Apr 27, 2020

Axios Pro Rata

πŸ–₯️ You’re invited: Axios tomorrow at 12:30pm ET will host a virtual live event on COVID-19’s impact on education. Guests include Arkansas Gov. Asa Hutchinson, Coursera CEO Jeff Maggioncalda, and Common Sense Media CEO Jim Steyer. Register here.

πŸ“Ί Tonight: "Axios on HBO" returns at a new time β€” Mondays @ 11 p.m. ET/PT. Conversations with NY Gov. Andrew Cuomo, Walmart CEO Doug McMillon, and more!

Top of the Morning

Illustration: Sarah Grillo/Axios

The Paycheck Protection Program portal is expected to reopen this morning, with around $322 billion of fresh funds for small businesses adversely affected by the coronavirus pandemic.

What's new: The SBA has explicitly prohibited "hedge funds and private equity firms" from receiving PPP loans, and also reaffirmed "affiliation" rules for private equity-owned companies.

Wait, what? Yes, there have been anecdotal reports of alternative investment firms at least inquiring about PPP loan eligibility. It's unclear if any such loans were made.

  • Most alternative investment firms have fewer than 500 employees, but the economic harm argument is tougher. Hedge funds might claim that they've experienced accelerated redemptions, thus reducing management fee flow, while private equity firms might point to LP defaults.
  • SBA used some imprecise language here, referring to hedge funds and private equity firms, but lawyers I spoke with don't think lenders will approve applications from PE firms at the fund or management company levels.
  • The bigger issue is that PPP loans operate under something called Section 7(a), which generally prohibits businesses that are primarily engaged in investment or speculation. SBA could have waived those guidelines for PPP β€” as it's done for businesses that generate revenue via legal gambling β€” but it didn't.

The bottom line: Alternative investment firms (or funds) were always edge cases for PPP loans, and now they've been thrown over that edge.

[Note: Axios qualified for a PPP loan of just under $5 million.]


Illustration: Sarah Grillo/Axios

Twin River Worldwide (NYSE: TRWH) will pay $180 million to buy a pair of casinos from Eldorado Resorts (Nasdaq: ERI) and one from Caesars Entertainment (Nasdaq: CZR), as Eldorado inches closer to its $17.3 billion purchase of Caesars.

  • Why it's the BFD: These are penny slot prices, even in the context of appeasing antitrust regulators and pandemic-related closures.
  • Details: Eldorado is divesting from a namesake casino in Shreveport, Louisiana, and the MontBleu in Lake Tahoe for $155 million, while Caesars is selling Bally's Atlantic City (and its underlying real estate) for $25 million. Back in January, Eldorado had agreed to sell its two properties to Maverick Gaming β€” with the Shreveport casino alone valued at $230 million.
  • The bottom line: "Combined, the three properties have 3,318 slot machines, 176 table games, and 2,092 hotel rooms. Twin Rivers noted Eldorado Shreveport has 6,000 square feet of convention space." β€” Howard Stutz, CDC Gaming Reports
Pro Rata for Kids

Today's project is for your kids to create a carnival midway game. It could be something traditional like bottle ring toss or knocking down a can pyramid, or something unique. Try to include a sign with the game name, plus there should be some sort of prize. Note: The game will cost you (the parent) exactly $1.00 to play.

  • Per usual, please email me (dan@axios.com) photos of what they create.

Last Friday I asked your kids to make unusual pancakes, either in terms of appearance or ingredients:

Sloane (age 7) went with heart rainbows.
Isabella (age 6) made pancakes out of matzo.
Venture Capital Deals

πŸš‘ Erasca, a San Diego-based precision oncology startup, raised $200 million in Series B funding. Arch Venture Partners and Cormorant Asset Management co-led, and were joined by EDBI, Invus, Terra Magnum Capital Partners, and return backers City Hill Ventures, Colt Ventures, and LifeSci Venture Partners. http://axios.link/rnmA

πŸš‘ Compass Pathways, a London-based developer of mental health therapies, raised $80 million in Series B funding. ATAI Life Sciences, McQuade Center for Strategic R&D, Founders Fund, Able Partners, Camden Partners, Perceptive Advisors, Skyviews Life Science, and Soleus Capital. http://axios.link/C87o

πŸš‘ Rome Therapeutics, a Cambridge, Mass.-based biotech focused on leveraging β€œjunk DNA” to discover cancer and autoimmune disease therapeutics, raised $50 million in Series A funding from GV, Arch Venture Partners, and Partners Innovation Fund. Founder and CEO Rosana Kapeller previously was an entrepreneur-in-residence at GV. http://axios.link/c0Af

