Sep 30, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Sarah Grillo/Axios

The Carlyle Group's David Rubenstein has called capital is one of America's greatest exports, particularly in regards to China. Now there's talk of a blockade.

  • Bloomberg reported on Friday that the White House is considering limitations on U.S. investments in Chinese companies. Several other news outlets reported the same, including Axios. The White House itself did not confirm or deny the reports.
    • Discussions included the possibilities of de-listing Chinese companies from U.S. stock exchanges and banning federal employee pensions funds from investing in Chinese equities.
    • There is no known talk of making similar restrictions on state or municipal pension funds' direct of indirect investments. But, were it to expand there, it could create major headaches for venture and private equity firms that invest in Chinese companies (even private ones, since hold periods usually extend post-IPO).
  • A Treasury Department spokesperson subsequently said the administration is not contemplating changes to listing rules for Chinese companies "at this time," and Trump economic advisor Peter Navarro today told CNBC that the original Bloomberg story was "fake news."
  • Again, the original reporting was legit.

The bottom line: The trade war may be moving well beyond tariffs, even if those involved are struggling to keep their stories straight.

Also...

💰 Truth to power? There's been lots of talk about how private market investors are going to hold a tougher line on startup governance and founder liquidity, in the aftermath of WeWork.

  • Wake me when it actually happens.
  • It's not just that many venture capitalists went overboard on "founder friendly." It's also that, when push comes to term sheet, few investors will walk over terms if the deal and founder are hot enough. Even if that means lax disclosure and oversight.

😱 Speaking of WeWork: There are reports that the company has virtually stopped signing new leases -- partially due to landlord apprehension -- although the company pushed back, saying that expects the pace to slow, not stop.

Canary watch: Jefferies laid off 15 people in its energy investment banking group, due to a slowdown in energy M&A activity, per Reuters.

  • Global energy M&A activity is down 25% from this time in 2018, and down 40% in the Americas, according to Refinitiv.

👚 Fast-fashion retailer Forever 21 filed for Chapter 11 bankruptcy protection yesterday, and said it plans to close up to 350 of its 800 global stores (including 178 in the U.S.). It also secured $350 million in debt financing from JPMorgan and TPG Sixth Street Partners.

  • Forever 21 was not owned by private equity, serving as a counter-example to an increasingly-pervasive narrative about how retail would be fine if not for the financial engineers.
The BFD
Source: Giphy

The Blackstone Group agreed to pay $5.9 billion for a portfolio of U.S. industrial warehouses from Colony Capital.

  • Why it's the BFD: Blackstone has become a major force in global e-commerce logistics, having acquired over one billion square feet. Last week it closed on its $18.7 billion purchase of U.S. industrial warehouses from Singapore's GLP, and also consolidated its European last-mile logistics real estate assets under a new umbrella called Mileway.
  • Bottom line: "The deal includes 60 million square feet across 465 warehouses in 26 U.S. markets, with particular concentrations in Dallas, Atlanta, Florida, northern New Jersey and California. It also includes Colony’s 51% stake in a 4 million square-foot portfolio of bulk-distribution warehouses, larger facilities further outside urban centers. Blackstone is also buying the unit that manages both sets of properties." — Miriam Gottfried, WSJ
Venture Capital Deals

🚑 Amboss, a Berlin-based knowledge platform for medical professionals, raised €30 million in Series B funding. Partech led, and was joined by Target Global and return backers Cherry Ventures, Wellington Partners, and Holtzbrinck Digital. http://axios.link/gaWt

🚑 Stipe Therapeutics, a Denmark-based immune-oncology startup, raised €20 million in Series A financing. Novo Seeds and Arix Bioscience co-led, and were joined by Wellington Partners and Sunstone Capital. www.stipetherapeutics.com

Fetch, an Austin, Texas-based provider of off-site package delivery solutions for apartment buildings, raised $10.5 million in Series A funding. Signal Peak Ventures led, and was joined by seed backers Silverton Partners and Capital Factory. http://axios.link/3x01

🚑 Ribometrics, a Durham, N.C.-based developer of RNA-targeting drugs, raised $7.8 million from return backers Dementia Discovery Fund and Illumina Ventures. http://axios.link/81Bu

DeadHappy, a UK-based life insurance startup, raised £4 million in Series A funding from e.ventures and Octopus Ventures. http://axios.link/d8XE

Private Equity Deals

EQT Partners bought Inexio, a German fiberoptic network operator, for a reported €1 billion. Sellers include Warburg Pincus. http://axios.link/7QhL

🚑 Francisco Partners agreed to buy Orchard Software, a Carmel, Ind.-based maker of workflow software for clinical and pathology labs. www.orchardsoft.com

Hellman & Friedman is considering a takeover bid for Euroclear, a Brussels-based securities depository that could be valued at upwards of £5 billion, per the FT. http://axios.link/tFve

Lyneer, a Ewing Township, N.J.-based staffing firm backed by Palm Beach Capital, acquired Hanover, M.D.-based Anchor Staffing.

