Jul 16, 2018

Axios Pro Rata

Greetings from Aspen, where tomorrow I'll moderate a Fortune Brainstorm Tech session with two SoftBank Vision Fund partners.

Also tomorrow: Axios has a live event in D.C. on how trade and federal economic policies are impacting America's communities. Guests include U.S. Agriculture Sec. Sonny Perdue and former U.S. Trade Rep. Ron Kirk. More info and RSVP here.

Top of the Morning

Photo by Roberto Machado Noa/LightRocket via Getty Images

Goldman Sachs this week is expected to officially name David Solomon as the successor to CEO Lloyd Blankfein, per NYT's Kate Kelly.

  • Exact timing: We don't know for sure, but Goldman has a management committee meeting this morning and reports earnings tomorrow.
  • Since Harvey Schwartz left Goldman earlier this year, Solomon's promotion to the top spot has been a matter of when, not if.

Hosein Khajeh-Hosseiny tells Axios that he has stepped down as CEO and managing general partner of Northgate Capital, a VC and private equity firm with nearly $5 billion in assets under management.

  • His plan is to form a new tech consulting and early-stage investment firm called Open X Innovations.
  • Khajeh-Hosseiny: "Open X will have two purposes. The first is to partner with incumbent, global firms that need to effectively transition into smart companies. The other is to help entrepreneurs who have distinctive technologies enabled by AI and machine learning to solve for complexity and simplify a lot of the decisions they need to make on the way to IPO."
  • He declined to identify his Open X partners, except to say that he has some. Initial investments will come from personal money.
  • Northgate has not yet named a replacement. CFO/COO Mo Virani says it is "in process."
  • Northgate was founded in 2000 by a pair of ex-NFL players, Brent Jones and Tommy Vardell, who left in 2016 under less-than-amicable circumstances.

The new face of influence-peddling, per Axios' Amy Harder:

Informal coalitions are popping up under Trump more than they have in the past, according to veteran Washington consultants and newly compiled federal lobbying data. These groups are mostly separate from the familiar, entrenched trade groups that traditionally run Washington’s lobbying and public relations machine.

Today in Abraaj: Colony Capital is now out and Cerberus is in, according to the FT.

  • A UAE court dismissed a bad check lawsuit against Abraaj founder Arif Naqvi, who separately reached a temporary settlement with a creditor over a $300 million loan.

Tweet of the Day, from @naval: "Whether hiring or investing, you don’t get the best deal at the best price."

The BFD

Source: Giphy

Apollo Global Management is among several firms to have expressed interest in buying Arconic (NYSE: ARNC), the aeronautics parts-maker that was known as Alcoa before a 2016 breakup.

  • Why it's the BFD: Because Arconic was the subject of a very contentious proxy battle last year with Elliott Management, which resulted in the ouster of CEO Klaus Kleinfeld and a board revamp. But the CEO swap hasn't helped Arconic's stock price, which has fallen 36% so far this year — partially due to a tariff-fueled rise in aluminum prices.
  • Size: Arconic has a current market cap of around $8.3 billion, plus $6.4 billion in debt.
  • Bottom line: "Should there be a deal, it would be the latest in a string of double-digit-billion leveraged buyouts from the likes of Blackstone, KKR and Carlyle Group. LBOs are on pace for their busiest year by dollar volume since 2007, according to Dealogic." — Miriam Gottfried & Dana Cimilluca, WSJ
Venture Capital Deals

Greensill Capital, a British online lending platform for supply chain finance, raised $250 million from General Atlantic at a $1.64 billion post-money valuation. It is the seven year-old company’s first round of outside equity funding. http://axios.link/GCHr

ASR Microelectronic, a Shanghai-based chipmaker, raised $100 million in Series B funding co-led by IDG Capital and Wanrong Hongtu Fund. http://axios.link/ZZYb

🚑 Pliant Therapeutics, a South Fran Francisco-based biotech startup focused on idiopathic pulmonary fibrosis, raised $62 million in Series B funding. Cowen Healthcare Investments led, and was joined by Eventide Asset Management, Schroder Adveq, Menlo Ventures, SCubed Capital and Agent Capital. www.pliantrx.com

A-lign, a Tampa, Fla.-based cybersecurity and compliance solutions provider, raised $54.5 million from FTV Capital. www.a-lign.com

PPRO, a London-based provider of cross-border payment solutions for merchants, raised $50 million in new funding led by PayPal. http://axios.link/HpJ0

