Axios Pro Rata

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June 04, 2021

🎧 Axios Re:Cap spoke with Zillow COO Jeremy Wacksman about the U.S. housing boom, and how much longer it might last. Listen here.

Top of the Morning

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Illustration: Aïda Amer/Axios

Tired: SPAC. Wired: SPARC.

Driving the news: Pershing Square Tontine, the SPAC formed last summer by Bill Ackman, confirmed that it's in talks to buy a 10% stake in Universal Music Group from Vivendi at a $40 billion enterprise value.

  • At first glance, this isn't what Tontine was formed to do. Or what any SPAC is formed to do, since they're expected to buy/merge private companies. It also had expected to sign a deal in 2020, per my Axios Re:Cap interview with Ackman last July.
  • Tontine raised more money than any SPAC in history and its prospectus repeatedly mentioned an interest in "mature unicorns." This led to lots of speculation that it would try to buy a company like Airbnb or Stripe, and word is that it did at least try to kick those sorts of tires.
  • The prospectus also mentioned private equity-owned and family-owned businesses (e.g., Bloomberg), although I can't find anything in there about corporate carveouts.

The twist: Tontine plans to also form what it's calling a SPARC, or special purpose acquisition rights company, seeded with cash that's not going to Universal.

  • This is different from the recent "Spinning Eagle" effort, which wanted to use stub cash to form a new SPAC (until the SEC suggested it not).
  • Instead, the SPARC will only collect cash from investors once it's identified a target and published a prospectus. At that point investors can either buy in, or trade their "rights" to the SPAC, which one source says is expected to trade pre-announcement in the $5 to $8 range.
  • The SPARC is expected to have the same official investment strategy as the original Tontine SPAC, and at least $6.5 billion at its disposal. Airbnb might be off the table, but Stripe and Bloomberg are still kicking around.

Investor reax: Tontine shares tanked on the news, which means Ackman has an uphill battle to convince "Tontards" that he got them a much better price than what they could get buying Universal on the open market (since Vivendi already had signaled plans to list it).

  • Investors might also be unhappy that they won't get a vote on the Universal deal. Pershing Square instead plans to satisfy redemption rights via a tender offer, which is certainly something that the SEC will review.

The bottom line: Bill Ackman is many things. Boring isn't one of them.

The BFD

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Illustration: Rae Cook/Axios

President Biden yesterday issued an executive order that bans Americans from investing in companies linked to the Chinese government’s military and surveillance activities.

  • Why it’s the BFD: This is Biden taking an even harder line against China than did the Trump administration via a similar EO, in terms of the number (59 including subsidiaries) and type of company. It's also Biden doing some legal clean-up, as Trump's EO sparked tons of confusion and lawsuits.
  • Details: So far the ban only extends to publicly listed Chinese companies, and does not include any investment funds. It's being overseen by the Treasury Department and goes into effect in August, but U.S. investors have up to a year to divest of existing holdings.
  • The bottom line: "Despite appeals from Beijing, the Biden administration has held the line on Trump tariffs that cover about $250 billion in trade with China and on separate Commerce Department sanctions banning the transfer of U.S. technology to gear-maker Huawei and others." — Gordon Lubold & Alex Leary, WSJ

Venture Capital Deals

Getir, an Istanbul-based grocery delivery app, raised $550 million at a $7.5 billion valuation from Silver Lake, DisruptAD, Mubadala and insiders Tiger Global and Sequoia Capital. http://axios.link/cl7n

Flink, a German on-demand grocery delivery startup, raised $240 million in Series A funding co-led by Prosus, BOND and Mubadala Capital. http://axios.link/qbv8

Capchase, a New York-based provider of non-dilutive capital, raised $125 million in Series A equity and debt funding. QED Investors led, and was joined by insiders Bling Capital, ScifiVC and Caffeinated Capital. www.capchase.com

Alation, a Redwood City, Calif.-based collaborative enterprise data platform, raised $110 million in Series D funding at a $1.2 billion valuation. Riverwood Capital led, and was joined by Sanabil Investments, Snowflake Ventures and insiders Costanoa Ventures, Dell Technologies Capital, Salesforce Ventures and Sapphire Ventures. http://axios.link/DMX1

Delimobil, a Russian car-sharing company, raised $75 million in pre-IPO funding from VTB. http://axios.link/Rl88

Realtime Robotics, a Boston-based industrial robotics startup, raised $31.4 million in Series A funding from HAHN Automation, SAIC Capital Management, Soundproof Ventures, Heroic Ventures, SPARX Asset Management, Omron Ventures, Toyota AI Ventures, Scrum Ventures and Duke Angels. http://axios.link/YiPs

Bobbie, a San Francisco-based organic infant formula startup, raised $15 million led by VMG. http://axios.link/a5rA

🚑 Stellanova Therapeutics, a Houston-based cancer biotech, raised $15.5 million in Series A funding led by Sporos Bioventures. http://axios.link/VJrc

