Oct 1, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Aïda Amer/Axios

Sen. Elizabeth Warren is no fan of private equity or private prisons, and Axios has learned that she wants answers from PE firms invested in prison services companies.

  • Warren yesterday sent letters of inquiry to five firms. Co-sponsoring the letters were Rep. Mark Pocan (D-Wisc.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.).
    • Requested information includes revenue, profits, number of employees, and number of incarcerated individuals related to the underlying investments.
  • Her goal is to determine if private equity ownership results in a lower standard of services, similar to an investigation she launched last month of PE-owned for-profit colleges.

None of the five targeted firms have a specific focus on correctional services, but each has made at least one significant investment in the sector:

  • American Securities: GTL, one of the two largest providers of inmate calling and emailing services.
  • Apax Partners: Attenti, a provider of electronic monitoring products.
  • BlueMountain Capital: Corizon Health, the largest private provider of medical services to prisons, operating in 220 facilities in 17 states.
  • H.I.G. Capital: Trinity Services Group, a provider of food and commissary services to correctional facilities in 43 states. It also owns healthcare services provider. Wellpath.
  • Platinum Equity: Securus, one of the two largest providers of inmate calling and emailing services.

The bottom line: Warren already has proposed legislation that would make private equity funds liable for debt obligations of their portfolio companies, including worker pension obligations. Now she seems interested in expanding PE liability to portfolio company "consumers," whether they be for-profit students or prisoners.

The BFD
Source: Giphy

PayPal (Nasdaq: PYPL) agreed to buy a 70% stake in GoPay, an online and mobile payment platform in China.

  • Why it's the BFD: PayPal will become the first foreign company allowed to provide digital payment services inside of China, via GoPay's existing license, and it comes amid escalating trade tensions between the U.S. and China.
  • Bottom line: "American companies have for years been trying to break into the world's second-largest economy, where the growing middle class means a growing market of consumers seeking lending, credit card and money transfer services. In recent years, the Chinese government has opened the door to foreign firms to start applying for licenses to launch payments networks in the country, but the approval process has been slow-going." — Clare Duffy, CNN
Venture Capital Deals

Rapyd, a digital wallet startup with offices in London and Silicon Valley, raised $100 million in Series C funding. Oak HC/FT led, and was joined by Tiger Global, Coatue, General Catalyst, Target Global, Stripe, and Entrée Capital. http://axios.link/Niyo

Unbabel, a Portugal-based provider of translation software for customer service messages, raised $60 million in Series C funding. Point72 Ventures led, and was joined by Greycroft, Indico Capital Partners, and e.ventures. http://axios.link/2nDr

Dave, a Los Angeles-based overdraft protection and money management startup, raised $50 million at a $1 billion valuation form Norwest Venture Partners. http://axios.link/i4kH

ePassi, a Finland-based mobile payment system for employee benefits, raised €41.5 million from firms like Bregal Milestone. http://axios.link/3JhV

Bnext, a Spanish mobile money startup, raised $25 million co-led by DN Capital, Redalpine, and Speedinvest. http://axios.link/paCp

Khatabook, an India-based mobile app that lets SMEs record and track business transactions, raised $25 million in Series A funding from GGV Capital, RTP Global, Sequoia India, Tencent, YC, and partners of DST Global. http://axios.link/Q7ww

Digit, a San Francisco-based personal spend management startup, raised $27.5 million in Series C funding. General Catalyst led, and was joined by Citi Ventures, Financial Venture Studio and return backers Ribbit Capital, GV, and Freestyle Capital. http://axios.link/RKKm

SenSat, a UK-based AI platform for creating digital representations of real-world locations, raised $10 million in Series A funding. Tencent led, and was joined by Sistema Venture Capital. http://axios.link/rgym

7Shifts, a Canadian restaurant labor management platform, raised US$6 million from Napier Park Financial Partners, Relay Ventures, and Conexus Credit Union. www.7shifts.com

Workona, a San Mateo, Calif.-based web browser management tool, raised $6 million from K9 Ventures and August Capital. www.workona.com

Ursa Major, a Burlington, Vt.-based “clean” skincare brand, raised $5 million in first-round funding. Fenwick Brands led, and was joined by Finn Capital Partners. www.ursamajorvt.com

Jobpal, a Berlin-based recruitment chatbot, raised €2.5 million in seed funding from InReach Ventures and Acadian Ventures. http://axios.link/LvY8

Private Equity Deals

Advent International agreed to buy Italian chemicals firm ICE for €700 million, per Reuters. It would be Italy’s largest leveraged buyout of 2019. http://axios.link/yqcR

Arbor Investments acquired The Bakery Cos, a Nashville, Tenn.-based maker of fresh and frozen breads, baked goods, and dough products.

