Oct 11, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

It has been just over one year since Walmart agreed to pay $3 billion to acquire Jet.com, an e-commerce platform that was better known for its fundraising prowess than its consumer name recognition. It was viewed by many to be the largest acqui-hire of all time — focused on Jet's founding CEO Marc Lore, who previously co-founded Quidsi (a.k.a. Diapers.com) — and skepticism was easy to find. Some went so far as to call it "a terrible mistake."

Then came yesterday:

  • Headline: Walmart told investors that it is predicting 40% growth in e-commerce sales for the fiscal year ending January 2019, at a stable pace of profit growth.
  • ROI: Company shares climbed 4.47%, representing a $10.75 billion increase in market cap. Or, put another way, Walmart gained >3x in a single day of trading than what it paid to acquire Jet.com. And, yes, we stay at around 3x even if we include subsequent Walmart e-commerce purchases like Bonobos, Modcloth, ShoeBuy and Moosejaw. Oh, and shares were up again in pre-market trading today.
  • Caveat: To be sure, e-commerce growth wasn't Walmart's only announcement yesterday. It also revealed plans for a large share buyback ($20b over two years), but it's that 40% growth figure that really drove the day.

• Secondary stuff: Private equity secondaries funds have secured $29 billion through the first three quarters of 2017, per Preqin. That matches the full-year record set in 2014, and active efforts include 44 PE secondaries funds seeking $31 billion (including $5 billion for a Goldman Sachs vehicle).

• Cars are the new smartphones: Kia reports that Cyanogen, which raised $115 million from firms like Andreessen Horowitz and Benchmark to build a more open Android operating system, has pivoted to self-driving technology.

• Global growth: KKR is out with a new report predicting that Asia "will account for a full 62% of total global growth this decade, compared to a more modest 43% during much of the prior two decades."

• Today in SoftBank: Masa Son tells David Rubenstein that it only took 45 minutes to convince Saudi Arabia to invest $45 billion into Vision Fund, during a new Bloomberg video interview. "1 billion per minute."

• Muni madness: President Trump yesterday tweeted: "Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country? Change tax law!"

  • Playbook: The league actually gave up its tax exempt status a couple years back, but it does still benefit from tax-exempt stadium bonds. Trump could try banning that loophole as part of the new tax package, which actually had been the intention of legislators back in 1986. Only trouble may be that Obama proposed it first.

• Deal dominoes: Axios' Bob Herman on Pfizer's announcement that it will consider strategic alternatives for its consumer health unit, which could fetch $15 billion: "OTC brands are profitable, but Pfizer wants to steer more of its business into the much higher margins of prescription drugs, an area where it has had few breakthrough therapies lately. Pfizer also has two valuable drug patents expiring soon (Viagra and Lyrica), which means the company could buy a biotech firm with money it gets from a sale."

The BFD

eShares, a Palo Alto, Calif.-based provider of equity management software, has raised $41 million in Series C funding. Social Capital and Menlo Ventures co-led the round, with Arjun Sethi and Matt Murphy taking board seats. Existing backers include Union Square Ventures, Spark Capital, K9 Ventures and Industry Ventures.

  • Why it's the BFD: Because proceeds will be used to help eShares expand beyond private company stock management. CEO Henry Ward says that the company already has deals with some VC-backed startups to manage their public stock ledgers post-IPO, with hopes someday of possibly launching its own exchange.
  • Context: The funding comes the same week as Solium Capital (TSX: SUM) acquired Capshare for its own cloud-based equity management platform.
  • Bottom line: eShares is really a byproduct of the IPO delay game, which has created bloated cap tables and liquidity frustrations for early employees. By adding public stock management, it hopes to essentially hedge against a trend-line reversal.
Venture Capital Deals

• Ola, an Indian ride-hailing company, confirmed reports that it has raised $1.1 billion in new funding led by Tencent, while adding that it's in talks to raise an additional $1 billion. http://axios.link/SRXT

