Feb 11, 2019

Axios Pro Rata

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Top of the Morning

Source: Giphy

We're now just five days away from another potential government shutdown and less than three weeks away from a full-blown trade war with China.

Either one could grind the capital markets to a halt. Not only because of the particulars β€” the SEC shutting back down, severely increased tariffs, etc. β€” but also because the negotiating strategy of "kick the can down the road" is really only something that can be done once with any credibility.

  • Govt shutdown: Congressional Democrats and Republicans continue to negotiate, but weekend talks devolved into "a stalemate" over non-wall immigration issues. A group of top U.S. CEOs is out this morning with a letter urging comprehensive immigration reform, but they might as well be asking for teleportation R&D funding. Don't worry, I'm getting my GIFs ready.
  • Trade tensions: Stocks are up on newfound optimism of a U.S.-China trade deal, in part based on last night's Axios report that Trump and Chinese President Xi Jinping could meet early next month at Mar-A-Lago. But it's not entirely clear why traders (or, more likely, algorithms) view another golf club dinner as curative, given that the last one resulted in this three month shot-clock without a gameplan.

πŸ¦„ Broken glass: The traditional "IPO window" for tech companies has been shattered, per a new report from boutique investment bank Scenic Advisement. That means more alternative listing structures (hello Slack), smaller percentage floats and much less focus on market timing. Kia has more.

β€’ Messy mouse: Disney continues to struggle to find a buyer for the nearly two dozen regional sports networks it acquired in its purchase of 21st Century Fox's entertainment assets. The Mouse must divest the RSNs, per its agreement with the U.S. government, and Fox Biz's Charlie Gasparino has a good rundown of the lowered pricing expectations (goodbye $20b) and the expected bidders like Amazon that didn't ultimately appear.

  • Axios' Sara Fischer thinks that if the price gets too low, "New Fox" could buy back the networks at a discount, or Disney will simply be forced to sell them a la carte. "Regardless, it seems the outcome of this sale will prove that RSNs are likely declining in value as television viewership declines."
  • Elsewhere in messes: Axios' David McCabe with the latest on the proposed Sprint/T-Mobile tie-up.

β€’ We've written before about Blade, the VC-backed short-distance aviation company known for helicopter rides from airports into city centers. This morning comes word that it has signed a deal with Lockheed Martin, whereby Blade will be "given" a dedicated Sikorsky-76C helicopter for one year of test usage.

  • Why it matters: For Blade, this is a bigger vehicle than what it normally uses, so that means increased capacity. But the real interesting part is Lockheed expressing an interest in short-distance, consumer transportation; including wanting access to Blade's data. Kind of like we saw auto OEMs belatedly dive into self-driving, we could see established aviation OEMs try to own the so-called flying taxi market.

🎧 Still not a subscriber to the Pro Rata Podcast, which we tape each morning after this newsletter gets sent? It's only 10 minutes long, and focused on the intersection of business, tech and politics. Very Axios-y.


Illustration: Rebecca Zisser/Axios

Morgan Stanley (NYSE: MS) has agreed to buy Solium Capital (TSX: SUM), a Calgary-based administrator for employee stock compensation, for approximately US$900 million in cash or C$19.15 per share (43% premium over Friday's closing price).

  • Why it's the BFD: Because this will help Morgan Stanley's wealth management group access the trove of unicorn millionaires whose paper is managed by Solium, including at such companies as Uber, Stripe and SpaceX. Plus, it's Morgan Stanley's largest acquisition in over a decade.
  • Bottom line: "We did a partnership in late 2016 with Morgan Stanley... and our win rate just went through the roof when we brought together our technology with their wealth management and workplace services." β€” Solium Capital CEO Marcos Lopez, speaking via phone to Axios.
Venture Capital Deals

β€’ Nuro, a Mountain View, Calif.-based maker of robotic delivery vehicles, raised $940 million from SoftBank Vision Fund. http://axios.link/19ly

