Feb 1, 2018

Axios Pro Rata

Top of the Morning
Photo by Tomohiro Ohsumi/Getty Images

"What the hell?"

That was the opening question yesterday at Upfront Summit for SoftBank Vision Fund's Lydia Jett and Colin Fann, for a packed afternoon session that brought outdoors networking and email checking to a halt.

Jett and Fann argued that too much is being made of SVF's $100 billion size, and too little of the "vision" part. More specifically, SoftBank CEO Masa Son's belief that the world is in a rare technological inflection point, and that large deal sizes are justifiable if you're thinking well beyond a 10-year investment horizon.

  • Yes, that 300 figure was said repeatedly, so it wasn't just a one-time tongue slip.
  • I don't know how to put this more tactfully, so... There was some unsettling cult of personality stuff emanating from the stage, well beyond the typical belief in a founder's vision.
  • Masa personally meets with founders prior to SVF investing, more to gauge personality and ambition than to judge underlying tech or business fundamentals.
  • SVF has only lost out on two deals so far. We previously reported one was Stitch Fix, so here's an open call for the other's identity.
  • $100 million is the "theoretical minimum" check size. SVF doesn't want control, but it also doesn't want to be a passive shareholder..
  • There was an interesting dichotomy yesterday: During a morning session I chaired on crypto investing, a lot was made about how buying startup tokens can be superior to buying equity, thanks to crypto's short-term liquidity flexibility (leaving aside custodial issues). SVF, however, is talking about investments that could take decades to exit. Most of the VC/LP audience, of course, continues to live in the vast middle ages.

• Romney raise: Solamere Capital, the Boston-based private equity shop co-founded by Tagg Romney (and chaired by dad Mitt), disclosed in SEC filings that its in the midst of raising its third fund.

  • Word is that capital is all committed and allocated, with a target just north of the $525 million raised for Fund II back in 2014. No comment from Solamere, natch.
  • One big change will be that around 80% of the capital is slated for direct investments, while the remainder will go to fund-of-funds activities (Solamere technically is raising two funds, one for each purpose). This is a change from last time around, when around $370 million of the $525 million was allocated for fund-of-funds.
  • No, LPs have not been given any special insight as to whether Mitt is running for Senate from Utah.

• Data break: U.S. worker productivity fell in Q4.

• PE earnings: Apollo Global Management and The Blackstone Group this morning both beat analyst estimates for Q4 earnings, and are up slightly in early trading.

  • Blackstone said that the carrying value of its private equity portfolio climbed 6.8% in Q4 and 17.6% for the year.
  • Per the FT: Listed PE firms "have over the past 18 months started to issue US preferred shares — income securities that pay a much higher coupon than traditional corporate debt."

• Actress acceleration: Hamet Watt, a serial entrepreneur (MoviePass, bLife) and board partner at Upfront Ventures, is launching a new startup foundry in Los Angeles called Share Ventures. Its first company is a stealthy effort co-founded by the foundry and actress Halle Berry, who yesterday told Upfront Summit that "the next evolution for me is becoming an entrepreneur."

  • Speaking of unexpected faces at Upfront: Colin Kapernick sat in the front row (next to Chamillionaire) for almost the entire event, suggesting that he's got some entrepreneurial or investment inclinations of his own (although he declined to comment on the record).
The BFD

CBS Corp.'s (NYSE: CBS) board today is expected to discuss a merger with Viacom (Nasdaq: VIAB), setting the stage for a possible reunion between two companies that were split apart in 2005 by Sumner Redstone.

