Oct 31, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Tough Tom times: Colony Capital CEO Tom Barrack has had better months. First, Colony agreed to bail out the embattled Weinstein Co., without fully appreciating the legal liabilities and other complexities created by Harvey's despicable actions. The deal was later called off, so all Barrack really got in exchange for his efforts was being regularly mentioned in the same breath as Harvey Weinstein.

Then came yesterday's federal indictments of former Trump campaign officials Paul Manafort and Rick Gates. Barack is credited with introducing Trump to Manafort, and for recommending that he be hired as campaign manager. Moreover, Colony hired Rick Gates as a consultant back in March, but fired him after the indictments were unsealed. Barrack's spokeswoman did not respond to requests for comment on either Manafort or Gates.

• Tax talk: Justin Field, VP of government affairs for the National Venture Capital Association, talks to Axios about what he's hoping for when the House GOP unveils its tax bill tomorrow:

  • Broad strokes: "There has been a lot of talk about making existing large companies and small businesses more competitive, but we also want focus on how tax reform can increase startup formation."
  • Wish list: (1) Retain existing tax treatment of carried interest. (2) Improve R&D tax credits for startups. (3) Create safe harbor for startups from net operating loss limitation rules. (4) Simplify qualified small biz stock rules.
  • Horror story: Anything that reminds the NVCA of the plan put forth in 2014 by former GOP Congressman Dave Camp.
  • Go deeper: Axios' Caitlin Owens reports on how the Senate's plan is shaping up. Worth noting that both chambers seem to be warming to the idea of phasing in that 20% corporate rate.

• New fund alert: CircleUp has raised $125 million for a new fund that will back early-stage consumer packaged goods companies with between $1 million and $10 million in revenue. Key here is that CircleUp seems to realize that CPG doesn't necessarily scale like tech, nor should it be valued similarly. Kia has more.

• Today in SoftBank: It looks like the Japanese giant has cooled on the proposed merger of its Sprint unit with T-Mobile.

• Next chip chapter: Benjamin Chow, founder of U.S.-based private equity firm Canyon Bridge Capital Partners, has been charged with insider trading related to his firm's failed attempts to acquire Lattice Semiconductor Corp.

  • Flashback: You may recall that Canyon Bridge's deal for Lattice was blocked by the Trump Administration on national security concerns, due to its state-backed limited partners in China. It then moved on to a deal for British chipmaker Imagination Technologies Group. Chow denies the charges.
The BFD

Lennar (NYSE: LEN) has agreed to buy Arlington, Va.-based home builder CalAtlantic (NYSE: CAA) for $9.3 billion in cash and stock (including $3.6 billion in assumed debt). The combined company would have a market cap of around $18 billion.

  • Why it's the BFD: Because it would create the country's largest home builder by revenue.
  • D.C. context: The National Association of Home Builders will oppose the House GOP's forthcoming tax bill, despite a weekend concession on federal itemized property tax deductions.
  • Bottom line: "In acquiring CalAtlantic, Lennar will have access to a new supply of developable land that can be built on quickly, which is less risky than buying large tracts of undeveloped land that could take years to get permits." – WSJ
Venture Capital Deals

• Remitly, a Seattle-based digital remittance company, says that it "is raising" $115 million in Series D funding. PayU, the fintech investment arm of Naspers, led the round. Return backers include Stripes Group, DFJ and DN Capital. http://axios.link/3qXp

🚑 Ada Health, a Berlin-based app described as an "Alexa for health," has raised €40 million in new VC funding. Access Industries led the round, and was joined by June Fund and Cumberland VC. http://axios.link/Xbf0

✏ Wonder Workshop, a Sunnyvale, Calif.-based maker of robots that teach kids computer science and coding fundamentals, has raised $41 million in Series C funding from Tencent, SoftBank Korea, TAL Education Group, MindWorks Ventures, Madrona Venture Group and VTRON Group. http://axios.link/VH9R

🚑 Kymera Therapeutics, a Cambridge, Mass.-based drug development startup that uses a targeted protein degradation platform, has raised $30 million in Series A funding. Atlas Venture led the round, and was joined by Lilly Ventures and Amgen Ventures. http://axios.link/vYZn

✏ Fclassroom, a Chinese developer of AI software to help students with homework and exams, has raised $15 million in Series C funding. Canhua Capital led the round, and was joined by XVC. http://axios.link/RtgE

• New Tranx Information Technology, a China-based translation software startup, has raised $7.5 million in VC funding from Kaitai Capital and Bojiang Capital Management Group. http://axios.link/EY9y

• EdGE Networks, an Indian provider of recruitment and workforce optimization software, has raised $4.5 million in Series A funding co-led by Kalaari Capital and Ventureast. http://axios.link/mxtH

Private Equity Deals

• American Industrial Partners has acquired a majority stake in The Brock Group, a Houston-based provider of industrial specialty services, from Lindsay Goldberg. www.brockgroup.com

• Argand Partners has acquired a majority stake in OASE Group, a German maker of water gardening products, from Equistone. www.oase-livingwater.com

• Arsenal Capital Partners has acquired Carolina Color Corp., a Salisbury, N.C.-based supplier of custom color concentrates for the plastics industry. Arsenal also purchased Lambertville, N.J.-based Breen Color Concentrates. www.carocolor.com

• CoolSys, an Anaheim, Calif.-based based portfolio company of Audax Private Equity, has acquired Certified Refrigeration and Mechanical, a Madison, Wis.-based refrigeration services company. www.crmwi.com

• Francisco Partners has acquired a majority stake in the certificate authority business of Clifton, N.J.-based Comodo. www.comodo.com

