Jul 29, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

Monday greetings from Martha's Vineyard, where the home office this week is a wraparound porch and closing time is just a bit earlier. Remember you can always email scoop or feedback to dan@axios.com, or use my anonymous tip-box (http://axios.com/tips). Okay, here we go...

Top of the Morning
Source: Giphy

Apollo Global Management CEO Leon Black for the first time addressed his relationship to Jeffrey Epstein, via an apologetic email sent to all Apollo employees last Friday morning. Its subject line was "Recent Press Coverage."

"I am sorry if this recent media attention has been a distraction or caused you any concern."

Black's email failed to explain why his family foundation reportedly donated $10 million to Epstein's nonprofit years after the disgraced "tax strategist" plead guilty to state charges of soliciting underage prostitutes.

  • Black led by saying that Apollo never did business with Epstein, although there's never been any allegation that it did.
  • "On a few occasions, I donated money to certain charitable organizations with which Mr. Epstein was affiliated and he made contributions to certain charitable organizations that are meaningful to me."
    • No specific confirmation of the $10 million nor the timing.
  • "I was completely unaware of, and am deeply troubled by, the conduct that is now the subject of the federal criminal charges brought against him."
    • Except... Black must have known about the state charges, which clearly reflect the type of conduct now reflected in the criminal charges, when making the $10 million donation. That's why Epstein resigned from Black's family foundation board in 2007.
    • Moreover, aren't private equity titans like Black supposed to be masters of due diligence? Which is why this story should be more than just a press-prompted "distraction" or "concern" for Apollo employees, shareholders, and limited partners.

Keep your eyes on a brewing situation with Cofense, a Virginia-based cybersecurity company acquired last year for around $400 million by BlackRock and London-based private equity firm Pamplona Capital Management.

  • Reuters reports that CFIUS, the U.S. government's national security review panel of foreign acquisitions, has asked Pamplona to sell its 47% stake in Cofense to BlackRock.
  • Why it matters, per Reuters: "The development represents one of the rare, high-profile examples of CFIUS undoing a deal that had already been completed."
  • The specific CFIUS objection to Pamplona isn't yet clear, although it likely relates to a major LP commitment from Mikhail Fridman, a controversial Russian oligarch that the Trump administration says has ties to Vladimir Putin.

Illustration: Sam Jayne / Axios

The London Stock Exchange said it's in talks to buy Refinitiv, the financial data provider that The Blackstone Group just last year carved out of Thomson Reuters (which retained a 45% stake).

  • Why it's the BFD: This would put the British bourse in direct competition with Bloomberg's terminals business.
  • ROI: Blackstone's deal valued Refinitiv at around $20 billion, while LSE reportedly is working on a $27 billion price-tag (including around $12 billion in assumed debt). Blackstone already spun off Refinitiv's Tradeweb bond-trading business via an IPO this past April.
  • Bottom line: "Exchanges are just data platforms." — Mike Santoli, CNBC
Venture Capital Deals

Nubank, a Brazilian digital credit card company, raised $400 million in Series F funding led by TCV at a valuation north of $10 billion. There had been earlier reports that SoftBank was interested. Nubank previously raised over $500 million from firms like Sequoia Capital, Redpoint Ventures, Goldman Sachs and Tencent. http://axios.link/4Fds

RedDoorz, a Singapore-based budget hotel booking site, raised $45 million in Series B funding led by Qiming Venture Partners. http://axios.link/mAQx

Drip Capital, a trade financing startup with offices in India and Palo Alto, raised $25 million in Series B funding. Accel led, and was joined by Trusted Insight, GC1 Ventures and return backers Wing VC, Sequoia India and YC. http://axios.link/wT8A

StashAway, a Singapore-based robo-advisor, raised $12 million in Series B funding. Eight Roads Ventures led, and was joined by Asia Capital & Advisors. http://axios.link/ydtq

Sense, a Boston-based home energy monitoring startup, raised $10 million in new Series B funding from MacKinnon, Bennett & Co. and IDO Investments. The round total is now $30 million. www.sense.com

Minut, a Swedish developer of a camera-les home security device, raised $8 million in Series A funding. KPN Ventures led, and was joined by Centrica and return backers Karma Ventures, SOSV and Nordic Makers. http://axios.link/PS8b

🚑 OptioSurgical, a Denver-based provider of analytics software to help hospitals reduce medical device costs, raised $3.3 million led by Next Frontier Capital. http://axios.link/ZWCo

BabySparks, a Plantation, Fla.-based early childhood development app, raised $2 million in seed funding led by Ocean Azul Partners. http://axios.link/e4Cb

