Axios Pro Rata

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January 24, 2022

Top of the Morning

Illustration of an old TV with Leon Black and Josh Harris on it.
Photo illustration: Brendan Lynch/Axios. Photos: Patrick T. Fallon/Bloomberg and Rich Graessle/Icon Sportswire via Getty Images

The backroom fight between Apollo Global Management co-founders Leon Black and Josh Harris has tumbled out into the open, providing plenty of free material to the writers of Wall Street soap operas like "Billions" and "Succession."

Why it matters: This is shaping up to become the messiest fight in private equity's 45-year history.

What to know: Apollo isn't a party to any of the related lawsuits, and is trying to portray this as an arms-length dispute between what it calls "two former employees." But Harris remains on the publicly-traded firm's board of directors, and current CEO Marc Rowan (the firm's third co-founder) was coaxed out of Hamptons retirement by Black.

  • In other words, the calls are still coming from inside the house.

Background: A model named Guzel Ganieva last July sued Black, who at the time was still Apollo's CEO, for defamation and sexual assault. Black, who had previously admitted to having an affair with Ganieva, countersued by denying the assault allegations (which are explicitly horrific) and calling her complaint an extortive "work of fiction."

  • Black's response also noted that he was seeking to learn if Ganieva "is acting alone or is working in concert with" others.
  • This felt like code for "I'm looking into Josh," as there were plenty of murmurs that Harris had been a driving force behind an Apollo investigation into Black's dealings with Jeffrey Epstein. Moreover, Harris was widely believed to be angling for the CEO job that ultimately went to Rowan.

Fast forward: In a court filing last week, Black accused Harris of orchestrating a "coup" and "malicious campaign," insinuating that Harris had a role in Ganieva's legal actions. A Harris spokesperson tells the WSJ that he has "no involvement of any kind in the filing of any claims by her."

  • Black's filing also says that Apollo was founded only by Black and Rowan, with Harris joining "soon afterwards as a junior employee." It's worth noting that Apollo, while run by Black, regularly referred to Harris as a "co-founder" in securities filings (including its IPO registration statement).

The bottom line: Apollo is the oldest private equity firm to have not successfully set up a founder succession plan, and that failure is set to play out in a courtroom.

The BFD

Illustration of a retail building covered in sale stickers
Illustration: Annelise Capossela/Axios

Kohl's (NYSE: KSS) received a $9 billion takeover offer from Acacia Research Corp., backed by activist investor Starboard Value, and reportedly may receive a rival bid from buyout firm Sycamore Partners.

Why it's the BFD: Kohl's is one of the country's largest off-mall department store operators, with over 1,100 stores in 49 states, and has innovated by partnering with brands like Amazon and Sephora to create mini stores-within-stores. It's also been a steady target of activist investors.

Details: Acacia offered $64 per share for Kohl's, compared to Friday's $46.84 closing price, while Sycamore reportedly may bid $65. Shares are up at the open today, but there's still more than a $10 gap on the bids.

The bottom line: "Whoever ends up with Kohl's is likely to follow a similar strategy to what Richard Baker is attempting with Hudson's Bay and what Eddie Lampert unsuccessfully tried with Sears, splitting apart its assets (real estate, brands, etc.) to unlock added value." — Richard Collings, Axios

Venture Capital Deals

• Swiggy, an Indian food delivery company, raised $700m in Series K funding at a $10.7b valuation. Invesco led, and was joined by Baron Capital Group, Sumeru, IIFL AMC Late Stake Tech Fund, Kotak, Axis Growth, Sixteenth Street Capital, Ghisallo, Smile Group, Segantii Capital and insiders Prosus Ventures, Alpha Wave Global, Qatar Investment Authority and ARK Impact. http://axios.link/Bu0i

• A Place for Mom, a Seattle-based marketplace for senior care services, raised $175m. Insight Partners led, and was joined by General Atlantic and Silver Lake. www.aplaceformom.com

• Ola Electric, an Indian e-scooter maker, raised $200m at a $5b valuation from backers like Tekne Private Ventures, Alpine Opportunity Fund and Edelweiss. http://axios.link/7weB

• Sayata, an Israeli cyber-risk assessment startup, raised $35m in new Series A funding. Pitango Growth and Hanaco Ventures co-led, and were joined by insiders Team8 Capital, Vertex Ventures, Elron Ventures and OurCrowd. http://axios.link/QkPT

• Spectrum Labs, an SF-based content moderation AI, raised $32m. Intel Capital led, and was joined by Munich Re Ventures, Gaingels, OurCrowd, Harris Barton, and insiders Wing VC, GFC, Greycroft, Ridge Ventures and Super{set}. http://axios.link/aVXV

Cana Technology, an Emeryville, Calif.-based developer of molecular beverage printers, raised $30m from The Production Board. http://axios.link/mT0W

🚑 Casana, a New York-based maker of health-monitoring toilets, raised $30m in Series B funding, Axios reports. Morningside led, and was joined by Matrix Partners, General Catalyst and Outsiders Fund. http://axios.link/4761

