Nov 16, 2020

Axios Pro Rata

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Top of the Morning

Illustration: Aïda Amer/Axios

Airbnb will flip its IPO filing this afternoon, setting itself up to go public before year-end.

Why it matters: This would cap off a resilient rebound for a company that many left for dead after the pandemic hit. As a source close to the company tells me: "Everyone knows Airbnb had a good Q3, but people may be surprised by just how good it was."

What to expect: This will be a traditional IPO, not a "hybrid" that includes some sort of direct listing. Airbnb did at least briefly consider the hybrid structure, but was quickly turned off by what it believed would be an extra one to three months of regulatory "testing."

  • There should be a small secondary piece for early shareholders, but uptake was relatively light given the broader hospitality sector challenges.
  • Airbnb "hosts" will not be given cash bonuses to buy shares. This is partially for regulatory reasons, but more because a similar (and laudable) effort by Uber went so poorly.
  • The company instead is putting aside 9.2 million shares for an "endowment" that's intended to help hosts in areas like education and emergency financial aid. It becomes effective once those shares reach $1 billion in value, with CEO Brian Chesky making an additional personal commitment of shares valued at over $100 million.
  • The filing will detail a new equity compensation plan for Chesky, who is pledging to donate all of his future equity comp to philanthropic causes.

Financials: Airbnb is expected to show its past five years of results.

  • This would include profitability in 2017 and 2018, but a net loss in 2019.
  • It's unclear how granular it will get on the 2020 results, in terms of segments. But what we know is that its cross-border business basically disappeared with the pandemic, as did much of its urban apartment rental business. On the upside have been suburban and rural rentals, including long-term bookings that previously weren't a core offering.

The big picture: Wall Street sources say they aren't concerned that the imminent IPO flood will lead to attention and/or capital deficit.

  • In addition to Airbnb, expect upcoming listings for DoorDash (already filed), Affirm, Roblox and Wish.
  • "Fund managers have been looking at these companies for a while, even if they didn't have the IPO prospectuses, and fortunately from a capital allocation perspective, there isn't much overlap in terms of industry sector," one banker explains.
  • There's also the recent failure of Ant Group's mega-offering, which could free up some cash (particularly for Affirm, since it's a fintech).

The bottom line: Airbnb has been teasing this IPO, both internally and externally, for well over a year. The wait is almost over.

The BFD

Source: Giphy

Simon Property Group (NYSE: SPG) agreed to buy an 80% stake in rival shopping mall operator Taubman Centers (NYSE: TCO) at a reduced price of $2.65 billion in cash, or $43 per share.

  • Why it's the BFD: This comes just hours before the two sides were set to battle in court over Simon's decision in June to cancel the takeover, then valued at $3.6 billion ($52.50 per share), citing a material adverse effect caused by the coronavirus pandemic. As part of the revised agreement, both sides agreed to drop litigation.
  • The bottom line: "Though retail and real estate have been among the sectors hardest hit by the pandemic, with fewer people spending time in stores or traveling, they could recover ground once a vaccine is widely available. In a sign that many investors are optimistic, shares of companies including Simon jumped early last week on news of successful vaccine test results." — Cara Lombardo, WSJ
Venture Capital Deals

Strava, a San Francisco-based social platform for fitness, raised $110 million in Series F funding. TCV and Sequoia Capital co-led, and were joined by Dragoneer and return backers Madrone Capital Partners, Jackson Square Ventures and Go4it Capital. www.strava.com

MindTickle, a San Francisco-based sales readiness plaform, raised $100 million in equity and debt. SoftBank led, and was joined by return backers Norwest Venture Partners, Accel Partners, Canaan, NEA, NewView Capital and Qualcomm Ventures. http://axios.link/GU0m

Form Energy, a Somerville, Mass.-based developer of battery systems for long-term storage of wind and solar energy, raised $70 million in Series C funding. Existing backers include Breakthrough Energy Ventures, The Engine and Prelude Ventures. http://axios.link/SVLW

🚑 AliveCor, a Mountain View, Calif.-based provider of mobile electrocardiogram technology, raised $65 million in Series E funding from existing backers OMRON, Khosla Ventures, WP Global Partners, Qualcomm Ventures and Bold Capital Partners. www.alivecor.com

Harbr, a London-based enterprise data exchange startup, raised $38.5 million in Series A funding. Dawn Capital and Tiger Global Management co-led, and were joined by seed backers Mike Chalfen, Boldstart Ventures, Crane Venture Partners, Backed and Seedcamp. www.harbrdata.com

ZeoTap, a customer intelligence platform, raised $18.5 million in new Series C funding (round total $60.5m) led by SignalFire. http://axios.link/JFC0

Highwing, a Denver-based open data platform for insurance brokers and carriers, raised $4 million in seed funding co-led by Baldwin Risk Partners and BrokerTech Ventures. http://axios.link/P3N1

Udemy, a San Francisco-based marketplace for online educational courses, is raising $100 million in Series F funding at a $3.3 billion valuation, per TechCrunch. http://axios.link/zyr3

Private Equity Deals

The Home Depot (NYSE: HD) agreed to buy building products company HD Supply Holdings (Nasdaq: HDS) for around $8 billion, or $56 per share.