  • Why it's the BFD: Because even though we've heard this siren song before, there are two big differences this time around: A pressure-inducing trend of mega-media mergers, including AT&T/Time Warner and Disney/Fox, and declining share prices for both CBS and Viacom.
  • Bottom line: "Tired of flirtations that went nowhere in late 2016, National Amusements president Shari Redstone seems ready to officiate a shotgun wedding. With controlling stakes in both companies, she’s nudging CBS CEO Leslie Moonves and Viacom CEO Bob Bakish to the altar whether they like it or not." — Andrew Wallenstein, Variety
Venture Capital Deals

Trifacta, a San Francisco-based “data wrangling” startup, has raised $48 million in Series D funding from Google, Ericsson, the Deutsche Borse and Accel. http://axios.link/ZY0s

Caffeine, a new social broadcasting platform (i.e., Twitch rival), has raised $46 million in funding from Andreessen Horowitz and Greylock Partners. http://axios.link/itU8

Bespin Global, a cloud management company with dual headquarters in China and South Korea, has raised $27 million in new funding. ST Telemedia led, and was joined by return backer Legend Capital. http://axios.link/hNB1

Organica Water, a Hong Kong-based provider of wastewater recycling solutions, has raised $21 million in Series D funding led by CITIC Capital Silk Road Fund. www.organicawater.com

• Igneous Systems, a Seattle-based hybrid cloud backup and archive solution for unstructured data, has raised $15 million in Series B funding co-led by Vulcan Capital and Orca Bay Capital. www.igneous.io

Joymode, a Los Angeles-based item rental subscription service, has raised $14 million in Series A funding. Naspers led, and was joined by seed backer Homebrew. http://axios.link/5sz9

Astound, a Menlo Park, Calif.-based developer of AI-driven automation solutions, has raised $11.5 million in Series A funding. Vertex Ventures and Pelion Venture Partners co-led, and were joined by The Hive, Slack Fund and Moment Ventures. www.astound.ai

Juniper Square, a San Francisco-based real estate investment management platform, has raised $6 million in Series A funding led by Felicis Ventures. http://axios.link/c2KC

Pulse Labs, a Seattle-based provider of voice app interaction analytics for brands, has raised $2.5 million in new funding. Madrona Venture Group led, and was joined by Amazon Alexa Fund, Bezos Expeditions and Techstars Ventures. www.pulselabs.ai

Private Equity Deals

AEA Investors has acquired Spectrum Plastics Group, an Alpharetta, Ga.-based plastics manufacturer, from Kohlberg & Co. www.spectrumplastics.com

Battery Ventures has completed its previously-announced purchase of PageUp, an Australian maker of enterprise talent management software, from Accel-KKR. www.pageup.com

Clayton, Dubilier & Rice has agreed to acquire Ply Gem (NYSE: PGEM), a Cary, N.C.-based building products manufacturer, for around $2.4 billion, or $21.64 per share (20% premium over Tuesday’s closing price). CD&R also will purchase a 70% stake in Atrium Windows & Doors from Golden Gate Capital (which will retain 30%), and then merge Atrium with Ply Gem. http://axios.link/oVry

Falfurrias Capital Partners has invested in E-Technologies Group, a West Chester, Ohio-based provider of software and automation systems integration and engineering design services. www.etech-group.com

Liquid Web, a Lansing, Mich.-based portfolio company of Madison Dearborn Partners, has acquired iThemes, an Oklahoma City-based maker of WordPress plugins. www.liquidweb.com

Lovell Minnick Partners has completed its previously-announced acquisition of Tortoise Investments, an asset and income investment firm with $20.2 billion in AUM. www.tortoiseinvest.com

Prospect Partners has acquired Minuteman Security Technologies, an Andover, Mass.-based provider of electronic security technology solutions for businesses. www.minutemanst.com

Royo Group, a Spanish backroom products company owned by H.I.G. Capital, has acquired Fiora Bath Collections, a Spain-based maker of resin shower trays. http://axios.link/PSHp

⛽ Stallion Oilfield Services, a Houston-based portfolio company of The Carlyle Group and The Riverside Co., has acquired the assets of AI’s Water Service, a Washington, Penn.-based provider of potable water transportation and services to the oil, gas and mining industries. www.stallionoilfield.com

Public Offerings

Adaptive Insights, a Palo Alto, Calif.-based maker of cloud-based financial management software, has hired Morgan Stanley to lead an IPO, according to Reuters. Adaptive Insights has raised around $175 million in VC funding from firms like JMI Equity, Norwest Venture Partners, ONSET Ventures, Bessemer Venture Partners, Cardinal Venture Capital, Monitor Ventures and Information Venture Partners. http://axios.link/XtHw

