July 26, 2023

Top of the Morning

Illustration: Aïda Amer/Axios

"Reverse CFIUS" is starting to take more shape.

Driving the news: In a lopsided 91-6 vote on Tuesday, the Senate moved to require U.S. investors to notify the Treasury Department when they invest in Chinese companies in certain sectors like AI and quantum computing.

Why it matters: As my colleague Hans Nichols explains, the result "is a barometer for how willing the Senate is to impose new rules for outbound investment, as both Congress and the White House explore ways to ensure that China's military does not achieve a technological advantage over the U.S. and its allies."

Details: The amendment requires that U.S. investors notify the Treasury Department of investments in certain sectors.

  • They include AI, quantum computing, advanced semiconductors and micro-electronics; hypersonics; satellite-based communications and networked laser scanning systems with dual-use applications in China and other “countries of concern.”
  • The legislation came in the form of an amendment spearheaded by Sens. Bob Casey (D-Pa.) and John Cornyn (R-Texas) to the Senate's must-pass National Defense Authorization Act.

Between the lines: While this legislation only requires notification, an executive order from President Biden on the same theme is expected to actually impose some restrictions.

Yes, but: Despite all the concerns expressed around Washington over TikTok, this legislation won’t deal with U.S. investments into its parent company — or any similar Chinese social media company down the line.

  • And if all other efforts from Washington continue to be focused on supply chain-related technologies, this will remain the case. (The letters sent to four venture firms last week by the House Select Committee on the CCP also focused on investments in AI and other high-tech areas.)
  • Granted, it'd be a much harder task to squeeze TikTok-related restrictions into a defense bill, so legislators are likely just working with what they have at the moment.

What's next: The House and the Senate now have to reconcile their respective NDAA bills.

  • And there's also the much-awaited White House executive order, which is expected to land in the coming weeks.

A new Leon Black lawsuit

Apollo co-founder and former CEO Leon Black has been accused of raping a then-16-year-old girl with autism and Down syndrome in 2002 at Jeffrey Epstein's Manhattan townhouse, according to a new lawsuit filed in federal court.

Why it matters: The allegations are just the latest twist in a multi-year saga that continues to ensnare Wall Street's wealthy and powerful.

  • "These vicious and defamatory lies, masquerading as allegations, have been intentionally manufactured by the Wigdor law firm as part of the firm's vendetta against Mr. Black for vigorously and successfully defending himself over the past two years," Susan Estrich, attorney for Black, said in a statement to CNBC.
  • Meanwhile, a Senate committee is now investigating a $158 million payment Black made to Epstein.

The BFD

Illustration: Brendan Lynch/Axios

Banc of California and PacWest, two California regional banks, are merging under the former's brand. Warburg Pincus and Centerbridge are also investing $400 million into the combined business for about a 19% stake.

Why it's the BFD: It's the latest regional bank merger this year in the name of stabilization — but this time, without regulator involvement.

Details: The new bank will operate under the Banc of California brand, with president and CEO Jared Wolff remaining at the helm. After the deal closes, the combined bank is expected to have about $36.1 billion in assets, $25.3 billion in total loans, $30.5 billion in total deposits and over 70 branches in California.

The bottom line: "PacWest was hit harder by the recent banking turmoil, losing 18% of its deposits in the first half of the year, versus a nearly 4% loss for Banc of California. PacWest investors were particularly skittish because of its ties to the type of venture customers who pulled cash en masse at SVB .... Executives and government officials increasingly expect regional banks to bulk up through mergers to help them weather the tougher operating environment." — Lauren Thomas, Justin Baer, Ben Eisen, Gina Heeb, WSJ

Venture Capital Deals

⛽️ Low Carbon, a U.K.-based renewable energy company, raised £400m from Massachusetts Mutual Life Insurance. www.lowcarbon.com

Competitive Socialising, a London- and New York-based parent a golf club and high-end entertainment company, raised $52m in Series C funding from Cain International and others. www.competitivesocialising.com

🚑 Kincell Bio, a Gainesville, Fla.-based cell therapy development and manufacturing company, raised $36m in Series A funding led by Kineticos Ventures. www.kincellbio.com

Collaborative Robotics, a Santa Clara, Calif.-based robot maker, raised $30m in Series A funding led by Sequoia Capital. https://axios.link/453gaNQ

⛽️ Dioxycle, a French carbon transformation startup, raised $17m in funding led by Breakthrough Energy Ventures and Lowercarbon Capital, with Gigascale Capital also participating. https://axios.link/3Ybk3yn

