Jan 24, 2018

Axios Pro Rata

Top of the Morning

Source: Giphy

Breaking: General Electric revealed during this morning's earnings call that the SEC is investigating the $6.2 billion charge related to GE Capital's insurance portfolio. The troubled conglomerate also said it plans to restate its 2016 and 2017 results.

  • GE stock was up in pre-market trading on 2018 guidance (despite missing on top and bottom lines for Q4), but fell quickly after the regulatory probe was disclosed.
  • No updates yet on the planned $20 billion in asset sales.

Bezos the Brilliant: Elected officials have spent the past three months falling all over themselves to show Amazon just how much their cities love the e-commerce giant, as part of the HQ2 search.

  • Bottom line: The real winner is Amazon, which has created a feedback loop of positive press and fawning politicians just as the company increasingly needs both. More at Axios.

Davos Men: President Trump is expected to host a small dinner later this week with European business leaders, as part of the World Economic Forum. No word yet from the White House on what CEOs will be attending.

  • Steve Mnuchin: "Obviously a weaker dollar is good for us as it relates to trade and opportunities... Longer term, the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency."
  • Wilbur Ross: "Trade wars are fought every single day [but] the difference now is U.S. troops are now coming to the ramparts.”

Deal scoop: Kia reports that San Francisco-based HomeShare has raised $5.7 million in seed funding led by Lightspeed Venture Partners.

  • Why it matters: Several startups are seeking to meet the skyrocketing demand for urban housing, particularly among young, single professionals in cities like San Francisco and New York. Read more.

Cryptography: Payment processor Stripe yesterday said that it was ending its support for Bitcoin (at least for now), blaming increased lag and fees: "Over the past year or two, as block size limits have been reached, Bitcoin has evolved to become better-suited to being an asset than being a means of exchange."

  • Why it matters: Bitcoin backers have regularly talked about the technology might be most valuable as a faster and more secure replacement for current payment rails, often as a rhetorical defense to price volatility concerns. But, now, Stripe is saying that Bitcoin is better suited as a substitute for gold than transaction infrastructure.

M&A ICYMI: Major conditions imposed by regulators as part of Comcast's merger with NBCUniversal expired this past Saturday, renewing debate over AT&T's proposed takeover of Time Warner. Axios' Kim Hart has more.

Recommended readings: CNBC's Christina Farr on the fall of Practice Fusion, and how employees were left with nothing while execs pocketed millions. WSJ's Greg Zuckerman and Rob Copeland on the chaotic battle for control of Och-Ziff.

Howard harbinger: Oaktree Capital's Howard Marks is out with his latest memo, in which he continues to essentially be a non-aggressive bull.

  • One obvious, but often overlooked, point he makes is that economic busts only follow booms. For the U.S. economy, that means large risks weren't being created during many of the more sluggish recovery years. Today, however...

Source: Giphy

Aurora Cannabis (TSX: ACB) has agreed to buy rival medical marijuana company CanniMed Therapeutics (TSX: CMED) for around C$1.1 billion (US$892m), following a fairly bitter takeover battle. As part of the agreement, Cannimed will terminate its earlier agreement to buy smaller rival Newstrike Resources.

  • Why it's the BFD: Because this is an expensive signal that the North American cannabis market isn't too concerned about Jeff Sessions.
  • Bottom line: "Share prices of Canadian growers have surged ahead of legalization, which is expected later this year. The country has at least 84 publicly traded companies tied to marijuana that trade on its exchanges, with a combined market valuation of C$36.9 billion." — Bloomberg
Venture Capital Deals

Katerra, the construction-tech company led by former Flex CEO Michael Marks, has raised $865 million in new funding led by SoftBank Vision Fund, at a valuation north of $3 billion. http://axios.link/jpUf

