July 24, 2017

Greetings from 30,000 feet, as I'm heading out for a few days in the Bay Area. If you're reading this, it means the United WiFi worked (hooray!). Please remember that you can send me scoop or feedback via email (just hit reply), anonymous tip (http://axios.com/tips) or confidential apps like Signal, Telegram and Confide (Dan Primack / 857-472-3072). Here we go...

Top of the Morning

• He's back: Former National Security Advisor Michael Flynn has returned to the business of consulting private equity firms, having formed a new shop called Resilient Patriot, per an AP interview with his brother, Joe Flynn.

  • Prior to his short-lived role in the Trump Administration, Flynn consulted for private equity firm Francisco Partners – owner of Procera Networks, which was controversial for its work with the Turkish government.
  • Flynn also was a paid advisor for Francisco portfolio company NSO Group, an Israeli cybersecurity company whose software was used by the Mexican government to spy on journalists and anti-corruption advocates. This past weekend there was an Israeli media report that The Blackstone Group is in talks to buy a 40% stake in NSO, while ClearSky would purchase another 10%.
  • No word yet on Flynn's current clients. Spokespeople for both Blackstone and Francisco say he is not currently consulting for them.

• Recommended reading: David Streitfield has a fascinating piece in the NY Times on the relationship between venture capitalist Ben Horowitz and his father David Horowitz (the former radical leftist turned Trump movement's "intellectual godfather"). Streitfield writes: "Father and son are a snapshot of America at this moment, a politicized and polarized place full of competing revolutions... David and Ben both said they have made a major effort to see where the other one is coming from. While no one's politics have changed, they realized they are not quite as far apart as it may seem."

• Crowdfrauding (cont): The Chicago Tribune on Friday delved into the Nin Ventures situation, and found yet another problem with the online bio of firm CEO Nin Desai. The firm also published a statement that does not address any of the specific falsehoods on its website, instead arguing that "journalists must act responsible and should be required to attain a license or certification to cover such stories."

• Econography: China has a new term for its cadre of acquisitive conglomerates, which it has begun trying to reign in: Grey rhinos, which the NYT describes as "large and visible problems in the economy that are ignored until they start moving fast."

• LP level: Sarah Kunst, one of the female entrepreneurs who accused Dave McClure of sexual misconduct, has joined the board of the Michigan State Foundation, in order to help it back VC firms that prioritize not just ROI, but also diversity and ethical behavior. "As a woman, I think you hear a lot of information that a lot of guys don't hear," she tells Axios.


KKR has agreed to acquire health information site WebMD (Nasdaq: WBMD) for around $2.8 billion (including debt), or $66.50 per share. That would represent a 20.5% premium to Friday's closing price, although is nearly flat from where WebMD was trading in late May 2016. Sellers would include BlackRock (10.48% of outstanding shares) and Blue Harbour Capital (9.13%), an activist investment firm founded by onetime KKR partner Clifton Robbins. KKR plans to merge WebMD with existing portfolio company Internet Brands.

  • Why it's the BFD: This deal reflects how the torturous federal debate over healthcare policy — including drug pricing — has caused pharma companies to pull back on advertising. WebMD formally launched the auction in February, saying that it anticipated a significant revenue slowdown.
  • Bottom line: "WebMD, which was founded in 1996 and primarily offers articles on health and healthcare, generated $705m in revenues last year. Almost 80 per cent of its sales were derived from advertising and sponsorship, with the bulk coming from the pharmaceuticals, biotechnology and medical device industries." –Adam Samson, FT

Venture Capital Deals

• Grab, Uber's biggest ride-hail rival in Southeast Asia, has raised $2 billion in new funding from existing investors SoftBank and Didi Chuxing. The Singapore-based company adds that it could soon raise an additional $500 million from new and existing investors, at which point Axios has learned the post-money valuation would top $6 billion. http://bit.ly/2uYKVXm

• Iqianbang, a Beijing-based P2P fundraising platform, has raised $80 million in Series B funding led by ShenZhen Grand Electronics. http://bit.ly/2tD0xzy

• Epet, a Chinese e-commerce platform for pet products, has raised $53 million in Series B funding led by IDG Capital. http://bit.ly/2tDkIxy

• Rimilia, a UK-based accounting startup focused on cash matching and credit collection, has raised $25 million in new VC funding co-led by Kennet Partners and Eight Road Ventures. http://tcrn.ch/2tDvYcZ

• Niuniuqiche, a Shanghai-based B2B new car sales site, has raised $17 million in Series A funding. Kaitai Capital led the round, and was joined by seed backer Zhongjun Fund. http://bit.ly/2vAGSxE

🚑 NeuroVia, a Cambridge, Mass.-based biotech startup focused on a rare genetic disorder called cerebral adrenoleukodystrophy, has raised $14 million in Series A funding. Novartis Venture Fund and Sanofi-Genzyme BioVentures co-led the round, and were joined by BioMed Ventures and Enso Ventures. http://bit.ly/2uFDDaF

• Arzeda, a Seattle-based computational protein design company, has raised $12 million in Series A funding. OS Fund led the round, and was joined by Bioeconomy Capital, Sustainable Conversion Ventures and return backer WRF Capital. http://bit.ly/2vOu9H5

