Sep 13, 2021

Axios Pro Rata

🚨 The top capital gains tax rate would be raised to 25%, per a draft proposal from House Democrats on the Ways and Means Committee, Axios' Hans Nichols reports. Carried interest is in there too. Go deeper.

🖥️ You're invited to a virtual event tomorrow at 12:30pm ET on the economic recovery of Black-owned businesses, led by Axios' Courtenay Brown and Hope King. Guests include Congressional Black Caucus Chair Joyce Beatty (D-Ohio), and president and CEO of the U.S. Black Chambers Ron Busby. Sign up here.

Top of the Morning

Illustration: Aïda Amer/Axios

Conventional wisdom is that richer people make more informed investment decisions than do less-rich people, even if their wealth was inherited or earned outside the capital markets. It's an unproven underpinning of accredited investor rules, and may play a major role in the fraud trial of Theranos founder Elizabeth Holmes.

Between the lines: Fraud trials mostly are about what the defendant knew and when they knew it. But, in this case, those questions might be flipped on their heads — with the defense rhetorically aiming them at Theranos investors who lost over $800 million.

  • Holmes' defense attorney Lance Wade set this up last week in his opening statement, according to some of those in the room (no transcript is yet publicly available).
  • Specifically, he suggested that investor witnesses called by the prosecution were most likely to be fund managers, because they manage other people's money and are looking for a scapegoat.
  • Wealthy investors who put their own money to work are less likely to be called, Wade claimed, because they'd testify to having conducted adequate due diligence; validating defense's central claim that Holmes was the victim of bad luck, not the perpetrator of bad deeds.
  • Among the blood testing company's billionaire investors were Rupert Murdoch, Carlos Slim and Bob Kraft.

The bottom line: A big part of the Theranos story has been how the company's cap table and board were stacked with rich and/or powerful men who didn't have medical backgrounds, while Silicon Valley healthcare investors steered clear or were never approached. In other words, Elizabeth Holmes allegedly knew her marks.

  • Jurors, though, are going to have their biases tested. If wealthy investors know what they're doing, by virtue of their wealth, then how could they also not know what they're doing?
The BFD

Illustration: Sarah Grillo/Axios

CVC Capital Partners agreed to buy Glendower Capital, a London-based private equity secondaries firm that manages around €8 billion in capital commitments.

  • Why it's the BFD: This highlights a major consolidation push in the private equity secondaries market, with at least five announced deals so far in 2021.
  • Details: Glendower spun out of Deutsche Asset Management in 2017, and has been raising $3.5 billion for its fifth fund. It invests both in LP fund portfolios and GP-led transactions, and will continue to operate independently under the Glendower name.
  • The bottom line: CVC adds AUM and diversification that could be helpful were it to eventually follow the IPO path of British buyout peers Bridgepoint and EQT.
Venture Capital Deals

BitSight, a Boston-based cybersecurity risk platform, raised $250 million from Moody’s (NYSE: MCO), and also will buy VisibleRisk, a cyber risk ratings joint venture created by Moody’s and Team8. BitSight previously raised $165 million from firms like GGV Capital, Flybridge Capital, Warburg Pincus and Menlo Ventures. http://axios.link/6co2

Papaya Global, an Israel-based workforce management platform, raised $250 million in Series D funding at a $3.7 billion valuation. Insight Partners led, and was joined by Tiger Global and insiders Greenoaks Capital, IVP, Scale Venture Partners, Bessemer Venture Partners, Alkeon Capital, Workday Ventures, Access Industries and Group 11. www.papayaglobal.com

JumpCloud, a Louisville, Colo.-based cloud directory platform, raised $159 million in Series F funding at a $2.56 billion valuation. Sapphire Ventures led, and was joined by Owl Rock, Whale Rock Capital, Sands Capital, Endeavor Catalyst and insiders General Atlantic, BlackRock and H.I.G. Growth Partners. www.jumpcloud.com

Commercetools, a German provider of ecommerce APIs , raised $140 million in Series C funding at a $1.9 billion valuation. Accel led, and was joined by insiders Insight Partners and REWE Group. http://axios.link/IWsZ

🚑 ADARx Pharma, a San Diego-based developer of RNA-targeting therapeutics, raised $75 million in Series B funding. OrbiMed Advisors led, and was joined by Lilly Asia Ventures SR One and Sirona Capital. http://axios.link/cMOk

🚑 Walking Fish Therapeutics, a South SF-based biotech focused on B cell engineering, raised $50 million in Series A funding co-led by Emerson Collective, Illumina Ventures and Quan Capital. www.walkingfishtx.com

LevaData, San Jose, Calif.-based provider of supply management software, raised $47 million in Series C funding. Banneker Partners led and was joined by insider Tola Capital. www.levadata.com

Billogram, a Stockholm-based payments platform for recurring billing, raised $45 million from Partech. http://axios.link/Z0YK

🚑 Numan, a London-based online clinic for men’s health, raised $40 million in Series B funding. White Star Capital led, and was joined by insiders Novator, Vostok New Global, Anthemis Exponential and Colle Capital. www.numan.com

