Axios Pro Rata

A green watering can with a dollar sign painted on it.
May 07, 2021

📺 "Axios on HBO" returns this Sunday, including Jonathan Swan's interview with Sen. Bernie Sanders (clip) and Hope King's sit-down with Shell CEO Ben van Beurden. Tune in at 6pm ET/PT on HBO and HBO Max.

🚬 Axios Re:Cap dives into President Biden's proposed ban on menthol cigarettes with Scott Gottlieb, who recommended the move when he led the FDA under Trump. Listen via Apple or Spotify.

Top of the Morning

An illustration depicting a gold wheelchair
Illustration: Sarah Grillo/Axios

Private equity's "Golden Age" may be on the verge of a comeback, after more than a decade of changed behavior.

Driving the news: Bloomberg reports that several groups of big PE firms are forming to bid on Illinois-based Medline Industries, a family-owned medical supply giant that could fetch around $30 billion.

  • It would mark the return of giant "club" deals that were largely abandoned after the 2008 financial crisis.
  • Reported suitors for Medline: Advent International partnered with Bain Capital and CVC Capital Partners; KKR with Clayton Dubilier & Rice; and The Blackstone Group with Hellman & Friedman. Apollo Global Management also is considering a bid.

History: In the mid-aughts, buyout funds teamed up with one another so that they could afford to buy bigger and bigger companies. Mostly from the public markets, but not exclusively.

  • This bothered lots of limited partners in these funds, who had invested with different managers for the primary purpose of diversification. Plus, they often were contractually obligated to pay different fee percentages to different managers, even though they were doing the same deal.
  • The other defining characteristic of this period was easy and loose debt, with strict covenants becoming the exception to the rule.
  • After the financial crisis, PE firms did fewer mega-buyouts and, when they did one, tending to do them alone and fill in the cash gap by offering big co-investment opportunities to LPs.

State of play: Conditions are ripe for a mega-LBO revival. Fundraising has been on fire, and outpacing deal-making. Lenders also have tons of dry powder, because so much of their 2021 activity has been for refinancings. And most target companies are expensive, by virtue of the endless bull market.

  • Per Axios' Kate Marino: "Loan investors will still be wary of super highly-levered deals or fake adjusted EBITDA. But if there are big LBOs were the debt will be liquid and the metrics are reasonable, they'll probably do well in syndication."

Bottom line: Medline is just one deal, and bids aren't even due for another couple of weeks. So it could end up as an outlier, or falling apart entirely. Maybe Apollo just does it alone. But it really does feel like a potential dam breaker — the start of something that we haven't seen for a long, long time.


Photo illustration of Icahn in front of a stock trend line going upward
Photo illustration: Annelise Capossela/Axios. Photo: Michael Nagle/Getty Images

Carl Icahn has sold his remaining 5 million shares in nutritional supplement maker Herbalife (NYSE: HLF), valued at around $248 million.

  • Why it's the BFD: This is the coda to one of the most public and contentious fights in the history of activist investing, with Icahn's long position wiping the floor with Bill Ackman's short position.
  • Balance sheet: Icahn earned around $1.3 billion from his Herbalife bet, while Ackman (who cashed out in 2018) lost nearly $1 billion.
  • Bottom line: "The time for activism has passed as [Herbalife] has grown, and I don't typically invest billions of dollars in companies where our role as activist is not needed." — Carl Icahn in January 2021

Venture Capital Deals

Ada Support, a Toronto-based chatbot developer, raised US$130 million at a $1.2 billion valuation. Spark Capital led, and was joined by Tiger Global and insiders Bessemer Venture Partners, Accel and FirstMark Capital.

Material Bank, a Miami-based materials marketplace for architects and construction professionals, raised $100 million in Series C funding. General Catalyst and Durable Capital Partners co-led, and were joined by Bond, Lead Edge Capital and insiders Bain Capital Ventures and Raine Ventures.

