Jun 30, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

Illustration: Aïda Amer/Axios

The fate of Cirque du Soleil will be decided in a courtroom, not under the big top.

Driving the news: The live events giant yesterday filed for bankruptcy protection in Canada and confirmed furloughs of around 3,500 employees.

What happened: The coronavirus pandemic decimated the company almost entirely reliant on revenue from live events.

  • Just weeks before the virus hammered North America, Caisse de dépôt et placement du Québec (CDPQ) had increased its stake in the company and its debt was trading just below par.

What now: Cirque's existing private equity owners, including TPG Capital, offered a reorganization plan whereby they'd retain a 55% equity stake.

  • A source says that 26 parties signed nondisclosure agreements with Cirque, but this was the only formal offer received.
  • It includes $300 million in new investment, $200 million of which is debt financing from Investissement Québec.
  • That money also would include the establishment of a $15 million fund for furloughed employees, and a $5 million fund for contractors.

But, but, but: Cirque creditors aren't pleased with an arrangement that would leave them without a controlling interest. They're expected to submit a rival plan today, ahead of a Canadian court hearing.

  • This reflects something that's emerging as a big difference between our current financial crisis and the prior edition: Banks and other lenders are in a much stronger financial position, and seem more interested in fighting to defend their cap table superiority.
  • These conflicts could become more prevalent as bankruptcies continue to rise. As we noted yesterday, there already have been more global corporate defaults in 2020 than in all of 2019.

The bottom line: Neither the private equity firms nor the creditors can really control when Cirque resumes operations. But the "winner" could significantly impact what that resumption looks like, and how many of the 3,500 employees get rehired.

The BFD
Source: Giphy

Lululemon (Nasdaq: LULU) agreed to acquire connected fitness company Mirror for $500 million in cash.

  • Why it's the BFD: This is Lululemon's largest-ever acquisition, and may kick-start an acquisition spree in the connected fitness space. It also reflects the company's stated desire to be more than just an apparel retailer, the first step of which was offering in-store yoga classes.
  • Backstory: The two companies had an existing content partnership, and Lululemon made a small investment last year.
  • ROI: Mirror raised over $70 million since its 2016 founding, most recently at a $300 million post-money valuation. Backers include Lerer Hippeau, Spark Capital, Point72 Ventures, and LionTree Advisors.
  • The bottom line: This is a pandemic-driven deal, but synergies can't really manifest themselves until Lululemon's stores are open and crowded. The big question is if interest in at-home fitness, which has surged as gyms remain closed, will persist once we're at a point when retail foot traffic can return.
Venture Capital Deals

Discord, a San Francisco-based online chat app, raised $100 million in new funding led by Index Ventures at a $3.5 billion valuation. http://axios.link/S6xo

Fivetran, an Oakland-based automated data integration provider, raised $100 million in Series C funding at a $1.2 billion post-money valuation. Andreessen Horowitz and General Catalyst co-led, and were joined by return backers CEAS Investments and Matrix Partners. http://axios.link/QwQG

SolarisBank, a German provider of fintech APIs to financial institutions, raised €60 million in Series C funding at a €320 million post-money valuation. http://axios.link/oFNf

Mynd Property Management, an Oakland-based single-family rental manager, raised $41.5 million in Series C funding. Wells Fargo led, and was joined by return backers Canaan Partners, Lightspeed Venture Partners, and Jackson Square Ventures. www.mynd.co

Area 1 Security, a Redwood City, Calif.-based email security company, raised $25 million from ForgePoint Capital and return backers Kleiner Perkins, Icon Ventures, and Top Tier Capital. The company also named Patrick Sweeney (ex-Talari Networks, SonicWall) as CEO. http://axios.link/k7CU

Cynet, a New York-based threat detection and response platform, raised $18 million in Series B+ funding. BlueRed Partners led, and was joined by Merlin International and return backers Norwest Venture Partners and Ibex Investors. http://axios.link/rb6R

DigniFi, a Seattle-based financing platform for auto repairs and services, raised $14 million in Series A funding led by BuildGroup. www.dignifi.com

Upsolver, a Sunnyvale, Calif.-based provider of developer software that eliminates the need to operate cloud data lakes, raised $13 million in Series A funding. Vertex Ventures US led, and was joined by Wing VC and return backer JVP. www.upsolver.com

Aclaimant, a Chicago-based workplace safety platform, raised $10 million in Series A funding. Mercury Fund led, and was joined by Royal Street Ventures, EBSCO Capital, KEC Ventures, RRE Ventures, and Aspen Capital Group. http://axios.link/T8nz

