Jun 30, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Pro Rata will be taking a holiday next week, which is code for: "Daddy made pancakes! Wait. No, I don't like that kind of pancakes!" [Note: actual type of pancake is irrelevant.] Be sure to keep checking in on the Axios Business Stream, and we'll be back in your inbox on July 10.

Top of the Morning

• Wilbur's war: Mike Allen and Jonathan Swan report this morning that President Trump is leaning toward imposing around a 20% tariff on steel and certain other imports. The vast majority of Trump advisors have voiced their opposition to the trade war plan, but there is one notable supporter: Commerce Sec. Wilbur Ross, the former private equity titan who in 2002 purchased a group of bankrupt U.S. steel manufacturers — including Pennsylvania's Bethlehem Steel — to form International Steel Group (later sold to what is now ArcelorMittal).

• Mystery solved: Several Los Angeles-area venture capitalists have been trying to learn more about Palisades Venture Capital, a stealthy group that recently announced a $20 million investment in Gamemine (sub-based mobile gaming platform) and a $5 million deal for BlockFraud (mobile billing fraud prevention). The firm's website does not identify any team members, and its original version stole some boilerplate from Spark Capital. Plus, the firm's name is very familiar to the old moniker of what is now Palisades Growth Capital. So I did some digging:

  • Palisades Venture Capital was formed by Los Angeles entrepreneur Daniel Starr, with funding from his family and friends, with a focus on mobile startups. You might know Starr from an appearance on Bravo's Million Dollar Listing (it's okay, I won't tell).
  • Starr's resume includes stints with companies like Blockbuster and SendMe, but his current startup is... GameMine. Yup, the $20 million investment was largely self-funding. Moreover, Starr and partner Flaviu Rus also are listed as executives on an SEC filing for BlockFraud -- although Starr says that is an attorney error, and that he and Rus are only investors in that company (which is led by CEO Massimo Cristini, formerly of Infobip).
  • Starr told me that Palisades does have committed capital (i.e., it's not a fundless sponsor), and that the stealth was mainly so that he could invest without the distraction of unsolicited deal-flow (sorry). As for the website boilerplate, he blamed that on an outsourced web dev in Finland. The firm name comes from his partner happening to live in the Palisades.

• Chip chat: Qualcomm has been investing in startups since 2000, but its VC arm has never had an office in the Bay Area. Until now. Kia Kokalitcheva reports that the San Diego-based firm's new San Francisco outpost will be led by managing director Patrick Eggen, along with senior investment manager Varun Jain.

• Q&A: Yesterday I spoke with Blue Apron CEO Matt Salzberg, shortly after his company began trading on the NYSE. One excerpt from the interview, on the issue of possible competition from Amazon-Whole Foods:

"What they do is obviously so different. Blue Apron is a products company. We create a new product every week and, while our channel is direct-to-consumer, we're very different than a distributor or an e-commerce company. Beyond that, in a lot of cases Amazon is actually our ally. What we're really competing against is offline grocery, because a new customer for us is usually someone who is already cooking at home but buying food at a grocery store. So we require some behavioral change when acquiring new customers and Amazon and others help to get people more comfortable buying food online. We do best in zip-codes with higher usage of online grocery purchases."

• Don't be a stranger: Pro Rata will be dark next week, but I'll still be active on the site and on Twitter (@danprimack). If there is something I should know, be sure to drop a line (dan@axios.com or http://axios.com/tips). If you're heading out on vacation, be sure to put Axios on your phone's homescreen. Here's how:

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The BFD

TIAA Private Investments and Antarctica Capital have acquired InterPark, a Chicago-based owner and operator of parking garages, from Alinda Capital Partners. No financial terms were disclosed, but a source tells Axios that it was in the ballpark of $1.1 billion. Other members of the buyside consortium included Silverpeak (which will focus on real estate), CIC Capital, China Life, Munich Re and PFA Pension.

  • Why it's the BFD: InterPark is America's largest parking garage owner and operator, with 57 lots containing 49,000 spaces. Most municipal lots are actually owned by building landlords (who can play havoc with rent costs).
  • History: Alinda had purchased InterPark for a bit over $300 million from GE Real Estate in 2011, although later invested another $150 million to both add lots and modernize the infrastructure, per a source familiar with the situation.
  • Bottom line: Municipal parking garages may be heading toward an inflection point (yes, I just wrote that), as we head toward autonomous driving. All sides of cash-flow could look quite different by the time TIAA and Antarctica Capital are ready to sell, with some real estate investors already looking at parking garages as future greenfield properties. For now, this is another case of private equity profiting from real estate-related deals done in the aftermath of the financial crisis.
Doc of the Day
Venture Capital Deals

🚑 Science Exchange, a Palo Alto, Calif.-based platform for outsourced R&D, has raised $28 million in Series C funding. Norwest Venture Partners led the round, and was joined by return backers Union Square Ventures, Maverick Capital and Collaborative Fund. http://bit.ly/2t7PrPF

• Vector, a Tucson, Ariz.-based micro satellite launch startup, has raised $21 million in Series A funding. Sequoia Capital led the round, and was joined by Shasta Ventures and Lightspeed Venture Partners. https://bloom.bg/2slN92n

• Rong Cloud, a Beijing-based instant messaging service, has raised around $14 million in Series B funding. GP Capital led the round, and was joined by Tianxing Capital. http://bit.ly/2u5PdbP