✏ HeroK12, a Miami Lakes, Fla.-based portfolio company of BV Investment Partners, has acquired SchoolMint, a San Francisco-based provider of student enrollment SaaS. SchoolMint had raised around $8 million in VC funding from firms like Runa Capital, Maiden Lane Ventures, CSC Upshot, Crosslink Capital, Reach Newschools Capital, Fresco Capital, the Govtech Fund and Kapor Capital. www.schoolmint.com

• Hildred Capital Partners has acquired an undisclosed stake in Crown Laboratories, a Johnson City, Tenn.-based skincare pharma company. www.crownlaboratories.com

• LLR Partners has acquired a minority stake in Professional Capital Services, a Philadelphia-based automated retirement plan services platform. www.pcs401k.com

🚑 Prelude Fertility, a Miami Beach, Fla.-based fertility clinic operator owned by Lee Equity Partners, has agreed to acquire Franklin, Tenn.-based Vivere Health from LLR Partners. It also will acquire the Houston Fertility Institute. http://axios.link/23nN

• ShoreView Industries has acquired Winzer Corp., a Plano, Texas-based distributor of maintenance repair supplies. Antares Capital provided senior debt financing. www.winzerusa.com

Public Offerings

🚑 Apellis Pharmaceuticals, a Crestwood, Ky.-based, set its IPO terms to 10.7 million shares being offered at $13-$15. It would have a fully-diluted market cap of around $750 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq under ticker APLS, with Citi serving as lead underwriter. Shareholders include Morningside Ventures (28% pre-IPO stake) and VenBio (9%). www.apellis.com

• Bandwidth, a Raleigh, N.C.-based cloud communications platform, set its IPO terms to 4 million shares being offered at $20-$22. It would have a fully-diluted market cap of around $423 million, were it to price in the middle. The company reports $157 million in revenue for the year ending June 30, 2017, and plans to trade on the Nasdaq under ticker BAND. Morgan Stanley is listed as left lead underwriter. www.bandwidth.com

🚑 InflaRx, a German drug developer focused on chronic inflammatory and autoimmune conditions, set its IPO terms to 6.67 million shares being offered at $14-$16. It would have a fully-diluted market cap of around $362 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq under ticker IFRX, with J.P. Morgan serving as lead underwriter. Shareholders include KFW, RA Capital Management, Bain Capital Life Sciences and Cormorant Asset Management. www.inflarx.de

• PPDAI Group, a Chinese P2P online lending platform, set its IPO terms to 17 million shares being offered at $16-$19. It would have a fully-diluted market cap of around $5.2 billion, were it to price in the middle. The company plans to trade on the NYSE under ticker PPDF, with Credit Suisse and Citi serving as lead underwriters. Shareholders include Sequoia Capital China and Lightspeed Venture Partners China. http://axios.link/vl95

Liquidity Events

• Hormel Foods (NYSE: HRL) has agreed to acquire Columbus Manufacturing, a Hayward, Calif.-based maker of salamis and deli meats, for around $850 million from Arbor Investments. http://axios.link/vOm8

• Ingersoll-Rand (NYSE: IR) has agreed to acquire GPSi, a Sarasota, Fla.-based provider of telematics for fleet managers transportation markets like education, golf and resorts, from Falconhead Capital. www.gpsindustries.com

• Staples, the office supplies retailer recently purchased by Sycamore Partners, is expecting bids for its China business within the next couple of weeks, according to the WSJ. http://axios.link/U41z

More M&A

• AirAsia said that it is in talks to sell all or part of its aircraft leasing business, and also divest its remaining 25% stake in a travel-booking joint venture with Expedia (Nasdaq: EXPE). http://axios.link/jSdk

⛽ LyondellBasell Industries (NYSE: LYB) is in talks to acquire Brazilian petrochemicals company Braskem (NYSE: BAK) for more than $10 billion, according to the WSJ. http://axios.link/5izB

• Mattel (Nasdaq: MAT) shares climbed sharply on a BMO Capital analyst suggestion that tough Q3 warnings mean that investors should "start looking at Mattel from a sale of the company perspective." http://axios.link/dBRW

⛽ Vistra Energy (NYSE: VST) has agreed to acquire rival energy producer Dynegy (NYSE: DYN) for $1.74 billion in stock. http://axios.link/DsxK

Fundraising

• LBC Credit Partners has closed its fourth fund with nearly $744 million in capital commitments. www.lbccredit.com

• Waverley Capital is raising $100 million for a debut fund focused on venture deals in the media space, according to Bloomberg. It is being led by Edgar Bronfman Jr., who will remain managing partner of Accretive, and Daniel Leff, who does not plan to raise another fund for his firm, Luminari Capital. http://axios.link/F0s9

It's Personnel

• Christopher Artinian has joined The Beekman Group as a managing director, focused on the consumer market. He previously was president and CEO of Branford Castle. He previously was CEO of TooJay's Gourmet Deli and, before that, of both Smokey Bones Bar & Fire Grill and Morton's The Steakhouse. www.thebeekmangroup.com

• Vikram Bajaj, the co-founder of Alphabet life sciences startup Verily and former chief scientific officer of cancer biotech company Grail, has joined Foresite Capital as a managing director. The move comes as Foresite continues to raise its fourth fund, which has a listed target of $650 million. http://axios.link/YaZ1

• John Tenet has joined 8VC as operating partner, Axios has learned. He previously was a principal with Valar Ventures and, before that, was with Allen & Co. www.8vc.com

Final Nuimbers
Dan Primack