Sep 14, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Reminder that tonight Axios is hosting an event in D.C. to discuss the challenges and opportunities facing women in business. Doors at 6pm. More info and RSVP by going here.

Top of the Morning

• Protectionist POTUS: President Trump yesterday blocked the proposed $1.3 billion takeover of Oregon-based Lattice Semiconductor by China-backed private equity firm Canyon Bridge, based on a CFIUS recommendation that leaned on national security concerns. We had discussed the situation earlier this month.

  • Official comment: White House statement is here
  • Thought bubble: This not only could further chill cross-border M&A between the U.S. and China, but also cause American private equity firms to become more circumspect when it comes to taking big LP commitments from China state-backed investors.

• Kick-off: As Axios first reported last night, FanDuel is in the midst of raising between $30 million and $40 million via a convertible note financing from existing investors. You might recall that the fantasy sports site suspended a fundraising effort in anticipation of a merger with rival DraftKings that was scuttled by federal regulators. The New York-based company to date has raised over $400 million in funding from firms like KKR, Google Capital, Shamrock Capital Group, Time Warner Investments and Comcast Ventures. Per terms of the DraftKings merger, it was valued at $1.2 billion.

• Gusher: Saudi Aramco today is disputing a Bloomberg report that it is delaying its IPO, which is expected to be the largest of all time and price in the second half 2018. At the same time, it didn't include any explicit mention of 2018 in its statement, which pulls a few sharp teeth out of it.

  • Axios energy reporter Ben Geman has more, including this perspective from David Goldwyn, who once was the U.S. State Department's top energy official: "The Saudis don't want to sell at the bottom of the market, so timing matters. But delay is risky. Will the OPEC deal collapse? Will shale boom? Will EVs slow demand?"

• Searching for Steve: Blackstone Group boss Steve Schwarzman said in a CNBC interview earlier this week that he has never Googled himself nor ever used an app (including Uber or similar services).

  • On a much more serious note: "I wouldn't be buying office buildings in Seoul right now."
The BFD

Social Capital Hedosophia Holdings, a blank check company formed to acquire a large private tech company, raised $600 million in its IPO. The Palo Alto, Calif.-based effort priced 60 million units at $10 per unit, compared to original plans to only sell 50 million units. Credit Suisse served as sole underwriter. The issuer — formed by VC firms Social Capital and Hedosophia — will trade on the NYSE under ticker symbol IPOA.

  • Why it's the BFD: There's an enormous glut of VC-backed "unicorns" that view the IPO process like Stan Uris views Pennywise. Social Capital and Hedosophia are offering a calmer entry to the public markets and, if successful, it could provide a new source of liquidity for venture investors.
  • Check back: Kia is scheduled to speak with Social Capital's Chamath Palihapitiya later this morning, and we'll try to quickly post highlights.
  • Bottom line: I still don't get it. While innovation in the staid VC and IPO markets is admirable (even with a 20% finder's fee), it's still unclear why a surging unicorn would avail itself of this option rather than a more traditional offering. Not only would it be deprived of the administrative and messaging discipline often developed via an IPO, but it also would have to accept that the few will be superior to the many when it comes to price discovery. And if it's a struggling unicorn, then why would the blank check shareholders want it, particularly with reduced disclosure requirements?
Venture Capital Deals

• Magic Leap, the secretive mixed reality company, is in talks to raise more than $500 million in new funding at around a $6 billion valuation, as first reported by Bloomberg and confirmed by Axios. New backers could include Temasek. http://axios.link/5bHg

• Bayer and Ginkgo Bioworks have launched a new Boston-based ag-tech company focused on the plant microbiome, with $100 million in startup investment by the two parent companies and Viking Global Investors. http://axios.link/smXp

• TTTech, an Austrian networking technology company for the industrial and automotive industries, has raised €75 million from Samsung. http://axios.link/VRya

⛽ StoreDot, an Israeli battery startup seeking to commercialize technology that can charge electric vehicles in just minutes, has raised $60 million in third-round funding. Daimler led the round (as part of a large3r strategic partnership), and was joined by return backers like Samsung Ventures and Roman Abramovich. http://axios.link/l34v

• Apttus, a San Mateo, Calif.-based provider of quote-to-cash business process automation solutions, has raised $55 million in Series E funding. Premji Invest was joined by return backers Salesforce.com, K1 and Iconiq Capital. http://tcrn.ch/2xkMYFH

• The Digital Marketing Institute, a Dublin, Ireland-based digital marketing and selling professional certification body, has raised €26 million in growth equity funding led by Spectrum Equity. http://axios.link/jJoM

• Heptio, a Seattle-based provider of open-source container management software solutions, has raised $25 million in Series B funding. Madrona Venture Partners led the round, and was joined by return backers Accel and Lightspeed Venture Partners. http://tcrn.ch/2x02Nzo

🚑 SPR Therapeutics, a Cleveland-based provider of neurostimulation technology for chronic and acute pain, has raised $25 million in Series C funding co-led by Frontcourt Ventures and an undisclosed family office. http://axios.link/EmyW

• Skywire Networks, a New York-based fixed wireless business broadband provider, has raised $23 million in new funding from Metropolitan Partners Group. www.skywirenetworks.com