Calli, a grocery delivery startup focused on Latin America, raised $22.5m in Series A funding. Dalus Capital and JAM Fund co-led, and were joined by Forerunner Ventures. Streamlined Ventures, Base10 Partners and YC. http://axios.link/d1pX

• Inventa, a Brazilian inventory discovery marketplace for SMBs, raised $20m in Series A funding. Andreessen Horowitz and Monashees co-led, and were joined by Founders Fund, Greenoaks, Greylock and Tiger Global. http://axios.link/bJzR

Aleph.im, a French decentralized storage and computing startup, raised $10m led by Stratos Technologies. http://axios.link/lF4z

Caramel, a startup by former Fair.com execs Craig Nehamen and Edward Brojerdi, raised $8m from firms like Primera Capital, per an SEC filing.

FarmRaise, a San Diego-based agricultural grant platform, raised $7.2 million in seed funding led by Susa Ventures. http://axios.link/mxOo

🌎 Heaten, a Norway-based heavy industry decarbonization startup, raised €6m from Azolla Ventures, Shell Ventures and Nysnø Climate Investments. www.heaten.com

Bateau, a Seattle-based provider of business intelligence software for the senior living market, raised $4m in seed funding led by CRV. www.trybateau.com

Caden, a New York-based zero-party data platform, raised $3.4m from backers like Jerry Yang, Barry Sternlicht and Wenda Millard. www.caden.io

🚑 dNovo, a San Jose, Calif.-based hair loss cure startup, raised $2.7 from YC, Felicis Ventures, Soma Capital and Yintai Investment. www.dnovobio.com

Hozon, a Chinese electric vehicle maker, is in talks to raise around $500m at a $7.1b valuation, ahead of a Hong Kong IPO, per Bloomberg. It’s raised $1.7b to date. http://axios.link/D6pW

Deliverect, a Belgian online food delivery software firm, is in talks to raise around €150m from firms like Coatue at a €1.2b valuation, per Bloomberg. http://axios.link/kXLC

Private Equity Deals

Blackstone and Starwood Capital Group, which last year paid $6b to buy Extended Stay America, agreed to buy WoodSpring Suites, a portfolio of 111 hotels, from for $1.5b from Brookfield Asset Management. http://axios.link/dlOa

Exclaimer Group, a British portfolio company of Insight Partners and Farview Equity Partners, bought Periodic, a Bloomington, Ind.-based provider of appointment scheduling software that had been seeded by Elevate Ventures, Real Ventures and Collina Ventures. http://axios.link/z5yk

Bain Capital and Carlyle are among those circling infant nutrition brand Friso, which is being sold for around $2b by Dutch food group Royal FrieslandCampina, per Bloomberg. http://axios.link/Ap6m

CeriFi, an Alpharetta, Ga.-based portfolio company of Leeds Equity Partners, bought Spidell Publishing, an Anaheim, Calif.-based provider of tax continuing education. www.cerifi.com

Gathr Outdoors, a Nashville-based portfolio company of Centre Partners, bought Cascadia Vehicle Tents, a Bend, Ore.-based maker of rooftop vehicle tents and related products. www.cascadiatents.com

🚲 KKR agreed to buy Dutch bicycle maker Accell Group (Amsterdam: ACCG) for €1.56b. http://axios.link/aa6H

Marlin Equity Partners bought a majority stake in Silobreaker, a London-based risk and threat intelligence SaaS. www.silobreaker.com

NextGen Growth Partners invested in DAWGS, a Chicago-based maker of steel panels for covering doors and windows in vacant buildings. www.dawgsinc.com

Platinum Equity agreed to buy Leaders Romans Group, a British residential property services firms, from Bowmark Capital. www.lrg.co.uk

OfficeSpace Software, an Alpharetta, Ga.-based provider of workplace management software, raised $150m from Vista Equity Partners. http://axios.link/P9Gf

🚑 Prime Global, a British portfolio company of LLCP, bought HCD Economics, a British medical communications and market access firm. www.primeglobalpeople.com

Summit Partners invested $96m in ConstructSecure, a Marlborough, Mass.-based risk management platform for capital projects and operations. www.constructsecure.com

Temasek agreed to buy London-based testing and inspection services provider Element Materials Technology from Bridgepoint for around $7b. http://axios.link/3NgL

Axios Pro Review

Didnt See GIF by Adult Swim - Find & Share on GIPHY
Source: Giphy

Some highlights from Friday's Axios Pro newsletters:

🚑 Health Tech: Scoop on Frazier Healthcare Partners exploring strategic alternatives for Parata Systems and a dive into the IBM Watson Health sale.

🛒 Retail: J. Jill's CFO talks debt refinancing and inside the activist push for International Flavors and Fragrances.

💰Fintech: SoftBank says no to tokens, the Fed says maybe to a digital dollar and KakaoPay says goodbye to top execs.

