Axios Pro Rata

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January 30, 2018

Top of the Morning

Lots of hands on a Dell laptop
Illustration: Rebecca Zisser / Axios 

I am now 100% certain that Dell Technologies is working on some sort of major transaction, but only about 0% certain as to the specifics. Some quick notes while I work to narrow that gap:

  • The latest: CNBC reported yesterday that one option is a reverse merger with VMWare, in which Dell holds an 80% stake via its $64 billion purchase of EMC. This comes after a Bloomberg story that Dell could IPO itself or buy out the remaining VMWare stake.
  • Why now? Debt. Around $51 billion of it to be exact. And, as we discussed yesterday, the recent tax bill is particularly tough on highly-leveraged companies (despite lower corporate rates). Had Congress included a grandfather clause, then banks like J.P. Morgan might not have recently re-organized Dell teams.
  • A big hurdle: Michael Dell originally took his company private, in part, because he absolutely hated being a public company CEO. And he maintained that posture years later (just fast-forward to 8:30 in this video). Conventional wisdom was that when buyout sponsor Silver Lake needed an exit, Michael himself would do the honors. But that became a much richer proposition after the EMC deal and, again, those subsequent changes to interest deductibility.
  • Alt options: Because I still struggle with Michael Dell rejoining the land of "circus clowns," I've got to entertain the possibility of either: (a) Michael transitioning into a non-CEO role, perhaps to be succeeded by VMWare's Pat Gelsinger; (b) New asset sales/public floats to pay down debt; or (c) Some sort of private transaction, perhaps with the help of a deep pocket like SoftBank (which has really become the Occam's Razor of tech financing).

Digital defense: Real estate tech company Compass included some interesting language in a Delaware filing (per Lagniappe Labs), related to its recent $450 million fundraise led by SoftBank Vision Fund.

Specifically, a majority of preferred shareholders would need to approve a company decision to:

  • Expect more companies to incorporate such crypto language into analog financing announcements.

Trumpland: The White House last night opted against imposing new sanctions on Russia, but Treasury did release a list of 96 Russian oligarchs in what appears to be a toothless "name and shame" effort. It also appears to be a copy-and-paste job from Forbes. Among the notable names were Yuri Milner and Mikhail Friedman.

  • Also: Private equity firm AEA Investors has sold a minority stake in itself to RDV, a family office affiliated with Education Secretary Betsy DeVos, as first reported by peHUB. AEA does not currently appear to hold any portfolio companies overseen by the Ed Dept, having sold off a for-profit college company back in 2014. Its only active ed investment is a provider of classroom audio-visual equipment.

AI fund alert: Andrew Ng, the former chief scientist at Baidu and co-founder of Coursera, has raised $175 million for his debut venture capital fund. LPs include Greylock, Sequoia Capital, NEA and SoftBank.

  • While billed as an investment vehicle, Ng tells Axios it's more about providing funding for ideas his team is incubating than it is for backing outside startups.


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Amazon, Berkshire Hathaway and JPMorgan Chase are forming a new company focused on technology solutions for employer-based health benefits. It will be "free from profit-making incentives and constraints," and initially focus on U.S. employees of the three sponsors.

  • Why it's the BFD: Just take a look at the swan-diving shares of companies like CVS, Humana, Walgreens and UnitedHealth.
  • Buffett bite: “The ballooning costs of healthcare act as a hungry tapeworm on the American economy."
  • Bottom line: "The healthcare industry was already beside itself over the prospect that Amazon, on its own, might enter the pharmacy business. Amazon along with Berkshire Hathaway and JPMorgan can bring to bear resources that few existing companies have the power to match." — Sam Baker, Axios

Venture Capital Deals

Hover, a computer vision startup that creates 3D models of homes, has raised $25 million in Series B funding from GV, Home Depot and roofing products company Standard Industries.

🚑 Tyto Care, an Israeli telehealth startup, has raised $25 million in new funding. Ping An Global Voyager Fund led, and was joined by Qure and return backers Cambia Health Solutions, Walgreens, Orbimed, Fosun Pharma and LionBird.

• Next Trucking, a Lynwood, Calif.-based online marketplace that connects truckers with shippers, has raised $21 million in Series B funding led by Sequoia Capital.

BehavioSec, a Palo Alto, Calif.-based provider of continuous authentication solutions through behavioral biometrics, has raised $17.5 million in Series B funding. Trident Capital Cybersecurity led, and was joined by Cisco Investments, ABN AMRO and return backers Octopus Ventures and Conor Venture Partners.

Busbud, a Montreal-based travel booking startup, has raised C$11 million in Series B funding. iNovia Capital led, and was joined by Teralys, Claridge, Plaza Ventures and return backer Real Ventures.

Bodle Technologies, a UK-based developer of “reflective” display technology, has raised £6 million in Series A funding. Parkwalk Advisors led, and was joined by Woodford Patient Capital Trust and return backers Oxford Sciences Innovation and the Oxford Technology and Innovations EIS Fund.

Goxip, a Hong Kong-based social shopping startup, has raised $5 million in new VC funding. Meitu led, and was joined by Nan Fung Group.

Memphis Meats, a San Francisco-based “clean meat” startup, has raised an undisclosed amount of funding from Tyson Foods (NYSE: TSN). The company previously raised $22 million from backers like DFJ, Cargill and Bill Gates.

