May 21, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Illustration: Lazaro Gamio/Axios

An ugly Bitcoin battle is brewing in California's 45th Congressional District, where Democratic Party voters next month will choose their candidate to take on vulnerable GOP incumbent Mimi Walters.

Dave Min, a former SEC enforcement attorney and aide to Chuck Schumer, recently put out a TV ad that included the following line about rival Brian Forde, a former Obama White House tech advisor who later served as the MIT Media Lab's director of digital currency:

"Brian Forde's big donors? Bitcoin speculators who oppose cracking down on drug deals and human trafficking."

Oh boy.

Forde is certainly a fav among the crypto crowd, many of whom have contributed via Bitcoin rather than U.S. dollars. In fact, Bloomberg recently reported that "Forde has already amassed more Bitcoin contributions than all previous congressional candidates combined."

But I've been unable to find any evidence that his "big donors" have ever said they "oppose cracking down on drug deals and human trafficking." Probably because no one says that.

So I asked Min's campaign manager for proof. Her first statement was that while Min "is a huge believer in the potential of distributed ledger technology," he has "deep concerns about the deregulatory agenda being pushed by Bitcoin and cryptocurrency enthusiasts." A follow-up was similarly unresponsive to the specifics.

Finally she pointed me to Forde donor Brock Pierce (yes, of Mighty Ducks and John Oliver fame), and his official role with a crypto lobbying group called The Bitcoin Foundation.

  • Pierce, while quite controversial, has never publicly said he opposes "cracking down on drug deals and human trafficking" — but Min's campaign apparently believes the statement is fair because Bitcoin Foundation opposes certain regulations that could, in theory, make such things more difficult.
  • Forde says that if Pierce has indeed said such things, he's "happy to refund his money."
  • Min's campaign provided no other examples. Pierce is indeed one of Forde's largest donors, but gave less than folks like Nicohlas Negroponte, venture capitalist Bill Tai and Xapo CEO Wences Cesares.

Bottom line: Min's attack line doesn't hold water, but the crypto industry should watch the primary's outcome carefully. If exploiting Bitcoin fears proves to be a winning strategy, expect other politicians to follow.

Breaking: UK signals it won't block Comcast on Sky News.

Trade wars: Honestly, who really knows right now? Steve Mnuchin yesterday said the "trade war is on hold," after months of pushing back against the term (including just three weeks ago). He also said that around $150 billion in expected tariffs are off the table for now, even thought Robert Lighthizer seems to disagree. Trump is tweeting trade this morning without specifics, while WaPo suggests that the apparent framework is largely a win for China and a loss for the U.S. (particularly U.S. tech, which doesn't seem to get IP protections).

  • Axios' Jonathan Swan: "The bark to bite ratio is currently about 85:1."
  • All of this comes against the backdrop of continuing negotiations over new CFIUS legislation. I'm told there should be language to protect U.S. investment firms that have Chinese limited partners (so long as they don't sit on LP advisory committees), but there is still big Silicon Valley concern about continued inclusion of minority equity investments from China in "critical technologies" such as AI.

$10 billion Shades of Uber: Ant Financial, the fintech affiliate of Alibaba Group, is set to close on $10 billion in new funding at a $150 billion valuation. One big caveat, per WSJ, is that investors must "agree not to invest in or raise their stakes in companies controlled by major rivals such as Tencent and JD.com."

Original listicle: The new Fortune 500 is out, with Walmart leading the pack (again). The rest of the top 5 reads: Exxon Mobil, Berkshire Hathaway, Apple and United Health.

The BFD
Source: Giphy

General Electric (NYSE: GE) has agreed to sell its railroad business to Wabtec (NYSE: WAB) for around $11.1 billion.

  • Why it's the BFD: Because this signals that GE chief exec John Flanney is serious about refocusing his struggling company, with GE Lighting also on the block and continued speculation that GE could separate its three major business units. It also means Wabtec will become one of the world's largest makers of freight locomotives and rail equipment, nearly doubling its current annual revenue.
  • Deal terms: GE will receive $2.9 billion in cash and a 9.9% stake in the combined company, while GE shareholders will receive a 40.2% stake.
  • Bottom line: "This is the beginning of the unraveling of General Electric," Andrew Ross Sorkin, CNBC
Venture Capital Deals

Orbbec, a Chinese motion sensing startup, raised more than $200 million in Series D funding led by Alibaba affiliate Ant Financial. Other backers include SAIF Partners, Green Pine Capital Partners, R-Z Capital and Tianlangxing Capital. http://axios.link/GHku

🚑 FogPharma, a Cambridge, Mass.-based developer of “cell-penetrating mini-proteins,” raised $66 million in Series B funding. 6 Dimensions Capital led, and was joined by GV, Blue Pool Capital, Horizons Ventures, Nan Fung Group, Leerink Partners and return backers Deerfield Management, Boyu Capital and WuXi AppTec Corporate Ventures. http://axios.link/B2hS

CubeIQ, a New York-based location intelligence startup focused on consumer behaviors, raised $27 million in Series B funding from Goldman Sachs, Nasdaq Ventures, DRW Venture Capital, Tribeca Venture Partners and return backers Tribeca Angels and TLcom Capital. http://axios.link/HLPo

