Axios Pro Rata
February 04, 2019
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Top of the Morning
Both private equity and activist investor funds are considered alternative asset classes, but the latter is becoming an increasingly popular alternative to the former.
- Starboard Value today agreed to invest $200 million into Papa John's, after the troubled pizza chain failed to secure attractive enough private equity offers during a four-month auction process.
- The deal also includes another $50 million infusion by the end of March, with Starboard's Jeffrey Smith being named chairman.
- Company namesake John Schnatter reportedly voted against the deal, thus extending his recent losing streak.
- Elliott Associates, after failing to successfully work with Apollo Global Management on an Arconic takeover, is seeking to raise $2 billion for an actual takeover fund — not so much evolving into private equity but seeking to co-opt it.
The bottom line: Activists for years have helped to create private equity opportunities, by agitating for sales. Now they are beginning to take some of those opportunities themselves.
• Kicking the carry can: Private fund managers breathed a sigh of relief when carried interest was ignored by the 2017 tax cut bill, but it's again working its way into the political bloodstream.
- Newly-declared presidential candidate Cory Booker mentioned it last week, and expect to hear more and more about it from those well to Booker's left.
- And, remember, it's something that President Trump supported during the campaign, and was surprised was missing from what Republicans sent him to sign.
• All hail breaks loose: One intriguing thing to look for in Uber's S-1, whenever it arrives, is how much information it provides about the other ride-hail companies in which it holds shares.
- These holdings, particularly in China's Didi Chuxing, could represent a sizable percentage of Uber's proposed market cap. Investors are going to want more than just the latest VC valuations.
- This also could be where Uber benefits a bit from an IPO for Lyft — assuming it doesn't get taken out first, Qualtrics-style — in that there will be another third-party data point.
- Also: Today's Pro Rata podcast will focus on how ride-hail drivers are organizing to fight for higher wages.
Hellman & Friedman agreed to lead an $11 billion acquisition of Ultimate Software (Nasdaq: ULTI), a Weston, Fla.-based provider of human capital management cloud software.
- Why it's the BFD: Because no one on the outside seemed to see this mega-deal coming. Zero media reports about a pending takeover, and neither Goldman Sachs nor Deutsche Bank were even covering the company until last week (when DB's "buy" rating clearly beat out Goldman's "neutral").
- Other investors in the buyside consortium include The Blackstone Group, GIC, CPPIB and JMI Equity. The deal includes a 50-day "go shop" provision, during which time Ultimate Software can solicit superior offers.
- Bottom line: The $331.50 per share price represents over a 19% premium to Friday's close price, but just about matches its $330.73 all-time high set last September.
Venture Capital Deals
• Guazi, a Chinese used car marketplace, is in talks to raise up to $1.5 billion from SoftBank Vision Fund. http://axios.link/Yv6M
• Siete Family Foods, an Austin, Texas-based Mexican-American food brand, raised $90 million in minority equity funding from The Stripes Group. www.sietefoods.com
⛽ 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
• BrumBrum, an Italian online car retailer and long-term renter, raised €20 million in Series B funding. Accel led, and was joined by Bonsai Ventures and eVentures. http://axios.link/TtqJ
• Bud, a British startup that helps banks connect their apps and data to other fintech providers, raised over $20 million in Series A funding from HSBC, Goldman Sachs, ANZ, Investec, Banco Sabadell and 9Yards Capital. http://axios.link/56Nw
• Aire, a British credit scoring startup, raised $11 million in Series B funding. Crane Venture Partners led, and was joined by Experian Ventures and Orange Digital Ventures. http://axios.link/oImF
🚑 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
• 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
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
• Belcan, a Cincinnati-based portfolio company of AE Industrial Partners, acquired Sitec, a UK-based engineering services and technical recruitment company for the defense, aerospace, industrial and government services markets. www.belcan.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.
• One Equity Partners acquired a 51% stake in video tech company MediaKind from Ericsson (Nasdaq: ERIC). http://axios.link/prd1
• Safety Technology Holdings, a Farmington Hills, Mich.-based portfolio company of Bridgepoint, acquired OpTek Systems, a Groton, Mass.-based maker of laser processing equipment. www.opteksystems.com
🚑 Solara Active Pharma, an Indian maker of active pharmaceutical ingredients, raised $30 million from TPG Growth.
• Anheuser-Busch InBev picked JPMorgan and Morgan Stanley for a possible IPO of its Asia brewing business, per Bloomberg. http://axios.link/eHNr
🚑 Sequana Medical, a Belgian maker of implantable devices for managing fluids in the abdomen, plans to raise up to $44 million in a Brussels IPO. The company has raised around $58 million in VC funding from firms like Life Science Partners, NeoMed Management, VI Partners, BioMedInvest, Entrepreneurs Fund, Capricorn Venture Partners, Salus Capital Partners, Newton BioCapital and Quest for Growth. http://axios.link/zEc1
• Arlington Capital Partners agreed to sell MicroPact, a Herndon, Va.-based provider of case management and business process management software, to Tyler Technologies (NYSE: TYL). www.micropact.com
• KKR is exploring a full or partial sale of Japanese chip equipment company Hitachi Kokusai, with two Chinese buyers interested, per the FT. http://axios.link/Qycf
• Palo Alto Networks (NYSE: PANW) is in talks to buy Demisto, a Cupertino, Calif.-based automated incident response platform, per Calcalist. Demisto has raised nearly $70 million in VC funding, most recently at a $218 million post-money valuation, from firms like ClearSky, Greylock and Accel. http://axios.link/1SAb
🎧 Spotify (NYSE: SPOT) is in talks to buy podcasting startup Gimlet Media for more than $200 million, per Recode. Gomet has raised around $27 million in VC funding from firms like Stripes Group, Emerson Collective, WPP, Betaworks and Graham Holdings. http://axios.link/CkwU
• Naspers of South Africa has acquired Russian online classifieds company Avito for $1.16 billion in cash. http://axios.link/9w6z
• Panalpina (Swiss: PWTN) shareholders rejected a $4.1 billion takeover offer from Copenhagen-listed freight transport company DSV. http://axios.link/LwFi
• Sunrise Records of Canada offered to buy British music retailer HMV, which is preparing for bankruptcy, per the FT. http://axios.link/oPzv
• Taptica International (AIM TAP) agreed to buy rival video advertising rival RhythmOne (AIM: RTHM) for $176 million in stock.
• Three Hills Capital Partners, a London-based mid-market private equity firm, raised 540 million for a new fund, per PE International. http://axios.link/y1wD
• TSG Consumer Partners raised $4 billion for its eighth flagship private equity fund. www.tsgconsumer.com
• Accel promoted London-based investors Andrei Brasoveanu and Seth Pierrepont to partner. www.accel.com