Mar 31, 2020

Axios Pro Rata

🎧 Over 164,000 people in the U.S. have now tested positive for the coronavirus. Among them is Axios co-founder and president Roy Schwartz, who joined the Pro Rata Podcast to discuss his unusual symptoms (no cough or fever), his hospital experience, and the complications of quarantining with a family. Listen here.

Top of the Morning

Illustration: Sarah Grillo/Axios

Global merger and acquisition activity fell sharply in the first quarter of 2020, with dollar volume dropping 28% to $698 billion and the number of deals off 14% to 9,616, according to preliminary data from Refinitiv.

  • Expert analysis: Duh.

The dollar drop was largely driven by the disappearance of megadeals valued at over $10 billion, which fell from $412 billion for the Jan. 1–March 28 period in 2019, to $179 billion that same period this year.

  • U.S. deal value also took a big bite, off 51%, which was enough to offset gains in Europe (+120%) and Japan (+66%).
  • The biggest falls by sector were for energy, health care, and materials. The only significant gainer was industrials, while consumer products, consumer staples, and retail were largely flat.
  • Private equity deal dollars actually rose slightly, bringing its percentage of the M&A market up from 10.7% in 2019 to 15.6% in 2020.

The deal number drop is a bit more complicated.

  • Yes, a 14% fall is significant. And unlike with the deal dollars, private equity played a major role with a 25% year-over-year decline.
  • But it's not much higher than the 13.1% decline between the 2018 and 2019 time periods.

Bottom line: Last year the deal dollar and number drops were nearly on par with one another, which suggests that there has been a lot of downward renegotiation over deals that were almost at the finish line.


Illustration: Aïda Amer/Axios

Easton Hospital, owned by a portfolio company of Cerberus Capital Management, secured $8 million from the State of Pennsylvania in a last-minute bailout to keep the facility's doors open. Through June, the state funding commitment would total $24 million.

  • Why it's the BFD: It's very welcome news that a hospital won't close in the midst of a pandemic, but it also reflects pretty indefensible behavior by Cerberus. To be sure, Easton Hospital is unprofitable and had been negotiating for months to be acquired by a larger local rival. Under normal circumstances, it would make sense for Cerberus and portfolio company Steward Health Care to wind things down. But this is a national emergency, and Cerberus, its billionaire CEO, and very wealthy partners could have stepped in to help save lives. Plus, Cerberus and Steward both knew that federal aid to hospitals was on the way.
  • The bottom line: "It’s hard to believe that Easton Hospital could have sat vacant in the coming months — shedding 700 jobs in the process — as the rest of the Lehigh Valley scurried to free up every room, ventilator and medical staffer to try to save lives." — The Express-Times editorial board
Pro Rata for Kids

Today's project is to create a brand-new superhero. On a single sheet of paper, please ask your kid(s) to draw their superhero, name their superhero and list three superpowers (the more unusual the better).

  • Per usual, please send me photos.

Yesterday I asked your kid(s) to create Henri Matisse-inspired collages. Here's some of what you sent in:

Alexandra (age 8)
Henry (age 12)
Anna (age 7)
Venture Capital Deals

Via, a New York-based ride hail and transit software company, raised $200 million in Series E funding at a $2.25 billion post-money valuation. Exor led, and was joined by Shell, Macquarie Capital, and Mori Building.

🚑 Affinia Therapeutics, a Waltham, Mass.-based gene therapy startup, raised $60 million in Series A funding. F-Prime Capital and NEA co-led, and were joined by Atlas Venture, Alexandria Venture Investments, Lonza, and Partners Innovation Fund.

Axonius, a New York-based cybersecurity asset management company, raised $58 million in Series C funding. Lightspeed Venture Partners led, and was joined by return backers OpenView, Bessemer Venture Partners, YL Ventures, Vertex, and WTI.

Strivr, a Palo Alto-based provider of VR training solutions , raised $30 million in Series B funding. Georgian Partners led, and was joined by Franklin Templeton, Prologis Ventures, and return backers GreatPoint Ventures and Alumni Ventures Group.

Juspay, an Indian provider of mobile payment solutions for merchants, raised $21.6 million in Series B funding. Vostok Emerging Finance led, and was joined by Wellington Management and return backer Accel.

Anagog, an Israeli provider of on-device AI solutions, raised $10 million in Series C funding. IN Venture and MizMaa co-led, and were joined by auto supplier Continental.

