Oct 2, 2017

Axios Pro Rata

Top of the Morning

The guy in the blue shirt is Orlando Bravo, co-founder of private equity firm Thoma Bravo, who on Saturday led a private airlift of supplies to the western coast of Puerto Rico. In addition to food and bottled water, Bravo's plane also carried water purification systems, IV medicines and satellite phones. Distribution on the island was helped by trucks provided by Sherwin Williams.

  • Bravo now lives in San Francisco and runs one of the world's largest buyout firms focused on technology companies. But he was born in the Puerto Rico city of Mayagüez, where his parents still live. He was unable to reach them for several days after Hurricane Maria hit.
  • This was Bravo's second airlift since the storm, aimed at areas on the opposite side of the island from San Juan. His family foundation also has committed to donate $10 million to relief and recovery operations, via the formation of Podemos Puerto Rico, which is the largest private contribution to date.

• Trading places: Ben Narasin has quietly joined the West Coast office of venture firm NEA, just a few months after stepping down as a general partner with Canvas Ventures. No comment from NEA, but Narasin already is listed inside the firm's voicemail directory.

• Capital climber: Sentinel Capital Partners this morning announced that it has sold Tennessee-based playground product company PlayCore, without disclosing additional information. Word is that the buyer is fellow private equity firm Court Square Capital Partners.

• All hail breaks loose: Travis Kalanick on Friday night turned up his battle with Benchmark to eleven, filling his two contested board seats with ex-Xerox CEO Ursula Burns and former Merrill Lynch CEO John Thain. The escalation came ahead of a vote scheduled for tomorrow on governance changes that could significantly limit Kalanick's future influence at Uber − no matter the arbitration results − that also would smooth the way for SoftBank's mega-investment (which already was approved by a majority of the board).

  • Spin: Kalanick partisans argue that Uber and new CEO Dara Khosrowshahi should be thrilled to have a pair of experienced executives added to the board. The other side says Khosrowshahi should be livid, since he was using SoftBank as a forcing mechanism for governance changes, and this move majorly complicates the issue.
  • Nuclear option: One possibility for anti-Kalanick shareholders like Benchmark would be to convert their preferred shares into common, thus giving them enough voting power to push through governance changes over objections of the new Travis Trio.
  • Timing: Note that all of this will need to get worked out before an arbiter rules on Benchmark v. Kalanick, which could still be months away.

• It's taxing: The White House continues to insist that its tax plan doesn't need "pay fors," because the plan will spur economic growth of at least 3% for the indefinite future. At the same time, Steve Mnuchin and Gary Cohn keep giving interviews about how most of the tax plan's details still need to be worked out by Congress, with only the 20% corporate rate as a must-have. It's like saying 5+n=10, while reserving the right to let n=6.

• ICOhno: The SEC has charged two "initial coin offering" issuers with fraud.• On the docket: (1) Serta Simmons, the mattress maker owned by Advent International, has sued VC-backed rival Casper for patent infringement, which could put a crimp in Casper's reported IPO plans. (2) The National Venture Capital Association filed a motion for a preliminary injunction to force the Trump Administration to implement the International Entrepreneur Rule, as a related lawsuit plays out.


Arbutus Biopharma (Nasdaq: ABUS), a Canadian developer of hepatitis B virus therapies, has agreed to a US$116 million investment from Roivant Sciences, the Swiss biotech company led by former hedge fund Vivek Ramaswamy. Roviant already held a 29.1% equity stake in Arbutus, which had a market cap of around $340 million as of Friday's market close.

  • Why it's the BFD: Because Roivant really needs a win, less than two months after securing a $1.1 billion investment led by SoftBank Vision Fund. A publicly-traded subsidiary called Axovant Sciences — which issued the largest biotech IPO of all time — last week learned that its lead Alzheimer's drug candidate doesn't work, which sent its shares down from $24.25 to just $6.26 in a single day of trading.
  • Bottom line: "This is not one of Ramaswamy's classic plays. His whole strategy centers on rescuing clinical-stage assets languishing in the pipelines of the world's biggest biopharma companies and putting them through an efficient late-stage effort, ramping up new drug products better than any of the majors. His first effort at that, with a 5HT6 Alzheimer's drug, proved a complete failure." -- John Carroll, Endpoint
Venture Capital Deals

🚑 KSQ Therapeutics, a Cambridge, Mass.-based drug discovery startup that utilizes CRISP-based screening tools, has raised $76 million in new VC funding. Flagship Pioneering led the round, and was joined by Polaris Partners, ARCH Venture Partners, and Alexandria Equities. The company also announced that former Genzyme CEO David Meeker will be its new CEO. http://axios.link/5IoJ

• Bastille, a San Francisco-based provider of enterprise threat detection solutions via software-defined radio, has raised $27 million in Series B funding from Bessemer Venture Partners, Spinnaker VC, Comcast, Keel Funds and Ballentine Partners. www.bastille.net

