Apr 11, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

When Real Desrochers stepped down suddenly last week as head of private equity at the California Employees' Retirement System (CalPERS), we noted that the nation's largest public pension was being kind of cagey about his eventual successor. It named an interim head (Desrochers deputy Sarah Corrs), but no official search process. Now we know why:

Per board meeting documents published yesterday, CalPERS investment staff (read: CIO Ted Eliopoulos) is recommending that the CalPERS private equity program (currently at nearly $26 billion) be effectively merged with the public equities program.

We're expecting more details during the board meeting, but this reads a bit like CalPERS is thinking about adopting more of a Canadian pension strategy of big direct investments (as opposed to solely being a passive investor in PE funds). Perhaps, then, it's not surprising that a source tells me Eliopoulos is said to have been spending lots of time lately with BlackRock, the current home of Mark Wiseman -- who is largely credited with developing the direct investment strategy while leading the Canada Pension Plan Investment Board.

• Hedge fund recipe: Activist investor JANA Partners yesterday disclosed a 9% stake in $12 billion grocery retailer Whole Foods, and said that it would speak with management about exploring ":strategic alternatives" (read: a sale process). Of particular interest is one of the names on JANA's proposed slate of new directors: Mark Bittman, a former New York Times food columnist and cookbook author who is on record as saying that he's "not a big fan of Whole Foods."

• Deep-linking redux: Branch, a Silicon Valley deep-linking startup, has raised $60 million in Series C funding led by Andy Rubin's Playground Ventures. TechCrunch broke the news yesterday, and CEO Alex Austin confirmed it to Axios ― adding that other return backers included NEA, Founders Fund, Pear Ventures, Samsung Ventures, Madrona Ventures, Cowboy Ventures and Ben Narasin. "Everyone bought back in and then some."

The last time we discussed deep-linking, it was in the context of Quixey, which shut down after burning through $130 million in VC funding. It's an important tech space, given that it's effectively the mobile app equivalent of hyperlinks for web pages. But it's also a very tough business to make a go of, as we saw not only with Quixey but also URX (acqui-hired by Pinterest). My colleague Kia says that Branch hopes to buck those odds by focusing on growth tools (e.g., downloads, referrals, better attribution), as are rivals like Yozio. Others, like Button, are aiming at commerce.

• Fake financial news: Hundreds of articles published on financial news sites were authored by individuals being paid to promote certain biotech stocks, according to enforcement actions announced yesterday by the SEC. Such payments were not disclosed to readers, nor apparently to the sites themselves, which included Seeking Alpha, Forbes, Yahoo Finance and TheStreet.

• Whistle while you work: Each year I get a voicemail that includes a whistled rendition of Happy Birthday. It's chock full of trills and other sounds so intricate that they sound like a wind instrument. There's no verbal greeting or other explicit identification, but I know it's from Chris Ullman, the bow-tied Carlyle Group communications boss who also is a 4-time world whistling champ (yup, that's a thing).

Now Chris has a book coming out about his whistling career, and just got a great Washington Post profile that includes an anecdote about applying to be chief spox for then-SEC chairman Arthur Levitt:

He was called into the boss's office and informed that the competition for the job was down to him and one other applicant. Levitt told him to whistle something. "Levitt has these piercing blue eyes," Ullman recalls. "I started thinking, 'Is this a test? Am I supposed to reject it? Is it too weird?'

Ullman had done his homework. He knew Levitt was a big opera fan. He decided to go for it, whistling a stirring rendition of the aria, "Vesti la giubba" from "Pagliacci."

The BFD

Sino IC Capital of China has agreed to acquire Xcerra Corp. (Nasdaq: XCRA), a Norwood, Mass.-based semiconductor testing company. The deal is valued at $580 million in cash, or $10.25 per share (14% premium to Friday's closing price), and includes a 35-day "go shop" provision.

