Sep 3, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Sarah Grillo/Axios

Himalaya Media launched in February as a San Francisco-based podcasting startup that had raised an eye-popping $100 million. But it didn't really have that much money in hand, nor were all the stated investors actually on board, Axios' Sara Fischer and I report.

Why it matters: For startups, funding equals credibility. The publication of your inaugural press release is not the right time to fake it 'til you make it.

What the press release said:

The San Francisco-based startup has raised $100M from General Atlantic, SIG and Ximalaya FM and will use this to support the tech innovation, marketing, and content production and acquisition that are driving this launch.  

What actually happened:

General Atlantic never invested in Himalaya Media, according to a firm spokeswoman. Instead, it previously invested in Ximalaya FM, the Chinese podcasting platform that Himalaya also lists as an investor. (Neither SIG nor Ximalaya FM responded to requests for comment, even to confirm that they had invested.) There are no relevant SEC filings.

  • Once Axios began making calls, Himalaya pulled down the press release (although versions of it remain elsewhere on the Internet).
  • Peter Vincer, Himalaya's original head of partnerships and marketing, says that Ximalaya FM is Himalaya's majority owner, although that was never disclosed in the press release or in subsequent media coverage. (Vincer now leads a spin-out podcast studio, HiStudios, that is controlled and funded by Himalaya.)

Himalaya CEO Yu Wang acknowledged to Axios that General Atlantic didn't invest directly in his company, and said he removed the press release because "some of the language... was a little bit confusing."

  • He also said the $100 million was a three-year commitment mostly from Ximalaya FM, of which Himalaya so far has received only around $10 million.
  • Wang insisted there are no financial or timing milestones that Himalaya must hit to receive the remaining money, but wouldn't say how disbursements are determined.
  • He volunteered to show Axios the equity commitment letter, which he claimed to have in front of him, so long as we didn't publish it. We agreed.
  • The letter never came. Instead, nearly a day later, we were told to direct all further questions to a representative of Ximalaya FM. We emailed that representative, but she never replied.

The bottom line: There is a history of Chinese startups overstating fundraises, but it is highly unusual for a U.S.-based company to do so.

The bottom line: Many media outlets — including Axios, Variety, and Fast Company — reported on the supposed deal. Today, however, we know that some of the initial information was false, and it's impossible to validate the $100 million figure.

Also...

Last Friday we discussed the controversy surrounding David Drummond, Alphabet's chief legal officer and head of corporate development.

  • Background: Drummond has copped to once fathering a child with a direct subordinate at Google, Jennifer Blakely, but insists that she was wrong in publicly alleging that Drummond also had relationships with other Google/Alphabet employees.
  • Drummond's statement: “Other than Jennifer, I never started a relationship with anyone else who was working at Google or Alphabet. Any suggestion otherwise is simply untrue."

The word "started" is doing a lot of work.

Drummond this past weekend got married to someone who once worked in his legal department at Google, per multiple sources and a LinkedIn profile timeline. The woman then left Google for around three years, which is when Drummond tells people they began dating. She later returned to Google's legal department, by which point Drummond was technically with Alphabet.

A spokesman for Alphabet/Google declined comment.

The BFD
Source: Giphy

EQT Partners, a Sweden-based private equity firm, formally announced plans to IPO on the Nasdaq Stockholm.

  • Why it's the BFD: It would be the largest European private equity firm listing in over two decades, and the first major global buyout firm listing since The Carlyle Group in 2012.
  • Details: EQT says it has around €40 billion in fee-paying AUM, spread over 19 active funds. It plans to raise at least €500 million via a 20% float, not including possible stock sales by insiders like the founding Wallenberg family.
  • Bottom line: This has been telegraphed for months, but it's still a bit surprising that EQT is going the IPO route. Many publicly-traded private equity firms have seen their stock prices stagnate, thus sparking a cottage industry of private stake sales.
Venture Capital Deals

Juul, the San Francisco-based e-cigarette giant, disclosed in an SEC filing that its new convertible debt sale has expanded from $325 million to $785 million. As we reported before, there isn't currently an equity-priced fundraising process, but these notes likely would roll in if/when that round does take place.

