Jun 16, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🎧 The Axios Pro Rata podcast is now Axios Re:Cap — a 10-minute pod, hosted by yours truly, that unpacks the day’s biggest stories through a business lens.

  • In our first episode, former NBA player and ESPN commentator Jalen Rose talks about how NBA players are trying to balance resuming play with efforts to improve racial justice and equality. Listen via Apple or via Axios.
Top of the Morning

Illustration: Eniola Odetunde/Axios

There is still well more than $100 billion available for Paycheck Protection Program loans, despite initial predictions that the late April refresh would be insufficient.

  • Glass half full explanation: Most qualifying small businesses that wanted a PPP loan already got one, and the economy is now reopening and recovering.
  • Glass half empty explanation: Many lenders, including large ones like Wells Fargo, stopped taking PPP applications. This may have been particularly problematic for small businesses that waited for loan forgiveness guidance to be finalized, which happened weeks past deadline.

Kathryn Petralia, co-founder and president of digital lending platform Kabbage, is in the latter camp — particularly when it comes to independent contractors like gig economy workers, who either didn't have existing banking relationships or found the application process to be byzantine.

  • "Around 40% of the 140,000 approved PPP loans through Kabbage have been for independent contractors, and their median loan amount is just $13,500," she says. "There aren't many banks that want to manually underwrite $14,000 PPP loans... It's just not worth their time."

What's new: Kabbage today is launching a dedicated PPP application portal for independent contractors.

  • Included is a channel for Uber drivers, in partnership with the company, whereby Uber-specific documentation will be automatically uploaded.
  • Similar arrangements could be coming soon with other gig economy companies.

The bottom line: The PPP loan application process remains open until June 30. Don't be surprised to see a last-minute surge, as non-traditional lenders like Kabbage seek out those who fell through the early cracks.

Also...

Barcelona-based Accelya today agreed to buy Farelogix, a Miami-based airline industry software provider.

  • Farelogix previously had a deal to be acquired for $360 million by Sabre (Nasdaq: SABR). But Sabre used the coronavirus pandemic to walk away from that transaction, despite having just defeated a Justice Department antitrust lawsuit.

Safarliland says it plans to divest its tear gas and other “crowd control solutions,” while refocusing on “passive defensive protection” like bulletproof vests.

  • As we recently reported, Safariland is one of the country’s largest makers of tear gas, and is backed by private equity firm Palm Beach Capital.
  • Something that didn't make our prior story is that the country’s leading maker of “pepper balls” is also backed by private equity. Lead sponsor ClearLight Partners didn’t return requests for comment.

Hertz yesterday filed for a $500 million stock offering, despite recently entering Chapter 11 bankruptcy protection.

  • The car rental giant explicitly warns potential investors that their equity would be subordinate to debtholders and other creditors. It also says it expects “our stockholders’ equity to decrease” and warns there is “significant risk… that our common stock will be worthless.”

Sen. Marco Rubio yesterday said that there will have to be at least some disclosure of PPP loan recipients, despite Treasury Department reticence. Per Rubio:

"There will be disclosure, and it's just a question of whether there’s differentiation between $100,000 loan and a $5 million loan... If you have a big loan, you know, there's no avoiding it. We’re going to need to know who you are."
The BFD

Illustration: Eniola Odetunde/Axios

The German government will invest €300 million for a 23% ownership stake in CureVac, a VC-backed mRNA biotech working on a COVID-19 vaccine.

  • Why it's the BFD: The deal is intended to prevent CureVac from relocating or being acquired by a foreign investor, reflecting increased global protectionism around coronavirus drugs.
  • Backstory: In March, a German newspaper reported that the Trump administration had discussed buying CureVac, sparking outrage in Germany.
  • Investors: CureVac is majority-owned owned by SAP co-founder Dietmar Hopp, via his VC firm, while other backers include Eli Lilly, Baillie Gifford, and the Bill & Melinda Gates Foundation.
  • The bottom line: "It's not clear whether Germany will seek to gain preferential access to the [CureVac] vaccine should it come through testing." — Ben Adams, FierceBiotech
Venture Capital Deals

Epic Games, owner of Fortnite, is nearing a $750 million round of funding at a $17 billion valuation, per Bloomberg. T. Rowe Price and Baillie Gifford are expected to participate, alongside existing backer KKR. http://axios.link/bhpM

🚑 Shattuck Labs, a cancer and inflammatory disease biotech with offices in Austin, Texas and Durham, N.C., raised $118 million in Series B funding. Redmile Group led, and was joined by Janus Henderson Investors, Fidelity, EcoR1 Capital, Hatteras Venture Partners, Avidity Partners, Partner Fund Management, Emerson Collective, and Piper Sandler & Co. http://axios.link/Wug4

🚑 Immvira, a Chinese developer of oncolytic viruses to treat cancer, raised $58 million in Series B funding. Huagai Capital led, and was joined by Apricot Capital and Cowin Capital. http://axios.link/fEXd