Akooda, a Cambridge, Mass.-based enterprise AI startup, raised $11m in seed funding from NFX, Atlassian Ventures, Village Global, and Founder Collective. https://axios.link/43M69Ui

⛽️ Ampcontrol, a New York-based electric vehicle fleet management software maker, raised $10m in Series A funding led by the Westly Group, with AngelPad and Lorimer Ventures also participating. https://axios.link/3qdGG8u

HumanFirst, a Canadian maker of low-code data productivity software, raised C$5m in seed funding across three SAFE notes led by Panache Ventures, with Inovia, Real Ventures, and BoxOne Ventures, Kevin Mahaffey, and other angel investors also participating. www.humanfirst.ai

Materials Nexus, a U.K.-based deeptech AI and quantum mechanic company, raised £2m ($2.8m) in seed funding led by Ada Ventures, with the National Security Innovation Fund, the University of Cambridge, Andrew MacKay and Jasmin Thomas also participating. https://axios.link/3YaBGOB

Aembit, a Silver Spring, Md.-based enterprise security access startup, raised an undisclosed amount in additional seed funding from Okta. www.aembit.io

Private Equity Deals

The Any Hour Group, backed by Knox Lane, acquired Black Diamond Experts and Bumble Breeze Plumbing, Heating and Air, both Utah-based home services providers. www.anyhourservices.com

Bain Capital and Valeas Capital Partners invested in Ren, an Indianapolis-based provider of software for managing donor-advised funds. www.reninc.com

🚑 General Atlantic made an investment of up to $160m into MAC Hospitals, a Mexican hospital provider backed by Actinver and PineBridge. www.hospitalesmac.com

Haveli Investments acquired Certinia, a San Jose-based services business software provider, from Advent International and Technology Crossover Ventures. General Atlantic participated in the acquisition. www.certinia.com

Oaktree Capital Management acquired a majority stake in Magnolia Wash Holdings, a Charlotte, N.C.-based chain of car wash locations backed by A&M Capital Opportunities Fund. www.magnoliawashholdings.com

SPAC Stuff

Haymaker Acquisition 4, the fourth blank check company led by Steven and Andrew Heyer targeting consumer businesses, raised $200m in an IPO by offering 20m units at $10. https://axios.link/43GAdRh

Liquidity Events

Amazon (Nasdaq: AMZN) cut the acquisition price of iRobot (Nasdaq: IRBT), the Bedford, Mass.-based maker of robot vacuums, by 15% to about $1.42b. iRobot also raised $200m in debt from Carlyle. https://axios.link/3pYHNZU

Tencent (OTCMKTS: TCEHY) agreed to acquire Techland, a Polish gaming studio. https://axios.link/44Mr1fx

More M&A

⛽️ TCW Group agreed to acquire an ETF business from Engine No. 1, a San Francisco-based impact investment firm. ​https://axios.link/4784Xh6

Fundraising

Altari Ventures, an early-stage venture firm focused on enterprise tech and fintech, raised $5.25m for its first fund. www.altariventures.com

Goodwater Capital, a Burlingame, Calif.-based early-stage venture firm, raised $1b total for its fifth early-stage fund and third opportunity fund. https://axios.link/3QbScMk

Main Sequence, an Australian venture capital firm, raised A$450m ($303m) in a first close of its third fund. https://axios.link/3O5JgFL

Valhalla Ventures, a Los Angeles-based early-stage venture firm focused on deeptech and gaming, raised $66m for its first fund. www.valhalla.ventures

It's Personnel

Alphabet has appointed Ruth Porat, its current chief financial officer, as president and chief investment officer starting Sept. 1. https://axios.link/3Y5TZ7J

ArcLight Capital Partners, a Boston-based middle-market infrastructure investment firm, appointed Gerry Anderson as a senior adviser and ArcLight Power Infrastructure board member. www.arclight.com

Balderton Capital, a U.K.-based venture firm, hired Leah Sutton as chief portfolio talent officer. She was previously at Elastic. www.balderton.com

ICONIQ Capital, a San Francisco-based investment firm, promoted Roy Luo to general partner at its growth investing practice. www.iconiqcapital.com

Helen Dean will step down as CEO at National Employment Savings Trust next year. https://axios.link/3rFa2Nr

Final Numbers

Data: FactSet; Chart: Axios Visuals

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