Pro Rata - Axios

Axios Pro Rata

Pro Rata

Repeat greetings from the Milken Conference in Los Angeles, where this morning I'll be moderating a panel on how technology is changing the finance market (panelists some from Google, Citi, SoFi, Two Sigma and Citadel). If you've got good questions, please shoot them over. Here we go...

Top of the Morning

Infravest: Transportation Sec. Elaine Chao explained yesterday that public-private partnerships will be a key part of the Administration's infrastructure plan, but was noncommittal on the rest (outside of streamlining permitting regulations). She did say, however, that there has been some talk about the pros and cons about tying together the various infrastructure banks that effectively live within different federal departments (including DOT). This came after Virginia Gov. McAuliffe said that low-interest federal loans "are the only way I can bring the private equity folks in" for infrastructure projects.

One other idea that got a lot of panel discussion was bundling, or the concept of tying funds for projects with user fees to projects without user fees. This is important because there is no way private investors are going to help rebuild a bridge or tunnel that has no recurring revenue stream.

Next: Last week we reported that Lowercase Capital founder Chris Sacca was retiring from startup investing, but that we didn't yet have details on the future plans of his Lowercase Capital partner, Matt Mazzeo. We've now learned from multiple sources that Mazzeo is partnering with Jonathan Teo and Justin Caldbeck, in what likely will be a re-branded version of their three-year old firm, Binary Capital. For Mazzeo, this is basically a move upstream from seed to Series A investing. No comment from any of the principals, natch.

New fund alerts: Two VC firms focused on real estate technology are announcing debut fund closes today:

  1. Moderne Ventures has closed its debut fund with $33 million. This is a Chicago-based group led by Constance Freedman, a onetime real estate agent who previously launched and managed an investment arm (Second Century Ventures) for the National Association of Realtors. Its focus is on startups in the real estate, finance, insurance and home services markets – usually for companies that already have between $2 million and $15 million in revenue. It also runs an accelerator/innovation program for companies of all sizes – out of Realogy Corp.'s headquarters – and seems to kind of operate like an outsourced VC group for many of its strategic LPs.
  2. Fifth Wall Ventures has closed its debut fund with $212 million from some of the largest players in real estate, including CBRE, Prologis, Hines, Lennar, Host Hotels, Equity Residential and Macerich Properties. The investment strategy is to work with these LPs to learn their pain points, back startups working on solutions and then introduce those startups to their LPs for strategic partnerships. Co-founder Brendan Wallace (co-founder of Cabify, ex-Blackstone Group): "Technology risk is not usually what determines success or failure for real estate startups, because the solutin is almost always better than the status quo. The issue is go-to-market and distribution risk. For certain companies, if they fail to sell to CBRE they're probably going to fail overall."

• Division of tech labor: President Trump yesterday announced the creation of something called the American Technology Council, which is aimed at modernizing IT and digital government services. I asked White House advisor Reed Cordish how this differs from the existing U.S. Digital Service, and he replied that the former will focus on strategy while the latter will focus on execution. Still reads mostly like re-branding.

From yesterday: (1) A bunch of you emailed and tweeted about your confusion over that Chinese pig farm operated by an Internet company. Well, the intersection of IT and pork production can also be found closer to home. (2) I messed up in saying ex-Advent IR pro Maggie Sahlman was joining Riverstone. She's joining BearTooth Advisors, the placement agency co-founded by fellow Advent alum Bob Brown (who also helps run IR for Riverstone). Apologies.

Dream scenario: Airline executives arrive on Capitol Hill today for a hearing that is expected to result more in reprimands than in legislative results. What I hope to hear from the chair after everyone is seated: "Thank you so much for coming. Unfortunately, we need to postpone this hearing because of weather inside the chamber, and we are rescheduling for tomorrow afternoon. What? How can there be inclement weather inside the chamber. I don't know sir. I'm not a meteorologist nor facilities manager. My computer tells me it's an indoor weather problem, and the people who control these decisions don't have inbound phone lines."

The BFD

Airbnb yesterday announced a settlement agreement with San Francisco over the issue of short-term rental laws.

  • Why it's the BFD: This is a big brick in the home-sharing unicorn's path to IPO, as sources have said that the offering will not come before there is more regulatory certainty in a small handful of key markets. San Francisco was one of these, more because of its status as home base than because of its percentage of revenue. Next up is New York City, since that's where the company would list (either on NYSE or NASDAQ).
  • But: Airbnb chief biz/legal officer Belinda Johnson was asked yesterday at Milken for a single salient point made by New York regulators. She couldn't come up with one.

Venture Capital Deals

WuXi NextCODE, a Chinese contract genomics company, has raised $75 million in Series B funding. Yunfeng Capital and Temasek co-led the round, and were joined by Amgen Ventures and 3W Partners. https://bloom.bg/2pAq9Yw

• Head InfoTech, an India-based skill-based gaming platform, has raised $73.7 million in funding led by Canada's Clarivest. http://bit.ly/2oT17XD

• Convene, a New York-based network of on-demand meeting and event venues, has raised $68 million in Series C funding. Return backers ArrowMark Partners, Brookfield Property Partners and Conversion Venture Capital were joined by new investors The Durst Organization and Elysium Management. http://for.tn/2prcvZy

• ServiceChannel, a New York-based SaaS platform and vertical marketplace for facilities management, has raised $54 million in new funding led by Accel. http://bit.ly/2pB8IHv

• Advanced Cardiac Therapeutics, a Santa Clara, Calif.-based developer of an ablation catheter to treat cardiac arrhythmias, has raised $45 million in new VC funding. Ajax Health led the round, and was joined by Questa Capital Management and return backer NEA. www.actmed.net

