Axios Pro Rata
December 11, 2019
Top of the Morning
Integrity Marketing Group, a private equity-backed distributor of life and health insurance products, yesterday told its 750 employees that they'll receive an aggregate payout of $50 million as a "recognition of their success" in growing the business. They'll also all become eligible for company stock, subject to 12-month vesting and continued employment.
- Corporate America has talked a big game in 2019 about how it must do a better job serving all stakeholders, not just investors.
- This is an example of a company putting its money where its mouth is, serving as a welcome rebuke to skeptics like me.
Private equity firm HGGC first invested in IMG in 2016, and has used it as a consolidation platform. Just this year alone, the Dallas-based company has acquired 18 smaller insurance product distributors, all around the country.
Earnings over that time have grown by around 800%, HGGC did a dividend recap, and the company recently announced a minority equity investment from Harvest Partners. Proceeds from that deal will be used to fund the $50 million payout — which averages out to $66,000 per employee, although actual distributions are lumpier (the smallest check size is $7,500).
- "We got to the $50 million number by retroactively calculating what people would have gotten had we begun giving equity when we started with HGGC," says IMG CEO Brian Adams (no, not that Bryan Adams).
- "Equitizing employees is never a bad idea... I think of it as being more part of old-school private equity, which I think is coming back," says HGGC partner Steve Young (yes, that Steve Young).
The bottom line: I don't know if Young is right, or if IMG and some recent KKR deals will remain exceptions to the prevailing rule. But I want him to be.
• Today in SoftBank: Praveen Akkiraju is stepping down as a managing partner of SoftBank Vision Fund, which he joined early last year from Cisco to focus on enterprise software investments, Axios has learned.
- The news was announced internally last night via an email, which said Akkiraju is "leaving to explore his passion for working with early-stage start-ups (operating or investing role)."
- Senior managing partner Deep Nishar will take on many of Akkiraju's responsibilities, including his board seat with Automation Anywhere.
• Correction: Yesterday's issue mistakenly reported that SoftBank Vision Fund's investment in Wag represented 0.003% of its committed capital. The correct percentage is 0.3%, as many of you emailed to point out. The "portfolio composition" comparison, on a dollar-for-dollar basis, was accurate.
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iFit, an interactive fitness streaming platform owned by the parent company of NordicTrack, raised $200 million led by Pamplona Capital Management.
- Why it's the BFD: Because this reflects how home fitness companies and their investors keep moving toward the Peloton model, minus the highly-questionable ad strategy.
- Bottom line: "As a serious runner, I train mainly outdoors. However, treadmills have played a significant role in my fitness regimen for years. But a virtual coach training me from a screen? It seemed like too much. My coach was Tommy Rivers Puzey. He’s a real person, an accomplished ultrarunner, and one of more than a dozen trainers available via the iFit program on my treadmill’s 22-inch screen. Throughout a recent 30-minute workout, Puzey earned my trust." — Stephen Regenold, GearJunkie
Venture Capital Deals
• Wefox, a Berlin-based insuretech platform, raised $110 million in Series B funding at what TechCrunch reports is a $1.65 billion pre-money valuation. Omers Ventures led, and was joined by Merian Chrysalis and Samsung Catalyst Fund. http://axios.link/pWCI
• Hometap, a Boston-based startup that helps homeowners take out cash without assuming new debt, raised $100 million in new funding. Iconiq Capital led, and was joined by return backers General Catalyst, G20, Pillar, and American Family Ventures. www.hometap.com
• Iterable, a San Francisco-based cross-channel marketing platform, raised $60 million in Series D funding. Viking Global Investors led, and was joined by CRV, Index Ventures, Blue Cloud Ventures, Harmony Partners, and Stereo Capital. http://axios.link/bRi5
• Carsome, a Malaysian used car marketplace, raised $50 million in Series C funding. MUFG Innovation Partners led, and was joined by Daiwa Pi Partners, Endeavor Catalyst, Ondine Capital, and return backers Convergence Ventures and Gobi Partners. http://axios.link/eqZb
• Secure Code Warrior, an Australian secure coding startup, raised $47.6 million in Series B funding. Goldman Sachs led, and was joined by ForgePoint Capital, Cisco, and return backers AirTree Ventures and Paladin Capital Group. http://axios.link/llZv
• Zetwerk, an Indian B2B marketplace for manufacturing, raised $32 million in Series B funding co-led by Lightspeed Venture Partners and Greenoaks Capital. http://axios.link/PamN
• Ordr, a Boston-based enterprise IoT security startup, raised $27.5 million in Series B funding. Battery Ventures led, and was joined by Wing VC, 1011 Ventures, and Unusual Ventures. www.ordr.net
• ObserveAI, a San Francisco-based provider of voice customer service agent enablement software, raised $26 million in Series A funding. Scale Venture Partners led, and was joined by Nexus Venture Partners, Steadview Capital, 01 Advisors, and Emergent Ventures. http://axios.link/8c8v