🚑 TwinStrand Biosciences, a Seattle-based developer of next-gen sequencing tech, raised $50 million in Series B funding. Section 32 led, and was joined by Soleus Capital, Janus Henderson Investors and insiders Madrona Venture Group, Ridgeback Capital and Alexandria Venture Investments.

Nearby, a local e-commerce platform founded by April Underwood, raised $21 million in Series A funding. Redpoint Ventures led, and was joined by insiders GV, Obvious Ventures, Cowboy Ventures, Sound Ventures, Moxxie Ventures and Tina Sharkey.

Youibot, a Chinese developer of autonomous mobile robots, raised $15.5 million. SoftBank Ventures Asia led, and was joined by insiders BlueRun Ventures and SIG.

🚑 Nøie, a Copenhagen-based skincare startup, raised $12 million in Series A funding. Talis Capital led, and was joined by Inventure.

Metafy, a marketplace for matching gamers with instructors, raised $5.5 million in new seed funding from Forerunner Ventures, DCM and Seven Seven Six.

Private Equity Deals

Abry Partners and Castik Capital acquired Reward Gateway, a London-based HR tech and employee engagement firm, from Great Hill Partners.

🎲 Apollo Global Management offered to pay A$4 billion to buy the gambling, gaming services and media businesses of Tabcorp (ASX: TAH). Alternatively, Apollo offered to buy only Tabcorp's wagering and media units for A$3.5 billion, matching a rival offer from Entain (LSE: ENT).

The Blackstone Group offered to buy British real estate developer St. Modwen Properties (LSE: SMP) for €1.21 billion.

Equistone acquired a majority stake in TimeToAct Group, a German IT consultancy.

Harvest Partners acquired a minority stake in Eden Prairie, Minn.-based cybersecurity and automation software maker HelpSystems, joining existing backers TA Associates, Charlesbank Capital Partners and HGGC.

KKR is in talks to buy John Laing Group (LSE: JLG), an infrastructure investment firm with around a £1.9 billion market cap.

Offen Petroleum, a Denver-based portfolio company of Court Square Capital Partners, acquired the business assets of Petromark, a Harrison, Ark.-based motor fuel distributor and trucking company.

Public Offerings

AIG (NYSE: AIG) says it plans to sell a 19.9% stake in its life insurance and retirement unit via an IPO, after having held discussions with suitors like Athene Holding (NYSE: ATH).

Bowman Consulting Group, a Reston, Va.-based provider of engineering-focused professional services, raised $52 million in its IPO. The company priced 3.7 million shares at $14, versus plans to offer 3.1 million shares at $12–$14, for a $153 million fully diluted value. It will list on the Nasdaq (BWMN), and reports $1 million of net income for 2020 on $122 million in revenue.

🚑 Gyroscope Therapeutics, a British developer of gene therapies for ocular diseases, postponed an IPO that was expected to offer 6.8 million shares at $20-$22, citing “market conditions.” It had planned to list on the Nasdaq (VISN) and is backed by around $220 million in VC funding from firms like Syncona, Forbion, T. Rowe Price and Sofinnova Ventures.

🌶️ Pepper Money, an Australian lender backed by KKR, plans to raise A$500 million in its IPO at a A$1.3 billion valuation, making it Australia's largest IPO of 2021.

Phillips Edison, a grocery-anchored shopping center REIT, filed for a $100 million IPO.

Remitly, a Seattle-based digital remittance company, has hired banks for an IPO, per Reuters. The company has raised $480 million in VC funding, most recently at a $1.5 billion valuation, from PayU, DN Capital, Generation Investment Management, Owl Rock Capital, Princeville, Stripes, Threshold Ventures and Top Tier Capital.

🚑 Talaris Therapeutics, a Louisville, Ky.-based developer of methods for allogeneic hematopoietic stem cell transplantation, raised $150 million in its IPO. The pre-revenue company priced in the middle of its $16–$18 range, for a $736 million fully diluted value, will list on the Nasdaq (TALS) and raised $215 million from firms like The Blackstone Group (24.9% pre-IPO stake), Qiming Venture Partners (9.2%), Citadel (7.8%) and Viking Global (7.8%).

