Jul 8, 2020

Axios Pro Rata

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Top of the Morning

Illustration: Aïda Amer/Axios

The U.S. Treasury Department is pointing the finger at lenders for errors discovered in Monday's PPP data disclosure. Per a senior administration official:

"Companies listed had their PPP applications entered into SBA’s Electronic Transmission (ETran) system by an approved PPP lender. If a lender did not cancel the loan in the ETran system, the loan is listed."

This explanation makes the most sense for phantom loans like the one listed for e-scooter company Bird, given that the SBA shouldn't otherwise have its financial information.

What we still don't know, however, is how many errors were made. I'm now hearing more talk of audits, although it remains unclear exactly what form they would take.

There also was a ton of reporting yesterday about PPP loans received by companies with ties to people like Donald Trump, Jared Kushner, Nancy Pelosi, and Joe Biden.

  • Such disclosure carries not just the intrinsic value of transparency for taxpayers, and also serve as receipts if politicians later criticize PPP or claim to have not really supported it.
  • But, but, but: There isn't anything wrong with any of these connections, so long as the loan recipient was truthful in the application. PPP was primarily designed to keep people on payroll, whether a small-town bartender or a front-desk worker at a Trump-branded hotel. It was an intentionally blunt instrument that didn't discriminate by the wealth or connections of someone's employer.

What's next: Soon we could get a better picture about how many payrolls were actually protected, as loan forgiveness applications are submitted and processed.

  • Treasury provided an estimate of 51 million jobs, but that's already coming under scrutiny (and not just because of phantom loans).

🏈 The XFL, a bankrupt pro football league, has set July 30 as the deadline for formal acquisition bids, Axios has learned from a source close to the process.

  • Word is that there were several indicative offers that came in by an earlier June 22 deadline, with prospective bidders coming from both the media/entertainment and pro sports worlds. My source says that these offers were for the entire league — not select assets — although I've been unable to get secondary confirmation.
  • One reason that there may be greater-than-expected interest is that any buyer could have extra runway to relaunch, given that established sports leagues remain either closed or diminished due to the pandemic.

Succession planning: Levine Leichtman Capital Partners, a 36 year-old private equity firm, today announced a formal succession plan. Co-founders Arthur Levine and Lauren Leichtman remain co-chairs of the executive and investment committees, but no longer will oversee day-to-day or investment operations.

  • Steve Klinsky has relinquished some ownership of New Mountain Capital, which he founded in 1999. Per public pension docs, firm managing directors now hold at least a 23% position in the buyout firm.
  • Steve Spurlock is retiring from VC firm Benchmark, where he's run operations and legal for 21 years, Axios has learned. His successor will be An-Yen Hu, who is joining from Goodwin Procter.

🎧 Axios Re:Cap has a double shot for you:

  • Our "regular" podcast focused on what Ghislaine Maxwell might know about Jeffrey Epstein's financial ties. We also posted an extra episode in which I spoke with the four lead organizers of the Facebook ad boycott, just hours after they met with Mark Zuckerberg.
  • Find the pods on Apple, Spotify, or Axios.

Illustration: Annelise Capossela/Axios

AMC Entertainment (NYSE: AMC) is nearing a restructuring deal that would let it avoid bankruptcy, per the WSJ.

  • Why it's the BFD: AMC is the country's largest cinema chain, last year serving more than 250 million U.S. attendees, but its screens have been dark since the pandemic began.
  • More movies: AMC and other theater owners yesterday sued New Jersey's governor for blocking them from reopening. In Canada, Cineplex said it plans to raise C$275 million in new debt, as it continues a legal battle over its failed takeover by Cineworld.
  • The bottom line: "The proposed deal would require bondholders [including Apollo Global Management] to provide a $200 million senior loan and to swap their unsecured claims at a discount for new, second-lien debt, people familiar with the matter said. Private equity firm Silver Lake, which has a representative on the company's board and owns $600 million of convertible bonds, would swap for first-lien debt." — Alexander Gladstone, WSJ
Venture Capital Deals

