Oct 4, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

After the Sandy Hook massacre five years ago, I wrote about how the weapons used had been produced by Freedom Group, a massive firearms conglomerate owned by Cerberus Capital Management. Among the indirect owners were teacher pension plans, and their outrage ultimately caused Cerberus to try selling Freedom Group. When that failed — namely because Cerberus had formed a company too big to buy and too integrated to split — it bought out Freedom Group (since renamed Remington) shares from limited partners who wanted to divest.

We do not yet have official word on what the deranged Las Vegas murderer used to commit his atrocities on Sunday night. But there is a very good chance that private equity money is again involved, and some institutional investors will again reconsider their commitments.

Some scene photos yesterday appeared to show AR-15 rifles, popular makers of which include Remington (still owned by Cerberus) and Stag Arms (owned by White Wolf Capital). But the photos also showed that the rifles appeared to be modified with two things:

  1. The first was a "bump stock," which basically helps someone increase the speed of their trigger finger. The primary maker is a company called Side Fire, and its bump stocks are sold by Cabela's, which was recently purchased by Bass Pro Shops (which, in turn, raised $2.4 billion last year from Goldman Sachs Merchant Banking and Pamplona Capital Management).
  2. The second was what TMZ identified high-capacity magazine made by Surefire, which about a decade ago raised private equity funding from Goldman Sachs and Broadsword Partners.

I got no comment from Pamplona, Bass Pro Shops or Broadsword, but a Goldman Sachs spokesman said the following about its Surefire investment:

"We are horrified by what has happened in Las Vegas. We are aware of allegations that SureFire magazines were used in the Las Vegas shootings but we cannot confirm the accuracy of such reports. We invested in SureFire ten years ago because it was selling world-leading illumination technology to military and law enforcement. Against our advice, the company moved into other products beyond lighting, including magazines. We stepped down from the board five years ago after they ignored our advice on this change in strategy and have tried to sell our stake repeatedly without success. We plan to exit this investment as soon as possible."

All hail breaks loose settles down: Uber's board yesterday voted unanimously to settle a whole slate of governance issues, and also to move forward with a SoftBank-led investment that remains anything but certain.

  • The short story: This agreement lets all sides legitimately claim victory, but the real winner was new CEO Dara Khosrowshahi.
  • Go deeper: We've got all the details, including a more defined IPO timeline, a 17-person board structure (!!) and board restrictions put on current and former officers (including both Dara and Travis Kalanick).

Canary count: Moody's is warning that Canada's largest pension funds are larding on the leverage, with an average bump from 19% to 24% since 2009. The result, it warns, is greater vulnerability to macroeconomic shocks. It's particularly notable given how some large U.S. pensions are talking about aping the Canadian model.

Oh Snap: Evan Spiegel was on the Vanity Fair Summit stage yesterday, being interviewed by Walter Isaacson. He acknowledged having done a lousy job of internal communications at Snap, which is infamous for a culture where almost no one knows what anyone else is working on -- even at senior levels, which has created a de facto key man risk on Spiegel. Key is that he recognizes the issue and is trying to improve.

  • Spiegel pushed back when Isaacson suggested Snap still has trouble attracting older users, by saying that "half of all new users are over 25." Yup, let that demographic perspective sink in.
  • Go deeper: Mike Allen with more from Los Angeles.
The BFD

Infinidat, an enterprise data storage company with offices in Israel and Massachusetts, has raised $95 million in Series C funding at a $1.6 billion post-money valuation. Goldman Sachs Private Equity led the round, and was joined by return backer TPG Growth.

  • Why it's the BFD: Conventional wisdom is that enterprise storage is on an unstoppable path to flash, but Infinidat has hit unicorn status with a hybrid box full of spinning disks. It argues that disk storage integration can prove cheaper and more effective than all-flash if subsystems are better optimized, and backs it up with claims of profitability and 13 straight quarters of revenue growth. Oh, and Infinidat also was founded by Moshe Yanai, who led development of EMC's Symmetrix products.
  • Bottom line: This round puts Infinidat into the 2018 IPO conversation.
Venture Capital Deals

• Infinidat, an Israeli data storage company led by EMC co-founder Moshe Yanai, has raised $95 million in Series C funding at a $1.6 billion post-money valuation. Goldman Sachs Private Equity led the round, and was joined by return backer TPG Growth. The company also said that it is now profitable. http://axios.link/W0fq

