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Sep 12, 2018

Axios Pro Rata

Situational awareness: The Carlyle Group just announced an agreement to buy Sedgwick, a Memphis-based insurance claims servicer, from majority owner KKR at a transaction value of $6.7 billion. Also, the FDA said it is considering pulling all flavored e-cigarettes from the U.S. market in response to an “epidemic” of teen use.

Top of the Morning

Illustration: Lazaro Gamio/Axios

Federal regulators are pumping the brakes on T-Mobile's proposed mega-merger with Sprint, with the FCC saying it needs more time to review newly-submitted information.

  • What matters: Both companies are brushing off the slowdown, claiming that they always expected approval to drag, but they both implied that this was a regulatory slam dunk when first announcing the deal in April. That they felt compelled to produce and deliver new and deeper models suggests they know there's still some reflexive resistance to letting the nation's #3 and #4 wireless carriers merge.
  • What doesn't matter: That the FCC paused the 180-day "shot clock," which is just an informal, non-binding period.
  • Remember that DOJ will also have its say on this, in addition to the FCC. Axios' Kim Hart emails: "The deal will be a big test case for antitrust enforcers, particularly after the DOJ lost its case to block AT&T-Time Warner. Unlike that one, this is a horizontal deal that would remove a direct competitor from the market and could have direct price impact-- a key metric in these sorts of reviews."
  • Go deeper: Sprint and T-Mobile's pitch to D.C.

• New firm alert: Steve Glickman, a former economic advisor to President Obama, has launched a new consulting firm called Develop, which will advise investors who want to participate in low-income "opportunity zones." More from Bloomberg:

The opportunity-zone breaks were one of the lesser-known provisions of the federal tax overhaul signed into law in December, but they’ve sparked a tremendous amount of interest. They’re especially attractive to firms seeking to redeploy capital gains. Investors start by plowing those proceeds into “opportunity funds,” deferring taxes until 2026. If the funds buy and hold qualifying assets for at least five years, investors can reduce the tax they pay on appreciation or eventually eliminate it altogether.

• IC-ohhhh: A federal judge in Brooklyn yesterday refused to dismiss a case brought against the founder of a cryptocurrency, who tried arguing that the tokens weren't securities.

  • Cryptocurrency companies are getting their own D.C. lobbying group, as companies like Coinbase and Circle reportedly have helped create something called the Blockchain Association.

• Leaving it on the table: Cadbury is stockpiling chocolate — both ingredients and finished product — in case there is a hard Brexit, per the Times of London.

🎧 Pro Rata Podcast: Yesterday we discussed IPOs, and SEC proposals to increase mom/pop access to startups,. My guest was Lise Buyer, who is best known for helping Google go public, and who reportedly now advising Lyft. (Listen) (Subscribe)


Source: Giphy

NIO, a Chinese electric car company whose backers include Baidu and Tencent, raised at least $1 billion in an IPO that priced at $6.25 per share (low end of range). The company will trade on the NYSE with an initial market cap of $6.4 billion, while Morgan Stanley was lead underwriter.

  • Why it's the BFD: Because it successfully got out in an environment where shares of both automakers and Chinese tech companies are under pressure. Yes it priced low, but that's as much a reflection on the bankers as the company, and a $1 billion public float shouldn't be downplayed.
  • Bottom line: NIO may someday become a rival to Tesla, but so far it makes Elon Musk's manufacturing output look prodigious. The Chinese upstart only began making deliveries this past June, with fewer than 2,000 vehicles shipped through the end of August.
Venture Capital Deals

Sisense, a New York-based startup provider of business analytics software for complex data, raised $80 million in new funding led by Insight Venture Partners. http://axios.link/dLt7

Sysdig, a Davis, Calif.-based provider of security and performance solutions for containers and cloud-native apps, raised $68.5 million in Series B funding. Insight Venture Partners led, and was joined by Accel and Bain Capital Ventures. http://axios.link/5gVK

Pendo, a Raleigh, N.C.-based customer analytics platform, raised $50 million in Series D funding. Sapphire Ventures led, and was joined by Geodesic Capital, FirstMark Capital and return backers Battery Ventures, Spark Capital, Meritech Capital and Contour Venture Partners. http://axios.link/t8bA

PingCAP, a Chinese distributed database company that created TiDB, raised $50 million in Series C funding. Fosun International and Morningside VC co-led, and were joined by return backers like China Growth Capital, Yunqi Partners and Matrix Partners China. http://axios.link/TBqz

Q4, a Toronto-based provider of investor relations and capital markets software, raised US$38 million in Series C funding. Napier Park led, and was joined by return backers OTEAF, Informative Venture Partners and Espresso Capital. www.q4inc.com