🚑 Vor Biopharma, a Cambridge, Mass.-based engineered cell therapy startup, raised $110 million in Series B funding. RA Capital Management led, and was joined by Fidelity, Pagliuca Family Office, Alexandria Venture Investments, and return backers 5AM Ventures, Johnson & Johnson Innovation, Osage University Partners, and PureTech Health. http://axios.link/obmO

Karma Automotive, the reincarnation of electric carmaker Fisker Auto, raised $100 million in new funding, per Bloomberg. http://axios.link/HOPD

LeanIX, a German enterprise architecture software startup, raised $80 million in Series D funding. Goldman Sachs Growth led, and was joined by return backers Insight Partners and DTCP. http://axios.link/AcUi

🚑 Doctor On Demand, a San Francisco-based virtual care provider, raised $75 million in Series D funding led by General Atlantic. www.doctorondemand.com

Growers Edge, a Johnston, Iowa-based provider of fintech products for farmers, raised $40 million in Series B funding from by S2G Ventures, Cox Enterprises, and Skyline Global Partners, Bunge Ventures, and Finistere Ventures. www.growersedge.com

Natron Energy, a Santa Clara, Calif.-based developer of sodium-ion batteries, raised $35 million in Series D funding. ABB Technology Ventures, NanoDimension Capital and Volta Energy Technologies co-led, and were joined by return backers Chevron, Khosla Ventures, and Prelude Ventures. www.natron.energy

🚑 VarmX, a Dutch biotech startup focused on reversing anticoagulation, raised €32 million in Series B funding from Ysios Capital, INKEF Capital, Lundbeckfonden Ventures, LSP, BioGeneration Ventures, and InnovationQuarter. www.varmx.com

Apiture, a digital banking experience startup formed by Live Oak Bank and First Data, raised $20 million from T. Rowe Price and Pinnacle Bank. http://axios.link/6Z1O

Farewill, a British digital platform for writing wills, raised £20 million in Series A funding. Highland Europe led, and was joined by Keen Ventures, Rich Pierson of Headspace, Broadhaven Ventures, Venture Founders, Augmentum Fintech, and Kindred Capital. http://axios.link/Zklu

Wagestream, a London-based income streaming startup, raised £20 million in Series B funding from QED Investors, Latitude Ventures, and Balderton Capital. www.wagestream.com

Liquid Wire, a Beaverton, Ore.-based liquid metal circuitry startup, raised $10 million in Series A funding led by Deerfield Management. http://axios.link/kRls

Second Front Systems, a San Francisco-based developer of national security software, raised $6 million in seed funding. Artis Ventures led, and was joined by Kleiner Perkins, 8VC, Gula Tech Adventures, and Abstract Ventures. http://axios.link/J5cL

PQShield, a British post-quantum cryptography startup, raised £5.5 million in seed funding. Kindred Capital led, and was joined by Crane Venture Partners and Oxford Sciences Innovation. http://axios.link/83Mh

Wintermute, an algorithmic liquidity provider for digital assets, raised $2.8 million in Series A funding led by Lightspeed Venture Partners. http://axios.link/Xt3I

Nayya, a New York-based employee benefits management startup, raised $2.7 million in seed funding. Social Leverage led, and was joined by Guardian Strategic Ventures, Cameron Ventures, and Soma Capital. http://axios.link/Iwtb

MonkeyLearn, a San Francisco-based no-code AI text analysis service, raised $2.2 million co-led by Uncork Capital and Bling Capital. http://axios.link/AZ4r

Private Equity Deals

Computer Design & Integration, a New York-based portfolio company of One Equity Partners, acquired Plan B Technologies, a Bowie, Md.-based IT solutions and professional services provider. www.cdillc.com

GB Auto Service, a Tucson, Ariz.-based vehicle repair company owned by Greenbriar Equity Group, acquired Sun Devil Auto Service. www.brakemax.com

