May 9, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

Thanks to Kia for filling in yesterday while I was holding signs for J, who was running for our town's school committee (she won!). Here we go...

Top of the Morning
Source: Giphy

Walmart made it official this morning, announcing that it will pay $16 billion for a 77% stake in Indian e-commerce leader Flipkart. Or, put another way, Amazon just suffered the sort of defeat that is usually reserved for physical retailers.

  • Initial confirmation came via SoftBank CEO Masayoshi Son, during an earnings presentation. The official Walmart press release appeared hours later.
  • Word is that all Flipkart investors had the opportunity to sell their entire stake, which SoftBank took advantage of. Backers that are retaining at least some of their position include Accel, Microsoft, Tencent and Tiger Global.
  • Walmart's early aggressiveness appears to have been key to its win, although Flipkart also had concerns that an Amazon tie-up could face antitrust scrutiny.
  • For Flipkart, this provides the company with a permanent capital structure without sacrificing managerial independence. It still expects to do an IPO — think Walmex 2.0 — but that runway has been significantly extended.
  • For India's startup ecosystem, this could be a game changer. Not only in terms of inspiring other prospective entrepreneurs, but also in the sheer amount of cash that Flipkart employees will have to invest in their own startups or in someone else's.

Something unexpected: Hedge funds have outperformed public equities in 2018, returning 0.39% through the end of April, per industry research firm HFR.

  • Why it matters: Hedge funds have lagged public equities for the past decade.

• Trade wars: Lots of chatter about a WSJ report that Toshiba has basically given up on the proposed $18 billion sale of its memory chip to a Bain Capital-led consortium, due to Chinese regulatory hurdles. But don't take it to the bank (at least not quite yet).

For starters, both parties are still wearing their happy faces:

  • Toshiba “still intends to close the memory business transaction as soon as possible, and has not made any alternative policy decisions.”
  • Bain spox: “We continue to work through the normal regulatory process. This process is proceeding and all parties remain strongly committed to closing the transaction as soon as possible.”

Second, part of the Chinese delay is said to have been caused by recent bureaucratic reshuffling that included MOFCOM.

Finally, Toshiba and Bain seem caught in trade war crossfire between Washington and Beijing — kind of like Qualcomm/NXP — and there is still a (declining) possibility that cooler heads will prevail.

  • Bottom line: This deal isn't healthy, but it still has a pulse.
The BFD
Source: Giphy

Liberty Global (Nasdaq: LBTYA) has agreed to sell its Germany and Eastern Europe assets to Vodafone (LSE: VOD) for $21.8 billion.

  • Why it's the BFD: Because this could kick off the same sort of telecom/media consolidation flurry in Europe that is already underway in the US.
  • Bottom line: "Telecoms traditionally made their money though pay TV and mobile plans. But as everything transitions to data-driven services (mobile and wireless internet), scale is much more important." — Sara Fischer, Axios
Venture Capital Deals

🚑 WeDoctor, a Chinese mobile medical scheduling and information company backed by Tenent, raised $500 million at a $5.5 billion valuation co-led by an affiliate of AIA Group (HK: 1299) and NWS Holdings (HK: 0659). http://axios.link/0PaQ

🚑 CStone Pharmaceuticals, a Chinese developer of immune-oncology drugs, raised $260 million in Series B funding. GIC led, and was joined by Sequoia China, Yunfeng Capital, 6 Dimensions Capital, CITIC PE, Taikang Insurance Group, ARCH Venture Partners, Hillhouse Capital, King Star Capital, 3W Partners, AVICT, Terra Mafnum Capital Partners and return backers Oriza Seed Venture Capital , Boyu Capital, and WuXi Healthcare Ventures. http://axios.link/u3C9

ThoughtSpot, a Palo Alto, Calif.-based provider of “search and AI-driven analytics for the enterprise,” raised $145 million in Series D funding. Sapphire Ventures was joined by return backers Lightspeed Ventures, Future Fund, Khosla Ventures, and General Catalyst. http://axios.link/rFTW

Fuse Universal, a London-based learning management platform, raised $20 million from Eight Roads Ventures. http://axios.link/wuRb

