Aug 1, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Well, that was unexpected: Cincinnati-based Vantiv last month announced that it would acquire British payment processing giant Worldpay for over £7.7 billion, beating out a rival bid from J.P. Morgan. But it seems the auction "win" never included a formal bid, and the two sides have yet to settle on final terms.

  • Timeline: The deadline was supposed to be today, but Worldpay has granted a one-week extension. If no final bid is submitted, then there would be a 6-month cooling-off period (and perhaps an opening for JPM).
  • The hang-up: Reuters reports that a major sticking point is where the combined company will be based: "Worldpay wants to make the deal palatable to the British government, which has recently taken a more protectionist stance on takeovers by foreign acquirers."
  • Bigger picture: Protectionism (and its regulatory relatives) is becoming one of the year's major M&A storylines. China has been leading the way, cracking down on domestic acquisitions of foreign assets (here's the most recent). Yesterday came news that India plans to stop China's Fosun International from buying local drugmaker Gland Pharma for $1.3 billion. And there have been numerous stories about stepped-up CFIUS action – or inaction, which is effectively the same thing – here in the U.S.

• Rebranding exercise: North Bridge Growth Equity has shrugged off the legacy brand, changing its name to GuidePost Growth Equity. Per firm co-founder Doug Kingsley: "We picked GuidePost because it symbolizes the business we're in, investing in later-stage companies with between $30 million and $40 million in revenue, meeting them on their journeys and helping guide them along their paths to even greater success."

  • Adios: Ed Anderson and Rich D'Amore -- who founded North Bridge Venture Partners in 1994, adding the growth practice in 2007 -- will not be involved with GuidePost.
  • Coming attractions: Kingsley declined to discuss fundraising, but the group's $580 million second fund is of 2013 vintage. So expect the rebrand to soon be followed by a Fund III marketing effort.

• The Mooch is Loose: Anthony Scaramucci might be out as President Trump's communications director, but that will not affect the pending sale of his SkyBridge hedge fund business to China's HNA Group. Or so says HNA, via an outside spokesman's comment to Axios: "The transaction remains on track and is expected to close by the end of the summer."

  • Due diligence: A source familiar with the situation says that Scaramucci, who officially left Skybridge when the deal was announced in January, has no right to terminate it. But it still faces regulatory scrutiny in both the U.S. and in China. No price was ever disclosed for the sale, although Forbes estimated SkyBridge to be valued at between $200 million and $230 million – which would mean around a $77 million after-tax payday for Scaramucci.

• New firm alert: Sunil Nagaraj quietly has stepped down as a Menlo Park-based vice president with Bessemer Venture Partners, in order to hang a shingle called Ubiquity Ventures. He had joined BVP in 2011, and served on the boards of portfolio companies AuthO and Zoosk.

• It gets worse: 500 Startups, the international seed-stage group founded by admitted sexual harasser Dave McClure, has shut its Canadian unit. Worth noting that 500 Startups still refuses to answer media questions about what it knew and when it knew it.

The BFD

Reddit has raised $200 million in new VC funding at a $1.8 billion post-money valuation. Backers include Coatue Management, Fidelity Investments, Andreessen Horowitz, Sequoia Capital, Vy Capital, Sam Altman and Ron Conway. Reddit majority owner Advance Communications did not participate.

  • Why it's the BFD: Because Reddit has just set its investor exit bar incredibly high, particularly given that it continues to focus much more on product than profit. Hard to imagine an acquirer at $2 billion-plus without a significant monetization upgrade, and Wall Street has spent months telling Snap that it cares about metrics beyond user growth and user engagement. Then again, so long as SoftBank exists...
  • In the weeds: Reddit's Form D filing with the SEC suggests $182 million of stock was sold, with a total of $250 million available. It also says the financing was for both Series B and Series C stock (it's possible the Series B relates to the exercise of existing warrants, or that there is some secondary component). A Reddit spokesperson was not available this morning for comment.
  • Bottom line: "[CEO Steve] Huffman's plan for the new funding includes a redesign of reddit.com — the company is literally re-writing all of its code, some of which is more than a decade old. An early version of the new design... looks similar to Facebook's News Feed or Twitter's Timeline: A never-ending feed of content broken up into "cards" with more visuals to lure people into the conversations hidden underneath." – Kurt Wagner, Recode
Venture Capital Deals

• Impossible Foods, a Redwood City, Calif.-based maker of plant-based food products, has raised $75 million in new VC funding. Temasek led the round, and was joined by Open Philanthropy Project, Bill Gates, Khosla Ventures and Horizon Ventures. http://on.wsj.com/2eVccDz

🚑 Milestone Pharmaceuticals, a Montreal-based drug developer focused on cardiovascular disease, has raised US$55 million in Series C funding. Novo Holdings led the round, and was joined by Forbion Capital, Tekla Capital Management and return backers like Domain Associates, Fonds de solidarité FTQ and BDC Capital. http://bit.ly/2f5dkUZ

• Carwow, a UK-based online marketplace for buying new cars, has raised £30 million in new VC funding. Vitruvian Partners led the round, and was joined by return backers Accel Partners and Balderton Capital. http://read.bi/2hiZLSK

• UnifyID, a San Francisco-based developer of an "implicit authentication platform," has raised $20 million in Series A funding. NEA led the round, and was joined by Andreessen Horowitz, Stanford-StartX, and Accomplice Ventures. http://tcrn.ch/2f4Atqt

• SmartX, a Beijing-based developer of hyper-converged infrastructure products, has raised $14 million in Series B funding. Matrix Partners China led the round, and was joined by return backers F&G Venture, Banyan Capital and Lenovo Capital. http://bit.ly/2tUBqEu

