May 20, 2019

Axios Pro Rata

Top of the Morning

Photo by Marcus Ingram/Getty Images

Almost no one had a clue what was about to happen.

As Vista Equity Partners founder Robert Smith began his commencement address yesterday morning at Morehouse College in Atlanta, school President David Thomas was simply expecting to hear inspirational words, allowing "students to look to the stage and project themselves into the future." Some of those almost-grads were likely just waiting out the minutes, so they could go celebrate with their families.

And then Smith announced that he would pay off all of their student loans. Or, as Smith put it, "we're going to put a little fuel in your bus."

The audience gasped. One person on stage next to Smith looked absolutely shocked (seriously, check out the video). Then came belated cheers, almost as if people were first waiting to make sure it wasn't some sort of prank.

Smith's grant will be disbursed through Morehouse, which is now working to figure out how exactly to go about it.

  • The school's low-end estimate is that it will be worth a total of $10 million, while its upper-end is $40 million.
  • Again, Smith didn't tell Morehouse ahead of time, so Morehouse didn't know to get the paperwork in order.

More from President Thomas, with whom I spoke on the phone last night:

"The way I think about Robert's gift is that it rewards those individuals who were committed to getting the best education they could at the best college they could attended, and who invested in themselves by taking on student debt. Our students are like individuals anywhere: There are probably other financial challenges they face not captured in this gift. But what he's essentially done is made these students free to make choices to follow their passions."
"Robert also sent a message that those of us with wealth in the African-American community who value institutions that distinctively serve the African-American community need to support those institutions."

Texas-based Smith is widely-rumored to have political aspirations, although for now he's committed to am $11.4 billion fund Vista raised just last year.

In the meantime, Smith's Morehouse announcement officially changed his mass media descriptor from "private equity investor" to "philanthropist," and put a further spotlight on America's student debt crisis.

From Moscow with litigation: A Russian court on Friday ordered private equity firm Baring Vostok Capital Partners to cede control of Russian bank Vostochny, which is at the center of a dispute that resulted in the arrest of BVCP founder Michael Calvey and three of his partners.

  • Vostochny resulted from a merger between a BVCP-owned bank and one owned by Russian oligarch Artem Avetisyan.
  • BVCP has accused Avetisyan of asset-stripping his bank prior to the merger, while Avetisyan has accused BVCP of artificially inflating the value of what its bank prior to the merger.
  • Baring Vostok pledged to appeal, arguing that the court ruled before it had time to read 6,000 pages of recently-submitted documents.

LBO IPO: Lab supplies company Avantor last Thursday night raised $2.9 billion in the largest LBO-backed IPO since 2011. It also added another $900 million via a concurrent offering of convertible preferred shares. But the whole thing was still something of a disappointment.

  • The company, owned by New Mountain Capital, originally filed to offer 154 million shares at $18-$21. It then bumped up the share count to 207 million but cut the price range to $14-$15.
  • It priced at $14 and, after one day of trading, opened this morning at just $14.30.

Illustration: Lazaro Gamio/Axios

T-Mobile US (Nasdaq: TMUS) and Sprint (NYSE: S) have agreed to sell off the Boost Mobile prepaid brand, as a concession to get FCC approval for their proposed $26.5 billion merger. The companies also made certain rural services guarantees and reiterated a pledge to not raise prices for three years.

  • Why it's the BFD: Because this makes the mega-merger much more likely, with Sprint and T-Mobile US shares rising 24% and 5.7%, respectively, in early trading.
  • Caveat: This agreement is only with the FCC, not also with the Department of Justice, with a senior FCC official telling reporters that DOJ continues to vet the deal. John Legere, who will serve as CEO of the combined company, last month disputed a WSJ story that the DOJ had warned that it was unlikely to approve the merger as currently constructed.
  • Bottom line: "Selling off part of the prepaid business -- where wireless customers pay as they go rather than taking out subscriptions -- might help soothe concerns raised by some state attorneys general. They fear that a consolidated, three-carrier market would harm low-income customers by curbing choices and raising prices." — Bloomberg
Venture Capital Deals

Auth0, a Bellevue, Wash.-based identity and authentication platform, raised $103 million in Series E funding at a valuation north of $1 billion. Sapphire Ventures led, and was joined by return backers like K9 Ventures and Telstra Ventures.

Clinc, an Ann Arbor, Mich.-based conversational AI startup, raised $52 million in Series B funding from Insight Partners, DFJ Growth, Drive Capital and Hyde Park Venture Partners.

Snapsheet, a Chicago-based provider of virtual claims software, raised $29 million in Series E funding. Tola Capital led, and was joined by Nationwide Insurance, State Auto Labs, Liberty Mutual, F-Prime Capital, OCA Ventures and USAA., a UK-based provider of decision-making AI for businesses, raised $24 million from backers like Tencent and Pearson.

