Mar 4, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

Illustration: Lazaro Gamio/Axios

Lyft has publicly filed its IPO prospectus, and word is that we should be getting the same from Uber within the next few weeks (albeit not this week). Lots to unpack:

  • Lyft's $911 million net loss in 2018 will be a massive hurdle to jump, given that it would appear to be the largest-ever net loss for a company entering the public markets for the first time. As of now, there is no visible path to profitability.
    • The co-founders write: "We thoughtfully balance investments in growth and profitability considerations, while deliberately leaning more towards growth (especially in these early days)."
    • "Early days" = 11 years since the founding of its predecessor company, Zimride, and seven years since the founding of Lyft.
  • Expect Lyft to emphasize focus when speaking with prospective investors. It's a ride-hail company, growing at a faster clip than is Uber, and not too distracted by large side projects like food delivery and autonomous vehicle development.
    • It's a smart message, although not entirely accurate. Lyft not only invests in other micro-mobility efforts like bike-share and scooters, but also has major AV initiatives.
    • Plus, it's unclear that ride-hail is actually a viable business. Uber once said its ride-hail efforts were profitable in large developed markets like North America, but it's not reaffirmed that claim lately and Lyft has never made it. One possible reason: The massive, albeit largely anecdotal, increase in rider discount offers. Maybe ride-hail is best as a monopoly, like taxis once were.
  • Keep eyes on Fidelity, which holds a 7.71% pre-IPO stake in Lyft. Does it buy back in at IPO, thus validating the concept of pre-IPO optionality investing? Or is it already done and just wants to harvest, thus casting doubt on the minotaur funding model.
  • Lyft did briefly consider a direct listing, per a source familiar, but is going for a traditional IPO because it needs the new cash. This is a financing event more than a liquidity event.
  • Lyft CEO Logan Green received a 2018 base salary of $401,500, plus nearly $42 million in stock awards. He also apparently required over $935,000 in "personal security services."

Unhappy ending: John Havens has "retired" as chairman of Napier Park Capital, an alternative credit platform with $11 billion in AUM, after being arrested in the Florida massage parlor sting that also nabbed New England Patriots owner Bob Kraft and private equity executive John Childs.

The BFD
Source: Giphy

Luminary Media, a Chicago-based subscription podcast network with exclusive content, reportedly raised around $60 million in new funding. The company has now raised nearly $100 million in total, from backers like NEA.

  • Why it's the BFD: Because this comes just weeks after Spotify acquired a pair of large podcast networks, with its own ambitions of becoming Netflix for podcasts.
  • Bottom line: "To some degree, of course, all media start-ups think they are going to be the next Netflix. The test for Luminary will come in the execution. And there are plenty of challenges. Subscription-based businesses are hot at the moment, but analysts say that consumers will begin pushing back and asking, How many entertainment services do I really need to be paying for every month?" — Brooks Barnes, NY Times
Venture Capital Deals

🛴 Voi Technology, a Stockholm-based e-scooter rental company, raised $30 million in Series A funding from Vostok New Ventures, Balderton Capital, LocalGlobe, Raine Ventures, Project A and Creandum. http://axios.link/uRGb

Moka, a Chinese talent acquisition platform, raised $27 million in Series B funding. Hillhouse Capital led, and was joined by Xianghe Capital, GSR Ventures and GGV Capital. http://axios.link/Ze96

Baseload Capital, a geothermal project development company, raised $12.5 million from Breakthrough Energy Ventures. http://axios.link/aXU5

Kuli Kuli, an Oakland-based superfood startup, raised $5 million in Series B funding co-led by Griffith Foods and Eighteen94 capital. http://axios.link/l55z

Private Equity Deals

The Carlyle Group agreed to buy Nordam Group, a Tulsa, Okla.-based aerospace manufacturing and repair company, out of Chapter 11 bankruptcy protection.

TA Associates invested in ARI Network Services, a Milwaukee-based provider of e-commerce and e-catalog software for dealers, distributors and equipment manufacturers. True Wind Capital, which took ARI private in 2017, will remain the company’s largest shareholder. www.arinet.com

🥡 Triartisan Capital Advisors and Paulson & Co. completed their $700 million purchase of restaurant chain P.F. Chang’s from Centerbridge Partners.

Public Offerings

Two companies, Futu Holdings and ShockWave Medical, are expected to IPO on U.S. exchanges this week. Road-shows could begin for such issuers as Levi Strauss and Alight. http://axios.link/tV2k

DataStax, a Santa Clara, Calif.-based data management platform, is prepping for an IPO, per Reuters. The company raised around $190 million in VC funding, most recently at a $967 million post-money valuation. http://axios.link/toJ9

ESR Cayman Ltd., a logistics real estate developer backed by Warburg Pincus, filed for a Hong Kong IPO that reportedly could raise upwards of $1.5 billion, per Reuters. http://axios.link/tkBz

🚑 Precision BioSciences, a Durham, N.C.-based developer of a genome editing platform, filed for a $100 million IPO. It plans to trade on the Nasdaq (DTIL) with J.P. Morgan as lead underwriter, and has raised around $240 million in VC funding from firms like VenBio (11% pre-IPO stake), Flare Capital Partners (9.7%), ArrowMark Partners and Franklin Templeton. http://axios.link/3qaD

Liquidity Events

BC Partners is getting takeover interest for Acuris, the UK-based financial news and data business formerly known as MergerMarket, from U.S. ratings agencies S&P Global, Moody’s and Fitch, per The Telegraph. http://axios.link/a1eq

More M&A

🚑 Biogen (Nasdaq: BIIB) agreed to buy British gene therapy company Nightstar Therapeutics (Nasdaq: NITE) for around $800 million in cash, or $25.50 per share (68% premium to Friday’s closing price). http://axios.link/vKpt

🍺 Carlsberg, the Danish brewer, acquired a minority stake in Beijing-based microbrewery Jing-A. http://axios.link/oIx0

Eaton Corp. (NYSE: ETN) plans to spin off its lighting unit into an independent, publicly-traded company. http://axios.link/QZGq

Instant Brands, the maker of Instant Pot kitchen appliances, is merging with Pyrex and CorningWare maker Corelle Brands, to create a company that would be valued north of $2 billion. http://axios.link/xBEn

Julius Baer upped its stake from 40% to 70% in Mexican wealth manager NSC Asesores. http://axios.link/0SSN

Newmont Mining (NYSE: NEM) has rejected an $18 billion hostile takeover offer from rival gold miner Barrick Gold (TSX: ABX). http://axios.link/1qsl

Fundraising

ATX Seed Ventures of Austin, Texas is raising $100 million for its third fund, per TechCrunch. http://axios.link/80j4

• Quake Capital is raising $100 million for its third seed fund, per TechCrunch. http://axios.link/80j4

• TA Associates is seeking to raise upwards of $8.5 billion for its thirteenth flagship private equity fund, per PE International. http://axios.link/7kjL

It's Personnel

Kate Richdale joined KKR as head of Asia-Pacific strategy and business development. She previously was chair of Asia (ex-Japan) investment banking for Goldman Sachs. www.kkr.com

Final Numbers
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Data: SEC filings and company reports; Chart: Chris Canipe/Axios
Dan Primack