May 14, 2019

Axios Pro Rata

Dan Primack

Breaking: Comcast agreed to sell its 33% stake in Hulu to the Walt Disney Co. in five years.

D.C. readers: You're invited to a live Axios event tomorrow morning on how to tackle healthcare's biggest challenges, including the opioid crisis. Mike Allen will interview Sen. Bill Cassidy (R-La.), Sen. Joe Manchin (D-W.Va), HHS Chief Medical Officer Dr. Vanila Singh and Mayor Steve Williams of Huntington, WV. RSVP here.

Top of the Morning
Source: Giphy

The nation's largest public pension system, CalPERS, has named Greg Ruiz as head of its $26 billion private equity program, a scant two years after the resignation of Réal Desrochers.

  • Ruiz has spent the past 12 years with middle-market private equity firms Altamont Capital Partners and FFL Partners.

Why it matters: CalPERS remains one of the country's largest investors in private equity funds, but hiring Ruiz is the latest signal that it wants to transition into more of a direct investor.

  • CalPERS CEO Marcie Frost told me on the Milken Global Conference sidelines that plans continue to progress on creating a quasi-independent direct investment group.
  • She didn't confirm that Silver Lake alums Adam Grosser and David Roux would be put in charge, but didn't deny it either. Nor did she express concerns that Grosser and Roux both come from the same area of industry expertise (tech), saying that the ultimate team would have more diverse backgrounds.
  • Frost acknowledges that one reason to put the program outside of the CalPERS org structure is because of compensation. Not only would "members have a lot of questions" about out-sized private equity pay, but it's still unclear how to even incorporate it into the state employee salary structure.
  • She also suggests the program would be a bit of a beta test, whereby CalPERS would "walk, not run."

🍔 Outlier: Beyond Meat shares yesterday rose another 4.95%, while the broader markets got crushed. This put its market cap at nearly $4 billion, a gain of 178% from its early May IPO. And shares are up again this morning.

  • Related: The Monday gain came as rival Impossible Foods announced $300 million in Series E funding at a $2 billion post-money valuation. It was co-led by existing backers Temasek and Horizons Ventures, and also included a slew of celebrities investors (Jay-Z, Kal Penn, Katy Perry, Questlove, Kirk Cousins, Serena Williams, Ruby Rose, etc.).

First-time fundraisers: First Republic Bank's Hana Yang recently presented the results of a survey of limited partners in new VC fund managers. Some notable findings:

  • Relative apathy toward thematic funds (vs. generalists) and geographically-focused funds (although non-institutional LP interest increased).
  • Preference for multiple GPs over sole proprietors.
  • Family offices make the fastest allocation decisions.
  • LPs prefer funds that contractually offer co-investment opportunities, even if the LPs don't ultimately exercise the rights.
  • View the full results.

📅 Mark it down: Slack plans to make its public market debut on June 20, via a direct listing.

🎧 Pro Rata Podcast focuses on the U.S.-China trade war escalation. I'm joined by Axios Markets editor Dion Rabouin. Listen here.

The BFD

Illustration: Sarah Grillo/Axios

Onex Partners agreed to acquire WestJet Airlines (TSX: WJA), Canada's second-largest air carrier, for C$3.5 billion. The C$31 per share price represents a 67% premium to Friday's closing price.

  • Why it's the BFD: It would be the largest-ever private equity takeover of an airline. It also would fulfill a long-held ambition for Onex, which failed in 1999 to buy Air Canada and in 2007 to buy Australia's Quantas Airways.
  • Bottom line: "It's a deal that no one saw coming. Not aviation experts, not analysts following the company, not even the vast majority of staff at the airline. There wasn't even a whiff of speculation. Even at WestJet's annual meeting last week, the question for WestJet was whether it might snap up a smaller rival, not if the Calgary-based carrier was up for sale." — Kyle Bakx, Tony Seskus, CBC News
Venture Capital Deals

Nextdoor, a San Francisco-based social network for neighborhoods, raised $123 million. Riverwood Capital led, and was joined by return backers Benchmark, Tiger Global and Kleiner Perkins.

🚑 DocPlanner, a Poland-based healthcare booking platform, raised €80 million in Series E funding. One Peak Partners and Goldman Sachs Private Capital co-led, and were joined by return backers Piton Capital and ENERN Investments. http://axios.link/rWwI

Rimac Automobili, a Croatia-based electric vehicle maker, raised €80 million from Hyundai Motor Co. and Kia Motors. http://axios.link/TbmJ

Tempo Automation, a San Francisco-based circuit-board manufacturing platform, raised $45 million in Series C funding. Point72 Ventures led, and was joined by fellow return backers Lux Capital and Uncork Capital, plus new investor Lockheed Martin. http://axios.link/CXki

WekaIO, a San Jose, Calif.-based provider of file storage for data-intensive apps, raised $32 million in Series C funding from HP Enterprise, Mellanox, NVIDIA, Seagate, Qualcomm and Western Digital Capital. http://axios.link/mn9X

Cynora, a San Jose, Calif.-based OLED materials company, raised $25 million in Series C funding. SRF led, and was joined by DBOLED, SBI Cross-Border Advantage Fund and return backers MIG Funds and Wecken & Cie. www.cynora.com

Webscale, a Sunnyvale, Calif.-based developer of converged software for hyperscale cloud automation, raised $14 million in Series B funding. Mohr Davidow Ventures led, and was joined by Benhamou Global Ventures and Grotech Ventures. http://axios.link/qlu1

