Sep 28, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Holding the line: White House economic advisor Gary Cohn told CNBC this morning that the proposed 20% corporate tax rate is a non-negotiable "bright-line test for us." More Cohn:

  • He argued that the entire tax plan will be paid for via economic growth, which suggests the tax plan's lack of "pay fors" is a feature, not a bug.
  • He stammered a bit when asked why carried interest wasn't mentioned in the 9-page framework, but reiterated that Trump views it as a loophole that should be closed. No follow-up on how broad-based it would be, as Steve Mnuchin has repeatedly referred to carried interest only in the context of hedge fund managers.

• New VC firm alert: Airbnb vets Andrew Swain (ex-CFO) and Jonathan Golden (ex-director of product) have quietly launched Designed Capital, which is targeting $60 million for a debut fund that would focus on marketplace startups, per multiple sources. Also, don't expect this to be the only new venture fund you'll hear about from former Airbnb folks.

• Chip chat: Toshiba announced that it has now signed that $18 billion sale agreement for its memory chip business with a Bain-led consortium that also includes SK Hynix and Apple. But, just because everything about this process needs to be ridiculous, the consortium canceled a planned news conference about the deal just minutes before it was set to begin. Oh, and legal challenges from Toshiba chip partner Western Digital continue to loom over the entire thing.

• Quotable: Fidelity Investments CEO Abby Johnson, when asked by David Rubenstein about Wall Street's interest in helping Fidelity go public: "By the time I came along, all the investment bankers had given up on making that pitch."

• Pump it down: The FDA yesterday erected a big speed-bump for Intarcia Therapeutics, the Boston biotech "unicorn" that has developed a matchstick-sized implantable device for Type II diabetes treatment.

  • What happened: The FDA sent a Complete Response Letter that Intarcia says relates to aspects of its device manufacturing process (the letter itself was not publicly released). That means commercialization in the U.S. will be delayed from Q4 of this year to the second half of 2018. Intarcia says the CRL should not necessitate any additional clinical trials.
  • Why it matters, beyond for Type II diabetes patients: Intarcia CEO Kurt Graves has been the rare VC-backed biotech CEO who has insisted on commercializing before IPO, and yesterday he told me that there is no change to that strategy. He added that the company has now raised over $615 million for its Series EE funding, which held a $215 million first close last fall at a $3.5 billion pre-money valuation. Most of the additional cash has come from sovereign wealth funds.

• Reader feedback: Thanks for all of your emails yesterday (and keep em coming). One thing I wanted to address was a question many of you had about why certain news blurbs only have company URLs at the end of them, while some have "links to press releases." To be clear, I never link to press releases. Only to relevant news stories. If there is no story available, that's when you get the URL.

The BFD

Apollo Global Management and The Blackstone Group are bidding on the business of Westinghouse Electric Co., the bankrupt U.S. nuclear power plant company that is currently owned by Japan's Toshiba Corp., according to Reuters. A deal could be valued at around $4 billion, with other private equity firms reported to be kicking the tires. PJT Partners is managing the process.

  • Why it's the BFD: Westinghouse is the only U.S. company to receive U.S. building permits for new nuclear power plants since the Three Mile Island incident nearly four decades ago – even though cost overruns on those plants helped cause the Chapter 11 filing (and also led to Toshiba having to put its memory chips biz on the block). It is currently unclear if the Apollo and Blackstone bid would include some exposure to those still-unfinished facilities, or if they only would acquire a nuclear power plant services business that reportedly generates around $400 million in annual EBITDA.
  • Connections: Apollo already is tied into this deal via a debtor-in-possession financing, while Blackstone owned a nuclear power plans more than a decade ago via its purchase of Texas Genco.
  • Bottom line: The buyer universe could be fairly limited. Many foreign financial sponsors or strategics — particularly from China — would have trouble passing U.S. regulatory muster, while the U.S. nuclear services space is so small that domestic rivals could face antitrust scrutiny.
Venture Capital Deals

• Shenzhen Suishou Technology, a Chinese personal finance management platform, has raised $200 million in Series C funding led by KKR. http://axios.link/jNzf

• Qingting FM, a Chinese audio content platform, has raised $150 million in Series E funding. We Capital and Baidu co-led the round, and were joined by China Minsheng Investment Group, Shenzhen Guozhong Venture Capital and Genimous Technology.

• Doing Now, a Beijing-based sports training group, has raised $75 million in Series A funding led by Yao Capital. http://axios.link/D6uC

• Onfido, a London-based provider of identity verification solutions, has raised $30 million in new VC funding. Crane Venture Partners led the round, and was joined by Microsoft Ventures and Salesforce Ventures. http://tcrn.ch/2y8R84x

• Chime, a San Francisco-based mobile banking startup, has raised $18 million in Series B funding. Cathay Innovation led the round, and was joined by Northwestern Mutual Future Ventures, Omidyar Network and return backers Crosslink Capital, Aspect Ventures, Forerunner Ventures and Homebrew. http://tcrn.ch/2hwpRSz

• VoxelCloud, a Los Angeles-based developer of automated medical image analysis solutions, has raised $15 million in new VC funding led by Tencent. http://axios.link/Zq16

• Heetch, a French ride-share startup, has raised $12 million in VC funding led by Felix Capital. www.heetch.com

• Anchor, a New York-based podcasting app, has raised $10 million in VC funding from The Chernin Group, Eniac Ventures, Homebrew and individual angels. www.anchor.fm

• Eden, an office management and tech support platform, has raised $10 million in Series A funding. Spectrum 28 led the round, and was joined by Fifth Wall Ventures, Bessemer Venture Partners, Y Combinator Continuity Fund, Canvas Ventures, Comcast Ventures and Eniac Ventures. http://tcrn.ch/2yG9cQB