β€’ Brain Corp., a San Diego-based developer of tech for autonomous mobile robots, raised $36 million in Series D funding led by return backer SoftBank Vision Fund. Others backers include ClearBridge Investments, Satwik Ventures, and Qualcomm Ventures. www.braincorp.com

β€’ Templafy, a Denmark-based provider of enterprise template management and document creation software, raised $25 million in Series C funding. Insight Partners led, and was joined by Dawn Capital, Seed Capital, and Damgaard Co. http://axios.link/LFIi

πŸš‘ Clever Care Health Plan, a Westminster, Calif.-based provider of Medicare Advantage plans, raised $20 million in Series A funding. Norwest Venture Partners led, and was joined by Global Founders Capital. http://axios.link/rb6c

β€’ Codota, an Israeli developer tool for autocompleting strings of code, raiosed $12 million in Series A funding. E.ventures led, and was joined by Khosla Ventures, TPY Capital, and Hetz Ventures. http://axios.link/4MWG

β€’ SingleOps, an Atlanta-based provider of business management SaaS for outdoor services companies, raised $6 million led by Five Elms Capital. http://axios.link/tdel

β€’ Tinvio, a Singapore-based order managing platform for supply chain merchants, raised $5.5 million in seed funding. Sequoia Capital India led, and was joined by Global Founders Capital and Partech Partners. http://axios.link/HPFA

β€’ Env0, a San Francisco-based cloud management platform for infrastructure-as-a-code architecture, raised $3.3 million in seed funding co-led by Boldstart Ventures and Grove Ventures. http://axios.link/b7QA

πŸš‘ BuyMed, a Vietnamese online pharma marketplace, raised $2.5 million from Sequoia Capital India and Genesia Ventures. http://axios.link/0fFz

Private Equity Deals

β€’ American Pacific Group acquired SaltStick, an electrolyte replenishment supplement. www.saltstick.com

β›½ BP (LSE: BP) restructured some terms of the planned $5.6 billion sale of its Alaska business to Hilcorp, an energy company backed by The Carlyle Group and Ace & Co. The overall deal value didn’t change. http://axios.link/90wz

β›½ KKR agreed to buy five solar energy plants for $204 million from Shapoorji Pallonji Infrastructure Capital. http://axios.link/KsM7

β€’ Merlin Entertainments, the operator of Legoland and Madame Tussauds, is seeking to raise €500 million via a new debt offering. Merlin was acquired last year for Β£6 billion by The Blackstone Group and CPPIB. http://axios.link/gXaW

Liquidity Events

β€’ Google is in talks to acquire enterprise cloud software company D2iQ (fka Mesosphere), which raised around $250 million in VC funding, Axios' Kia Kokalitcheva reports. Go deeper.

More M&A

β€’ Boeing (NYSE: BA) walked away from its late 2018 agreement to buy an 80% stake in Embraer’s (NYSE: ERJ) commercial jet business for $4.2 billion. Boeing claimed Embraer failed to meet a closing condition, but Embraer called the charge "false" and said it will seek damages. http://axios.link/TnxJ

β€’ Imperial Brands (LSE: IMB) agreed to sell its U.S. premium cigar unit for €185 million to Gemstone Investment Holding and the rest of its premium cigar business to Allied Cigar for €1.04 billion. http://axios.link/duRJ


β€’ China Everbright is seeking to raise $2.8 billion for a new China-focused ESG private equity fund. http://axios.link/pUtn

β€’ Icebreaker.vc, a Finnish firm that backs pre-seed and seed-stage startups, held a €50 million first close on its second fund. http://axios.link/6GDb

β€’ OMERS launched a US$750 million VC fund focused on early-stage tech companies in North America and Europe. http://axios.link/WuAn

β€’ Sequoia Capital China said that it will partner with Starbucks to invest in Chinese tech startups within the retail and food and beverage sectors. No financial details of the partnership were disclosed. http://axios.link/zZmt

It's Personnel

β€’ Sasha Astafyeva (ex-Felix Capital) and Terese Hougaard (ex-CapitalG) joined European venture firm Atomico as a partner and principal, respectively. http://axios.link/cn85

β€’ Sumit Rajpal joined the Securities & Exchange Commission as a senior policy adviser. He previously was with Goldman Sachs as global co-head of merchant banking. http://axios.link/VDjT

Final Numbers
Source: Refinitiv Deals Intelligence

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