May 8, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Greetings from the home office, where it's good to be back after a week on the road. Just a reminder that Pro Rata is just one of several morning missives offered up by Axios, and you can get them all by going here. Here we go...

Top of the Morning

• Clear the decks: Harvard Management Company is seeking to sell off more than $2.5 billion of private equity, venture capital and real estate investments, Axios has learned from multiple sources. Cogent Partners, a unit of Greenhill & Co., is managing the process.

  • Breakdown: The secondary offerings include just under $1 billion of PE/VC partnership positions (none of which are considered to be terribly impressive), plus around $1.6 billion of real estate positions.
  • Why? HMC changed up its senior leadership at the end of 2016, so this is basically a chance for them to clear the decks (even though it might result in a decent performance hit for the fiscal year ending June 30). Not too dissimilar to the thinking behind what former HMC CEO Jane Mendillo did when she took over years ago, except that she sold into a much less beneficial secondary market (which, arguably, depressed HMC's private equity returns for years to follow). This time around, however, secondary buyers are flush with cash and Harvard can be choosy. If it manages to unload even 30% or 40% of the offered assets, consider that a Crimson win.
  • Context: Were Harvard to sell off all $2.5 billion at NAV, it would appear to be the largest endowment secondary sale of all time.
  • HMC comment: Nope.

• Coming attractions: Tech giant Dell has its big Las Vegas event today, where it is expected to announce the existence of a corporate venture arm called Dell Technologies Capital, which basically is the merging of the existing Dell Ventures and EMC Ventures teams. It is being led by former EMC Ventures boss Scott Darling, and has an annual investment budget of around $100 million.

• Passed through: NBC News yesterday did a segment on how Wisconsin-based Rexnord is carrying through with pre-election plans to move around 300 manufacturing jobs from Indianapolis to Mexico, which was followed just minutes later by this Trump tweet:

"Rexnord of Indiana made a deal during the Obama Administration to move to Mexico. Fired their employees. Tax product big that's sold in U.S."

This is hardly the first time that Trump has threatened such a thing ― kind of an offshoring-specific BAT ― but there was no mention of it in the tax proposal laid out last month by the White House. In other words, Rexnord called his bluff.

The BFD

Ares Management is in talks to acquire Chuck E. Cheese for around $2 billion from Apollo Global Management, per Bloomberg. The report adds that Bain Capital, Hellman & Friedman and Warburg Pincus has expressed interest in the company – which also was considering an IPO – but bailed over pricing.

  • Why it's the BFD: Because this is the sort of company that should have disappeared in an age of home video-games, decent pizza and indoor trampoline parks, but instead is still worth $2 billion. Plus, my family once held a surprise 70th birthday party for my great uncle at one, which remains my favorite surprise party of all time.
  • Fun fact: Chuck E. Cheese was founded by Nolan Bushnell, who also founded Atari and was Steve Jobs' first boss.
Venture Capital Deals

• Sea Ltd. (f.k.a. Garena), a Singapore-based consumer Internet company, has raised $550 million in new VC funding. Tencent led the round, and was joined by GDP Venture and JG Summit Holdings. https://bloom.bg/2pXyHZN

• Outset Medical, a San Jose, Calif.-based developer of an all-in-one dialysis device, has raised $76.5 million in Series C funding. T. Rowe Price led the round, and was joined by return backers Fidelity, Warburg Pincus, Partner Fund Management, Perceptive Advisors and The Vertical Group. http://bit.ly/2pqJ2wc

• Smule, a San Francisco-based social music platform, has raised $54 million in new VC funding at a $604 million post-money valuation (per Reuters). Tencent led the round, and was joined by return backers Adams Street Partners and Bessemer Ventures. http://reut.rs/2pmGChv

• MariaDB, a Finland-based open-source database development company, has raised €25 million in combined debt and Series C equity funding from the European Investment Bank. http://tcrn.ch/2qRZtCO

• Bangsun Technology, a Chinese provider of real-time risk management software, has raised $23 million in Series B funding. F&G Ventures led the round, and was joined by Legend Capital and Co-Stone Capital. http://bit.ly/2qS3kiq

• Cornershop, a grocery delivery startup focused on Chile and Mexico, has raised $21 million in new VC funding led by Accel. http://tcrn.ch/2pcvskf

• Falcon Computing Solutions, a Santa Clara, Calif.-based provider of acceleration solutions for big data applications, has raised $8 million in new VC funding. Intel Capital led the round, and was joined by SV Tech Ventures, Sierra Ventures, Baidu Ventures and Clear Ventures. www.falcon-computing.com

• Fortem Technologies, a Provo, Utah-based developer of an air defense system focused on drones, has raised $5.5 million in VC funding co-led by Signia Venture Partners and Data Collective. http://tcrn.ch/2pmGrCB

• Flex Logix Technologies, a Mountain View, Calif.-based provider of of embedded FPGA IP and software, has raised $5 million in Series B funding. Lux Capital and Eclipse Ventures co-led the round, and were joined by Tate Family Trust. www.flex-logix.com

• Devicare, a Barcelona-based developer of home care products for patients with chronic illnesses, has raised €3 million in seed funding led by EMESA Corporación Empresarial. http://bit.ly/2pW9T6p

• Fluence Analytics, a New Orleans-based provider of polymer monitoring technologies, has raised an undisclosed amount of Series A funding led by Energy Innovation Capital. www.fluenceanalytics.com

