Feb 28, 2017

Axios Pro Rata

Top of the Morning

• Data dump: Bain & Co. this morning released its annual global private equity report. Some takeaways:

  • Nearly 70% of unrealized deals invested in 2008 or earlier are being held below par.
  • There were more mega-buyout funds (>$5b) raised in 2016 than in any other year since 2008.
  • Dry powder is at a record high (see Final Numbers for chart).
  • Buyout NAV fell in 2016, as rises in valuation and call-downs didn't offset the larger increase in distributions.
  • Most U.S. buyouts last year were of privately-held companies, while most buyouts in Europe were sponsor-to-sponsor.

• Timeline: The proposed merger between fantasy sports sites DraftKings and FanDuel is going through a thorough regulatory review but, if everything goes as the companies are hoping, final approval should come around June. Axios wasn't publishing when the deal was first announced last November, but I did write on LinkedIn about how DK/FD planned to secure regulatory approval. Flashback here.

• PE WH: Wilbur Ross yesterday received Senate confirmation to become the next U.S. Commerce Secretary, by a 72-27 vote. In an unrelated note, the FTC gave approval to Anthony Scaramucci's planned sale of SkyBridge Capital to a Chinese investor consortium. It remains unclear if Scaramucci will end up with an Administration role.

• Kicked out: HomeHero yesterday announced that it is pivoting away from providing homecare workers to seniors, following a series of regulatory and competitive battles. The SoCal startup, which raised more than $20 million in VC funding, was primarily felled by rulings that prevented it from using 1099 contractors as homecare workers, which was the model by which it offered lower-cost services than traditional providers.

Takeaway from a healthcare-focused VC: "Tech adoption cycles by end entities in healthcare are often overestimated by tech money applying mental models from consumer tech or enterprise IT."

• Guestlist: Mike Allen reports that Melania Trump's guests during tonight's Congressional speech will include Megan Crowley: "At 15 months, Megan was diagnosed with Pompe Disease and not expected to live more than a few years. To look for a cure, her father founded Novazyme Pharmaceuticals, a five-person startup that he built into a 100-person company. Megan, age 20, is now a sophomore at Notre Dame."

Novazyme is a great story, and has been owned by Genzyme since 2001. But in the context of GOP complaints over recent town hall protests, it's also worth noting that Novazyme's main VC backers included an affiliate of Soros Private Equity...

• Where in the world: I'm hopping a plane soon for North Carolina, where tomorrow I'll be speaking and moderating at a venture banking event in Durham hosted by Square 1. Hope to see some of you there (or at Allen & Son tonight, where I plan to grab some delicious BBQ).


Royalty Pharma has agreed to acquire the royalty stream of multiple sclerosis drug Tysabri from Perrigo (NYSE: PRGO) in a deal that could be valued at upwards of $2.85 billion. The transaction includes $2.2 billion in cash at closing (expected in 30 days) and up to $650 million in potential milestone payments based on Tysabri sales in 2018 and 2020.

Why it's the BFD: This is all about activist investor Starboard Value, which already had forced Perrigo to replace five of its directors and to lay off around 750 employees. Now it's effectively forced the Irish company to dump the upside from one of its top prescription products, which it had acquired via the 2013 purchase of Elan Corp. And more asset sales could be coming.

Bottom line: "Starboard, fresh off victory at Yahoo Inc., argued Perrigo management has been distracted by the merger fight and attempts to diversify away from its over-the-counter drugs business, a powerhouse in private-label medicines including versions of headache remedy Tylenol, heartburn aid Pepcid and allergy pill Claritin." ― Anne Steele

Venture Capital Deals

• PebblePost, a New York-based direct mail marketing startup, has raised $15 million in Series B funding. RRE Ventures led the round, and was joined by Greycroft Partners and Tribeca Ventures. http://tcrn.ch/2mEFyog

• Dealflo, a UK-based provider of financial agreement automation services, has raised £10 million in new VC funding. Holtzbrink Ventures led the round, and was joined by Frog Capital and return backer Notion Capital. http://bit.ly/2lNQ2SS

• POD Point, a British provider of electric car charging stations, has raised £7.5 million in new VC funding from Draper Esprit and Barclays Capital. The company also is raising another £1.5 million via crowdfunding site Crowdcube. http://bit.ly/2m3hCOY

• Fortscale Security, a San Francisco-based provider of user and entity behavior analytics for security, has raised $7 million in new VC funding. Evolution Equity Partners and Valor Capital Group co-led the round, and were joined by Intel Capital, Blumberg Capital, Swarth, CME ventures and UST Global. www.fortscale.com

• Workfit, a Menlo Park, Calif.-based developer of a virtual assistant for meetings, has raised $5.5 million in seed funding from Battery Ventures, Greycroft Partners and Salesforce Ventures. http://tcrn.ch/2lOpWiy

• Exonics Therapeutics, a Boston-based developer of CRISPR technology to correct DMD mutations in boys, has raised $5 million in seed funding from CureDuchenne Ventures. http://bit.ly/2lRJZNb

• Flo Live, a Spain-based provider of IoT network integrity and revenue growth solutions, has raised $4.2 million in Series A funding co-led by ARIE Capital and Golden Sunflower Capital. www.flolive.net

• Dubset Media, a San Francisco-based startup focused on legal distribution of mix and remix music, has raised $4 million in Series A funding led by Cue Ball Capital. http://tcrn.ch/2mxujyn

Polarity, a Washington, D.C.-based developer of a commercial human memory-augmentation and collaboration platform, has raised $3.5 million in new VC funding led by Strategic Cyber Ventures. http://bit.ly/2l7KO7e

