Jul 17, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Changing of the guard: KKR today announced that Joe Bae and Scott Nuttall will become co-presidents and co-chief operating offers of the private equity giant, responsible for all day-to-day activities. Firm co-founders Henry Kravis and George Roberts will continue to serve as co-chairs and co-CEOs.

  • Why it matters: Generational change is a huge challenge for private equity firms, and this is KKR basically laying out its game-plan for succession.
  • Happy trails: Alex Navab will step down as KKR's head of Americas private equity and retire from the firm. Or, put more bluntly, he's not in line for the top job and will now pursue other opportunities.

• YouTube time: On Friday we filmed a quick video on sexual harassment in venture capital. Watch it here.

• Related: I don't think there is any clear answer to the question of how these revelations will impact female founders. On the one hand, I do believe that most male VCs will be extra vigilant when it comes to their own behavior. If not for moral reasons, then just for self-preservation. So that's clearly a positive. On the other hand, I also think there is a chance that many male VCs may largely avoid female founders entirely, as a cowardly defense mechanism. If so, it could reduce funding opportunities.

• Tax time: Victor Fleischer has stepped down as co-chief tax counsel for Senate Finance Committee Democrats, just one year after signing on, in order to return to the University of San Diego faculty.

You may recall that Fleischer's 2006 academic paper on carried interest taxation really kicked off a debate over why the IRS treats such fees-for-service as capital gains (I know, I know... some of you view it a wee bit differently:). In a Facebook post about his decision, Fleischer noted that he might have stuck it out longer if he felt the prospects for 2017 tax reform were stronger.

  • On the other hand: Axios' Jonathan Swan reports that the White House is much more organized on tax reform than it may appear from the outside.

• Recommended reading: The WSJ's Ryan Dezember has an interesting piece about the current mess as Enervest, an energy-focused private equity firm whose $2 billion fund has basically been rendered worthless by the fall in oil prices.Key line: "Though private-equity investments regularly flop, industry consultants and fund investors say this situation could mark the first time that a fund larger than $1 billion has lost essentially all of its value."• Where in the World? Some have asked if I'm in Aspen today for Fortune Brainstorm Tech. I'm not, keeping in the proud tradition of former event co-chairs who find it just a bit too weird to attend. But if you're there and want to chat with an Axion, please hit up Kia Kokalitcheva.

The BFD

Desktop Metal, a Burlington, Mass.-based maker of 3D metal printing systems, has raised $115 million in Series D funding. Axios has learned the round gives the company a post-money valuation north of $1 billion, compared to around $360 million post on its Series C round last fall.

  • Why it's the BFD: 3D metal printing may revolutionize not only industrial design but also industrial supply chains. Rather than ordering thousands of components and storing them in a warehouse, companies in industries from home appliances to aerospace could print to order.
  • Backers: Over half the money came from new investors, like Future Fund, Techtronic Industries, Milwaukee Tool, AEG, Ryobi, Hoover, Vertex Ventures, Moonrise Venture Partners, Oreck, Shenzhen Capital Group, VAX and Dirt Devil. Return backers include NEA, GV, Lowe's, Lux Capital, DCVC Opportunity, Tyche, Kleiner Perkins Caufield & Byers and Saudi Aramco.
  • More context: I went down to Desktop Metal HQ back in April, just as it was unveiling its first products. Here's the recap.
Venture Capital Deals

• Leap Motion, a San Francisco-based provider of motion control software and hardware, has raised $50 million in Series C funding. J.P. Morgan Asset Management led the round, and was joined by return backers Andreessen Horowitz, Founders Fund, Highland Capital Partners and SOSventures. http://on.wsj.com/2uAbNg3

• Yimidida, a Shanghai-based logistics services platform for small cities in China, has raised around $44 million in Series B funding. CDH Investments led the round, and was joined by Global Logistic Properties, Source Code Capital, K2VC and Tuofeng Investment. http://bit.ly/2uquC5a

• Wukong Zuche, a Beijing-based car rental startup focused on tourist, has raised around $68 million in new equity and debt funding ($31m/$37m) from state-owned YMCI Group. http://bit.ly/2uqLSY5

• Awake Security, a Mountain View, Calif.-based provider of cybersecurity analytics, has raised more than $30 million in new VC funding from Greylock and Bain Capital Ventures. www.awakesecurity.com

🚑 PegBio, a Chinese drug developer focused on diabetes and obesity, has raised $20 million in Series E funding led by Shanghai-listed Tasley Pharma. http://bit.ly/2uA9iuw

🚑 Wellframe, a Boston-based provider of mobile patient engagement and care management solutions, has raised $15 million in Series B funding. F-Prime Capital led the round, and was joined by return backer DFJ. http://bit.ly/2tPiQ1o

🚑 Enterin, a Philadelphia-based developer of drugs to treat Parkinson's disease, has raised $12.7 million in Series A funding led by New Ventures. www.enterininc.com

• WaveOptics, a British developer of waveguide-based optics, has raised £12 million in Series B funding from Gobi Ventures and return backers Octopus Ventures, Touchstone Innovations and Robert Bosch Venture Capital. http://tcrn.ch/2u0O73a

• Plum, a Palo Alto, Calif.-based appliance for automatically chilling and serving wine by the glass, has raised $9 million in Series A funding. Khosla Ventures led the round, and was joined by Las Olas Venture Capital. http://cnb.cx/2e2E2sb

• Synthio (f.k.a. Social123), an Atlanta-based startup that automates data cleansing for B2B marketing contact data, has raised $8.5 million in growth equity funding from Fulcrum Equity Partners. http://bit.ly/2timKmq

🚑 Sensome (f.k.a. Instent), a Paris-based developer of micro-sensor technology for smart medical devices, has raised €4.7 million in seed funding. Kurma Diagnostics led the round, and was joined by Paris-Saclay Seed Fund and ID Invest. www.sensome.com

