Nov 20, 2019

Axios Pro Rata

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Top of the Morning

Source: Giphy

Yesterday's House hearing on private equity landed with a whimper, after more than a week of escalating rhetoric from progressive Democrats.

  • Top takeaway: Even if Elizabeth Warren wins the presidency, she would have a tough time getting her "Stop Wall Street Looting Act" through Congress, with or without Democratic Party control of both chambers.

Republicans almost unanimously defended private equity, citing examples of successful PE-backed companies in their districts.

  • They were emboldened by the presence of Wayne Moore, a trustee from the Los Angeles Country Employees' Retirement Association, who testified that private equity was his system's top-performing asset class for the past decade.
  • Few did more than glancingly acknowledge the presence of Giovanna De La Rosa, a 20-year Toys 'R' Us employee who lost her livelihood when the company went under.
  • The few GOP questions about Toys were directed at PE industry lobbyists, asking if it wasn't really Amazon that killed it, without any interest in the role of debt or extracted fees.

Democrats were more balanced between pro and con. Some proffered leading questions about troublesome PE deals in retail and healthcare services, but several lauded private equity, again with in-district examples. A few even credited private equity with their own private-sector career successes — and it's hard to see that cohort becoming sympathetic to Warren's cause.

  • One possible area of bipartisan agreement, or at least intra-Democrat agreement, was on the need for greater transparency between private equity firms and their investors. In the words of witness Eileen Applebaum, "Limited partners need a union."
  • Rep. Alexandria Ocasio-Cortez was the final questioner, but did not ask a question of either private equity lobbyist, or of the pension fund trustee. Opportunity forfeited.

What to watch: If either Warren or Bernie Sanders share their private equity criticisms during tonight's presidential debate, thus elevating it in voter minds, despite yesterday's deflated trial balloon.

Also...

Gordon Sondland, the current U.S. ambassador to the EU and today's star impeachment witness, used to be a private equity executive.

  • He was a founding member of Aspen Capital, a hospitality-focused firm based in Oregon, where he was primarily responsible for the firm's hotel affiliates.

Moving on: Tagar Olson is leaving KKR, where he has led the firm's North American private equity activity in financial services and hospitality/leisure, Axios has learned from multiple sources. No word yet on his future plans.

  • Olson joined KKR in 2002, and currently sits on the board of portfolio companies First Data, Apple Leisure Group, PURE, Sedgwick, USI, and WMIH Corp.

🎧 Pro Rata Podcast digs into the future of DACA, following last week's Supreme Court hearing. Listen here.

The BFD

Illustration: Aïda Amer/Axios

Alibaba Group raised around $11.2 billion via a secondary share sale in Hong Kong.

  • Why it's the BFD: It's the largest Hong Kong listing in nearly a decade, and returns Alibaba to the exchange where it first listed in 2007 (later it went private and then IPO'd in New York).
  • But, but, but... Alibaba priced shares at nearly a 3% discount to where they closed trading Tuesday on the NYSE, preventing this from becoming one of the 10 largest global floats of all-time.
  • Bottom line: "The mega share sale comes as Hong Kong’s economy has been hurt by months of increasingly violent protests and growing anti-China sentiment. Alibaba’s return will please Chinese officials who’ve watched many of the country’s largest private firms flock overseas for capital." — Bloomberg
Venture Capital Deals

Clumio, a San Jose, Calif.-based provider of enterprise data backup solutions, raised $135 million in Series C funding co-led by Altimeter Capital and return backer Sutter Hill Ventures. http://axios.link/wPko

Vayyar Imaging, an Israeli developer of 4D radar imaging sensors, raised $109 million in Series D funding. Koch Disruptive Technologies led, and was joined by Regal Four and return backers Battery Ventures, Bessemer Ventures, ICV, ITI, Walden Riverwood, and Claltech. www.vayyar.com

Neon, a Brazilian digital bank, raised around $94 million in Series B funding. General Atlantic and Banco Votorantim co-led, and was joined by return backers Monashees, Omidyar Network, Propel, Quona, and Mabi. http://axios.link/3Imi

Rex, an Austin, Texas-based residential real estate brokerage platform, raised $40 million in Series C-1 funding from individuals like Citadel founder Ken Griffin. www.rexhomes.com

🚑 Tissium, a Paris-based developer of biomorphic programmable polymers, raised €39 million in Series B funding from BNP Paribas, EIF, M&L Investments, ValQuest Partners, and return backers Bpifrance, CM-CIC Innovation, CapDecisif, Omnes Capital, and Sofinnova Partners. http://axios.link/pgAC

GoExpedi, a Houston-based online procurement platform for oilfield services, raised $25 million in Series B funding. Top Tier Capital Partners led, and was joined by CSL Ventures, Crosslink Capital, Bowery Capital, and Blue Bear Capital. www.goexpedi.com

Gravitational, a cloud deployment startup, raised $25 million in Series A funding. Kleiner Perkins led, and was joined by S28 Capital and YC. http://axios.link/4XBp

🚑 Lucence Diagnostics, a Singapore-based developer of non-invasive cancer screening tests, raised $20 million in Series A funding. IHH Healthcare led, and was joined by SGInnovate and Heliconia Capital. www.lucencedx.com

Superpedestrian, a Boston-based scooter fleet developer, raised $20 million from Spark Capital, General Catalyst, Hanaco Ventures, and Empire Angels. http://axios.link/bkLL

