May 24, 2018

Axios Pro Rata

Situational awareness: The White House just sent a letter to North Korea, saying the June 12 summit won't happen. Stocks fell sharply on the news.

Top of the Morning

Source: Giphy

Ride-hail companies still aren't profitable, but they sure are good at raising money. The latest from the land of "noooooo.... why is the icon going in the opposite direction?"

  • Uber reported Q1 2018 financials yesterday, showing significantly increased revenue and shrinking losses, as it continues to prep for a 2019 IPO. Full details here.
  • Uber also launched another tender offer, letting early employees and investors sell up to $600 million of shares at an implied $62 billion valuation (more than what SoftBank paid but less than what the Saudis paid... except for what the Saudis paid via SoftBank... yeah, it's complicated).
  • Coatue Management is leading the tender, with existing Uber backers Altimeter and TPG also participating. Yes, Coatue once led a large round for Lyft, but word is that it's been slowing selling off that position. Not because of Lyft, per se, but because it has shorter-than-usual private fund cycles and has been liquidating much of its first "Kona" fund portfolio via secondary sales.
  • Kia has learned that SoftBank has committed to invest in Getaround, a San Francisco-based peer-to-peer car rental service. Word is that the company had been targeting around $100 million, although the final figure might differ a bit.
  • Kia also just posted a smart piece on differences between the e-hail economy and the e-scooter economy.
  • Grab's $1 billion-targeted round remains in market. And Bloomberg reports that Middle East-focused Careem is in market for $500 million.

• "Par is the new discount." That's the message of a new report on the private equity secondaries market from Credit Suisse, which says pricing hit record highs in 2017. Average prices for PE fund interests were 96% of NAV, while higher quality funds regularly went for 110% of NAV.

• North of the border: Canadian regulators have blocked China's CCC International from buying Toronto-listed construction and infrastructure development company Aecon Group. for C$1.5 billion (including debt), citing national security concerns.

  • Why it matters: This is the first time Justin Trudeau's government has ever blocked a major foreign merger, and reflects that the U.S. isn't the only place where Chinese acquirors are facing regulatory challenges.

• Intelligence: Cerberus Capital Management is seeking to sell U.S. defense contractor DynCorp, which could fetch more than $1.3 billion, per Reuters.

  • This is a good time to remind you that President Trump recently appointed Cerberus CEO Stephen Feinberg to chair a White House intelligence advisory board, despite his firm's ownership of a large U.S. defense contractor.
Via Getty Images

Spangler Candy, the Ohio-based maker of Dum Dums lollipops and those orange marshmallows shaped like circus peanuts, has agreed to buy New England Confectionary Co. out of bankruptcy for $18.8 million. Losing bidders were Gordon Brothers and Round Hill Investments.

  • Why it's the BFD: Because this averts a looming crisis for Valentine's Day 2019 (Necco originated those little candy hearts w/ messages on them), while also guaranteeing that my father can continue to eat his treasured Clark Bars. Plus, this saves 232 jobs in Revere, Mass. (at least for now), as one of the other bidders had been a liquidator.
  • History, via WBUR: "Union soldiers fighting in the Civil War carried Necco Wafers, the company says. So did GIs during World War II; the War Department bought them by the caseload and sent them to Europe and the Pacific because they didn't melt and seldom broke during shipping."
  • Bottom line: "We're very excited... well, because it's candy," Kirk Vashaw, Spangler’s chairman and CEO, to The Boston Globe.
Venture Capital Deals

🚑 Brii Biosciences, a startup aiming to “accelerate the development and delivery of breakthrough medicines in China,” raised $260 million in first-round funding from ARCH Venture Partners, 6 Dimensions Capital, Boyu Capital, Yunfeng Capital, Sequoia Capital and Blue Pool Capital.

🚑 CareZone, a San Francisco-based mobile app for managing chronic health conditions, raised $50 million in Series D funding led by return backer NEA.

• Reltio, a Redwood Shores, Calif.-based “self-learning data platform,” raised $45 million in Series D funding. NEA led, and was joined by fellow insiders Crosslink Capital, .406 Ventures and Sapphire Ventures.

🚑 Strata Oncology, an Ann Arbor, Mich.-based precision oncology platform, raised $26 million in Series B funding. Pfizer Ventures, Merck Global Health Innovation Fund, Deerfield Management and Renaissance VC Fund were joined by return backers Arboretum Ventures and Baird Capital.

Superpedestrian, a Cambridge, Mass.-based maker of hardware and software for e-bikes and e-scooters, raised $16.5 million in Series B-1 funding from Spark Capital, General Catalyst, Charles Kim and Tony Fadell’s Future Shape.

• Abstract, a San Francisco-based design workflow system, raised $16 million in Series B funding. Scale Venture Partners led, and was joined by return backers Amplify Partners and Cowboy Ventures.

Sentry, a San Francisco-based provider of application performance management solutions for developers, raised $16 million in Series B funding from insiders Accel and NEA.

Amuse, a Stockholm-based digital music label, raised $15.5 million in Series A funding co-led by Lakestar and Raine Ventures.

Hugging Face, a New York-based chatbot startup, raised $4 million in seed funding led by A.Capital Ventures.

👓 Wires Glasses, a London-based eyewear startup, raised an undisclosed amount of seed funding from True Ventures.

Private Equity Deals

⛽ Actis has agreed to acquire an 88% stake in a 100-mw wind power project in Kenya.