Urban, a London-based booking platform for on-demand wellness services, raised $10 million in Series B funding (inclusive of a recent crowdfund). Accelerated Digital Ventures led, and was joined by return backers Passion Capital and Felix Capital. http://axios.link/5KOI

Understory, a Madison, Wis.-based weather station network, raised $5.25 million in Series B funding. True Ventures led, and was joined by 4490 Ventures and Rise of the Rest. http://axios.link/yEpN

Soundstripe, a Nashville-based production music startup, raised $4 million in Series A funding led by Vocap Investment Partners. http://axios.link/XUbf

Private Equity Deals

Ardian is nearing a €550 million deal to buy Spanish wind farm operator Renovalia from Cerberus Capital Management, per Reuters. http://axios.link/JwtM

The Blackstone Group invested €175 million for a minority stake in Romanian sports betting and gaming company Superbet.

Court Square Capital Partners acquired Virtium, a Rancho Santa Margarita, Calif.-based provider of solid state storage and memory solutions, from L Squared Capital Partners. www.virtium.com

Cove Hill Partners invested in NetDocuments, a cloud-based content services platform for law firms and corporate legal and compliance departments. Existing investors include Clearlake Capital. www.netdocuments.com

Graycliff Partners acquired Sweeteners Plus, a Lakeville, N.Y.-based bulk sugar processor. www.sweetenersplus.com

KKR and Spur Energy Partners agreed to acquire the Permian Northwest Shelf assets of Percussion Petroleum, a Houston-based portfolio company of Carnelian Energy Capital.

Lee Equity Partners agreed to buy a majority stake in K2, a San Diego-based property and casualty insurance services provider. www.k2ins.com

Post Capital Partners acquired a majority stake in ProChamps, a Melbourne, Fla.-based technology and system administrator for property registration programs. www.prochamps.com

Riverside Partners acquired a majority stake in 3Play Media, a Boston-based provider of fast-turnaround video accessibility services. www.3playmedia.com

Sterling Partners invested in Reading Plus, an adaptive literacy intervention and practice tool for grades 3-12. www.readingplus.com

🚑 Swanton Care & Community, a portfolio company of Apposite Capital, acquired UK-based adult residential and supported living providers Values in Care and GRS Care. www.swantoncare.com

Public Offerings

Grocery Outlet Holdings, an Emeryville, Calif.-based discount grocer owned by Hellman & Friedman, filed for a $100 million IPO. It plans to trade on the Nasdaq (GO) with BAML as lead underwriter. It reports $16 million of net income on $2.29 billion in revenue for 2018. www.groceryoutlet.com

🚑 IDEAYA Biosciences, a South San Francisco-based developer of synthetic lethality medicines and immuno-oncology therapies, set IPO terms to 5 million shares at $13-$15. The pre-revenue company would have a fully-diluted market value of $290 million, were it to price in the middle, and plans to trade on the Nasdaq (IDYA) with J.P. Morgan as lead underwriter. It has raised around $140 million from firms like 5AM Ventures (18.7% pre-IPO stake), Canaan Partners (15.6%), Celgene (7.8%), BVF Partners (7.3%), WuXi Healthcare Ventures (7.3%), Perceptive Life Sciences (6.5%), Nextech Invest (6.2%) and GV (5.2%). www.ideayabio.com

🚑 Peloton Therapeutics, a Dallas-based developer of small molecule cancer therapies, set IPO terms to 9.4 million shares at $15-$17. The pre-revenue company would have a fully-diluted market value of $742 million, were it to price in the middle, and plans to trade on the Nasdaq (PLTX) with J.P. Morgan as lead underwriter. It has raised around $270 million from firms like The Column Group (19.6% pre-IPO stake), Remeditex Ventures (14.7%), Topspin Partners (11.3%), RA Capital (7.5%), UC Regents (6.9%) and Nextech Invest (5.8%). www.pelotontherapeutics.com

Liquidity Events

Mastercard (NYSE: MA) agreed to buy Transactis, a New York-based electronic billing and payment processing company that had raised over $70 million from firms like Capital One, PNC, Fifth Third Bank, Runway Venture Partners, QED Investors, Safeguard Scientifics and TD Bank. http://axios.link/PTx0

More M&A

Auchan Retail, a French supermarkets group, agreed to sell its Italian business to Italian cooperative Conad. http://axios.link/QBwc

Bayer agreed to sell its Coppertone brand of sun-care products for $550 million to Germany’s Beiersdorf. http://axios.link/GfXe

Discovery (Nasdaq: DISC) agreed to buy Golf Digest from Condé Nast for a reported $35 million. http://axios.link/yWCh

JD.com (Nasdaq: JD) is investing around $55 million for up to a 10% stake in Jiangsu Xinning Modern Logistics (SZSE:300013), a supply chain services company focused on consumer electronics. http://axios.link/x0kM

Vodafone (LSE: VOD) agreed to sell its New Zealand unit for US$2.23 billion to Brookfield Asset Management and Infratil (NZ: IFT). http://axios.link/wXsc

Final Numbers
Expand chart
Data: Money.net; Chart: Axios Visuals

Shares of Uber fell 10.37% on Monday, their second day of trading since going public.

  • That put Uber's stock down 17.2% from its $45 per share IPO price, representing nearly $13 billion in total lost value.
  • They opened slightly higher this morning, but were back in the red as of 10am.

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Dan Primack