Jun 6, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Axios tomorrow morning will host its next News Shaper event in D.C., featuring Mike Allen interviews of White House counselor Kellyanne Conway and three ambassadors: Jordan's Dina Kawar, Singapore's Ashok Kumar Mirpuri and Germany's Peter Wittig. RSVP here.

Top of the Morning

• Surge stuff: (1) Today's weekly all-hands at Uber will not include a discussion of Eric Holder's report on workplace culture, including Susan Fowler's allegations of sexual harassment and gender discrimination, per multiple sources. This is a change from what many employees had been told, and may be a timing issue related to CEO Travis Kalanick's recent family tragedy. (2) Frances Frei, a Harvard Business School professor focused on management issues, has joined Uber as its first SVP of leadership and strategy (she'll apparently commute from Cambridge). It's worth noting that this is not the COO role (i.e., Kalanick's #2), for which Uber continues to recruit.

• Recommended reading: Steve Schwarzman sat down for a deep Q&A with Bloomberg's Jason Kelly, which touches on politics, private equity, Blackstone's history and his love for Law & Order.

  • On Trump: "Every president has some type of ideology, and the current president is basically a capitalist who believes in efficiency... So whenever he sees something that is inconsistent with efficiency, he'll abandon what he said before in order to get to execution. The previous government was different. They had a very strong ideology."
  • Finance philosophy #1: "There are no brave old people in finance. Because if you're brave, you mostly get destroyed in your 30s and 40s. If you make it to your 50s and 60s and you're still prospering, you have a very good sense of how to avoid problems and when to be conservative or aggressive with your investments."
  • Finance philosophy #2: "There are no patents in finance. Everything has a decay curve, in terms of its margins."
  • On his role: "I'm 70 and in great health with enormous enthusiasm. I love what I'm doing. But in 1987, when we closed our first fund, I was absolutely essential, because there was hardly anybody else here. At this point in my career, I'm not essential."

• Call option: Yesterday we reported in the Axios stream that YipTV, a Florida-based provider of over-the-top television content, has proposed a $9.50 per share takeover offer for Israeli cloud calling company MagicJack VocalTel (Nasdaq: CALL). This would represent nearly a 50% premium to where MagicJack stock opened trading on Monday, although shares spiked on the news and settled up nearly 16%. How does a tiny startup finance such a bid? A big credit facility commitment from Goldman Sachs.

• Moving on: Highland Capital Partners is in market with its tenth flagship fund, but is doing so without Sean Dalton in the general partnership (although he will "assume a partner role while continuing to actively serve as a GP in all existing funds"). Two notes:

  1. In 2012, HCP co-founder Bob Higgins and Paul Maeder invited me to dinner in Boston, to introduce me to Dalton and Peter Bell as the firm's next leaders. Bell left last summer, while Maeder returned full-time and is listed as a GP on the new fund (as is Bob Davis, who had been rumored to be considering retirement).
  2. Higgins remains with Causeway Media Partners, a sports-focused VC firm he co-founded by Boston Celtics co-owner Wyc Grousbeck and Mark Wan, co-founder of Three Arch Partners. An SEC filing shows that CMP has held a $207 million close on its second fund (which is above initial target). Grousbeck declined comment, however, suggesting that a final close has not yet occurred (or just that he has paranoid attorneys, which is equally likely).

• Purple rain: Before his death last summer, musician Prince anonymously bankrolled Powerhouse, a for-profit clean energy incubator in Oakland, per Bloomberg. So far, the group has worked with more than 40 startups.


HD Supply (Nasdaq: HDS) has agreed to sell its waterworks products distribution business to Clayton Dubilier & Rice for $2.5 billion. Goldman Sachs managed the sell-side process.

