Jul 26, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Aïda Amer/Axios

A scant 24 hours ago, in this very space, I wondered if SoftBank Vision Fund 2 could match the $100 billion raised for its inaugural effort, despite the parent company's plans to boost its contribution from $28 billion to $38 billion.

Silly rabbit.

The Japanese giant last night publicly announced that it's secured $108 billion in commitments for Vision Fund 2. And, perhaps more importantly, that number is only expected to grow.

  • This is where things get a little bit murky.
  • The group of listed investors in SoftBank's press release does not include the sovereign wealth funds of either Saudi Arabia or United Arab Emirates.
  • But word from multiple sources is that they're both basically in, and at a commitment level that could approximately their massive Fund 1 checks (when Saudi PIF was the single largest investor with a $45 billion slug).
  • But, again, any Saudi/UAE money is would be on top of the $108 billion.
    • Also missing so far are Fund 1 investors Qualcomm and Sharp Corp. Plus Goldman Sachs, which was reportedly interested.
  • New investors include Microsoft, Standard Chartered, Sumitomo Mitsui, MUFG Bank, Dai-ichi Life Insuran., SMBC Nikko Securities, Daiwa Securities, and Kazakhstan's sovereign wealth fund.

Why it matters: U.S. GDP is slowing, but that's not affecting the mega money chase for startup sex appeal.

Coming attractions: The U.S. Justice Department will hold a media briefing at 11 am EST this morning, related to a "significant merger enforcement action." It's likely about T-Mobile/Sprint, and one big question will be if DOJ has convinced state AGs to drop their opposition.

Hiccup or hurdle? Yesterday's BFD was Advent International agreeing to buy British aerospace and defense group for £4 billion, which we noted could face UK political and regulatory pressure.

  • But the deal's first challenge might come from the sell-side, as Cobham's largest shareholder said it does not find the £4 billion offer to be "compelling," despite the 35% share premium to Wednesday's closing price and a 50% premium to the three-month average.

🎧Pro Rata Podcast digs into the IPO mis-pricing debate, which was highlighted yesterday by big "pops" for both Livongo and Health Catalyst. My guest is venture capitalist Bill Gurley, who recently tweeted:

Imagine if a CFO/CEO gave away a half a billion dollars? Or simply squandered it. How would that be viewed? This is similar, but it's institutionalized, and therefore everyone is numb to it.

Listen to the episode by going here.

The BFD

Photo by Robyn Beck / POOL / AFP/Getty Images.

The Boring Company, Elon Musk's transportation tunneling startup, raised $120 million at an $800 million pre-money valuation.

  • Why it's the BFD: Because this is Boring's first outside investment round, having previously raised $113 million from Musk and early employees (plus that $10 million from flamethrower sales).
  • Investors reportedly include 8VC, Vy Capital, Craft Ventures, Valor Capital, and Steve Jurvetson's Future Ventures.
  • Bottom line: "In May, Boring won its first commercial transportation contract, a $48.7 million mile-long project to shuttle visitors around the Las Vegas Convention Center. The project will provide an important test of whether it can really dig more cheaply than competitors and navigate the government bureaucracy involved in municipal projects." — Sarah McBride & Dana Hull, Bloomberg
Venture Capital Deals

Trax, a Singapore-based provider of image recognition tech to CPG brands, raised $100 million in Series D funding led by Hopu Investment Management. Earlier reports were that the round was being marketed with a $1.1 billion pre-money valuation. http://axios.link/Vs85

Pyze, a Redwood City, Calif.-based provider of user analytics and marketing campaign management software, raised $4.6 million. Illuminate Ventures led, and was joined by Benhamou Global Ventures and Correlation Ventures. http://axios.link/NeHZ

Ethyca, a provider of compliance software for GDPR and other digital regulations, raised $4.2 million. IA Ventures and Founder Collective co-led, and were joined byTable Management and Sinai Ventures. http://axios.link/JO32

Futr, a London-based developer of chatbots for police and other government organizations, raised £2.4 million in seed funding from Praetura Ventures. http://axios.link/EyW3

Private Equity Deals

🚽 Apax Partners is nearing a deal to buy German portable toilet maker ADCO for upwards of €800 million, per Bloomberg. Others suitors had included EQT Partners and Triton. http://axios.link/bfr5

The Carlyle Group and Stellex Capital Management agreed to acquire and merge Vigor Industrial, a Portland, Ore.-based infrastructure, defense and maritime services company, with MHI Holdings, a Norfolk, Va.-based provider of ship husbandry services. www.vigor.net

🚑 Ciox Health, an Alpharetta, Ga.-based clinical data exchange company, raised $30 million in new equity funding co-led by majority owner New Mountain Capital and new investor Merck GHIF. http://axios.link/I7g3

DFW Capital Partners acquired Vertex Group, a Richardson, Texas-based provider of utility customer experience management software, from GenNx360 and Oak Hill Capital. www.vertexone.net

HGGC agreed to buy Woburn, Mass.-based font licensor Monotype Imaging (Nasdaq: TYPE) for $825 million, or $19.85 per share (23% premium to yesterday’s closing price). Yes, this means that private equity is about to own Times New Roman.

