Jun 15, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Outside a shopping mall in northern China. Photo via STR/AFP/Getty Images

Here we go. Again.

The White House this morning said that the U.S. will implement a 25% tariff on around $50 billion of Chinese goods, adding that it will impose additional tariffs if China retaliates with any new tariffs of its own (which China says it will do).

We're still awaiting the official list of products, which will be broken up into two buckets — $34 billion related from an existing list of product lines (818 or 1,333 proposed lines) and another $16 billion from a new list (284 product lines related to Chinese industrial policy).

  • There is still plenty of wiggle room, as the tariffs don't become effective until July 6. And the markets don't yet seem to believe a trade war will happen, with the Dow down only around 175 points as of this writing.
  • Axios' Mike Allen on Trump's "I mean it" moment with China.
  • It's unclear how this will impact Qualcomm's $44 billion deal for NXP, which Chinese regulators appear to be using as trade leverage. There were reports yesterday that Chinese approval had come, but those got walked back and Qualcomm this morning extended its tender deadline for the 25th time.
  • All of this comes against a backdrop of economic weakening in China. For more on that, a must-read by Bloomberg's David Fickling.

That was fast: AT&T closed its $85 billion purchase of Time Warner last night. DoJ opted not to ask for an emergency stay, per the judge's request, but still reserves the right to appeal.

  • New York regulators are threatening to rescind approval for Charter's $55 billion purchase of Time Warner Cable, which closed more than two years ago. At issue is an alleged failure to complete promised network expansion.

Today in Theranos: Bad Blood author John Carreyrou recently told Vanity Fair that Elizabeth Holmes is talking to prospective investors for a new startup idea.

Not sure yet how real this is, particularly since vocal Holmes defender and venture capitalist Tim Draper tells me that he "wasn’t aware of that" until I asked. Holmes didn't return a request for comment.

Crypto: A top SEC official said yesterday that ether is not a security. Well, at least not in its present-day form.

Never mind? Medical device giant Stryker said in an SEC filing that it "is not in discussions with Boston Scientific Corporation regarding a potential acquisition."

Happy trails: Sean Doherty is retiring from Bain Capital after a 13-year run, Axios has learned. He originally joined as the firm's first general counsel, but ended up with an expanded role that included oversight of compliance and public affairs — the latter of which meant he served as defensive coordinator when Mitt Romney ran for president.

  • Doherty is planning a second act outside of the law, possibly expanding on his efforts to help fund diabetes-related startups. As for Bain, it has hired Christopher Green, who currently co-leads Ropes & Gray's private equity and hedge fund SEC enforcement and litigation group.

SpinLaunch, a Sunnyvale, Calif.-based developer of space catapults, raised $35 million in Series A funding from firms like GV, Kleiner Perkins and Airbus Ventures. It previously raised $5 million in seed funding.

  • Why it's the BFD: Did you miss the part about space catapults?
  • More money: SpinLaunch also is set to receive $25 million via a special purpose bond issuance by Hawaii, despite some resident objections to the prospect of megaton satellites being thrown over their homes.
  • Bottom line: "Rather than using propellants like kerosene and liquid oxygen to ignite a fire under a rocket, SpinLaunch plans to get a rocket spinning in a circle at up to 5,000 miles per hour and then let it go—more or less throwing the rocket to the edge of space, at which point it can light up and deliver objects like satellites into orbit." — Ashlee Vance, Bloomberg
Venture Capital Deals

Xiaohuanggou, a Chinese “smart recycling platform” owned by Paithink Group, raised around $164 million in Series A funding from Zhongzhi Enterprise Group. http://axios.link/75Sf

Reonomy, a New York-based commercial real estate data and analytics startup, raised $30 million in new funding. Sapphire Ventures led, and was joined by return backers SoftBank Capital and Bain Capital Ventures. http://axios.link/kz7K

Kustomer, a New York-based CRM platform for customer experience and support, raised $26 million in Series B funding. Redpoint Ventures led, and was joined by Cisco and return backers Canaan Partners, Boldstart Ventures, and Social Leverage. www.kustomer.com

Influential, a Las Vegas-based AI marketing influencer platform, raised $12 million in Series B funding from WME and return backer Capital Zed, ECA Ventures, Paradigm Talent Agency, ROAR and Tech Coast Angels. http://axios.link/ix87

Private Equity Deals

Apollo Global Management has suspended the sales process for Reston, Va.-based military security services company Constellis (f.k.a. Blackwater), after talks with Canada’s Garda World Security (owned by Rhone Capital) broke down, per Reuters. Apollo had been seeking upwards of $2.5 billion and may now move for an IPO. http://axios.link/nkag

BWAY, an Atlanta-based portfolio company of Stone Canyon Industries, has agreed to acquire Maitland, Fla.-based Industrial Container Services from Centerbridge Partners. http://axios.link/Eozs

⛽ DDH1 Drilling, an Australian deep directional drilling services company owned by Oaktree Capital Management, acquired an equity stake in Strike, an Australian provider of air core and reverse circulation drilling services. www.ddh1.com.au

