May 25, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

While the stockings were hung by the chimney with care last Christmas Eve, some private equity investors were stirring. In fact, they were quietly firing a general partner led by Ruben King-Shaw, known for his stints in both the Bush 43 and Obama Administrations. He currently on the boards of Cerberus-backed hospital chain Steward Health, publicly-traded Cotiviti Holdings and two weeks ago was named CEO of a medical fraud company.

The story, which includes misleading information in a federal regulatory filing, has not been told until now. It's a bit too long for this newsletter format, but I encourage you to read by going here.

• More recommended reading: The Blackstone Group has picked Sean Klimczak to run its $40 billion-targeted infrastructure fund, which recently secured a $20 billion memorandum of understanding from the Saudi government. He's been with Blackstone since 2005, most recently as a senior managing director in its private equity group. Ryan Dezember has a good profile in the WSJ:

"Klimczak began meeting with Saudi officials in April 2016 about an infrastructure fund that would never expire, allowing Blackstone to take on projects that took years to bear fruit and sometimes had lower returns than private-equity fund investors sought. Blackstone executives say strong political support for infrastructure spending from both U.S. political parties during the presidential campaign made it an inviting time to start a dedicated fund, which it had tried and failed to do a decade earlier."

• Feel connected: If you're in deal-making circles ― particularly tech deal-making circles ― you probably have just a few degrees of separation from Greg Gianforte, the GOP candidate for Montana's lone congressional seat who last night was charged with misdemeanor assault after attacking a reporter for The Guardian. Gianforte was the founder and former CEO of RightNow Technologies, which was backed by both Greylock and Summit Partners before he took it public and then sold to Oracle in 2011 for $1.5 billion.

The BFD

Tanium, an Emeryville, Calif.-based provider of endpoint cybersecurity and PC management solutions, has raised $100 million in common stock financing at a $3.75 billion post-money valuation. TPG Capital led the round, and was joined by fellow return backer IVP. Most of the proceeds will go toward early employee liquidity, including for co-founder and chairman David Hindawi (who wants to expand his philanthropic pursuits).

  • Why it's the BFD: Tanium is the country's most highly-valued private cybersecurity company, with clients that include both major U.S. banks and the U.S. Department of Defense.
  • IPO? CEO Orion Hindawi (David's son) had said in the past that the company would go public in 2017, but new CFO Fazal Merchant (ex-DreamWorks) tells Axios that the timing is now TBD. "It's up to me and the rest of my team to make sure we're prepared for an IPO, but any timeline would be artificial."
  • Controversy: Tanium recently was the subject of an explosive Bloomberg piece, claiming that Orion Hindawi's behavior had caused executive departures and been flagged as a point of concern by major shareholder Andreessen Horowitz. It also suggested that Tanium had fired certain employees because their stock options were about to vest – a charge that the company denied. Merchant (who only formally began work this week) says that the new round was not done to sate concerns reflected in that article, adding that he's "learned in his years not to believe everything you read." He declined, however, to go into further detail.
Venture Capital Deals

• Peloton, the maker of indoor cycling bikes and live-streamed fitness content, has raised $325 million in Series E funding at a $1.25 billion post-money valuation. Backers include Wellington Management, Fidelity Investments, Kleiner Perkins, True Ventures, Comcast NBCUniversal, GGV Capital, Balyasny and QuestMark Partners. Here is a recent Axios interview with Peloton's CEO: http://bit.ly/2mVpKkk

• 99, a Brazil-based provider of ride-hail in Latin America, has raised $100 million in new VC funding from SoftBank (not via Vision Fund, which has a ride-hail prohibition). http://bit.ly/2rTQFx0

• Billtrust, a provider of cloud-based payment cycle management software, has raised $50 million in new equity funding led by Riverwood Capital Management. www.billtrust.com

🚑 Harpoon Therapeutics, a South San Francisco-based developer of T-cell recruiting biologic therapies for the treatment of cancer, has raised $45 million in Series B funding. Arix Bioscience and New Leaf Venture Partners co-led the round, and were joined by Taiho Ventures and return backer MPM Capital. www.harpoontx.com

• G2 Crowd, a Chicago-based platform for crowdsourcing enterprise software reviews, has raised $30 million in Series B funding. Accel led the round, and was joined by Pritzker Group Venture Capital and individual angels. http://tcrn.ch/2rUrI3z

🚑 DocPlanner, a Poland-based online platform for physician booking, has raised €15 million in Series D funding. Enern Investments led the round, and was joined by One Peak Partners and Target Global. http://bit.ly/2qXzk6f

