Jun 7, 2018

Axios Pro Rata

Situational awareness: The U.S. has "executed a definitive agreement with ZTE," which includes a $1 billion fine. New Jersey today is expected to legalize sports betting, following a similar move by Delaware.

Top of the Morning

Source: Giphy

PetSmart reportedly has hired restructuring advisors to help slash its $8 billion-plus debt pile, almost all of which is attributable to the retailer's 2015 buyout by BC Partners.

It's not an emergency — most of the PetSmart notes don't come due for several more years, and part of this is to capitalize on current discounts that BC may hope are fleeting — but it's the sort of thing that drives private equity critics crazy. And with good reason:

  • BC Partners did an $800 million dividend recap just one year after the acquisition, rather than paying off debt, reinvesting in the business or saving for a rainy day.
  • Now that the rainy (or at least drizzly) day has arrived, in the form of decreased profits and increased competition, it's PetSmart itself that pays for the restructuring advisors — not the private equity owners who are being paid a management fee to prevent the need for debt restructuring.
  • BC Partners bought PetSmart in early 2015, when it was obvious to absolutely everyone that specialty retail isn't immune to the move from physical to digital (i.e., this isn't like buying Toys "R" Us in 2005). Buying a popular e-commerce biz (Chewy) and having in-house vet clinics doesn't necessarily offset the rest of that brick-and-mortar expense, which becomes exacerbated by big debt.
  • A spokeswoman for BC Partners did not return request for comment.

• OEM out: GM no longer has a representative on Lyft's board of directors, with president Dan Ammenn stepping down yesterday (as first scooped by Bloomberg). We're told that his departure was in the works before last week's announcement that SoftBank is investing up to $2.25 billion into GM's self-driving car unit.

  • But make no mistake about it: The GM-Lyft relationship has deteriorated since a $500 million investment in early 2016.

Crypto nuance: SEC commissioner Jay Clayton earlier this year said, "Every ICO I've seen is a security." Brett Redfearn, the SEC's director of trading and markets, didn't explicitly contradict that yesterday in a CNBC interview, but he did create a bit more wiggle room:

"It's not as obvious as you would think. We've had a number of different products that we've looked at... not all of them are obvious on their face what they are."

Delicious update: It turns out that the maker of Necco Wafers isn't being bought by Ohio's Spangler Candy after all. Spangler — maker of those orange marshmallow "circus peanuts" — backed out at the last minute, with a bankruptcy court then moving down the bidder list to the Metropoulos family (known for reviving such companies as Hostess and Pabst Blue Ribbon).

  • Final price-tag was $17.3 million, which works out to around 17.5 billion 6-packs of Necco wafers.

Athenahealth (Nasdaq: ATHN) yesterday announced that it is for sale, following the resignation of founder and CEO Jonathan Bush and a recent $6.5 billion hostile takeover offer from Paul Singer's Elliott Associates.

  • Why it's the BFD: Because it's a multi-billion dollar collision of three otherwise unrelated trends: #MeToo (Bush admitted to assaulting his ex-wife), increased activist shareholder audacity and health data digitization.
  • Go deeper: Axios' Bob Herman on what happens next.
  • Bottom line: Elliott bid $160 per share, which now appears to be a floor.
Venture Capital Deals

Tiantianpaiche, a Chinese used car auction site, raised $100 million from Autohome (NYSE: ATHM). http://axios.link/IK8L

Nashwork, a Chinese co-working space operator, raised $78 million in Series B funding. Sino-Ocean Capital led, and was joined by China Huarong Asset Management, Deutsche Bank and Clearwater Capital. http://axios.link/2hNm

Figure Technologies, a San Francisco-based consumer credit access startup led by ex-SoFi CEO Mike Cagney, has secured $51 million of what might be a $59 million funding round, per an SEC filing. Backers include Ribbit Capital. www.figure.com

🚑 Sirnaomics, a Gaithersburg, Md.-based developer of RNAi therapeutics, raised $25 million in Series C1 funding. Yuexiu New Industrial Investment led, and was joined by Sangel Biomedical VC, HuaKong Equity Investment and Qianhai Shenghui Investment. www.siranomics.com

Meesho, an Indian “social selling” startup, raised $11.5 million in Series B funding. Sequoia India led, and was joined by return backers SAIF Partners, YC and Venture Highway. http://axios.link/4SWD

