• Toeholds: Apollo Global Management may increase its investors' exposure to public equities, per a Bloomberg review of marketing materials for the firm's next flagship buyout fund (slated to close in May). Specifically, Apollo would allocate up to 10% of the $20 billion+ targeted vehicle to listed stocks on the open market, doubling the 5% allocation on its current fund.
- Why? The idea is to form so-called toeholds, or small stakes that may lead to future takeover opportunities.
- Unique? Nope. For example, KKR can invest up to 15% of its new North American buyout fund in listed stocks. We've also seen it a bunch in retail stocks, from firms like Golden Gate and Sycamore Partners buying stakes.
- Caveat: It's possible that the allocation increase won't actually be in the final Apollo fund documents. Such terms are fluid until the close.
- Argument: Apollo's Josh Harris told the Oregon Investment Council: "The public markets for the first time in our history are affording us many, many diamonds in the rough."
- Translation: Harris is basically suggesting that while the public markets have richly rewarded strong performers, it's effectively shunned challenged companies, thus leading to a bifurcated market (overvalued vs. undervalued, rather than properly valued on either side).
- Counterargument: LPs are being asked to pay big control-oriented fees for non-control positions.
• Round off: Yahoo today told shareholders that Verizon agreed to pay $4.475 billion for Yahoo's core Internet assets, which is on the low end of the announced $4.48 billion price-tag (which already was revised down from $4.8b, due to disclosures of various security breaches).
• Risk reversal: President Trump continues to sign executive orders at a pace that would make President E-O(bama) blush, including one last Friday that tells the Treasury Department to review regulators' ability to label private equity and other non-bank firms as risky institutions. Also, Axios' Jonathan Swan reports that new EOs on trade could come as soon as this week.
• Deal scoop: Summit Partners has agreed to acquire a majority stake in PrismHR, a Massachusetts-based SaaS suite for HR service providers, for more than $100 million, Axios has learned. Part of the proceeds will be used to provide partial liquidity to existing PrismHR investor Accel-KKR, which will roll over a portion of its holdings and retain one of its two board seats.
- Special sauce: The difference between PrismHR and other HR software companies is target market. Whereas most human capital management solutions serve a single corporate client, PrismHR aims at organizations that may have a single employee working for multiple clients (e.g., a restaurant, a bar and a pizza place). In such cases, benefits might need to be calculated differently at different levels.
- Deal genesis: Summit first contacted PrismHR several years ago via its cold-calling program, but conversations didn't really heat up until late 2016.
- Plans: The deal is effectively about growth, although Summit doesn't view this as a rollup opportunity. Instead, the idea is to scale up PrismHR's nearly 200-person workforce (both on tech and sales side), with CEO Gary Noke saying he can "see a straight path past $100 million in revenue." The current run rate is north of $35 million, compared to $7 million when Noke took over for the company's founding CEO in 2014.
• Answers: Online Q&A site Quora on Friday disclosed that it has raised $85 million in new VC funding at around a $1.8 billion valuation. Company co-founder and CEO Adam D'Angelo tells Axios that proceeds will go toward "internationalization" (i.e., adding languages ― it did Spanish at the end of 2016 with French, German and Italian to soon follow) and to increase its focus on machine learning (e.g., figuring out who should answer each question).
D'Angelo also clarified Quora's unusual entry into the Y Combinator program in 2014, despite already being 5 years-old at the time:
"I think it got blown up in the press to be more than it actually was. Sam [Altman] and other YC partners wanted to do an experiment investing in later-stage companies, so they did a small investment in our last round. That gave us YC status, but we didn't do the normal stuff that early-stage companies do at YC... but it did make us eligible for what became the YC Continuity Fund, which is where a lot of the new funding is coming from."
• Recommended reading/viewing: My long-ago colleague Laurie Segall has put together a fantastic docuseries for CNNgo called Mostly Human, and her latest episode focuses on depression and other mental health issues in the tech world. "In Silicon Valley, where your biggest asset is your brain, the stigma is magnified." Get more here.