Oct 18, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Photo by Jabin Botsford/The Washington Post via Getty Images

The Blackstone Group might have pulled its executives from next week's "Davos in the Desert" event in Riyadh, but it does not appear to be altering its deep financial ties to Saudi Arabia.

  • Blackstone reported Q3 earnings this morning, and during an analyst call was asked about possible pressures related to the Saudi Public Investment Fund's anchor commitment to an infrastructure fund that so far has garnered around $5 billion (total target of $40 billion, half of which could come from PIF).
  • I couldn't quite tell which Blackstone exec replied, but he said: "We've been concerned by what we've been reading... In the short-term we may get some questions, but the key thing to remember is our investors know Blackstone is the sole GP of the capital. We have sole discretion... Investors have enormous confidence in us which is why we believe we're on a path to growing [infrastructure] to large-scale despite some near term challenges."

What Blackstone highlights is how it's much easier if is for firms to walk with their feet than with their wallets. BlackRock's Larry Fink, for example, bailed on the conference. But check out this exchange with CNBC's Joe Kernan:

Kernan: If it becomes clear without a scintilla of doubt, that either King Salman or MBS ordered this, are you going to cut off all business ties with Saudi Arabia?
Fink: No.

The only real exceptions so far have been Richard Branson and Ari Emanuel. But expect reporters and investors to begin asking these more consequential questions, particularly the conference fades into the past. And we'll see if Blackstone is right that this is only a "short-term" issue.

There have been several more additions to the list of former speakers at the event, including Vinod Khosla, Android and Essential founder Andy Rubin, UK trade secretary Liam Fox, French finance minister Bruno LeMaire and Dutch finance minister Wopke Hoekstra.

  • Still no word from SoftBank or its participating portfolio companies.

Axios has learned that one interesting person still expected to attend, albeit not in a speaking role, is Dina Powell — who rejoined Goldman Sachs earlier this year as a member of its management committee after a stint in the Trump White House.

  • This comes shortly after Powell pulled herself out of consideration to replace Nikki Haley as US Ambassador to the UN, and her continued attendance seems to be out of a responsibility she feels to the WH-MBS relationship she helped to foster.
  • Also don't be surprised to see a bunch of bankers from Goldman to be floating around, particularly those on regional coverage teams. Same goes for other big investment banks, including some whose CEOs pulled themselves off the program.
  • Pro Rata Podcast: Our latest is on the Saudi situation. Listen here.

• Silicon Sweden: Venture capitalist Ken Howery has been nominated by President Trump to be the U.S. Ambassador to Sweden, a position that has been empty since Trump took office.

  • Howery was a co-founder and first CFO at PayPal, before helping to form Founders Fund, where he remains a general partner.
  • Trump's nomination statement did not explain why Howery was picked.
  • Founders Fund declined comment, except to say Howery remains an "active partner."

• Problema: BC Partners has an unexpected problem in Italy, where it's been seeking to sell a local restaurant holding company for around €700 million. Per Reuters:

A group of private equity investors bidding for Italy’s Old Wild West restaurant chain is fretting over Rome’s plans to shut shops on Sundays...
Italy’s deputy prime minister Luigi Di Maio, leader of the anti-establishment 5-Star Movement, has spoken of introducing a ban on Sunday shopping in large commercial centers before the end of the year to defend family traditions...
Cigierre runs more than 180 restaurants across Italy and its flagship brand Old Wild West, very active in mid-sized Italian towns, has a number of sites inside shopping malls.
The BFD
Source: Giphy

Tilman Fertitta, owner of the Golden Nugget Casinos, Landrys restaurant chain, and Houston Rockets basketball franchise, reportedly has approached Caesars Entertainment (Nasdaq: CZR) about a reverse merger.