Gamalon, a Cambridge, Mass.-based AI company focused on understanding customer communications, raised $20 million in Series A funding. Intel Capital led, and was joined by .406 Ventures, Omidyar Technology Ventures and return backers Boston Seed Capital, Felicis Ventures and Rivas Capital. http://axios.link/3BOT

KeyedIn, a Minneapolis-based provider of cloud ERP and project management software, raised $15 million in Series C funding led by Arrowroot Capital. www.keyedin.com

SafeBreach, a Sunnyvale, Calif.-based provider of cyber breach and attack simulation solutions, raised $15 million in new funding. Draper Nexus led, and was joined by return backers Sequoia Capital, Deutsche Telekom Capital Partners and HPE Pathfinder. www.safebreach.com

Life House, a new “lifestyle boutique hotel” concept, raised $10 million in new funding from Global Founders Capital, Comcast Ventures and Trinity Ventures. It also secured $30 million in real estate funding led by Henley Investments. www.life-house.com

Rootility, an Israeli developer of root-focused plant breeding methods, raised $10 million in Series C funding co-led by an ADM Capital affiliate, Middleland Capital and GreenSoil Investments. http://axios.link/VkdE

🚑 Murj, a Santa Cruz, Calif.-based developer of implantable cardiac devices, raised $8.5 million in new VC funding. Longitude Capital led, and was joined by return backer True Ventures. www.murj.com

⛽ Axiom Energy, a Richmond, Calif.-based provider of energy storage solutions for grocery stores and cold storage facilities , raised $7.6 million in new Series A funding. GXP Investments and Shell Ventures co-led, and were joined by WorldQuant Ventures, SV Tech Ventures and Meson Capital. www.axiomenergy.com

🚑 Luna DNA, a San Diego-based “community-owned” genomic and medical research database, raised $4 million from backers like Illumina Ventures and Arch Venture Partners. http://axios.link/6zo6

Ample Foods, a San Francisco-based maker of “drinkable superfood meals,” raised $2 million in new funding led by Slow Ventures. http://axios.link/qTw4

Private Equity Deals

Baring Private Equity Asia and PAI Partners have agreed to acquire World Freight Co. International, a cargo freight capacity manager, from Greenbriar Equity Group. http://axios.link/k6iN

Lantern Capital has received U.S. bankruptcy court approval for its purchase of The Weinstein Co., but its unclear if any capital is being set aside for litigation settlements. http://axios.link/WvpQ

🚑 Simplura, a Lynbrook, N.Y.-based portfolio company of One Equity Partners, has acquired Keystone In-Home Care, a Lancaster, Penn.-based provider of in-residence care for senior and disabled patients.
www.all-metro.com

TPG Capital is in talks to acquire a minority stake in cosmetics company Anastasia Beverly Hills at a valuation just south of $3 billion (including debt), per Reuters. http://axios.link/O3OH

Public Offerings

🚑 Ascletis, a Chinese developer of oncology drugs, has filed for a Hong Kong IPO. It’s the first biotech to do so under the recently-relaxed listing rule, and has raised arund $155 million in VC funding from firms like C-Bridge Capital and Goldman Sachs. http://axios.link/LiPX

🚑 Autolus Therapeutics, a British immune-oncology company, filed for a $100 million IPO. It plans to trade on the Nasdaq (AUTL), with Goldman Sachs as lead underwriter. Shareholders in the pre-revenue company include Syncona (40.6% pre-IPO stake), Woodford Investment Management (26.4%) and Arix Bioscience (9.1%). http://axios.link/XLgm

Avast, a British anti-virus software maker owned by CVC Capital Partners, has cut its proposed IPO range from 250-320 pence per share to 250-270. It still could represent the largest-ever UK tech IPO. http://axios.link/hb3K

🚑 Evelo Biosciences, a Cambridge, Mass.-based developer of monoclonal microbials for treating inflammatory diseases, raised $85 million in its IPO. The pre-revenue company priced 5.3 million shares at $16 (middle of range), for a fully-diluted market value of $563 million. It will trade on the Nasdaq (EVLO), while Morgan Stanley was lead underwriter. It has raised over $170 million in VC funding from Flagship Pioneering, GV, Celgene, Alexandria Venture Investments and the Mayo Clinic. www.evelobio.com

