Jul 28, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Today in SoftBank: Yeah, we're at the point where this needs to become a regular feature. Two developments since yesterday's note-a-palooza on tech's great devourer:

  • SoftBank is in talks to lead a new $1 billion financing for Ofo, the Chinese bike-sharing company that already has raised $450 million in 2017, per Reuters. This could bring the startup's valuation north of $3 billion, as it battles well-funded rivals like Mobike.
  • Oaktree's Howard Marks took aim at Vision Fund in a new memo that discusses excessive risk-taking in tech finance. Key line: "The willingness of investors to invest in a shockingly large fund for levered tech investing with a questionable structure is a further indication of an exuberant, unquestioning market."

Media M&A: The Emerson Collective, led by Laurene Powell Jobs, has agreed to acquire a majority stake of The Atlantic from current owner David Bradley (who will retain a minority stake and operational control, although Emerson has a contractual option to eventually purchase the remaining stake). Not included are some Atlantic satellite properties, including biz-focused Quartz (which was never part of the negotiations). No financial terms were disclosed.

  • Bottom line: Emerson wants more influence in D.C. policy issues, and this is a big boot in the door.
  • Read David Bradley's memo to Atlantic staffers by going here.
  • Key disclaimer from Axios' Sara Fischer: Emerson Collective is an investor in Axios. So is David Bradley. Sources say that David Bradley and Powell Jobs' mutual investments in Axios may have sparked the negotiations.

• PE trendline, from KKR's Scott Nuttal during a Q2 earnings call: "We've been selling on a global basis more than we have been buying, in particular in the U.S. and Europe. Asia has been closer to a net deployer, but we see different opportunities there."

• Blast off: Yesterday we noted that Luke Nosek, a co-founding partner with Peter Thiel's Founders Fund, was raising $100 million for something called Gigafund. We've since learned that Nosek is leaving Founders Fund to work full-time on the new effort, which is initially devoted to raising capital that could be invested into Elon Musk's SpaceX. We've since learned more:

  • A source says that Nosek has been spending an increasing amount of time on SpaceX business, and the idea behind Gigafund is to ensure that the space exploration company won't ever run into debilitating capital constraints. It is worth noting, however, that Elon Musk is not guaranteeing Gigafund any future investment allocations to for SpaceX or any of his other companies.
  • Gigafund will not have any formal relationship to Founders Fund, which has invested around $200 million to date into SpaceX (making it the firm's largest investment). The firm will continue to be represented on the SpaceX board by Nosek, but has not yet decided what to do with Nosek's two others Founders Fund portfolio company board seats.

• One to watch: Remember that the sale of Anthony Scaramucci's hedge fund business, SkyBridge Capital, has not yet closed.

• Cold Water: Meg Whitman was indeed the front-runner for Uber's CEO role as of late yesterday afternoon, with strong support from at least half the board (Travis Kalanick was a notable exception). But the leak appears to have forced her hand, and forced her out of the running. If the initial leak came from the board's anti-Meg faction, then it worked. If it came from the pro-Meg faction, then it proved a major miscalculation. In a late-night tweetstorm, Whitman wrote:

"Normally I do not comment on rumors, but the speculation about my future and Uber has become a distraction. So let me make this as clear as I can. I am fully committed to HPE and plan to remain the company's CEO. We have a lot of work still to do at HPE and I am not going anywhere. Uber's CEO will not be Meg Whitman."

• Have a great weekend...

The BFD

Redfin, an Internet-enabled residential real estate brokerage, raised $138 million in its IPO. The Seattle-based company priced 9.23 million shares at $15 per share (above $12-$14 range), for a fully-diluted market value of around $1.56 billion. It will trade on the Nasdaq under ticker symbol RDFN, while Goldman Sachs and Allen & Co. served as lead underwriters. Shareholders include Greylock (12.4% pre-IPO stake), Madrona Ventures (11.4%), Tiger Global (10.5%), DFJ (10.2%), Vulcan Capital (10%) and T. Rowe Price (7.1%).