Z League, a gaming tournament platform, raised $13.5 million in new funding. Backers include Andreessen Horowitz and Goodwater Capital. www.zleague.gg

Ganaz, a Seattle-based workforce management platform, raised $7 million in Series A funding from Bessemer Venture Partners, Founders’ Co-op, Taylor Ventures, AgFunder and Techstars. http://axios.link/C3Vz

Teemyco, a Swedish virtual office provider, raised $3.2 million in seed funding. 42Cap led, and was joined by Antler and Luminar Ventures. www.teemyco.com

🚑 Prixa, an Indonesian health management platform, raised $3 million. MDI Ventures led, and was joined by TPTF and Siloam Hospitals Group. http://axios.link/3i3Y

The Beans, a San Francisco-based financial wellness startup, raised $2 million. Precursor Ventures led, and was joined by Relay Ventures, One Planet VC, Swing Ventures and Oxford Angel Fund. http://axios.link/On8f

Private Equity Deals

Apollo Global Management agreed to acquire EmployBridge, an Atlanta-based industrial staffing company. http://axios.link/n3zR

Dallas Plastics, a Mesquite, Texas-based portfolio company of Sole Source Capital, acquired Hi-De Liners, an Orange, Mass.-based manufacturer of polyethylenes. www.dallasplastics.com

Duke Street Private Equity agreed to buy COMPO, a European maker of gardening soil, seed and fertilizers, from China's Kingenta. www.compo-group.com

Right Time, a Canadian portfolio company of Gryphon Investors, acquired Comfort Masters, a provider of residential HVAC, air quality and hot water services. www.right-time.ca

Public Offerings

DLocal, a Uruguayan cross-border payments company, raised $618 million in its IPO. The company priced at $21 (above $16–$18 range), for an initial market cap of $6.2 billion, and closed its first day of trading (Nasdaq: DLO) at $32.39 per share. DLocal had raised $350 million from firms like Alkeon Capital, Bond Capital, D1 Capital Partners and Tiger Global. http://axios.link/yOEM

SentinelOne, a Mountain View, Calif.-based autonomous cybersecurity platform, filed for an IPO. It plans to list on the NYSE (S) and reports a $118 million net loss on $93 million in revenue for 2020. The company raised over $260 million in VC funding, most recently at a $3.1 billion valuation, from firms like Insight Partners (15.8% pre-IPO stake), Tiger Global (12.4%), Third Point Ventures (11.3%), Redpoint Ventures (8%), DCVC (5.2%) and Anchorage Capital (5%). http://axios.link/q6wf

Xometry, a Gaithersburg, Md.-based online marketplace for custom-manufactured parts, filed for an IPO. It plans to list on the Nasdaq (XMTR) and reports a $31 million net loss on $141 million in revenue for 2020. The company raised around $200 million in VC funding from firms like Highland Capital Partners, T. Rowe Price, Foundry Group, BMW iVentures,Greenspring Associates and Durable Capital Partners. http://axios.link/OWoi

SPAC Stuff

🚑 Babylon Health, a British telehealth platform, agreed to go public at an implied $4.2 billion valuation via Alkuri Global Acquisition (Nasdaq: KURI), a SPAC led by ex-Groupon CEO Rich Williams. Babylon had raised $625 million from firms like Saudi Arabia’s Public Investment Fund, Munich Re, Kinnevik and Vostok New Ventures. http://axios.link/XomZ

Liquidity Events

MediaMath, a New York-based operating system for marketers and ad agencies, hired Luma Partners and Centerview Partners to explore strategic options, including a possible sale, per WSJ. The 14-year-old company has raised over $400 million (plus got a PPP loan) from firms like Searchlight Capital Partners, Spring Lake Equity Partners, Akamai, Safeguard Scientifics, Catalyst Investors and Observatory Capital. http://axios.link/LiTZ

More M&A

🚑 Bayer agreed to buy Noria Therapeutics, a Doylestown, Pa.-based radiotherapeutics biotech focused on prostate cancer. http://axios.link/EJor

Fundraising

Architect Capital, a San Francisco-based asset-based lender to tech startups, raised $100 million for its first funds. http://axios.link/hSbb

Future Perfect Ventures, a New York-based VC firm led by Jalak Jobanputra, is raising $60 million for its third fund, per an SEC filing. www.futureperfectventures.com

Paceline Equity Partners, a Dallas-based PE firm, raised $350 million for its first opportunities fund. www.pacelineequity.com

It's Personnel

GIC, a Singapore sovereign wealth fund, named New York-based Brian Kapetanis as its head of private equity secondaries. http://axios.link/fg62

Final Numbers

Data: FRED; Chart: Axios Visuals
Data: FRED; Chart: Axios Visuals

The U.S. economy added 559,000 jobs in May, which more than doubled April's number but which still fell short of economist estimates.

  • The unemployment rate fell to 5.8% from 6.1%, representing a pandemic low.
  • Go deeper.

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