Top of the Morning
The Aramco IPO keeps moving forward, despite devastating drone strikes, and this week promised at least $75 billion of dividends through 2024. But Axios' Felix Salmon smells a spill:
- The Saudi royal family controls Aramco. If it needs to extract money, it can always raise the company's tax rate, or simply expropriate what's needed.
- Foreign shareholders could be stuck with worthless shares.
- In countries with robust civil societies, shareholders have significant legally enforceable rights, and those rights underpin the value of their shares.
- In countries like Saudi Arabia, by contrast, foreign shareholders only win insofar as it behooves the local government to keep them happy.
• Varsity blues: Gordon Caplan yesterday was sentenced to one month in prison and fined $50,000, after pleading guilty to paying $75,000 to rig his daughter's college entrance exam.
- Caplan was a former private equity partner with law firm Wilkie Farr & Gallagher, where he also served as co-chairman.
- He's the fourth parent sentenced to far in the wide-ranging scam, and said he'll now focus on "doing everything I can to recover some portion my good name."
• Swamp stuff: Private equity has been in the national headlines a lot recently, namely because of accusations aimed by President Trump at Hunter Biden.
- Biden was a co-founding partner of a U.S. private equity firm called Rosemont Seneca, and an unpaid director at a Chinese private equity firm called BHR Partners.
- Let's focus on BHR, since that's what Trump did yesterday.
- Securities filings cited by the WSJ show that the firm is 80% controlled by multiple Chinese entities, while Hunter Biden himself eventually held a 10% stake.
- Trump said yesterday that Hunter Biden "walks out of China with $1.5 billion," before adding that the Chinese should investigate the son of his political rival for corruption.
- The WSJ reports that the only known source for the $1.5 billion was an old WSJ story about what BHR was seeking to raise in a fund to invest outside of China, but it's unclear if the target was ever reached.
- BHR invested mostly in Chinese companies, including Didi Chuxing, although it also participated in a few U.S. deals, including a 2015 minority co-investment in the buyout of a Michigan-based auto parts maker.
- Overall, the WSJ tracked $2.5 billion of BHR investments into companies.
Bottom line: If the $1.5 billion was indeed raised, it would have been for limited partnership interests in an investment fund. Not $1.5 billion into a director's pockets. Somewhere, Mitt Romney is shaking his head and thinking, "Didn't we do all of this already?"
🎧 Pro Rata Podcast focuses on unintended consequences of the trade war on U.S. manufacturing. Listen here.
Bird, a Santa Monica, Calif.-based e-scooter rental company, raised $275 million in Series D funding at a $2.5 billion pre-money valuation. CDPQ and return backer Sequoia Capital co-led the round.
- Why it's the BFD: Come on, admit it. You figured e-scooter unicorns were a flailing fad, and that the public market performance for Uber/Lyft would snuff out valuation expansion.
- History: Bird launched in 2017, got a $1 billion post-money price in mid-2018 and then a $2 billion post-money just six months later. This round comes at a sizable premium, albeit at a slower growth rate.
- Bottom line: E-scooter economics initially cared about market share and regulation arbitrage. The new focus is on sidewalk lifespan, with Bird and its rivals working to develop more durable and tamper-proof vehicles.
