May 1, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Greetings from Los Angeles, where I'm in town for the Milken Conference. Speakers this morning include Steve Mnuchin, Wilbur Ross, William Ford and Josh Harris. My big moment comes tomorrow (disclaimer: "big moment" = "breakout session"). If you're sticking on the East Coast, a reminder that Axios tomorrow morning hosts a Washington, D.C. breakfast on the intersection of business and societal good. RSVP by going here.

Top of the Morning

• Dude, where's my GDP? President Trump yesterday told CBS Face the Nation that America's economy is lagging many of its peers:

"I talk to the heads of countries. 'How are you doing?' 'Not well, not well.' 'Why?' 'GDP is 8%. GDP is 9%. We are doing poorly.' GDP ― Our GDP is, like, 1%."

Reality check: Only six countries had GDP of 8% or better in 2015, most of which are developing economies, according to The World Bank: Ireland, West Bank/Gaza, Ethiopia, Palau, Core d'Ivoire and Uzbekistan. We could also add India with a 7.9% GDP growth rate, but Trump prefers to round down (since his 1% figure for the U.S. is actually 1.6%).

Global 2016 data isn't yet available, but preliminary figures don't suggest that the group expanded much (if at all) last year. For example, 2015 leader Ireland reported a 5.2% rate last year. So either world leaders are lying to Trump, or Trump was lying to CBS.

• "We are late cycle." That was the message from KKR's Scott Nuttall to Wall Street analysts last week, in explaining why the firm's private equity business has become a net seller in the U.S. and Europe. The one geographic exception for KKR is Asia, particularly when it comes to corporate carve-outs in Japan.

• The public cloud: Cloudera shares finished up more than 20% on Friday, in its first day of post-IPO trading. A few quick takeaways from a conversation with company co-founder, chief strategy officer and former CEO Mike Olson:

  • Timing: "When Intel did the strategic investment it really removed the urgency around the IPO in that we didn't need to raise money. But real companies go public and we were going to do it sooner or later. We made the decision around six months ago."
  • Did Intel offer to buy Cloudera? "I'm not going to comment on that."
  • Comp spin: "The huge investment IBM is making in Watson benefits us because it introduced a lot of our concepts to large enterprises, but I think Watson is much more of a branding exercise than a tech offering."
  • Culture: "I have told everyone in the company to ignore the stock price, and I'm sure that everyone is refreshing the stock price every 15 minutes or so. That will fade. Really the message I've shared is that most of the value in successful companies like Oracle is created after the IPO."

• IR alert: Maggie Sahlman left the fundraising and investor relations group of Advent International, and now comes word that she's signed on with placement agency Bear Tooth as a managing director. The common thread here is Bear Tooth boss Bob Brown, who previously was with Advent.

The BFD

The Blackstone Group and 21st Century Fox (Nasdaq: FOXA) reportedly are working together on a possible takeover bid for Tribune Media (NYSE: TRCO), which also has received interest from Sinclair Broadcasting (Nasdaq: SBGI) and Nexstar Media Group (Nasdaq: NXST). Tribune is currently valued north of $3 billion, and owns more Fox TV affiliates than any other broadcast station conglomerate.

  • Context: All of this comes just two weeks after the FCC removed certain limits ― related to something called the UHF discount ― on broadcast TV ownership.
  • Bottom line: "With all of the drama occurring around the future of 21st Century Fox, it makes sense that the Murdochs would want to diversify its revenue stream and invest in TV businesses with steady cashflows. The family is currently awaiting regulatory approval for the acquisition of Sky TV in the UK. – Sara Fischer
Venture Capital Deals

• 3D Robotics, a Berkeley, Calif.-based drone software company, has raised $53 million in Series D funding. Atlantic Bridge led the round, and was joined by Autodesk Forge Fund, True Ventures, Foundry Group and Mayfield. Its prior funding round was led by WestSummit Capital. http://tcrn.ch/2oNjYU2

• Live.me, a live video streaming app subsidiary of Cheetah Mobile (NYSE: CMCM), has raised $60 million in VC funding from Cheetah, Matrix Partners China, Evolution Media China, Gobi Partners, IDG Capital and Welight Capital. http://bit.ly/2px9BAT

• Singapore Life, a stealthy insurance tech startup, has raised $50 million in Series A funding from a unit of China Credit Fintech Holdings and IPGL. http://bit.ly/2oYDp8b

• Weiyang, a Chinese pig farm business operated by Internet firm NetEase, reportedly has raised $23 million in Series A funding from Sinovation Ventures, JD.com and Meituan-Dianping. http://bit.ly/2qoQF7m

• Airwallex, an Australian provider of cross-border payment solutions, has raised US$13 million in Series A funding. Tencent led the round, and was joined by Sequoia China and Mastercard. http://tcrn.ch/2pzO5gF