  • Why it's the BFD: This business could become a significant beneficiary of a boost in federal and municipal infrastructure spending, as it distributes around 23,000 products for underground water, wastewater and drainage projects.
  • Coming attractions: U.S. waterworks distribution is a $13 billion industry, but it's highly fragmented. So expect CD&R to use this as a platform to make smaller, tuck-in acquisitions.
  • LBO once-removed: HD Supply put its waterworks unit on the block, in part, to reduce a debt load that can be traced back to its $8.5 billion carve-out from Home Depot back in 2007. Among the private equity sponsors on that earlier deal? Clayton, Dubilier & Rice.
Venture Capital Deals

• Netskope, a Los Altos, Calif.-based cloud access security broker, has raised $100 million in Series E funding. Accel and Lightspeed Venture Partners co-led the round, and were joined by fellow return backers Social Capital and Iconiq Capital, while new investors Sapphire Ventures and Geodesic Capital also participated. http://for.tn/2r1ix0c

• Shipt, a Birmingham, Ala.-based online grocery delivery platform, has raised $40 million in Series B funding co-led by Greycroft Partners and e.ventures. http://tcrn.ch/2rZPPSs

• Plume Design, a Palo Alto, Calif.-based provider of "adaptive WiFi" solutions, has raised $37.5 million in new VC funding. Comcast Cable, Samsung and Presidio Ventures were joined by return backers Liberty Global, Shaw Cable, and Jackson Square Ventures. www.plumewifi.com

• Yibuyongche, a Chinese provider of electric vehicle sharing services (kind of like ZipCar for EVs), has raised $19 million in Series A funding led by Do-Fluoride Chemicals Co. http://bit.ly/2syRewh

🚑 PhiSkin, a Shanghai-based provider of aesthetic medical and beauty services, has raised $17 million in Series B funding. Legend Capital led the round, and was joined by Ares Management. http://bit.ly/2rP2p6k

🚑 Neuronetics, a Malvern, Penn.-based developer of transcranial magnetic stimulation (TMS) therapy, has raised $15 million in Series G funding. Ascension Ventures was joined by return backers Accuitive Medical Ventures, GE Ventures, Interwest Partners, Industry Ventures, Investor Growth Capital, KBL Healthcare Ventures, New Leaf Venture Partners, Onset Ventures, Pfizer, Polaris Venture Partners and Three Arch Partners. www.neurostar.com

🚑 Lung Therapeutics, an Austin, Texas-based developer of therapeutics for niche, orphan drug indications in fibrosis and lung injury/disease, has raised $14.3 million in Series B funding. Bios Partners led the round, and was joined by return backer UT Horizon Fund. www.lungtx.com

• Tulip, a Somerville, Mass.-based developer of a manufacturing app platform, has raised $13 million in Series A funding. NEA led the round, and was joined by Pitango Venture Capital. http://bit.ly/2sc1vl3

• Freight Farms, a Boston-based maker of crop production units out of old shipping containers, has raised $7.3 million in Series B funding led by return backer Spark Capital. http://bit.ly/2rv9cCB

• Clustree, a French provider of "AI-powered" HR recruitment solutions, has raised €7 million in Series A funding. Creandum led the round, and was joined by Idinvest Partners and Alven Capital. http://tcrn.ch/2sLZ45k

• Audiobirst, a Palo Alto, Calif.-based audio content platform, has raised $6.7 million in Series A funding. Advanced Media (Tokyo: 3773) led the round, and was joined by backers like Flint Capital and 2B-Angels. http://bit.ly/2qY23pE

⛽ Arcadia Power, a Washington, D.C.-based renewable energy startup, has raised $6 million in new VC funding. Energy Impact Partners led the round, and was joined by BoxGroup and Wonder Ventures. http://bit.ly/2rwlBoK

🚑 DOC+, a Russian provider of digital health services, has raised $5 million in Series B funding from return backers Yandex and Baring Vostok. www.docplus.ru

• Wahed, a New York-based automated investment service that complies to Shariah standards, has raised $5 million in seed funding from individual investors. http://tcrn.ch/2rHFsQm

• Yeay, a German online video platform that lets users sell items for brands, has raised $4.9 million in seed funding co-led by Grazia Equity and Mountain Partners. http://tcrn.ch/2sJ8m1Z

• DealCloud, a Charlotte, N.C.-based provider of online management and workflow software for M&A transactions, has raised $4.5 million in new VC funding co-led by Cultivation Capital and Hamilton Lane. http://bit.ly/2sx1MMv