  • Why it's the BFD: The venture capital industry is desperate for a big aftermarket win, following the lead balloon performance of Snap, Blue Apron and Tintri. Not so much for the company's specific investors, but for the prospect of bringing other tech companies to market. So this is really more of a prospective BFD, since a strong pricing doesn't necessarily translate into trading activity – particularly given that Redfin is (yet another) unprofitable issuer.
  • Bottom line: "Redfin's business is growing, and the company gained market share in 81 of the 84 markets in which it operated. Even so, Redfin's market share stands at just 0.58% nationwide. In its oldest markets, Redfin's market share still hovers below 2%... Last year, Redfin brokers and affiliated real estate agents helped people in the U.S. buy and sell more than 75,000 homes, representing $35.3 million of Redfin's $41.6 million in revenue." – Nat Levy, GeekWire
Venture Capital Deals

• Traveloka, an Indonesia-based online travel portal, has raised $350 million in equity funding from Expedia (Nasdaq: EXPE) at a reported valuation north of $1 billion. Existing backers include East Ventures, Hillhouse Capital Group, JD.com and Sequoia Capital. http://tcrn.ch/2uE6ATo

• Toast, a Boston-based provider of cloud software for restaurant management, has raised $101 million in new financing. Generation Investment Management and Lead Edge Capital co-led the round, and was joined by return backers like Bessemer Venture Partners. http://bit.ly/2tX1cqT

• Haimawan, a Chinese developer of cloud-based mobile operating systems, has raised around $58 million in Series C funding from backers like Science & Technology Co. http://bit.ly/2vPZjyC

Kezar Life Sciences, a San Francisco-based developer of drugs to treat autoimmune diseases, has raised $50 million in Series B funding co-led by Cormorant Asset Management and Morningside Ventures. http://bit.ly/2v60uvM

• Within, a Los Angeles-based virtual reality studio led by former music video producer Chris Milk, has raised $40 million in Series B funding. Temasek and Emerson Collective co-led the round, and were joined by WPP, Macro Ventures and return backers 21st Century Fox, Andreessen Horowitz and Raine Ventures. http://bit.ly/2v3GREQ

• Big Switch Networks, a Santa Clara, Calif.-based software-defined networking company, has raised $30.7 million in new VC funding from backers like Dell Technologies Capital, Silverlake Waterman, MSD Capital and Intel Capital. http://bit.ly/2tMOOhT

• Marqeta, an Oakland-based open API platform for prepaid debit and credit cards, has raised $25 million in new VC funding. Visa led the round, and was joined by CreditEase and return backers Commerce Ventures, 83 North, Granite Ventures and CommerzVentures. http://tcrn.ch/2uwOHWL

• AutocloudPro, a Shanghai-based developer of a cloud platform for auto parts sales and distribution, has raised around $17 million in new VC funding from Qingsong Fund, Shoutai Investment Group, Langsheng Investment, Matrix Partners China and Fenghou Capital. http://bit.ly/2v5R9Em

🚑 Cyrus Biotechnology, a Seattle-based maker of computational tools for protein modeling and design, has raised $8 million in Series A funding. Trinity Ventures led the round, and was joined by OrbiMed Advisors, SpringRock Ventures and the W Fund. www.cyrusbio.com

• FilterEasy, a Raleigh, N.C.-based air filter subscription service, has raised $6.9 million in Series B funding. Arsenal Venture Partners led the round, and was joined by NC State Endowment Fund, Bonaventure Capital, Cofounders Capital, IDEA Fund Partners, John Replogle and Triangle Angel Partners. http://bit.ly/2h8Tg4A

• LoftSmart, a New York-based site for college students in search of off-campus housing, has raised $5 million in new VC funding. Tribeca Venture Partners led the round, and was joined by Corigin Real Estate Group and Sterling Equities. https://bloom.bg/2vIhlmh

• Peer5, a Palo Alto, Calif.-based streaming content platform for publishers, has raised $2.5 million in seed funding from FundersClub, Oriza Ventures, Tank Hill Ventures, Leorsa Group and individual angels. http://tcrn.ch/2uFMIgX

• ActionStreamer, a Cincinnati-based developer of wearable technologies to capture point-of-view video of athletes, has raised nearly $1.9 million in seed funding. CincyTech led the round, and was joined by Vine Street Ventures. http://bit.ly/2tHrCNZ

• Megacool, provider of a GIF-sharing API for mobile game developers, has raised $1.5 million in funding led by Alliance Ventures. http://bit.ly/2vdQW2I

• Brolly, a British app for buying insurance products, has raised £1 million in seed funding. Valar Ventures and Pi Labs co-led the round, and were joined by Entrepreneur First. http://tcrn.ch/2vLlxBw

Private Equity Deals

• Advent International has agreed to acquire a majority equity stake in First Watch Restaurants, a University Park, Fla.-based breakfast, brunch and lunch concept, from Freeman Spogli & Co. No financial terms were disclosed. http://bit.ly/2tP7Ioo