  • History: Home Depot spun off HD Supply to private equity firms in 2007 for $10.3 billion, with HD Supply going public in 2013.

American Securities agreed to buy Foundation Building Materials (NYSE: FBM), a Santa Ana, Calif.-based distributor of specialty buildings products like wallboard, suspended ceiling systems, metal framing. The deal is valued at around $1.37 billion (including debt), or $19.25 per share (27% premium to Friday’s closing price), while majority shareholder Lone Star Funds will exit.
www.fbmsales.com

🚑 Aspen Dental Management, an East Syracuse, N.Y.-based portfolio company of Leonard Green & Partners, agreed to buy ClearChoice Management Services, a provider of practice management services to a network of dental implant centers, from Sun Capital Partners. www.clearchoice.com

BC Partners agreed to buy Dutch puzzle producer Keesing Media Group from Ergon Capital and Mediahuis, with Bloomberg reporting a price tag north of €300 million. http://axios.link/uZsL

Clearlake Capital Group agreed to buy PrimeSource, an Irving, Texas-based distributor of specialty building materials, from Platinum Equity. www.primesourcebp.com

EQT agreed to buy a majority stake in Thinkproject, a German provider of construction intelligence SaaS, from TA Associates. www.thinkproject.com

KKR and Rakuten (Tokyo: 4755) agreed to buy an 85% stake (65/20 split) in Japanese supermarket chain Seiyu from Walmart (NYSE: WMT) at a $1.6 billion enterprise value. http://axios.link/5tbe

KKR invested in CMC Machinery, an Italian manufacturer of automated packaging solutions. www.cmcmachinery.com

Public Offerings

Seven companies plan to price IPOs this week on U.S. exchanges, targeting an aggregate raise of $3.4 billion. http://axios.link/Lmnd

17 Education & Technology Group, a provider of K-12 education services in China, filed for a $100 million IPO. It plans to list on the Nasdaq (YQ) with Goldman Sachs (Asia) and Morgan Stanley as lead underwriters, and reports a $144 million net loss on $119 million in revenue for the first nine months of 2020. Backers include Shunwei Capital (20.2% pre-IPO stake), H Capital (12.3%), CL Lion Investment (11.6%) and Esta Investments (11.2%). http://axios.link/3r19

🚑 BioAtla, a San Diego-based developer of antibody therapies for solid tumor cancers, filed for a $100 million IPO. It plans to list on the Nasdaq (BCAB) with JPMorgan as lead underwriter, and raised $162 million from firms like Pfizer Ventures (10.4% pre-IPO stake), Soleus Private Equity (8.3%), HBM Healthcare (7.9%), Baker Brothers (6.9%), Cormorant Asset Management (6.9%) and Farallon Capital Management (6.9%). http://axios.link/4wYa

C3.ai, a Redwood City, Calif.-based enterprise AI SaaS company led by Tom Siebel, filed for a $100 million IPO. It plans to list on the NYSE (AI) with Morgan Stanley as lead underwriter, and reports a $69 million net loss on $157 million in revenue for the fiscal year ending April 30, 2020. It raised over $360 million from backers like TPG (22.6% pre-IPO stake), Baker Hughes (15.1%), BlackRock, Sutter Hill Ventures, Breyer Capital, Interwest Partners, Makena Capital Management and Wildcat Venture Partners. http://axios.link/mJvN

🚑 Kinnate Biopharma, a San Diego-based oncology biotech, filed for a $100 million IPO. The pre-revenue company plans to list on the Nasdaq (KNTE) with Goldman Sachs as lead underwriter, and raised nearly $200 million from Foresite Capital (33.3% pre-IPO stake), OrbiMed (10.5%), RA Capital Management (10%), Nextech (8.9%) and Vida Ventures (7.9%). http://axios.link/KXs1