Dream Games, a Turkish mobile gaming startup, raised $7.5 million from Balderton and Makers Fund. http://axios.link/6Pyd

🐶 Jinx, a direct-to-consumer dog food commerce startup led by ex-Casper employees, raised $5.6 million from backers like Initialized Capital, Align Ventures, and Brand Foundry. http://axios.link/wJb0

Picnic, a Seattle-based maker of food production robots, raised $5 million in seed funding. Creative Ventures led, and was joined by Flying Fish Partners and Vulcan Capital. http://axios.link/J5mE

Shield Compliance, a Seattle-based provider of compliance management software for financial firms serving the cannabis market, raised $5 million in Series A funding led by Copia Investments. www.shieldbanking.com

Casualy, a London-based evidence data platform for biomedicine, raised $4.8 million in Series A funding. Pentech Ventures led, and was joined by EBRD VC and return backer Marathon Venture Capital. www.casualy.com

Bunch, a party app for mobile games, raised nearly $4 million from Supercell, Tencent, Riot Games, Miniclip, and Colopl Next. www.bunch.live

Studs, a New York-based ear-piercing startup, raised $3 million in seed funding led by First Round Capital. www.studs.com

Kimaï, a direct-to-consumer jewelry brand that uses lab-grown diamonds and recycled gold, raised $1.2 million in seed funding led by Talis Capital. http://axios.link/uz3m

Private Equity Deals

Advent International agreed to buy Olaplex, a Santa Barbara, Calif.-based professional hair care brand. www.olaplex.com

Ardian is the front-runner to buy German utility EWE, which also has been pursued by Allianz and Macquarie, per Reuters. http://axios.link/vndg

🚑 Brighton Park Capital acquired Relatient, a Franklin, Tenn.-based provider of healthcare patient engagement software that had raised VC funding from firms like Elsewhere Partners. http://axios.link/Ml77

🚑 Clayton, Dubilier & Rice agreed to buy Cynosure, a Westford, Mass.-based maker of medical aesthetics systems, from Hologic. (Nasdaq: HOLX). www.cynosure.com

NexPhase Capital invested in Surgent, a Devon, Penn.-based provider of continuing professional education for financial professionals. www.surgent.com

Public Offerings

Yeahka, a Chinese mobile payments company, is planning to raise around $300 million in a Hong Kong IPO, per Bloomberg. Shareholders include Tencent, Greycroft, Infinity Venture Partners, Adams Street Partners, and Industry Ventures. http://axios.link/sxSY

Liquidity Events

🚑 Cinven is considering a sale of Synlab, a German lab services company that could fetch around €5.5 billion, per Bloomberg. http://axios.link/NV3K

DoorDash is considering a 2020 direct listing, rather than an IPO, per Bloomberg. http://axios.link/3maF

More M&A

The Deutsche Bourse is considering a bid for the Madrid Exchange, which already has a $3.1 billion takeover offer from the Swiss bourse and interest from Euronext, per Bloomberg. http://axios.link/6Sly

Merck KGaA is considering a sale of a pigments business that could fetch €1.5 billion, per Bloomberg. http://axios.link/6twL

NCR (NYSE: NCR) acquired POS Solutions, an Austin, Texas-based provider of point-of-sale software for restaurants. http://axios.link/Moy2

TrustArc, a San Francisco-based privacy software company that’s raised over $100 million in VC funding, acquired Nymity, a Toronto-based provider of privacy compliance software. www.trustarc.com

Fundraising

.406 Ventures raised $294 million for its fourth fund, and also promoted Payal Agrawal Divakaran to partner. www.406ventures.com

Balance Point Capital, a Connecticut-based equity and debt investor focused on middle-market companies, held an $85 million close on its fourth fund, per an SEC filing. www.balancepointcapital.com

CAVU Venture Partners raised $250 million for its third fund, focused on “better for you” consumer goods. http://axios.link/vOd5

CincyTech, a Cincinnati-based VC firm, is raising $50 million for its fifth fund, per an SEC filing. www.cincytechusa.com

Clocktower Technology Ventures raised $70 million for its second fund focused on early-stage fintech companies. www.clocktowerventures.com

Fortress Group, a private equity placement agent, has rebranded to Trailmark. www.trailmark.com

Kairos Venture Partners is raising up to $250 million for its third fund, per an SEC filing. www.kairosventures.com

🚑 NovaQuest of Raleigh, N.C. raised $275 million for its new private equity fund focused on healthcare services and technology companies. http://axios.link/GmIM

Palm Drive Capital, a New York-based VC and growth equity firm, held a $44 million first close on its $100 million-targeted third fund. www.palmdrive.vc

It's Personnel

• Andrew Claerhout, former head of infrastructure and natural resources investing at the Ontario Teachers’ Pension Plan, joined Searchlight Capital Partners to co-lead infrastructure investments. www.searchlightcap.com

• Lizzy Bates joined Spark Capital as VP of marketing and comms. She previously was with Bessemer Venture Partners. www.sparkcapital.com

• Felix Scherzer is leaving Credit Suisse, where he’s led financial institutions M&A, per the FT. http://axios.link/EN7k

• Daniel Urdaneta joined Reinvent Capital as a partner, per his LinkedIn profile. He previously spent two years with ValueAct Capital. Read more on Reinvent.

Final Numbers
Expand chart
Data: Yahoo; Chart: Axios Visuals

GateHouse Media and Gannett, the country's two largest newspaper publishers, officially closed their merger yesterday.

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