Emissary, a New York-based sales intelligence platform, raised $6.3 million. G20 Ventures led, and was joined by PBJ Capital, Converge, and Castor Ventures. http://axios.link/qxOA

PlayBrain, a Tokyo-based e-sports content provider, raised $6 million in Series A funding from backers like BitKraft Esports Ventures. www.playbrain.jp

Nacelle, a Los Angeles-based headless e-commerce developer platform, raised $4.8 million from Index Ventures and Accomplice. http://axios.link/OZDG

Willa, a freelancer payment platform, raised $3 million in seed funding led by EQT Ventures. http://axios.link/OtVw

Private Equity Deals

Mercer Advisors, a Denver-based wealth management firm owned by Oak Hill Capital and Genstar Capital, acquired Argosy Wealth Management, a Los Angeles-based based wealth manager with around $330 million in AUM. www.merceradvisors.com

Redwire, a portfolio company of AE Industrial Partners, acquired Made In Space, a Jacksonville, Fla.-based developer of zero-gravity manufacturing solutions. http://axios.link/8LdN

Public Offerings

Montrose Environmental Group, an Irvine, Calif.-based environmental measurement firm owned by Oaktree Capital Management, filed for a $160 million IPO. It plans to trade on the NYSE (MEG) with BofA and William Blair as lead underwriters, and reports a $41 million net loss on $61 million in revenue for Q1 2020. http://axios.link/u0TU

Liquidity Events

Bharti Enterprises, an Indian conglomerate led by Sunil Mittal, offered to buy bankrupt satellite firm OneWeb, whose backers include SoftBank, per Bloomberg. http://axios.link/Pcl9

Shift Technologies, a San Francisco-based P2P used car marketplace, confirmed plans to go private via a $730 million reverse merger with blank-check acquisition company Insurance Acquisition Corp. (Nasdaq: INSU). Shift has raised over $300 million from firms like DCM, Highland Capital Partners, Threshold Ventures, and BMW iVentures. http://axios.link/5AUN

Uber (NYSE: UBER) has offered to buy Postmates, an on-demand delivery platform that’s raised $900 million in VC funding, per the NY Times. A separate Reuters report says that Postmates has revived its IPO plans. http://axios.link/W5qo

Velodyne, a San Jose, Calif.-based maker of Lidar auto sensors, is in talks to go public via a reverse merger with blank-check acquisition company Graf Industrial (NYSE: GRAF). It raised $225 million from backers like Ford Motor Co., Nikon, and Hyundai Mobis. http://axios.link/0H1n

More M&A

🃏 Eldorado Resorts (Nasdaq: ERI) received U.S. antitrust approval for its $17.3 billion purchase of Caesars Entertainment (Nasdaq: CZR). http://axios.link/FhJS

SAS (Stockholm: SAS), a Scandinavian airline, secured around $1.5 billion in rescue funding from top shareholders. http://axios.link/ExC5

Wirecard North America, a unit of the scandal-played German fintech Wirecard, is seeking a buyer. http://axios.link/9LMu

Fundraising

645 Ventures, a New York-based early-stage firm, is raising $100 million for its third fund, per an SEC filing. www.645ventures.com

B Capital Group raised $820 million for its second growth equity fund. www.bcapgroup.com

Reach Capital, an early-stage VC firm focused on ed-tech, is raising $150 million for its third fund, per an SEC filing. www.reachcapital.com

Oakpi Venture Capital is raising $30 million for its sixth fund, per an SEC filing. www.okapivc.com

Southfield Capital, a Greenwich, Conn.-based lower middle-market private equity firm, is raising $300 million for its third fund, per an SEC filing. www.southfieldcapital.com

Summit Partners raised €1.1 billion for its third European growth equity fund and $1 billion for its fifth North American VC fund. www.summitpartners.com

It's Personnel

John Harper joined H.I.G. Capital as a managing director and head of its London small-cap LBO team. He previously was a partner with Inflexion. http://axios.link/eBKT

Chad Pike is leaving The Blackstone Group after 25 years, per PE International. He founded the firm’s tactical opportunities unit and co-led its real estate business. http://axios.link/UEPt

Justin Silver joined Warburg Pincus as an executive-in-residence. He previously was EVP of corp dev and new product development for Ability Network (acquired by Inovalon). www.warburgpincus.com

Final Numbers
Data: Yahoo; Chart: Axios Visuals
Dan Primack

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