• MessageBird, a 7 year-old cloud communications company based in Amsterdam, has raised $60 million in Series A funding from Accel and Atomico. http://for.tn/2xg3ojC

🚑 Immatics, a German developer of cancer immunotherapies, has raised $58 million in Series E funding. Amgen was joined by return backers like Dievini Hopp Biotech and Wellington Partners. http://axios.link/5WKZ

• Roofstock, an Oakland-based online marketplace for single-family rental home investments, has raised $35 million in Series C funding. Canvas Ventures led the round, and was joined by return backers Lightspeed Venture Partners, Bain Capital Ventures, Khosla Ventures, Nyca Partners, QED Investors and FJ Labs. http://tcrn.ch/2xgBcIL

• Nanotronics, a Brooklyn-based maker of an automated microscope, has raised $30 million in Series D funding. Investment Corp of Dubai led the round, and was joined by return backer Founders Fund. http://axios.link/NY4S

• AtScale, a San Mateo, Calif.-based business intelligence platform, has raised $25 million in Series C funding. Atlantic Bridge led the round, and was joined by Wells Fargo, Index Ventures and return backers Storm Ventures, UMC, Comcast and XSeed Capital. It also named Peter Perrone as CFO. http://axios.link/Zgbq

• Frame.io, a New York-based collaboration platform for online video, has raised $20 million in Series B funding. FirstMark Capital led the round, and was joined by Accel, SignalFire and Shasta Ventures. http://tcrn.ch/2xdSefC

• OpsRamp, a San Jose, Calif.-based enterprise IT management platform for hybrid environments, has raised $20 million in equity funding from Sapphire Ventures. http://axios.link/Fcj2

• Numetric, an American Fork, Utah-based maker of business intelligence tools, has raised $13 million in new VC funding from Insight Venture Partners, EPIC Ventures, Tim Draper and Aaron Skonnard. www.numetric.com

🚑 Level Ex, maker of a professional video game for physicians, has raised $11 million in Series A funding. 4490 Ventures led the round, and was joined by Jazz Venture Partners and Pritzker Group Venture Capital. http://axios.link/Zo3l

🌞Azgaza, a San Francisco-based provider of pay-as-you-go software for rural solar energy needs, has raised $10.5 million in Series B funding. Emerson Collective led the round, and was joined by Rethink Impact, Salesforce Ventures, Social Capital, and the Stanford StartX Fund. http://tcrn.ch/2yToMbA

• HYPR, a New York-based provider of enterprise facing decentralized authentication solutions, has raised $8 million in Series A funding. RRE Ventures led the round, and was joined by return backers RTP Ventures, Boldstart Ventures and Mesh Ventures. http://tcrn.ch/2fH4fi9

• Radar, a New York-based location platform for mobile apps, has raised $2 million in seed funding. Accel led the round, and was joined by existing backers like Expa and Fuel Capital. www.onradar.com

Private Equity Deals

• The Abraaj Group has invested in Pakistani cinema operator Cinepax Ltd. No financial terms were disclosed. www.abraaj.com

• Aquiline Capital Partners has sponsored a recap of existing portfolio company Worley, a Hammond, La.-based provider of claims adjustment and related services. The deal includes $205 million in financing from Twin Brook Capital Partners. www.worleyco.com

• Argos Soditic has acquired Fabbri Group, an Italian provider of wrapping machines and films to the fresh food sector, from Lincolnshire Management for an undisclosed amount.

• Battery Ventures has acquired Latitude Geographics, a Canadian provider of web-based mapping software and geographic information systems. No financial terms were disclosed. www.latitudegeo.com

• Goldman Sachs and Edizone Holdings (family office of Benetton family) have submitted a joint bid for Italian packaging company Guala Closures, which is being auctioned off for more than €1 billion by Apriori Capital Partners, according to Reuters. There could be up to five other suitors. http://reut.rs/2gaOzEx

• Lightyear Capital has invested in Datalot, a Brooklyn-based provider of digital marketing solutions for the insurance industry. No financial terms were disclosed. www.datalot.com

• Realtime Electronic Payments, an Atlanta-based portfolio company of Corsair Capital, has acquired PaidSuite, a provider of electronic payment solutions to the accounts receivable management market. No financial terms were disclosed. REP also said that it has completed a debt refinancing via a $100 million credit facility lead arranged by SunTrust Bank.www.repayonline.com

