Mar 7, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Greetings from the home office, which now features a Ms. Pac-Man machine (totally unrelated: I may be a bit tardy in replying to emails for a while). A reminder that Generate, our daily download on the energy sector, began publishing yesterday. And our tech newsletter, Login, launches next week. And we also have Vitals, which is on top of the ACA situation and all other things healthcare. You can subscribe to them by going here. Okay, here we go...

Top of the Morning

• It's a spectacle: Snap stock closed trading yesterday at $23.77 per share, which was a 12.26% drop for the day and nearly 1% below where its shares began trading at post-IPO open. It also was down another 8% in early trading this morning. Notes:

  • What happened? A bunch of Wall Street analysts yesterday issued "sell" ratings on Snap, which has yet to receive a "buy" rating.
  • Does it matter? Not unless you're an early-rising day trader. We still have a long runway until any of the lockups expire.
  • S&P Global Intelligence: IPO generated around $85 million in underwriting fees (led by $25.7m for Morgan Stanley), or a 2.5% gross spread. That would make it the 10th-most underwriting fees ever for a global tech IPO (just below TyCom in 2010, and just above FirstData in 2015).
  • Lunch table: The Council of Institutional Investors, a nonprofit corporate governance group whose members manage more than $3 trillion in combined assets, is asking index providers S&P Dow Jones Indices and MSCI to bar Snap from inclusion. At issue is that the company's Class A stock has no voting rights. Reuters has more.

• Hmmmm.... Last week we cited a Bloomberg report about how Chinese bike-sharing startup Ofo had raised $450 million at a valuation north of $1 billion. Now, however, there are questions about whether that total is legit. Per China Money Network:

"A number of Wechat screenshots have circulated showing unnamed individuals accusing Ofo of faking the US$450 million number, claiming the company raised only a portion of that amount."

Normally I wouldn't share such un-sourced speculation, except that neither the company nor any of its investors are returning requests for comment. Or, to be more specific, requests to simply confirm that the company raised what it said it raised. Not even saying "I can't talk about it." Just straight radio silence, which is pretty unusual for some of these folks. Moreover, two VCs with major China exposure tell me that the alleged Ofo raise inflation is an open secret, perhaps designed to put a little fear into rivals like Mobike (whose own recent raise size was confirmed to Axios by investor TPG). Oh, and someone familiar with some earlier Ofo exposure tells me that the "situation is still in flux," but declined to elaborate. So let's keep an eye on this one...

• Fund family: Last month we reported that Betaworks Ventures was nearing a $50 million final close on its debut seed fund. Previously, the group had invested off the balance sheet of New York-based tech studio Betaworks. Now comes an regulatory filing showing that Notation Capital ― a pre-seed investment firm that spun out of Betaworks more than two years ago ― is raising up to $25 million for its second fund.

• Follow-up: KKR tells me that its new $13.9 billion North American buyout fund does not include any language that would permit fund term alterations in the event of U.S. tax changes (including to carried interest).

• Recommended reading: Why taxing robots won't be easy, by David McCabe.

• Keep track: Our Healthcare team is all over the GOP replacement plan for Obamacare, so please check out the Axios Healthcare Stream.

• Thiel Watch: Silicon Valley's Trump whisperer will be giving a dinner keynote speech tonight at the CERAWeek energy conference in Houston. It should be interesting to see if he touches on the President taking credit for yesterday's announcement that Exxon Mobil will invest $20 billion over 10 years into a series of Gulf Coast projects (even though most of the projects were announced or even begun before November's election).

The BFD

Hellman & Friedman and Singapore sovereign wealth fund GIC have agreed to acquire Spanish mutual funds platform Allfunds Bank from Santander (Spain), Warburg Pincus, General Atlantic and Sanpaolo (Italy) for around $1.45 billion.

Why it's the BFD: Leaving aside that it's literally the day's largest deal, some of the reporting also suggests that China's Legend Holdings submitted a competitive bid, but was at a disadvantage because of... well, the fact that it's from China.

Bottom line: "[Sources say that] Spanish banking group Santander, which partly controls Allfunds, was nervous about handing the asset to a Chinese buyer. Chinese buyers have been facing hurdles including increased scrutiny from domestic authorities when attempting to strike outbound deals. The effect has hurt the chances of Chinese buyers in competitive auctions." ― Javier Espinoza, FT

Venture Capital Deals

• Confluent, a Palo Alto, Calif.-based streaming platform built on Apache Kafka, has raised $50 million in new VC funding. Sequoia Capital led the round, and was joined by return backers Benchmark and Index Ventures. http://tcrn.ch/2n9SrH6

• Hubble, an ecommerce startup focused on daily disposable contact lenses, has raised $16.5 million in Series A funding. FirstMark Capital led the round, and was joined by seed backers Greycroft Partners, Wildcat Capital Management and Two River. http://tcrn.ch/2n162RE

• Qapital, a New York-based personal finance app, has raised $12 million in Series A funding from backers like Northzone, Anthemis Exponential Ventures, Industrifonden and Rocketship VC. http://tcrn.ch/2mer7Iw

• Isotropic Systems, a McLean, Va.-based developer of satellite antenna technology, has raised $5 million in VC funding from Waterlow Management. http://bit.ly/2n9SqCS

• Anchor FM, a New York-based audv io social network, has raised $2.8 million in new VC funding from backers like Omidyar Network and the Chernin Group. http://tcrn.ch/2lXQsFD

• Factory, a Berlin-based co-working space operator, has raised €1 million in seed funding from backers like Round Hill Capital, 500 Startups and Elkstone Capital. http://tcrn.ch/2n6JQFd