OpenGov, a Redwood City, Calif.-based provider of government performance management software, raised $51 million in Series D funding. Weatherford Capital and 8VC co-led, and were joined by return backer Andreessen Horowitz. http://axios.link/6HdR

Credit Sesame, an online credit and loan management platform, raised $43 million. ATW Partners led, and was joined by return backers Menlo Ventures, Inventus Capital, Globespan Capital, IA Capital Groups, Symantec, Capital One Ventures, and Stanford University. http://axios.link/YPD8

Cazoo, a London-based online car-buying platform, raised £25 million from DMG Ventures, Stride.VC, Octopus Ventures and Entrée Capital. It has now raised more than £55 million, but hasn’t yet launched. http://axios.link/cG1c

Joblift, a Germany-based job search and employment platform, raised €15 million in Series B funding from RedLine, TruVenturo, DN Capital, Cherry Ventures, Btov, and Picus. http://axios.link/Q34K

🚑 GNA Biosolutions, a German developer of point-of-care molecular diagnostic devices, raised $13.5 million. GreyBird Ventures led, and was joined by Wachtumsfonds Bayern, SHS Capital, Robert Bosch VC, UVC Partners, Mey Capital Matrix, KfW, and btov Partners. http://axios.link/2jjs

Baton Systems, a San Francisco-based provider of inter-bank payments infrastructure, raised $12 million in Series A funding. Trinity Ventures led, and was joined by Alsop Louie and Commerce Ventures. http://axios.link/gefT

🚑 Baze, a Swiss provider of at-home blood testing devices, raised $6 million from Nature’s Way. http://axios.link/PvnO

Lengoo, a Germany-based online translation platform, raised €6 million in Series A funding. Redalpine led, and was joined by seed backers Creathor Ventures and Piton Capital. http://axios.link/G5GE

🚑 Robocath, a French developer of robotic systems for treating vascular diseases, raised €5 million from Go Capital, NCI, Normandie Participations, M Capital, Supernova Invest, Normandie Innovation, Crédit Agricole, and Unexo. http://axios.link/wZdE

Spotawheel, an online auto dealer in Greece and Poland, raised €5 million in equity and debt funding from VentureFriends and Velocity Partners. http://axios.link/OuHn

Private Equity Deals

AE Industrial Partners acquired Triman Industries, a West Berlin, N.J.-based supply chain and repair management business for the military aftermarket. www.trimanindustries.com

Avista Capital Partners acquired GCM, a Union City, Calif.-based outsourced manufacturer of high-precision components and assemblies, from May River Capital. www.gogcm.com

🚑 The Blackstone Group and Cinven are among those considering offers for the medical equipment unit of Smiths Group (LSE: SMIN), per Bloomberg. http://axios.link/IoUa

CPS Performance Materials, a Bound Brook, N.J.-based portfolio company of Arsenal Capital Partners, acquired Ambler, Penn.-based GEO Specialty Chemicals. www.geosc.com

H.I.G. Capital acquired Nadir Figueiredo Indústria e Comércio, a Brazilian tableware maker, for approximately $239 million. www.nadirfigueiredo.com.br

Valeo Foods, a Dublin-based portfolio company of Capvest Partners, agreed to buy the European potato chips business of Campbell Soup Co. (NYSE: CPB) for $80 million. http://axios.link/2tAL

Waud Capital Partners acquired Health & Safety Institute, a Eugene, Ore.-based health and safety compliance and training platform, from The Riverside Company. www.hsi.com

