May 28, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

📺 Axios on HBO returns this Sunday for its second season, premiering at 6 p.m. with a replay at 11:30 p.m. It's just like Game of Thrones, minus dragons, genocide and some questionable character choices. Check out the Season 2 trailer.

Top of the Morning

Illustration: Sarah Grillo / Axios

Alibaba is considering a $20 billion secondary offering in Hong Kong, five years after raising $25 billion via an IPO in New York, according to Bloomberg. Three story-lines:

  1. This may be as much about rising trade tensions between the U.S. and China as it is about raising capital. Floating in Hong Kong could further strengthen ties between Alibaba and Beijing, while also providing some regulatory risk mitigation in the U.S.
  2. Hong Kong recently relaxed its listing rules to include such things as dual-class shares. Alibaba had proven unable to get HK approval for its governance structure the last time around but, if successful now, it could pour accelerant onto HK's tech listings business.
  3. Get it while the going is good. Or, as Axios' Felix Salmon puts it: "I think it makes sense to tap public markets right now. Frankly I’m surprised everyone isn’t doing it."

🚨 It's not just the Fed: Denmark's central bank yesterday warned about an increase in leveraged loans, and a corresponding decrease in leveraged lending standards.

Hmmm.... Ryan Graves, Uber's first CEO and then head of global ops, has resigned from the ride-hail company's board of directors. No word yet on why he'd do so just two weeks after the IPO, with Graves not returning a request for comment. Maybe we'll get more clarity after market close this Thursday, when Uber has its first earnings report as a public company.

🦄 Unicorn hunters: Axios' Kia Kokalitcheva this morning writes about the shifting priorities of some crossover investors in high-growth tech startups:

Mutual funds and hedge funds have spent the past several years investing in privately-held tech startups, primarily to establish relationships that could help them get more shares when those companies go public.
Some of these same firms now seem more interested in capturing gains while tech startups are still private, with IPO optionality a secondary concern.

🎧 Pro Rata Podcast returns today, following a week in which we discussed tech trade tensions, the war on vaping, Eric Swalwell's presidential plan, and the T-Mobile/Sprint merger. Each one is just 10 minutes long.

The BFD

Illustration: Rebecca Zisser/Axios

Fiat Chrysler (BIT: FCA) and Renault (Paris: RNO) have tentatively agreed to a 50/50 merger, although both companies' boards still need to approve.

  • Why it's the BFD: It would create the world's third-largest automaker, knocking GM down to fourth, with around 8.7 million vehicles produced per year.
  • Geopolitics: The French and Italian governments may balk at expected layoffs, even if Fiat Chrysler is promising no plant closures. And then there's Japan, where hometown hero Nissan would see its Renault stake cut in half, thus losing influence despite Carlos Ghosn being taken out of the picture via prosecution.
  • Bottom line: "Creating a global automotive powerhouse had long been the goal of both the ousted Ghosn and the late FCA chief Sergio Marchionne, who died last year without achieving his objective. But the motivations that drove their thinking are still relevant today, including slowing global auto sales, squeezed profits, and pressure to invest in new technologies like autonomy and electrification." — Joann Muller, Axios
Venture Capital Deals

PayJoy, a San Francisco-based startup that enabled smartphone purchases via installment payments, raised $20 million in Series B funding. Greylock led, and was joined by Union Square Ventures, EchoVC and Core Innovation Capital. http://axios.link/OGiD

FreshToHome, an Indian e-commerce startup for fresh fish and meats, raised $11 million in Series A funding led by CE Ventures. http://axios.link/Bu35

JetStream Software, a San Jose, Calif.-based cloud data protection startup, raised $7.7 million in Series A funding led by Digital Alpha Advisors. www.jetstreamsoft.com

Jackpocket, a New York-based mobile app developer for state lotteries, raised $5 million in new Series B funding (round total $21m) from PROOF, Gavin Isaacs and return backers BlueRun Ventures, Bullpen Capital, Conductive Ventures, DCM Ventures, DCG, Subversive Capital and David Stern. www.jackpocket.com

Chronograph, a New York-based provider of portfolio monitoring and reporting software for institutional private capital investors, raised an undisclosed amount of Series A funding. AlpInvest Partners led, via an investment off parent company Carlyle Group’s balance sheet, and was joined by Nasdaq Ventures. www.chronograph.pe

Trax, a Singapore-based provider of image recognition tech to CPG brands, is seeking to raise $100 million at a $1.1 billion pre-money valuation, per Bloomberg. http://axios.link/VAhF

