Jan 31, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Greetings from the home office for the last time this week, as I'm about to hop a flight to LA (so long as I beat the snow). Be sure to drop me news and views by replying to these morning missives, and please ask your colleagues to sign up for Pro Rata. Here we go...

Top of the Morning

• Startup Visa: President Trump is planning to kill off an effort to encourage startup company founders (funded by U.S. investors) to immigrate to the U.S., according to a draft executive order obtained by Axios. The affected program ― called the International Entrepreneur Rule ― was basically the Obama Administration's workaround to Congress' inability to pass a Startup Visa bill, despite broad bipartisan support and a GOP sponsor in Arizona Sen. Jeff Flake. More details here.

• We working: Co-working space "unicorn" WeWork is in talks for a $1 billion equity investment from the SoftBank Vision Fund, according to the WSJ. I'm hearing that while the discussions have indeed taken place, things remain a bit premature given that SVF isn't even closed yet (and there's still that other pesky WSJ story about how SVB cornerstone LP Saudi Arabia paused U.S. investments out of its sovereign wealth fund). It's also worth noting that WeWork is expected to soon begin raising a real estate fund (first discussed last fall) that would be structured as independent from WeWork (even though the company would make a major investment).

• Secondary survey says: Private equity secondaries volume fell 12% last year to around $37 billion, according to a survey from Evercore. That's likely because 60% of respondents believe target returns have decreased. On the upswing in prominence, however, were GP liquidity and direct deals, which rose from 22% of the total to 29%. Also worth noting that dry powder climbed from $70 billion to a record high of $90 billion. Will be interesting to see if the dry powder dog wags the deal-making tale, despite those ROI worries.

• Here to help: If you need an easy way to explain carried interest taxation and arguments on both sides to non-industry folks, we've put this together for you.

• It'll be a Spectacle: Snap should be expecting a lot of IPO road-show questions about reports that Instagram is eating into its user base, in what seems to be the first time in a long time that Facebook has successfully copycatted another successful tech company's product.

• Profiles in courage: Three private equity firms ― KKR, Madison Dearborn and TH Lee ― tell me that they do not believe they have any employees directly affected by the immigration ban. None of them, nor any of the other dozen or so I contacted, is yet making a broader statement about the ban.

• Update: Uber emailed late yesterday afternoon to say that "thousands" of its drivers are affected by the ban, and that "we have heard from several hundred drivers who need legal support."

The BFD

Iconix Brand Management (Nasdaq: ICON) reportedly is considering a sale of its majority stake in Peanuts Worldwide, which generates around $30 million in annual EBITDA. Guggenheim Partners is managing the process, and also is helping Iconix find a buyer for its Strawberry Shortcake brand. Unprofitable Iconix likely is divesting in an effort to pay down some of its massive debt-load, which was at nearly $1.3 billion as of last check.

• Why it's the BFD: You mean, beyond the fact that we're talking about Woodstock, Lucy, Linus and the whole gang being for sale? Let alone the Great Pumpkin? You need more than that? No. That's enough.

• Bottom line: "Three months ago – and after more than three decades of collaboration – insurance giant MetLife dropped the Peanuts characters as mascots, dealing a blow to Iconix. The most recent contract, which had been signed in 2014, had reportedly cost MetLife between $10m to $15m a year." -- The Independent.

Venture Capital Deals

• SoundHound, a Santa Clara, Calif.-based developer of voice-enabled AI and conversational intelligence technologies, has raised $75 million in new VC funding. New investors include Kleiner Perkins, SharesPost 100 Fund, MKaNNm, NVIDIA, GPU Ventures, Samsung Catalyst Fund, Nomura, Sompo Japan Nipponkoa Insurance and Recruit Holdings. Return backers include Global Catalyst Partners, Walden Venture Capital and TransLink Capital. http://bloom.bg/2kcg8Ow

• TeamSnap, a Boulder, Colo.-based provider of sports league management software, has raised $25 million in new VC funding led by Foundry Group. www.teamsnap.com

• CafeX Communications, a New York-based provider of real-time engagement solutions for mobile and web platforms, has raised $18 million Series C funding. Rakuten led the round, and was joined by Illuminate Ventures, USAA, Intel Capital and Cisco Investments. This comes one week after CafeX acquired Canadian videoconferencing startup Vayyoo. http://bit.ly/2jY06Ig

