Apr 25, 2018

Axios Pro Rata

Top of the Morning
Illustration: Sarah Grillo / Axios

Hong Kong has formally unveiled new stock exchange rules that will allow listings of unprofitable biotech companies, plus dual-class share structures.

  • Conventional wisdom is that the revised regs will act as a magnet for many Chinese companies that otherwise would list in the U.S., thus improving the odds of "holding onto" the next Alibaba.
  • More interesting is an argument I'm hearing from stateside biotech investors, who believe many U.S.-based biotech "unicorns" will look east as a way to maintain their high valuations. Their idea is that there will be an initial deluge of Asia-based money because of the new diversification opportunity, and that could result in artificially high multiples. Sure it's cynical, but that doesn't make it wrong.

Unicorn bonds: WeWork is seeking to raise up to $500 million via a junk bond sale, in what would be its first-ever debt offering. That also means that it's passing around financials, and the FT got its hands on them. Highlights:

  • Revenue more than doubled between 2016 and 2017, from $436 million to $886 million. Nearly 93% of revenue is tied to membership.
  • Net loss increased by 117.2% to $933 million. The largest expense increase was general/admin (+294%), followed by sales and marketing (+230%).
  • $2.02 billion in cash at the end of 2017.

IPO watch: Indoor cycling "unicorn" Peloton this morning hired ex-JPMorgan exec Jill Woodworth as CFO (replacing Lisa Klinger), and also added four new VP-level execs. This comes one day after it added Pamela Thomas-Graham as an independent director.

On the docket: Sequoia Capital has sued the founder of a Chinese cryptocurrency exchange for allegedly violating a funding round exclusivity agreement (i.e., negotiating with another firm after agreeing in principle with Sequoia). Par for the course in M&A and private equity, but it's pretty rare in VC-land.

• Retail therapy: Private equity has become a scapegoat for retail industry woe, thanks to recent bankruptcies of companies like Toys "R" Us, Nine West and Bi-Lo.

  • Fortune's Phil Wahba offers a more balanced view, arguing that the difference between PE retail wins and losses has been more about secular trends than debt-loads.
  • He also says not to expect new retail mega-buyouts like Sycamore's 2017 deal for Staples, with private equity instead focused on smaller transactions.
Rupert Murdoch. Photo by Drew Angerer/Getty Images.

Comcast this morning announced a $31 billion takeover bid for European television giant Sky (LSE: SKY), which subsequently terminated an already agreed-upon deal with 21st Century Fox that was 16% lower per share.

  • Why it's the BFD: Because Roberts vs. Rupert is a mega-media battle in which the winner will believe it can compete with Netflix, and the loser will feel like an unloved UHF network.
  • Bigger picture: Comcast's move could have implications for Fox's proposed sale of entertainment assets to Walt Disney Co.
  • Bottom line: "Fox would need Disney's permission to increase its own bid, as it would need to increase its borrowing. Disney has already signaled its appetite for the fight, however, with an offer to buy Sky News regardless of whether its wider deal with Fox proceeds... [a move] intended to make it more difficult for media plurality concerns to derail the Murdoch bid for Sky." — Christopher Williams, The Telegraph
Venture Capital Deals

🚑 Doctor On Demand, a San Francisco-based virtual care provider, raised $74 million in Series C funding. Goldman Sachs and Princeville Global co-led and were joined by return backers Venrock, Shasta Ventures and Tenaya Capital. www.doctorondemand.com

BigCommerce, an Austin, Texas-based outsourced builder of e-commerce sites, raised $64 million in new funding. Goldman Sachs led, and was joined by return backers General Catalyst, GGV Capital and Tenaya Capital. http://axios.link/ulqd

CampusLogic, a Phoenix-based provider of student financial services software, raised $55 million in funding led by JMI Equity. www.campuslogic.com

SEMRush, a Philadelphia-based digital marketing analytics platform, raised $40 million in funding co-led by Greycroft, Siguler Guff and e.ventures. www.semrush.com

Uberflip, a Toronto-based content experience platform for B2B marketers, raised US$32 million in Series A funding led by Updata Partners. www.uberflip.com

Clark, a German robo-insurance advisor, raised $29 million in Series B funding. Portag3 Ventures and White Star Capital co-led, and were joined by Coparion, Kulczyk Investments and Yabeo Capital. http://axios.link/C1ai

Guesty, a Walnut, Calif.-based CRM tool for property management, raised $19.75 million in Series B funding, per an SEC filing. http://axios.link/hcVD

KidBox, a New York-based kid’s clothing subscription box service, raised $15.3 million in Series B funding. Canvas Ventures led, and was joined by Thrive Global, Zola and return backers Firstime Ventures and HDS Capital. http://axios.link/rjkk

BuildingConnected, a San Francisco-based provider of contractor-selection software for construction projects, raised $15 million in new funding from Brookfield Ventures. http://axios.link/Xqa7

Savari, a Santa Clara, Calif.-based developer of sensors that connect cars to roadway signals, raised $12 million in Series B funding. Aviva Ventures led, and was joined by return backers SAIC Capital and Flex. http://axios.link/xxXc