• Meixin Global, a cross-border wealth management platform with offices in New York and Beijing, has raised "tens of millions" of dollars in Series A funding. Korea Investment Partners led the round, and was joined by Bertelsmann Asia Investments, Tangzhu Capital and Liuhe Capital. http://bit.ly/2vtxLhc

• Swvl, an Egypt-based startup that connects commuters with private buses, has raised $500,000 from Dubai-based ride-hail startup Careem. http://reut.rs/2uzUlZj

Private Equity Deals

• 3i Group and CITIC Capital have completed their previously announced acquisition of Formel D, a German provider of support services for the auto industry, from Deutsche Beteiligung. 3i invested €247 million in the deal, while CITIC invested around €72 million. www.formeld.com

• Alpina Partners, a London-based private equity firm, has acquired the QDA software platform and related operations of ASI Datamyte, a Plymouth, Minn.-based provider of hardware and software for lab operators. No financial terms were disclosed. www.asidatamyte.com

🍕 Brentwood Associates has acquired a minority equity stake in Blaze Pizza, a Pasadena, Calif.-based fast-casual pizza chain with over 200 locations. Other significant Blaze Pizza shareholders include LeBron James. https://bloom.bg/2vhA0UP

• The Carlyle Group has agreed to make a "substantial investment" in ZeroChaos, an Orlando, Fla.-based provider of workforce management solutions. www.zerochaos.com

• The Carlyle Group has agreed to acquire ADB Safegate, a Belgium-based airfield lighting company, from PAI Partners. No financial terms were disclosed, but earlier reports suggested around a €900 million enterprise value. http://reut.rs/2v9cWbP

• Gen Cap America has acquired Custom Plastic Specialties, an Erie, Penn.-based maker of products sold to promotional products distributors. No financial terms were disclosed. http://bit.ly/2uA9h9Q

• GPB Capital has acquired a majority stake in Kenny Ross Automotive Group, operator of 10 auto dealerships in the Pittsburgh area. No financial terms were disclosed. www.gbp-cap.com

• New Mountain Capital has acquired Sparta Systems, a Hamilton, N.J.-based provider of QMS software, from Thoma Bravo. No financial terms were disclosed. www.spartasystems.com

⛽ Oaktree Capital Management has acquired an undisclosed equity stake in Australian drilling services company DDH1 Drilling. No financial terms were disclosed. http://reut.rs/2ur96NH

• Peak Rock Capital has acquired Gold Coast Bakeries, a Santa Ana, Calif.-based maker of specialty and organic breads, buns, rolls and sweet goods. No financial terms were disclosed. www.goldcoastbakery.com

• Rosewood Private Investments has acquired Healthy Natural, the contract manufacturing and packaging subsidiary of RiceBran Technologies (Nasdaq: RIBT), for $18.3 million. www.healthynatural.com

Public Offerings

• Six companies are planning to price IPOs on U.S. exchanges this week: Calyxt, Federal Street Acquisition, Kala Pharmaceuticals, TPG Real Estate Finance Trust, PetIQ and YogaWorks. http://bit.ly/2ur5x9Z

• Redfin, a Seattle-based residential real estate brokerage, has set its IPO terms to around 9.23 million shares being offered at between $12 and $14 per share. It would have a fully-diluted market value of around $1.35 billion, were it to price in the middle of its range (vs around $820m post-money on last private round). The company reports, and plans to trade on the Nasdaq under ticker symbol RDFN. Goldman Sachs and Allen & Co. are serving as lead underwriters. Shareholders include Greylock (12.4% pre-IPO stake), Madrona Ventures (11.4%), Tiger Global (10.5%), DFJ (10.2%), Vulcan Capital (10%) and T. Rowe Price (7.1%). www.redfin.com

Liquidity Events

• Benchmark and some other early Uber shareholders have held talks about selling a portion of shares to SoftBank, per Bloomberg. It is worth remembering that, were SoftBank to buy, it would be precluded from doing it via Vision Fund, per investor agreement.

• MidOcean Partners has agreed to sell Water Pik, a Fort Collins, Colo.-based maker of oral health products and replacement showerheads, to Church & Dwight (NYSE: CHD) for approximately $1 billion in cash. http://reut.rs/2t7z3Oo

More M&A

• Ramon Ang, the billionaire president of San Miguel Corp., has agreed to acquire a majority stake in Philippines-based newspaper publisher Inquirer Group of Cos. from the Prieto family. http://reut.rs/2uA7vpe

• Unilever (LSE: ULVR) and Hormel Foods (NYSE: HRL) each have made takeover bids for the food business of Reckitt Benckiser (LSE: RB), which includes French's mustard and could be valued at around £2 billion, according to The Sunday Times. http://bit.ly/2v6nVm6

• Volkswagen has hired Citigroup to explore strategic options for German transmissions maker Renk, according to Reuters. http://reut.rs/2uuJEGI

• The Washington Cos. has agreed to acquire Dominion Diamond Corp. (NYSE: DDC) for around $1.2 billion, or $14.25 per share.

• Wells Fargo (NYSE: WFC) "is preparing to jettison more businesses," according to an FT interview with CFO John Shrewsbury, who said they would be smaller units valued in the hundreds of millions of dollars. http://on.ft.com/2txkxi9

Fundraising

• VMG Partners, a private equity firm focused on the branded consumer sector, has closed its fourth fund with $700 million in capital commitments. www.vmgpartners.com

It's Personnel

• David Comeau, founder of DC50 and former president of Mondelez International Asia-Pacific, has joined KEEN Growth Capital as a venture partner. www.keengrowthcapital.com

Final Numbers: Employment & wage changes
Dan Primack