Private Equity Deals

The Blackstone Group is in talks to acquire around a 55% stake in the Financial and Risk business of Thomson Reuters (NYSE: TRI), at a unit value of around $20 billion (including debt), per Reuters.

KLDiscovery, a McLean, Va.-based provider of e-discovery solutions, has raised an undisclosed amount of growth equity funding from WestView Capital Partners and return backers The Carlyle Group and Revolution Growth.

Public Offerings

🚑 Entera Bio, an Israeli developer of oral drugs for treating a thyroid condition and osteoporosis, has postponed its planned $55 million IPO. The pre-revenue company had planned to trade on the Nasdaq under ticker symbol ENTX, with Oppenheim & Co. serving as lead underwriter. Shareholders include Pontifax Venture Capital (8.9% pre-IPO stake) and David Bonderman.

🚑 Evolus, an Irvine, Calif.-based developer of a biosimilar version of Botox, set its IPO terms to 5 million shares being offered at $12-$14. It would have a fully-diluted market value of $313 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq under ticker EOLS, with Cantor serving as lead underwriter.

InterCement Participações, a Brazil-based cement maker, is considering a float of its European and African operations, according to Reuters.

⛽ Quintana Energy Services, a Houston-based onshore oilfield services company, set its IPO terms to 9.3 million shares being offered at $12-$15. It would have a fully-diluted market value of around $435 million, were it to price in the middle. The company plans to trade on the NYSE under ticker symbol QES, with BofA Merrill Lynch and Simmons & Co. serving as lead underwriters.

Victory Capital Holdings, a Brooklyn, Ohio-based asset management firm with $59 billion in AUM, set its IPO terms to 11.7 million shares being offered at $17-$19. It would have a fully-diluted market value of $1.4 billion, were it to price in the middle. The company plans to trade on the Nasdaq under ticker VCTR, with J.P. Morgan serving as lead underwriter. Shareholders include Crestview Partners and Reverence Capital Partners.

Liquidity Events

American Express (NYSE: AXP) has acquired Mezi, a San Francisco-based chatbot shopping app that had raised over $11 million in VC funding from firms like Nexus Venture Partners, Saama Capital and American Express Ventures.

Crestview Partners is considering a full or partial sale process for NEP Group, a Pittsburgh-based provider of broadcast TV solutions, according to Bloomberg. Minority owner The Carlyle Group has an option to buy the remaining stake at an enterprise value of around $2.5 billion.

Microsoft (Nasdaq: MSFT) has acquired PlayFab, a Seattle-based maker of cloud-based tools for game developers. PlayFab had raised around $13 million in VC funding from Benchmark, Madrona Venture Group and Startup Capital Ventures.

⛽ Sterlite Power of India has agreed to acquire the 28.4% stake it doesn’t already own in its transmission infrastructure business from Standard Chartered Private Equity.

More M&A

• Elliott Advisors is in talks to acquire British bookseller Waterstones, according to Sky News.

GIC has acquired a 49% stake in Chinese credit rating agency Lianhe Ratings from Fitch Ratings.

Renesas Electronics (Tokyo: 6723) has held takeover talks with U.S. chipmaker Maxim Integrated (Nasdaq: MXIM), according to CNBC. A deal could be worth around $20 billion.

SAP (NYSE: SAP) has agreed to acquire Callidus (Nasdaq: CALD), a Dublin, Calif.-based maker of cloud-based sales and marketing software, for $2.4 billion, or $36 per share (10% premium on Monday’s closing price).

Tencent is leading a $5.4 billion purchase of a 14% stake in Wanda Commercial Properties.

Uber has agreed to sell the assets of its auto leasing business, including both vehicles and existing leases, to, an auto finance startup that last fall raised around $40 million in VC funding from BMW i Ventures, Penske Automotive Group, 3Rodeo, Mercedes Benz and G Squared.

🚑 Varian Medical (NYSE: VAR) has agreed to acquire Australian oncology drugmaker Sirtex Medical (ASX: SRX) for around US$1.3 billion.


🚑 LRVHealth (f.k.a. Long River Ventures) has raised $100 million for its fourth early-stage venture fund.

It's Personnel

• Ken Chenault, the outgoing CEO of American Express, has joined venture firm General Catalyst as chairman (a new position) and managing director. He is expected to lead investments and take board seats. Chenault also recently agreed to join the boards of Airbnb and Facebook.

Alice Handy is retiring from investment management firm Investure, which she founded back in 2003. She turned over the CEO reins to Bruce Miller earlier this month. Prior to founding Investure, Handy was chief investment officer for the University of Virginia endowment.

• J.P. Morgan named Daniel Pinto (head of investment banking) and Gordon Smith (head of consumer banking) as co-presidents.

• Michael Mashkautsan, former chief of staff at the National Cyber Bureau in the Israeli Prime Minister's office, has joined London-based VC firm LocalGlobe as a partner.

• Stephen Pitts is stepping down as a senior leveraged loan banker with Deutsche Bank, in order to join BofA Merrill Lynch.

Marc Wursdorfer has joined the private funds group of UBS as head of EMEA. He previously was with Credit Suisse.

Final Numbers

Data:; Chart: Axios Visuals
Data:; Chart: Axios Visuals

Wynn Resorts stock has sunk nearly 19% in the wake of sexual harassment and assault allegations against founder and CEO Steve Wynn. For the casino mogul himself, that represents a two-day paper loss of $462.55 million.

  • Wynn Resorts bonds are also under pressure, based on news of increased scrutiny by regulators in Macau.