🚑 Swift Biosciences, an Ann Arbor, Mich.-based provider of library prep solutions for genomic sequencing, has raised $12.2 million in Series D funding led by Arboretum Ventures. www.swiftbiosci.com

• Abl Schools, a San Francisco-based provider of time resource management software for schools, has raised $7.5 million in Series A funding. Rethink Education led the round, and was joined by Sinovation Ventures and return backers Owl Ventures, Reach Capital and First Round Capital. http://tcrn.ch/2t5D1Yo

• AUrate, a New York-based fine jewelry startup, has raised $2.62 million in new VC funding from backers like Arab Angel and Victress Capital. http://bit.ly/2uqwbwe

• Lynq, a New York-based developer of P2P location tracking technology, has raised $1.9 million in seed funding. Plus Eight Equity Partners led the round, and was joined by ARC Angel Fund and Angel Investor Forum. http://bit.ly/2s22DUX

• ClauseMatch, a London-based provider of real-time collaboration tools for legal and finance teams, has raised $1.6 million in seed funding. Speedinvest led the round, and was joined by SparkLabs Global Ventures, Techstars, Tom Glocer and Cristobal Conde. http://tcrn.ch/2tnYKNU

• Terran Orbital, an Irvine, Calif.-based nanosatellite company, has raised an undisclosed amount of strategic funding from Lockheed Martin (NYSE: LMT). http://bit.ly/2twO00b

Private Equity Deals

• Jacuzzi Brands, a portfolio company of Ares Management, has acquired two companies: Hydropool, a Canadian maker of swim spas and hot tubs; and BathWraps, an Illinois-based maker of bath remodeling products. No financial terms were disclosed for either transaction. www.bathwraps.com

• KKR has agreed to acquire a majority stake in Dixon Hospitality, an Australian hospitality and leisure company, for an undisclosed amount. http://bit.ly/2u5Z8ya

• Kakao Mobility, a Korean ride-hail service, has spun out from Korean mobile messaging company Kakao with a $437 million investment from TPG Capital. http://tcrn.ch/2txh3kc

• Monomoy Capital Partners has agreed to acquire West Marine (Nasdaq: WMAR), a Watsonville, Calif.-based omni-channel retailer of boating gear and apparel. The deal has an equity value of $338 million, or $12.97 per share (34.4% premium over yesterday's closing price). http://bit.ly/2twUZWT

• Oaktree Capital Group is nearing an agreement to acquire Fifth Street Asset Management (Nasdaq: FSAM) for around $350 million, according to the WSJ. Fifth Street is a Greenwich, Conn.-based debt investor with around $4.5 billion in assets under management. http://on.wsj.com/2sqycXG

• Rutland Partners has sponsored a management buyout of Aston Barclay, a British car auction group. No financial terms were disclosed, except that Crescent Capital Group provided unitranche financing. http://bit.ly/2uqXvKG

• Vista Equity Partners has acquired a majority stake in PayLease, a San Diego-based payments and billing provider for the property management and HOA industry. No financial terms were disclosed. Prior PayLease sponsor Francisco Partners and company management will retain minority stakes. www.paylease.com

• Warburg Pincus is leading one of the two remaining bidders to acquire Global Logistic Properties, a Singapore-listed warehouse operator valued at around $10 billion, according to Reuters. The other group involves Hopu Investment Management and Hillhouse Capital Group. http://reut.rs/2twBgGR

Public Offerings

🚑 Dova Pharmaceuticals, a Durham, N.C.-based drug developer focused on treatments for thrombocytopenia, raised $75 million in its IPO. The company priced 4.4 million shares at $17 per share (high end of range), for an initial market cap of around $425 million. It will trade on the Nasdaq under ticker symbol DOVA, while J.P. Morgan was listed as left lead underwriter. Shareholders include PBM Capital Investments (84.8% pre-IPO stake) and Perceptive Life Sciences (5.4%). www.dova.com

Liquidity Events

🚑 Roche has acquired mySugr, an Austrian diabetes management platform, for an undisclosed amount. MySugr had raised VC funding from Roche, XL Hwalth, iSeed and Aws Fonds Management. http://reut.rs/2tsM1sN

• Tikehau Capital (Paris: TKO) has acquired French crowdlending startup Credit.fr for €12 million. Sellers include Truffle Capital. www.tikehaucapital.com/en

More M&A

🍺 Asahi Group, a Japanese brewer, has agreed to sell its remaining 20.4% stake in China's Tingyi-Asahi Beverages for $614 million to joint venture partner Tingyi (Cayman Islands) Holding Corp. http://reut.rs/2u6I9vM

• Stockmann, a Finnish retail conglomerate, has agreed to sell its grocery business to S Group for €27 million.

Fundraising

• Vitruvian Partners, a UK-based private equity firm, has closed its third fund with €2.4 billion in capital commitments. ,www.vitruvianpartners.com

It's Personnel

• Danske Bank Private Equity said that its top investment managers, managing partner John Danielsen and senior partner Peter Thellufsen, have stepped down. The Danish bank said the moves are being done to "integrate Danske Private Equity more closely into Danske Bank Asset Management." http://bit.ly/2trLYxZ

• Julie Sandler is joining Seattle-based startup studio Pioneer Square Labs as a managing director. She previously was a partner with Madrona Venture Group. http://bit.ly/2uqKOQg

Final Numbers
Dan Primack