• Zibby, a New York-based rent-to-own payment platform for retail and e-commerce, has raised $13.5 million in new VC funding. CURO and MissionOG co-led the rounds, and were joined by Blumberg Capital and Tribeca Venture Partners. http://bit.ly/2qQUhkO

• Chef'd, an El Segundo, Calif.-based meal-kit company, has raised $10 million in Series B funding from Campbell's Soup Co. and FreshDirect. http://for.tn/2rTKMyP

• Merlon Intelligence, a San Francisco-based provider of risk management and compliance software for financial services companies, has raised $7.65 million in seed funding. DCVC led the round, and was joined by Fenway Summer, Nyca and Work-Bench. http://tcrn.ch/2rTCyH0

🚑 Viz, a San Francisco-based provider of AI-enabled medical imaging for emergency treatment, has raised $7.5 million in seed funding. Danhua Capital and Innovation Endeavors co-led the round, and were joined by AME Cloud Ventures. http://bit.ly/2qfSsv8

🚑 Scopio Labs, an Israeli provider of digital microscopy solutions, has raised $7 million in new VC funding from backers like OurCrowd. http://bit.ly/2rWi00E

• Coins, a provider of financial services for the unbanked in the Philippines and Thailand, has raised $5 million in VC funding from Naspers. http://tcrn.ch/2riYuPO

• Discuss.io, a Seattle-based startup that uses videoconferencing and crowdsourcing for brand research, has raised $5 million in Series A funding from Unilever Ventures and Pereg Ventures. http://bit.ly/2qlCZZr

• Reali, a San Mateo, Calif.-based "app-enabled real estate company," has raised $5 million in Series A funding led by Signia Venture Partners. www.reali.com

• Minibrew, a Dutch maker of residential beer-brewing machines, has raised $2.8 million in seed funding from undisclosed investors. http://tcrn.ch/2qi33Wg

• Bulletin, a "WeWork for retail space," has raised $2.2 million in seed funding from Flybridge Capital Partners, Kleiner Perkins, Liquid 2 Ventures, Afore Capital, Y Combinator, Tim Draper and Kevin Hale. http://tcrn.ch/2rS7Izd

• Bowery, a New York-based provider of tech-enabled commercial appraisals, has raised $1.75 million in seed funding from Camber Creek, Fika Ventures, Corigin Ventures, LeFrak and Expansion Venture Capital. www.boweryres.com

• BuildOnMe, a Reston, Va.-based provider of AI-enabled apps, has raised an undisclosed amount of funding from ServiceNow Ventures. www.buildon.me

Private Equity Deals

• Actis has agreed to acquire the Brazilian wind farms business of Spain's Gestamp Renewables, according to Bloomberg. The deal could be worth around $760 million. https://bloom.bg/2rkj9mt

🚑 Advent International and Permira are not planning to top an existing €5.3 billion takeover bid (from Bain Capital and Cinven) for German generic drugmaker Stada, according to Reuters. There had been talk that the firms were working on a counteroffer with Shanghai Pharmaceuticals. http://reut.rs/2qShMK8

• Cerberus Capital Management is working with American Eagle Outfitters (NYSE: AEO) on a joint takeover bid for struggling teen apparel retailer Abercrombie & Fitch (NYSE: ANF), according to the WSJ. http://on.wsj.com/2qgz0y3

🚑 Citic Capital and China's Humanwell Healthcare have acquired the condoms and sexual health business of Australia's Ansell (ASX: ANN) for US$600 million. http://on.ft.com/2qn58PV

Public Offerings

• Appian, a Reston, Va.-based provider of a software development platform, raised $75 million in its IPO. The company priced 6.3 million shares at $12 per share (middle of range), for a fully-diluted market value of around $878 million. It will trade on the Nasdaq under ticker symbol APPN, while Morgan Stanley was listed as left lead underwriter. Appian reports a $14 million net loss on around $133 million in revenue for 2016, compared to a $6.6 million net loss on $111 million in revenue for 2015. Shareholders include Novak Biddle Venture Partners (21.5% pre-IPO stake) and NEA (11.7%). www.appian.com

• Cinven is reviving its plans to list German truck and trailer parts maker Jost, according to Reuters. http://reut.rs/2rku6EC

• Sea Ltd. (f.k.a. Garena), a Singapore-based online gaming company valued at $4.3 billion by venture capitalists, has filed confidentially for a U.S. listing, according to Bloomberg. Goldman Sachs and Morgan Stanley are working on the offering, which is expected to come in 2018. https://bloom.bg/2qUrEBK

• Smart Global Holdings, a Newark, Calif.-based maker of specialty memory solutions to the electronics industry, raised $58 million in its IPO. The company priced 5.3 million shares at $11 per share, which is below its proposed $13 to $15 per share range.The Silver Lake-owned company will trade on the Nasdaq under ticker symbol SGH, while Barclays and Deutsche Bank served as lead underwriters.

