Top of the Morning
When government shutdown ended on Friday, I wrote that the stalled parade of 2019 IPOs may resume. My hesitation is based on some pretty significant complications:
- This is only a temporary fix, with President Trump telling The Wall Street Journal overnight that odds are "less than 50-50" that a border security deal will be reached before a three-week deadline is hit. Not only does this mean that SEC workers shouldn't get too comfortable in their chairs, it also means that potential IPO candidates will be hesitant to begin a process that could be halted indefinitely by D.C. dysfunction.
- Some issuers, such as Gossamer Bio and several blank-check companies, had been planning to go public via a fixed-price workaround. That was always a high-risk bet, so don't be surprised if they now step back and rework toward a more traditional process that will take longer. No comment from Gossamer, however.
- The timing isn't so great right now from an earnings perspective. Take Beyond Meat, which filed its S-1 document shortly before Thanksgiving. The company theoretically could launch its road-show next week and price before the shutdown deadline but, at this point, a source says it doesn't want to launch a road-show without fully-audited Q4/full-year financials that aren't yet ready. Other prospective issuers are in the same boat, which means April could be when the actual IPO floodgates open (again, assuming the first complication is avoided).
That said, it's not all storm clouds. Confidential filers, like Uber and Lyft, should begin getting needed feedback from SEC officials. And, if the government does remain open in three weeks, that should give companies plenty of time to file S-1 documents and price before investors begin going on summer vacations.
• Hegemony: Fewer than 10% of asset management firms are owned by women or racial minorities, despite performing on par with firms owned by white men, according to a study released this morning by The Knight Foundation,Bella Private Markets and HBS Professor Josh Lerner.
- Methodology: The study used a 25% threshold for determining women and/or racial minority ownership.
- Private equity: Women-owned firms represent 5.2% of the total market and manage 3.4% of industry AUM. Minority-owned firms represent 3.9% and manage 3.8% of industry AUM. No evidence of lower returns than the overall industry.
- Go deeper: Wall Street's white male control, by the numbers
• Unicorn births: 97 Chinese startups were newly-valued at $1 billion or more in 2018, per a new report from Shanghai-based Hurun Report.
- Bottom line: This record raise suggests that China's startup scene is not running parallel to the country's broader economy, which is slowing. But it's also worth remembering that we don't usually have independent validation of such valuations (heed David Chao's warning) and many of these companies claim to have raised so much cash that post-money valuations lose luster.
🧣 Where in the World? Later this week I'll be in LA for the annual Upfront Summit, where I'll be interviewing Khosla Ventures' Keith Rabois and actor/entrepreneur Joseph Gordon-Levitt. Hope to see a bunch of Pro Rata readers there!
🎧 Pro Rata Podcast: Our Friday episode focused on the idea of taxing wealth (not just income), as has been proposed by Sen. Elizabeth Warren. Listen here.
MoneyGram (Nasdaq: MGI), a Dallas-based money transfer company whose largest shareholder is private equity firm Thomas H. Lee Partners, is exploring a sale, per Reuters. It also is seeking to restructure its $900 million debt-load.
- Why it's the BFD: Because this is the culmination of an awful year for MoneyGram, which just 13 months ago was under agreement to be acquired for $1.2 billion by Alibaba's Ant Financial. But U.S. regulators blocked that deal on national security grounds, sending MoneyGram's shares down more than 80%. In fact, its current market cap is close to the $125 million that MoneyGram was recently fined for not doing enough to prevent fraudulent money transfers.
- Bottom line: "MoneyGram, which has to contend with 'junk' credit ratings, is also exploring raising additional money in the form of preferred equity that would sit above shareholders and below lenders for the purposes of repayment in a restructuring." — Mike Spector & David French, Reuters
Venture Capital Deals
• Wynd, a Paris-based provider of omnichannel retail management SaaS, raised €72 million from Natixis Payments, Groupe BPCE, Banque Populaire and Caisse d’Epargne. http://axios.link/usny
⛽ Yellow Door Energy, a UAE-based solar developer, raised $65 million in Series A funding from IFC, Mitsui & Co., Equinor Energy Ventures, Arab Petroleum Investments and Adenium. www.yellowdoorenergy.com
• Contentsquare, a Paris-based digital experience analytics and optimization platform, raised $60 million in Series C funding. Eurazeo led, and was joined by return backers Canaan Partners, Highland Europe and H14. http://axios.link/PjVb
🚑 Day Zero Diagnostics, a Boston-based genomic sequencing startup focused on infectious diseases, raised $8.6 million in Series A funding. Triventures led, and was joined by Sands Capital Ventures and Golden Seeds. http://axios.link/NDfs
• Renewal Mill, a food ingredient “upcycling” startup, raised $2.5 million in seed funding from HG Ventures. www.renewalmill.com
Private Equity Deals
🚑 Advent International acquired a majority stake in BioDuro, a San Diego-based life sciences contract R&D firm that also has facilities in China. www.bioduro.com
• Levine Leichtman Capital Partners bought West Academic, a St. Paul, Minn.-based provider of law school learning materials, from Eureka Equity Partners. www.westacademic.com
• Morgan Stanley Capital Partners invested in Clarity, a Madison, Conn.-based provider of member communications solutions for health insurance payors, third-party admins and dental insurers.
• Your Super, a maker of plant-based “superfoods,” raised $5 million in Series A funding. PowerPlant Ventures led, and was joined by Doehler Ventures. www.yoursuper.com
• Maoyan, a Chinese movie ticketing platform backed by Tencent, will raise around $250 million at a $2.2 billion valuation in its Hong Kong IPO after pricing at the bottom of its indicative range, per Reuters. http://axios.link/aQy8
⛽ The Cheng family of Hong Kong is considering a takeover bid for Dutch fuel supplier Varo Energy, which is currently owned by The Carlyle Group and could be valued at around $2.3 billion (including debt), per Bloomberg. http://axios.link/dbhs
• Dropbox (Nasdaq: DBX) agreed to acquire HelloSign, a San Francisco-based e-signature platform, for $230 million in cash. HelloSign had raised around $20 million in VC funding from firms like Foundry Group, USVP, Greylock and Webb Investment Network. http://axios.link/BP2K
• Entegris (Nasdaq: ENTG) agreed to buy Versum Materials (NYSE: VSM), a Tempe, Ariz.-based maker of specialty materials for the semiconductor and display industries, for around $3.83 billion in stock. http://axios.link/ahRL
• Naspers of South Africa has acquired Russian online classifieds company Avito for $1.16 billion in cash. http://axios.link/9w6z
• Poland’s government may seek to block George Soros and local publisher Agora from buying Radio Zed, the country’s second-largest radio broadcaster, per Bloomberg. Radio Zed is currently owned by Czech Media Invest. http://axios.link/er9q
⛽ Saudi Aramco is investing upwards of $1.6 billion for a 19.9% stake in South Korean oil refiner Hyundai Oilbank. http://axios.link/TEzP
• The Carlyle Group held a $1.8 billion first close on its second long-dated buyout fund, which is targeting a total of $5 billion, per Bloomberg. www.carlyle.com
• John Empson is stepping down as head of Europe capital markets for KKR, which is raising €5 billion for its latest European buyout fund, per the FT. http://axios.link/ZxGn
• Lance Milken stepped down as a senior partner in the private equity group of Apollo Global Management, in order to set up a family office, per the FT. http://axios.link/64M6