• Earnix, an Israeli developer of predictive customer analytics software for financial institutions, has raised $13.5 million in new VC funding. Israel Growth Partners was joined by return backers JVP and Vintage Investment Partners. http://bit.ly/2kn0RN8

• YouEarnedIt, an Austin, Texas-based SaaS platform for employee engagement, has raised $6.5 million in Series A funding. IDG Ventures USA and Silverton Partners co-led the round, and were joined by return backers WPP, Social Starts, the Motley Fool and Capital Factory. http://bit.ly/2kmxDOA

• Entrypoint, a New York-based self-service development platform for VR content creators, has raised $2 million in seed funding co-led by Samsung Next and Two Sigma Ventures. http://for.tn/2jZ2nCV

Private Equity Deals

• ARX Equity Partners has agreed to acquire Deva, a Czech Republic-based maker of baby fruit desserts and fruit drinks, from Danone Group (Paris: BN). No financial terms were disclosed. www.danone.com

• CenterOak Partners has acquired a majority stake in Aakash Chemicals and Dye-Stuffs, a Glendale Heights, Ill.-based provider of colorants and additives. No financial terms were disclosed. www.aakashchemicals.com

• Chrysaor, a North Sea-focused oil company backed by EIG Partners, has agreed to acquire a large portion of Royal Dutch Shell's North Sea oil and gas assets for $4.7 billion. http://reut.rs/2kmwcQh

• Currency Capital, a Los Angeles-based online equipment financing exchange, has raised an undisclosed amount of growth equity funding from Lovell Minnick Partners. http://bit.ly/2kKLDiQ

• Dos Rios Partners has acquired Pathfinder Aviation, an Alaskan provider of helicopter tours and travel. No financial terms were disclosed. www.pathfinderaviation.com

• Pacific Equity Partners has acquired a majority stake in Allied Mills, an Australian maker and distributor of bakery products, from GrainCorp (ASX: GNC). The deal comes with an enterprise value of A$455 million. http://bit.ly/2jQW1V7

• Solera Holdings, a Westlake, Texas-based portfolio company of Vista Equity Partners, has completed its previously-announced acquisition of Autodata, a UK-based provider of technical information to the automotive service, maintenance and repair industry. No financial terms were disclosed. www.solerainc.com

• Tech Air, a Danbury, Conn.-based distributor of gases and related welding supplies, has acquired Gases & Arc, a Denver-based distributor of welding and industrial supplies and industrial gases. No financial terms were disclosed for either deal. Tech Air is a portfolio company of CI Capital Partners. www.techair.com

Public Offerings

• Foundation Building Materials, a Tustin, Calif.-based distributor of wallboard and suspended ceiling systems, has set its IPO terms to 12.8 million shares being offered at between $17 and $19 per share. It plans to trade on the NYSE under ticker symbol FBM, with Deutsche Bank listed as left lead underwriter. The company is owned by Lone Star Funds. www.fbmsales.com

Mauser Group, a Dutch maker of rigid packaging products and services for industrial use, has set its IPO terms to 12.6 million shares being offered at between $20 and $22 per share. It would have a fully-diluted market value of around $1 billion, were it to price in the middle of its range, The company plans to trade on the NYSE under ticker symbol MSR, with BofA Merrill Lynch and Citigroup are serving as lead underwriters. Mauser is owned by Clayton Dubilier & Rice, and reported 1.6 billion in revenue for the 12 months ending last September 30. www.mausergroup.com

• Snap plans to list on the New York Stock Exchange following its upcoming IPO, as first reported by CNBC. http://cnb.cx/2jv9lOa

Liquidity Events

• Ebates, a subsidiary of Rakuten (Tokyo: 4755), has acquired Cartera Commerce, a Lexington, Mass.-based provider of loyalty marketing solutions and rewards programs. No financial terms were disclosed. Cartera had raised over $50 million in VC funding from firms like Comvest Partners, Flybridge Capital Partners, Dace Ventures, LBO Enterprises, Horizon Technology Finance and Venture Capital Fund of New England. www.cartera.com

