Axios Pro Rata

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July 18, 2019

Top of the Morning

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Illustration: Rebecca Zisser/Axios

San Francisco's IPO tax is dead! Long live San Francisco's IPO tax!

  • Voters were to be asked this November to approve a corporate tax increase on stock-based compensation from 0.38% to 1.5%.
  • It would have been retroactive to May 7, just days before Uber went public.

Yesterday the measure delayed for a year, primarily because it might as well have been written in crayon. For example, it wasn't clear if the "IPO tax" was exclusive to companies going public, or to all stock-based compensation.

But the really devilish detail might have been use of proceeds.

  • The original bill earmarked proceeds for affordable housing initiatives, with proponents arguing that newly-minted tech millionaires exacerbate an already-acute problem.
  • This meant, per San Francisco rules, that it would have needed two-thirds voter support to become law.
  • The revised/delayed bill will also allow proceeds to be used for general city purposes, thus lowering the passing threshold to a simple majority.

Expect to see final language within the next few weeks, and then on the 2020 ballot.

🕒 We're now on Day 5 of Leon Black, CEO of Apollo Global Management, refusing to confirm or deny that his family foundation was the source of a $10 million donation to Jeffrey Epstein's charity in 2015.

  • Vanity Fair yesterday reported that Black's foundation did indeed cut the check in question.
  • If this is accurate, it means Black's disclosures last week about his foundation cutting ties with Epstein back in 2007 were disingenuous.

Scoop: Stifel Financial has launched a venture lending unit that it hopes to eventually become a $1 billion business.

  • It's co-founded by Square 1 Bank vets Brad Ellis and Nathaniel Stone. While only being disclosed today, the moves actually came earlier this year — with decisions made before a recent spate of Square 1 defections to form a new venture lending group at Signature Bank.
  • More from Ellis, on how his group will interact with Stifel's investment bank: "We're seeing early-stage breakout companies that are four or five years away from a potential transactions, and we can identify those for the investment bank so they can get to know the companies and add value earlier. On the other side, they can introduce us to later-stage companies closer to that exit, but which maybe are looking to bolster their balance sheet before an M&A or IPO."

🎧 Pro Rata Podcast digs into Trump's "anti-Squad" tweets, including if they're strategic or spontaneous. Listen here.

  • We've also created a dedicated Twitter handle for the podcast, where we'll notify about new episodes and provide a space for feedback and suggestions. Please follow @ProRataPod.


Episode 17 Diamonds GIF - Find & Share on GIPHY

Dust Identity, a Framingham, Mass,-based supply chain security and tracking startup that utilizes diamond dust, raised $10 million in Series A funding. Kleiner Perkins led, and was joined by Airbus, Lockheed Martin, New Science Ventures, Angular Ventures and Castle Island Ventures.

  • Why it's the BFD: Do you know any other company whose business model is based on diamond dust? Specifically, inexpensive industrial diamond waste that's used to lightly coat an object, thus creating unique tagging properties and an ability to ensure that the object hasn't been messed with.
  • Bottom line: "Dust Identity’s tagging technology could eventually help secure the increasingly long and complex supply chains that global manufacturers rely on. Producers of complex products like airplanes or electronics would be among the biggest potential users of the company's technology, which emerged from research into the quantum properties of diamonds." — David Z. Morris, Fortune

Venture Capital Deals

TravelPerk, a London-based business travel booking and management platform, raised $60 million in new Series C funding (bringing the round total to $104m). Return backers include Kinnevik, Target Global, Felix capital, Sunstone, LocalGloba and DST Global partners.

Momentus, a Santa Clara, Calif.-based provider of in-space shuttle services for moving satellites between orbits, raised $25.5 million. Prime Movers Lab led, and was joined by YC, the Lerner Family, University of Wyoming Foundation, Quiet Capital, Mountain Nazca, Ace & Co., Liquid 2 Ventures and Drake Management.

MyMoneyMantra, an Indian financial services marketplace, raised $15 million in first-round funding from IFSD and Vaalon Capital.

Fortify, a Boston-based additive manufacturing startup, raised $10 million in Series A funding. Accel led, and was joined by Neotribe Ventures, Prelude Ventures, and Mainspring Capital Partners.

TurboTenant, a Fort Collins, Colo.-based online platform for tenants and landlords, raised $6.5 million in Series A funding. RET Ventures led, and was joined by return backer Access Venture Partners.

Spruce, a Houston-based provider of hotel-like services to the multifamily housing market, raised $3 million. Fitz Gate Ventures led, and was joined by Mercury Fund, Capital Factory and the Houston Angel Network.

N26, a Germany-based mobile retail bank startup, is raising $170 million in fifth-round funding from insiders, per TechCrunch. Earlier this year the company raised $300 million at a $2.7 billion valuation from Insight Partners, GIC, Tencent, Allianz X, Valar Ventures, Earlybird VC and Greyhound Capital.

Private Equity Deals

Arcline agreed to buy the Reciprocating Compression unit of Baker Hughes, a General Electric (NYSE: GE) company.

Arsenal Capital Partners agreed to buy a control stake in Revolution, a Little Rock, Ark.-based maker of closed-loop plastic products.

🚑 Bain Capital is in talks to buy a minority stake in healthcare tech companies combined Zelis Healthcare and RedCard, which are being merged by Parthenon Capital, per Bloomberg. The enterprise value could be around $6 billion.