• SalesHood, a San Francisco-based sales productivity platform, has raised an undisclosed amount of VC funding from TeleSoft Partners (which is led by SalesHood founder Arjun Gupta). http://bit.ly/2pSJHJF

Private Equity Deals

• Belcan, a Cincinnati-based engineering consultancy owned by AE Industrial Partners, has completed its previously-announced acquisition of Schafer Intermediate Holdings, an Arlington, Va.-based provider of tech and consulting solutions focused on national security, from Metalmark Capital. No financial terms were disclosed. http://bit.ly/2pW7cBN

• Hill International (NYSE: HIL) has sold its construction claims group to private equity firm Bridgepoint for $147 million in cash. www.hillintl.com

• Rubicon Oilfield International, a Houston-based portfolio company of Warburg Pincus, has acquired Choice Completions Systems, a Houston-based provider of downhole products for unconventional multi-stage completions. No financial terms were disclosed. www.rubicon-oilfield.com

• Tan Capital Partners has acquired the tech assets of Los Angeles-based mobile survey company Osurv. No financial terms were disclosed. http://bit.ly/2pSIIcr

• TPG Growth has agreed to acquire a majority stake in Medical Solutions, an Omaha, Neb.-based provider of hospital staffing solutions, from Beecken Petty O'Keefe & Co. (which will retain a minority stake). No financial terms were disclosed. www.medicalsolutions.com

• TPG Capital has bid A$2.2 billion to acquire the metro newspaper and real estate classifieds unit of Australia's Fairfax Media (ASX: FXJ), in an offer that would include the Sydney Morning Herald. If accepted, the remaining assets of Fairfax Media – including its New Zealand publishing unit, community papers and radio unit – would become a separately-listed company. http://reut.rs/2pqGi1O

• VRC Technologies, a Brownwood, Texas-based chemical formulation and manufacturing company, has raised an undisclosed amount of growth equity funding led by Cimbria Capital. www.vrctexas.com

Public Offerings

• Seven companies are expected to price U.S. IPOs this week: Gardner Denver, Guaranty Bancshares, Five Point Holdings, Solaris Oilfield Infrastructure, ASV Holdings, Accelerated Pharma and Veritone. http://bit.ly/2pmL4g5

• Bright Scholar Education, an operator of international and bilingual schools in China, has set its IPO terms to 15 million shares being offered at between $8 and $10 per share. It would have an initial market cap of around $1 billion, were it to price in the middle of its range. The company plans to trade on the NYSE, with Morgan Stanley and Deutsche Bank serving as lead underwriters. BSE reports under $1 million in net income on $151.5 million in 2016 revenue.

• Ironshore, a Bermuda-based specialty property and casualty insurer, has withdrawn registration for a $500 million IPO, following Liberty Mutual's $3 billion purchase of the company from Fosun International.

• Venator Materials, a Texas-based pigments and additives company being spun off by Huntsman Corp. (NYSE: HUN), has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol VNTR, with BofA Merrill Lynch listed as left lead underwriter. The company reports a $77 million net loss on $2.3 billion in revenue for 2016. www.venatorcorp.com

Liquidity Events

• Federal Signal Corp. (NYSE: FSS) has agreed to sell Truck Bodies and Equipment International, a Lake Crystal, Minn.-based manufacturer of dump truck bodies and trailers, from GenNX360 Capital Partners for $270 million.

More M&A

• Coach (NYSE: COH) has agreed to acquire handbag designer and retailer Kate Spade (NYSE: KATE) for $2.4 billion in cash, or $18.50 per share (9% premium over Friday's closing price). http://reut.rs/2qJVB9L

• Coca-Cola South Africa has sold a 17.5% stake in carbonated fruit juice brand Appletiser to African Pioneer Group, to fulfill obligations related to a previous CCBSA merger with SABMiller (LSE: SAB). http://reut.rs/2pXC8Q3

• DHT (NYSE: DHT), a Bermuda-based crude tanker company, has rejected a fifth (and likely final) takeover offer from Frontline (NYSE: FRO), calling the $500 million all-stock offer "woefully inadequate." http://reut.rs/2qfSmHm

• PPG Industries (NYSE: PPG) has been rejected for a third time in its efforts to acquire Dutch paint maker Akzo Nobel. Its most recent offer valued Akzo at around $28.8 billion. http://reut.rs/2prjn6y

• Sinclair Broadcasting (Nasdaq: SBGI) has agreed to acquire television broadcaster Tribune Media (NYSE: TRCO) for around $3.9 billion in cash and stock (not including assumed debt). http://reut.rs/2pcN5QR

Fundraising

• 500 Startups is targeting nearly $22 million for a Canada-focused seed fund and up to $10 million for a Vietnam-focused seed fund, per regulatory filings. www.500.co

• Blue Run Ventures is raising up to $200 million for its sixth fund, according to a regulatory filing. www.brv.com

• Listen Ventures of Chicago has secured more than $15 million for a $30 million second fund, per a regulatory filing. www.listen.co

It's Personnel

• David Buttress, former CEO of Just Eat (LSE: JE), is joining venture firm 83North as a general partner. www.83north.com

• Harry Stebbings has stepped down as an entrepreneur-in-residence with Atomico, after just a 6-month run. The 20 year-old host of the "20 Minute VC" podcast is preparing to raise his own VC fund, per Business Insider. http://read.bi/2pqGrlU

Final Numbers
Dan Primack