DocAuthority, an Israeli data management startup, raised $10 million in Series A funding. Raine Ventures led, and was joined by Greycroft, ff VC, Differneital VC, 2B Angels and Plus Ventures. www.docauthority.com

CloudNC, a UK-based developer of AI software for manufacturing automation, raised £9 million in Series A funding led by Atomico, per TechCrunch. http://axios.link/Ii1I

LendStreet, an Oakland-based online consumer debt restructuring and consolidation platform, raised $7 million in Series A funding co-led by Prudential Financial and Radicle Impact. The company also secured $110 million in debt financing from Prudential and CIM. www.lendstreet.com

Marshmallow, a UK-based digital car insurance startup aimed at immigrants and expats, raised $1.2 million in seed funding from Passion Capital and Investec. http://axios.link/kv4f

Private Equity Deals

Apex Group, a fund administrator owned by Genstar Capital, has acquired Ipes, a provider of fund administration services to private equity. http://axios.link/bTCB

⛽ Dalmore Capital and Swiss Life Asset Managers are part of a group that has acquired Cory Riverside Energy, owner and operator of a large incinerator in London, from Strategic Value Partners for over £1.5 billion, per the FT. http://axios.link/53TX

Ironhorse Funding, a Beverly, Mass.-based financing platform for motorcycle dealers and distributors, raised $30 million from Crestline Investors.

🍔L Catterton has invested in Goiko Grill, a Spain-based gourmet burger chain. www.goikogrill.com

L Catterton also agreed to invest $200 million for a minority equity stake in The Honest Co., a Los Angeles-based maker of natural consumer products. http://axios.link/6pGL

Milestone Partners has acquired mTAB, a provider of provides database services and cloud-based data analytics platforms. www.mtab.com

🚑 NEA has acquired Paladina Health, a Denver-based chain of primary care clinics, from DaVita (NYSE: DVA) for $100 million. http://axios.link/61Fw

Liquidity Events

Principal Financial Group (Nasdaq: PFG) has acquired RobustWealth, a Lambertville, N.J.-based digital wealth management platform that had raised around $7 million from backers like Walden Venture Capital. http://axios.link/T0oY

More M&A

🚑 Carl Icahn has acquired a small stake in Allergan (NYSE: AGN), which is under pressure from other activists and has publicly discussed divestitures, per Reuters. http://axios.link/zf2n

🚑 Fortive (NYSE: FTV) has offered to buy the medical sterilization unit of Johnson & Johnson (NYSE: JNJ) for around $2.7 billion in cash. http://axios.link/KIaF

Tencent and Zhejiang Geely Holding have agreed to acquire a 49% stake in the WiFi networking unit of state-owned China Railway Corp. http://axios.link/lw09

Wilmcote Holdings (LSE: WCH) is in talks to buy the agrochemicals unit of Platform Specialty Products (NYSE: PAH) for around $3 billion, per the WSJ. http://axios.link/YkKQ


Camber Creek has raised $30 million for its second real estate-focused VC fund. www.cambercreek.com

The Carlyle Group has partnered with OppenheimerFunds to launch a private credit fund available to high-net-worth individuals. http://axios.link/65E9

🚑 Pfizer (NYSE: PFE) is committing $600 million in new capital to its venture capital arm, with 25% allocated to investments in neuroscience startups. http://axios.link/Fxzw

It's Personnel

Priti Youssef Choksi has joined Norwest Venture Partners as a partner. She previously spent nine years at Facebook in corp dev and biz dev roles. http://axios.link/V8OP

Deutsche Bank has named Ian Dorrington and Manfred Affenzeller as heads of U.S. leveraged finance, following the departures of Scott Sartorius and Christopher Blum, per Business Insider.

Ellen Li has joined Actis as head of Asia investor relations. She previously led institutional sales for Janus Henderson Global Investors in Asia. www.act.is

Gregg Parise has joined Sweetwater Capital Partners as a managing partner. He most recently was CEO of Events.com and had been a senior advisor to SCP. www.sweetwatercapitalpartners.com

Faisal Rahman, a former Deutsche Bank exec, is joining SoftBank to help manage Middle Eastern investor relations for efforts like Vision Fund, per Bloomberg.

Jesse Searby has joined Thomas H. Lee Partners to focus on corporate development. He previously was SVP of corp dev at MyWebGrocer.

Jonathan Smidt has left KKR, where he was head of industrials and energy in Europe. http://axios.link/vfdh

Final Numbers: Tech M&A
Source: Thomson Reuters Deals Intelligence. Data through June 4.

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