  • Why it's the BFD: Because U.S. regulators have been particularly finicky when it comes to Chinese takeovers of domestic chip companies, and approval/disapproval of this deal could be viewed as a guidepost for Trump-era CFIUS (alongside a previously-announced purchase of Lattice Semiconductor, which remains in the midst of regulatory review). The market's early read isn't terribly optimistic, as Xcerra shares closed trading yesterday 6% below the takeover price, at $9.63 per share, and was down another percentage point in pre-market trading.
  • Bottom line: "Shortly before leaving office in January, former President Barak Obama made public a report by advisors and semiconductor industry insiders that warned of the threat posted to the U.S. semiconductor industry by China's aggressive moves to become a global player in the chip space, including the acquisition of U.S. firms." ― Dylan McGrath, EE Times
Venture Capital Deals

• Lucid, a New Orleans-based market research company, has raised $60 million from North Bridge Growth Equity. www.luc.id

• Cirius Therapeutics (f.k.a. Octeta Therpeutics), developer of an insulin sensitizer for the treatment of patients with non-alcoholic steatohepatitis and liver fibrosis, has secured up to $40 million in Series A funding co-led by Frazier Healthcare Partners and Novo AS. http://bit.ly/2p33pQt

• Tegile Systems, a Newark, Calif.-based provider of flash-driven storage arrays, has raised $33 million in new VC funding. Western Digital Corp. led the round, and was joined by return backers Meritech Capital, Capricorn Investment Group and Cross Creek Capital. www.tegile.com

• Mylio, a Bellevue, Wash.-based "private cloud" company known for a photo organizing app, has raised $25 million in new VC funding from China Everbright. http://bit.ly/2o7lPiT

• Synack, a "hacker-as-a-service" startup co-founded by a pair of ex-NSA analysts, has raised $21.25 million in Series C funding. Microsoft Ventures led the round, and was joined by Hewlett Packard Enterprise, Singtel Innov8 and return backers GV, GGV Capital and Kleiner Perkins Caufield & Byers. http://bit.ly/2o38Y09

• Ortho Kinematics‚ an Austin, Texas-based developer of spine imaging informatics, has raised $18.6 million in Series D funding. No investors were identified, although existing company backers include Medtronic. http://bit.ly/2nZXsCH

• Agrisoma Biosciences, a Canadian developer of agricultural feedstock for biofuels, has raised C$15.4 million in Series B funding from Groupe Lune Rouge and return backers Cycle Capital Management, and BDC Venture Capital. www.agrisoma.com

• Proveca, a UK-based developer of medicines for children, has raised £4 million in new venture capital and debt financing. Catapult Ventures led the equity tranche, while Kreos Capital provided debt. http://bit.ly/2oltgon

• Fresh Relevance, a UK-based marketing platform for ecommerce companies, has raised £2.15 million in new VC funding from Foresight VCT. http://bit.ly/2osT4zh

• Qwilr, an Australian provider of business document digitization solutions, has raised $1.5 million in VC funding from Point Nine. www.quilr.com

• Five Jack, an Indonesian ecommerce game platform, has raised $1.2 million in VC funding from backers like 500 Startups. www.fivejack.com

Private Equity Deals

• 3i Group has acquired Hans Anders, a Netherlands-based eyeglasses retailer, for €200 million. Sellers include Alpha Private Equity and AlpInvest. http://bit.ly/2p0Sc5z

• Brentwood Associates has acquired Jefferson Dental Care, a dental support organization in Texas, from Black Canyon Capital. No financial terms were disclosed. www.jeffersondentalcenters.com

• Cérélia Group, a French food company owned by IK Investment Partners, has acquired English Bay Batter, a Vancouver-based bakery business. No financial terms were disclosed. www.englishbaycookies.com

• Sino IC Capital has agreed to acquire Xcerra Corp. (Nasdaq: XCRA), a Norwood, Mass.-based semiconductor testing company. The deal is valued at $580 million in cash, or $10.25 per share. http://bit.ly/2o1LF6W

• Waterous Energy Fund has acquired around a 66% equity stake in Northern Blizzard Resources (TSX: NBZ), a Calgary-based heavy-oil company, from Riverstone Holdings and NGP Capital for $244 million (or $3.60 per share). https://tgam.ca/2pop6tp

Public Offerings

• Altice USA, the U.S. unit of Amsterdam-listed broadband giant Altice NV, has filed for a $100 million IPO. J.P. Morgan is listed as left-lead underwriter. The company reports a $656 million net loss on more than $9 billion in pro forma revenue for 2016. www.altice.net

• Vine Resources, a Plano, Texas-based natural gas E&P company focused on the Haynesville Basin of Northwest Louisiana, has filed for a $500 million IPO. It plans to trade on the NYSE under ticker symbol VRI, with Credit Suisse and Morgan Stanley serving as co-lead underwriters. Backers include The Blackstone Group.

