| | | | | | | Presented By Global X ETFs | | | | Pro Rata | | By Dan Primack ·Aug 31, 2020 | | 📺 "Axios on HBO" tonight at 11pm ET/PT includes my interview with DoorDash CEO Tony Xu, plus interviews with Eli Lilly CEO David Ricks, South Carolina Senate candidate Jaime Harrison, and a chaotic election prediction from the data firm funded by Mike Bloomberg. 🎧 "Axios Re:Cap" talked with CNN's Brian Stelter about his new book on the feedback loop between President Trump and Fox News. Listen via Apple, Spotify, or Axios. | | | | | | Top of the Morning |  | | | Illustration: Sarah Grillo/Axios | | | | Six months ago we wrote about how Ben Meng, chief investment officer of America's largest public pension, was the subject of Indiana Republican Rep. Jim Banks' claims of tacitly working for the Chinese government. - The accusations were baseless and xenophobic. They also missed that Meng's real offense was that of being careless — a far cry from Banks' portrayal of a meticulous mole.
The backstory: Meng earlier this month left the California Public Employees' Pension System (CalPERS), where he helped oversee over $400 billion in assets under management. - It was officially a resignation, but came after financial blogger Susan Weber discovered that Meng had filed incomplete (i.e., false) financial disclosure forms with CalPERS. In other words, his resignation had big "You can't fire me, I quit" vibe.
- Weber also reported that Meng had personal investments in several private equity firms with which CalPERS does business, without finding evidence that he had recused himself from decisions involving those firms.
Between the lines: These are unforgivable sins for a retirement system fiduciary, although it's a stretch to reasonably argue Meng was trying to line his pockets. - CalPERS had decades-long relationships with the private equity firms in question, long predating Meng's arrival.
- Meng had made efforts to increase CalPERS' private equity exposure, but by expanding into direct investing, not increasing the amount of investment in third-party funds.
This mess has led one CalPERS board member, Margaret Brown, to publicly call for a temporarily suspension of any new private equity investments until the conclusion of an investigation into Meng's disclosures. She tells me the expected time frame would be 30 to 90 days. - No other CalPERS board members or system executive is publicly supporting Brown's suspension proposal.
- This feels like a mistake. Not because I necessarily think Meng is guilty of much more than sloppiness, but because it's impossible to be sure without the concluded investigation.
- CalPERS has deep enough pockets that it could ask fund managers to give it an extra couple months to consider limited partner commitments, without causing it to miss out on opportunities.
The bottom line: CalPERS had been through some massive private equity scandals before, which perhaps is why it's treating this situation like a minor inconvenience. But those past experiences should instead serve as a reminder to board and staff that they often don't know what they don't know. |     | | | | | | The BFD |  | | | Illustration: Eniola Odetunde/Axios | | | | Clayton Dubilier & Rice agreed to buy Austin, Texas-based business management software company Epicor Software from KKR for $4.7 billion (including debt). - Why it's the BFD: It's the largest enterprise software deal so far in 2020. It's also a big win for KKR, which tried but failed to sell Epicor last year.
- ROI: KKR bought Epicor in 2016 from Apax Partners for around $3.3 billion (including debt), and recently extracted $560 million via a $1.7 billion dividend recap.
- The bottom line: "The company, which makes back-office and sales software for manufacturing, distribution, retail and service-industry customers... has completed a number of acquisitions under KKR's ownership. Those include deals for electronic-data interchange software maker 1 EDI Source and warehouse-management software provider Majure Data." — Miriam Gottfried, WSJ
| | | | | | | | Venture Capital Deals | | • Eruditus, a Mumbai-based provider of exec-level courses, raised $113 million in Series D funding. Leeds Illuminate and Prosus Ventures co-led, and were joined by the Chan Zuckerberg Initiative and return backers Sequoia Capital India and Ved Capital. http://axios.link/TLbO 🚑 Erasca, a San Diego-based precision oncology startup, raised $36 million in new Series B funding (round total now $236m). New investors include Partner Fund Management and OrbiMed. www.erasca.com • DyeMansion, a German developer of additive manufacturing finishing systems, raised $14 million in Series B funding from Nordic Alpha Partners, UVC Partners, btov Partners, KGAL, and AM Ventures. http://axios.link/PQAY 🚑 Semalytix, a German provider of patient experience data tools to pharma companies, raised €4.3 million in Series A funding. Btov Partners led, and was joined by seed backer Fly Ventures. http://axios.link/8bYD • Steno, a Los Angeles-based provider of litigation software, raised $3.5 million in seed funding led by First Round Capital. http://axios.link/ibuu | | | | | | | | A message from Global X ETFs | | Explore how technology is making education more accessible | | |  | | | | Before Zoom became a household name, growth in online learning was spurred by benefits of cost, convenience and the potential to expand educational access. Recent events may prove an accelerant to the trend. Explore what's next in education — and why investors may want to take notice. | | | | | | Private Equity Deals | | • Allegro MicroSystems, a Manchester, N.H.