PrecisionHawk, a Raleigh, N.C.-based enterprise drone platform, has raised $75 million in new VC funding. Third Point Ventures led, and was joined by Comcast Ventures, Senator Investor Group, Constellation Technology Ventures, Syngenta Ventures and return backers Intel Capital, Millennium Technology Value Partners, DuPont, Verizon Ventures, USAA and Indiana University's Innovate Indiana Fund. http://axios.link/CjdB

Dianrong, a Chinese peer-to-peer lending platform, has raised $70 million in new Series D funding (bringing the round total to $290m). New investors include Orix Asia Capital and CLSA. http://axios.link/wLlo

Blacklane, a Berlin-based provider of limos and other high-end transportation, has raised between $40 million and $45 million in Series D funding, per TechCrunch. ALFAHIM led, and was joined by return backers like Daimler and btov Partners. http://axios.link/vziQ

Rainforest QA, a San Francisco-based provider of on-demand quality assurance solutions, has raised $25 million in Series B funding from Silicon Valley Bank, Bessemer Venture Partners, Sutter Hill Capital, Rincon Ventures and Initialized Capital. www.rainforestqa.com

🚑 Bonti, a Newport Beach, Calif.-based developer of a neurotoxin for treating musculoskeletal pain, has raised $15.5 million in Series C funding led by City Hill Ventures. http://axios.link/YrTs

PrinterLogic, a St. George, Utah-based provider of enterprise printer management software, has raised $15 million in Series A funding from Mercato Partners. www.printerlogic.com

Unravel, a Menlo Park, Calif.-based big data performance management platform, has raised $15 million in Series B funding. GGV Capital led, and was joined by Menlo Ventures and Microsoft Ventures. http://axios.link/VJWq

🚑 Skyhawk Therapeutics, a Waltham, Mass.-based developer of small molecule therapeutics for correcting RNA expression, has raised $8 million in seed funding from backers like Alexandria Venture Investments and Tim Disney. www.skyhawktx.com

🚑 LindaCare, a Belgium-based provider of remote patient monitoring solutions for chronic disease management, has raised €7 million in Series B funding from Philips, PMV and return backers Capricorn ICT Arkiv and Connecticut Innovations. www.lindacare.com

BeliMobilGue, an Indonesian middle-man for used auto sales, has raised $3.7 million in seed funding led by Intudo Ventures. https://axios.link/MyYZ

Esports One, a consumer-facing provider of esports information technology, has raised $3 million in seed funding from XSeed Capital and Eniac Ventures. http://axios.link/7zEk

Private Equity Deals

Barstool Sports, a New York-based digital sports content and commerce company, has raised $15 million in new funding from majority owner Chernin Group. http://axios.link/4TcK

GTCR has agreed to acquire EaglePicher, a Joplin, Mo.-based provider of power solutions for the defense, aerospace and medical end markets, from Apollo Global Management portfolio company Vectra. www.eaglepicher.com

Intermediate Capital Group has acquired PSB Academy, a private chain of tertiary education facilities, from Baring Private Equity Asia. http://axios.link/AN3M

Magnitude Software, an Austin, Texas-based portfolio company of Audax Private Equity, has acquired Innowera, an Irving, Texas-based provider of SAP process and workflow management solutions. www.magnitudesoftware.com

One Equity Partners has acquired Rizing, a Stamford, Conn.-based provider of SAP functional and technical consulting services, from Bunker Hill Capital. www.rizing.com

Public Offerings

Bioceres, an Argentine developer of crop productivity traits for genetically-modified seeds, has set its IPO terms to 11.8 million shares at $10-$12. It would have a fully-diluted market value of $497 million, were it to price in the middle. The company plans to trade on the NYSE under ticker BIOX, with Jefferies serving as lead underwriter. Bioceres previously filed for an IPO in 2015, but later pulled the registration. www.bioceres.com.ar

⛽ FTS International, a Fort Worth, Texas-based provider of hydraulic fracturing services for the oil and gas industry, set its IPO terms to 15.2 million shares being offered at $15-$18. It would have a fully-diluted market value of around $1.8 billion, were it to price in the middle. The company plans to trade on the NYSE under ticker FTSI, with Credit Suisse serving as lead underwriter. Shareholders include Chesapeake Energy, RRJ Capital and Temasek. www.ftsi.com