Liquidity Events

• Amobee, a Foster City, Calif.-based unit of SingTel, has completed its previously-announced $310 million acquisition of Turn, a Redwood City, Calif.-demand-side platform for digital advertising. Turn had been valued at more than $700 million in 2014 by VC backers, including Fidelity, BlackRock, ClearBridge Investments, Firsthand Technology Value Fund, Northport Investment Management, Pine River Capital Management, Focus Ventures, Norwest Venture Partners, Shasta Ventures, Western Technology and Trident Capital. http://bit.ly/2pnhPdq

• Bain Capital has agreed to sell Consolidated Container Co., an Atlanta-based rigid plastic packaging manufacturer, to Lowes Corp. (NYSE: L) for around $1.2 billion. www.cccllc.cm

• Conyers Park Acquisition Corp. (Nasdaq: CPAA), a blank check acquisition company, said that it would merge with Denver-based Atkins Nutritionals in a $730 million deal that will see existing Atkins backer Roark Capital cash out. Conyers Park will be led going forward by Atkins CEO Joseph Scalzo, while current chairman Jim Kilts (Centerview Partners, ex-CEO of Gillette and Nabisco) will remain chairman. http://bit.ly/2oUOdYX

• Harland Clarke Holdings has agreed to acquire RetailMeNot (Nasdaq: SALE), an Austin, Texas-based online coupon company, for around $630 million. The $11.60 per share sale price represents nearly a 50% premium over Friday's closing price. Sellers will include Norwest Venture Partners, which holds 9.92% of outstanding RetailMeNot shares. http://tcrn.ch/2pnIBCH

More M&A

• AT&T (NYSE: T) has agreed to acquire Straight Path Communications (NYSE MKT: STRP), a Glen Allen, Va.-based owner of nationwide rights to millimeter-wave spectrum, for $1.6 billion ($95.63 per share, which represents a premium over Friday's closing price). http://bit.ly/2p2GDYV

• Grupo Aeroportuario del Sureste, a listed Mexican airport operator, has agreed to acquire a majority stake in two Colombian airport operators ― Airplan and Aeropuertos de Oriente ― for around $262 million. http://reut.rs/2p2AfRd

• Pon Holdings has offered to purchase listed Dutch bicycle maker Accell Group for €845 million. http://reut.rs/2oU7w4m

• SDIC Fund Management of China has invested $46.6 million for a 19.9% equity stake in Maxwell Technologies (Nasdaq: MXWL), a San Diego-based maker of energy storage and power delivery solutions. www.maxwell.com

• Supervalu (NYSE: SVU) has agreed to acquire Unified Grocers, a Portland, Ore.-based wholesale grocery distributor, for $375 million (including debt). http://strib.mn/2okRFdw

• Tahoe Investment Group (f.k.a. Fujian Thai Hot Investment) has agreed to acquire Alliance HealthCare Services (Nasdaq: AIQ), a Newport Beach, Calif.-based provider of outsourced radiology, oncology and interventional services, for $13.25 per share in cash. www.alliancehealthcareservices-us.com

• YPF, Argentina's state-run oil company, has submitted a bid for Royal Dutch Shell's refinery and gas station operations in Argentina, according to Reuters. http://reut.rs/2p0Qf9d

Fundraising

Freestyle Capital has closed its fourth early-stage VC funding with $90 million in capital commitments. The San Francisco-based firm also promoted Jenny Lefcourt to general partner. http://tcrn.ch/2oRERwZ

• One Rock Capital Partners has closed its second mid-market private equity fund with $964 million in capital commitments. www.onerockcapital.com

• SV Life Sciences, a longtime Boston-based venture capital and growth equity firm, has renamed itself SV Health Investors. It also has closed its sixth fund with $400 million in capital commitments.

• Tokio Marine Capital, a Japanese middle-market buyout firm, has closed its fifth fund with around $466 million in capital commitments. http://bit.ly/2pozLUX

It's Personnel

• James Liu has joined law firm Dorsey & Whitney as a Shanghai-based of counsel focused on M&A. He previously was a partner with Jincheng, Tongda & Neal. www.dorsey.com

• Brent Williams and Brendan Murphy have joined mid-market investment bank Lincoln International as managing directors in the firm's special situations group (Williams will serve as co-head of the group). Both previously were with Teneo Capital. www.lincolninternational.com

Final Numbers: Africa private equity deals (2011-2016)
Dan Primack