Jun 26, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🚨 Situational awareness: Amazon just confirmed that it will buy robo-taxi developer Zoox.

  • No financial terms were disclosed, but word is that the FT peg of around $1.2 billion is on target — well below the $3.2 billion valuation Zoox fetched in 2018 before firing its founding CEO. As we've said before, big tech isn't going to let antitrust investigations get in the way of its M&A activity.

🎧 Axios Re:Cap digs into the boom for Black-owned bookstores, including how some of those popular Instagram "lists" had unintended consequences. Listen via Apple or via Axios.

Top of the Morning

Illustration: Aïda Amer/Axios

Venture capital funds soon will be eligible for a huge new pot of Wall Street money, after federal regulators yesterday weakened rules that were put in place after the financial crisis.

  • Driving the news: Many banks had been banned from balance sheet investing in venture capital funds due to the Volcker Rule, which was part of the Dodd-Frank financial reform package passed in 2010. That prohibition will now expire on Oct. 1, based on an announcement from a group of agencies that included the SEC and FDIC.

An argument in favor of this deregulation is that the Volcker Rule disproportionately hurt smaller, regional venture capital funds that had relied on local banks for fund capital.

An argument against this deregulation is that venture capital hasn't lost any of its high risk profile.

  • Other changes: Banks now will be allowed to invest in credit funds and make certain types of equity co-investments on private equity transactions (despite recent SEC criticism of PE co-investment practices). They remain prohibited from balance sheet investing in private equity funds and hedge funds.

Context: This move comes just weeks after the U.S. Labor Department loosened rules to allow defined contribution plans like 401(k)s to invest in alternative asset funds like private equity and venture capital.

Bottom line: The Volcker Rule was never fully implemented as Volcker and other advocates wanted, and has been consistently watered down over time.

The BFD
Source: Giphy

Albertsons, an Idaho-based grocer whose brands include Safeway, raised $800 million in its IPO. The Cerberus-owned company priced 50 million shares at $16, below initial plans to offer 65.8 million shares at $18–$20, for an initial market cap of $7.7 billion.

  • Why it's the BFD: This is one of very few 2020 IPOs to majorly miss expectations, and came on the same night that six other issuers beat their targets.
  • Third time's a charm: Cerberus Capital Management first tried to take Albertsons public in 2015, but didn't succeed. It then tried in 2018 to merge Albertsons with drug store chain Rite Aid, but that deal died due to investor and shareholder advisory firm opposition.
  • Bottom line: "Rival supermarket chain Kroger Co. said last week that the surge in demand for essential goods it saw during the coronavirus outbreak was fading, as American households reconsider their needs." — Joshua Franklin, Reuters
Venture Capital Deals

Sonder, a hotel and short-term apartment rental platform, raised $170 million in new Series E funding at a $1.3 billion post-money valuation. Fidelity, Westcap, and Inovia Capital were joined by Greenoaks, Spark Capital, Greylock, Valor Equity, Tao Capital, Atreides Capital, and Lennar. http://axios.link/Oxgu

SevenRooms, a New York-based provider of hospitality guest management software, raised $50 million in Series B funding from Providence Strategic Growth. http://axios.link/Xouv

Hopin, a London-based virtual events provider, raised $40 million in Series A funding. IVP led, and was joined by Salesforce Ventures and return backers Accel, Northzone, Seedcamp, and Slack Fund. http://axios.link/1Yxl

SQream, an Israeli data analytics acceleration platform, raised $39.4 million in Series B+ funding. Mangrove Capital Partners and Schusterman Family Investments co-led, and were joined by return backers Alibaba, Hanaco VC, Sistema VC, World Trade Center Ventures, Blumberg Capital, and Silvertech Ventures. http://axios.link/AQ3B

CMG, a New York-based provider of workflow and real-time data analytics for capital markets transactions, raised $25 million from Barclays, Citi, Fidelity, Goldman Sachs, J.P. Morgan, Morgan Stanley and return backers Canaccord Genuity, Franklin Templeton, StageDotO, and Shea Ventures. http://axios.link/3CDt

Element, a San Francisco-based “industrial data hub,” raised $18 million in Series B funding. Activate Capital and Forte Ventures co-led, and were joined by Evonik VC, Kerogen Digital Solutions, High Tide Foundation and return backers Kleiner Perkins Green Growth, Ajax Strategies, Blue Bear Capital, Schneider Electric Ventures, Honeywell Ventures, and ABB Tech Ventures. http://axios.link/OQW3

🚑 Cryosa, a Roseville, Minn.-based developer of sleep apnea therapies, raised $8.25 million in Series A-2 funding from firms like Santé Ventures and Japan’s HOYA Corp. http://axios.link/m71x

🚑 Okami Medical, a developer of catheter-based devices for peripheral vascular occlusion, raised $7.2 million in Series D funding led by USVP. http://axios.link/2uV5

🚑 Avive Solutions, a San Francisco-based developer of cardiac arrest response device, raised $7 million. Laerdal Million Lives Fund led, and was joined by Kenko Venture Partners and Irish Angels. http://axios.link/wtWN

Doorkee, a New York-based property rental platform, raised $5.7 million. Simon Baron Development led, and was joined by Corigin Ventures, Alpha Edison, Stonehenge NYC, and Bushburg Properties. http://axios.link/dcsc

