Axios Pro Rata
March 18, 2021
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Top of the Morning
The American Federation of Teachers is aiming its sights on private equity, six years after issuing a report on hedge funds that led to widespread divestitures.
Why it matters: Public teacher pension funds are major investors in private equity funds. The California State Teachers' Retirement System, for example, has over $30 billion allocated to the asset class.
Driving the news: AFT and the Americans for Financial Reform Education Fund today will issue a 19-page report titled "Lifting the Curtain on Private Equity," arguing that teacher pension funds should reexamine their private equity investment strategies.
- It's reminiscent of the 2015 hedge fund report, particularly in its analysis that private equity doesn't provide the sort of after-fee outperformance that justifies the lack of liquidity.
- It also argues that teacher pensions should demand more fee transparency, improve their own benchmarking (risk adjusted PME>IRR) and take into account how fund behavior impacts other unionized employees and local community economies.
Policy: AFT's report also says that pensions should: "Consider supporting federal legislation, such as the Stop Wall Street Looting Act, that would mitigate some of the investment risks associated with private equity."
- That's the bill first introduced in 2019 by Sen. Elizabeth Warren (D-Mass.), who is quoted in AFT's press release.
- Warren's legislation, however, isn't primarily aimed at improving private equity's financial performance (although it does include several laudable reforms). It's instead aimed at kneecapping private equity by, among other things, making buyout funds liable for leveraged financing.
- By including this recommendation, AFT is sending something of a mixed message to its pension fiduciaries: You aren't getting enough financial performance from private equity, and you should support something that may make private equity's financial performance even worse.
In the months following AFT's 2015 hedge fund report, public pensions in such places as New Jersey, Illinois and Rhode Island made changes to their hedge fund investment practices. New York City bailed on hedge funds entirely.
- Certain public pensions, including in California and Chicago, also took divestment actions after a 2019 AFT report on private prisons.
Reality check: Local pension trustees are fiduciaries, which means they're likely to stick with private equity if they believe their own portfolio performance is an outlier to AFT's narrative. Remember, everyone's top quartile...
The bottom line: AFT isn't telling local pension fiduciaries to exit private equity. But it sure is lighting the path.
Vine Energy, a Blackstone Group-backed natural gas E&P operating in Louisiana's Haynesville Basin, raised $301 million in its IPO. The company priced 21.5 million shares at $14, versus plans to offer 18.7 million shares at $16–$18.
- Why it's the BFD: Vine is the first U.S. shale producer to go public since 2017.
- Details: The company will list on the NYSE (VIE). It reports a $252 million net loss on $349 million in revenue for 2020, versus a $24 million profit on $587 million in revenue for 2019.
- Bottom line: "The IPO miss underscores how much investor appetite for the cash-intensive shale industry has waned after years of poor returns and a pandemic-driven market crash in 2020. While oil and natural gas prices have rebounded since last year, Wall Street has little interest in seeing a shale boom once again." — Michael Tobin and Sergio Chapa, Bloomberg
Venture Capital Deals
• Yotpo, a New York-based e-commerce marketing platform, raised $230 million in Series F funding at a $1.4 billion valuation. Bessemer Venture Partners and Tiger Global co-led, and were joined by ClalTech Investment, Coin Ventures, Hanaco, Vertex Ventures and Vintage Investment Partners. http://axios.link/GmOu
• SecurityScorecard, a New York-based cybersecurity ratings platform, raised $180 million in Series E funding. Silver Lake Waterman, T. Rowe Price, Kayne Anderson Rudnick and Fitch Ventures were joined by insiders Evolution Equity Partners, Accomplice, Riverwood Capital, Intel Capital, NGP Capital, AXA Venture Partners, GV and Boldstart Ventures. http://axios.link/UxFK
🚑 Vaccitech, a British biotech that helps Oxford/AstraZeneca develop their COVID-19 vaccine, raised $168 million in Series B funding at a $425 million post-money valuation. M&G Investment Management led, and was joined by Gilead Sciences, Tencent and the Monaco Constitutional Reserve Fund. http://axios.link/ciqS
• Fireblocks, a New York-based crypto infrastructure provider, raised $133 million in Series C funding. Coatue, Ribbit Capital and Stripes co-led, and were joined by BNY Mellon, SVB and insiders Paradigm, Galaxy Digital, Swisscom Ventures, Tenaya Capital and Cyberstarts Ventures. www.fireblocks.com