• WhyHotel, an operator of pop-up hotels in luxury apartment buildings, raised $20 million in Series B funding. Harbert Growth Partners led, and was joined by Camber Creek, Highland Capital Partners, Working Lab Capital, Geolo Capital and Rise of the Rest. www.whyhotel.com
• Albo, a Mexican challenger bank, raised $19 million in Series A funding led by Valar Ventures. http://axios.link/Abj9
🚑 Quellis Biosciences, a Boston-based drug startup focused on rare diseases, raised $17 million in Series A funding led by PXV Fund. http://axios.link/KrcD
• Housi, a Brazilian residential real estate asset management platform, raised $12 million from Redpoint eVentures. www.housi.com.br
• Tines, an Ireland-based cybersecurity automation startup, raised $11 million in new Series A funding. Accel led, and was joined by Index Ventures and Blossom Capital. www.tines.io
• Gtmhub, a Denver-based OKR platform, raised $9 million in Series A funding led by CRV. http://axios.link/j0MK
• Popspots, an Austin, Texas-based merchandise analytics and in-store marketing platform for retail groceries, raised $5 million in Series A funding. Silverton Partners led, and was joined by Capital Factory. http://axios.link/7K8x
• CoachHub, a German talent development platform, raised $4 million in Series A funding from HV Holtzbrinck Ventures, Partech, Speedinvest x, RTP Global, and Signals VC. http://axios.link/n9SC
• Balloon, a San Francisco-based “insight mobility platform,” raised $2.1 million in seed funding co-led by Launch and Wavemaker Partners. http://axios.link/4s19
Private Equity Deals
• Apollo Global Management offered $4.3 billion to buy the powertrain unit of Tenneco (NYSE: TEN), per Bloomberg. http://axios.link/ktiE
• Acorn Growth Cos acquired a majority stake in Aerospares, a UK-based aftermarket supplier and distributor of rotable parts for commercial aircraft. www.aerospares2000.com
• Bain Capital is nearing a deal to buy a large stake in Italian IT services provider Engineering Ingegneria Informatica from Apax Partners, at an enterprise value north of €1.5 billion, per Reuters. Existing backer Neuberger Berman is expected to retain its position. http://axios.link/mcnM
• Kleinfelder, a San Diego-based portfolio company of Wind Point Partners, acquired the geotechnical, environmental, and materials testing unit of Advantage G&E, a Columbia, Md.-based portfolio company of First Capital Partners. www.kleinfelder.com
• XP, a Brazilian brokerage and wealth manager, raised $2 billion in its IPO. The company priced 72.5 million shares at $27 (above $22-$25 range), for an initial market value of $14.9 billion. It will trade on the Nasdaq (XP), Goldman Sachs served as lead underwriter, and pre-IPO shareholders include General Atlantic. http://axios.link/LMDj
• Locaweb, a Brazilian web services company, filed for a Sao Paulo IPO. The company generated around $75 million of revenue during the first nine months of 2019, and shareholders include Sumeru Equity Partners. http://axios.link/Y5o6
🚑 Centerbridge Partners is seeking a buyer for Versant Health, a New York-based managed vision care benefits company that could fetch more than $2 billion (including debt), per Reuters. http://axios.link/FeAj
• Payoneer, a New York-based cross-border payments company backed by over $300 million in VC funding, acquired Optile, a German payment platform. http://axios.link/3qKB
• Uber (NYSE: UBER) is in talks to buy Foresight, an AV simulation software startup that was seeded by Amino Capital and Basis Set Ventures, per The Information. http://axios.link/KTeh
☕ Illycaffe, an Italian coffee roaster and store chain, is seeking to sell around a 20% equity stake at a valuation north of €1 billion, in order to support U.S. expansion, per Bloomberg. http://axios.link/4W8r
• New York Life is the frontrunner to buy Cigna’s (NYSE: CI) non-health insurance units for upwards of $6 billion, per Bloomberg. http://axios.link/oI3G
🚑 Starboard Value is pushing for Mednax (NYSE: MD) to sell all of part of itself, and has privately nominated a majority slate of directors, per the WSJ. The Sunrise, Fla.-based health services company has a market cap just north of $2 billion. http://axios.link/8qeg
• Ada Ventures, a London-based seed-stage firm focused on “normally overlooked” founders, raised £27 million for its debut fund. http://axios.link/uLjh
• Hyde Park Venture Partners of Chicago and Indianapolis raised $100 million for its third fund. www.hydeparkvp.com.
🚑 Omega Funds, a Boston-based VC firm focused on pharma, raised $438 million for its sixth fund. www.omegafunds.com
• Pear, a Palo Alto-based seed-stage investment firm, raised $160 million for its third fund. http://axios.link/b10T
🚑 PXV Fund has been formed as a $210 million biotech VC fund, via a partnership between Perceptive Advisors and former Sarepta Therapeutics CEO Chris Garabedian. http://axios.link/tzTk
• Konstantine Buhler quietly joined Sequoia Capital as a partner. He previously was a principal with Meritech Capital Partners. www.sequoiacap.com
• Behrman Capital promoted Simon Lonergan to managing partner. www.behrmancap.com
• General Atlantic promoted Lefei Sun, head of its China healthcare investments, to managing director. www.generalatlantic.com
🚑 R. Halsey Wise joined TPG as a senior advisor focused on healthcare IT. He previously was chairman and CEO of MedAssets.
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