• Atlas Merchant Capital, the private equity firm led by former Barclays CEO Bob Diamond, is in "advanced talks" to acquire Talcott Resolution, an annuities run-off business, from Hartford Financial Services Group (NYSE: HIG), according to Reuters. The deal could be worth between $3 billion and $3.5 billion. http://reut.rs/2tPuCMs

• BMC Software, a portfolio company of Bain Capital and Golden Gate Capital, has ended talks to acquire business software maker CA Inc. (Nasdaq: CA) after "struggling to arrange financing," according to Reuters. Had the deal occurred, it would have been the largest LBO of a tech company since Dell bought EMC. http://reut.rs/2u4klay

• Brite Media Group, a San Francisco-based out-of-home advertising firm backed by The Beekman Group, has acquired Clean Zone Marketing, a Noblesville, Ind.-based provider of transit advertising services. www.britemedia.com

• CVC Capital Partners and KKR are prepping a joint bid for the specialty chemicals unit of Akzo Nobel, which could be valued north of €9 billion, according to Bloomberg. Apollo Global Management and Advent International also are considering offers. https://bloom.bg/2u1Iu1d

• Equistone has agreed to acquire Bruneau, a French online distributor of office furniture and supplies, from Weinberg Capital Partners. No financial terms were disclosed, except that Bruneau generated €312 million in 2016 revenue. www.equistonepe.com

🚑 LongueVue Capital has acquired Zavation Medical Products, a Jackson, Miss.-based maker of spinal implants, instruments and biologics. No financial terms were disclosed. www.zavation.com

• Montagu Private Equity has agreed to acquire OASIS, an Ireland-based provider of records and information management solutions, from Sverica and Housatonic Partners. No financial terms were disclosed. www.oasisgroup.com

• Oak Hill Capital Partners has agreed to acquire EPIC Insurance Brokers & Consultants, a retail property and casualty insurance broker with nearly $300 million in annual revenue, from The Carlyle Group at an enterprise value of approximately $1 billion. www.epicbrokers.com

• One Equity Partners has agreed to acquire Lutech, an Italian IT systems integrator, from sellers like Germany's Laserline. No financial terms were disclosed. www.lutech.it

• Platinum Equity has agreed to acquire Fischer Tech, a Singapore-listed maker of high-volume precision engineering plastic components, for approximately US$124 million. http://bit.ly/2vP9UtD

Public Offerings

Dropbox is planning to pick Goldman Sachs as lead manager for its upcoming IPO (assuming it actually goes through with such an offering), according to Bloomberg. https://bloom.bg/2v61orX

• Purple, an Alpine, Utah-based direct-to-consumer mattress startup, is going public via a $1.1 billion reverse merger with Global Partner Acquisition Corp. (Nasdaq: SPAC). http://tcrn.ch/2w50DN6

Liquidity Events

Montagu Private Equity is nearing an agreement to sell French margarine maker St. Hubert to China's Fosun International and Beijing Sanyuan Foods for around €600 million, according to Bloomberg. https://bloom.bg/2vb4FHj

More M&A

⛽ Glencore (LSE: GLEN) has agreed to acquire a 49% stake coal mines in Australia's Hunter Valley for just over A$1.1 billion, from China's Yancoal (which just agreed to purchase Rio Tinto's Hunter Valley ops) and Japan's Mitsubishi. Glencore will then manage the operations via a joint venture with Yancoal. http://reut.rs/2uIESDn

• Toshiba will pay nearly $2.2 billion to extricate itself from a pair of unfinished nuclear reactors in South Carolina that were being built by Toshiba's now-bankrupt Westinghouse subsidiary. The installment payments will go to SCANA Corp. (NYSE: SCG) and state-owned utility Santee Cooper. http://reut.rs/2uIN5HR

• Verizon Communications (NYSE: VZ) is in talks to acquire the Chicago-area fiber network of WideopenWest (NYSE: WOW) for more than $200 million, according to Reuters. http://reut.rs/2u4luyS

Fundraising

• Maniv Mobility, an Israeli VC firm focused on mobility tech startups, has raised more than $40 million in capital commitments for its debut fund. www.maniv.com

• Intermediate Capital Group has closed its second private equity secondaries fund with $1.1 billion in capital commitments. www.icgam.com

It's Personnel

• Jeremy Newsom has joined Platform Partners as an executive vice president. He previously was an EVP and head of corporate banking an Amegy Bank. www.platformllc.com

Final Numbers
Dan Primack