Jan 12, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

• Be aggressive. Be be aggressive. LevFin Insights yesterday told clients that while "market technicals are helping to drive strong investor demand for the first members of the class of 2017 LBO financings, these early deals again find sponsors taking an aggressive stance on documentation." The group adds that this trend -- which relates to everything from covenants, incremental leverage to repricing language -- began first emerging in the final few months of 2016. LevFin Insights managing director Kelly Thompson summed it up thusly, via email: "Nothing is sacrosanct anymore. Everything is open for discussion."

• Hit the road: AppDynamics is launching its IPO roadshow today, as it looks to become the first large tech IPO of 2017, per multiples sources familiar with the situation. But the early headline is likely to be how it's seeking to raise at a lower valuation than its most recent VC infusion, which was $1.9 billion in late 2015 (yes, participants in that Series F round included anti-dilution provisions). Hitting the high end of its proposed IPO terms (12m shares at $10-$12) would only give AppDynamics a $1.5 billion market cap.

First three banks listed are Morgan Stanley, Goldman Sachs and J.P. Morgan. AppDynamics reports a $95 million net loss on $158 million in revenue for the nine months ending 10/31/16.

• Drug dump: A big business story from yesterday's PEOTUS press conference was Trump's apparent interest in taking on pharmaceutical companies, which he said are "getting away with murder." He didn't give any specifics as to what he plans to do about it, but drug stocks tanked anyway (and still haven't fully recovered). Sellers likely were most worried about Medicare price renegotiations, although I also wonder if Trump ― who counter-intuitively seems suspicious of big company mergers ― could try to use FTC action as his stick.

• Buzzy bedfellows: Speaking of Trump, the PEOTUS has been very complimentary of SoftBank over the past few weeks. Wonder if he's aware that it was an early investor in that online media company he just called a "failing pile of garbage." And it's still on the cap table.

• Back in market: Los Angeles-based Crosscut Ventures is in market with its fourth fund, according to an LP source. There's a chance that it could more than double the size of its current $75 million vehicle.

• Still in market: Double Impact, the Bain Capital social impact fund launched in 2015 by ex-Mass. Governor Deval Patrick still hasn't closed, although a source says it does have the ability to make investments.

• Cross-border: Chinese venture capital firm Qiming Venture Partners is raising what appears to be a new fund focused on U.S. healthcare startups, per an SEC filing. It's very common for U.S. VC firms to raise dedicated China funds, but it's quite unusual to see it go in the opposite direction.

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Funding Circle, a London-based peer-to-peer lending marketplace for small businesses, has raised $100 million in new equity funding at a valuation in excess of $1 billion. Accel led the round, and was joined by return backers Baillie Gifford, DST Global, Index Ventures, Ribbit Capital, Rocket Internet, Sands Capital Ventures, Temasek and Union Square Ventures.

Why it's the BFD: This is a loud vote of investor confidence in an online lending space that just experienced a difficult year. The LendingClub scandal. British regulators saying that they plan to propose stronger P2P lending rules, particularly related to marketing. The perpetually-depressed stock price of On Deck Capital (not P2P, but focused on same small biz space as Funding Circle). And none of that even addresses the challenges of being a UK-based P2P lender operating globally in the looming era of Brexit.

Venture Capital Deals

• Studio71, a Los Angeles-based multi-channel media company owned by ProSiebenSat.1, has raised €53 million in new equity funding from broadcasters TF1 Group (France) and Mediaset (Italy) at around a €400 million post-money valuation. ProSiebenSat.1 retains around a 70% stake. http://bit.ly/2j415WV

• EasyStack, a provider of open cloud solutions and services for Chinese enterprise customers, has raised $50 million in Series C funding. China's Cash Capital led the round, and was joined by several other unidentified RMB funds. http://bit.ly/2inoaFg

• EZ Cater, a Boston-based business catering platform, has raised $35 million in Series D funding. Iqonic Capital led the round, and was joined by return backer Insight Venture Partners. http://bit.ly/2ienovS

• FarmLogs, an Ann Arbor, Mich.-based startup that helps farmers digitally manage their farm to increase profitability, has $22 million in Series C funding. Naspers Ventures led the round, and was joined by Drive Capital, Huron River Ventures, Hyde Park Venture Partners, SV Angel and Sam Altman. http://tcrn.ch/2idombB

• POC Medical Systems, a Livermore, Calif.-based, has raised $21 million in Series A funding. BioVentures led the round, and was joined by Sirius America Insurance Company, IFG Healthcare and MIA Investment Ltd. www.pocmedicalsystems.com

• CompareEuropeGroup, a consumer price comparison site, has raised €20 million in Series A funding. Ace & Co. led the round, and was joined by Pacific Century Group, Nova Founders Capital, SBI Holdings, Peter Thiel and Mark Pincus. http://tcrn.ch/2iGtyRo

• SmarterHQ, an Indianapolis-based provider of personalized marketing software, has raised $13 million in new VC funding. Spring Lake Equity Partners led the round, and was joined by return backers Battery Ventures and Simon Venture Group. http://bit.ly/2iLWdI7

• Velocidi, a New York-based, has raised $12 million in its first round of institutional funding since being founded in 2010. Pilot Growth Equity Partners led the round, and was joined by Neuberger Berman Group. http://bit.ly/2jaLd6G

• Gravy Analytics, a Leesburg, Va.-based provider of mobile audience analytics, has raised $7.7 million in new VC funding. Spring Lake Equity Partners led the round, and was joined by Gaspar Global Ventures, Loeb Holding Corp. and company chairman Richard Braddock. http://bit.ly/2jaOFPp

• Trackforce, a San Diego-based provider of physical security software, has raised $7.4 million in growth equity funding from Five Elms Capital. http://bit.ly/2jzrCu4

