Oct 17, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

WeWork's future may be determined by two men, neither of whom are its new co-CEOs.

  • Per Reuters: WeWork directors Bruce Dunlevie (Benchmark) and Lew Frankfort (ex-CEO of Coach) will serve as a special board committee to consider $5 billion rescue packages submitted by SoftBank and JPMorgan.

The idea is to "ring-fence" the board against undue influence by SoftBank, which has two director seats. It also knocks out former CEO Adam Neumann, who continues to serve as WeWork's chairman.

  • This is the part where we note that Benchmark helped SoftBank boot Newmann in the first place, so its independence from the Japanese giant is a bit ambiguous.

As we previously reported, WeWork's money is running short. Expect this to be wrapped up by Halloween.

🧱 Debt wall: U.S. companies have a whopping $1.18 trillion of leveraged loans on their books, but relatively little of it is set to mature in the next two years.

  • Only around $150 billion comes due before the end of 2022, per S&P LCD.
  • Approximately $200 billion matures in 2023, and then both 2024 and 205 breach the $300 billion mark.
  • The current leveraged loan default rate is 1.43%.

New direction: The FT today reports that the SEC is beginning to take a closer look at direct listings as an alternative to IPOs.

  • Direct listings already are permitted. The trouble is that they only can be used to float shares held by insiders, rather than allowing the company itself to sell for the purpose of fundraising. Go deeper.
  • One workaround proposed by law firm Latham & Watkins, which had a representative meet recently with the SEC, would let companies fundraise just before the direct listing, at a discount to the public price. That technically solves the primary capital piece, but without lockups would codify the same sorts of pricing asymmetries that direct listings are designed to eliminate.

PE politics: 65% of limited partners in private equity funds believe that President Trump will be reelected, per a survey of more than 60 LPs by placement agency Eaton Partners. Another 30%, split evenly, expect either Elizabeth Warren or Joe Biden to end up in the Oval Office.

🎬 That's a wrap: Endeavor Group, the Hollywood talent agency and live events company led by Ari Emmanuel, withdrew its IPO registration yesterday, three weeks after postponing an offering that was originally expected to raise more than $600 million.

  • The move lets Endeavor out of its quiet period, and guarantees that it won't restart the IPO process until at least 2020.
  • Endeavor hoped being public would better facilitate acquisitions, so odds now are that it would tap the private markets for anything large (as it did when buying UFC in 2016). The float also would have helped Endeavor cut into its debt-load, which now will be just nibbled away at via organic growth.

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Source: Giphy

The Federal Communications Commission approved T-Mobile's proposed $26.5 billion takeover of Sprint, on a partisan 3-2 vote.

  • Why it's the BFD: This was the final regulatory hurdle for a merger that would reshape America's mobile landscape, following Justice Department approval in July, although it still faces significant court challenges from 16 states. Or, put another way, yet another court confrontation between the Trump administration and state attorneys general.
  • Bottom line: Proponents of the deal argue it it will create more viable competition for the AT&T/Verizon duopoly, and accelerate 5G development and deployment. Opponents, including two Democratic FCC commissioners, contend that fewer national carriers will result in higher prices.
Venture Capital Deals

Pensando, an edge computing startup aimed at data centers, raised $145 million in Series C funding co-led by HP Enterprise and Lightspeed Venture Partners. http://axios.link/rYYJ

Pendo, a Raleigh, N.C.-based customer analytics platform, raised $100 million in Series E funding at a $1 billion valuation. Sapphire Ventures led, and was joined by General Atlantic, Tiger Global and return backers Battery Ventures, Meritech Capital, FirstMark, Geodesic Capital, and Cross Creek. http://axios.link/btBu

Canva, an Australian design software company, raised $85 million at a $3.2 billion valuation from Bond, General Catalyst, Bessemer Venture Partners, Blackbird, and Sequoia China. http://axios.link/gzks

Galileo Financial, a Salt Lake City-based provider of back-end software for fin-tech companies, raised $77 million from Accel. http://axios.link/yvnD

Invoca, a Santa Barbara, Calif.-based provider of call tracking and conversational analytics software, raised $56 million. H.I.G. Growth and return backer Upfront Ventures co-led, and were joined by Accel and Morgan Stanley. http://axios.link/3hLy

MyGate, an Indian provider of security management software for guard-gated properties, raised $56 million in Series B funding from Tencent, Tiger Global, JS Capital, and return backer Prime Venture Partners. http://axios.link/h9T9