GitPrime, a Durango, Colo.-based provider of software engineering analytics, raised $10.5 million in Series A funding. OpenView led and was joined by return backer DCVC. www.gitprime.com

Pusher, a London-based provider of cloud infrastructure for adding real-time functionality to apps, raised $8 million in Series A funding. Balderton Capital led and was joined by Heavybit. http://axios.link/ok3k

SidelineSwap, a Boston-based online marketplace for buying and selling sports apparel and equipment, raised $5 million in Series A funding. Global Founders Capital led, and was joined by Admiral Capital, Peak6 Sports, RiverPark Ventures, FJ Labs and The Player’s Impact. http://axios.link/wygd

SalesHero, a San Francisco-based maker of a AI-enabled sales assistant, raised $4.5 million in seed funding from Baidu Ventures, CometLabs, Cherry Ventures and Signals VC. www.saleshero.ai

Cowboy, a Belgian e-bike maker, raised $3 million in seed funding led by Index Ventures. http://axios.link/g495

Improvado.io, a San Francisco-based startup seeking to simplify how marketers and ad agencies interact with data, raised $3 million in seed funding from individuals. www.Improvado.io

🏈 Religion of Sports Media, a startup whose co-founders include Tom Brady and Michael Strahan, has raised $3 million in a venture capital round co-led by Advancit Capital and Courtside Ventures. http://axios.link/WUHs

Private Equity Deals

AEA Investors and BC Investment Management agreed to buy Springs, a Middleton, Wis.-based maker of window coverings and drapery hardware, from Golden Gate Capital. www.springswindowfashions.com

Leonard Green & Partners agreed to acquire SRS Distribution, a McKinney, Texas-based wholesale distributor of building products, from Berkshire Partners for more than $3 billion, per Reuters. http://axios.link/w01N

One Championship, a Singapore-based mixed martial arts league, is raising at least $100 million at around a $1 billion valuation, per Bloomberg. http://axios.link/JjDR

Public Offerings

Docusign, a San Francisco-based e-signature platform, increased its IPO price range from $24-$26 to $26-$28. It still plans to offer 21.7 million shares and begin trading later this week on the Nasdaq under ticker DOCU. Morgan Stanley is lead underwriter. www.docusign.com

Libstar Holdings, a South African maker of sweets and bakery products, priced a Johannesburg IPO at a valuation of nearly $700 million. In other South African IPO news, glass bottle-maker Consol has shelved its IPO plans due to “market conditions.”

More M&A

A U.S. bankruptcy court judge approved the sale of 82 Toys "R" Us stores in Canada to Toronto-based Fairfax Financial for C$300 million. http://axios.link/Bqsg

Bharti Infratel agreed to merge with rival Indus Towers, in a deal that would create the world’s second-largest telecom towers company. http://axios.link/iLyG

Sinclair Broadcast Group (Nasdaq: SBGI) said it would sell 23 television stations as a condition of completing its $3.9 billion acquisition of Tribune Media (NYSE: TRCO). http://axios.link/4Ipa

SoftBank plans to move its $20 billion in ride-hail investments off its balance sheet and into Vision Fund, per the FT. http://axios.link/DiJL

🚑 Takeda Pharmaceutical (Tokyo: 4502) announced preliminary agreement to acquire Irish drugmaker Shire (LSE: SHP) for $64 billion. http://axios.link/3eLd


AIG (NYSE: AIG) is seeking to sell a portfolio of private equity fund stakes that could be valued at upwards of $2.3 billion, per PE International. http://axios.link/4QR6

G2VP closed its debut fund with $298 million, per an SEC filing. The firm is comprised of former Kleiner Perkins greentech investors, and says it focuses on sustainable industrial technologies. www.g2vp.com

Nonantum Capital Partners has raised $386 million for its debut private equity fund, per an SEC filing.

Sinovation Ventures, a China-based VC firm led by ex-Google China boss Kai-Fu Lee, raised $500 million for its $900 million-targeted fourth fund. http://axios.link/bYGA

It's Personnel

• Canada Pension Plan Investment Board has put Shane Feeney in charge of its C$51 billion global private equity portfolio. http://axios.link/mUfx

• Eric Goldstein joined Goodwin as a New York-based partner in the private equity and private funds practices. He previously was deputy GC and chief compliance officer for Insight Venture Partners. www.goodwinlaw.com

Jay Hegenbart (ex-Harvest Partners) has formed a new private equity firm called Infinedi Partners, per his LinkedIn profile.

• Ben Veghte has stepped down as VP of communications with the National Venture Capital Association, in order to lead comms for Pluralsight.

Chris Williams has taken an “indefinite leave of absence” from Twin Brook Capital Partners, the mid-market lender he co-founded in 2014, according to Buyouts. The move relates to a family health issue, per an investor letter. http://axios.link/DNXL

Final Numbers: Year's most important healthcare event
Source: Venrock survey of healthcare professionals and investors