Naxicap Partners agreed to buy Siblu Villages, an owner-operated holiday park operator in France and The Netherlands, from Stirling Square Capital Partners. www.siublu.com

Palm Beach Capital invested in J Polep, a Chicopee, Mass.-based wholesale distributor to the convenience and grocery store markets. www.jpolep.com

Providence Equity Partners made an indicative bid to buy Bulgarian telco Vivacom, putting it up against a joint bid from United Group (owned by BC Partners and KKR), per the FT. A deal could be worth around €1.2 billion. http://axios.link/mpWo

Public Offerings

Six companies plan to price IPOs on U.S. exchanges this week. ADC Therapeutics, Viela Bio, Frequency Therapeutics, Aprea Therapeutics, Monopar Therapeutics, and MetroCity Bankshares. http://axios.link/ogkP

🚑 Beam Therapeutics, a Cambridge, Mass.-based developer of genetic medicines via base editing, filed for a $100 million IPO. It plans to trade on the Nasdaq (BEAM) with JPMorgan as lead underwriter. The pre-revenue company raised in VC funding from firms like Arch Venture Partners (23% pre-IPO stake, F-Prime Capital (19.4%), Hillhouse Capital (7.4%), Redmile Group, Cormorant Asset Management, GV, Altitude Life Science Ventures, Eight Roads Ventures and Omega Funds. http://axios.link/tYec

Liquidity Events

The Chernin Group paid $83 million for a majority stake in recipe and cookware site Food52, which had raised $19 million from VC firms like 14W and Walden VC. http://axios.link/yYYQ

🚑 Gryphon Investors agreed to sell ECG, a San Diego-based management consultant for healthcare providers, to Siemens Medical Solutions.

🚑 Webster Capital is seeking a buyer for BayMark Health Services, a Lewisville, Texas-based network of opioid treatment centers, per PE Hub. http://axios.link/b6A1

More M&A

D.E. Shaw has built a stake in Emerson Electric (NYSE: EMR) and plans to push for a breakup of the company, per Bloomberg. http://axios.link/o6fa

NextEra Energy Partners (NYSE: NEP) agreed to acquire Meade Pipeline, owner of a 39.2% stake in the 185-mile intrastate Central Penn gas pipeline, from AltaGas (TSX: ALA) for around $1.37 billion (including $90m in future capital contributions). www.nexteraenergypartners.com

🚑 Orphan Biovitrum, a listed Swedish drugmaker focused on rare diseases, agreed to buy Durham, N.C.-based Dova Pharmaceuticals (Nasdaq: DOVA) for up to $915 million in cash. http://axios.link/QJHl

Rio Tinto (LSE: RIO) abandoned plans to sell or float its Canadian iron ore business, due to a lack of buyer interest, per the WSJ. http://axios.link/3cAD

Roper Technologies (NYSE: ROP) agreed to sell Gatan, a maker of peripherals for electron microscopes, to Ametek (NYSE: AME) for $925 million. http://axios.link/aWwE

Tencent (HK: 0700) agreed to buy a 29% stake in Dutch MMO games publisher Funcom (Oslo: FUNCOM). http://axios.link/INnb

🚑 Veeva Systems (NYSE: VEEV) agreed to buy Crossix Solutions, a New York-based provider of patient data and analytics, for $430 million in cash. http://axios.link/EEMa

Walmart (NYSE: WMT) is considering strategic options for JetBlack, a text-based concierge commerce service, after receiving inbound acquisition interest, per Bloomberg. http://axios.link/7i7v

Westpac Banking (ASX: WBC) is considering a sale process for its life insurance business, which could fetch around A$2 billion, per Reuters. http://axios.link/5bFr

It's Personnel

Matt Anderson (ex-Arrow Electronics) and Stefan Grunwald (ex-Cardinal Health) joined The Carlyle Group as chief digital officer and chief procurement officer, respectively. www.carlyle.com

Jennifer Lum joined Harvard University as an entrepreneur-in-residence, per her LinkedIn profile. She previously co-founded and served as chief product officer for Forge.ai.

Final Numbers: Global M&A by quarter
Source: Refinitiv
Dan Primack

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