneer Square Labs, a Seattle-based startup studio, has raised $80 million for its first VC fund.http://axios.link/RmZ7

Starwood Capital Group has closed its eleventh real estate opportunities fund with nearly $7.56 billion. www.starwoodcapital.com

Volpi Capital, a tech growth equity firm focused on Northern Europe, has closed its debut fund with €185 million. www.volpicapital.com

It's Personnel

Martin Mumford has joined private equity firm Angeles Equity Partners as an operating partner. He previously was with Oliver Wyman. www.angelesequity.com

Final Numbers: Private company comp
Source: PitchBook summary of Thelander 2018 Private Company Compensation Report. Note: Data is for total cash compensation.

More data from PitchBook and Thelander:

  • The median ratio of private company CEO-employee cash comp is 1.82x, but it rises to 3.15x when directors and VPs are excluded.
  • Private company tech CEOs have average cash salaries of $239k for 2018 and average projected cash bonuses of $110k.
  • Founder CEOs of privately-held tech cos hold an average of 21% of fully-diluted shares, while non-founder CEOs hold 6.4%.
Dan Primack