OJO Labs, an Austin, Texas-based maker of an AI assistant for the real estate industry, raised $20.5 million in Series B funding from LiveOak Venture Partners, Silverton Partners, Realogy, RBC, Northwestern Mutual Future Ventures and ServiceMaster. http://axios.link/uClK

TuneGO, a Henderson, Nev.-based platform that connects artists with the music industry, raised $7.7 million in Series B funding led by return backer Falcon Capital. www.tunego.com

Hoop, a UK online marketplace for finding and booking local children’s activities, raised £4 million in Series A funding. Edge Investment Partners led, and was joined by return backer BGF Ventures. www.hoop.co.uk

Private Equity Deals

Accel-KKR has acquired Sageworks, a Raleigh, N.C.-based provider of software and information products to U.S. financial institutions. http://axios.link/IeOm

Fireman Capital Partners has acquired a majority stake in Bandon Holdings, a franchisee of 38 Anytime Fitness clubs in Texas, Oklahoma and Kansas. www.firemancapital.com

Bain Capital has offered to acquire BWX (ASX: BWX), an Australian branded skin and hair-care products company, for around A$803 million. http://axios.link/DY3P

🚑 KKR is partnering with hospital operator HCA (NYSE: HCA) on a takeover bid for physician services provider Envision Healthcare (NYSE: EVHC), per Reuters.

Partners Group has acquired around a 48% stake in GlobalLogic, a San Jose, Calif.-based provider of digital product engineering services, from Apax Partners at an enterprise value of over $2 billion. www.globallogic.com

Rackspace, a managed cloud services company owned by Apollo Global Management, has acquired RelationEdge, a Carlsbad, Calif.-based digital agency and Salesforce implementation partner. http://axios.link/WDNo

Public Offerings

8 companies are expected to price IPOs on U.S. exchanges this week: GreenSky, EVO Payments, Ambow Education, CLPS, Kiniksa Pharma, Scholar Rock, Iterum Therapeutics and Hancock Jaffe Labs. http://axios.link/d1YP

Chara Solutions, a Louisville, Ky.-based provider of environmental and maintenance services to coal and nuclear power plants, filed for a $100 million IPO. It plans to trade on the NYSE (CHRA), with Morgan Stanley as lead underwriter. www.charah.com

Puxin, a Beijing-based provider of K-12 afterschool tutoring services, has filed for a $300 million IPO. It plans to trade on the NYSE (NEW), with Citi as leads underwriter. It reports a $63 million net loss on $204 million in revenue for 2017.

Liquidity Events

Bain Capital and Golden Gate Capital have hired Goldman Sachs and Credit Suisse to find a buyer for BMC Software, which they acquired five years ago for $6.9 billion, per Bloomberg. Possible suitors include Thoma Bravo and KKR. http://axios.link/9AVf

🚑 HC-One, the UK’s largest provider of elderly residential and nursing homes, is seeking a buyer for around £1 billion, per the FT. Current shareholders include Formation Capital, HCP and Safanad. http://axios.link/76Hr

IHS Markit (Nasdaq: INFO) has agreed to buy New York-based market data company Ipreo from The Blackstone Group and Goldman Sachs for $1.86 billion. http://axios.link/YmCx

Microsoft (Nasdaq: MSFT) has acquired Semantic Machines, a Newton, Mass.-based startup that makes chatbots sound more human. Semantic Machines had raised over $20 million in VC funding from Bain Capital Ventures and General Catalyst. http://axios.link/tNQv

Permira has sold its 18% stake in British life insurer Just Group (LSE: JUST) for £237 million, via a share placement. http://axios.link/v9LM

🚑 Providence Equity Partners has hired Harris Williams & Co. to find a buyer for Therapy Brands, a Birmingham, Ala.-based provider of behavioral health software that generates around $18 million in pro forma EBITDA, per WSJ. http://axios.link/RLUg

More M&A

⛽ AC Energy, a unit of listed Philippine conglomerate Ayala Corp., is seeking to sell up to 50% of its coal-fired energy unit, which could fetch upwards of $1 billion. http://axios.link/8r9p

Fifth Third Bancorp (Nasdaq: FITB) has agreed to buy Chicago-based MB Financial (Nasdaq: MBFI) for around $4.7 billion in stock and cash. http://axios.link/TTWz

Hitachi Rail (Tokyo: 6501) is preparing to assume full control of Italian rail-signaling company Ansaldo STS (Milan: STS), by acquiring a minority stake held by Elliott Associates. http://axios.link/d1Jh

Fundraising

Emergence Capital has closed its fifth VC fund with $435 million. http://axios.link/lwkM

The Rohatyn Group has acquired J.P. Morgan’s Asian infrastructure platform, including funds and an India-based investment team. www.rohatyngroup.com

Final Numbers
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Note: Expensive metros are defined as the 10 most expensive with populations over 1 million people based on Bureau of Economic Analysis Regional Price Parity data for 2015; Data: Indeed.com; Chart: Chris Canipe/Axios
Dan Primack