7Net, a Chinese online exam grading service, raised $30 million in Series B funding from Sinovation Ventures, Wanrong Capital, Shanghai SIIC Fund Management Gaosi Education and ELEX. http://axios.link/bpmU

Undo, a UK-based debugging tools startup, raised $14 million in Series B funding led by Cambridge Innovation Capital. http://axios.link/hXfS

Eatigo, a Thailand-based restaurant booking startup, raised around $10 million from TripAdvisor (Nasdaq: TRIP). http://axios.link/Q6ml

Headout, a New York-based mobile app for last-minute travel and experience booking, raised $10 million in Series A funding from seed backers Nexus Venture Partners and Version One Ventures. http://axios.link/6RWI

Private Equity Deals

Allied Universal, a Santa Ana, Calif.-based security and facility services company owned by Warburg Pincus, has agreed to buy Roswell, Ga.-based rival U.S. Security Associates from Goldman Sachs for around $1 billion. http://axios.link/YkZp

Arrowhead, a Blaine, Minn.-based portfolio company of The Riverside Co. and Investcorp, has acquired Ratioparts, a German distributor of aftermarket replacement parts for outdoor power and forestry equipment. www.arrowheadep.com

CVC Capital Partners and Germany's Messer will pay $3.3 billion to acquire a majority of Linde's North American gasses assets and select South American assets, which are being divested in order to enable Linde's (DE: LIN1) planned $79 billion merger with Praxair (NYSE: PX).

KKR has agreed to acquire RBmedia, a Landover, Md.-based audiobook publisher, from Shamrock Capital. http://axios.link/0I5K

⛽ Mubadala Investment Co. is expected to take bids for Spanish oil company Cepsa Trading, which could be valued at around €10 billion, per Bloomberg. Possible suitors include Vitol Group, CVC Capital Partners and Blackstone. http://axios.link/7ALD

SSP Innovations, a Centennial, Colo.-based portfolio company of Warren Equity Partners, has acquired TC Technology, a Carlsbad, Calif.-based provider of mobile geospatial information software for field staff to utilities and municipalities. www.sspinnovations.com

Public Offerings

Ten companies are scheduled to go public on U.S. exchanges this week, including Tilray and Rubius Therapeutics. http://axios.link/fGPS

Opera, an Oslo-based maker of a web browser and digital content discovery tools, set its IPO terms to 9.6 million shares at $10-$12. It would have a fully-diluted market value of $1.3 billion, were it to price in the middle. The company plans to trade on the Nasdaq (OPRA) with CICC and Citi as lead underwriters, and reports $6.6 million of net income on $39 million in revenue for Q1 2018. Shareholders include China’s Kunlun Tech (48% stake).

Liquidity Events

The Carlyle Group is in “advanced talks” to sell all or part of Italian call-center company Comdata Group, which generated 105 million in 2017 EBITDA, per PE News. http://axios.link/TRzR

Gett, an Israeli ride-hail company, is considering the sale of a U.S. business (Juno) that it bought for $200 million just a year ago, per Bloomberg. http://axios.link/6it9

👖 Nine West Holdings hired Lazard to explore a sale of its remaining assets, including its Anne Klein brand and jeanswear unit. The Sycamore Partners-owned company went bankrupt earlier this year, and sold off its namesake brand for $340 million. http://axios.link/3OVI

More M&A

🚑 Anbang Insurance of China is considering a sale of its Hexie Health Insurance business, per Bloomberg. http://axios.link/OvNV

Xerox (NYSE: XRX) is considering a sale of its leasing finance unit, per Reuters. http://axios.link/ztZV

Fundraising

Golden Equator Capital (Singapore) and Korea Investment Partners (Seoul) are forming an $88 million VC fund focused on Southeast Asia-based tech startups. http://axios.link/DJRp

The Raine Group has raised $579 million for its third private equity fund, per an SEC filing. www.raine.com

Thompson Street Capital Partners has closed its fifth mid-market buyout fund with $1.15 billion. www.tscp.com

Final Numbers: Buyout fund fees
Source: 2018 Preqin Private Capital Fund Terms Advisor
  • More from Preqin:
"For the majority (86%) of investors interviewed at the end of 2017, fund terms and conditions are so important that they have on at least one occasion decided not to invest in a fund because of the proposed arrangement. Management fees and transparency are the key areas in which LPs believe alignment of interests can be improved, as true in previous years. Thirty percent of respondents would each like to see improvements in the hurdle rate and in the implementation of performance fees."

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