Swappie, a Finland-based refurbisher and reseller of secondhand iPhones, raised €35.8 million in Series B funding. TESI was joined by return backers Lifeline Ventures, Reaktor Ventures, and Inventure Investors. http://axios.link/R5Ok

🚑 Abacus Insights, a Boston-based data integration and interoperability platform for health plans and providers, raised $35 million in Series B funding. Blue Venture Fund led, and was joined by return backers CRV, .406 Ventures, Horizon Healthcare Services, and Echo Health Ventures. www.abacusinsights.com

🚑 eTheRNA, a Belgian developer of mRNA therapeutics, raised €34 million in Series B funding. Grand Decade, BNP Paribas Fortis PE, Yijing Capital, and Novalis LifeSciences were joined by return backers Boehringer Ingelheim, Omega Funds, LSP and PMV. http://axios.link/BJNK

🚑 Ona Therapeutics, a Barcelona-based biotech focused on metastatic cancer, raised €30 million in Series A funding from Alta Life Sciences, Bpifrance, Ysios Capital, and return backer Asabys Partners. http://axios.link/czlQ

Wandelbots, a German no-code programming startup focused on industrial robots, raised $30 million in Series B funding. 83North led, and was joined by Next47 and M12. http://axios.link/Rbz9

Drishti Technologies, a Mountain View-based provider of video analytics for the factory floor, raised $25 million in Series B funding. Sozo Ventures led, and was joined by Alpha Intelligence Capital, Toyota AI Ventures, Micron Ventures, Presidio Ventures, Hella Ventures, and return backers Emergence Capital, Benhamou Global Ventures, and Andreessen Horowitz. www.drishti.com

Hydrow, a maker of connected rowing machines, raised $25 million led by L Catterton. http://axios.link/5pJM

Salt Security, a Palo Alto-based API security startup, raised $20 million in Series A funding led by Tenaya Capital. www.salt.security

Open Raven, a Los Angeles-based data security platform, raised $15 million in Series A funding. Kleiner Perkins led, and was joined by Upfront Ventures. www.openraven.com

Kasada, an Australian provider of web traffic security solutions, raised US$10 million in Series B funding. Ten Eleven Ventures led, and was joined by return backers Main Sequence Ventures and Westpac. http://axios.link/hZ74

TransferGo, a London-based international money transfer service, raised $10 million. Seventure and Vostok Emerging Finance co-led, and were joined by Hard Yaka, Revo Capital, and Bootstrap Europe. http://axios.link/VcRc

VESoft, a Chinese graph database startup, raised $8 million in Series A funding. Redpoint China Ventures led, and was joined by return backer Matrix Partners China. http://axios.link/fTko

Apprentice, a Jersey City, N.J.-based conversational AI and AR platform for the life sciences and chemical markets, raised $7.5 million led by Insight Partners. http://axios.link/BQJS

4Degrees, a Chicago-based startup focused on helping people better leverage their professional networks, raised an undisclosed amount of funding from Harlem Capital. http://axios.link/Pcva

Private Equity Deals

• 24 Hour Fitness, a gym chain backed by AEA Investors, filed for Chapter 11 bankruptcy protection. http://axios.link/JQGE

Accel-KKR invested in PINC, a Union City, Calif.-based provider of supply chain management software for yard operations. www.pinc.com

• AgroFresh Solutions (NYSE: AGFS), a Philadelphia-based company focused on extending the shelf-life of produce and flowers, secured a $150 million convertible preferred stock investment from Paine Schwartz Partners. www.agrofresh.com

• Authentic Brands is in talks with mall landlords Simon Property Group (NYSE: SPG) and Brookfield Property Partners (Nasdaq: BPY) to buy J.C. Penney out of bankruptcy, per Bloomberg. Authentic Brands is backed by private equity firms General Atlantic, Lion Capital, and Leonard Green & Partners. http://axios.link/jCpG

BYD Co., a listed Chinese electric vehicle maker backed by Berkshire Hathaway, said that its chipmaking arm (BYD Semiconductor) raised around $113 million from backers like SAIC and BAIC. http://axios.link/aeEV

🐄 KKR and Capitol Peak Partners won a bankruptcy auction for Borden Dairy. http://axios.link/JVOX

• KKR led a $650 million investment in Vietnamese real estate developer Vinhomes. http://axios.link/HUpl

Redbird Capital Partners is buying a 24.2% stake in U.S. bowling and family entertainment center operator Main Event Entertainment from Australia’s Ardent Leisure (ASX: ALG) for $80 million. http://axios.link/LbXk

Trinity Consultants, a Dallas-based portfolio company of Levine Leichtman Capital Partners, acquired Vision Environment, an Australian provider of water quality monitoring services for commercial dredgers. www.trinityconsultants.com