• PolicyBazaar, an Indian lending marketplace and digital insurer, raised $75 million led by Falcon Edge Capital. An earlier Bloomberg report was that the company, previously backed by SoftBank Vision Fund and Tiger Global, was seeking to raise $250 million in pre-IPO funding at a $2 billion-plus valuation. http://axios.link/IOHm
🚑 Happify Health, a New York-based digital platform for improving mental and physical health, raised $73 million in Series D funding. Deerfield Management led, and was joined by Omega Capital Partners and ION Crossover Fund. http://axios.link/27wN
🚑 Aktis Oncology, a Cambridge, Mass.-based developer of targeted radiopharmaceuticals for treating solid tumors, raised $72 million in Series A funding. MPM Capital, EcoR1 Capital and Vida Ventures co-led, and were joined by Octagon Capital, TCG Crossover, Novartis and Bristol Myers Squibb. www.aktisoncology.com
🚑 Bigfoot Biomedical, a Milpitas, Calif.-based developer of insulin delivery and dosing devices, raised $57 million in equity and debt funding from Madryn Asset Management. www.bigfootbiomedical.com
• Shelf Engine, a Seattle-based inventory management platform for grocers, raised $41 million in Series B funding. General Catalyst led, and was joined by GGV Capital, Foundation Capital, 1984 Ventures, Correlation Ventures, Founders’ Co-op, Soma Capital, Firebolt Ventures and Initialized Capital. http://axios.link/20Da
• Cubyn, a Paris-based ecommerce logistics outsourcer, raised €35 million co-led by Eurazeo and Bpifrance. http://axios.link/0urV
• Secureframe, a San Francisco-based cybersecurity compliance startup, raised $18 million in Series A funding. Kleiner Perkins led, and was joined by Gradient Ventures and Base10 Partners. www.secureframe.com
• Seon, a Hungarian business fraud prevention startup, raised $12 million in Series A funding. Creandum led, and was joined by PortfoLion. http://axios.link/v2k4
• Asteya, a Miami-based income insurance startup led by Alex Williamson (ex-chief brand officer for Bumble), raised $10 million. Backers include I2BF Ventures, Capital Factory, Cap Meridian Ventures, Northstar Ventures, Atrum and Whitney Wolfe Herd. http://axios.link/m6Fv
• Oso, a New York-based provider of authorization solutions for developers, raised $8.2 million in Series A funding. Sequoia Capital led, and was joined by SV Angel, Company Ventures and Highland Capital. http://axios.link/OlCe
• Edge Pathways, a New York-based STEM education platform, raised $8 million in seed funding from First Round Capital, Emerge Education and Rethink Education. www.edgepathways.com
• Cymbio, an Israeli "brand-to-retailer connectivity" startup, raised $7 million in Series A funding led by Vertex Ventures. http://axios.link/Of0C
• Pixxel, a hyperspectral imaging startup with offices in LA and India, raised $7.3 million in seed funding from backers like Techstars and Omnivore VC. http://axios.link/EfbN
• Diem, a London-based debit card startup, raised $5.5 million in seed funding led by Fasanara Capital. http://axios.link/GQmV
⚡Noon Energy, a Palo Alto-based developer of long-duration energy storage solutions, raised $3 million in seed funding. Prime Impact Fund led, and was joined by Collaborative Fund, At One Ventures and Xplorer Capital. http://axios.link/nnxo
• Pledge, a Venice, Calif.-based fundraising platform, raised $3 million in seed funding. Maven Ventures led, and was joined by Designer Fund, Mantis VC, MS&AD Ventures, Randi Zuckerberg and Bill Tai. www.pledge.to
• Copy.ai, a Memphis-based developer of copywriting tools for business customers, raised $2.9 million. Craft Ventures led, and was joined by Atelier Ventures and Sequoia Capital. http://axios.link/66TM
• Saleor, a headless e-commerce platform with offices in Poland and the U.S., raised $2.5 million in seed funding led by Cherry Ventures. http://axios.link/D1OR
🎨 Eazel, a New York-based virtual art gallery platform, raised $1.5 million in Series A funding from Seoul-based InterVest. www.eazel.net
• Even, a Denver-based provider of solutions for medication-induced nutrient depletions, raised $1.5 million in seed funding from Align Ventures, Spring Street Group and GAN Ventures. www.feeleven.com
• Kitopi, a Dubai-based cloud kitchen company, is raising between $150 million and $200 million for a Southeast Asia push, per Reuters. It previously raised $90 million from firms like Knollwood Investment Advisory and Lumia Capital. http://axios.link/DD6D
• NotCo, a Chilean plant-based milk producer, is seeking to raise new funding at a $1 billion valuation, per Bloomberg. It previously raised $118 million from backers like Bezos Expeditions, L Catterton, General Catalyst, Maya Capital, Future Positive, SOSV and Kaszek Ventures. http://axios.link/YM1L
Private Equity Deals
• Accel-KKR invested in Kimble Applications, a London-based provider of professional services automation solutions. www.kimbleapps.com
• Altamont Capital Partners acquired certain assets of Wave Electronics, a Houston-based distributor of connected home, AV and residential security products, from Kingswood Capital Management. www.wave-electronics.com