Zon, a Dubai-based decentralized mobile e-commerce platform, raised $8 million in seed funding led by ASA Ventures.

Qarnot, a French developer of computer servers that also heat buildings, raised €6 million from Banque des Territoires, Caisse des Dépôts, Engie Rassembleur d'Énergies, A/O PropTech, and Groupe Casino.

Private Equity Deals

Alchemist Capital Partners Korea and Credian Partners will pay $435 million to buy the foundry unit and a manufacturing facility from South Korean chipmaker MagnaChip (NYSE: MX).

Aurea Software, an Austin, Texas-based portfolio company of ESW Capital, agreed to buy Redwood City, Calif.-based document creation and collaboration software company BroadVision (Nasdaq: BVSN) out of bankruptcy.

🎮 CVC Capital Partners and iDreamSky (HK: 1119) may lower their $1.3 billion offer to jointly acquire Chinese gaming company Leyou (HK: 1089), per Bloomberg.

Morgan Stanley Infrastructure Partners completed its $500 million-plus purchase of Seven Seas, the water treatment business of AquaVenture Holdings, from Culligan, an Advent International-backed company.

Stonepeak Infrastructure Partners completed its purchase of Trac Intermodal, a Princeton, N.J.-based transportation equipment company from Fortress Investment Group.

Thoma Bravo agreed to buy Command Alkon, a Birmingham, Ala.-based supplier collaboration platform for heavy construction, from Quilvest Capital.

Public Offerings

Dana Gas, a UAE-based energy company, said it may spin off its upstream unit and list it in Abu Dhabi.

🚑 Smiths Group (LSE: SMIN) said it is delaying the planned spinoff of its medical unit, as it refocuses on making ventilators.

Liquidity Events

Palo Alto Networks (NYSE: PANW) agreed to buy CloudGenix, a San Jose, Calif.-based provider of software-defined WAN, for $420 million in cash. CloudGenix had raised around $100 million in VC funding from Bain Capital Ventures, CRV, Mayfield, ClearSky, Wipro Ventures, and Intel Capital.

More M&A

Alibaba (NYSE: BABA) plans to buy at least a 10% stake in Chinese courier Yunda Holdings (SZ: 002120) for nearly $800 million, per Reuters.

Altice Europe said that its HOT subsidiary has ended talks to acquire Israel’s Partner Communications.

Newlat (Milan: NWLF) agreed to buy a 46% stake in Italian dairy group Centrale del Latte d’Italia (Milan: CLII).

Pinduoduo (Nasdaq: PPD), a Chinese e-commerce company, said it raised $1.1 billion via a private share placement.

Starboard Value disclosed a 9.3% stake in Commvault (Nasdaq: CVLT), a Tinton Falls, N.J.-based data management and protection software company with a market cap of around $1.8 billion.

Sumitomo Mitsui Banking Corp. is investing $384 million for a 4.9% stake in Ares Management (NYSE: ARES), a U.S.-based investment firm that focuses on lending to mid-sized businesses.

ValueAct Capital acquired more than a 7% stake in Japanese chip and display materials maker JSR (Tokyo: 4185), a position valued at around $283 million.

Vivendi (Paris: VIV) completed its sale of a 10% stake in Universal Music Group to a Tencent-led consortium at a €30 billion enterprise value.


Ardian raised a record $18 billion for its eighth private equity secondaries fund, which is expected to hold a final close next month, per Bloomberg.

Gemspring Capital, a Westport, Conn.-based lower middle-market private equity firm, raised $750 million for its second fund.

General Catalyst raised $600 million for its tenth early stage fund, plus $1 billion for a new growth fund and $700 million for an “endurance fund” that will back companies doing at least $100 million in sales.

JPMorgan Asset Management is seeking to raise upwards of $10 billion for new investments — $3b for credit, $3b for real estate, and $4b for transportation/infrastructure — per Bloomberg.

It's Personnel

Rick Andlinger joined cybersecurity-focused Option3Ventures as a partner and chief investment officer. He previously led a family office investment firm.

Elisa Gruber joined wealth management firm Ballentine Partners as director of private investing. She previously helped lead Liberty Mutual’s private equity group.

Final Numbers
Data: IHME COVID-19 health service utilization forecasting team; Cartogram: Andrew Witherspoon/Axios

🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and roadside zookeepers to sign up.

Also, a big thank you to Tribeca Venture Partners, which just did a per rider match from our Saturday Peloton fundraiser, bringing the grand total over $120,000.