Pluang, an Indonesian investment and savings app, raised $35 million in new second round funding (round total now $55m). Square Peg led, and was joined by SIG, UOB Venture Management, Go-Ventures and Openspace Ventures. http://axios.link/qeXF

Capiter, an Egyptian B2B ecommerce platform, raised $33 million in Series A funding co-led by Quona Capital and MSA Capital. http://axios.link/WSjQ

Rezilion, an Israeli developer of automation tools for security operations, raised $30 million. Guggenheim Investments led, and was joined by JVP and Kindred Capital. http://axios.link/8zDN

MarginEdge, a Fairfax, Va.-based provider of restaurant cost management software, raised $18 million in Series B funding led by IGC Hospitality. http://axios.link/FqoH

🚑 Babyscripts, an obstetrics virtual care startup, raised $12 million in Series B funding. MemorialCare Innovation Fund led, and was joined by Philips Ventures and the CU Healthcare Innovation Fund. http://axios.link/GCVo

Gr3n, a Swiss plastic recycling tech startup, raised €6.3 million in Series B funding from backers like Chevron Technology Ventures and Standex International. www.gr3n-recycling.com

Cresicor, a Spring, Texas-based CPG trade management platform, raised $5.6 million in seed funding. Costanoa Ventures led and was joined by Torch Capital. http://axios.link/Gtaa

Private Equity Deals

• Anthology, a Boca Raton, Fla.-based higher ed software company owned by Veritas Capital, agreed to merge with Blackboard, a Washington, D.C.-based ed-tech software company backed by Leeds Equity Partners and Providence Equity Partners (each of which will be minority owners of the combined company). www.anthology.com

• FloWorks, a Houston-based portfolio company of Clearlake Capital Group, acquired Genesis Systems, a Garland, Texas-based distributor of control valve, regulator and valve automation products. www.gofloworks.com

• Hidden Harbor Capital Partners acquired Georgia-based HVAC service provider Air Conditioning Specialist. www.theairconditioningspecialist.com

• The Jordan Co. agreed to buy Chicago-based freight brokerage Echo Global Logistics (Nasdaq: ECHO) for $1.3 billion, or $48.25 per share (54% premium to last Thursday’s closing price). http://axios.link/wC8R

Sydney Airport Holdings (ASX: SYD) received a sweetened A$23.6 billion takeover offer from a group that includes IFM Investors, QSuper and Global Infrastructure Partners. The airport had rejected previous offers, but will now allow the group to conduct due diligence. http://axios.link/lO0P

Public Offerings

Ten companies plan to go public on U.S. exchanges this week: Thoughtworks, On Holding, Dutch Bros, Sportradar, Definitive Healthcare, ForgeRock, Dice Therapeutics, Procept Robotics, Tyra Biosciences and EzFill. http://axios.link/p41V

A.K.A. Brands, a Gen Z-focused online fashion brands portfolio owned by Summit Partners, set IPO terms to 13.9 million shares at $17-$19. It would have an initial market cap of $2.3 billion, were it to price in the middle. It plans to list on the NYSE (AKA) and reports $15 million of net income on $215 million in revenue for 2020. http://axios.link/CogA

Cadre Holdings, a provider of safety and survivability equipment for first responders, and Enact Holdings , a mortgage insurer being spun out of Genworth Financial, both revived previously-postponed IPO processes.

🚑 Exscientia, a British AI drug discovery startup, filed for an IPO. It plans to list on the Nasdaq (EXAI) and raised over $400 million from firms like SoftBank, Evotec, Novo Holdings, BlackRock, Celgene, GT Healthcare Partners, Bristol-Myers Squibb and Casdin Capital. http://axios.link/Th4A

Freshworks, a San Mateo, Calif.-based provider of customer support software, set IPO terms to 28.5 million shares at $28-$32. It would have a $9.6 billion fully diluted value, were it to price in the middle, plans to list on the Nasdaq (FRSH) and reports a $10 million net loss on $169 million in revenue for the first half of 2021. Freshworks raised around $400 million, most recently at a $3.5 billion valuation, from firms like Tiger Global (26.2% pre-IPO stake), Accel (25.8%), CapitalG (8.3%), Sequoia Capital India (12.3%) and Steadview Capital Management. http://axios.link/gWZ9

Sterling Check, a New York-based provider of background screening and ID verification software, set IPO terms to 14.3 million shares at $20-$22. It would have a $2.1 billion fully diluted value, were it to price in the middle, plans to list on the Nasdaq (STER) and reports $4 million of net income on $299 million of revenue for the first half of 2021. Backers include Goldman Sachs. http://axios.link/QQO1

Thomas James Homes, an Aliso Viejo, Calif.-based provider of urban single-home housing development software, filed for an IPO. It reports $2 million of net income on $291 million in revenue for the first half of 2021 and plans to list on the Nasdaq (TJH). Backers include Oaktree Capital. http://axios.link/dAEb