HgCapital acquired a majority stake in F24, a pan-European emergency notification provider. http://axios.link/fPlY

KKR agreed to acquire Global Atlantic Financial Group, a Bermuda-based retirement and life insurance company, for approximately $4.4 billion. Sellers include Pine Brook Road Partners and Goldman Sachs. www.globalatlantic.com

Silver Lake agreed to buy French payroll software provider Silae for more than €500 million. http://axios.link/tJUf

Public Offerings

Illustration: Aïda Amer/Axios

Rocket Companies, a Detroit-based mortgage lender operating under the Rocket Mortgage and Quicken Loans brands, filed for an IPO that Renaissance Capital estimates could raise $3 billion. It plans to list on the NYSE (RKT), and reports $97 million of net income on $1.37 billion in revenue for Q1 2020, and is controlled by chairman Dan Gilbert. http://axios.link/Ic0y

Liquidity Events

🚑 CVC Capital Partners hired Morgan Stanley and Rothschild & Co. to help it find a buyer for French private medical chain Elsan, which could fetch around €3 billion, per Bloomberg. http://axios.link/YyE9

Docusign (Nasdaq: DOCU) acquired Liveoak Technologies, an Austin, Texas-based e-signature platform, for around $38 million. Liveoak raised $28 million from such firms as Broadhaven Capital Partners, Seven Peaks Ventures, and Wild Basin Investments. http://axios.link/6Efl

More M&A

Allstate (NYSE: ALL) agreed to buy auto insurer National General Holdings (Nasdaq: NGHC) for around $4 billion in cash, representing around a 69% per share premium to Tuesday’s closing price. http://axios.link/3gdI

Brooks Brothers, the oldest U.S. apparel retail, filed for Chapter 11 bankruptcy protection and said it will close 51 stores. http://axios.link/pQDz

Corelogic (NYSE: CLGX) rejected an unsolicited $7 billion takeover offer from Cannae Holdings (NYSE: CNNE) and Senator Investment Group. http://axios.link/rY0W

Itochu (Tokyo: 8001) is launching a $5.5 billion tender offer for the 49.9% stake it doesn’t already own in Japanese convenience store operator FamilyMart (T: 8028). http://axios.link/bA0A

🚑 Medtronic (NYSE: MDT) made a takeover offer for Intersect ENT (Nasdaq: XENT), a Menlo Park-based medical device maker with a market cap of around $450 million, per Bloomberg. http://axios.link/BCms

Steinhoff International (JSE: SNHJ) agreed to sell its stake in French furniture retailer Conforama France to Mobilux. http://axios.link/FZhQ


DCM, a U.S. venture fund with a China focus, raised $880 million for its tenth fund. http://axios.link/YjET

Navegar, a Philippines-focused private equity firm, raised $197 million for its second fund. http://axios.link/oKw6

It's Personnel

Nicholas Basso joined Peak Rock Partners as a managing director focused on credit investments. He previously was a managing director with Oaktree Capital Management. www.peakrockcapital.com

Noel Goggin, CEO of retail tech software company Aptos, joined Bridge Growth Partners as a senior advisor. www.bridgegrowthpartners.com

Kayne Anderson Capital Advisors named Jon Levinson and J.C. Frey as co-heads of the firm’s renewable energy investment unit. www.kaynecapital.com

Daniel Kim joined mid-market private equity firm HKW as a partner. He previously was a partner and co-founder of Bregal Sagemount. www.hkwinc.com

🚑 Steve Schiess and William Klitgaard joined Avista Capital Partners as operating executives focused on health care investments. Schiess previously was CEO of Zest Dental Solutions, while Klitgaard was president of LabCorp subsidiary Enlighten Health. www.avistacap.com

Final Numbers: VC-backed PPP loan recipients
Source: CB Insights
  • CB Insights also found that the VC firms with the most portfolio companies receiving PPP loans were Plug and Play, Y Combinator, Techstars, and New Enterprise Associates.

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