Public Offerings

🚑 Forma Therapeutics, a Waltham, Mass.-based biotech focused on hematologic diseases and cancers, set IPO terms to 11.8 million shares at $16-$18. It would have a fully diluted market value of $676 million, were it to price in the middle, and plans to list on the Nasdaq (FMTX). The company reports a $34 million net loss on $101 million in revenue for 2019, and is backed by such firms as Novartis, Lilly Ventures, RA Capital Management, Baker Brothers, and Cormorant. http://axios.link/pabi

🚑 Genetron, a Beijing-based cancer genomics company, set IPO terms to 13 million shares at $11.50-$13.50. It would have an initial market value of $1.1 billion, were it to price in the middle, and plans to trade on the Nasdaq (GTH) with Credit Suisse and CIC as lead underwriters. The company raised nearly $80 million in VC funding from groups like Zhongjin Kangrui Medical Industrial Fund, V Star Capital and Shenshang Xingye Fund. http://axios.link/qKdl

🚑 Progenity, a San Diego-based molecular testing company, set IPO terms to 6.7 million shares at $14-$16. It would have a fully-diluted market value of $721 million, were it to price in the middle, and plans to list on the Nasdaq (PROG) with Piper Sandler as lead underwriter. The company reports a $148 million net loss on $144 million in revenue for 2019, while shareholders include Athyrium Capital Management (48% pre-IPO stake). http://axios.link/PoCx

🚑 Repare Therapeutics, a Montreal-based precision oncology startup, set IPO terms to 7.4 million shares at $16-$18. It would have a fully-diluted market value of $589 million, were it to price in the middle, and plans to list on the Nasdaq (RPTX) with Morgan Stanley as lead underwriter. Shareholders include Versant Ventures (30.1% pre-IPO stake), MPM Capital (11.8%), OrbiMed (11.2%), USB (9.2%), Cowen (8.2%), FTQ (7.5%), and Redmile Group (6.8%). http://axios.link/lrTl

🚑 Therapeutics Acquisition, a biotech-focused blank check acquisition company formed by RA Capital Management, filed for a $100 million IPO. http://axios.link/tejf

Liquidity Events

🚑 Foundation Medicine, a Cambridge, Mass.-based subsidiary of Roche, acquired liquid biopsy company Lexent Bio, a San Francisco-based liquid biopsy company that had raised around $10 million from firms like Threshold Ventures. http://axios.link/KqUh

The London Stock Exchange (LSE: LSE) won’t offer concessions to EU antitrust regulators in order to gain approval for its $27 billion takeover of financial data analytics company Refinitiv from The Blackstone Group, per Reuters. http://axios.link/4bg9

Metro (LON: MTRO), a British challenger bank, confirmed that it’s in early talks to buy RateSetter, a London-based P2P lender that’s raised around $77 million from backers like Woodford Investment Management, Moulsford Capital, and Artemis Ventures. http://axios.link/YK4W

🚑 Walmart (NYSE: WMT) acquired CareZone, a San Francisco-based mobile app for managing chronic health conditions that had raised over $150 million in VC funding from firms like NEA. CNBC reports a deal value of around $200 million. http://axios.link/H4cT

More M&A

Kevin Durant, a player for the NBA’s Brooklyn Nets, acquired a 5% stake in Major League Soccer’s Philadelphia Union club, with an option to later buy another 5%. http://axios.link/oRDS

🏈 Josh Harris (Apollo Global Management) and David Blitzer (Blackstone Group) acquired a small stake in the NFL’s Pittsburgh Steelers, per Bloomberg. The pair already owns the NBA’s Philadelphia 76ers and NHL’s New Jersey Devils, and reportedly is in talks to buy MLB’s New York Mets. http://axios.link/vVcG

Lagardere (Paris: MMB) is seeking to sell its live entertainment assets, including the Les Folies Bergeres cabaret, for upwards of €70 million, per Les Echos. http://axios.link/hX9k

Travelex, a British foreign currency exchange firm owned by Finablr (LSE: FIN), said it’s ending its efforts to find a buyer. http://axios.link/zZHn

Fundraising

• FirstMark Capital of New York raised $380 million for its fifth early stage fund and $270 million for its third opportunities fund. www.firstmarkcap.com

Osceola Capital, a Tampa, Fla.-based mid-market private equity firm, raised $125 million for its debut fund. www.osceola.com

It's Personnel

• R. Todd Bradley, former CEO of Mozido and former president of TIBCO Software, joined One Equity Partners as an operating partner. www.onequity.com

Consonance Capital Partners, a health care-focused private equity firm, promoted both Javier Starkand and Sean Breen to partners. www.consonancecapital.com

Nathan Dickstein left Marathon Asset Management to join AE Industrial Partners as a director. www.aeroequity.com

Final Numbers: May Retail Sales
Source: U.S. Commerce Department
Dan Primack

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