Jun 2, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🚲 Let's ride again, this time for change. On Saturday at 11am ET we'll host another Pro Rata reader Peloton ride, with proceeds going to the NAACP Legal Defense and Educational Fund. The more riders, the more money raised.

  • We've already secured the largest single donation in the (short) history of these rides. If you'd like to make a "per rider" pledge, please email me.
  • More details to come later this week.
Top of the Morning

Illustration: Eniola Odetunde/Axios

U.S. forces yesterday used tear gas on peaceful protesters outside the White House gates, prior to a declared curfew, clearing a path for President Trump to visit a riot-damaged church for a photo opportunity.

  • Two of the largest U.S. producers of tear gas are owned by private equity firms, but those firms have no interest in discussing their ownership.

There is no federal tracking of tear gas usage by U.S. law enforcement, thus making it difficult to determine which company's products are used most regularly. But several outside research firms have determined that market leaders include:

Combined Systems of Jamestown, Pennsylvania.

  • The company was acquired in 2005 by Point Lookout Capital Partners, a New York-based private equity firm whose portfolio is dominated by law enforcement-related investments. Point Lookout didn't return interview requests.
  • The Carlyle Group also participated in that deal as a minority investor. It was made out of an old fund that's already closed with its assets sold, but Carlyle retains a residual equity piece in a trust that it's been unable to exit.
  • A source close to the firm says that Carlyle would not make such an investment today, because it would violate the firm's "responsible investing guidelines."

Safariland of Jacksonville, Florida.

  • The 56-year-old company was acquired in 2012 by a consortium, which includes Palm Beach Capital, from BAE Systems for $124 million.
  • Palm Beach Capital didn't return an interview request.
  • That deal also included Warren Kanders, a onetime investment banker who last summer stepped down as vice chairman of the Whitney Museum of American Art due to protests over his Safariland involvement.

Tear gas isn't really a gas. It's a pressurized powder that mists upon deployment and can cause choking and other symptoms beyond tears. It also lives in a legal gray zone, due to international treaties that allow it to be used in domestic law enforcement but not in war.

  • Many in law enforcement argue that tear gas ultimately saves lives of both police and protesters, as conflicts could otherwise turn deadly.
  • But, as we saw last night live on TV, it can also be abused with impunity.

The bottom line: Private equity firms typically take every opportunity to talk about their portfolio companies, proud of their products and management teams. In this case, they're silent.


Illustration: Aïda Amer/Axios

Cerberus Capital Management has agreed to sell control of community hospital group Steward Health Care back to the company, as first reported by the New York Times and confirmed by Axios.

  • Why it's the BFD: This would make Steward one of the country's largest physician-owned and operated companies. It also marks the end of a 10-year ownership period for Cerberus, which was most recently marked by threats to shutter a Pennsylvania hospital in March, despite the pandemic, if the facility didn't receive state bailout funds.
  • The bottom line: Dallas-based Steward has 37 hospitals across nine states, employing more than 42,000 people, plus a network of 42 skilled nursing facilities and over 25 urgent care centers.
Pro Rata for Kids

Today's project is for your kid(s) to create tin foil leaf rubbings. Have them find a leaf or two, place it under a sheet of aluminum foil, and then gently rub it with their fingers until the shape emerges. As a bonus, they can then paint the foil leaf.

  • Per usual, please send photos of what they create.
Venture Capital Deals

Vacasa, a Portland, Ore.-based vacation rental management platform, raised $108 million. Silver Lake led, and was joined by fellow insiders Riverwood Capital and Level Equity. www.vacasa.com

Climeworks, a Swiss developer of carbon capture technologies, raised around $76 million from undisclosed investors. http://axios.link/QxhX

Summit Partners invested $37 million in Appway, a Swiss provider of customer onboarding and lifecycle management automation software for financial institutions. http://axios.link/naKX

Danggeun Market, a South Korean online marketplace for secondhand goods, raised $33 million in Series C funding co-led by Goodwater Capital and Altos Ventures. http://axios.link/VAwy

Cortex, a Brazilian “growth intelligence” startup, raised $22 million in Series B funding. SoftBank led, and was joined by Redpoint eventures. www.cortex-intelligence.com

Tovala, a Chicago-based smart oven and meal service startup, raised $20 million in Series B funding. Finistere led, and was joined by return backer Origin Ventures. http://axios.link/1uLU

🚑 Ezra, a New York-based provider of early cancer screening solutions, raised $18 million. FirstMark Capital led, and was led by return backers Accomplice, Seedcamp, Credo Ventures, Founders Future, and LDV Capital. http://axios.link/XAXD

Tictrac, a London-based employee wellbeing platform, raised £6 million led by Puma Private Equity. http://axios.link/vB71

Oloid, a Sunnyvale, Calif.-based developer of enterprise facial recognition tech, raised $5 million in seed funding. Emergent Ventures led, and was joined by Unusual Ventures. http://axios.link/1bTJ

Saturas, an Israeli developer of a precision irrigation management system, raised $3 million from Gefen Capital, Hubei Forbon Technology, and Trendlines Agrifood Fund. http://axios.link/aJFk

Rise Gardens, a Chicago-based provider of in-home hydroponic garden systems, raised $2.6 million in seed funding led by True Ventures. http://axios.link/yCLS

Private Equity Deals

AE Industrial Partners acquired Deep Space Systems, a Boca Raton, Fla.-based provider of payloads, systems, and components to the space industry.

