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Elliott Management has acquired around a $2.5 billion take in SoftBank Group, saying the market "significantly undervalues" the Japanese group's assets.

  • So far the relationship appears to be friendly, but Elliott isn't shy about getting into the mud if that's where it feels the most profit lies.
  • Singer vs. Son would be the investment world's version of Ali-Frazier.

Why it matters: This puts pressure on SoftBank to partially liquidate its larger holdings, such as its 25% stake in Alibaba Group, as Elliott reportedly is seeking around $20 billion in stock buybacks (or maybe a bit less if combined with deleveraging). It also could slow Vision Fund 2 investments until SoftBank holds at least a first close on third-party commitments (or has enough Vision Fund 1 proceeds to recycle).

  • This is the largest investment Elliott has ever made in a Japanese company, although it's no stranger to the country (e.g., Unizo).
  • Elliott bought at a particularly tricky moment for SoftBank. Not only because of questions surrounding Vision Fund 2, but also because its planned Sprint sale rests in the hands of a U.S. court.
  • SoftBank's market cap rose from around $89 billion to $95 billion on the news.

What Elliott is saying: "Elliott has engaged privately with SoftBank’s leadership and is working constructively on solutions to help SoftBank materially and sustainably reduce its discount to intrinsic value."

What SoftBank is saying: “SoftBank always maintains constructive discussions with shareholders regarding their views on the Company and we are in complete agreement that our shares are deeply undervalued by public investors. SoftBank welcomes feedback from fellow shareholders.”

The big question is how an activist hedge fund, which thinks in months and years, deals with a company that claims to think in centuries.

Source: Giphy

Warner Music Group, a music recording and publishing company owned by Len Blavatnik's Access Industries, filed for an initial public offering that Renaissance Capital estimates could target around $750 million.

  • Why it's the BFD: WMG is the third-largest U.S. music company by market share. Its recording artists include Ed Sheeran, Bruno Mars, and Cardi B, while its publishing unit includes Twenty One Pilots, Lizzo and Katy Perry.
  • Financials The company reports $258 million of net income on around $4.48 billion in revenue for fiscal 2019, compared to $312 million of net income on $4 billion in revenue for fiscal 2018.
  • Bottom line: "When billionaire Len Blavatnik bought WMG for $3.3 billion in 2011, the major labels were still reeling from the digital revolution that had turned the business upside down. Since then, the recorded music industry has gained significant ground thanks to the rise of subscription services, such as Spotify and Apple Music, that have helped to offset losses from piracy." — Ryan Faughnder, LA Times
Venture Capital Deals

Netskope, a Los Altos, Calif.-based cloud access security broker, raised $340 million in Series F funding at nearly a $3 billion valuation. Sequoia Capital led, and was joined by CPPIB, PSP Investments, and return backers Lightspeed Venture Partners, Accel, Base Partners, Iconiq Capital, Sapphire Ventures, Geodesic Capital, and Social Capital.

Byju, an Indian education startup, raised $200 million at an $8 billion valuation from existing backer General Atlantic, per TechCrunch.

🚑 Sonoma Biotherapeutics, a developer of regulatory T-cell treatments for autoimmune and neurodegenerative diseases, raised $40 million in Series A funding from Arch Venture Partners, Milky Way Ventures, 8VC, and Lyell Immunopharma.

🚑 Vineti, a San Francisco-based developer of logistics software for cell and gene therapies, raised $35 million in Series C funding. Cardinal Health led, and was joined by Novartis, Gilead Sciences, and return backers Canaan Partners, Threshold Ventures, Section 32, LifeForce Capital, Casdin Capital, and Hive Ventures.

HopSkipDrive, a Los Angeles-based ride-share company focused on kids and families, raised $22 million in Series C funding from Cyrus Capital Partners, State Farm Ventures, and return backers Upfront Ventures, FirstMark Capital and Greycroft.

Landing, a membership-based provider of finished urban apartments, raised $20 million in Series A funding. Greycroft led, and was joined by Maveron and Abstract Ventures. The company also secured $10 million in debt.

🚑 Intabio, a Newark, Calif.-based developer of instrumentation systems for biotherapeutic precision analysis and quality assessment, raised $18 million in Series B funding. Northpond Ventures led, and was joined by Genoa Ventures and Vertical Venture Partners.

🚑 PentixaPharm, a German biotech focused on hematologic and solid tumors, raised €15 million in Series A funding led by ELSA Eckert Life Science Accelerator.

Worlds, a Dallas-based spatial AI platform, raised $10 million in Series A funding. Align Capital led, and was joined by Chevron, Piva, and Hypergiant Industries.

Nurvv, a London-based maker of wearable tech for runners, raised $9 million in Series A funding from Hiro Capital.

SureSale, a Los Angeles-based provider of used vehicle certifications, raised $7 million in Series A funding. Upfront Ventures led, and was joined by Coffin Capital.

OptimoRoute, a Palo Alto-based route optimization startup, raised $6.5 million in Series A funding led by Prelude Ventures.

SaaSWorks, a Boston-based developer of scaling solutions for SaaS businesses, raised $5 million led by Conversion VC.