• Blue Point Capital Partners acquired Weaver Leather, a Mt. Hope, Ohio-based maker of leather products for such end markets as equine, livestock and construction. www.weaverleather.com
• Eurazeo agreed to buy a majority stake in French wealth management and provident insurance firm Groupe Premium at a €290 million valuation. http://axios.link/AUVB
• Golden Gate Capital agreed to buy Securly, a San Jose, Calif.-based developer of web surfing safety products for kids. Securly had raised $35 million from firms like Owl Ventures, Defy Partners, InnoSpring, ZhenFund, Salesforce Ventures and D20 Capital. www.securly.com
• HSBC is in talks to sell its French retail banking unit to MyMoneyGroup, a portfolio company of Cerberus Capital Management. http://axios.link/BL98
• The Jordan Co. agreed to buy a majority stake in AIT Worldwide, an Itasca, Ill.-based freight forwarder, from Quad-C Management. www.aitworldwide.com
• Protos Security, a Daleville, Va.-based portfolio company of Southfield Capital, acquired Mulligan Security, a New York-based provider of security and fire safety professionals. www.protossecurity.com
• The Rise Fund, an affiliate of TPG, agreed to buy a $200 million stake in the mobile money unit of Airtel Africa, valued at $2.65 billion. http://axios.link/weIv
• Vista Equity Partners agreed to buy ARCOS, a Columbus, Ohio-based provider of resource management software, from The Riverside Company. www.arcos-inc.com
• The Duckhorn Portfolio, a Napa Valley luxury wine producer backed by TSG Consumer Partners, raised $300 million in its IPO. The company priced at $15 (within range), for a fully diluted market value of $1.8 billion. Duckhorn will list on the NYSE (NAPA) and reports $32 million of net income on $270 million in revenue for its fiscal year ending last July. http://axios.link/9Gmk
• Dmall, a Chinese fresh food e-commerce platform, hired BofA, Goldman Sachs and JPMorgan for a U.S. IPO that could fetch over $500 million, per Reuters. Backers include Industrial Bank Co., Tencent, Lenovo and IG Capital. http://axios.link/oyCT
• Tuya, a Chinese developer of IoT and voice AI platforms, raised $915 million in its IPO. The company priced at $21 (above $17–$20 range), will list on the NYSE (TUYA) and had raised over $230 million in VC funding from firms like Future Fund (Australia), NEA, China Broadband Capital, CICC Global Bridge Capital, Quadrille Capital, and C.M. Capital Advisors. http://axios.link/BeKc
• OfferPad, a Chandler, Ariz.-based online platform for home-sellers, agreed to go public at a $3 billion implied valuation via Supernova Partners Acquisition (NYSE: SPNV), a SPAC led by former Zillow CEO Spencer Rascoff. Offerpad raised around $450 million from firms like LL Funds. http://axios.link/AchT
• Acropolis Infrastructure Acquisition, an infrastructure SPAC formed by Apollo Global Management, filed for a $400 million IPO. http://axios.link/uJW8
• CHW Acquisition, a consumer products and retail SPAC co-led by GlaxoSmithKline brand manager Jonah Raskas, filed for a $100 million IPO. http://axios.link/ASKw
• DILA Capital Acquisition, a Latin America tech SPAC, filed for a $50 million IPO. http://axios.link/Tgai
• Falcon Capital Acquisition II, a media SPAC formed by Alan Mnuchin’s Ariliam Group, filed for a $400 million IPO. http://axios.link/3KoS
• Fifth Wall Acquisition II, a prop-tech SPAC formed by Fifth Wall, filed for a $150 million IPO. http://axios.link/phTz
• ICG Hypersonic Acquisition, prop-tech SPAC formed by Island Capital Group, filed for a $250 million IPO. http://axios.link/RIzf
⚡ Keter1 Acquisition, an Israeli tech SPAC led by Zeev Ventures’ Oren Dobronsky, filed for a $250 million IPO. http://axios.link/0Qt4
• Red Cell DRM Acquisition, an electrical grid transition SPAC, filed for a $250 million IPO. http://axios.link/DvRO
• Stellaris Growth Acquisition, a data centers SPAC led by Ronald Felt (ex-BNP Paribas), filed for a $128 million IPO. http://axios.link/0L9Z ⚡
• II-VI (Nasdaq: IIVI) raised its takeover offer for Coherent, a Santa Clara, Calif.-based maker of lasers and related products, to $7 billion. That tops a sweetened $6.9 billion bid from Lumentum (Nasdaq: LITE) and a $6 billion offer from MKS Instruments (Nasdaq: MKSI) http://axios.link/rC9m
⚡National Grid (NYSE: NGG) agreed to buy WPD, England's largest electricity distribution business, from PPL (NYSE: PPL) for $10.9 billion. National Grid also agreed to sell Rhode Island utility Narragansett Electric Co. to PPL for $3.8 billion. http://axios.link/VL3z
• Meka Asonye joined First Round Capital as an investment partner. He previously was a sales exec with MixPanel and Stripe. http://axios.link/1Q8W
• Doug Keller joined Dyal Capital Partners as an SVP, per his LinkedIn. He previously was head of private wealth and defined contributions at Pantheon Ventures. www.dyalcapital.com
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