StreamSets, a San Francisco-based data ops platform, raised $35 million in Series C funding. Harmony Partners led, and was joined by Tenaya Capital and return backers Battery Ventures and NEA. www.streamsets.com

RapidRatings, a New York-based provider of financial health analytics, raised $30 million from FTV Capital. www.rapidratings.com

Solid Power, a Louisville, Colo.-based maker of all solid-state batteries, raised $20 million in Series A funding from Hyundai, Samsung, Sanoh Industrial Co., Solvay Ventures and A123 Systems. http://axios.link/DSvI

Yoco, a South African point-of-sale payments provider, raised $16 million in Series B funding. Partech led, and was joined by Orange Digital Ventures, FMO, Accion Frontier Inclusion Fund and Velocity Capital. http://axios.link/3UmI

Lively, a New York-based direct-to-consumer lingerie startup, raised $6.5 million in Series A funding from GGV Capital, NF Ventures and ex-Nautica CEO Harvey Sanders. http://axios.link/5xOK

Dealpath, a San Francisco-based provider of cloud software for evaluating and managing real estate transactions, raised an undisclosed amount of funding from JLL Spark. www.dealpath.com

Intsite, an Israeli developer of autonomous cranes, raised an undisclosed amount of funding from Terra Venture Partners.

Private Equity Deals

Anta Sports (HK: 2020) and FountainVest have made a $5.3 billion takeover approach for listed Finnish sports equipment maker Amer Sports. http://axios.link/JWst

• Baring Private Equity agreed to buy up to $538 million worth of stock in Japanese electronics company Pioneer Corp. (Tokyo: 6773), as part of a bailout plan that would keep Pioneer publicly-traded. http://axios.link/W8ZR

• The Carlyle Group and InvestIndustrial formed a 50/50 joint venture to create a holding and acquisition company for high-end interior design brands. Initial holdings include B&B Italia, Flos and Louis Poulsen. http://axios.link/MfPN

• CVC Capital Partners has failed to acquire Premiership Rugby, for which it bid £275 million, after other team owners in the English rugby union’s top division declined to approve the transaction. http://axios.link/7RxH

🚑 General Atlantic agreed to buy a majority stake in OneOncology, a Nashville-based operator of cancer treatment clinics. http://axios.link/ctP9

🚑 H.I.G. Capital acquired Reliant Rehabilitation, a Plano, Texas-based provider of therapy services to skilled nursing facilities. www.reliant-rehab.com

🚑 Innovia, a St. Paul, Minn.-based surgical products portfolio company of Shore Capital, acquired Eagle Labs, a Rancho Cucamonga, Calif.-based maker of ophthalmic products like micro-surgical knives. www.innoviamedical.com

• Pamlico Capital acquired Personify, a provider of constituent management and engagement software to nonprofits, from Rubicon Technology Partners. www.personifycorp.com

More M&A

e.l.f. Beauty (NYSE: ELF), an Oakland-based cosmetics maker, is under pressure from activist investor Marathon Partners Equity Management, to either cut costs or sell itself, per the WSJ. http://axios.link/TZz5

🥛 Kirin, a Japanese conglomerate, said it will launch a review of Australia’s Lion Dairy & Drinks business, which could include a sale. Possible bidders include other local dairy groups, New Zealand’s Fronterra or private equity. http://axios.link/Ayxn

Nielsen Holdings (NYSE: NLSN), under pressure from Elliott Management, is expanding its strategic review to include a possible sale of the entire company, per Reuters. Its market cap is nearly $9.4 billion. http://axios.link/4Qlv


• Conscious Venture Lab, a Baltimore-based startup accelerator led by Jeff Cherry, is raising $50 million for a VC fund, per an SEC filing. www.consciousventurelab.com

Imec.xpand of Belgium raised €117 million for its debut early-stage and growth equity fund. www.imecxpand.com

• Prudential Capital Energy Partners raised $343 million for its first energy mezzanine fund.

• SaaS Capital, a provider of credit facilities to SaaS companies, closed its third fund with $75 million. www.saas-capital.com

🚑 Vivo Capital raised $635 million for a new “opportunity fund” that will invest in small and mid-cap public healthcare equities. http://axios.link/ps5p

It's Personnel

• Mary Armstrong is stepping down as director of communications at Warburg Pincus, in order to take a similar position at General Atlantic.

James Connor and Daniel Wayte, both London-based private equity attorneys, joined the London office Orrick. Connor previously was with Simpson Thatcher, while Wayte was with Milbank. www.orrick.com

Tania Daguere Lindbäck is leaving The Blackstone Group to join BC Partners as a London-based partner. She also will become BC’s first female partner. http://axios.link/T4Kf

Final Numbers: Q2 US PE lending
Source: PitchBook US lending league tables; data for Q2 2018

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