Apr 14, 2020

Axios Pro Rata

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Top of the Morning

Illustration: Sarah Grillo/Axios

Over 70% of the federal government's $349 billion small business bailout program is already spoken for, as Democrats and Republicans continue to squabble over an expansion that both sides believe is necessary.

State of play: There is still a lot we don't know about how the existing program is operating, and possibly won't until the next pot of money is emptied, Axios' Alayna Treene and I report.

The big question: Will there be a public database of PPP loans, which could help provide insights on efficacy and checks on fraud?

  • The Small Business Administration does typically disclose granular data for the category of loans under which PPP falls — including the number of jobs supported.
  • But the databases are static spreadsheets, not dynamic or easily searchable, and only updated annually. If that method is continued, we wouldn't learn about PPP recipients until early 2021.
  • Axios repeatedly asked SBA officials if a PPP-specific database will be forthcoming (and when), but didn't receive a direct answer.

Plus, it also could be helpful to know details of denied applications, as well as lender-approved ones that later lose SBA guarantees. Such sunlight could discourage bad actors who divert lender attention away from legitimate applicants, not to mention expose flaws whereby applicants are unfairly denied.

  • For example, there is widespread talk of venture capital and private equity fund managers applying for PPP loans, even though management fee cashflows should not have been negatively impacted by the coronavirus.

We also don't know how much money is actually out the door.

  • The SBA this morning disclosed that over 1 million applications have been approved, totaling over $247 billion from more than 4,600 lenders.
  • Crickets when it comes to how much of that $247 billion is actually in small business bank accounts, thus helping to forestall layoffs and missed financial obligations like paying utility bills. Lenders have 10 calendar days to fund from the date of loan approval, but it's unclear if things are moving faster or slower (let alone how specific lenders are performing).

The bottom line: This speed of this massive program, from conception to execution, has been lightening quick. Data disclosure, however, isn't keeping pace.


Illustration: Sarah Grillo/Axios

The XFL, a pro football league created by World Wrestling Entertainment boss Vince McMahon, yesterday filed for Chapter 11 bankruptcy protection. It hopes to find a buyer for some of its assets.

  • Why it's the BFD: This reflects how the coronavirus pandemic has devastated the live sports industry, with sources suggesting that other shoestring leagues could soon meet a similar fate.
  • What we learned: The XFL has a dual-class stock structure, through which McMahon held 100% of the Class A shares and WWE held 23.5% of the Class B interests. WWE had previously disclosed receiving an equity interest in exchange for the XFL name and unspecified shared services, but claimed to have written off the entire investment value by mid-2018.
  • The bottom line: "The XFL got off to a hot start from a viewership perspective, drawing 3.12 million viewers in Week 1. By the time Week 5 rolled around, that number had been cut in half. Still, there were signs of life. The St. Louis BattleHawks had reportedly sold 45,000 tickets to their next game before the league shut down due to the coronavirus outbreak." — Darren Rovell, Action Network
Pro Rata for Kids

Today's project is for your kids to make a "monster" out of a tissue box (or other sort of box, with an oval cut into it). Just do a Google image search for "tissue box monster" to see what I'm talking about.

  • Per usual, please send me pics of what they come up with. Bonus points if their monster has a name!

Yesterday, I asked your kids to develop a brand new snack. Here are some new things to try at home:

Nana’s CheRamen, by Emma (age 9). Her dad says it combines instant ramen and shredded cheese, inspired by her grandmother (Nana) who she admires as a wonderful cook.
Toby (and his dog) realized that apple slices deserve rainbow sprinkles.
Vivian (age 7) created a crafty Curger. And apologies to her brother Thomas (12), for running out of space to include his drawing of the Moreo, which stuffs M&Ms inside of an Oreo cookie.
Venture Capital Deals

🚑 54gene, an African genomics startup, raised $15 million in Series A funding led by Adjuvant Capital. http://axios.link/WUSQ

Crop Enhancement, a San Jose, Calif.-based developer of products for improving crop yield, raised $8 million in Series B funding. Spruce Capital Partners led, and was joined by 1955 Capital, Phoenix Venture Partners, Cavallo Ventures, Davinia Investments, and Alexandria Ventures. http://axios.link/QodH

Frank, a New York-based financial aid platform for students, raised $5 million from Gingerbread Capital, Aleph, and Marc Rowan. http://axios.link/ZLLl

Kumu Holdings, a Philippines-based live-streaming startup, raised $5 million in Series A funding. Openspace Ventures led, and was joined by Kickstart Ventures, ABS-CBN, Gobi-Core Philippine Fund, Summit Media, and Foxmont Capital Partners. http://axios.link/jLPk

MightyJaxx, a Singapore-based maker of licensed collectibles, raised around $3.2 million. KB Financial Group led, and was joined by Greycroft and SG Innovate. http://axios.link/Hv5e

Private Equity Deals

🚑 IntegriChain, a Philadelphia-based drug distribution and payment software company backed by Accel-KKR, agreed to buy the life sciences unit of Tennessee-based Cumberland Life Sciences. http://axios.link/fMlh

Lineage Capital acquired a minority stake in City Rise, a Lodi, Calif.-based traffic management company. www.cityrisesafety.com

Montage Partners invested in URW, a Phoenix-based vegetation and landscape management company for government agencies, railroads, and solar energy operators. www.unitedrightofway.com

Stone Point Capital and Further Global completed their $4.2 billion purchase of Duff & Phelps, a New York-based corporate advisor and valuation firm, from Permira. www.duffandphelps.com

Wynnchurch Capital acquired the assets of Western Forge & Flange, a Cleveland, Texas-based manufacturer of forgings and flanges. www.western-forge.com

Liquidity Events

🚑 The Wicks Group completed its $190 million sale of SCI Solutions, a Seattle-based provider of health care patient access and enablement software, to R1 RCM (Nasdaq: RCM). www.scisolutions.com

More M&A

China is considering a merger of its two largest brokerage firms, Citic Securities and CSC Financial, per Bloomberg. http://axios.link/oxkN

Cellnex (Madrid: CLNX) agreed to buy the telecom towers unit of Portuguese mobile operator NOS for €375 million. http://axios.link/qh9C

LOT, a Polish airline, walked away from its agreement to buy German airline Condor from insolvent British travel company Thomas Cook. http://axios.link/o31H

SAP (NYSE: SAP) is considering a sale of its digital interconnect business, per Bloomberg. http://axios.link/s9fc


Clearlake Capital Group raised more than $7 billion for its sixth fund. www.clearlake.com

General Atlantic and Iron Park Capital Partners are raising $5 billion for a joint fund that will provide structured equity and debt financing to “previously-healthy companies now facing distress because of the pandemic,” per the WSJ. http://axios.link/Y3Fk

Lightspeed Venture Partners said that it has raised $890 million for its thirteenth flagship fund, plus $1.83 billion for its fourth “select” fund and $1.5 billion for a new opportunity fund. www.lsvp.com

It's Personnel

Jessica Brennan joined Onex Corp. as a New York-based managing director and head of client and product solutions. She previously was an IR managing director with The Carlyle Group. www.onex.com

Matt Gullen joined H.I.G. Capital as a managing director, per his LinkedIn page. He previously was a partner with Comvest Partners. www.higcapital.com

Final Numbers
Reproduced from PwC CFO Pulse Survey; Chart: Axios Visuals

Go deeper: Corporate America sees recovery moving further away

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