  • Why it's the BFD: Because this could be the second time that Caeasars changes hands near a market top. The first time was via a 2008 leveraged buyout by Apollo and TPG that resulted in a massive bankruptcy and restructuring.
  • Details: Apollo (7.5% stake) and TPG still hold equity in Caesars (7.5% and $4.5%, respectively), and reportedly would would retrain positions in the combined company. Bloomberg says the deal would be at around $13 per share, and include the sale of Golden Nugget and Landrys real estate to a REIT, which Caesars would then use to buy back stock.
  • Bottom line: "Caesars, which operates 49 casinos in 13 U.S. states as well as in Britain, Egypt, Canada and South Africa, is playing catch-up with rivals such as MGM Resorts International and Wynn Resorts Ltd, as it gradually pays down debt and improves profitability. It has also been investing in its U.S. sports-betting business and is exploring ways to expand in emerging markets given its absence from Macau." — Greg Roumeliotis, Reuters
Venture Capital Deals

• Panshi, a Chinese online and mobile advertising firm, raised $320 million in Series D funding from Cybernaut Investment Group and return backers Hana Financial Group and CCB Trust Co. http://axios.link/LUg7

• Vacasa, a Portland,, Ore.-based vacation rental management company, raised $64 million in Series B funding. Riverwood led, and was joined by Level Equity, Assurant and Newspring. http://axios.link/88E7

• Tastemade, a Santa Monica, Calif.-based food and lifestyle digital network and studio, raised $35 million in Series E funding. Goldman Sachs Growth Equity led, and was joined by Amazon, Cool Japan Fund and return backers Redpoint Ventures, Raine Ventures, Comcast Ventures and Liberty Media. http://axios.link/NNnc

• Infusionsoft, a Chandler, Ariz.-based provider of CRM, sales and marketing software to SMBs, raised $20 million from ORIX Growth Capital. http://axios.link/fLUE

• Oh My Green, a San Francisco-based health-food delivery platform for offices, raised $20 million in its first institutional funding round. Backers include Initialized Capital, Powerplant Ventures, Backed VC, ZhenFund, Talis Capital and the Stanford StartX Fund. http://axios.link/GEyj

🚑 Acticor Biotech, a Paris-based developer of treatments for thrombotic diseases, raised €15.3 million in Series B funding. Newton BioCapital led, and was joined by Mirae Capital, CMS Medical Venture Investment, A&B and CapDecisif Management. www.acticor-biotech.com

• ProducePay, a Los Angeles-based provider of financial solutions to fresh produce farmers, raised $14 million in Series B funding. Anterra Capital led, and was joined by Rabo Frontier Ventures, Coventure, Social Leverage, FJ Labs, Greenhouse Capital, Moonshots Capital and Tribeca Angels. www.producepay.com

• Cobo, a Beijing-based cryptocurrency wallet startup, raised $13 million in Series A funding co-led by DHVC and Wu Capital. http://axios.link/TnB0

• Mrs Wordsmith, a London-based provider of illustrated and animated word products, raised $11 million in Series A funding. Trustbridge Partners led, and was joined by Reach Capital and Kindred Venture Capital. http://axios.link/aU59

• FundGuard, a New York-based AI platform for investment funds, raised $4 million from Blumberg Capital and LionBird. www.fundguard.com

• Momenta, a Chinese developer of autonomous driving technology, said it raised an undisclosed amount of funding at a valuation north of $1 billion, from Tencent, China Merchants Group, CCB International and return backers NIO Capital and Pagoda Investment. http://axios.link/mCTp

• Royole, a Chinese maker of rollable displays, raised an undisclosed amount of new funding at a $5 billion valuation from firms like Yingke Innovation Asset Management, per ChinaMoneyNetwork. http://axios.link/iXC1

Private Equity Deals

🚑 Astorg Partners agreed to buy a majority stake in Nemera, a European maker of drug delivery devices, from Montagu Private Equity (which will retain a position). http://axios.link/isBK

🚑 Censis Technologies, a Franklin, Tenn.-based portfolio company of The Riverside Company, acquired Applied Logic, a St. Louis-based provider of hardware and software used by sterile processing departments of hospitals and medical facilities. www.censis.com

Capital Dynamics agreed to buy a 50% stake in Whiteside Hill Wind Farm, located in Scotland, from GE Capital. http://axios.link/2bfm

Crestview Partners agreed to buy Elo Touch Solutions, a Milpitas, Calif.-based maker of touchscreens, from The Gores Group. www.elotouch.com

Finaccess Capital of Mexico offered to buy a control stake in Restaurant Brands New Zealand (NZ: RBD), operator of KFC and Pizza Hut franchises, for US$578 million. http://axios.link/vtf4