• Xee, a French connected car platform developer, has raised €12 million in new VC funding from Bridgestone EMEA, Total, Cofip and Via ID. http://bit.ly/2qonVef

• Deep Sentinel, a deep learning startup focused on home security, has raised $7.4 million in Series A funding. Shasta Ventures led the round, and was joined by Bezos Expeditions, Lux Capital and UP2398. http://tcrn.ch/2qf86df

• Cars45.com, a Nigerian online marketplace for used cars, has raised $5 million in Series A funding from Frontier Cars Group, a holding company backed by Balderton Capital, EchoVC, NEA and TPG Growth. http://tcrn.ch/2qvci4Z

• Mech Mocha, an India-based mobile game publisher, has raised $5 million in Series A funding co-led by Accel and Shunwei Capital. http://bit.ly/2qkVNft

• ReThink Medical, a San Francisco-based maker of heart failure medical devices, has raised $3 million in VC funding. Emergent Medical Partners led the round, and was joined by Norwich Ventures and Launch Capital. www.rethinkmedical.com

• Catalia Health, a San Francisco-based patient care management company, has raised $2.5 million in VC funding led by Khosla Ventures. www.cataliahealth.com

Private Equity Deals

• AEA Investors has acquired National Carwash Solutions, a Grimes, Iowa-based provider of systems and services to car washes, from Trivest Partners. No financial terms were disclosed. www.nationalcarwashsolutions.com

• Golden Gate Capital has agreed to acquire 20-20 Technologies, a provider of provider of interior space planning software, from Vector Capital. No financial terms were disclosed. www.2020technologies.com

• Golden Gate Capital has completed its previously-announced $565 million purchase of Bob Evans Restaurants from Bob Evans Farms (Nasdaq: BOBE).

• Harris Corp. (NYSE: HRS) has completed the previously-announced sale of its IT services business to Veritas Capital for $690 million in cash. http://bit.ly/2jktzyQ

• Macquarie Group and Hastings Funds Management are the final two bidders for Endeavour Energy, an Australian power grid operator being sold by New South Wales state for around A$4 billion, according to Reuters. http://reut.rs/2pxhzKl

• Resilience Capital Partners has acquired certain assets of National Label, a Lafayette Hill, Penn.-based packaging labeling company. No financial terms were disclosed. www.nationallabel.com

Public Offerings

• Six companies are expected to price IPOs on U.S. exchanges this week, per Renaissance Capital: Antero Midstream, Biohaven Pharmaceuticals, Liberty Oilfield Services, KKR Real Estate Finance Trust, UroGen Pharma and Ovid Therapeutics. http://bit.ly/2pxapp7

• Avenue Therapeutics, a New York-based maker of an IV formulation of the opioid tramadol, has filed for a $50 million IPO. It plans to trade on the Nasdaq under ticker symbol ATXI with Raymond James serving as lead underwriter. The company is majority owned by Fortress Biotech (Nasdaq: FBIO). http://bit.ly/2oXA20p

• Bodymasters, a Saudi Arabian fitness club chain backed by private equity firms Amwal Al Khaleej and Mefic Capital, is considering an IPO, according to Reuters. http://reut.rs/2pMvlMb

More M&A

• Healthcare Trust of America (NYSE: HTA) has agreed to acquire the medical offices business of Duke Reality (NYSE: DRE) for $2.8 billion in cash. http://reut.rs/2oP7HhJ

• Pembina Pipeline (TSX: PPL) has agreed to acquire fellow Canadian pipeline company Versen (TSX: VSN) for around C$9.7billion. http://reut.rs/2pxhKoZ

• Shaw Communications (TSX: SJRb) is seeking a buyer for ViaWest, a Greenwood Village, Colo.-based data center operator, according to Reuters. It is seeking a premium to the $1.2 billion it paid to buy ViaWest from private equity firms in 2014. http://reut.rs/2pMboVy

• Time Inc. (NYSE: TIME) announced on Friday that it is removing itself from the auction block, sending its shares tumbling. http://bit.ly/2oXMIEJ

Fundraising

• Fertitta Capital has been launched to invest in consumer-facing companies in the tech, media and entertainment sectors (across the capital structure). It's being seeded by a $500 million investment from Frank and Lorenzo Fertitta (who sold Ultimate Fighting Championship last year for $4 billion) and will be led by former UFC chief financial officer Nakisa Bidarian. There are no current plans to raise outside capital, according to a source familiar with the situation. www.fertittacapital.com

• Kairos Ventures is raising upwards of $150 million for its second fund, per an SEC filing. www.kairosventures.com

It's Personnel

• Jennifer Li is stepping down as CFO of Baidu (Nasdaq: BIDU) in order to lead the Chinese Internet company's $3 billion investment arm, Baidu Capital. http://bit.ly/2oP0Fts

Final Numbers: Spin-offs & Carve-outs
Dan Primack