Jan 27, 2020

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

The IPO-pocalypse sure didn't last long.

Three months after WeWork pulled its offering, we're expecting a $1 billion+ offering this week and another next week. It also appears that mattress maker Casper will push forward with its listing, albeit as an "undercorn."

  • First up will be Reynolds Consumer Products, which is best known for its aluminum foils, plastic wraps and Hefty trash bags. At the top of its range, it would raise around $1.3 billion at a $5.7 billion market cap.
  • Next week we should get PPD, a private equity-owned pharma contract research group that could raise $1.6 billion at a $9.2 billion market cap.

Yes, both of these are profitable, well-established companies. And few pundits seem to care about the unprofitable biotechs that also expect to price this week (sorry biotechs — maybe you should do something more interesting than curing our diseases and saving our lives... have you considered scooters?).

So that brings us to Casper Sleep, the unprofitable, upstart mattress maker that was inexplicably valued like a tech company by venture capitalists.

  • Casper this morning set IPO terms that seemed to acknowledge how the private markets erred.
  • If it prices at the top of its range, the company would be valued at around $744 million, which is well shy of the unicorn valuation it previously received (no, the fully-diluted value doesn't get you there either).
  • But, but, but: The very fact it's launching its road-show, in the face of ongoing skepticism, suggests that the macro IPO chill has thawed. Or at least that bankers are willing to take the reputational risk.

The bottom line: No one company's failings, no matter how massive, can single-handedly derail the broader equity or capital markets. That's true whether it's WeWork, Boeing, or whatever misery comes next.

🎧 Pro Rata Podcast digs into the corporate climate change pledges that poured out of the World Economic Forum in Davos. Listen here.

  • Our next episode will focus on coronavirus and feature an interview with Ron Klain, who served as President Obama's "Ebola czar." Expect it to post just before noon EST. Subscribe.
The BFD

Illustration: Aïda Amer/Axios

TKC Holdings, a portfolio company of H.I.G. Capital, is seeking creditor approval to spin off prisoner phone services company Inmate Calling Solutions via a management buyout.

  • Why it's the BFD: When a for-profit prison services company like TKC decides a business has become too politically toxic to own, you know there's a serious problem. Particularly when it wants to divest so badly that it's willing to hurt its own credit-worthiness.
  • Details: TKS would help finance the deal via $280 million in new debt, including a $220 million PIK note.
  • Bottom line: "The controversial prison phone industry has come under fire for charging inmates as high as $25 for a 15-minute call... ICS and [rival] Securus, which was once owned by HIG but is now a portfolio company of Platinum Equity, dropped plans to merge in April 2019 after the Justice Dept and FCC raised concerns that the deal could harm competition." — Davide Scigiluzzo, Bloomberg
Venture Capital Deals

CurrencyCloud, a London-based foreign exchange payments automation platform, raised $80 million in Series E funding from Visa, IFC, SBI Group, BNP Paribas, and Siam Commercial Bank. http://axios.link/0Tqc

🚑 Quench Bio, a Cambridge, Mass.-based biotech focused on inflammatory diseases, raised $50 million in Series A funding. RA Capital led, and was joined by Abbvie Ventures, Atlas Venture and Arix Bioscience. http://axios.link/bhp3

Bizongo, an Indian B2B packaging marketplace, raised $30 million in Series C funding. Schroder Adveq led, and was joined by return backers B Capital, Accel, Chiratae Ventures, and IFC. http://axios.link/39T7

Crexi, a Los Angeles-based commercial real estate marketplace, raised $30 million from Mitsubishi Estate Co., Industry Ventures, Prudence Holdings, and return backers Lerer Hippeau Ventures and Jackson Square Ventures. http://axios.link/u1bS

Iguazio, an Israeli data science startup, raised $24 million. INCapital Ventures led, and was joined by return backers Samsung SDS, Kensington Capital Partners, Plaza Ventures, and Silverton Capital Ventures.

