Mar 9, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

Situational awareness: The Dow fell more than 2,000 points in early trading, with the S&P 500 plunging around 7%, causing a 15-minute trading pause. Deal-makers from various asset classes tell me that processes are grinding to a halt, due to both logistics (travel, etc.) and pricing uncertainties.

Top of the Morning

Illustration: Aïda Amer/Axios

Pro athletes are diversifying into private equity after years of focusing most of their alternative investment activities on real estate and tech startups.

  • The driving financier is Mark Patricof, who previously led a media and entertainment-focused investment bank that he sold in 2015 to Houlihan Lokey.

Patricof's inspiration struck several years ago when co-hosting a "Shark Tank"-like show with former New England Patriots star Rob Gronkowski, in which winning founders received pro athlete endorsements.

  • "I realized that a lot of these athletes had no exposure to private equity, and really didn't understand what it was. It felt like an opportunity," Patricof tells me. "And plenty of companies and private equity firms like being associated with pro athletes."
  • He received financial backing from J.P. Morgan for a co-investment platform, whereby athletes like J.J. Watt, Venus Williams, Victor Oladipo, C.C. Sabathia, and Henrik Lundqvist get the opportunity to participate in deals led by such private equity firms as L Catterton and Providence Equity Partners.
  • Patricof and his team identify co-investment opportunities, and athletes get deal-by-deal participation rights. Patricof's other investors, including JPM, fill up the remaining allocation.

This is the convergence of two trends: Pro athletes becoming more sophisticated about their money, seeking more diversified investment options, and private equity firms trending toward co-investment over syndicate partners.

  • Patricof is one of the first to play at this new apex, but will hardly be the last.

Illustration: Rebecca Zisser/Axios

Tegna (NYSE: TGNA), the local television and radio broadcaster previously known as Gannett, received rival $4.35 billion takeover bids from Apollo Global Management and Gray Television (NYSE: GTN).

  • Why it's the BFD: If successful, Apollo would become one of the country's largest local TV owners, having last year acquired Cox Media and Northwest Broadcasting.
  • The bottom line: It's surprising to see a bidding war in the midst of such valuation volatility — Tegna's shares have fallen more than 21% in the past two weeks, while Gray is down 33%. Apollo theoretically has an advantage because its bid is all-cash, but the private equity firm could face challenges in finding buyers for new leveraged loans.
Venture Capital Deals

Hungry, a catering marketplace that connects businesses with independent chefs, raised $20 million in Series B funding led by Evolution VC Partners.

Argent, a London-based cryptocurrency wallet provider, raised $12 million in Series A funding. Paradigm led, and was joined by Index Ventures.

Goodlord, a London-based provider of property rental management software, raised £10 million in Series B funding from Finch Capital, Latitude Ventures, and Oxx Capital.

Rest Less, a British social enterprise platform for people over 50, raised £3 million in seed funding led by QED Investors.

Corevist, a Raleigh-based provider of B2B commerce software for manufacturers, raised $2.8 million in Series A funding led by Jurassic Capital.

Private Equity Deals

Battery Ventures bought WinWorker, a German provider of business management software and mobile tools for SME craftsmen.

Bessemer Investors acquired Leonard Valve Co., a Cranston, R.I.-based maker of water temperature control valves and monitoring devices.

ClearCourse Partnership, backed by Aquiline Capital Partners, acquired Felinesoft, a U.K.-based provider of experience design and other digital solutions for British businesses and charities.

New Heritage Capital invested in DeWinter Group, a San Francisco-based provider of temporary and permanent staffing solutions with a focus on finance, accounting, and IT.

Public Offerings

Illustration: Aïda Amer/Axios

Albertsons, the grocery chain owned by Cerberus Capital Management, filed for an IPO that Renaissance Capital estimates could raise $2 billion. The company previously filed for an IPO in 2015, but pulled it after agreeing to a never-completed merger with Rite Aid.

🚑 Ayala Pharma, an Israeli developer of treatments for genetically defined cancers, filed for a $50 million IPO. It plans to trade on the Nasdaq (AYLA) with Citigroup as lead underwriter, and raised $53 million in VC funding from Israel Biotech Fund (35.5% pre-IPO stake), aMoon (25.1%), Harel Insurance (18.5%), Novartis (7.3%), and Bristol-Myers Squibb (6.5%).

🚑 Cydan, a Cambridge, Mass.-based orphan drug accelerator, is the only company expected to go public this week on a U.S. exchange. It plans to raise $76 million, and has raised $60 million from firms like NEA, Pfizer, Alexandria Venture Investments, Lundbeckfond Ventures, and Longitude Capital.

🚑 Lyra Therapeutics, a Watertown, Mass.-based biotech focused on ear, nose and throat diseases, filed for a $58 million IPO. It plans to trade on the Nasdaq (LYRA) with BofA Securities as lead underwriter. The pre-revenue company raised $150 million in VC funding from Perceptive Advisors (32.4% pre-IPO stake), North Bridge Venture Partner (17.3%), Polaris Partners (16%), RA Capital (9.6%), Intersouth Partners (7.9%), ArrowMark Partners (7.3%), Soleus Capital (5.5%), and Clifton Capital.

🚑 Smiths Group (LSE: SMIN) is planning to spin off its medical-equipment unit via a stock float, after potential acquirers balked at a $3 billion asking price, per Bloomberg.

🚑 Zentalis Pharma, a cancer drug startup led by Anthony Sun (ex-Aisling Capital), filed for a $100 million IPO. It plans to trade on the Nasdaq (ZNTL) with Morgan Stanley as lead underwriter, and raised $147 million from Matrix Capital, Viking Global Investors, Redmile Group, Farallon Capital, Perceptive Advisors, Surveyor Capital, and Eventide Asset Management.

Liquidity Events

Firmenich, a Swiss flavor and fragrance company, agreed to buy DRT, a French provider of rosin and turpentine extracted from pine resin, for around €2 billion from Ardian, Tikehau Capital, and family shareholders.

More M&A

🚑 Acadia Healthcare (Nasdaq: ACHC) said it received several initial bids for British mental health care center operator Priori Group, which could fetch around £1 billion.

Moody’s (NYSE: MCO) acquired RBA International, a London-based provider of online retail bank training and certifications.

Pacific Equity Partners agreed to buy Australian off-grid energy producer Zenith Energy (ASX: ZEN) for A$151 million.

Prudential (LSE: PRU) this week will disclose plans to either float or sell a stake in its U.S. business (Jackson), following pressure from activist investor Third Point, per the FT.

Tesco (LSE: TSCO) agreed to sell its Thai and Malaysia supermarkets unit to Thailand’s Charoen Pokphand Group at a $10.6 billion enterprise value.


Point72, the investment firm led by Steve Cohen, is raising upwards of $900 million for a new VC/PE fund focused on artificial intelligence, per Bloomberg.

It's Personnel

Adam Heltzer joined Ares Management as a managing director and head of ESG. He previously was with Partners Group.

Final Numbers
Source: Refinitiv Deals Intelligence
Dan Primack

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