Sep 11, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

DC readers: Join Axios this Thursday for a discussion on the future of transportation and self-driving, with Rep. Robert Latta (R-OH), Global Automakers CEO John Bozzella & SAE International CEO David Schutt. RSVP here.

  • Also, pleased to welcome Joann Muller to Axios, where she'll lead our autonomous vehicles coverage and write our new AV newsletter. She's spent the past 15 years as Detroit bureau chief for Forbes, and can be followed @JoannMuller.
Top of the Morning
Source: Giphy

Limited partners in private investment funds are asking the SEC for help, Axios' Kia Kokalitcheva reports.

Specifically, they want the agency to consider a ban on so-called "hedge clauses" that limit GP liability and fiduciary duties. These self-serving terms are showing up with increasing regularity due to increased competition for allocations in top venture capital, energy and private equity funds.

  • Delaware, where many funds are registered, passed a law in 2004 that basically gave GP's sole discretion when writing contracts, including the ability to limit certain fiduciary duties.
  • The SEC reinforced this position in a 2007 no-action letter that reversed its historical interpretation of the Investment Advisers Act of 1940 and its anti-fraud provisions.
  • Per a comment letter from the Institutional Limited Partner Association: "LPs have seen a noteworthy increase in GPs seeking to waive their fiduciary duties owed to investors under Delaware law... Eliminating or significantly modifying fiduciary requirements under state law is particularly concerning because there is a limited private right of action under the Advisers Act, and investors in a private equity fund are locked up for a significant number of years (with 15 years not being out of the ordinary) with limited withdrawal rights."

ICYMI: Gurbaksh Chahal, the serial tech entrepreneur who as of last check was hawking an ICO and threatening to sue me, is now in jail. Six months for a probation violation related to a pair of domestic abuse cases.

CBS mess: Yesterday i incorrectly wrote that the network's settlement with Shari Redstone's National Amusement would preclude a tie-up with Viacom, at least in the short-term. Instead, it says that National Amusements won't propose such a merger for at least two years, but one could be put forth if supported by two-thirds of the reconstructed CBS board.

  • Per Axios' Sara Fischer: "The CBS board actually has real board power now."
  • There also was a structural change to the trust set up by Sumner Redstone, which would make it easier to sell CBS to a different third party like Verizon.
  • Sara and I dug into the CBS mess in yesterday's Pro Rata podcast. (Listen) (Subscribe)
In Memoriam
David Retik (l) and Chris Mello (r)

Please take a moment to remember the thousands of innocents murdered 17 years ago this morning.

Among them were Boston-based private equity investors David Retik and Chris Mello, both of whom were on Flight 11. The foundation established in their names has since awarded nearly $2 million in grants to over 40 nonprofit organizations.

The BFD

Illustration: Rebecca Zisser/Axios

Renesas Electronics (Tokyo: 6723) agreed to buy U.S. chipmaker Integrated Device Technology (NYSE: IDTI) for $6.7 billion, or $45 per share.

  • Why it's the BFD: Because it's an interesting test for U.S. and Chinese antitrust authorities, both of which have become reluctant to approve global semiconductor mergers. Renesas has said it isn't worried, pointing to a lack of product overlap, but acquirers never express concern on announcement day.
  • Bottom line: "Renesas has been keen to get its hands on IDT’s know-how in analog semiconductors for wireless networks and sensors — expertise crucial to develop autonomous driving and connected car technology." — Makiko Yamazaki, Reuters
Venture Capital Deals

Evaneos, an online marketplace for custom travel experiences, raised $80 million in Series D funding. Partech and Level Equity co-led, and were joined by Quadrille Capital and return backers XAnge, Serena Capital and Bpifrance. http://axios.link/THmh

Atrium, a tech-enabled law firm startup led by Twitch founder Justin Kan, raised $65 million in new funding led by Andreessen Horowitz. http://axios.link/Swnj

🚑 OncoResponse, a Seattle-based immunotherapy company, raised $40 million in Series B funding. RiverVest Venture Partners led, and was joined by Qatar Investment Authority, Redmile Group and return backers Alexandria Venture Investments, ARCH Venture Partners, HT Family Office, Canaan Partners, Helsinn Investment Fund and William Marsh Rice University. www.oncoresponseinc.com

Facet Wealth, a Baltimore-based financial planning platform, raised $33 million in Series A funding. Warburg Pincus led, and was joined by Slow Ventures. http://axios.link/93J8

AutoGrid, a Redwood City, Calif.-based smart energy grid company, raised $32 million in Series D funding. CLP Holdings Group, Innogy, Ørstead and Tenaska were joined by return backers Energy Impact Partners, Envision Ventures, Total Energy Ventures, Clearsky Power & Technology Fund, E.ON and Foundation Capital. http://axios.link/2GFm

🚑 Biodesy, a South San Francisco-based biomolecule characterization company, raised $20 million in Series C funding. Alexandria Venture Investments led, and was joined by return backers 5AM Ventures, Pfizer Ventures and Roche Venture Fund. www.biodesy.com