🚑 KKR and TPG are among those circling Acadia Healthcare (Nasdaq: ACHC), a Franklin, Tenn.-based operator of behavioral health centers that has a market cap of around $3.1 billion, per Reuters. http://axios.link/MZVt

Spotify (NYSE: SPOT) has acquired an equity stake in DistroKid, a New York-based music distribution platform backed by Silversmith Capital Partners. http://axios.link/uFFt

Public Offerings

🚑 Gamida Cell, an Israel-based developer of stem cell therapy products, set IPO terms to 3.6 million shares at $13-$15. It would have a fully-diluted market value of $300 million, were it to price in the middle, and plans to trade on the Nasdaq (GMDA) with BMO as lead underwriter. Shareholders include Novartis (21.6% stake), Clal Biotechnology Industries (18.6%), Shavit Capital (12.9%), Israel HealthCare Ventures (11.8%) and VMS Investment Group. www.gamida-cell.com

🚑 PhaseBio Pharma, a Malvern, Penn.-based drug developer focused on orphan cardiopulmonary diseases, raised $46 million in its IPO. The company priced 9.2 million shares at $5, versus plans to offer 5 million shares at $12-$14. The pre-revenue company will trade on the Nasdaq (PHAS) with Citigroup as lead underwriter, and had raised around $140 million in VC funding from firms like NEA, Hatteras Venture Partners, Johnson & Johnson and Fletcher Spaght Ventures. www.phasebio.com

🎲 Studio City International, a Macau resort and casino company being spun out of Melco International (HK: 200), raised $359 million in its IPO. The company pieced 28.75 million shares at $12.50 (high end of range), and will trade on the NYSE (MSC) with Deutsche Bank as lead underwriter. http://axios.link/517P

🚑 Twist Bioscience, a San Francisco-based startup focused on synthetic DNA, set IPO terms to 5 million shares at $14-$16. It would have a fully-diluted market value of $418 million, were it to price in the middle, and plans to trade on the Nasdaq (TWST) with JPMorgan as lead underwriter. Twist has raised around $280 million from firms like Arch Venture Partners (14.8% stake), Illumina (14.8%), Tao Capital Partners (7.7%), Fidelity (5.7%), Paladin Capital Group (4.9%), Foresite Capital Management and Yuri Milner. www.twistbioscience.com

• Valtech, a London-based provider of digital agency services, indefinitely postponed an IPO that had been expected to price this week, with 6.7 million shares being offered at $14-$16. http://axios.link/Vfs1

Liquidity Events

• E.W. Scripps (Nasdaq: SSP) agreed to buy Triton, a Sherman Oaks, Calif.-based provider of software to the digital audio market, for $150 million from Vector Capital.
www.tritondigital.com

• J.F. Lehman completed its previously-announced sale of NRC Group, a provider of environmental, compliance and waste management services, to a blank check company called Hennessy Capital Acquisition Corp. III.

More M&A

• Alibaba will invest around $288 million into listed Chinese wine and spirits importer and distributor 1919.cn. http://axios.link/7PYa

MEG Energy (TSX: MEG) rejected a C$6.4 billion takeover from rival oil and gas producer Husky Energy (TSX: HSE), due to price. http://axios.link/APtl

🚑 Novartis (SWX: NOVN) agreed to buy Endocyte (Nasdaq: ECYT), a West Lafayette, Ind.-based cancer drug developer, for around $2.1 billion, or $24 per share (54% premium over yesterday’s closing price). http://axios.link/HWsB

🚑 Piramal Enterprises of India is considering a sale of its contract pharma unit, which could fetch around $1 billion, per Bloomberg. http://axios.link/HvTN

Royal Dutch Shell agreed to sell its Danish upstream business to Noreco for $1.9 billion. http://axios.link/GMH1

Fundraising

• H.I.G. Growth closed its third fund with $970 million. www.higgrowth.com

• Vista Equity Partners held an $11.4 billion first close on its seventh flagship tech buyout fund, which is targeting $16 billion, per the WSJ. http://axios.link/9Ohk

It's Personnel

• Shasta Ventures promoted Nikhil Basu Trivedi to managing director. http://axios.link/gouv

Final Numbers
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Data: S&P, Yahoo Finance; Chart: Andrew Witherspoon/Axios
Dan Primack