🚑 Olema Pharma, a San Francisco-based biotech focused on women’s cancers, set IPO terms to 10 million shares at $16-$18. It would have a fully-diluted market value of $670 million, were it to price in the middle, and plans to list on the Nasdaq (OLMA) with JPMorgan as lead underwriter. The pre-revenue company raised over $150 million in VC funding from firms like BVF Partners (20% pre-IPO stake), Janus Capital (10.6%), Cormorant (10.3%), Logos Opportunities Fund (9.4%), RA Capital (6.3%), and Wellington Management (6.3%). http://axios.link/lINZ

PubMatic, a Redwood City, Calif.-based programmatic ad platform, filed for a $75 million IPO. It plans to list on the Nasdaq (PUBM) with Jefferies and RBC Capital Markets lead underwriters, and reports nearly $8 million of net income on $92.5 million in revenue for the first nine months of 2020. The company raised $76 million from firms like Nexus India (25.7% pre-IPO stake), Pelion Venture Partners (18.8%), August Capital (15.9%) and DFJ (9.1%). http://axios.link/klqP

🚑 Sigilon Therapeutics, a Cambridge, Mass.-based cell therapy company, filed for a $100 million IPO. It plans to list on the Nasdaq (SGTX) with Morgan Stanley as lead underwriter, and raised $180 million from Flagship Pioneering (48.3% pre-IPO stake), Eli Lilly (11.4%), CPP Investments, Longevity Vision Fund and BlackRock. http://axios.link/4CdS

SPAC Stuff

Aequi Acquisition, a SPAC led by Hope Taitz (ELY Capital), cut its IPO size from $300 million to $200 million. http://axios.link/709S

CF Finance Acquisition III, a SPAC formed by Cantor Fitzgerald, raised $200 million in its IPO. http://axios.link/aOwL

Liquidity Events

The Carlyle Group is seeking a buyer for Hunkemoller, a Dutch lingerie and swimwear retailer, per Bloomberg. http://axios.link/Xa6C

Nexi (Milan: NEXII), Italy’s largest payments company, agreed to buy Nordic rival Nets for €7.8 billion (including 1.8b in debt) in stock. Sellers include Advent International, Bain Capital, Fisher Lynch Capital, and GIC. http://axios.link/KXZF

Reliance Retail acquired a 96% stake in Indian furniture and décor marketplace Urban Ladder for around $24.5 million. Urban Ladder had raised over $100 million from firms like Sequoia Capital India, Kalaari Capital, and SAIF Partners. http://axios.link/IpuW

More M&A

Illustration: Sarah Grillo/Axios

PNC Financial (NYSE: PNC) agreed to pay $11.6 billion in cash to buy the U.S. business of Spanish bank BBVA (MC: BBVA). http://axios.link/s4i9

Cisco Systems (Nasdaq: CSCO) agreed to buy the assets of Banzai Cloud, a Hungarian startup that helps enterprises transition to microservices on Kubernetes. www.banzaicloud.com

Endeavour Mining (TSX: EDV) agreed to buy Teranga Gold (TSX: TGZ) for C$2.24 billion in stock (5.1% premium over Friday’s closing price). http://axios.link/9uqm

Nissan Motor (Tokyo: 7201) is seeking to sell some of all of its 34% stake in Mitsubishi Motors (T: 7211), per Bloomberg. http://axios.link/kpLS

Fundraising

Bentley Systems (Nasdaq: BSY) launched a $100 million corporate VC fund that will back startups involved in digital solutions for roadways, waterways, and other physical infrastructure. www.bentley.com

BrightSphere Investment Group (NYSE: BSIG) is seeking a buyer for its majority stake in Landmark Partners, a private equity secondaries and fund-of-funds manager that could be valued at around $1 billion, per Reuters. http://axios.link/xyVU

Comcast (Nasdaq: CMCS) will roll its long-standing corporate VC group, Comcast Ventures, into its cable unit’s strategic business development group. http://axios.link/R52w

🚑 Jeito Capital, a French biotech VC firm, secured a €50 million commitment from Sanofi. http://axios.link/Bkvv

NextView Ventures of Boston raised nearly $90 million for its fourth fund, per an SEC filing. http://axios.link/7K82

It's Personnel

Jay Clayton will step down as chairman of the U.S. Securities & Exchange Commission at year-end, ahead of his term expiring next summer. http://axios.link/jod8

Paul Cozza, the departing CEO of the North Carolina Ports Authority, is joining Corsair Infrastructure Partners as an operating partner. www.corsair-infrastructure.com

Final Numbers
Source: Refinitiv Deals Intelligence. Data through Nov. 12, 2020.

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