• Varjo, a Finnish developer of mixed reality headsets, has raised $8.2 million in Series A funding. EQT Ventures led the round, and was joined by Lifeline Ventures, the Venture Reality Fund and Presence Capital. http://axios.link/83NP

• Vestwell, a New York-based digital retirement platform, has raised $8 million in Series A funding. F-Prime Capital Partners led the round, and was joined by Primary Venture Partners, FinTech Collective, and Commerce Ventures. www.vestwell.com

🚑 Peptilogics, a West Mifflin, Penn.-based developer of a peptide platform to treat multidrug-resistant bacterial infections, has raised $5.5 million in Series A funding from Peter Thiel, Stefan Roever and BlueTree Ventures. http://axios.link/6H7Z

• Beehive, a Dubai-based P2P lending platform, has raised $5 million in Series A funding from the Riyad TAQNIA Fund and the Mohammed Bin Rashid Fund. www.beehive.ae

• Trellis, a provider of cannabis inventory management software, has raised $2 million in seed funding. Casa Verde Capital (yes, Snoop Dogg's fund) led the round, and was joined by the Gateway accelerator. http://read.bi/2ycFqWR

Private Equity Deals

• Bain Capital is in talks to acquire Japanese ad agency Asatsu-DK (Tokyo: 9747) for at least $1.2 billion, according to Reuters. http://reut.rs/2x8zIoN

• Berkshire Partners has acquired Accela, a Ran Ramon, Calif.-based provider of civic engagement software for local and state governments, from Abry Partners (which will retain a minority stake). No financial terms were disclosed. http://tcrn.ch/2hziFFr

• Global Logistic Properties, a Singapore-listed warehouse operator, has agreed to acquire European logistics platform Gazely for around $2.8 billion. The deal is being supported by a private equity consortium that recently agreed to buy GLP for around $11.6 billion. http://reut.rs/2x8OuXB

• Monarch Travel Group, a British air carrier backed by Greybull Capital, has filed for insolvency, making it the UK's largest-ever airline failure. https://bloom.bg/2xSckKS

🚑 Pamplona Capital Management completed its previously-announced take-private acquisition of Parexel International, a Boston-based contract drug research organization, for approximately $5 billion (including debt), or $88.10 per share. http://axios.link/gaqm

• Selecta Group, a Swiss vending machine company owned by KKR, has agreed to acquire Grupo Argenta, an Italian vending and coffee service provider, from Motion Equity Partners. No financial terms were disclosed. www.selecta.com

Public Offerings

• Three companies are expected to price IPOs on U.S. exchanges this week: Black Ridge Acquisition (blank check co formed by Black Ridge Oil & Gas), Rhythm Pharmaceuticals and Switch. http://axios.link/vpyW

• Hexindai, a Beijing-based consumer lending platform, has filed for an $80 million IPO. It plans to trade under ticker symbol HX, with Network 1 Financial Securities as sole underwriter. The company reports around $8.6 million of net income on $23 million of revenue for its most recent fiscal year.

Liquidity Events

• Arsenal Capital Partners has agreed to sell Accella Performance Materials, a Maryland Heights, Mo.-based specialty polyurethane platform, to Carlisle Cos. (NYSE: CSL) for $670 million. www.accellacorp.com

More M&A

• General Electric (NYSE: GE) has completed the previously-announced sale of its water treatment business (GE Water) to France's Suez SA and Canada's Caisse de dépôt et placement du Québec for $3.4 billion. http://reut.rs/2kiUb4m

• Metro (TSX: MRU), Canada's third largest grocery chain, has agreed to acquire pharmacy chain Jean Coutu Group (TSX: PLCa) for C$4.5 billion, or C$24.50 per share. https://tgam.ca/2g3IARN

• Morgan Stanley (NYSE: MS) has agreed to acquire Mesa West Capital, a Los Angeles-based real estate credit platform with $5 billion in AUM, for an undisclosed amount. http://reut.rs/2wsxSux

• Sprott Inc. (TSX: SII) has agreed to acquire Central Fund of Canada Ltd., manager of a closed-end commodities mutual fund that trades in the U.S. and Canada. www.centralfund.com


🍔 Enlightened Hospitality Investments, a new private equity effort led by Shake Shack founder Danny Meyer, has raised $220 million for its debut fund. http://on.wsj.com/2hJfw68

• NFX Guild, a Palo Alto, Calif.-based early-stage VC firm, is raising up to $150 million for a new fund, per an SEC filing. www.nfx.com

• Stonepeak Infrastructure Partners is raising up to $5 billion for its third fund focused on lower-to-middle market infrastructure opportunities in the U.S. and Canada, according to minutes from an Oregon public pension meeting. www.stonepeakpartners.com

It's Personnel

• Marc St. John is stepping down as a partner with CVC Capital Partners, which had joined in 1999, according to the FT. The moves comes just months after CVC raised the largest-ever European buyout fund. http://on.ft.com/2xS8Ube

• Sandhya Venkatachalam has joined Social Capital to lead growth equity investing, per Fortune. She previously was a co-founder of Centerview Capital.