🚑 Valneva, a Paris-listed developer of vaccines for infectious diseases, raised $94 million in its Nasdaq float (VALN).

🚑 Waterdrop, a Chinese health insurance and healthcare crowdfunding platform, raised $360 million in its IPO. It priced at the high end of its $10–$12 range, will list on the NYSE (WDP) and reports a $102 million net loss for 2020 on $464 million in revenue. Shareholders include Tencent, Boyu Capital, Gaorong Capital and Swiss Re.

SPAC Stuff

🚑 Jasper Therapeutics, a Palo Alto-based developer of conditioning and therapeutic agents for hematopoietic stem cell transplants and gene therapies, agreed to go public at an implied $490 million market cap via Amplitude Healthcare Acquisition (Nasdaq: AMHCU).

🚑 Science 37, a developer of "site-less" clinical trials, agreed to go public at an implied $1.05 billion valuation via LifeSci Acquisition II (Nasdaq: LSAQ), per Bloomberg. Science 37 raised over $140 million in VC funding from firms like Lux Capital, Redmile Group, PPD, Sanofi, Novartis, LifeSci Venture Partners, GV, Amgen, Glenn Capital and Mubadala.

Blue Safari Group Acquisition, a Chinese fintech and business services SPAC, filed for a $50 million IPO.

Mericsson Acquisition, an Asia media and entertainment SPAC, filed for a $40 million IPO.

Liquidity Events

🚑 AMN Healthcare Services (NYSE: AMN) agreed to buy Synzi, a St. Petersburg, Fla.-based healthcare communications platform, from Kinderhook Industries for $42.5 million.

One Equity Partners sold Intren, a Union, Ill.-based utilities contractor primarily, to MasTech (NYSE: MTZ) for $420 million (including an earnout).

🚑 Ontario Teachers' Pension Plan is seeking a buyer of PhyMed Healthcare Group, a Nashville-based anesthesia services provider that’s expected to fetch less than $300 million, per PE Hub.

More M&A

Moneta Money Bank (Prague: MONET) agreed to buy Air Bank and other assets from Dutch private equity firm PPF, with the bolstered Czech lender to be valued at over $3 billion.

🚑 Walmart (NYSE: WMT) agreed to buy MeMD, a Scottsdale, Ariz.-based provider of telehealth services.


Boundary Street Capital, a private credit firm focused on tech, raised $330 million for its debut fund.

Five Elms Capital, a Kansas City-based growth equity firm, is raising $550 million for its fifth fund, per an SEC filing.

Hillhouse Capital, a Hong Kong-based private equity firm, is nearing final closes on around $18 billion for three new funds, per Bloomberg.

OneVC, a Brazilian VC firm, is raising $50 million for its second fund, per an SEC filing.

Park Square Capital of London raised €1.8 billion for its fourth subordinated debt fund.

Starlight Ventures, a Miami-based VC firm, has secured over $21 million for its $50 million-targeted second fund, per an SEC filing.

It's Personnel

David Enriquez stepped down as head of private equity investing for the New York City comptroller’s office, per WSJ. No word yet on his future plans.

Final Numbers: 😱😱😱

Data: FRED; Chart: Axios Visuals
Data: FRED; Chart: Axios Visuals

The U.S. economy added 266,000 jobs in April, far short of the nearly 1 million jobs that economists were expecting. And things only get more disappointing from there:

  • The unemployment rate ticked higher from 6% to 6.1%.
  • March's jobs gains were revised down from 916,000 to 770,000.

Axios' Courtenay Brown writes: "The gain in jobs in April was barely enough to keep up with population growth, let alone to recover from the pandemic's layoffs."

✔️Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and mothers to sign up.