Public Offerings

Vaar Energi, a Norwegian oil and gas joint venture of Eni (Milan: ENI) and HitecVision, plans to list in Oslo. http://axios.link/anJx

SPAC Stuff

Allwyn Entertainment, a European lottery operator based in Prague, agreed to go public at an implied $9.3b valuation via Cohn Robbins Holdings (NYSE: CRHC), the SPAC led by former WH economic advisor Gary Cohn and private equity veteran Clifton Robbins. http://axios.link/mkwo

FG Merger, a North American financial services SPAC, filed for a $70m IPO. http://axios.link/X9jg

Moose Pond Acquisition, a consumer tech SPAC formed by Next Coast Ventures, withdrew registration for a $200m IPO that it filed last March. http://axios.link/aDjb

N2 Acquisition, a SPAC formed by the founders of TOMS Capital and Mariposa Capital, withdrew registration for a $450m IPO that it filed last March. http://axios.link/uB5M

Liquidity Events

BC Partners and Pollen Street Capital hired BofA and Morgan Stanley to advise on exit options for British bank Shawbrook, which they bought in 2017, per Bloomberg. http://axios.link/XDuP

Fortescue Metals (ASX: FMG), an Australian miner, agreed to buy Williams Advanced Engineering, a British battery and electrification company, for around £164m from EMK Capital and Williams Grand Prix Engineering. http://axios.link/006G

Gorillas, a German grocery and convenience item delivery unicorn, is in talks to buy Frichti, a French food delivery startup that’s raised over $50m from firms like Idinvest Partners, Felix Capital and Alven Capital Partners, per Bloomberg. http://axios.link/Hp9R

Paylocity (Nasdaq: PCTY) bought Cloudsnap, an Austin, Texas-based business application integration company whose backers included Active Capital and Mercury Fund. www.cloudsnap.com

More M&A

AccuWeather bought Plume Labs, a French provider of air pollution data. http://axios.link/ro7M

AdvancedAdvT (LSE: ADVT) sweetened its all-stock takeover offer for advertising firm M&C Saatchi (LSE: SAA), per Sky News. http://axios.link/1At7

BAE Systems (LSE: BA) hired Lazard to find a buyer for NetReveal, a provider of financial crime and fraud detection services, per Bloomberg. http://axios.link/va88

🚲 Blackwells, an activist hedge fund, called for the ouster of Peloton (Nasdaq: PTON) CEO John Foley and that the connected fitness company should consider a sale process. A Blackwells spokesman says that the firm holds "less than a 5%" stake in Peloton and doesn't have as short position.

Eldridge Industries, the investment firm led by Todd Boehly, is considering a sale of its CBAM Partners credit business, per Bloomberg. http://axios.link/Z1EE

Facebook was approached by VCs about spinning out its Workplace enterprise communication product as an independent “unicorn” company, but the social media giant declined, per TechCrunch. http://axios.link/x6Cq

Kering (Paris: PRTP) agreed to sell Girard-Perregaux and Ulysse Nardin to current management of the luxury watch brands. http://axios.link/jvjn

Trian, the activist hedge fund led by Nelson Peltz, has taken a position in Unilever (LSE: ULVR), which just abandoned its efforts to buy GSK's consumer unit, per the FT. http://axios.link/xCNA

Vodafone (LSE: VOD) has considered an acquisition approach for smaller British telco Three UK from CK Hutchison (HK: 00001), per Bloomberg. http://axios.link/riH7

Wisk, a Mountain View-based electric air taxi company, raised $450m from existing backer Boeing. http://axios.link/9Py0

Fundraising

Apollo Global Management is saying its new flagship buyout fund, which is in market with a $25b target, won’t invest in fossil fuels, per Bloomberg. http://axios.link/TTw8

🌎 Azolla Ventures (f.k.a. Prime Impact Fund), a Cambridge, Mass.-based climate tech VC firm, is raising $200m for its second fund. www.azollaventures.com

🌎 Blackstone launched a sustainable resources credit platform. www.blackstone.com

Eurazeo held a €150m close on its €250m-targeted second smart city venture fund. www.eurazeo.com

First Spark Ventures, a new “deep tech” VC firm led by Manish Kothari (SRI International), is raising $200m for its debut VC fund and $600m for an opportunities fund, per SEC filings. www.firstsparkventures.com

It's Personnel

Christopher Dorsett joined Macquarie Capital as a managing director of leveraged finance, per his LinkedIn. He previously was with Natixis CIB Americas.

Louis Vachon, former president and CEO of National Bank of Canada, joined J.C. Flowers & Co. as an operating partner. www.jcfco.com

Foley & Lardner named Daljit Doogal as its next chairman and CEO, succeeding Jay Rothman. www.foley.com

Final Numbers

LP secondaries pricing
Source: Jefferies Global Secondary Market Review, January 2022

2021 was a record-breaking year for private equity secondaries, with $132 billion of total volume, per Jefferies.

  • It also was the second straight year that GP-led transactions made up the slight majority (52%) of volume, in an industry that was long dominated by LP-led transactions.

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