🚑 Magenta Medical, an Israeli developer of heart failure solutions based on miniaturized blood pump technology, raised an undisclosed amount of VC funding led by NEA. Others backers include Pitango VC and JVC Investment Partners. www.magentamed.com

Private Equity Deals

Colony Capital is in talks for a minority stake in Legendary Entertainment, a film and TV producer down by China’s Dalian Wanda Group for $3.5 billion in 2016, per Bloomberg. If Colony buys in, the valuation is expected to be lower. http://axios.link/Xv1p

🚑 Leonard Green and Ares Management completed their purchase of Press Ganey, a Wakefield, Mass.-based healthcare measurement company, from EQT Partners. No financial terms were disclosed, but Bloomberg put the enterprise value north of $4 billion. http://axios.link/Bzy1

Public Offerings

Six companies plan to price IPOs on U.S. exchanges this week: Dynatrace, Flux Power, Kura Sushi USA, Rapt Therapeutics, Sundial Growers, and WiMi Hologram. http://axios.link/9njG

Wanda Sports Group, a live sports and events business being spun out of China’s Wanda Group, raised $190 million in its IPO. The company priced shares at $8 (below downwardly-revised range), wityh shartes closing down at %5/16 per share on their first day of trading (Nasdaq: WSG). Wanda Sports, which owns the Iron Man Triathlon, used Morgan Stanley as lead underwriter, and reports a $2.7 million net loss on $276 million in revenue for Q1 2019. http://axios.link/oqrX

Liquidity Events

Vice Media is in talks to buy Refinery29, a digital media company focused on millennial women, per the WSJ. Refinery29 has raised over $100 million in VC funding, and has been seeking another $20 million, from firms like Stripes Group, Discovery Communications, WPP and WarnerMedia. http://axios.link/oqp9

More M&A

🚑 Pfizer (NYSE: PFE) agreed to merge its off-patent drugs unit with Mylan (Nasdaq: MYL), via a tax-free spinoff.

  • Under terms of the all-stock deal, Pfizer shareholders would own 57% of the combined entity, which would be domiciled in the U.S. and led by Pfizer off-patent chief Michael Goettler. Pfizer also would issue $12 billion in new debt.
  • Mylan CEO Heather Bresch, who took lots of PR slings and arrows during the Epipen pricing debacle, would leave.
  • Thought bubble from Axios' Bob Herman: "All of these drugs are off patent. Which hypothetically means their sales could drop to zero. Like, there’s no reason anyone should ever get an Rx for Viagra now. This is Mylan trying to stave off investors who are mad, and this is Pfizer unloading drugs it doesn’t much care about so it can focus more on big-ticket patented drugs."

🚑 Exact Sciences (Nasdaq: EXAS) is in advanced talks to buy cancer testing company Genomic Health (Nasdaq: GHDX) for around $2.8 billion, per Bloomberg. http://axios.link/Akxh

🚑 NeuroBo Pharmaceuticals, a Boston-based drug startup focused on neurodegenerative diseases, will become publicly-listed via a reverse merger with Gemphire Therapeutics (Nasdaq: GEMP), a Livonia, Mich.-based developer of treatments for dyslipidemia and nonalcoholic fatty liver disease. http://axios.link/cgW2

🚑 Novartis (Swiss: NOVN) will not sell its Sandoz generics business as part of its broader corporate revamp, per a local newspaper interview with Novartis CEO Vas Narasimhan. http://axios.link/rYuk

Osaka Gas (Tokyo: 9532) agreed to buy Houston-based shale gas company Sabine Oil & Gas for $610 million. http://axios.link/eRzq

Takeaway (Amsterdam: TKWY) offered to buy fellow food delivery company Just Eat (LSE: JE) for $6.2 billion. http://axios.link/jxsF

Trian Fund Management, led by Nelson Peltz, has asked plumbing supplies distributor Ferguson (LSE: FERG) to sell its UK business, per Sky News. Ferguson has a market cap north of £14 billion, and Trian holds a 6% stake. http://axios.link/Krnd


Huaxing Growth Capital, a private equity arm of Chinese investment bank China Renaissance, raised around $945 million for its third yuan-denominated fund. http://axios.link/mW9T

Joy Capital, a China-focused VC firm, raised $700 million for its latest fund. http://axios.link/ESeY

It's Personnel

Jomayra Herrera has left Emerson Collective to join Cowboy Ventures. www.cowboy.vc

Shawn Maguire joined Sequoia Capital as a partner focused on seed and early-stage deals. He previously was with GV. www.sequoiacap.com

Final Numbers: Price changes for Silicon Valley venture rounds
Source: Fenwick & West Silicon Valley VC Survey, Q2 2019.
Dan Primack

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