• Clearwater Clinical, an Ottawa-based provider of mobile devices and cloud-based data management solutions for the hearing health market, has raised C$6 million in Series A funding led by Whitecap Venture Partners. www.cleasrwaterclinical.com

• Kuli Kuli, a U.S. food startup focused on a plant called moringa, has raised $4.25 million in Series A funding. Eighteen94 Capital led the round, and was joined by S2G Ventures and InvestEco. http://tcrn.ch/2iGtyRo

• Roambee, a Santa Clara, Calif.-based physical asset monitoring startup, has raised $3.1 million in strategic funding from Deutsche Telekom. http://tcrn.ch/2jH8YEP

Private Equity Deals

• CHA Consulting, an Albany, N.Y.-based portfolio company of Long Point Capital, has acquired an unspecified stake in American Fire Protection, a Birmingham, Ala.-based maker and servicer of fire protection systems. No financial terms were disclosed. www.chacompanies.com

• CPP Investment Board has acquired a 48% stake in India-based digital products outsourcing firm GlobalLogic from Apax Partners (which retains another 48%) No financial terms were disclosed, but Economic Times puts the enterprise value at around $1.5 billion. http://bit.ly/2jaZ7qb

• CVC Capital Partners is in advanced talks to acquire MSC Software Corp., a Newport Beach, Calif.-based simulation software company owned by Elliott Associates and Symphony Technology Group, according to Reuters. A deal could be valued at more than $800 million. http://reut.rs/2jHwf9m

• McDonald's (NYSE: MCD) is seeking bidders for up to a 33% stake in its Japan business, according to the WSJ. Morgan Stanley is running the process, with bids expected next week from several private equity firms. The news comes just after McDonald's agreed to sell an 80% stake in its China business to Citic Capital and The Carlyle Group for just over $2 billion. http://on.wsj.com/2jmINjh

• McNally Capital has acquired Dedicated Computing, a Waukesha, Wis.-based original design manufacturer of computing systems for OEM customers. No financial terms were disclosed. www.dedicatedcomputing.com

• Multifuels Midstream Group, a Houston-based portfolio company of Warren Equity Partners, has purchased 124 miles of high-pressure gas pipeline in Central Texas from an unidentified, publicly-based MLP. www.multifuels.com

• RedBird Capital Partners and Ontario Teachers' Pension Plan have invested in Compass Datacenters, a Dallas-based wholesale datacenter developer. No financial terms were disclosed. www.compassdatacenters.com

• Stern Partners, a Canadian private equity firm, has acquired a majority stake in Vancouver-based LGBT television network OUTtv (which will switch over to a Netflix-type model). No financial terms were disclosed. http://bit.ly/2jzqB5o

• TA Associates has invested in Think Project, a Munich-based provider of cross-enterprise collaboration and workflow software to the construction and engineering industries. No financial terms were disclosed. www.thinkproject.com

Public Offerings

• Bank of Jiujiang, a lender in eastern China, is prepping a $500 million Hong Kong IPO, per Bloomberg. http://bloom.bg/2jaeHCj

• PappaRich, a Malaysian quick-serve restaurant chain, is prepping an IPO that could value the company at a minimum of $140 million, per Bloomberg. http://bloom.bg/2jGM8x8

Liquidity Events

• GTCR and Canondale Investments have sold Avention, a Concord, Mass.-based provider of business lead generation and related tools, to Dun & Bradstreet (NYSE: DNB) for $150 million. http://bit.ly/2jHn1Ko

• Onex Corp. has hired Bank of America to help it explore a sale of USI Insurance Services, a Valhalla, N.Y.-based insurance brokerage that could be valued at upwards of $4 billion (including debt). http://reut.rs/2j43AbI

More M&A

• Atlas Copco, a Swedish industrials group, said that it is seeking a buyer for its road equipment construction unit. www.atlascopco.com

• Johnson & Johnson (NYSE: JNJ) has "tentatively agreed" on a price at which to acquire Acetlion (SWX: ATLN), accoding to Bloomberg. J&J last year had offered to acquire the Swiss biotech company at more than $28 billion, or $260 per share. The new deal would include a spinout of Actelion's R&D unit into a separate company. http://bloom.bg/2inzfWN


• Correlation Ventures has closed its second fund with $200 million in capital commitments. www.correlationvc.com

• Hidden Harbor Capital Partners is raising up to $250 million for its debut fund, according to an SEC filing. The Florida-based firm was founded last year to make control investments in lower middle market companies. http://bit.ly/2ijKbRM

It's Personnel

• Dominique Boies has joined Montreal-based renewable chemicals company Enerkem as CFO and EVP. He is a former private equity investment manager with Caisse de dépôt et placement du Québec, after which he joined Canadian retailer Rona as CFO. www.enerkem.com

• Andy Hayes has joined fund placement and advisory firm FirstAvenue as a Dallas-based principal. He previously was a private equity officer at the Oregon State Treasury. www.firstavenue.com

• Phil Kwun has joined investment bank Mooreland Partners as a managing director. He previously was a managing director with Sonenshine Partners. www.moorelandpartners.com

• James Newell has quietly become a partner with Seattle-based Voyager Capital, after having spent the past three years as a principal with Institutional Venture Partners.

• Ken Pontarelli is retiring from Goldman Sachs, where he helped lead private equity investments in the energy sector, according to Reuters. http://reut.rs/2jHuqcH

• Matt Ross has quietly joined Verizon as a manager of strategic product innovation. He previously was with Trucks.vc and the Zull-Lurie Commercialization Fund.

• Paul Zolfaghari, former president of MicroStrategy (Nasdaq: MSTR), has agreed to join private equity firm Carrick Capital Partners as an operating executive. www.carrickcapitalpartners.com

Final Numbers
Dan Primack