Plannuh, a Boston-based planning and budgeting tool for marketers, raised $4 million in seed funding co-led by Glasswing Ventures and Gradient Ventures.

AllVoices, a Los Angeles-based encrypted communications platform for making complaints to corporate HR departments, raised $3 million in seed funding from Crosscut Ventures, Greycroft, Halogen Ventures, and Vitalize VC.

Private Equity Deals

AE Industrial Partners acquired American Pacific, a Cedar City, Utah-based chemical manufacturer for U.S. government military and space programs, from Huntsman Family Investments.

HgCapital acquired SmartTrade Technologies, a French provider of managed services and hosted software for trading desks, from Keensight Capital and Pléiade Venture.

Silver Lake confirmed that it's acquired a minority stake in Equinox, the upscale fitness club operator and majority owner of SoulCycle, for an undisclosed amount. We first discussed the deal last month.

Public Offerings

Casper Sleep ended its first day of trading up 12.5% to $13.50 per share, compared to its $12 per share IPO price. At one point shares were up around 25%, before settling back down.

  • I asked Casper CEO Philip Krim why the company didn't break out mattress sales from non-mattress sales, to which he said he didn't believe investors needed that level of granularity. He also declined to comment on if the company held any acquisition talks over past few weeks.

Calisen Group, a British smart meter maker owned by KKR, raised £328 million in its London IPO at an initial valuation of around £1.32 billion.

Corfin Industries, a Salem, N.H.-based portfolio compony of Behrman Capital, acquired Micross Components, an Orlando-based provider of microelectronic components, from Insight Partners.

Liquidity Events

🚑 CVC Capital Partners is considering a sale or IPO for French private medical chain Elsan, which could fetch around €3 billion, per Bloomberg.

Salesforce (NYSE: CRM) acquired Evergage, a Somerville, Mass.-based provider of real-time marketing personalization solutions. Evergage had raised around $26 million in VC funding from Arrowroot Capital, G20 Ventures, and Point Judith Capital.

🚀 SpaceX confirmed that it eventually plans to spin out its Starlink satellite broadband business via an IPO.

  • Thought bubble from Axios Space's Miriam Kramer: "SpaceX is ahead in what might prove to be a very crowded market, with multiple companies include OneWeb and Amazon looking to break into the satellite broadband game. The Musk outfit still has a long way to go before it proves that Starlink is viable commercially, however. The company has launched 240 Starlink satellites so far, with plans to operate up to 42,000 of these small spacecraft in the future."
More M&A

Carrefour (Paris: CARR) reportedly is in talks to buy Brazilian retail chain Makro from The Netherlands-based SHV Holdings.

Fidelity National Financial (NYSE: FNF) agreed to buy annuities and life insurance firm FGL Holdings (NYSE: FG) for $2.7 billion in stock, or $12.50 per share (2.9% premium over Thursday’s closing price).

Match Group (Nasdaq: MTCH) expressed interest in acquiring Meet Group (Nasdaq: MEET), a Pennsylvania-based social app maker with a market cap of around $430 million, per Bloomberg.

🚢 TUI (LSE: TUIT) agreed to sell its stake in Hapag-Lloyd Cruises for €700 million to joint venture partner Royal Caribbean Cruises (NYSE: RCL).

ViacomCBS (Nasdaq: VIAC) is considering takeover offers for tech-focused media property CNET, per Bloomberg.

U.S. Attorney General Bill Barr yesterday floated the idea of the U.S. acquiring a control stake in Finland's Nokia or Sweden's Ericsson, as a defensive move on 5G networking against China's Huawei. Go deeper: Team Trump's 5G misfires


A/O PropTech, a new European VC firm focused on real estate tech, launched with €250 million of “permanent capital.”

Aberdeen Standard Investments reportedly is raising €300 million for co-investments in European private equity deals.

Brookfield Infrastructure Partners closed its fourth fund with $20 billion, of which around 40% has already been committed.

The California State Teachers’ Retirement System (CalSTRS) plans to increase its private equity allocation, incrementally rising from a 9% target to a 13% target.

Carta, a VC-backed startup that helps other startups manage their equity, formed a corporate venture fund.

First Eagle Investment Management raised $782 million for its fourth direct lending fund focused on the middle markets.

General Catalyst reportedly is raising $600 million for its next early-stage fund, plus at least $1 billion for growth-stage and follow-on deals.

INVL Asset Management of Lithuania raised €165 million for a Baltics-focused private equity fund.

West Capital Partners, a leveraged buyout arm of Goldman Sachs, plans to raise $8 billion for a new fund, per Reuters.

It's Personnel

Tom Bratkovich joined Wilshire Associates as a senior vice president focused on private markets, per his LinkedIn page. He previously founded Longview Investment Partners and co-founded Hycroft.

Scott Rogan stepped down as head of midstream investments at Energy Capital Partners, per Bloomberg, which also reports that firm is pausing new pipeline deals because of “the accelerating downturn in shale.”

David Thévenon and Rana Yared joined London-based VC firm Balderton Capital. Thévenon previously was a partner with SoftBank Vision Fund, while Yared was a partner with Goldman Sachs’ principal investments unit.

Final Numbers
Source: Refinitiv. Data through Feb. 6, 2020.

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