• WideOpenWest, the country's sixth-largest cable operator, raised $310 million in its IPO. The company priced 18.2 million shares at $17 per share, compared to earlier plans to offer 19 million shares at between $20 and $22 per share. It will trade on the NYSE under ticker symbol WOW, while UBS was listed as left lead underwriter. WideOpenWest reports $26.3 million of earnings for 2016, compared to net losses in both 2014 and 2015. Its 2016 revenue was around $1.24 billion, up slightly from $1.22 billion the year earlier. Shareholders include Crestview Partners and Avista Capital Partners. http://bit.ly/2pGavhM

Liquidity Events

• Investcorp and Clarity Partners have hired banks to pursue a possible sale of Los Angeles-based telecom company TPx Communications, which is expected to generate around $160 million in 2017 EBITDA, according to the WSJ. http://on.wsj.com/2rigedM

• Microsoft (Nasdaq: MSFT) has acquired Israeli cybersecurity startup Hexadite for around $100 million, according to Calcalist. Hexadite had raised around $10 million in VC funding from Hewlett Packard Ventures, Ten Eleven Ventures and YL Ventures. http://bit.ly/2qlE3fT

• Red Hat (NYSE: RHT) has agreed to acquire Codenvy, a San Francisco-based provider of on-demand cloud-native developer tools and workspaces. No financial terms were disclosed. Codenvy has raised around $9 million in VC funding from Auriga Partners and Toba Capital. http://tcrn.ch/2r0b03G

• Swander Pace Capital has sold its 80% equity stake in Kicking Horse Coffee, a Canadian organic and fair-trade coffee company, to Italy's The Lavazza Group for C$215 million. http://bit.ly/2riERam

• Terra Firma Capital Partners has hired Goldman Sachs and Knight Frank to pursue a possible sale of Consolidated Pastoral Co., Australia's largest privately-owned cattle rancher, according to The Australian. The company could be worth around A$1 billion. http://bit.ly/2rXYeSC

More M&A

🍺Brown Forman (NYSE: BF), the $21 billion maker of Jack Daniels whiskey, said that it is not for sale, following a CNBC report that Constellation Brands (NYSE: STZ) had made a takeover offer. http://reut.rs/2rBxACt

• Callidus Software (Nasdaq: CALD) has acquired RevSym, a Sunnyvale, Calif.-based provider of revenue and incentive management solutions. No financial terms were disclosed. www.revsym.com

• Rayonier Advanced Materials (NYSE: RYAM) has agreed to acquire Canadian packaging and forest products company Tembec (TSX: TMB) for $807 million. http://reut.rs/2qZInDG

• Safran (Paris: SAF) has cut the price of its takeover offer for Zodiac Aerospace (Paris: ZC), a French maker of plane cabin interiors, by around 15% to €7.3 billion, due to declining profits. http://on.mktw.net/2rCMo3q

• ServiceNow (NYSE: NOW) has acquired Qlue, a Palo Alto, Calif.-based provider of virtual agent messaging solutions. No financial terms were disclosed. http://bit.ly/2rPuBDy

Fundraising

• Apax Partners is raising its first-ever fund focused on tech investments, with plans to pursue both growth equity and buyout opportunities. http://bit.ly/2qfoGKJ

• BC Partners, a London-based buyout firm, has set up a Luxembourg fund so that it will have an onshore European presence following Brexit. http://bit.ly/2rkjLsh

• Champ Private Equity of Australia has closed its fourth fund with A$735 million in capital commitments (well short of its original A$1.5 billion target). http://bit.ly/2qZMOAw

• DC Capital Partners, a private equity firm focused on control deals in the U.S. government services, engineering and construction services sectors, has closed its first institutionally-backed fund with $450 million in capital commitments. www.dccapitalpartners.com

• Pentech, a UK-based VC firm, has closed its third fund with £88 million in capital commitments. http://tcrn.ch/2qhFTz9

• Pilot Growth Equity of San Francisco is raising up to $150 million for its second fund, per an SEC filing. Fortress Group is serving as placement agent. www.pilotgrowth.com

• Sard Verbinnen & Co., a corporate communications firm, has opened an office in Hong Kong that will be led by Ron Low (relocating from Silicon Valley) and Rick Carew (ex-WSJ). www.sardverb.com

It's Personnel

• Asís Echániz has stepped down as a principal on the European infrastructure team of KKR, according to Dow Jones.

Final Numbers
Dan Primack