β€’ Nav, a Salt Lake City-based business credit startup, raised $44 million from Goldman Sachs, Point72 Ventures, Experian Ventures, CreditEase and Aries. http://axios.link/o16Z

β€’ PerimeterX, a San Francisco-based cybersecurity startup focused on preventing automated website attacks, raised $43 million in Series C funding. Scale Venture Partners led, and was joined by Adams Street Partners and return backers Canaan Partners, Vertex Ventures and Data Collective. http://axios.link/RRJT

β€’ Soocas, a Chinese electric toothbrush maker, raised $30 million in Series C funding. Vision Knight Capital led, and was joined by Kinzon Capital, Greenwoods Investment, Yunmu Capital and Cathay Capital. http://axios.link/WP7C

β€’ 2nd Address, a San Francisco-based rental platform for business travelers, raised $10 million. GV led, and was joined by Foundation Capital and Amicus Capital. http://axios.link/knf5

β€’ Corrux, a Munich-based provider of analytics software for on-site industrial equipment, raised $3.1 million in seed funding led by Target Partners. www.corrux.io

Private Equity Deals

β›½ Ara Partners invested in Priority Power, a Midland, Texas-based energy management services and consulting firm. www.prioritypower.net

β€’ CC Capital, Cannae Holdings and Thomas H. Lee Partners completed their $6.9 billion take-private buyout of Dun & Bradstreet. http://axios.link/lHrx

β€’ City Capital Ventures acquired Redberry Group, the largest Burger King franchisee in Canada.

πŸš‘ Francisco Partners acquired Qualcomm Life, a provider of medical device connectivity solutions, from Qualcomm (Nasdaq: QCOM). The company will be renamed Capsule Technologies.

β€’ KKR completed its previously-announced acquisition of a 60% stake in Ramky Enviro Engineers, an India-based provider of environmental management services, for $530 million. http://axios.link/R0zU

β€’ Searchlight Capital Partners offered to buy a control stake in B Communications, the parent company of Bezeq Israel Telecom, for $133.3 million. http://axios.link/iczC

Public Offerings

πŸš‘ ShockWave Medical, a Santa Clara, Calif.-based maker of medical devices for calcified cardiovascular disease, filed for a $70 million IPO. It plans to trade on the Nasdaq (SWAV) with Morgan Stanley as lead underwriter, and reports a $41 million net loss on $12 million in revenue for 2018. The company raised around $150 million in VC funding from firms like Venrock, T. Rowe Price, Sectoral Asset Management, Sofinnova Capital and Fidelity. www.shockwavemedical.com

More M&A

β€’ Euronext (Paris: ENX) increased its takeover bid for the Oslo bourse to $786 million, as it continues to battle Nasdaq (Nasdaq: NDAQ). http://axios.link/qfeX

β€’ Scotiabank of Canada agreed to sell its El Salvador banking and insurance business to Panama’s Imperia Intercontinental. http://axios.link/li5N

πŸš‘ Smith & Nephew (LSE: SN) has discussed an acquisition of NuVasive (Nasdaq: NUVA), a San Diego-based maker of spinal surgery devices that has a market cap north of $2.5 billion, per the FT. http://axios.link/Ewv8

β€’ Sports Direct (LSE: SPD) dropped a takeover bid for bankrupt British cafΓ© chain Patisserie Valerie (AIM: CAKE), just two days after making the offer. http://axios.link/s1vW


β€’ Summit Partners is raising $4 billion for its tenth flagship growth equity fund, per a public pension document. http://axios.link/qmzH

β€’ TPG Capital closed its seventh Asia-focused private equity fund at over $4.6 billion. http://axios.link/CjxB

It's Personnel

β€’ Jacob Moresco is joining Danish VC firm Sunstone as an investment director. He previously helped lead business development for LEO Pharma. http://axios.link/zsFg

β€’ Markus Noe-Nordberg joined H.I.G. Capital as a managing director and head of European middle market private equity. He previously was with Pamplona Capital. www.higcapital.com

Final Numbers
Source: Refinitiv. Data through Feb 7, 2019.