Autokiniton, a portfolio company of KPS Capital Partners, completed its $900 million ($31 per share) purchase of Tower International, a Livonia, Mich.-based maker of automotive structural metal components and assemblies. http://axios.link/tKFG

Beecken Petty O’Keefe acquired Midwest Products & Engineering, a Milwaukee-based outsourced manufacturer for healthcare and technology OEMs, from Pfingsten Partners. www.mpe-inc.com

Brookfield Business Partners will pay $1.3 billion to acquire a 45% stake in industrial services company BrandSafe from Clayton, Dubilier & Rice (which will retain a 45% position). Company management will hold the remaining 10%. http://axios.link/AqNK

The Blackstone Group completed its $750 million purchase of San Francisco-based mobile video advertising company Vungle, which had raised $25 million in VC funding from firms like Crossslink Capital, Thomvest Partners, GV, and Uncork Capital. http://axios.link/zCuX

Cook & Boardman Group, a Winston-Salem, N.C.-based commercial door entry company owned by Littlejohn & Co., acquired Converged Communications, a Jacksonville-based provider of tech solutions to commercial and institutional clients in Florida and Georgia. www.cookandboardman.com

Leeds Equity Partners acquired VitalSmarts, a Provo, Utah-based provider of corporate training services, from TwentyEight Inc. www.vitalsmarts.com

Trinity, a Waltham, Mass.-based portfolio company of Parthenon Capital Partners, acquired Bell Canyon Consulting, a Carlsbad, Calif.-based data management consultant. www.bellcanyonconsulting.com

Wynnchurch Capital invested in Eastern Metal Supply, a Lake Worth, Fla.-based distributor of aluminum extrusions. www.easternmetal.com

Public Offerings

🚑 4D Molecular Therapeutics, an Emeryville, Calif.-based gene therapy company, filed for a $100 million IPO. It plans to trade on the Nasdaq (DDDD) with Goldman Sachs as lead underwriter. The pre-revenue company raised around $108 million in VC funding from firms like Viking Global, Pfizer, Repleon, Chiesi Ventures, CureDuchenne Ventures, BVF Partners, Berkeley Catalyst Fund, Pappas Capital, Perceptive Advisors, Ridgeback Capital, Mirae Asset, ArrowMark Partners, and Janus Henderson Group. http://axios.link/npgR

36KR Holdings, a Chinese online publisher of tech news, filed for a $100 million IPO. It plans to list on the Nasdaq with Credit Suisse and CICC as lead underwriters, and reports a $6.6 million net loss on $29 million in revenue for the first half of 2019. http://axios.link/OxxJ

🚑 Aesthetic Medical International, a Chinese provider of aesthetic medical treatments, filed for an $80 million IPO. It plans to trade on the Nasdaq (AIH) with Cantor Fitzgerald as lead underwriter, and reports $12 million of net income on $57 million in revenue for the first half of 2019. http://axios.link/CibA

🚑 Cabaletta Bio, a Philadelphia, Penn.-based developer of T-cell therapies for autoimmune diseases, filed for a $100 million IPO. It plans to list on the Nasdaq (CABA) with Morgan Stanley as lead underwriter. The pre-revenue company raised $88 million in VC funding from firms like 5AM Ventures (19% pre-IPO stake), Adage Capital (19%), Baker Brothers (19%), Boxer Capital (5.5%), and Deerfield Management (5.5%). http://axios.link/oz0W

🚑 Phantom Pharma, a Buffalo Grove, Ill.-based developer of drugs for GI diseases, filed for a $100 million IPO. It plans to list on the Nasdaq (PHAT) with Goldman Sachs as lead underwriter. The pre-revenue company raised $90 million in VC funding from firms like Frazier Life Sciences (41% pre-IPO stake), Takeda (9.1%), Medicxi, Abingworth Management, Greenspring Associates, Sahsen Ventures, Richard King Mellon Foundation, Janus Henderson Group, BVF Partners, and RA Capital Management. http://axios.link/4phg

SoftwareOne, a Switzerland-based Microsoft software reseller in which KKR holds a 25% stake, is prepping a Swiss IPO for later this quarter. http://axios.link/kTf9

Youdao, a Chinese online education platform, filed for a $300 million IPO. It plans to list on the NYSE (DAO) with Citi and Morgan Stanley as lead underwriters, and reports a $24 million net loss on $80 million in revenue for the first half of 2019. Shareholders include NetEase (66% pre-IPO stake). http://axios.link/og7l

Liquidity Events

Hanwha Aerospace of South Korea completed its $300 million purchase of EDAC Technologies, a Cheshire, Conn.-based aerospace engine component manufacturer, from Greenbriar Equity Group. www.edactechnologies.com

More M&A

AMA Group (ASX: AMA) agreed to buy the vehicle repair business of Australian insurer Suncorp Group (ASX: SUN) for $420 million. http://axios.link/2XEe

Kathmandu Holdings, a New Zealand-listed outdoor apparel maker, agreed to buy Australian surf brand Rip Curl Group for A$350 million. http://axios.link/UxPC

Macquarie Group agreed to sell its 70% stake in England’s Hobart International Airport to Queensland Investment Corp. and Royal Schiphol Group. http://axios.link/aQvz

Sempra Energy (NYSE: SRE) agreed to sell its Peruvian businesses to China Yangtze Power for $3.59 billion. http://axios.link/vhcw

It's Personnel

Pierre-Olivier Bouée resigned as COO of Credit Suisse, in the midst of a corporate espionage scandal. http://axios.link/9kNx

Michael Hoffman plans to retire as president of Probitas Partners, the private equity placement firm he co-founded, per PE Hub. http://axios.link/OHW4

Amit Jain joined Sequoia Capital India as a Singapore-based managing director. He previously led Uber’s Asia-Pacific operations. http://axios.link/pKS6

Adina Tecklu joined Khosla Ventures as a principal. Previously she was an associate at Canaan Partners. https://www.khoslaventures.com

Welsh, Carson, Anderson & Stowe promoted David Caluori, Ryan Harper, and Frances Higgins to general partner. www.wcas.com

Final Numbers
Source: Renaissance Capital. Data through 9/30/19 market close.
Dan Primack

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