Excellere Partners, a Denver-based PE firm, launched an acquisition platform focused on the cybersecurity and managed IT services market. It will be led by Amjed Saffarini, founder and former CEO of CyberVista. www.excellerepartners.com

H.I.G. Capital acquired USALCO, a Baltimore-based provider of aluminum-based chemicals used primarily in water and wastewater treatment processes and for manufacturing catalysts used by refineries. www.usalco.com

🚑 Osceola Capital sponsored a recap of Central Medical Group, a Flanders, N.J.-based provider of outsourced equipment management solutions for hospices.

Pexco, a Johns Creek, Ga.-based portfolio company of AEA Investors, acquired Exlon Extrusion, a Greensboro, N.C.-based precision extruder of plastic tubing. www.pexco.com

Shamrock Capital acquired Adweek, a New York-based ad industry publication, from Beringer Capital. www.adweek.com

United Group, an Amsterdam-based portfolio company of BC Partners, agreed to buy a minority equity stake and the debt of Greek telecom and pay-TV provider Forthnet. www.united.group

Warburg Pincus agreed to invest more than £250 million into the merger of British wealth management firms Tilney and Smith & Williamson, alongside existing sponsor Permira. http://axios.link/OGVe

Wellspring Capital Management acquired Steele Solutions, a Franklin, Wis.-based provider of steel infrastructure for distribution, warehouse, and manufacturing facilities. www.steelesolutions.com

Public Offerings

🚑 Applied Molecular Transport, a San Francisco-based biotech focused on immune-mediated inflammation and metabolic diseases, set IPO terms to 10 million shares at $12-$14. It would have a fully diluted market value of $448 million, were it to price in the middle, and plans to trade on the Nasdaq (AMTI) with BofA Securities as lead underwriter. The company raised nearly $100 million in VC funding from firms like EPIQ Capital (25.91% pre-IPO stake) and Founders Fund (20.74%). http://axios.link/h6MN

Dada Nexus, a Chinese on-demand retail and delivery platform, set IPO terms to 16.5 million shares at $15-$17. It would have an initial market cap of $3.5 billion, were it to price in the middle, and plans to trade on the Nasdaq (DADA) with Goldman Sachs Asia as lead underwriter. The company reports a $236 million net loss on $438 million in revenue for 2019. Shareholders include Sequoia Capital China (11.4% pre-IPO stake) and DST Global (9.4%). http://axios.link/pKKn

Fiat Chrysler said it will list its Comau robot-making unit. http://axios.link/9Xpw

Semiconductor Manufacturing International, one of China’s largest chipmakers, filed for a $2.8 billion float in Shanghai. The company is already listed in Hong Kong. http://axios.link/ZYoU

Vroom, a New York-based platform for buying and selling used vehicles, set IPO terms to 18.8 million shares at $15-$18. It would have a fully diluted market value of $2 billion, were it to price in the middle, and plans to trade on the Nasdaq (VRM) with Goldman Sachs as lead underwriter. The company reports a $41 million net loss on $376 million in revenue for Q1 2020, and had raised over $700 million from firms like L Catterton (20.6% pre-IPO stake), T. Rowe Price (16%), Bill Gates (7.2%), General Catalyst (6.4%), Autonation (5.9%), Durable Capital Partners, Annox Capital, Nue Capital, Fraser McCombs Capital, and Detroit Venture Partners. http://axios.link/ytLp

Shift4 Payments, an Allentown, Penn.-based payment tech company owned by Searchlight Capital Partners, set IPO terms to 15 million shares at $19-$21. It would have a market cap of $1.6 billion, were it to price in the middle, and plans to trade on the NYSE (FOUR) with Citigroup as lead underwriter. The company reports a $5.2 million net loss on $199 million in revenue for Q1 2020. http://axios.link/osja

Liquidity Events

Zip Co. (ASX: Z1P) agreed to buy QuadPay, a New York-based buy-now-pay-later company from Susquehanna International Group for $269 million in cash and stock. http://axios.link/gTGo

More M&A

Arthur D. Little, a Boston-based management consultancy, acquired Cutter Consortium, a U.S. business tech research company, and Presans, a French firm focused on industrial innovation. www.adlittle.com

Equinix (Nasdaq: EQIX) agreed to buy 13 data centers from Bell Canada for $750 million. http://axios.link/JYfs

Volkswagen completed its previously announced $2.6 billion investment in Argo AI, a Pittsburgh-based self-driving tech upstart owned by Ford Motor Co. http://axios.link/hHjS

• Western Union (NYSE: WU) has offered to acquire rival money-transfer service MoneyGram International (Nasdaq: MGI), per Bloomberg. http://axios.link/NQit


Ardian raised $19 billion for its eighth private equity secondaries and co-investments funds. That’s not a typo. http://axios.link/8bxu

InvestEco Capital of Toronto raised C$100 million for its third venture fund focused on sustainable food brands. www.investeco.com

🚑 OurCrowd, an Israeli crowdfunding VC platform, is raising $100 million for a “pandemic innovation” fund. http://axios.link/CdTs

It's Personnel

Kareem Aly joined Felicis Ventures as a principal. He previously as with Thomvest Ventures. www.felicis.com

Mike Kay joined Angeles Equity Partners as an operating partner. He previously was with McKinsey & Co. www.angelesequity.com

Joseph Konzelmann joined TPG as a partner and head of fundraising for the Eastern U.S. and MENA regions. He previously was with Goldman Sachs as a managing director and senior sovereign strategist. www.tpg.com

• OMERS named Blake Hutcheson president and CEO, succeeding Michael Latimer. www.omera.com

Final Numbers
Data: Morning Consult; Note: ±2% margin of error; Chart: Axios Visuals
Dan Primack

🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues, and to sign up.