• MissionU, a San Francisco-based "college alternative," has raised $8.5 million in Series A funding. FirstMark Capital led the round, and was joined by John Doerr, Omidyar Network and seed backers First Round Capital, University Ventures, Box Group, Rethink Education and Learn Capital. http://tcrn.ch/2h3TwSO

Virtuo, a Paris-based car rental startup, has raised €7.5m in new VC funding from Balderton Capital. http://axios.link/GtTZ

⛵ Snag-A-Slip, a Baltimore-based online boat slip reservation platform, has raised $4.8 million in Series A funding. Claritas Capital led the round, and was joined by TCP Venture Partners and Jerry South. http://bsun.md/2wYXnak

• Marketware, a Cottonwood Heights, Utah-based provider of SaaS healthcare relationship technology, has raised $4.5 million in Series B funding led by Epic Ventures. www.marketware.com

Cybrary, a Greenbelt, Md.-based provider of open-source cybersecurity training, has raised $3.5 million in new VC funding led by Arthur Ventures. http://axios.link/QPk4

• Swirlds, a College Station, Texas-based creator of a "hashgraph distributed consensus platform," has raised $3 million in seed funding led by NEA. www.swirlds.com

Private Equity Deals

• AE Industrial Partners has completed its previously-announced take-private acquisition of CDI Corp. (NYSE: CDI), a Philadelphia-based provider of IT consulting and staffing services, for approximately $155 million, or $8.25 per share. www.cdicorp.com

• Continental Services, a Detroit-based food services company owned by New Heritage Capital, has acquired Satellite Vending Co., a -based provider of vending, micro-market and office coffee services in the Detroit market. No financial terms were disclosed. www.ContinentalServes.com

🚑 CVC Capital Partners is nearing an agreement to purchase the non-U.S. women's health assets of Teva Pharmaceutical Industries (NYSE: TEVA), which could be valued at around $800 million, according to Bloomberg. https://bloom.bg/2xxNMYR

🚑 Navicure, a Duluth, Ga.-based provider of claims management and patient payment solutions to healthcare providers, is in advanced talks to acquire Louisville, Ky.-based claims management software provider ZirMed for around $750 million, according to Reuters. Navicure is owned by Bain Capital, while ZirMed backers include Sequoia Capital. http://reut.rs/2fl3A6u

🚑 Practice Insight, a Houston-based provider of revenue cycle management and electronic data interchange solutions for healthcare providers, has secured an undisclosed amount of mezzanine funding from Yukon Partners. www.practiceinsight.net

Public Offerings

• ACM Research, a Fremont, Calif.-based provider of single-wafer wet cleaning equipment, has filed for a $34.5 million IPO. It plans to trade on the Nasdaq under ticker symbol ACMR, with Roth Capital Partners serving as lead underwriter. The company reports a $3 million net loss on $14.4 million in revenue for the first half of 2017. Shareholders include Shanghai Science and Technology Venture Capital (18.2% pre-IPO stake). www.acrmrsch.com

• RYB Education, a Chinese provider of early childhood education services, has set its IPO terms to 7.8 million American depository shares being offered at between $16 and $18 per share. It would have an fully-diluted market cap of around million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol RYB, with Credit Suisse and Morgan Stanley serving as lead underwriters. It reports nearly $5 million in net income on $64 million in revenue for the first half of 2017.

More M&A

• Santander is the frontrunner to acquire Deutsche Bank's Polish assets, which also have received interest from Portugal's Millennium BCP, according to Reuters. http://reut.rs/2h3vc3w

🚑 Tenet Healthcare (NYSE: THC) has hired advisors to explore strategic alternatives that could include a possible sale. The Dallas-based hospital operator has seen its stock price slide around 75% since the beginning of 2015, bringing its market cap down to just around $1.6 billion. http://axios.link/8gTF

Fundraising

• Ardian is targeting $1.2 billion for its sixth private equity secondaries fund, which would be nearly double the size of its predecessor, according to Secondaries Investor. http://axios.link/Lcw4

• Abris Capital Partners has closed its third private equity fund focused on Central Europe, with 500 million in capital commitments. www.abris-capital.com

• Asia Alternatives, an Asia-focused private equity fund-of-funds manager, has closed its fifth fund with over $1.8 billion in capital commitments. http://axios.link/U1Yv

• Samsung has launched a $300 million fund focused on connected car and autonomous vehicle technologies. http://axios.link/VRya

It's Personnel

• Jim Davis has joined Irvine, Calif.-based accelerator Cie Digital Labs as an entrepreneur-in-residence. He previously led brand marketing for Pepsi. www.ciedigital.com

• Highland Capital Management, a Dallas-based alternative asset manager, has promoted Trey Parker to co-CIO, alongside firm co-founder Mark Okada. Parker joined Highland in 2007, ultimately leading its credit research group and serving as portfolio manager on several credit funds. http://reut.rs/2xn1xbA

• Dave Parker, former CEO of Code Fellows, has joined Seven Peaks Ventures as a Seattle-based venture partner. www.sevenpeaksventures.com

Final Numbers
  • More from Preqin: The median management fee for buyout funds has remained static at 2% over the past decade, but the mean has fluctuated and comes in at 1.94% for all buyout funds raised or raising in 2017.
Dan Primack