Mar 25, 2020

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Sarah Grillo/Axios

Uncle Sam today will become Corporate America's lender of last resort, but it's still unclear if it also will become its activist shareholder.

Driving the news: We're still awaiting full text of the bipartisan deal struck last night between the White House and Senate leaders, including if there will be any straight equity or warrants tied to financial help for affected industries and companies.

  • Airlines and big companies like Boeing have fought hard against such a move, arguing that interest payments would be adequate financial upside for taxpayers.

Boeing CEO Dave Calhoun, a former private equity executive, yesterday told Fox Business that his company would refuse government assistance if it came with equity strings attached: "If they force it we just look at all the other options, and we’ve got plenty of them."

  • Boeing declined to tell Axios what any of those other options were. Weird, since there are "plenty" of them. It also couldn't reconcile the existence of such options with Calhoun claiming the government needs to support credit markets.

Ben Baldanza, former Spirit Airlines CEO and current JetBlue director, yesterday rejected proposals for Treasury taking equity in airlines during a CNBC interview, but repeatedly dodged when asked why.

  • We do know there will be stock buyback and CEO bonus prohibitions on the airline package. Plus added oversight, transparency, and worker protection provisions.

The bottom line: Corporate America is right that it didn't directly cause this problem, as Wall Street caused the 2008 crisis, so there is no need to be punitive. But neither did taxpayers, and they're the ones footing the bill after years of corporate stock buybacks and mediocre wage increases. It will be interesting to see where the Senate sided.


Startup layoffs are on the rise, which means many soon will be in the unexpected position of either exercising their vested options or abandoning them. It's an always difficult (and costly) choice made even tougher by the volatile economic outlook. Kia has more.

  • In quasi-related news, it appears that expanded unemployment provisions in the stimulus bill will include gig economy workers.

• The Real Estate Roundtable, whose members include The Blackstone Group, last night called for both residential and commercial landlords to hold off on evictions and to work on solutions with impacted tenants (including to protect credit ratings).

  • One key issue is that most lease and rental agreements have no sort of pandemic exceptions, nor is it typically included in interruption-of-business insurance. Expect both of those things to change when the dust settles.
  • Same goes for real estate debt instruments, which firms like Blackstone use to finance their purchases.
  • The plan being voted on today would make rent, mortgage and utility costs eligible for Small Business Administration loan forgiveness.

🎧 Pro Rata Podcast digs into President Trump's proposal to reopen America within weeks, putting him at odds with public health officials and many economists. Listen here.


Illustration: Aïda Amer/Axios

Facebook (Nasdaq: FB) is in talks to buy a 10% stake in Indian telecom operator Reliance Jio from Reliance Industries, per the FT.

  • Why it's the BFD: This could become Facebook's second-largest acquisition ever, behind WhatsApp, based on bank analyst estimates that Jio is worth around $60 billion.
  • The bottom line: "Facebook has long sought to invest in big markets where Internet connectivity is sparse, expensive, or both — figuring that a boost in Internet usage will end up resulting in more users. Its last approach, subsidizing free use of Facebook, was poorly received in India. This would appear to be a different tact to achieve the same goal." — Ina Fried, Axios
Pro Rata for Kids

Yesterday I asked you to send in activities your kids have come up with to pass the time at home. Some highlights (and ideas):

  • Meg wrote in to say her toddler has turned a laundry basket into a train, which he "drives" around the house to pick up various items that are to be delivered to her.
  • Manisha suggests giving your kids three words. Have them choose one to build a LEGO picture of that word. Then you guess which word they built.
  • Brian's kids are drawing a design or part of an object. Then they pass it on to a sibling or parent to finish the drawing and decide what the design should become. They write a note on the back and send to family or "friends we don't know yet" in the nearby nursing home.
  • Erin's kids are doing their version of Chopped. She gives them five ingredients and they need to make a meal out of them.
  • Jerry's kids have updated the pillow fort idea by taking a bunch of old cardboard boxes and turning them into a rocket ship:
Venture Capital Deals

• TierPoint, a St. Louis-based data center operator, raised $320 million in new equity funding. Argo Infrastructure Partners, Wafra, and Macquarie Capital Principal Finance co-led, and were joined by return backers Cequel, Ontario Teachers, RedBird Capital Partners, The Stephens Group, and Thompson Street Capital Partners.