Public Offerings

🚑 10x Genomics, a Pleasanton, Calif.-based genomics company, set IPO terms to 9 million shares at $31-$35. It would have an initial market cap of $3 billion, were it to price in the middle, and plans to trade on the Nasdaq (TXG) with JPMorgan as lead underwriter. The company reports a $14.5 million net loss on $109 million in first half 2019 revenue, and had raised $320 million in VC funding from firms like Foresite Capital (18.1% pre-IPO stake), Venrock (16.3%), Paladin Capital (11.5%), Fidelity (11.3%), Meritech Capital Partners, and SoftBank. http://axios.link/Rh5i

Cloudflare, a San Francisco-based provider of content delivery network services, set IPO terms to 35 million shares being offered at $10-$12. It would have an initial market cap of $3.23 billion, were it to price in the middle, and plans to trade on the NYSE (NET) with Goldman Sachs as lead underwriter. The company reports a $37 million net loss on $129 million in revenue for the first half of 2019, and had raised over $400 million in VC funding, from firms like Fidelity (30.9% pre-IPO stake), Pelion Ventures (9.2%), NEA (8.8%), Venrock, Union Square Ventures, and Franklin Templeton. http://axios.link/vnGr

🚑 IGM Biosciences, a Mountain View-based cancer drug developer, set IPO terms to 7.81 million shares at $15-$17. It would have an initial market cap of $412 million, were it to price in the middle, and plans to trade on the Nasdaq (IMGS) with Jefferies as lead underwriter. The pre-revenue company raised $120 million in VC funding from million in Series C funding from Redmile Group, Janus Henderson Investors, Baker Brothers, Vivo Capital, and Haldor Topsøe Holding. http://axios.link/nzRb

🚑 Satsuma Pharmaceuticals, a South San Francisco-based developer of therapies for migraines, set IPO terms to 5 million shares at $14-$16. It would have an initial market cap of $242 million, were it to price in the middle, and plans to trade on the Nasdaq (STSA) with Credit Suisse as lead underwriter. The pre-revenue company raised $74 million in VC funding from firms like RA Capital (30.2% pre-IPO stake), TPG Biotech (16.1%), Wellington Management (10%), Osage University Partners (6%), CAM Capital (5.5%), and Cormorant Asset Management (5%). http://axios.link/5zjC

Saudi Arabia replaced Energy Minister Khalid al-Falih as chairman of Aramco with sovereign wealth chief Yasir al-Rumayyan, in a move viewed as smoothing the path for Aramco's IPO. http://axios.link/LPIt

🚑 SmileDirectClub, a Nashville-based provider of at-home teeth straightening systems, set IPO terms to 58.54 million shares being offered at $19-$22. It would have an initial market cap of $7.9 billion, were it to price in the middle, and plans to trade on the Nasdaq (SDC) with JPMorgan as lead underwriter. SDC reports a $53 million net loss on $374 million in revenue for the first half of 2019, and had raised nearly $400 million in private funding from firms like Clayton, Dubilier & Rice, Spark Capital, and Kleiner Perkins Digital Growth. http://axios.link/qh4n

🚑 SpringWorks Therapeutics, a Stamford, Conn.-based developer of treatments for rare diseases and cancers, set IPO terms to 7.35 million shares at $16-$18. It would have an initial market cap of $684 million, were it to price in the middle, and plans to trade on the Nasdaq (SWTX) with JPMorgan as lead underwriter. The pre-revenue company raised $228 million in VC funding from firms like Perceptive Advisors, Tavistock Group, HBM Healthcare Investments, BVF Partners, Surveyor Capital, Samsara BioCapital, ArrowMark Partners, GlaxoSmithKline, Laurion Capital Management and return backers OrbiMed, Bain Capital, Pfizer and LifeArc. http://axios.link/hsZt

Liquidity Events

Antin Infrastructure Partners is seeking a buyer for Dutch fiberoptic network owner Eurofiber, which could be valued north of 1.5 billion, per Bloomberg. http://axios.link/B4ig

Centerbridge hired JPMorgan and Goldman Sachs to find a buyer for German parking garage manager Apcoa, which could net over €1 billion, per Reuters. http://axios.link/qXiR