• Klue, a Vancouver-based competitive business intelligence startup, has raised C$4 million in new VC funding. Omers Ventures led the round, and was joined by Vancouver Founder Fund, BDC Venture Capital, Pallasite Ventures and SK Ventures. www.klue.com

• AdAsia, a Singapore-based online advertising startup, has raised $2.5 million in new VC funding from Japanese news app Gunosy. This comes on top of a $12 million Series A round that held a first close in April. http://tcrn.ch/2xDgeWl

• CallDesk, a virtual agent for customer support calls, has raised €2.1 million in new VC funding from Point Nine Capital and EQT Ventures. http://tcrn.ch/2wYnsC4

• Yooji, a French organic baby food startup, has raised an undisclosed amount of funding from Danone (Paris: DANO). http://reut.rs/2k55pcp

Private Equity Deals

• 365 Data Centers has acquired Host.net, a provider of data center services in Southeastern Florida, from Novacap. No financial terms were disclosed. Emeryville, Calif.-based 365 is backed by Chirisa Investments, Longboat Advisorsd and Lumerity Capital. www.365datacenters.com

🚑 Audax Private Equity has acquired WellSpring Consumer Healthcare, a Sarasota, Fla.-based marketer of OTC and cosmetic brands in the skin care, feminine hygiene and gastrointestinal care categories, from Sentinel Capital Partners. No financial terms were disclosed. www.wellspringpharm.com

• The Carlyle Group is getting extra time to finalize its takeover plan for British convenience store chain Palmer & Harvey, via bridge financing from P&H suppliers Imperial Brands and Japan Tobacco International, according to Sky News. http://axios.link/TWCp

• CallRail, an Atlanta-based call analytics platform, has raised $75 million in growth equity funding from Sageview Capital and Leaders Fund. http://axios.link/TqtL

🚑 KKR has completed it previously-announced purchase of The Nature's Bounty Co., a Ronkonkoma, N.Y.-based maker of health and wellness products, from The Carlyle Group. No financial terms were disclosed.

Public Offerings

🚑 Deciphera Pharmaceuticals, a Waltham, Mass.-based developer of kinase inhibitors for solid tumors, raised $128 million in its IPO. The company priced 7.5 million shares at $17 per share (top of range), and will trade on the Nasdaq under ticker symbol DCPH. J.P. Morgan was listed as left lead underwriter. Shareholders in the pre-revenue company include New Leaf Venture Partners (15.27% pre-IPO stake), SV Life Sciences (6.41%) and Viking Global Investors (6.11%). www.deciphera.com

• Lyft is in advanced talks to pick IPO advisors, according to Reuters. http://reut.rs/2hyPimu

🚑 Nightstar Therapeutics, a London-based gene therapy company focused on rare inherited retinal diseases, raised $75 million in its IPO. The company priced 5.4 million shares at $14 per share (middle of range), and will trade on the Nasdaq under ticker symbol NITE. Jefferies was listed as lead left underwriter. Shareholders in the pre-revenue company include NEA and Wellington Management. www.nightstartx.com

🚑 NuCana, a UK-based developer of cancer therapeutics, has raised $100 million in its IPO. The company priced 6.7 million shares at $15 per share (middle of range), for an initial market cap of around $526 million. The company will trade on the Nasdaq under ticker symbol NCNA, while Citigroup was listed as left lead underwriter. Shareholders include Sofinnova Capital (32.39% pre-IPO stake), Sofinnova Ventures (16.54%), Morningside Ventures (12.04%) and Scottish Enterprise (9.29%). www.nucanabiomed.com

• Roku, a Los Gatos, Calif.-based over-the-top (OTT) streaming player service, raised $219 million in its IPO. The company priced 15.67 million shares at $14 per share (high end of range), for an initial market cap north of $1.3 billion. It will trade on the Nasdaq under ticker symbol ROKU, while Morgan Stanley was listed as left lead underwriter. It reports a $24.2 million net loss on nearly $200 million in revenue for the first half of 2017. Roku has raised over $200 million in VC funding, from firms like Menlo Ventures (35.3% pre-IPO stake), Fidelity (12.9%), 21st Century Fox (7%), Globespan Capital Partners (6.1%) and Netflix. www.roku.com

Liquidity Events

• Daimler has acquired Flinc, a German ride-sharing company that had raised VC funding from General Motors and Deutsche Bahn. No financial terms were disclosed. http://reut.rs/2hB6xnv

More M&A

• Hain Celestial (Nasdaq: HAIN), a Lake Success, N.Y.-based food and beverage company with a $4.2 billion market cap, has reached a settlement with activist investor Engaged Capital that could open the door to a possible sale process, according to the WSJ. http://on.wsj.com/2fSO4Pc

• Naspers has paid €660 million to acquire half of Rocket Internet's stake in Delivery Hero (DE: DHER), a European meal delivery company that went public in June. The deal increase Naspers' stake in the company to 23.6%. http://reut.rs/2wlO9kQ

Fundraising

• New Mountain Capital has closed its fifth flagship private equity fund with $6.15 billion in capital commitments. www.newmountaincapital.com

• Redpoint Ventures is raising up to $400 million for its third growth equity fund, per an SEC filing. www.redpoint.com

It's Personnel

🚑 Mark Barrett has joined Frazier Healthcare Partners as an entrepreneur-in-residence. He previously was global head of strategy and business development and Sanofi Genzyme. www.frazierhealthcare.com

• GTCR has promoted both John Kos and Jeff Heh to principal. www.gtcr.com

Dan Primack