Treez, a Fremont, Calif.-based point-of-sale software for the cannabis industry, raised $11.5 million in new Series A funding led by Intrinsic Capital Partners. www.treez.io

Hoodline, a San Francisco-based local news and content discovery platform, raised $10 million. Neoteny led, and was joined by Sound Ventures, Dentsu Ventures and Innovation Endeavors. http://axios.link/itpa

Impossible Aerospace, a Santa Rosa, Calif.-based commercial drone maker, raised $9.4 million in Series A funding from Bessemer Venture Partners, Eclipse Ventures and Airbus Ventures. http://axios.link/THud

Migo, a Seattle-based meta-search app for on-demand rides, raised $9 million in Series A funding from Enterprise Holdings, Hyundai, Thayer Ventures, Second Avenue Partners, Via-ID, Rolling Bay Ventures and B37 Ventures. http://axios.link/vSe6

Silicon Line, a German provider of ultra-low-power optical link technology for consumer electronics, raised €8.2 million in Series B funding led by Capital-E. www.silicon-line.com

Ravelin, a London-based provider of fraud prediction and prevention solutions for e-commerce, raised £8 million in Series B funding. BlackFin Capital Partners led, and was joined by return backers Amadeus Capital Partners, Passion Capital and Playfair Capital. http://axios.link/IYVs

Private Equity Deals

Ancor Capital Partners acquired SIMR, an Ann Arbor, Mich.-based health economics and outcomes research company. www.statinmed.com

Apax Partners agreed to invest in Paycor, a Cincinnati-based provider of human capital management software. www.paycor.com

The Blackstone Group and Telereal Trillium agreed to buy more than 5,000 commercial properties — including many Victorian railway arches — from Network Rail, a British state-owned rail operator, for nearly £1.5 billion. http://axios.link/uYR2

Castanea Partners acquired a majority stake in West Coast Fitness, a franchisee and operator of ten Orangetheory studios in Los Angeles and San Francisco. www.castaneapartners.com

Elite SEM, a New York-based portfolio company of Mountaingate Capital, acquired CPC Strategy, a San Diego-based digital marketing agency focused on the retail sector. www.elitesem.com

MidOcean Partners acquired Florida Food Products, a Eustis, Fla.-based maker of natural and clean label ingredients, from Kainos Capital. www.floridafood.com

Tiger Peak Capital acquired a majority stake in Voice Comm, a Pennsauken, N.J.-based provider of supply chain management services for the mobile device accessories industry. www.myvoicecomm.com

Public Offerings

Bank7, an Oklahoma City-based bank with branches in Texas and Kansas, set IPO terms to 3.3 million shares at $18-$21. It plans to trade on the Nasdaq (BSVN), with Keefe Bruyette Woods as lead underwriter.

EdtechX Holdings Acquisition, a London-based SPAC formed by IBIS Capital to acquire an ed-tech business, filed for a $55 million IPO. http://axios.link/Ptj2

Liquidity Events

Genstar Capital completed its $2 billion sale of Accruent, an Austin, Texas-based provider of physical resource management solutions, to Fortive (NYSE: FTV).

🍰 TowerBrook Capital Partners agreed to sell Wilton Brands, a Naperville, Ill.-based provider of baking and cake-decorating products, to Germany’s Dr. August Oetker KG. http://axios.link/C2C2

United Rentals (NYSE: URI) agreed to buy rival equipment rental company Blueline Rental from Platinum Equity for $2.1 billion. www.bluelinerental.com

More M&A

⛽ SandRidge Energy (NYSE: SD) said it has ended a strategic review process, saying that proposed takeover offers “undervalued” the shale oil producer. http://axios.link/VFyG

Fundraising

Capvis raised €1.2 billion for its fifth European mid-market private equity fund. www.capvis.com

The Carlyle Group raised $5.5 billion for its seventh real estate fund. www.carlyle.com

EQT Partners, a Swedish private equity giant, is considering an IPO, per Bloomberg. http://axios.link/TSwf

Global Logistic Properties and Singapore’s GIC have formed a $2 billion private equity fund focused on “income-generating logistics facilities in China.” www.glprop.com

Westhook Capital, a Los Angeles-based buyout firm focused on the lower middle-markets, closed its debut fund with $140 million. It’s led by Michael Hooks, co-founder of Black Canyon Capital. www.westhook.com

It's Personnel

Brian Gladden, former CFO of Mondelēz International and Dell, joined Bain Capital as an operating partner and “CFO specialist.” www.baincapital.com

Peter Preisler joined Oaktree Capital Group as head of Europe and Africa marketing. He previously was with T. Rowe Price. http://axios.link/GD5s

Meena Thever joined Bridge Investment Group as a managing director of capital markets. She previously was a director in BlackRock’s alternative specialists group. www.bridgeig.com

Final Numbers
Expand chart
Adapted from IEA; Note: 2018 is through Aug. Investments include seed, series A and series B deals. Mobility service, internet-of-things, biochemical and artificial intelligence start-ups are excluded unless directly energy-related; Chart: Axios Visuals
Dan Primack

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