CVC Capital Partners has hired Morgan Stanley and UBS to lead a London IPO for antivirus software business Avast Software, according to Reuters. http://axios.link/xLEQ

🚑 Sol-Gel Technologies, an Israel-based developer of topical drug products for the treatment of skin diseases, raised $75 million in its IPO. The pre-revenue company priced 6.25 million shares at $12, compared to original plans to offer 6.25 million shares at $11-$13. It will trade on the Nasdaq under ticker symbol SLGL, while Jefferies and BMO Capital Markets serving as co-lead underwriters. www.sol-gel.com

VICI Properties, a REIT that leases properties to Caesars Entertainment, raised $1.2 billion in its IPO. The company priced 60.5 million shares at $20, compared to original plans to offer 50 million shares at $19-$21. It has an initial market cap of $7.2 billion, and will trade on the NYSE under VICI. Morgan Stanley served as lead underwriter.

Liquidity Events

Leonard Green & Partners has sold Tourneau, a New York-based luxury watch retailer, to Switzerland’s Bucherer. http://axios.link/uIAN

Opengate Capital is seeking a buyer for French plastic compounder Nakan, which could fetch around 350 million, according to Bloomberg. http://axios.link/o4nb

Sun Capital Partners has hired Rothschild to find a buyer for German packaging group Coveris Rigid, which could be valued at between €640 million and €720 million, per Reuters. http://axios.link/LBBD

More M&A

• Alibaba (NYSE: BABA) is acquiring a 33% stake in its $60 billion fintech affiliate Ant Financial. http://axios.link/PzkQ

Bertelsmann is seeking a buyer for customer relationship management unit Arvato ARM, according to Reuters. http://axios.link/KK1h

Brookfield Asset Management is in talks to acquire Forest City Realty Trust (NYSE: FCE), a Cleveland-based REIT with a market cap north of $6 billion, according to Bloomberg. http://axios.link/89J7

Heilan Home Co., a Shanghai-listed menswear company, is raising around $1.59 billion from an investor group that includes Tencent, JD.com and Vipshop, according to Reuters. Around half the capital will be used to create a strategic investment fund. http://axios.link/LIHz

Meredith Corp. (NYSE: MDP) has completed its $2.8 billion acquisition of magazine publisher Time Inc.

🚑 Seattle Genetics (Nasdaq: SGEN) has agreed to acquire breast cancer drug maker Cascadian Therapeutics (Nasdaq: CASC) for $614 million in cash, or $10 per share (69% premium to Tuesday’s closing price). http://axios.link/bl1X

TDC of Denmark has agreed to acquire the broadcasting and entertainment business of Swedish Modern Times Group for around $2.5 billion in cash and stock. http://axios.link/TD5T

🍦 Unilever has agreed to acquire Romanian ice cream brand Betty Ice. http://axios.link/vEtp

It's Personnel

Jeff Immelt, former CEO of General Electric, has joined venture firm NEA as a venture partner. www.nea.com

Gridiron Capital has promoted Kevin Jackson to managing partner. www.gridironcapital.com

Ridgemont Equity Partners has promoted Matt Ibbetson and Kelly Lineberger to principal. www.ridgemontep.com

Paul Willard has joined Storm Ventures as a partner. He previously was a partner at Subtraction Capital and, before that, was CMO of both Practice Fusion and Atlassian. www.stormventures.com

Final Numbers
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Data: Energy Information Administration; Chart: Axios Visuals
  • U.S. crude oil production last November topped 10 million barrels for the first time since 1970. Analysts expected continued increases in 2018, likely breaking all-time highs.
  • Per Axios' Ben Geman: "Cracking the 10 million barrier is a symbolic reminder of how the U.S. has become a global oil powerhouse on the strength of the fracking boom that bolstered production in Texas, North Dakota and elsewhere."