Hearst and a unit of Goldman Sachs have acquired Slickdeals, a Las Vegas-based online coupon site, from Warburg Pincus for more than $500 million. http://axios.link/JmSy

🚑 Oak Hill Capital Partners has agreed to acquire VetCor, operator of 272 veterinary hospitals across 28 states, from Harvest Partners and Cressey & Co. www.vetcor.com

Public Offerings

Avalara, a Seattle-based provider of transaction tax compliance software, raised $180 million in its IPO. The company priced shares at $24 (above increased $21-$23 range), for an initial market cap of $1.56 billion. It will trade on the NYSE (AVLR). Goldman Sachs was lead underwriter. The company reports a $15 million net loss on $61 million in revenue for Q1, and raised nearly $400 million from firms like Sageview (27.1% stake), Warburg Pincus (27.1%) and Battery Ventures (9.9%). www.avalara.com

🚑 Calliditas, a Swedish developer of kidney disease drugs, filed for a $75 million IPO. It has raised over $30 million from firms like Investinor and Industrifonden. http://axios.link/oXaP

🚑 Neon Therapeutics, a Cambridge, Mass.-based developer of neoantigen-targeted therapies for cancer, set its IPO terms to 6.25 million shares at $15-$17. It plans to trade on the Nasdaq (NTGN) with Morgan Stanley as lead underwriter. The pre-revenue company has raised around $160 million from firms like Third Rock Ventures (44.4% pre-IPO stake), Access Industries (12.7%), Fidelity (7.5%) and Partner Fund Management (6.8%). www.neontherapeutics.com

🚑 Neuronetics, a Malvern, Penn.-based developer of transcranial magnetic stimulation therapy, set its IPO terms to 5 million shares at $14-$16. It plans to trade on the Nasdaq (STIM) with Piper Jaffray as lead underwriter. The pre-revenue company has raised over $200 million from firms like Investor Growth Capital, New Leaf Ventures, GE Ventures, Ascension Ventures, Accuitive Medical Ventures, Interwest Partners, Industry Ventures, KBL Healthcare Ventures, Onset Ventures, Pfizer, Polaris Venture Partners and Three Arch Partners. www.neurostar.com

🚑 Verrica Pharmaceuticals, a West Chester, Penn.-based developer of treatments for warts and other viral skin diseases, raised $75 million in its IPO. The pre-revenue company priced shares at $15 (middle of range), for an initial market cap of $374 million. It will trade on the Nasdaq (VRCA), while BoA Merrill Lynch as lead underwriter. Shareholders include PBM Capital Group (58.4% pre-IPO stake), Perceptive Advisors (12.1%) and OrbiMed (6.4%). www.verrica.com

Liquidity Events

Abraaj Group sold its remaining 5.4% stake in listed Egyptian construction group Orascom Construction for $52 million. http://axios.link/Z1ZN

Blackstone agreed to sell Intelenet, an Indian business process outsourcing company, to Teleperformance (Paris: TEP) for around $1 billion. http://axios.link/pmXF

Brussels Airport is hitting the auction block, after minority shareholders Ontario Teachers Pension Plan and Macquarie settled a legal dispute. http://axios.link/GUOT

Delachaux Group, a French metals and railways business, called off a planned IPO, after shareholder CVC Capital Partners agreed to sell its entire stake to Caisse de dépôt et placement du Québec and the Delachaux family. www.delachaux.com

Rhone Capital hired Goldman Sachs to find a buyer for Ohio-based paper packaging company Ranpak, which could fetch around $1.5 billion, per Bloomberg. http://axios.link/yKDD

More M&A

IFA Rotorion, a German auto parts maker partially owned by Rolls-Royce Power Systems, has hired Goldman Sachs to find a buyer, per Reuters. A deal could be worth around €500 million. http://axios.link/U26U

• Life Company Consolidation Group agreed to buy British mutual life insurance group Equitable Life. http://axios.link/FxRH

•Puig, a Spanish fashion and fragrances company, acquired a majority equity stake in Belgian fashion brand Dries Van Noten. http://axios.link/7Ibp


🚑 The British government has formed a £2.5 billion co-investment program to support local biotech startups. http://axios.link/ik1j

PPM America Capital Partners has closed its seventh private equity co-investment fund with $648 million. www.ppmamerica.com

Torch Capital, a New York-based early-stage VC firm focused on consumer brands and digital media, is raising $60 million for its debut fund, per an SEC filing.

It's Personnel

Bryn Gostin has left Goldman Sachs to join Capital Dynamics as head of product development and strategic initiatives. www.capdyn.com

Ben Herman has left Cressey & Co. to join Los Angeles-based private equity firm LightBay Capital as a principal. www.lightbaycapital.com

Sorenson Capital promoted Matt Marsh from principal to managing director. www.sorensoncapital.com

Final Numbers
Expand chart
Reproduced from BP Statistical Review of World Energy, June 2018; Chart: Axios Visuals

Go deeper: Explaining the persistence of fossil fuels

Dan Primack

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