Mural, a visual collaboration platform, raised $23 million in Series A funding. Radian Capital led, and was joined by Gradient Ventures and Endeavor Catalyst. www.mural.co

GelSight, a Waltham, Mass.-based developer of industrial 3D imaging solutions, raised $10 million in Series B funding led by Anzu Partners. http://axios.link/k1vw

ProGuides, a Los Angeles-based e-sports learning platform, raised $5 million in seed funding. M13 led, and was joined by Amplify LA, Quest Venture Partners, and GFR Fund. http://axios.link/RYJN

CustomerGauge, a B2B customer feedback platform, raised an undisclosed amount of equity funding from Riverside Acceleration Capital. www.customergauge.com

Pine Labs, a Singapore-based merchant commerce platform, raised an undisclosed amount of funding from Mastercard. http://axios.link/Gj36

Private Equity Deals

Advent International and Partners Group are among those considering bids for the Steinhoff International’s European retail unit, which runs the Pepco and Poundland discount chains, per Bloomberg. A deal could be worth around $4.4 billion. http://axios.link/tNqh

🚑 PromptCare, a New Providence, N.J.-based portfolio company of The Halifax Group, acquired Premier Specialty Infusion, a Hoffman Estates, Ill.-based provider of home infusion services with a focus on managing immunoglobulin therapy. www.promptcare.net

Public Offerings

Five companies and one SPAC plan to price IPOs on U.S. exchanges this week. Issuers include Reynolds Consumer Products, which would be the year’s first $1 billion+ listing, plus One Medical, Arcutis Biotherapeutics, Avadim Health, Black Diamond Therapeutics and InterPrivate Acquisition. http://axios.link/DYZw

Liquidity Events

🚑 AEA Investors is seeking a buyer for 1-800 Contacts, an Orem, Utah-based contact lens retailer that could fetch more than $2 billion (including debt), per Reuters. http://axios.link/6cvx

F5 Networks (Nasdaq: FFIV) completed its $1 billion purchase of Shape Security, a Mountain View, Calif.-based bot and online fraud mitigation company that had raised over $180 million (most recently at a $1 billion pre-money valuation). Shape Security backers included C5 Capital, Kleiner Perkins, HPE, Norwest Ventures Partners, Focus Ventures, JetBlue Technology Ventures, Top Tier Capital Partners, and Epic Ventures. http://axios.link/urBS

🚑 Marlin Equity is seeking a buyer for Virgin Pulse, a Providence, R.I.-based employee health engagement platform that could fetch over $2 billion, per PE Hub. http://axios.link/gZkn

Palladium Equity Partners sold DolEx Dollar Express, an Arlington, Va.-based provider of electronic funds transfer services, to an undisclosed group of investors and company management.

More M&A

James Benamor is seeking a buyer for his 60.6% stake in Amigo (LSE: AMGO), the British subprime lender he founded. http://axios.link/xF4w

• Glencore is among those discussing a possible takeover of Argentinian processed soy giant Vicentin, per Reuters. http://axios.link/geiM

• India’s government said it plans to sell its entire stake in flagship carrier Air India, after efforts to sell a smaller piece received no bids. http://axios.link/dKoZ

• Kaltura, a New York-based video cloud that’s raised over $160 million in VC funding, acquired Newrow, a South Plainfield, N.J.-based video conferencing and collaboration platform. http://axios.link/qct7

🚑 Sanofi (Paris: SASY) completed its $2.5 billion purchase of La Jolla, Calif.-based cancer drug company Synthorx, which has delisted from the Nasdaq. http://axios.link/3Kq3

Saudi Arabia’s Public Investment Fund is in talks to acquire the Newcastle United football club for around $445 million, per multiple reports. http://axios.link/zeTC

Final Photo

Photo by Rob Carr/Getty Images

Kobe Bryant, who was one of nine people who died yesterday in a tragic helicopter crash, had been intent on becoming as successful in business as he was in basketball.

  • A major part of that effort was as co-founder of Bryant Stibel, an investment firm he and former Web.com CEO Jeff Stibel formed in 2013 to invest in tech and media groups. Portfolio companies included LegalZoom, The Honest Co., and Scopely.
  • Last year, Permira and Bryant Stibel formed a partnership focused on non-control investments.
  • He also had become a fixture in the Los Angeles tech scene, with dozens of entrepreneurs and founders yesterday tweeting out photos and memories of recent meetings. Expect his legacy to feature prominently this week during the annual Upfront Summit, which begins Wednesday in Pasadena.

Please keep the families and friends of all the victims in your thoughts, as they try to cope with unspeakable tragedy.

Dan Primack

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