• Bill.com, a Palo Alto, Calif.-based business payment digitization company, has raised $100 million in new funding co-led by J.P. Morgan Chase and Temasek. Return backers include August Capital, Scale Ventures, Napier Park, DCM, Icon Ventures and Emergence Capital http://axios.link/46sZ

• Lalamove, a Hong Kong-based urban delivery and logistics company, has raised $100 million in Series C funding. Shunwei Capital led the round, and was joined by Xianghe Capital and MindWorks Ventures. http://axios.link/e9RN

• Petuum, a Pittsburgh-based machine learning infrastructure platform, has raised $93 million in Series B funding. SoftBank led the round, and was joined by Advantech Capital. https://bloom.bg/2yg434f

• Andela, a New York-based tech staffing platform focused on training and connecting African developers with U.S. companies, has raised $40 million in Series C funding. CRE Ventures led the round, and was joined by DBL Partners, Amploy, Salesforce Ventures, TLcom Capital, the Chan Zuckerberg Initiative, Google Ventures and Spark Capital. http://axios.link/g5kW

🚑 Shockwave Medical, a Fremont, Calif.-based maker of devices for treating calcified cardiovascular disease, has raised $35 million in new Series C funding (bringing the round total to $80m). Fidelity was joined by return backers like T. Rowe Price. http://axios.link/TFyF

• Brilliant, a San Mateo, Calif.-based lighting control company, has raised $21 million in Series A funding. August Capital led the round, and was joined by Miramar Ventures, The Box Group and the Stanford-StartX Fund. www.brilliant.tech

• Misspao, a Chinese developer of fully-automated mini fitness rooms, has raised $11 million in Series A funding. The National SME Development Fund led the round, and was joined by Matrix Partners China, ChinaEquity Group, Whales Capital and Lieying Capital. http://axios.link/uV6X

• Bigscreen, a VR enterprise collaboration startup, has raised $11 million in Series A funding co-led by Andreessen Horowitz and True Ventures. http://on.wsj.com/2yeiftU

• Ometria, a London-based consumer marketing platform, has raised $11 million in new VC funding from firms like Summit Action, Sonae IM and Samos Investments. http://axios.link/RmMH

• HIPPEAS, a Los Angeles-based snack-maker, has raised $10 million from CAVU Venture Partners. www.hippeas.com

• AlertMedia, an Austin, Texas-based provider of mass communication software, has raised $8 million in Series B funding. Next Coast Ventures led the round, and was joined by return backer ATX Seed Ventures. www.alertmedia.com

• Impossible Objects, a Northbrook, Ill.-based additive manufacturing startup, has raised $6.4 million in Series A funding. OCA Ventures led the round, and was joined by IDEA Fund Partners, Mason Avenue Investments, Huizenga Capital Management and Inflection Equity Partners. http://axios.link/31ri

• Drop, a millennial-focused rewards platform that works on top of existing loyalty programs, has raised $5.5 million in seed funding. Sierra Ventures led the round, and was joined by White Star Capital, ff Venture Capital, Portag3 Ventures and HOF Capital. http://axios.link/e340

• Withlocals, a Dutch marketplace for personalized travel experiences, has raised $4.2 million in Series A funding led by Inkef Capital. http://tcrn.ch/2xyiyw2

• Vyng, a Santa Monica, Calif.-based mobile alert and ringtone personalization service, has raised nearly $3 million in seed funding led by March Capital Partners. http://tcrn.ch/2gcewqx

Private Equity Deals

🚑 Arcapita and Mumtalakat have agreed to acquire a 90% stake in NAS United Healthcare Services, an Abu Dhabi-based provider of outsourced health insurance processing services. No financial terms were disclosed. www.arcapita.com

• BC Partners has agreed to acquire German industrial ceramics company Ceramtec from Cinven. No financial terms were disclosed, but Reuters puts the price-tag at €2.6 billion. Others members of the buyside group include PSP Investments and Ontario Teachers' Pension Plan. http://nyti.ms/2zfsAUL