I Squared Capital acquired PEMA, a European truck and trailer rental company, from Societe Generale (Paris: SOGN). http://axios.link/oPl8

Lime Rock Resources acquired a non-operated overriding royalty interest on Marcellus Shale properties from Range Resources Corp. (NYSE: RRC). www.limerockresources.com

Maroon Group, an Avon, Ohio-based portfolio company of CI Capital Partners, acquired Amsyn, a Stamford, Conn.-based distributor of specialty chemicals to markets like pharma, electronics and coatings. www.amsyn.com

Olympus Capital Asia led a $91 million investment for a 25% stake in Thai microfinance company Thai Credit Retail Bank. http://axios.link/gQcD

Public Offerings

9F, a Beijing-based online consumer lender, filed for a $150 million IPO. It plans to trade in the U.S. under ticker symbol JFG, with Credit Suisse as lead underwriter, and reports $79 million of net income on $179 million in revenue for Q1 2019. 9F raised around $180 million in VC funding from firms like Plentiful International, Xinda International, SBI Holdings and Famous Group. http://axios.link/45tM

AMTD International, a Hong Kong-based investment bank, set IPO terms to 20.8 million shares at $8.10-$8.48. It would have an initial market cap of $1.9 billion, were it to price in the middle, and plans to list on the NYSE (HKIB) with AMTD Global Markets as lead underwriter. http://axios.link/Q5c4

ProSight Global, a Morristown, N.J.-based specialty insurer owned by Goldman Sachs and TPG Capital, raised $110 million in its IPO. The company priced shares at $14 (below $16-$18 range), for an initial market cap of $602 million. It will trade on the NYSE (PROS) with Goldman Sachs as lead underwriter, and reports $14 million of net income on $213 million in revenue for Q1 2019. http://axios.link/q127

Switchback Energy Acquisition, a blank check acquisition company formed by Natural Gas Partners to acquire an energy company, raised $300 million in its IPO. It will trade on the NYSE (SBE) with Goldman Sachs as lead underwriter. http://axios.link/hXUI

Vista Oil & Gas, a Mexico City-based oil and gas E&P backed by Riverstone Holdings, raised $93 million in its IPO. The company priced shares at $9.25, the as-converted prior price of shares on a Mexican exchange, for a fully-diluted market value of $822 million. It will trade on the NYSE (VIST) with Citi as lead underwriter. http://axios.link/M3Hy

More M&A

🍏 Apple (Nasdaq: AAPL) yesterday confirmed a $1 billion agreement to buy the majority of Intel's (Nasdaq: INTC) smartphone-modem chip business for $1 billion. http://axios.link/yXwG

Askul Corp. (Tokyo: 2678), a Japanese mail-order services company, said it plans to exercise its right to demand that Yahoo Japan (Tokyo: 4689) sell its 45% stake in the company, although that “right” remains a source of contention between the two companies. http://axios.link/leaQ

Berkshire Hathaway increased its position in Bank of America (NYSE: BAC) from 896 million shares to 950 million shares, putting it just above 10% of outstanding shares.

Charles Schwab (NYSE: SCHW) agreed to acquire USAA’s investment management arm for $1.8 billion. http://axios.link/3dZr

Moody’s (NYSE: MCO) acquired a majority stake in Four Twenty Seven, a Berkeley, Calif.-based provider of data and analytics around physical climate risk. http://axios.link/fr00

Schroders (LSE: SDR) agreed to buy a majority stake in BlueOrchard, Switzerland-based impact investment firm with around $3.5 billion in AUM. http://axios.link/Ub04

Toast, a Boston-based restaurant management platform, acquired StratEx, a Chicago-based provider of HR and payroll management software for restaurants. Toast recently raised $250 million in Series E funding at a $2.7 billion valuation. http://axios.link/aoR7

Fundraising

Benhamou Global Ventures raised $70 million for an opportunity fund that will make later-stage investments in select BGV II and BGV III portfolio companies. http://axios.link/j6wy

Eurazeo raised €2.5 billion for its fourth flagship buyout fund, of which €700 million came from third parties and the remainder from its balance sheet. http://axios.link/CQqI

Morpheus Ventures, a Sherman Oaks, Calif.-based early-stage VC firm, is raising $200 million for its second fund, per an SEC filing. www.morpheus.com

🚑 OSF HealthCare, a Peoria, Ill.-based healthcare system, announced a second corporate VC fund of $75 million. www.osfhealthcare.org

It's Personnel

Don Gerne, a former partner with Metalmark Capital, joined Gemspring Capital as a managing director. Gemspring also added Charlie Fraas, the onetime COO of 1800flowers.com, as a managing director and head of portfolio ops. www.gemspring.com

Mitchell Schear joined Camber Creek, a VC firm focused on property tech startups, as an executive partner. He’s the former president of Vornado/Charles E. Smith. www.cambercreek.com

Final Numbers: Q2 GDP
Expand chart
Data: Bureau of Economic Analysis; Chart: Chris Canipe/Axios
  • Bottom line: 2.1% GDP growth for the second quarter represents a significant slowdown from Q1's 3.1% growth rate, but still better than the 1.9% that economists had expected — reflecting how strong consumer spending offset slowed business investment.
Dan Primack

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