• Knightscope, a Menlo Park, Calif.-based developer of physical security technologies, has raised $3 million in equity funding from Konica Minolta (Tokyo: 4902), as part of a Reg A+ offering. www.knightscope.com

Private Equity Deals

• Aquiline Capital Partners has acquired OSG Billing Services, a Ridgefield Park, N.J.-based provider of billing and customer communications solutions. No financial terms were disclosed, except that Monroe Capital arranged a senior credit facility. www.osgbilling.com

• Aurora Capital Partners has acquired Randall-Reilly, a Tuscaloosa, Ala.-based provider of B2B data and marketing services for the trucking, construction and agriculture markets, from Investcorp for an undisclosed amount. www.randallreilly.com

• Baird Capital has acquired a majority stake in CAV, a UK-based provider of ice protection and drag reduction technology to the general aviation, commercial aerospace and defense markets. No financial terms were disclosed. http://bit.ly/2rY0NIi

⛽ BlackRock has completed its previously-announced acquisition of the energy-focused private equity infrastructure unit of First Reserve, including a 37-person team and two funds that had raised a combined $3.7 billion. No financial terms were disclosed. http://bit.ly/2rXC3zU

🚑 The Carlyle Group and GTCR have agreed to acquire contract drug manufacturer Albany Molecular Research (Nasdaq: AMRI) $21.75 per share. http://read.bi/2qSONDx

⛽ Evolution Midstream of Denver has agreed to acquire the Rowdy Gas Gathering System in Wyoming from Lucid Energy Group. No financial terms were disclosed. Both Evolution and Lucid are portfolio company of EnCap Flatrock Midstream.

• KKR has acquired A-Gas, a British provider of distribution and lifecycle management of specialty chemicals and gasses, from LDC. No financial terms were disclosed. http://bit.ly/2sKstg2

Public Offerings

• Delivery Hero, a European meal delivery company, said that it plans to raise upwards of €900 million via a Frankfurt IPO that could value the company at around €4 billion. Around half of the offered stock would come from founding shareholder Rocket Internet. Overall, the company has raised around $1.7 billion in private equity funding. http://reut.rs/2rwetbR

Liquidity Events

• Alteryx (NYSE: AYX) has acquired Yhat, a Brooklyn, N.Y.-based provider of self-service data science tools. No financial terms were disclosed. Yhat had raised $1.5 million in seed funding from Steelhead Ventures and Point Reyes Management. www.yhathq.com

• GI Partners has agreed to sell a portfolio of over 3,100 single-family rental properties to Colony Starwood Homes (NYSE: SFR) for around $815 million. www.colonystarwood.com

• Snap (NYSE: SNAP) has acquired Placed, a Seattle-based provider of analytics for the offline success of online ads, for around $125 million, according to Bloomberg. Placed had raised around $13 million in VC funding from firms like Madrona Venture Group and Two Sigma Ventures. https://bloom.bg/2rH7cER

More M&A

• Accenture (NYSE: CAN) has agreed to acquire LabAnswer, a Sugar Land, Texas-based provider of laboratory informatics consulting services, for an undisclosed amount. http://zd.net/2qOyAhQ

• Alitalia has received "32 expressions of interest" in purchasing the troubled Italian air carrier, according to administrators. http://reut.rs/2rHEWlu

• Grupo BTG Pactual of Brazil has agreed to acquire Weyerhaeuser's (NYSE: WY) Uruguay timberlands and a related manufacturing business for $403 million. http://bit.ly/2qZe2Du

• Synnex Corp. (NYSE: SNX) has agreed to acquire Westcon-Comstor, a Tarrytown, N.Y.-based distributor of technology and services for network security and data centers, from South Africa's Datasec (J: DTCJ) for upwards of $800 million. http://reut.rs/2rP1qTA


• Alpha Private Equity has closed its seventh pan-European private equity fund with €903 million in capital commitments. http://bit.ly/2rwfDUK

• L Catterton, a Connecticut-based private equity firm focused on consumer brands, is targeting $1.25 billion for its third Asia-focused fund, per an SEC filing.

Dan Primack