• LeoLabs, a startup focused on helping "detect, map and help avoid collisions with debris and objects floating in low-Earth orbit," has raised $4 million in VC funding from SRI International, Horizons Ventures and Airbus Ventures. http://tcrn.ch/2lgeXwv

• Enersize, a Finnish developer of energy savings software for industrial compressed air systems, has secured an undisclosed amount of funding from Scania Growth Capital. According to Reuters, the company is prepping a 2017 IPO. http://reut.rs/2lPbGI8

• Tealium, a San Francisco-based provider of real-time customer data and enterprise tag management solutions, has raised an undisclosed amount of Series E funding from Citi Ventures. www.tealium.com

• Oyo Rooms, an Indian budget hotel room aggregator, is in talks to raise between $300 million and $500 million from SoftBank Vision Fund, according to the Economic Times. http://bit.ly/2m7yeot

Private Equity Deals

• Advent International has agreed to acquire CCC Information Services, a Chicago-based provider of SaaS solutions to the auto, insurance and collision repair industries, from Leonard Green & Partners and TPG Capital. No financial terms were disclosed. www.cccis.com

• The Blackstone Group and Prudential have been named preferred buyers for a £12.5 billion portfolio of former Bradford & Bingley mortgages that are being sold off by the UK government. Blackstone is seeking most of the loans, whereas Prudential only bid on around £3 billion worth, per the FT. http://on.ft.com/2ljO4YA

• Branford Castle Partners has acquired Surface Preparation Technologies, a Mechanicsburg, Penn.-based provider of rumble strips and related roadway safety services. No financial terms were disclosed. Sellers include L2 Capital Partners. www.surfpreptech.com

• Generation Growth Capital has acquired BestMark, a Minnetonka, Minn.-based provider of customer experience measurement analytics. No financial terms were disclosed, except that Bell Capital Finance provided senior debt and Exmarq Capital Partners provided mezzanine debt. http://bit.ly/2l7GdSE

• KKR is the front-runner to acquire a stake in Indian mobile tower infrastructure company Bharti Infratel. http://bit.ly/2mp0TFQ

• Kohlberg & Co. has agreed to acquire Pexco, an Alpharetta, Ga.-based specialty plastics manufacturer, from Odyssey Investment Partners. No financial terms were disclosed. Kohlberg plans to merge Pexco with existing portfolio company PPC Industries. www.pexco.com

• Warburg Pincus has shuttered Anemka Resources, a mining asset acquisition platform it launched two years ago with former ArcelorMittal executive Peter Kukielski. Anemka never actually acquired any assets, and Kukielski will leave his executive-in-residence role with Warburg Pincus. http://bloom.bg/2lMexQg

Liquidity Events

• EQT Partners is seeking a buyer for Faersch Plast, a Danish packaging group that could be worth around €700 million, per Reuters. http://reut.rs/2lPcT2a

• Mozilla has acquired Pocket, a San Francisco-based content time-shifting app, for an undisclosed amount. Pocket had raised over $14 million in VC funding, from firms like NEA, Foundation Capital and Baseline Ventures. http://tcrn.ch/2lNwEaf

More M&A

• Barnes & Noble Education (NYSE: BNED) has acquired MBS Textbook Exchange, a Columbia, Mo.-based wholesale textbook distributor, for $174.2 million in cash. www.mbsbooks.com

• Bloq, an enterprise blockchain company whose shareholders include Tally Capital, has acqui-hired blockchain analytics startup Skry for an undisclosed amount. http://bit.ly/2m2lnUz

• Dar Group of Dubai has acquired a 13.4% stake in Australian engineering firm WorleyParsons (ASX: WOR). http://bit.ly/2m7PcTD

• Frontline (NYSE: FRO) said that it has made its best and final offer for Bermuda-based crude oil tanker company DHT (NYSE: DHT), and that it was rejected. Frontline continues to hold a 16.4% stake in DHT. http://reut.rs/2m7Dicw

• General Electric (NYSE: GE) is planning to launch the sale of its $3 billion industrial solutions group in March, according to Bloomberg. http://bloom.bg/2ls1Au7

• Tata Sons of India has agreed to pay $1.18 billion to buy out NTT DoCoMo's (Japan) stake in a telecom joint venture, resolving a long-standing legal dispute. http://bit.ly/2ljULKn


• CYTS Hongqi Fund has been formed as a tourism-focused fund by Sequoia Capital China, IDG Capital and China CYTS Tours Holding. No word yet on a target capitalization. http://bit.ly/2m2lM97

• Double M Partners, a Los Angeles-based seed investment firm led by Mark Mullen, is raising up to $40 million for its third fund, per an SEC filing.

• Lux Capital has closed its fifth VC fund with $400 million in capital commitments. www.luxcapital.com

• Orbimed Advisors is raising upwards of $450 million for its third Asia-focused fund, per an SEC filing.

• Silverton Partners, an Austin, Texas-based VC firm, is raising up to $100 million for its fifth fund, per an SEC filing.

• Tectonic Capital, a New York-based VC group led by FoundersGuild partners Josef Feldman and David Wolfson, is raising $35 million for a new fund, per an SEC filing.

• Wellspring Capital Partners is raising upwards of $1.2 billion for its sixth private equity fund, per an SEC filing.

It's Personnel

• Kevin Dooley has joined Vora Ventures, a Cincinnati-based tech private equity firm, as EVP and chief strategy officer. He previously was managing partner of Accenture's Cincinnati and Dayton, Ohio offices. www.voraventures.com

• Renata Quintini has joined Lux Capital as a partner, according to Dow Jones. She previously was a general partner with Felicis Ventures. www.luxcapital.com

• C.A. Webb , former head of the New England Venture Capital Association, is leaving Underscore_VC, a Boston-based venture firm she helped co-found in 2015. http://bit.ly/2lPzThq

Final numbers