Electra Private Equity, a London-listed alternative investment trust, formally put itself up for sale and also said it has had discussions over selling parts of its portfolio.

Golden Gate Capital is considering a merger of portfolio companies Eddie Bauer and Pacific Sunwear, according to Reuters.

Patriot Erectors, a Dripping Springs, Texas-based steel fabrication and erector company, has raised an undisclosed amount of private equity funding from Ranch Creek Partners and Hillstar Capital.

Permira has agreed to acquire a majority stake in WeddingWire, a Chevy Chase, Md.-based wedding services marketplace, for $350 million. Sellers include Spectrum Equity, which will retain an ownership stake.

The Riverside Company has invested in Destiny Solutions, a Toronto-based provider of student lifecycle management SaaS.

Public Offerings

• Adyen, a Dutch payments platform that has raised more than $250 million in VC funding, said that its upcoming IPO will be on the Euronext Amsterdam. It also confirmed that the expected valuation will be between €6 billion and €9 billion.

🚑 Aptinyx, an Evanston, Ill.-based developer of therapeutics for treating neurologic disorders, filed for an $80 million IPO. It plans to trade on the Nasdaq (APTX), with J.P. Morgan as lead underwriter. The company has raised around $135 million in VC funding, from firms like Adams Street Partners (14.85% pre-IPO stake), New Leaf Ventures (11.63%), Longitude Venture Partners (11.63%), Frazier Life Sciences (11.63%), Bain Capital Life Sciences (6.98%) and LVP Life Science Ventures (5.71%).

Autodis, a French spare auto parts distributor owned by Bain Capital, has suspended a planned IPO that had been expected to value the company north of $1.5 billion. It blamed a “cautious” market for the move.

Evo Payments, an Atlanta-based payment solutions company owned by Madison Dearborn Partners, raised $224 million in its IPO. The company priced 14 million shares at $16 (high end of range), for a fully-diluted market value of around $1.9 billion. It began trading on the Nasdaq (EVOP) and closed its first day up at $19.02 per share. J.P. Morgan was lead underwriter.

GreenSky, an Atlanta-based digital lending platform, raised $874 million in its IPO. The company priced around 34 million shares at $23 per share (high end of range), and had raised over $600 million from firms like TPG Growth, Pimco, DST Global, ICONIQ Capital, QED Investors and Wellington Management.

🚑 Kiniksa Pharmaceuticals, a Lexington, Mass.-based biotech company focused on inflammatory disease, raised $152 million in its IPO. The pre-revenue company priced 8.44 million shares at $18 (extra shares, middle of proposed range), for a fully-diluted market value of around $931 million. It will trade on the Nasdaq (KNSA) while Goldman Sachs was lead underwriter. Kiniksa had raised $320 in VC funding from firms like Baker Brothers and Arrowpoint Funds.

🚑 Scholar Rock, a Cambridge, Mass.-based developer of drugs that target suprecellular activation of growth factors, raised $75 million in its IPO. The company priced 5.36 million shares at $14 (middle of range), for an initial market cap of $342 million. It will trade on the Nasdaq (SRRK) while Jefferies was lead underwriter, and had raised around $100 million in VC funding from firms like Fidelity (14.94% pre-IPO stake), Polaris Partners (14.1%), Arch Venture Partners (13.82%), Astal International (10.2%) and EcoRI Capital (5.22%).

Liquidity Events

Kroger (NYSE: KR) has agreed to buy Home Chef, a Chicago-based meal-kit company. The deal is valued at upwards of $700 million, including $200 million upfront. For context, Blue Apron’s current market cap is around $570 million. Home Chef had raised around $52 million in VC funding, from firms like L Catterton, Shining Capital and Guild Capital.

Paddy Power Betfair (Ireland: PPB) has agreed to buy fantasy sports site FanDuel, by merging FanDuel with PPB's U.S. operations and contributing $158 million in cash. FanDuel had raised $435 million in venture capital funding from firms like KKR, NBC Sports, Shamrock Capital Group, Comcast Ventures and the NBA.

More M&A

Coinbase has agreed to acquire crypto trading relay platform Paradex.

Smurfit Kappa (Ireland: SKG) has agreed to acquire Dutch paper and recycling company Reparenco for around €460 million, as it seeks to stave off a takeover attempt by International Paper (NYSE: IP).

Reliance Worldwide (ASX: RWC) agreed to buy British plumbing supplies business John Guest Holdings for around US$923 million.

Vontobel (Swiss: VONN) has agreed to acquire Swiss private bank Notenstein La Roche from Raiffeisen for around $705 million.

VTB, Russia’s second-largest bank, has sold a 12% stake in listed Russian food retailer Magnit for around $1.02 billion to Marathon Group. VTB retains a 17.3% position.


MSouth Equity Partners of Atlanta has raised nearly $800 million for its fourth fund, per an SEC filing.

It's Personnel

Ken Gonzalez has joined NightDragon Security, a cybersecurity-focused VC firm led by Dave DeWalt, as a managing director. He previously was a managing director with Trident Capital Cybersecurity.

Julia Kaufman and Elliott Parker have joined Indianapolis-based venture studio High Alpha as VP of HR and managing director of corporate innovation, respectively. Kaufman previously was with Salesforce, while Parker was with consulting firm Innosight.

Probitas Partners, a San Francisco-based fund placement agent, has promoted three staffers to managing director: Caryn Feinberg, Haakon Gresvig and Ray Tsao. It also hired John Caley (ex-Grubb & Ellis) as a managing director on the real estate team.