• CoAdvantage, a Tampa, Fla.-based HR solutions provider backed by Morgan Stanley Private Equity, has acquired Progressive Employer Management Co., a Sarasota, Fla.-based professional employer organization. No financial terms were disclosed. www.coadvantage.com

• Sun-in Co., a South Korean maker of bakery ingredients, has raised $30 million in minority equity funding from Goldman Sachs, per the WSJ. http://on.wsj.com/2yeWwTc

Public Offerings

• BAWAG, an Austrian bank majority-owned by Cerberus Capital Management, disclosed that it plans to raise up to €2.1 billion euros in Vienna IPO. http://reut.rs/2g1L3fr

Liquidity Events

🚑 Express Scripts Holding (Nasdaq: ESRX) has agreed to acquire Bluffton, S.C.-based healthcare benefits manager EviCore for $3.6 billion. Sellers include General Atlantic, TA Associates and Ridgemont Equity Partners. http://axios.link/4L8x

• Google has acquired DB60, a podcasting app that had been seeded by firms like Khosla Ventures. http://read.bi/2zdPb4c

• Trading Technologies, a Chicago-based provider of trading software, has acquired Neurensic, a Chicago-based provider of market surveillance and compliance solutions that had been seeded by Plug & Play Ventures. No financial terms were disclosed. http://reut.rs/2xxDO58

More M&A

🚑 Merck & Co. (NYSE: MRK) has agreed to acquire an option to buy the diabetic macular edema program of Cambridge, Mass.-based biotech KalVista (Nasdaq: KALV) for upwards of $752 million (including $37m upfront). Merck also will invest $9 million for a 9.9% equity stake in the company. http://axios.link/I8Tm

• Merlin Entertainments (LSE: MERL) said that it will not buy any part of SeaWorld Entertainment (NYSE: SEAS). https://bloom.bg/2wMWfDs

Fundraising

• Amplo, a new seed firm led by Sheel Tyle (ex-NEA), is raising $100 million for its debut fund, per Forbes. http://axios.link/xYH7

• Atomic Labs of San Francisco is raising up to $100 million for its second fund, per an SEC filing. www.atomic.vc

• Icon Ventures has closed its sixth fund with $265 million in capital commitments. The Palo Alto-based firm also is opening a San Francisco office. www.iconventures.com

• Orchid Asia is targeting $900 million for its seventh China-focused private equity fund, according to a Pennsylvania public pension document. Its past two funds have net IRRs through Q1 2017 of 13.1% (Fund VI) and 29% (Fund V). http://axios.link/bmR6

• PAI Partners is targeting €4 billion for its seventh European buyout fund, according to a Pennsylvania public pension document. Its past two funds have net IRRs through Q1 2017 of 15.6% (Fund VI) and 10.8% (Fund V). http://axios.link/JxkG

🌽Pontifax AgTech Management, a growth equity fund focused on the global food and ag sectors, has closed its debut fund with $105 million in capital commitments. www.pontifaxagtech.com

It's Personnel

🚑 Iñaki Cobo Bachiller has agreed to joined KKR has head of EMEA healthcare activities, effective Jan. 1. He'll be based in Spain and previously was a senior managing director with CVC Capital Partners. www.kkr.com

• Abbas Hussain has joined C-Bridge Capital as a senior partner. He previously ran the pharma and vaccine unit of GlaxoSmithKline. http://axios.link/Fosv

• Melody Koh, former head of product at Blue Apron, has joined NextView Ventures as a New York-based venture partner. www.nextviewventures.com

🚑 Greg Yap has joined Menlo Ventures as a partner focused on life sciences (an area the firm hasn't explored since the mid-90s). He previously was an entrepreneur-in- residence at Illumina Ventures and, before that, co-founder and CEO of PyrAmes and Biodesy. http://axios.link/pp3H

Final Numbers
Dan Primack