Private Equity Deals

Acendre, an Australian portfolio company of Strattam Capital, acquired ICS Learning Group, a Pasadena, Md.-based provider of e-learning systems. http://axios.link/LMRD

Charterhouse Capital Partners offered to buy Tarsus (LSE: TRS), a Dublin-based media company, for around £561 million. http://axios.link/vgue

The Crosby Group, a Tulsa-based portfolio company of KKR, acquired Gunnebo Industrier, a Swedish maker of parts for heavy lifting applications, from Segulah. http://axios.link/ka2K

EQT Infrastructure offered to buy Australian telco Vocus Group (ASX: VOC) for A$3.3 billion. http://axios.link/UNtx

Gold Medal, a Sewell, N.J.-based portfolio company of Kinderhook Industries, acquired Earthtech Contracting, a Woodbine, N.J.-based provider of trash and recycling collection services in New Jersey. www.goldmedal.net

Meredith (NYSE: MDP) agreed to sell Sports Illustrated to Authentic Brands Group for $110 million. ABG is a brand development company backed by General Atlantic, Leonard Green & Partners and Lion Capital. http://axios.link/48zv

Public Offerings

This week’s U.S. IPO calendar includes only a pair of blank-check acquisition companies. IPO roadshows for both Chewy and CrowdStrike could launch next week. http://axios.link/hCfU

Airtel Africa, a unit of India’s Bharti Airtel, is considering a London IPO for next month that Reuters estimates could net around $1 billion. http://axios.link/EDPf

🚑 Atreca, a Redwood City, Calif.-based developer of a solid tumor drug, filed for a $100 million IPO. It plans to trade on the Nasdaq (BCEL) with Cowen as lead underwriter. The pre-revenue company raised over $230 million from firms like Baker Brothers, Boxer Capital, Wellington Management, Bill & Melinda Gates Foundation, Cormorant Asset Management, Aisling Capital, Tavistock Group, EcoR1 Capital, Redmile Group, Samsara BioCapital and Tekla Capital Management. http://axios.link/DSCk

Cibus, a San Diego-based developer of plant and microbial platforms for breeding technologies, withdrew registration for an IPO that had planned to sell 6.67 million shares at $14-$16, after delaying the offering back in February. Morgan Stanley was lead underwriter. Cibus has raised around $180 million in VC funding from firms like Fidelity, New Ventures Fund, Alexandria Venture Investments and Cormorant Asset Management. http://axios.link/C6op

PT Softex Indonesia, a sanitary products maker owned by CVC Capital Partners, is considering an IPO that could raise upwards of $500 million, per Bloomberg. http://axios.link/I42u

Liquidity Events

Astorg Partners agreed to sell European pay TV operator M7 Group to Vivendi’s Canal+ for around $1.1 billion. http://axios.link/3uuZ

CVC Capital Partners is again considering a sale or IPO for British appliance insurer Domestic & General, which could be valued at upwards of £1.25 billion, per Sky News. http://axios.link/wrog

👗 Warburg Pincus is seeking a buyer for British upscale fashion brand Reiss, per The Telegraph. http://axios.link/3DCM

XIO Group of China hired Evercore Partners to find a buyer for J.D. Power, a Wilmington, Del.-based customer survey and car ratings company that could fetch $1.9 billion, per Reuters. http://axios.link/fnFD

More M&A

• Sibanye-Stillwater (JSE: SGL) shareholders approved a $286 million takeover of Lonmin (LSE: LMI), which would create the world’s second-largest platinum producer. http://axios.link/EWPW

• SoundCloud, a Berlin-based music streamer that’s raised over $230 million in VC, acquired Repost Network, a Los Angeles-based music distribution service that helps artists leverage SoundCloud. http://axios.link/0A0g

• Khaled bin Zayed Al Nehayan, a Dubai billionaire, reportedly agreed to buy Premier League club Newcastle United from Mike Ashley. http://axios.link/VM1S

Fundraising

• Future Positive Capital, an early-stage VC firm with offices in London and Paris, raised $57 million for its debut fund. http://axios.link/lomI

• Panacea Venture, a Chinese healthcare VC firm, raised $180.5 million for its debut fund. It was founded by ex-KPCB China partners James Huang and Hai Mi. http://axios.link/xKsa

It's Personnel

• Christopher Tuffin joined Chicago-based private equity firm Arbor Investments as a New York-based partner. He previously was a director in BAML’s consumer and retail investment banking group, focused on food and beverage. www.arborpic.com

• SV Angel promoted Beth Turner to general partner. She's been with the firm sine 2017.

Final Numbers
Source: Renaissance Capital
Dan Primack