• BusyBusy, a Utah-based provider of software that tracks on-site labor costs, has raised an undisclosed amount of VC funding from the venture arm of Caterpillar Inc. http://bit.ly/2mejmlD

Private Equity Deals

• Advent International and Permira are discussing a joint bid for listed German generic drugmaker Stada, which could be valued at around €3.6 billion in a takeover, according to Reuters. Also discussing a pairing are Cinven and Bain Capital. Each of the four firms previously approached Stada separately. http://reut.rs/2mXR5A1

• Baliwick, a Chaska, Minn.-based provider of design and deployment of customized, large-scale IT solutions, has raised an undisclosed amount of private equity funding from Norwest Equity Partners. http://bit.ly/2lY72oI

• FirstLight Fiber, an Albany, N.Y.-based portfolio company of Oak Hill Capital Partners, has agreed to acquire Finger Lakes Technologies Group, a provider of Internet and voice services to business customers in New York and Pennsylvania, from Trumansburg Telephone Co. No financial terms were disclosed. http://bit.ly/2mhu5gS

• Fincare Business Services, an Indian "financial inclusion platform" focused on rural areas in India, has raised around $75 million in private equity funding. Backers include TA Associates, True North, Tata Opportunities Fund, LeapFrog Investments, SIDBI, Kotak Mahindra Old Mutual Life Insurance and Edelweiss Tokio Life Insurance. www.fincare.com

• Francisco Partners is investing $200 million for a 16.7% ownership stake in Iconectiv, a unit of Ericsson (Nasdaq: ERIC) that helps operators to interconnect networks. http://reut.rs/2mRDTzB

• Genoptix, a Novartis company focused on oncology diagnostics and informatics, has completed the previously-announced sale of its clinical lab to an investor group that includes Ampersand Capital Partners and 1315 Capital. No financial terms were disclosed. www.1315capital.com

• ScentAir, a Charlotte, N.C.-based scent marketing company owned by Parthenon Capital Partners, has acquired Brandaroma, a provider of ambient scent marketing solutions. No financial terms were disclosed. www.scentair.com

• Shawbrook Group (LSE: SHAW) has rejected an £825 million takeover offer from BC Partners and existing shareholder Pollen Street Capital. The bid had represented a 22% premium over where the British lender's shares had closed trading last Thursday. http://reut.rs/2mhF35Y

• Sun Capital Partners has acquired Horizon Services, a Wilmington, Del.-based residential provider of plumbing and HVAC services. No financial terms were disclosed. www.suncappart.com

• TA Associates has agreed to acquire ITRS, a London-based provider of real-time monitoring and analytics software to the financial services sector, from The Carlyle Group. No financial terms were disclosed. http://bit.ly/2mAmOdc

Public Offerings

• Ardagh Group, an Irish packaging conglomerate, has set its IPO terms to 16.2 million shares being offered at between $17 and $20 per share. It would have a fully-diluted market value of around $4.3 billion, were it to price in the middle of its range. The company reports $6.7 billion in revenue for 2016. http://bit.ly/2mwQFmg

• ProPetro, a Midland, Texas-based oilfield services company focused on hydraulic fracturing, has set its IPO terms to 20 million shares being offered at between $16 and $19 per share. It plans to trade on the NYSE under ticker symbol PUMP, with Goldman Sachs and Barclays serving as lead underwriters. The company is backed by Energy Capital Partners, and reports a $36 million net loss on $273 million in revenue for the first nine months of 2016. www.propetroservices.com

Liquidity Events

• CA Technologies (Nasdaq: CA) has agreed to acquire Veracode, a Burlington, Mass.-based provider of application security solutions, for around $614 million in cash. Veracode had been in confidential IPO registration for nearly two years, and had raised over $110 million in VC funding from firms like Wellington Management, .406 Ventures, Accomplice, Cross Creek Advisors, Flexera Software, In-Q-Tel, Agman Partners, Meritech Capital Partners, Polaris Partners, StarVest Partners, Symantec and TELUS Ventures. http://bit.ly/2meQZUv

• HTC Group, a Swedish portfolio company of Polaris Private Equity, has agreed to sell its floor grinding solutions business to a unit of Husqvarna Group. No financial terms were disclosed. www.husqvarna.com

More M&A

• HP Enterprise (NYSE:HPE) has agreed to acquire Nimble Storage for $1.09 billion in cash, or $12.50 per share (45.3% premium to yesterday's closing price. http://reut.rs/2naiZrO

• MeetMe (Nasdaq: MEET) has acquired Tagged and Hi5, a pair of social networks founded in 2004 to help users meet new people, for $60 million. http://tcrn.ch/2lVFJLI

• National Bank of Greece has agreed to sell South Africa Bank of Athens to AFGRI Holdings, per an EU-approved restructuring plan. http://bit.ly/2lA8wcE

• Tech Mahindra (India) has agreed to acquire CJS Solutions Group, a Jacksonville, Fla.-based health IT consultant, for $110 million. http://reut.rs/2mwS6kt

Fundraising

• Lemnos Labs, a hardware-focused VC firm in Silicon Valley, has raised $50 million for its third fund. http://bit.ly/2mwwvZx

• QIC, an Australian investment management firm, has raised A$2.35 billion for a new global infrastructure private equity fund. http://bit.ly/2mOoZtY

It's Personnel

• Justin Kan has stepped down as a partner with Y Combinator, in order to launch a new incubator called Zero-F. http://bit.ly/2mx8661

Final Numbers
Dan Primack