• Calysta, a Menlo Park, Calif.-based developer of proteins for commercial aquaculture and livestock feed, has raised $40 million in Series D funding. Mitsui & Co. led the round, and was joined by Cargill, the Municipal Employee Retirement System of Michigan, Walden Riverwood Ventures, Aqua-Spark and Pangaea Ventures. http://bit.ly/2pDNlYe

• Fornova, a London-based provider of online distribution software for the hotel market, has raised $17 million in Series B funding. Deutsche Telekom Capital Partners led the round, and was joined by Waypoint Capital and return backer JAL Ventures. http://bit.ly/2qtnlg1

• Bitfusion, an AI lifecycle management platform, has raised $5 million in Series A funding. Vanedge Capital led the round, and was joined by Sierra Ventures and return backers Data Collective, Resonant VC and Geekdom. http://tcrn.ch/2p3X6eW

• Truck Alliance (d.b.a. Huochebang), a Chinese on-demand trucking service, is nearing a $156 million Series B fundraise led by Baidu Capital at around a $1 billion valuation, according to Bloomberg. https://bloom.bg/2pDNfj2

Private Equity Deals

Atlantic Street Capital has acquired a majority stake in GAT Airline Ground Support, a Fayetteville, Ga.-based provider of outsourced airline services, from the company's founding family. No financial terms were disclosed. www.gatags.com

• Centerbridge Partners has acquired the parent company of Industrial Container Services, a Maitland, Fla.-based provider of reconditioned container services, from Aurora Capital Group. No financial terms were disclosed. www.iconserv.com

• Charlesbank Capital Partners has acquired Tecomet, a Wilmington, Mass.-based provider of manufacturing solutions for complex, tight-tolerance products, from Genstar Capital. No financial terms were disclosed. www.tecomet.com

• H.I.G. Capital has agreed to acquire a majority stake in CONET Technologies, a German provider of IT systems and consulting services. No financial terms were disclosed.
www.conet.de

• IK Investment Partners has acquired Colisée Group, a French nursing home operator, from Eurazeo for €236 million ($257.2 million). http://bit.ly/2prwfw2

• Invo Healthcare Associates, a Jamison, Penn.-based provider of behavioral health and other therapeutic services to individuals with special needs, has raised an undisclosed amount of minority equity funding from The Jordan Co. The company continues to be controlled by The Wicks Group of Cos. www.invohealthcare.com

• LeafFilter, a Hudson, Ohio-based provider of gutter protection solutions to residential homeowners, has raised an undisclosed amount of private equity funding from Gridiron Capital. www.leaffilter.com

• Robert Bosch GmbH has agreed to sell its automotive starter and generator business to Zhengzhou Coal Mining Machinery Group and China Renaissance Capital Investment for $595 million. http://reut.rs/2prhWaM

Public Offerings

Smart Global Holdings, a Newark, Calif.-based provider of specialty memory solutions to the electronics industry, has filed for an IPO. It plans to trade on the Nasdaq under ticker symbol SGH, with Barclays and Deutsche Bank serving as lead underwriters. The company is owned by Silver Lake.

Liquidity Events

• Cisco (Nasdaq: CSCO) has agreed to acquire Viptela, a San Jose, Calif.-based software defined wide area networking company, for $610 million. This is a lower price than the $875 million valuation that Viptela received last year in a $75 million Series C round from Redline Capital, Northgate Capital and Sequoia Capital. http://tcrn.ch/2p4kA3G

More M&A

• 2U (Nasdaq: TWOU) has agreed to acquire GetSmarter, a South Africa-based provider of online education and training courses, for upwards of $123 million in cash ($103m up-front). www.2u.com

Accell Group, a listed Dutch bicycle maker, has ended talks to be acquired by Pon Holdings, citing price disagreements. Pon originally had offered €845 million. http://bit.ly/2pSNHLe

• IAC/InterActiveCorp (Nasdaq: IAC) has agreed to acquire Angie's List (Nasdaq: ANGI), an Indianapolis-based consumer review site. The deal is valued at $500 million in cash, or $8.50 per share (44.3% premium over yesterday's closing price). http://reut.rs/2qzruOy

• Intercontinental Exchange (NYSE: ICE) has completed its previously-announced acquisition of TMX Atrium, a Luxembourg-based operator of global exchanges and clearing houses, from Canadian exchange operator TMX Group. No financial terms were disclosed. www.tmxatrium.com

• Monsanto Co. (NYSE: MON) has terminated an agreement to sell farm equipment unit Precision Planting to Deere & Co. (NYSE: DE), which had received regulatory pushback. http://reut.rs/2qsPxj8

Fundraising

Consensus Capital Holdings has been launched as a Michigan-based private equity firm by Jason Byrd (ex-MD at Charter Capital Partners) and Michael Brom (ex-CFO of Huizenga Group).

• J-Star, a Japanese mid-market buyout firm, has closed its third fund with around $291 million in capital commitments. www.j-star.co.jp

• Salesforce.com reportedly is committing $100 million for its fourth corporate VC fund.

It's Personnel

Investcorp has promoted Gabriel Aractingi to head of its Saudi Arabia business. https://bloom.bg/2qyXiTT

• Nobuaki Kurumatani, former deputy president of Sumitomo Mitsui Banking, has been named chair of the Japan business of CVC Capital Partners. http://s.nikkei.com/2pE0u3j

• Eric Shuey, a former corporate development executive with Fresenius Medical Care, has joined Revelstoke Capital Partners as an operating partner. www.revelstokecp.com

Martin Tschopp has joined Naspers Ventures as chief operating officer. He previously was CEO of Kiva.org. www.naspers.com