Venture Capital Deals
🚑 Icosavax, a Seattle-based developer of a vaccine for respiratory syncytial virus, raised $51 million in Series A funding. Qiming Venture Partners USA led, and was joined by Adams Street Partners, Sanofi Ventures, and NanoDimension. http://axios.link/Xqbl
• Dunzo, an Indian hyper-local delivery service, raised $45 million in Series D funding from Google, Lightbox Ventures, STIC, and 3L Capital. http://axios.link/XnR4
• Osaro, a San Francisco-based provider of machine learning software for warehouse robots, raised $16 million in Series B funding from King River Capital, Alpha Intelligence Capital, Founders Fund, Pegasus Tech Ventures, and GiTV Fund. http://axios.link/3uqj
• Gradient AI, a Cambridge, Mass.-based software startup for commercial insurers, raised $6 million in Series A funding. Forte Ventures and Sandbox Insurtech Ventures co-led, and were joined by return backer MassMutual Ventures. www.gradientai.com
• Oneiro, a Boston-based cryptocurrency platform, raised $5 million from Cosimo Ventures. http://axios.link/tpHW
• Mon Ami, an app that connects college students with socially-isolated seniors, raised $3.4 million in seed funding co-led by Freestyle Capital and Cowboy Ventures. http://axios.link/GIfN
• Strigo, an Israeli customer training management startup, raised $2.5 million in seed funding. Hanaco Ventures led, and was joined by Greycroft. www.strigo.io
Private Equity Deals
• Apollo Global Management and The Carlyle Group are the two remaining bidders for Arriva, the European transport business being sold by Deutsche Bahn for around €3 billion, per Bloomberg. http://axios.link/jC3M
• Capstone Logistics, a Peachtree Corners, Ga.-based portfolio company of The Jordan Co., agreed to buy the assets of MileZero, a defunct provider of last-mile delivery logistics software. www.capstonelogistics.com
• CVC Capital Partners said it will invest over $400 million for a minority stake in Israeli ad-tech company IronSource. An earlier report suggested it would invest $450 million for a 25% stake. http://axios.link/u0Oi
• Highview Capital acquired Gold Star Foods, an Ontario, Calif.-based distributor of food to K-12 child nutrition programs. Gold Star will be merged with existing Highview portfolio company Good Source. www.goldstarfoods.com
• Insignia Capital Group invested in Netrush, a Vancouver, Wash.-based third-party retail agency focused on Amazon marketplaces. www.netrush.com
• Kronos, a Chemlsford, Mass.-based portfolio company of Hellman & Friedman and The Blackstone Group, acquired Optimum Solutions, a Nashville-based provider of HCM software. www.kronos.com
🍿 NexPhase Capital invested in Popcornopolis, a Vernon, Calif.-based maker of ready-to-eat popcorn. www.popcornopolis.com
• Silver Lake agreed to buy Australian event ticketing company Ticketek for A$1.3 billion. http://axios.link/484M
• TorQuest Partners invested in Joriki, a Canadian contract manufacturer of food and beverage products. http://axios.link/gkqM
• Global Blue, a Swiss shopping tax refund company, is prepping a €1 billion Amsterdam IPO, per Reuters. http://axios.link/XRJZ
• Verallia, a French glass bottle maker owned by Apollo Global Management, priced its Paris IPO at the low end of its range, for an initial market cap of €3.2 billion. It is the largest French IPO since 2017. http://axios.link/tlbB
• Crescent Capital Partners is seeking a buyer for Australian water pipeline manufacturer Steel Mains, per Reuters. http://axios.link/W6H0
• Nautic Partners sold Custom Window Systems, an Ocala, Fla.-based maker of windows and doors for the residential and multifamily markets, to Iowa’s Pella Corp. www.cws.cc
• Thomson Reuters (NYSE: TRI) acquired FC Business Intelligence, a London-based B2B events firm, from LDC. http://axios.link/wm36
⛽ Abu Dhabi National Oil is seeking a buyer for its natural gas pipelines, which could fetch around $5 billion, per Bloomberg. http://axios.link/nyf5
• Clariant, a Swiss chemicals company, is in talks to sell its Masterbatches plastic adhesives unit to Ohio-based PolyOne Corp. (NYSE: POL) for around $1.5 billion, per Bloomberg. http://axios.link/PtyW
• RingCentral (NYSE: RNG) will invest $125 million into telecom equipment company Avaya (NYSE: AVYA), via a preferred equity investment that could result in a 6% stake upon conversion to common stock. This is part of a larger strategic partnership, and comes after Avaya had been considering sale or merger options. http://axios.link/CdK5
Final Numbers: Jobs report
- Jobs: +136k
- Expectations were +145k
- 114k of the new jobs were private sector
- Unemployment rate fell from 3.7% to 3.5%.
- Strongest number since December 1969
- Avg hourly earnings mostly flat, and +2.9% year-over-year.
- Lowest y-o-y increase since July 2018.
- Per Axios' Courtenay Brown: "The number may calm recession fears after a week that saw a deterioration in manufacturing data and softening on services."