• Snow Phipps Group has acquired DecoPac, an Anoka, Minn.-based provider of cake decorations to professional cake decorators and bakeries. No financial terms were disclosed. www.decopac.com

• Thomas H. Lee Partners has completed its previously-announced purchase of a majority stake in Ten-X, an Irvine, Calif.-based online commercial and residential real estate marketplace. Existing Ten-X investors CapitalG and Stone Point Capital retained minority equity stakes. No financial terms were disclosed. www.ten-x.com

Public Offerings

• Evoqua Water Technologies, a Pittsburgh-based water treatment and services company owned by AEA Investors, has filed for a $100 million IPO. It plans to trade under ticker symbol AQUA, with Credit Suisse and J.P. Morgan serving as lead underwriters. The company reports nearly a $7 million net loss on $891 million in revenue for the nine months ending June 30, 2017. www.evoqua.com

🚑 OptiNose, a Yardley, Penn.-based developer of breath-powered nasal drug delivery solutions, has set its IPO terms to 6.25 million shares being offered at between $15 and $17 per share. It would have a fully-diluted market cap of around $625 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq, with Jefferies listed as left lead underwriter. Shareholders include Avista Capital (58.85% pre-IPO stake) and Fidelity (7.5%). www.optinose.com

• Qudian, a China-based online micro-credit lender backed by Alibaba Group's Ant Financial, has set its IPO terms to 37.5 million American depository shares being offered at between $19 and $22 each. It would have a fully-diluted market cap of around $6.9 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol QD, with Morgan Stanley listed as left lead underwriter. http://axios.link/1C4g

Liquidity Events

• Amazon (Nasdaq: AMZN) has acquired Body Labs, a New York-based developer of 3D body models for B2B software applications, for upwards of $70 million, per TechCrunch. Body Labs had raised around $13 million in VC funding from firms like Intel Capital. http://tcrn.ch/2xeYbZo

• Office Depot (Nasdaq: ODP) has agreed to buy CompuCom System, a Plano, Texas-based provider of IT services to business customers, for around $1 billion from Thomas H. Lee Partners (which will retain an 8% stake). https://bloom.bg/2knfgu6

• Warburg Pincus has agreed to sell around $1.2 billion worth of Asian investments via a secondary transaction that includes both Lexington Partners and Goldman Sachs on the buy-side, per the WSJ. http://on.wsj.com/2xS1bL2

More M&A

Laurene Powell Jobs has agreed to acquire around a 20% stake in Monumental Sports & Entertainment, a Ted Leonsis-led group that owns the Washington Wizards NBA franchise, Washington Capitals NHL franchise and Capitol One Aena, per the Washington Post. http://wapo.st/2xcOjuq

• Prudential (LSE: PRU) is seeking a buyer for its Vietnam consumer finance unit, which could garner upwards of $150 million, per Reuters. http://reut.rs/2wy8vHA

Fundraising

• Newbury Partners has raised $1.27 billion for its fourth private equity secondaries fund, per Dow Jones. www.newbury-partners.com

• Oakley Capital, a European VC and private equity fund listed on London's AIM, has closed its third fund with €800 million in capital commitments. http://axios.link/Chuq

• The Rise Fund, a social impact private equity fund from TPG Capital, has closed with $2 billion in capital commitments. https://bloom.bg/2xTEKTm

• Salesforce (NYE: CRM) has launched a $50 million social impact fund that will operate under the Salesforce Ventures umbrella. http://axios.link/MFJ9

• Trive Capital, a Dallas-based private equity firm focused on the lower middle-markets, has closed its third fund with $1 billion in capital commitments. www.trivecapital.com

It's Personnel

• Martin Giles is returning to journalism after spending a couple of years with Wing Venture Partners, per his LinkedIn account. The former Economist writer will become SF Bureau Chief for the MIT Tech Review.

• Justin Lawrence has joined Adams Street Partners as a principal on the firm's private credit team. He previously was with Ares Management. www.adamsstreetpartners.com

• Idris Mohammed has joined The Carlyle Group as a managing director on the firm's sub-Saharan Africa team. He previously was with DPI and, before that, Goldman Sachs. www.carlyle.com

• Dan Pfeiffer, a former Obama senior advisor and current co-host of Pod Save America, has stepped down as VP of communications and policy for crowdfunding site GoFundMe. http://axios.link/V5LO

Dan Primack