Fresh Direct Produce, a Vancouver-based portfolio company of HKW, acquired Emperor Specialty Foods, a Canadian distributor of mushrooms, pears, and other specialty produce.

Frontline Education, a Malvern, Penn.-based portfolio company of Thoma Bravo, agreed to buy Perennial EdTech, a Roseville, Calif.-based classroom software provider, from Alpine Investors.

General Atlantic is in talks to acquire a majority stake in San Francisco-based cosmetics brand Morphe, for more than $2 billion (including assumed debt), per Reuters.

KKR is partnering with Rabobank on a takeover bid for Dutch utility Eneco, which could fetch around €3 billion, per Reuters. A rival group reportedly includes Royal Dutch Shell and PGGM.

Panoramic Growth Equity sponsored a management buyout of Elmelin, a UK-based maker of industrial insulation.

🚑 Permira is in talks to buy British drugmaker Quotient Sciences from GHO Capital for around £600 million (including assumed debt), per Bloomberg.

Stonegate, a British pub operator owned by TDR Capital, agreed to buy larger rival Ei Group (LSE: EIGE) for £1.27 billion.

Public Offerings

AssetMark Financial, a Concord, Calif.-based wealth management platform, raised $275 million in its IPO. The company priced shares at $22 (above range), for an initial market cap of $1.59 billion. It will list on the NYSE (AMK) with JPMorgan as lead underwriter, and reports $99 million of net income on $296 million in revenue for 2018. Shareholders include China’s Huatai International.

🚑 Fulcrum Therapeutics, a Cambridge, Mass.-based developer of rare disease therapies based on gene regulation, raised $72 million in its IPO. The company priced shares at $16 (low end of range), for an initial market cap of $373 million. It will trade on the Nasdaq (FULC) with Morgan Stanley as lead underwriter, and had raised around $140 million from Third Rock Ventures (43.2% pre-IPO stake), GlaxoSmithKline (9.5%) and Foresite Capital (8%).

🚑 Genmab, a Danish developer of therapeutic antibodies for cancer, raised $506 million in its IPO. The company priced shares at $17.75 (just below final trades in Copenhagen), for a market cap north of $11.5 billion, and will trade on the Nasdaq (GMAB) with BAML as lead underwriter.

🚑 Mirum Pharmaceuticals, a San Diego-based developer of a treatment for rare cholestatic liver diseases, raised $75 million in its IPO. The company priced shares at $15 (middle of range), for an initial market cap of $345 million. It will trade on the Nasdaq (MIRM) with Citi as lead underwriter, and had raised $120 million in VC funding from firms like NEA (20.8% pre-IPO stake), Frazier Life Sciences (17.3%), Deerfield Managementy (17.3%), Novo Ventures (10.4%), Shire (10.3%) and RiverVest Venture Partners (9%).

🚑 Phreesia, a New York-based provider of patient-intake software, raised $167 million in an upsized IPO. The company priced at $18 per share (above target range), for an initial market cap of $633 million. It will trade on the NYSE (PHR) with JPMorgan as lead underwriter, and reports a $7 million net loss on $28 million in revenue for Q1 2019. The company had raised around $119 million in VC funding from LLR Equity (23.85% pre-IPO stake), HLM Venture Partners (17.33%), Polaris Partners (14.52%), Ascension Ventures (10.77%), Echo Health Venture (9.01%), Blue Cross Blue Shield Venture Partners (7.8%) and VantagePoint Venture Partners (7.08%).

Voyager Air, a UK-based aircraft leasing company, has shelved a planned £200 million London IPO, citing “unfavorable market conditions.”

Liquidity Events

Colony Capital is considering a sale of warehouse unit Colony Industrial, which could fetch over $5 billion, per Bloomberg.

Court Square Capital and HGGC are seeking a buyer for Dynata, a Plano, Texas-based survey research company that could fetch over $3 billion, per Reuters.

Visa (NYSE: V) acquired Payworks, a German provider of point-of-sale payment gateway software that had raised around $19 million in VC funding from firms like Visa Ventures, SpeedInvest and CommerzVentures.

More M&A

eBay (Nasdaq: EBAY) agreed to buy a 5.5% stake in Indian e-commerce marketplace Paytm, with TechCrunch reporting a price of between $150 million and $200 million. eBay also said it would consider strategic alternatives for its StubHub and Classifieds businesses.

Ebix (Nasdaq: EBIX) agreed to buy Indian online travel booking company Yatra (Nasdaq: YTRA) for $338 million.

EssilorLuxottica is in talks to buy Dutch eyewear retailer GrandVision for around €7.1 billion.

General Electric (NYSE: GE) agreed to sell an 80% stake in its GE Solar business to BlackRock.

🚑 Takeda Pharmaceutical (Tokyo: 4502) is seeking to fetch around $1.6 billion for a portfolio of drugs for sale in Western Europe, per Reuters.

Telecom Italia (Milan: TLIT) is considering a sale process for around €2 billion in assets, including a stake in separately-listed towers unit INWIT, per La Repubblica.


CVC Capital Partners closed its second “strategic opportunities” fund with €4.6 billion in capital commitments.

It's Personnel

Benjamin Wu joined TPG Sixth Street Partners as a managing director, after eight years at Macquarie Group, per his LinkedIn page.

TSG Consumer Partners promoted Adam Hemmer to senior vice president.

Final Numbers

Data: McKinsey Global Institute; Map: Andrew Witherspoon/Axios
Data: McKinsey Global Institute; Map: Andrew Witherspoon/Axios

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