-based portfolio company of One Equity Partners, acquired Voxtel, a Beaverton, Ore.-based provider of LiDAR and other photonic and 3D imaging technologies. www.allegromicro.com • AT&T (NYSE: T) is seeking private equity buyers for a majority stake in DirecTV, per Bloomberg. It's also seeking to sell its Crunchyroll anime video unit for upwards of $1.5 billion. http://axios.link/Gbqv 🍪 Elliott Management is considering a takeover offer for Aryzta (Swiss: ARYN), the struggling Swiss baking company that makes Otis Spunkmeyer cookies and McDonald's burger buns, per Bloomberg. Both Apollo Global Management and Cerberus Capital Management also have weighed bids. http://axios.link/Ua0L • Middleground Capital signed a stalking horse agreement to acquire the assets of bankrupt Shiloh Industries (Nasdaq: SHLO), a Valley City, Ohio-based provider of lightweighting, noise, and vibration solutions, for $218 million in cash. www.shiloh.com • Rcapital Partners is in advanced talks to buy Archant, publisher of The New European, per the FT. http://axios.link/NVHH • Thoma Bravo completed its previously-announced purchase of Foundation Software, a Strongville, Ohio-based provider of construction accounting and payroll software. www.foundationsoft.com | | | | | | | | Public Offerings |  | | | Illustration: Sarah Grillo/Axios | | | | 🚑 GoodRx, a price comparison app for prescription drugs at local pharmacies, filed for a $100 million IPO. It plans to list on the Nasdaq (GDRX) with Morgan Stanley as lead underwriter, and reports nearly $55 million of net income on $257 million in revenue for the first half of 2020. Backers include Silver Lake, Francisco Partners, and Spectrum Equity. http://axios.link/SzLP 🚑 Compass Pathways, a London-based developer of mental health therapies, filed for a $100 million IPO. The pre-revenue company plans to trade on the Nasdaq (CMPS) with Cowen as lead underwriter, and raised around $133 million from ATAI Life Sciences (29% pre-IPO stake), Founders Fund (7.5%), McQuade Center for Strategic R&D (5.8%), Able Partners, Camden Partners, Perceptive Advisors, Skyviews Life Science, and Soleus Capital. http://axios.link/AIpn • Huuuge, a Polish mobile games publisher, said it is planning a Warsaw IPO. The company has raised around $57 million in VC funding from firms like Korea Investment Partners, Woori Technology Investment, and Kiwoom Investment. It generated $260 million in 2019 revenue. http://axios.link/F4Oz 🚑 Implantica, a Swiss developer of smart medical implants, said it's prepping a Stockholm IPO for late next month. http://axios.link/11kt | | | | | | | | SPAC Stuff | | • Reinvent Technology Partners, a tech-focused SPAC led by Reid Hoffman and Mark Pincus, filed for a $600 million IPO. http://axios.link/iUIy • ByNordic Acquisition, a SPAC targeting a Northern European fintech, filed for a $100 million IPO. http://axios.link/ETER • Equity Distribution Acquisition, a SPAC formed by Sam Zell to acquire an industrials business, filed for a $300 million IPO. http://axios.link/9j3d | | | | | | | | Liquidity Events | | • Capital Today hired Deutsche Bank to find a buyer for its 16.7% stake in Three Squirrels, a listed Chinese online snacks maker, per the WSJ. Its stake is valued at around $655 million. http://axios.link/90L8 | | | | | | | | More M&A | | ⚾ Steve Cohen, the billionaire hedge fund manager, reportedly has entered exclusive talks to buy the New York Mets from the Wilpon family. Rivals bidders had included David Blitzer/Josh Harris and Jennifer Lopez/Alex Rodriguez. http://axios.link/eKLl 🚑 Nestlé (Swiss: NESN) agreed to buy the 74.4% stake it didn't already own in Aimmune Therapeutics (Nasdaq: AIMT), a Brisbane, Calif.-based maker of peanut allergy treatments, for $2 billion. http://axios.link/9Mtd • Reliance Retail, India's larger retailer, agreed to pay $3.4 billion to acquire the retail, wholesale, warehousing, and logistics units of Future Group. http://axios.link/tHHY ⛽ Whitecap Resources (TSX: WCP) agreed to buy oil producer NAL Resources from Manulife Financial (TSX: MFC). http://axios.link/MefW | | | | | | | | Fundraising | | • Warburg Pincus is seeking to raise $2.5 billion for its second fund focused on financial services, per Bloomberg. It will be led by firm president Tim Geithner. http://axios.link/CAFR | | | | | | | | Final Numbers | | | | | | | | | | A message from Global X ETFs | | How genomics is helping understand and combat pandemics | | |  | | | | Governments and industry leaders are united in pursuing COVID-19 treatments. Genomic science is at the forefront of today's battle, while also ushering in a new era of precision medicine. Learn more about genomics and the future of health care. | | | | 🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues, and pension watchers to sign up. | | | | Axios thanks our partners for supporting our newsletters.
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