🚑 Actuate Therapeutics, a Fort Worth, Texas-based pharma startup focused on cancer and inflammatory diseases, raised $21.7 million. Kairos Ventures led, and was joined by DEFTA Partners, Tech Coast Angels and return backer Bios Partners.

Robin Powered, a Boston-based provider of office meeting room booking software, raised $20 million in Series B funding. Tola Capital led, and was joined by Allegion Ventures and return backers Accomplice and FirstMark Capital.

Wagestream, a London-based flexible wage app, raised £15 million from Balderton Capital and Northzone, plus a £25 million debt facility from Shawbrook.

Modulr, a UK-based payments platform for digital businesses, raised £14 million. Frog Capital led, and was joined by return backer Blenheim Chalcot.

CozyKin, a New York-based provider of infant childcare services, raised $6 million in Series A funding. Bessemer Venture Partners led, and was joined by NextView Ventures and Primary Venture Partners.

Private Equity Deals

Criteria, a West Hollywood, Calif.-based provider of employment analytics SaaS, raised $56 million from Sumeru Equity Partners.

GIC acquired a minority equity stake in WaterBridge, a Houston-based provider of produced and flowback water services to the oil and gas industry, from Five Point Energy at an enterprise value of $2.8 billion.

Kelso & Co. agreed to buy J.S. Held, a Jericho, N.Y.-based consultant to the construction and insurance claims industries, from Lovell Minnick Partners.

Goldman Sachs confirmed it’s in talks to buy French hotelier B&B Hotels from PAI Partners. The FT puts the possible price-tag at around $2.1 billion.

ParkerGale Capital acquired a majority stake in EditShare, a Boston-based provider of storage solutions for media.

SymphonyAI, a Los Altos, Calif.-based investment firm, bought Azima Global, a Boston-based provider of machine condition monitoring and asset reliability solutions.

Tierpoint, a St. Louis-based data center operator, is seeking to raise between $250 million and $500 million in new equity funding, per Bloomberg. Current shareholders include Ontario Teachers, RedBird Capital Partners and TA Associates.

Public Offerings

Five companies plan to go public on U.S. exchanges this week, including three cancer biotechs, a Permian pipeline operator and a SPAC.

Safe Auto Insurance Group, a Columbus, Ohio-based auto insurer, filed for a $50 million IPO. It plans to trade on the Nasdaq (SAIG) with BAML as lead underwriter, and reports a $26 million net loss on $112 million in revenue for the first quarter of 2019.

Liquidity Events

The Carlyle Group is in talks to sell a 25% stake in its Corpus Christie, Texas-based crude oil export terminal for $625 million, to a trio of unidentified companies that would jointly operate an affiliated pipelines, per Reuters.

🚑 Catalent (NYSE: CTLT) completed its previously-announced $1.2 billion acquisition of Paragon Bioservices, a Baltimore-based contract research and manufacturing group, from shareholders like Camden Partners and NewSpring Partners.

🚑 JPMorgan (NYE: JPM) agreed to buy InstaMed, a Philadelphia-based healthcare payments company that had raised around $115 million from firms like Carrick Capital Partners and Osage Venture Partners. Reports put the deal value at between $500 million and $600 million, making it the bank’s largest post-financial crisis acquisition.

More M&A

Abertis of Spain is seeking to sell its 35% stake in France’s A65 motorway, with Eiffage (Paris: FFGR) likely to bid, per Reuters.

Harsco (NYSE: HSC) agreed to buy Clean Earth, a Hatboro, Penn.-based recycling and waste remediation company, from Compass Diversified Holdings (NYSE: CODI) for approximately $625 million in cash.

Lions Gate Entertainment (NYSE: LGF) offered to sell cable channel Starz to CBS (NYSE: CBS) for $5.5 billion, after rebuffing an informal $5 billion bid, per Reuters.

Morgan Stanley (NYSE: MS) agreed to acquire a 5.5% stake in French asset manager Tikehau (Paris: TKO).

Mylan (Nasdaq: MYL) exercised an option to buy a portfolio of prescription and OTC products in Australia from South Africa’s Aspen Pharmacare (JSE: APN) for A$188 million.


Hustle Fund, a seed-stage investor led by 500 Startups alums Eric Bahn and Elizabeth Yin, is raising up to $50 million for its second fund, per an SEC filing.

Knightsbridge Advisers raised over $370 million for its latest VC fund-of-funds.

It's Personnel

Ben Dillon joined SK Capital Partners as a managing director focused on IR and fundraising. He previously was a managing director with Partners Group.

Kevin Roche joined Hermes Investment Management as director of private debt and CLOs. He previously was with Allied Irish Banks.

Final Numbers
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Data: Fannie Mae, Bloomberg, NEF, Institute of International Finance; Chart: Axios Visuals