• Eventbrite has acquired Ticketscript, an Amsterdam-based live event ticketing platforms. No financial terms were disclosed. Eventbrite has raised around $200 million in VC funding from firms like Sequoia Capital, Tenaya Capital and Tiger Global. Ticketscript had raised £7 million from Fleming Family & Partners. http://tcrn.ch/2kbO0Ln

• Razer, an Irvine, Calif.-based maker of gaming hardware and wearable devices, has acquired the assets of smartphone developer Nextbit,. No financial terms were disclosed. Razer has raised over $125 million in VC funding from firms like Digital Grid, Intel Capital Partners, IDG Capital, Temasek and Accel. Nextbit had raised over $18 million from Accel, GV and Dentsu. http://bit.ly/2jPPqwx

• Return Path, a New York-based email marketing service, has acquired ThreatWave, a Louisville, Colo.-based email sensor network. No financial terms were disclosed. Return Path has raised around $150 million in VC funding, while ThreatWave had raised over $5 million from firms like Foundry Group (which also is a Return Path shareholder). http://dpo.st/2kcrkL9

• Trinity Hunt is seeking a buyer for Family Help & Wellness, a Salem, Ore.-based operator of behavioral health programs serving adolescents and young adults, according to Dow Jones. www.famhelp.com

More M&A

• A.P. Moller-Maersk of Denmark said that it is considering the sale of its oil and gas shipping business in Brazil. http://reut.rs/2kc7LTa

• Attraqt (LSE: ATQT) has agreed to acquire Fredhopper, an Amsterdam-based e-commerce software company, from SDL (LSE: SDL) for approximately $31 million. http://bit.ly/2kPRra3

• Keysight Technologies (NYSE: KEYS) has agreed to acquire Ixia (Nasdaq: XXIA), a Calabasas, Calif.-based provider of app performance and security resilience solutions, for approximately $1.6 billion in cash. http://reut.rs/2kL0zx8

• Indutrade, an Oslo-listed Swedish engineering group, has acquired British healthcare equipment manufacturer Sunflower Medical for an undisclosed amount. http://bit.ly/2jyDVGC

• Upworthy, a Brooklyn-based viral news and video site, is merging with Los Angeles-based media and consulting firm Good Worldwide. No financial terms were disclosed. Upworthy has raised over $20 million in VC funding from firms like Spark Capital, Catamount Ventures, Initialized Capital and New Media Ventures. http://politi.co/2kmMubu

• Validus (NYSE: VR) has agreed to acquire the Crop Risk Services unit of Archer Daniels Midland (NYSE: ADM) for $127.5 million in cash. http://bit.ly/2jq7q2l

Fundraising

• Oxx has been launched as a new growth equity firm with offices in London and Stockholm. It will focus on the B2B software market, and is led by former Amadeus Capital execs Richard Anton and Mikael Johnsson. http://bit.ly/2jq7tej

• Susquehanna International Group has launched Susquehanna Private Capital, which will focus on middle-market buyouts in a variety of sectors. It will be led by new managing director Leo Helmers, who previously was managing partner of LMZ Partners and, before that, was a managing director with The Carlyle Group. www.spcllc.com

• Third Kind Venture Capital, a New York-based firm led by shana Fisher, has raised over $44 million for its debut fund, according to an SEC filing.

It's Personnel

• Claus Benkert has joined KKR Capstone as head of European operations. He previously led by Munich office for McKinsey & Co. www.kkr.com

• Craig Farr has joined The Carlyle Group as a senior advisor to the firm's credit group. He previously was with KKR as head of credit and capital markets, before leaving in 2015. http://bloom.bg/2kjFyMJ

• Jeremy Shure has joined Silicon Valley Bank as a New York-based managing director focused on early-stage companies, per his Linkedin account. He previously was director of invention at Horizon Media and, before that, was an attorney with Ackerman. www.svb.com

• Rashaun Williams, a founding partner with Queensbridge Venture Partners, has joined merchant bank Manhattan Venture Partners, in order to launch a new secondaries fund. http://tcrn.ch/2jMyBCP

Final Numbers: Secondary Private Equity
Dan Primack