Trivie, a Frisco, Texas-based workforce knowledge retention platform, raised $5 million in Series A funding led by Cottonwood Venture Partners. http://axios.link/oNyN

Teooh, a London-based virtual gathering platform, raised €4 million in seed funding from Spark Capital and General Catalyst. http://axios.link/Hz8a

Lightrun, an Israeli continuous debugging startup, raised $4 million in seed funding led by Glilot Capital Partners. http://axios.link/ylEv

TurtleTree Labs, a Singapore-based developer of cultured human breast milk, raised $3.2 million in seed funding from Green Monday Ventures, KBW Ventures, CPT Capital, Artesian, and New Luna Ventures. http://axios.link/lTQq

Byju, an Indian education startup, raised an undisclosed amount of funding from Bond at a $10.5 billion valuation. http://axios.link/dBqp

Private Equity Deals

ASG, a Walnut Creek, Calif.-based portfolio company of Alpine Investors, acquired Homebot, a Denver-based mortgage lending and real estate software startup that had raised around $4 million from Black Knight Partners, Moderne Ventures, Picus Capital, and Axel Springer. www.alpinesg.com

✈️ Bain Capital won the bankruptcy auction to buy airline Virgin Australia Holdings, beating out a rival bid from Cyrus Capital Partners. http://axios.link/hEnC

Clearlake Capital Group acquired a majority stake in Dallas-based CLO specialist WhiteStar Asset Management from Pine Brook Capital Partners. http://axios.link/LASd

Public Offerings

Agora, a Santa Clara, Calif.-based developer of cloud communication APIs, raised $350 million in its IPO. The company priced 17.5 million shares at $20 (above $16–18 range), for a fully-diluted market value of $2.2 billion. It will list on the Nasdaq (API) and reports a $3 million net loss on $36 million in revenue for the first three months of 2020. Shareholders include Morningside (15.7% pre-IPO stake), SIG (12.8%), Shungwei Ventures (10.2%), and Coatue Management (9%). http://axios.link/uS4Q

🚑 Akouos, a Boston-based developer of gene therapies for hearing, raised $213 million in its IPO. The pre-revenue company priced 12.5 million shares at $17, versus plans to offer 8.33 million shares at $14–$16, for an initial market cap of $552 million. It will list on the Nasdaq (AKUS) and had raised $162 million in VC funding from firms like 5AM Ventures (21.6% pre-IPO stake), NEA (18.6%), Pivotal BioVentures (7.5%), Sofinnova Ventures (7.3%), RA Capital (7.3%), Novartis (5.3%), and Fidelity (5%). http://axios.link/u9lt

🚑 PolyPid, an Israeoi biotech focused on surgical site infections, raised $60 million in its IPO. The company priced 3.8 million shares at $16 (added shares, middle of range), for a fully-diluted market value of $319 million. It will trade on the Nasdaq (PYPD) and had raised nearly $100 million in VC funding from Aurem Ventures (15.6% pre-IPO stake), Shavit Capital (13.9%), Xenia VC (5.6%) and Friendly Angels Club (5.2%). http://axios.link/V6s1

Fusion Acquisition, a blank check acquisition company focused on the financial services industry, raised $305 million in its IPO (more than originally planned). It’s led by John James, founder and CEO of BetaSmartz. http://axios.link/u2iU

🚑 Fusion Pharma, a Canadian developer of alpha-particle radiotherapeutics for treating cancer, raised $213 million in its IPO. The company priced 12.5 million shares at $17 (above $14–$16 range), for a fully-diluted market cap of $774 million, and will list on the Nasdaq (FUSN). It raised around $170 million in VC funding from firms like HealthCap (12.6% pre-IPO stake), Adams Street Partners (12.3%), J&J (10.4%), CPPIB (8.5%), TPG Biotech (8.1%), OrbiMed (7.8%), and Seroba Life Sciences (6.4%). http://axios.link/kaQs

Kensington Capital Acquisition, a blank check acquisition company focused on the auto industry, raised $200 million in its IPO (more than originally planned). It’s led by Justin Mirro, founder and president of auto-focused investment firm Kensington Capital. http://axios.link/9r5P

Pague Menos, a Brazilian drugstore chain backed by General Atlantic, filed for a Sao Paulo IPO. http://axios.link/86uT

Liquidity Events

Keysight Technologies (NYSE: KEYS) completed its $330 million purchase of Eggplant Software, a London-based provider of automated software testing tools, from The Carlyle Group. http://axios.link/9GJn

More M&A

National Commercial Bank, Saudi Arabia's largest lender, agreed to buy rival Samba Financial Group for around $13 billion. http://axios.link/viVR

Fundraising

3L, a Los Angeles-based growth equity firm, is raising $400 million for its second fund, per an SEC filing. www.3lcap.com

Addition, the new VC firm led by ex-Tiger Global investor Lee Fixel, is closing in on $1.3 billion for its debut fund, per the FT. http://axios.link/q9sc

It's Personnel

Ruth Porat, CFO of Alphabet, joined The Blackstone Group's board of directors. http://axios.link/vZJv

🚑 Dunston Almeida, former EVP of strategy and corp dev for Zelis Healthcare, joined TPG as a healthcare advisor, per his LinkedIn page.

Final Numbers
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Data: The COVID Tracking Project, state health departments; Map: Andrew Witherspoon, Sara Wise, Danielle Alberti/Axios
Dan Primack

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