• Azequa, a Seattle-based provider of cloud application connectivity for business users, has raised $10.8 million in Series B funding. Insight Venture Partners led the round, and was joined by DFJ and Ignition Partners. www.azequa.com

• Flutterwave, a San Francisco-based startup that enables banks and businesses to make and accept payments in Africa, has raised $10 million in Series A funding. Greycroft Partners and Green Visor Capital co-led the round, and were joined by Y Combinator and Glynn Capital. http://cnnmon.ie/2wet8YI

• Wonderbly (f.k.a. LostMyName), a London-based personalized publishing startup, has raised $8.5 million in Series B funding. Ravensburger, a European games and puzzle publisher, led the round. Other backers include Google Ventures, Project A Ventures, Greycroft Partners, The Chernin Group and Allen & Co. The company also secured a new venture debt facility from Silicon Valley Bank. http://bit.ly/2viGkyD

🚑 Limelight Health, a San Francisco-based quote-to-enroll platform, has raised $7 million in Series B funding, MassMutual Ventures led the round, and was joined by AXA Strategic Ventures, Wanxiang Healthcare Investments, Portag3 Ventures and Plug and Play Ventures. www.limelighthealth.com

• Drive Motors, a San Francisco-based online marketplace for new cars, has raised over $5.2 million in new VC funding from firms like Bullpen Capital, per an SEC filing. www.drivemotors.com

• Carspring, a Berlin-based online marketplace for used cars, has raised £5 million in Series B funding from Channel 4's Commercial Growth Fund and founding investor Rocket Internet. http://tcrn.ch/2wgR2D2

• Datarino Group, a Polish provider of behavioral ad-targeting solutions, has raised $1.6 million in Series A funding from Luma Ventures. http://bit.ly/2tV0vz1

• Taxify, an Estonian taxi-hail service operating in Europe and Africa, has raised an undisclosed amount of equity funding from China's Didi Chuxing. http://tcrn.ch/2viw9dx

Private Equity Deals

⛽ The Blackstone Group has agreed to acquire a 32.4% stake in the Rover Pipeline Project from Energy Transfer Partners (NYSE: ETP) for $1.57 billion. http://on.wsj.com/2uR0VcX

• China First Capital Group, Rhodium Capital and Widus Partners have agreed to acquire a 54% equity stake in SJW International Co., a South Korean online English language education company. The deal is valued at upwards of $135 million. http://bit.ly/2vopqzv

• Clayton Dubilier & Rice has completed its previously-announced purchase of a 60% stake in Capco, the management consulting unit of Fidelity National Information Services (NYSE: FIS), for $477 million. FIS will retain a 40% equity interest. www.capco.com

• DG3, a British printing company backed by Resilience Capital Partners, has acquired the offset print business of London-based Leycol Printers. No financial terms were disclosed. www.dg3.com

• ETC Global Group, a Los Angeles-based brokerage and clearing group, has secured up to $68 million in financing from Cerberus Capital Management and Quantlab Investments. www.etc-clearing.com

• Hospitality Staffing Solutions, an Atlanta-based portfolio company of Littlejohn Capital, has acquired DEZ Staffing, a provider of hospitality and industrial staffing services in the Denver market. No financial terms were disclosed. http://bit.ly/2w1TUV6

• Marlin Equity Partners has agreed to acquire ABIT Europe Group, a provider of claims and credit management, and risk and impairment software. No financial terms were disclosed. ABIT has offices in The Netherlands and Germany. www.abit.de

• Warburg Pincus has agreed to acquire Service Logic, a Charlotte, N.C.-based provider of aftermarket maintenance and repair services for commercial HVAC equipment, from Sterling Investment Partners. No financial terms were disclosed. www.servicelogic.com

Public Offerings

There is no IPO news this morning, so let's peek at aftermarket performance of some of the year's VC-backed offerings. The below percentages are rounded gains/losses from IPO price, as of yesterday's market close:

  • Appian: +63%
  • Blue Apron: -34%
  • Carvana: +30%
  • Jounce Therapeutics: -19%
  • MuleSoft: +28%
  • Okta: +29%
  • RedFin: +61%
  • Snap: -20%
  • Tintri: -4%
Liquidity Events

• Amazon (Nasdaq: AMZN) has acquired GameSparks, an Ireland-based "backend-as-a-service" for game developers. No financial terms were disclosed. GameSparks had been seeded by Enterprise Ireland. http://tcrn.ch/2eV6kd9

• Facebook (Nasdaq: FB) has acquired conversational AI startup Ozlo for an undisclosed amount. Ozlo raised a $14 million Series A round in May 2016 from Greylock, Amino Capital and AME Cloud Ventures. http://tcrn.ch/2tSBfth

More M&A

⛽ AES Corp. (NYSE: AES) and Alberta Investment Management Co. have acquired sPower, an owner and operator of utility-scale solar assets in the U.S., for $1.6 billion in cash (including $712m of assumed debt). https://bloom.bg/2w1neei

Fundraising

• UpHonest Capital, an early-stage VC firm led by Wei Guo, has secured $30 million for a debut fund that could total $40 million, per an SEC filing.

It's Personnel

• Mike Abbott has stepped down as a general partner with Kleiner Perkins Caufield & Byers. http://tcrn.ch/2vcF0xL

• Jacob Polny has stepped down as a Europe-focused principal with private equity firm TPG Capital, according to an email sent out on Monday to friends and colleagues. His next stop will be Telemos Capital, which he refers to as a private equity-focused family office that is in the process of being formed. http://bit.ly/2tVytDR

Dan Primack