Meili, a Chinese e-commerce site for women’s fashion, is prepping a $500 million U.S. IPO for later this year, per Reuters. Morgan Stanley would serve as lead underwriter, with Credit Suisse and China Renaissance also participating. VC backers include Vision Capital. http://axios.link/8ZZs

Pluralsight, a Farmington, Utah-based professional learning platform, set its IPO terms to 20.7 million shares at $10-$12. It would have a fully-diluted value of around $1.5 billion, were it to price in the middle. The company a $100 million IPO. The company reports a $97 million net loss on $168 million in revenue for 2017, and plans to trade on the Nasdaq (PS) with Morgan Stanley as lead underwriter. . Pluralsight has raised over $230 million in VC funding from firms like Insight Venture Partners, Iconiq Capital and Felicis Ventures. http://axios.link/dL7j

Springer Nature, the BC Partners-backed publisher of magazines Nature and Scientific American, has scrapped a $3.2 billion Frankfurt IPO due to weak demand. http://axios.link/EIQi

U.S. Express Enterprises, a Chattanooga, Tenn.-based mid-sized trucking company, filed for a $100 million IPO. It plans to trade on the NYSE (USX), with BofA Merrill Lynch as lead underwriter. The company reports nearly a $4 million net loss on over $1.55 billion in revenue for 2017. www.usxpress.com

Liquidity Events

Recruit Holdings (Tokyo: 6098) has agreed to buy Glassdoor, a Mill Valley, Calif.-based employer information platform, for $1.2 billion in cash, per Bloomberg. Glassdoor raised around $200 million in VC funding, most recently at an $860 million post-money valuation, from firms like Battery Ventures, T. Rowe Price, CapitalG, Sutter Hill Ventures and Tiger Global. http://axios.link/G1bq

SK Telecom and Macquarie have agreed to acquire ADT Caps, a South Korean security systems provider, from The Carlyle Group for around $2.76 billion.

More M&A

Patrick Drahi says that he won’t sell the struggling French unit of Altice NV, despite reported interest from Bouygues. http://axios.link/YT2L

Albert Frere has sold his 6.6% stake in Burberry Group (LSE: BBRY) for nearly $700 million, sending the company’s shares down to a four-month low. http://axios.link/vPSE

Keystone Foods, the Pennsylvania supplier of Chicken McNuggets to McDonald’s, has received takeover interest from Tyson Foods, Cargill and Fosun International, per Bloomberg. Keystone’s Brazilian owner, Marfrig, could fetch more than $3 billion in a sale. http://axios.link/0inW

⛽ Total (Paris: FP) will sell its Haiti retail business, including 92 gas stations, to a regional consortium called Bandari Corp. http://axios.link/fByz

Fundraising

Canada Pension Plan Investment Board and Allianz Capital Partners are anchor investors for the first private infrastructure investment trust in India. It’s called IndInfravit, and initially will acquire five operational toll roads.

EQT Partners raised $800 million for its third Asia mid-market buyout fund. http://axios.link/GL1T

Female Founders Fund has closed its second fund with $27 million. www.femalefoundersfund.com

🚑 Linden has closed its fourth healthcare-focused private equity fund with $1.5 billion. www.lindenllc.com

It's Personnel

David Ashcroft (ex-Cerberus) joined J.F. Lehman as a managing director of portfolio operations. www.jflpartners.com

John Hood, chair of the Rhodes Trust, has joined the board of directors for The Blackstone Group. www.blackstone.com

Jorge Ramirez, former president of the Chicago Federation of Labor and an ex-AFL-CIO official, has joined GCM Grosvenor as a managing director and head of labor strategies for its Labor Impact Infrastructure business.

Peter Scheman has left Goldman Sachs to join Jefferies as co-head of Americas industrials investment banking, per Reuters. http://axios.link/Tw3b

Final Numbers
Source: PitchBook Valuations Report; Data through March 2018.
  • More from PitchBook: "We believe much of this valuation expansion has been caused by the buildup of dry powder and general availability of capital to high-growth companies, which has given these companies pricing power in negotiations with investors."
Dan Primack