Toast, a Boston-based restaurant management platform, set IPO terms to 21.1 million shares at $30-$33. It would have an initial market cap of $15.7 billion, were it to price in the middle, plans to list on the NYSE (TOST) and reports a $235 million net loss on $704 million of revenue for the first half of 2021. Toast raised around $900 million in VC funding, most recently at a $2.7 billion valuation, from firms like Tiger Global (12.8% pre-IPO stake), Bessemer Venture Partners (12.5%), T. Rowe Price (6%) and TCV (5.5%). http://axios.link/m1Qs

SPAC Stuff

Forge Global, an SF-based private securities marketplace, agreed to go public at an implied $2 billion valuation via Motive Capital Corp. (NYSE: MOTV). Forge Global had raised over $330 million from firms like Caffeinated Capital, Panorama Point Partners, Operative Capital, Munich Re, Walden VC, Streamlined Ventures, Draper Associates and BNP Paribas. http://axios.link/Le7D

Berenson Acquisition I, a software and tech-enabled services SPAC, filed for a $250 million IPO. http://axios.link/bJ4u

Black Mountain Acquisition, an energy SPAC led by Rhett Bennett, filed for a $200 million IPO. http://axios.link/dSE5

Super Plus Acquisition, a SPAC led by Long Yi (ex-CEO of China’s Urban Tea), filed for a $50 million IPO. http://axios.link/6p2r

Energem Corp., an Asia energy SPAC, filed for a $100 million IPO. http://axios.link/LpjE

Liquidity Events

The Blackstone Group hired Goldman Sachs to find a buyer for German measuring tech firm Schenck Process, which could fetch more than €1.4 billion, per Reuters. http://axios.link/J67m

The Carlyle Group is considering either a sale or IPO for Hartsville, S.C.-based packaging company Novolex, which could fetch around $6 billion, per Bloomberg. http://axios.link/QpsG

DigitalBridge (fka Colony Capital) is seeking a buyer for Andean Telecom Partners, which owns telecom towers and fiber networks in Colombia, Peru and Chile, per Bloomberg. A deal could be valued at around $2 billion. http://axios.link/gQf7

🚑 Permira hired RBC to find a buyer for LSNE, a Bedford, N.H.-based contract development and manufacturing firm that specializes in freeze-drying drugs and devices, per PE Hub. http://axios.link/iPPB

TransUnion (NYSE: TRU) will pay $3.1 billion in cash to buy Reston, Va.-based identity resolution company Neustar from Golden Gate Capital, which will retain Neustar's security solutions unit as an independent entity. http://axios.link/fJUD

UPS (NYSE: UPS) agreed to buy Roadie, an Atlanta-based same-day delivery company that had raised $62 million (plus a PPP loan) from backers like UPS, Home Depot, Tomorrow Ventures, H. Barton Asset Management, Guggenheim Partners, Warren Stephens and Jim McKelvey. http://axios.link/64uR

More M&A

Illustration: Aïda Amer/Axios

Kansas City Southern (NYSE: KSU) agreed to be acquired by Canadian Pacific Railway (TSX: CP), deeming its $31.1 billion cash and stock to be superior to a higher offer from Canadian National (TSX: CNR) that's run into regulatory troubles. http://axios.link/ec3R

Ithaca Energy, a British subsidiary of Israel-listed Delek Group, agreed to pay around $1 billion to buy the North Sea oil and gas assets of Japan-listed Marubeni, per Reuters. http://axios.link/89vV

Rolls-Royce (LSE: RR) and Babcock (LSE: BAB) sold their combined 39% stake in AirTanker Holdings, an air-to-air refueling company that serves Britain's Royal Air Force, for £315 million to Equitix Investment Management. http://axios.link/UYcR

Telefónica (Madrid: TEF) hired Goldman Sachs to find a buyer for its 50% stake in mobile towers business Cornerstone Telecom Infrastructure, which could fetch around €2 billion, per El Confidencial. http://axios.link/CjF6

Vista Outdoor (NYS: VSTO) agreed to buy San Diego-based golf simulator maker Foresight Sports for $499 million (including a possible $25m earnout). http://axios.link/XJWt

Fundraising

Diversis Capital Management, an LA-based private equity firm focused on software and tech-enabled services, raised $675 million for its second fund. www.diversis.com

Falfurrias Capital Partners, a Charlotte-based lower midmarket PE firm, raised $850 million for its fifth fund. www.falfurriascapital.com

Jungle Ventures, a Southeast Asia-focused VC firm, raised $225 million for its fourth fund. LPs include Temasek and DEG. http://axios.link/v9tO

Final Numbers: 🚴💰🚴💰

Huge thanks to everyone who hopped on their Peloton bikes yesterday, to help raise money for Tuesday's Children.

  • I'm still compiling all the donations, but know that more than 150 riders helped raise at least $120,000.
  • Gratitude to our donors, including (but not limited to): Airbnb, ChowNow, CIBC, Cooley, Freestyle Capital, Greycroft, GGV Capital, Chris Sacca, Mark Suster, Yves Sisteron, Jesse Rogers, Insight Partners, TPG Capital, Silver Lake, Union Square Hospitality Group.

I'll have the final tally later this week. If you'd like to help us boost the number, and benefit a great cause, please go here to donate.

🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and secondaries investors to sign up.