🚑 Hinge Health, a digital health startup focused on musculoskeletal injuries, has raised $8 million in Series A funding led by Atomico. http://tcrn.ch/2uZO3SP

⛽ Entier, a UK-based catering company focused on remote workplaces like oil rigs, has raised £6.5 million from the Business Growth Fund. http://bbc.in/2vOLe3A

• LVL5, a San Francisco-based provider of computer vision software and maps for autonomous cars, has raised $2 million in seed funding from 9Point Ventures and Paul Buchheit. http://bit.ly/2uDO8uy

• The Town Kitchen, an Oakland-based industrial catering company, has raised $1 million in seed funding. Urban Innovation Fund led the round, and was joined by Better Ventures, Rose Culinary Ventures, Slow Money and SheEO. www.thetownkitchen.com

Private Equity Deals

• The Blackstone Group has agreed to acquire Clarion Events, a British trade show operator, from Providence Equity Partners for £600 million. http://on.ft.com/2eHfMkw

• Escape Technology, a Roseville, Calif.-based provider of ERP software for K-12 software, has raised an undisclosed amount of private equity funding from Alpine Investors. www.escape.technology

• Fox Rent A Car, a Los Angeles-based rental car company, has raised $25 million in funding form NewSpring Capital, Kemper Corp. (NYSE: KMPR) and Star Mountain Capital. Proceeds will be used to refinance debt.

🚑 H.I.G. Capital has acquired a control stake in Santa Lucia Pharma Apps, an Italian provider of workflow and logistics services to hospitals. No financial terms were disclosed. www.slpa.eu

• KKR has agreed to acquire The Nature's Bounty Co., a Ronkonkoma, N.Y.-based maker of health and wellness products, from The Carlyle Group. No financial terms were disclosed.

• Partners Group has agreed to acquire British public sector software company Civica from OMERS Private Equity for approximately £1 billion. Other suitors reportedly had included BC Partners, Berkshire Partners and Japan's NEC Corp. http://reut.rs/2tCBOM1

• Platinum Equity has agreed to acquire United Site Services, a Westborough, Mass.-based provider of portable restrooms and temporary fencing, from Calera Capital. No financial terms were disclosed. www.unitedsiteservices.com

• Trilantic North America has agreed to acquire a majority stake in OrthoLite, an Amherst, Mass.-based maker of open-cell foam insoles and other footwear components, from Blue Point Capital Partners. No financial terms were disclosed. www.ortholite.com

Public Offerings

• Three companies are expected to price IPOs on U.S. exchanges this week: Redfin, RBB Bancorp and Sienna Biopharmaceuticals. http://bit.ly/2uW8aBr

🚑 Clementia Pharmaceuticals Inc., a Montreal-based drug company focused on rare diseases like fibrodysplasia ossificans progressiva, has set its IPO terms to 7.15 million shares being offered at between $13 and $15 per share. It would have a fully-diluted market value of around $450 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol CMTA, with Morgan Stanley and Leerink Partners serving as lead underwriters. Shareholders include OrbiMed Advisors (42.4% pre-IPO stake), BDC Capital (22.7%), NEA (8%). UCB, RA Capital Management, Rock Springs Capital Management, EcoR1 Capital and Janus Capital Management. www.clementiapharma.com

More M&A

• Asda, a British supermarket group owned by Wal-Mart, is considering a £4.4 billion takeover offer for British discount retailer B&M European Value Retail (LSE: BME), according to The Sunday Times. http://bit.ly/2gWvjgP

• Davide Campari (Milan: CPRI) has sold its Carolans and Irish Mist brands to Kentucky-based Heaven Hill Brands for $165 million. http://reut.rs/2gVGAOD

• Rayonier Advanced Material (NYSE: RYAM) has increased its takeover offer for Canadian paper and cellulose pulp maker Tembec (TSX: TMB) to C$475 million (excluding debt), or $4.75 per share (up from C$4.05 per share). http://reut.rs/2tDaKMt

✈ Ryanair, an Irish budget air carrier, said that it has submitted a non-binding takeover bid for troubled Italian carrier Alitalia. http://reut.rs/2uQ8GjF

🚑 Mitsubishi Tanabe Pharma (Tokyo: 4508) has agreed to acquire Israeli CNS drug developer Neuroderm (Nasdaq: NDRM) for $1.1 billion in cash, or $39 per share (19% premium over Friday's closing price). http://reut.rs/2tSWOZU


• CastleLake, a Minneapolis-based private investment firm, has closed its fifth distressed debt fund with $2.4 billion in capital commitments. http://bit.ly/2uPjdvP

• Monta Vista Capital, a Silicon Valley VC firm focused on early-stage B2B companies, is raising up to $30 million for its second fund, per an SEC filing. www.montavc.com

It's Personnel

• The Carlyle Group has promoted Patrick McCarter and Cam Dyer to co-heads of the firm's global TMT team. They succeed James Atwood, who will remain a managing director. www.carlyle.com

• Larsen Jensen (a former Navy SEAL and Olympic swimmer) has joined Lightspeed Venture Partners as a partner, per his LinkedIn profile. www.lsvp.com

Final Numbers