🚑 Curiox Biosystems, a Singapore-based bioinstrumentation startup, raised $15 million in Series B funding from KB Investment, IMM Investment, Quad Investment, HB Investment, DAYLI Investment, and SV Investment. http://axios.link/JKjJ

Winnow, a UK-based maker food waste tracking technology for commercial kitchens, raised $12 million in Series B funding from Ingka Group, Mustard Seed, Circularity Capital, D:Ax, and The Ingenious Group. http://axios.link/NT6J

3DSignals, an Israeli provider of asset performance monitoring software for production floors, raised $8.5 million in Series A funding. Mercura Capital led, and was joined by return backers SOMV and Grove Ventures. http://axios.link/Zn98

TruTag, a Hawaii-based maker of edible barcodes for authenticating food and medical products, raiswd $7.5 million in Series C funding co-led by Pangaea Ventures and Happiness Capital. http://axios.link/bhYT

🚑 Versameb, a Swiss developer of RNA-based drugs, raised $6.5 million in Series C funding led by Novartis Venture Fund. www.versameb.com

Private Equity Deals

The Carlyle Group completed its purchase of a 37% stake in Spanish oil company Cepsa from Mubadala Investment Co. http://axios.link/If4q

Cornell Capital invested in Lorom, a Taipei-based specialized cable manufacturing and assembly company. www.lorom.com

GHK Capital Partners acquired Dura-Supreme, a Howard Lake, Minn.-based maker of semi-custom and custom cabinetry. www.durasupreme.com

LLR Partners and Parthenon Capital acquired DaySmart Software, an Ann Arbor, Mich.-based provider of business management software to the spa/salon, pet care, and tattoo markets, from SFW Capital Partners. www.daysmart.com

🚑 Lone Star Funds is considering a takeover bid for Australian building materials company Boral (ASX: BLD), which could fetch A$6 billion, per The Australian. www.boral.com.au

🚑 Revelstoke Capital Partners invested in The Care Team, a Farmington Hills, Mich.-based provider of home health and hospice services. www.careteammi.com

Rockbridge Growth Equity invested in White Glove, a Birmingham, Mich.-based seminar marketing and planning company. http://axios.link/E7a4

Whitney, Bradley & Brown, a Reston, Va.-based portfolio company of H.I.G. Capital, acquired BRTRC Federal Solutions, a Vienna, Va.-based provider of support services to U.S. military and intelligence agencies. www.wbbinc.com

Public Offerings

Baladna, a Qatari dairy business, is prepping an IPO that could raise $392 million. http://axios.link/AOzU

BellRing Brands, a St. Louis-based protein bar and shake company being spun out of Post (NYSE: POST), raised $480 million in its IPO. It priced 34.3 million shares at $14 (below $16-$18 range, and will trade on the NYSE (BRBR). The company reports $96 million of net income on $640 million in revenue for the first nine months of 2019.

Liquidity Events

Brentwood Associates agreed to sell The Marshall Retail Group, a Las Vegas-based airport and resort retailer, to WH Smith (LSE: SMWH) for $400 million. http://axios.link/JyLi

More M&A

🚑 Alexion Pharma (Nasdaq: ALXN) agreed to buy Achillion Pharma (Nasdaq: ACHN) for $930 million upfront, or $6.30 per share (72.6% premium over Tuesday’s closing price), plus possible earnouts. http://axios.link/SFUY

🚑 Baxter International (NYSE: BAX) is in talks to pay between $350 million and $400 million to buy the surgical products group Seprafilm from Sanofi (Paris: SAN), per Bloomberg. http://axios.link/RSY9

Centrica (LSE: CNA) hired Goldman Sachs to find a buyer for its control stake in E&P business Spirit Energy, which could fetch more than $2 billion, per Bloomberg. http://axios.link/4Jnz


Idinvest of German raised €350 million for its third mid-market private equity fund. http://axios.link/mtno

Sofinnova Partners, a Paris-based life science VC firm, raised 333 million for its ninth fund. www.sofinnovapartners.com

It's Personnel

Citigroup named Peter Babej as CEO of Asia-Pacific operations. He previously led its financial institutions group. http://axios.link/9UdL

KCRise Fund, a Kansas City-based VC firm, promoted Edward Frindt to partner. www.kcrisefund.com

Final Numbers
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Data: Baker McKenzie; Chart: Naema Ahmed/Axios
Dan Primack

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