🚑 Kallyope, a New York-based biotech focused on the “gut-brain axis,” raised $112 million in Series C funding. Casdin Capital and Greenspring Associates were joined by return backers Alexandria Venture Investments, Illumina Ventures, Polaris Partners, and The Column Group.

Nature’s Fynd, a Chicago-based alt protein startup, raised $80 million in Series B funding. Generation Investment Management and Breakthrough Energy Ventures co-led, and were joined by 1955 Capital, Mousse Partners, ADM Ventures, and Danone Manifesto Ventures.

🚑 Apexigen, a San Carlos, Calif.-based developer on cancer antibodies, raised $65 million in new Series C funding (round total now $123m). Decheng Capital led, and was joined by Oceanpine Capital.

SoftIron, a London-based developer of data center appliances, raised $34 million in Series B funding from undisclosed backers.

Espressive, a developer of company help-desk chatbots, raised $30 million in Series B funding. Insight Partners led, and was joined by Wing VC and General Catalyst.

Alma, a Paris-based provider of installment payment solutions to merchants, raised €12.5 million from Idinvest and Isai.

Arkose Labs, a San Francisco-based provider of online fraud and abuse prevention software, raised $22 million in Series B funding. M12 led, and was joined by return backers PayPal and USVP.

Akur8, a Paris-based provider of automated pricing software for commercial and residential insurance, raised €8 million in Series A funding from BlackFin Capital Partners and MTech Capital.

🚑 ClinOne, a Denver-based provider of remote clinical trial patient management software, raised $3.6 million in Series A funding led by the CU Healthcare Innovation Fund.

Private Equity Deals

🚑 Arcadia Consumer Healthcare, a Bridgewater, N.J.-based portfolio company of Avista Capital, acquired the U.S. rights to upset stomach medicine Kaopectate from Sanofi (Paris: SAN).

The Carlyle Group may be souring on its agreed-upon takeover of Australian debt collector Pioneer Credit (ASX: PNC), asking for new data on its business operations and performance, per The Australian.

Guy & O'Neill, a Fredonia, Wisc.-based portfolio company of Centre Partners, acquired Boomerang Laboratories, a Spring Park, Minn.-based manufacturer of liquid-fill personal care and light-duty household cleaning products

Tangent Technologies, an Aurora, Ill.-based portfolio company of The Sterling Group, acquired Bedford Technologies, a Worthington, Ill.-based plastic lumber extruder.

Liquidity Events

• Deutsche Wohnen, a German property group, agreed to buy most of the operations of rival Isaria for €600 million from Lone Star Funds.

More M&A

• European Union antitrust regulators have extended their deadline to decide whether to approve EssilorLuxottica’s (Paris: ESLX) €7.2 billion takeover of Dutch eyewear retailer GrandVision (AS: GVNV).

• Mitsubishi Corp. completed its €4.1 billion purchase of Dutch utility Eneco.

• Shanghai Yuemu Cosmetics, a Chinese maker of facial beauty masks, is considering a sale process, per Bloomberg. In 2018 it had a deal to be bought for $781 million, but the buyer later terminated because it said SYC hadn’t delivered promised financial performance.


The Carlyle Group raised $2.3 billion for its fourth Japan buyout fund.

• FMI Investment Partners, a Durham, N.C.-based lower middle market private equity firm, secured $26 million of a $100 million-targeted debut fund, per an SEC filing.

It's Personnel

• Rex Kim was named chief investment officer of Oregon’s public pension fund. He previously was a senior consultant with Multnomah Group.

• Genstar Capital promoted Rob Clark to director and Scott Niehaus to principal.

Final Numbers: Global VC deal volume
Source: PitchBook
Dan Primack

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