🚑 Menlo Therapeutics, a Menlo Park, Calif.-based drug developer focused on chronic pruritus and chronic cough, has increased its proposed IPO terms from 5.7 million shares at $14-$16 to 6.5 million shares at $16-$17. It plans to trade on the Nasdaq under ticker MNLO, with Jefferies serving as lead underwriter. The pre-revenue company has raised around $110 million in VC funding from firms like Vivo Capital (24.9% pre-IPO stake), Remeditex (17.8%), Presidio Partners (16.5%), Merck Sharp & Dohme Corp. (8.3%), VenBio (8%), F-Prime Capital (7.5%), Novo Holdings, Rock Springs Capital, Aisling Capital and Bay City Capital. www.menlotherapeutics.com

Novares, a French maker of plastic components for auto manufacturers, is reviving a Paris IPO that was postponed last fall, according to Reuters. It plans to raise between €130 million and €150 million. http://axios.link/T0u1

Ri Happy Brinquedos, a Brazilian toy-maker backed by The Carlyle Group, has filed for a Sao Paulo IPO. http://axios.link/BMaC

🚑 Sol-Gel Technologies, an Israel-based developer of topical drug products for the treatment of skin diseases, set its IPO terms to 5 million shares at $11-$13. It would have a fully-diluted valuation of around $209 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq under ticker symbol SLGL, with Jefferies and BMO Capital Markets serving as co-lead underwriters. www.sol-gel.com

🚑 Solid Biosciences, a Cambridge, Mass.-based drug developer focused on Duchenne muscular dystrophy, increased its IPO terms from 5.9 million shares being offered at $16-$18 to 7 million shares being offered at $18-$19. It plans to trade on the Nasdaq under ticker SLDB, with J.P. Morgan serving as lead underwriter. The company has raised over $50 million in VC funding, from firms like JPMorgan (11.4% pre-IPO stake), Perceptive Advisors (11%), Bain Capital Life Sciences (6.7%), RA Capital (6.4%), RTW Investments, Foresite Capital, Cormorant Asset Management, Janus Capital Management and Biogen. www.solidbio.com

Liquidity Events

Ardian is seeking a buyer for ESIM, an Austrian maker of crop-protection chemicals that could be worth around 400 million, according to Bloomberg. http://axios.link/XkLK

Facebook (Nasdaq: FB) has acquired Confirm, a Boston-based provider of software that authenticates government-issued IDs. Confirm had raised around $6 million in VC funding from Accomplice, Cava Capital and Rho Canada Ventures. http://bit.ly/2BpXLNc

More M&A

ComScore (OTC: SCOR), a Reston, Va.-based audience measurement company, has hired Goldman Sachs to explore options that could include a sale, according to Bloomberg. http://axios.link/dF63

Irdeto has acquired Denuvo, a German provider of anti-piracy and anti-cheat solutions for game publishers. http://axios.link/wcOv


HarbourVest Partners is raising up to $2.5 billion for its fifth private equity co-investment fund, per PE International. http://axios.link/IrjR

• Portfolio Advisors has raised $1.5 billion for its third private equity secondaries fund. www.portad.com

• University of Tokyo Edge Capital is raising around $225 million for a debut fund that will focus on tech transfer spinouts from the University of Tokyo. https://axios.link/SI5M

It's Personnel

• Jeff Browning has joined Next Coast Ventures as a venture partner. He previously was a principal with private equity firm GTCR. www.nextcoastventures.com

• MFV Partners is raising up to $75 million for its second VC fund, per an SEC filing. www.mfvpartners.com

Vestar Capital Partners has promoted Nikhil Bhat to principal. www.vestarcapital.com

Final Numbers: U.S. cross-border M&A under Trump
Data for 1/20/16-1/4/17. Source: Thomson Reuters.