Engie (Paris: ENGIE) acquired Mobisol, an African off-grid solar power company that had raised around $37 million from groups like IFC and Investec. http://axios.link/ikok

Goldman Sachs and TPG Sixth Street Partners are seeking a buyer for Australian data center operator AirTrunk, per Australia Financial Review. http://axios.link/WsWk

🚑 Vertex Pharma (Nasdaq: VRTX) agreed to acquire Semma Therapeutics, a Cambridge, Mass.-based biotech that uses stem cell-derived islets to potentially cure Type 1 diabetes, for $950 million in cash. Semma had raised $158 million in VC funding from MPM Capital, Eight Roads Ventures, Cowen Group, F-Prime Capital Partners, Arch Venture Partners, Novartis, Medtronic, T1D Fund, ORI Capital, Wu Capital, 6 Dimensions Capital and SinoPharm Capital. www.semma-tx.com

More M&A

Allen & Overy, a British corporate law firm, ended merger talks with U.S. peer O’Melveny & Myers over pricing disagreements, per the FT. http://axios.link/WSO8

Aroundtown (DE: AT1) and TLG Immobilien (DE: TLGG), both German commercial real estate companies, are considering a merger. http://axios.link/gG1N

Concho Resources (NYSE: CXO) agreed to sell its New Mexico Shelf assets to Spur Energy Partners for $925 million.

Continental (DE: CONG), a German auto parts supplier, said it will prep a sale process for its Powertrain unit, as a possible alternative to a planned listing. http://axios.link/efWn

Eminent Capital said it will oppose the $6 billion food delivery merger of Just Eat (LSE: JE), in which Eminent holds a 4.4% stake, with Takeaway.com (Amsterdam: TKWY). http://axios.link/Sy7P

J2 Acquisition (LSE: JTWO) agreed to buy APi Group, a New Brighton, Minn.-based provider of commercial life safety solutions and industrial specialty services, for around $2.9 billion. www.apigroupinc.com

🎬 Kinepolis (Brussels: KIPO) agreed to buy Michigan-based movie theater chain MJR Digital Cinemas for $152 million. http://axios.link/AyAZ

Jana Partners disclosed a 9% stake in Bloomin’ Brands (Nasdaq: BLMN), owner of Outback Steakhouse. http://axios.link/jL2S

Lloyds Banking Group (LSE: LLOY) agreed to buy a £3.7 billion UK residential mortgage portfolio from Tesco Bank. http://axios.link/Ffov

Oyo, an Indian budget hotelier valued by VCs at $10 billion, acquired Copenhagen-based data science startup Danamica for a reported $10 million. http://axios.link/mqHc

Williams Grand Prix Holdings may sell part of its engineering unit, after receiving private equity approaches, per Sky News. http://axios.link/0FW5

Fundraising

Champ Private Equity of Australia rebranded to CPE Capital. http://axios.link/aiWk

L Catterton Partners is raising $4 billion for its ninth flagship private equity fund, per an SEC filing. It's also in the process of raising its third Latin America-focused fund. www.lcatterton.com

Xiang He Capital, a Chinese VC firm, raised $425 million for its second US-denominated fund. http://axios.link/IZQs

It's Personnel

Scott Frederick joined Sands Capital Management as a managing director. He spent the past four years with NEA, as a partner and head of business development and federal initiatives, and also was co-founder of Valhalla Partners.

Stacy Kim joined law firm Wilson Sonsini Goodrich & Rosati as its first US-licensed partner in London. She previously was a partner working with tech companies at Orrick. www.wsgr.com

Johan Magnusson was fired as CEO of $36 billion Swedish pension fund AP1 for alleged violations of trading rules. http://axios.link/XXwh

Simon Tilley stepped down as a partner at Inflexion Private Equity in order to join investment bank Stephens as a managing director of European financial sponsors. http://axios.link/5nPC

Final Numbers
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Data: University of Michigan Surveys of Consumers; Chart: Axios Visuals
Dan Primack

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