| | | | | | | | | | Axios Pro Rata | | By Dan Primack · Sep 07, 2023 | | | | | | Top of the Morning |  | | | Illustration: Aïda Amer/Axios | | | | Private equity got almost everything it wanted when securities regulators watered down their new fund oversight rules. Now it wants the rest. Driving the news: Six trade groups, including the American Investment Council and National Venture Capital Association, last week filed a lawsuit seeking to block the SEC from implementing its Private Fund Advisers rule. - Their basic argument, put forth by lead attorney Eugene Scalia, is that the SEC overstepped its authority to regulate private funds.
- Retail investors are novices in need of protection, but limited partners in private funds are sophisticates backed by a phalanx of even smarter lawyers. If LPs really thought there were structural flaws, they'd just walk away and learn to code.
Strategy: Were plaintiffs to prove the SEC has no legal right to make these rules, or that it did so via improper procedure, then the rest of their arguments become superfluous. - If not, they'll argue the substance of the rules themselves, which they consider capricious and impractical.
- Per the petition: "Among other things, the rules would effectively bar many of the bespoke contractual terms investors negotiate to meet their specific needs, would effectively bar advisers from charging for certain expenses, and would require costly reporting that is wholly unnecessary."
Reality check: The rules only require funds to disclose the existence of bespoke contractual terms to other limited partners in the fund. It does not "bar" them. - The industry apparently believes that such disclosure would create fee compression, because all LPs will want the same terms (i.e., the cheapest ones).
- But aren't these the same sophisticated investors who don't need SEC protection? Don't LPs understand that there are material benefits of making outsized or early fund commitments, and agree that there should be? Or are they not quite so smart anymore?
- It's notable that the Institutional Limited Partners Association didn't join the petition.
The bottom line: Private equity isn't asking for fairer or smarter or prettier rules. It's asking for no new rules at all. |     | | | | | | The BFD | | Source: Giphy Smurfit Kappa (LSE: SKG), an Irish paper packaging company, said it's in talks to merge with Atlanta-based rival WestRock (NYSE: WRK). Why it's the BFD: It would create a $20 billion global giant, with $34 billion in combined revenue. Details: No financial terms were disclosed, but Smurfit said the combined company would be called Smurfit WestRock, headquartered in Dublin and listed on the NYSE. - WSJ broke news of the talks, which forced Smurfit's hand and caused it to issue the public statement. A formal deal announcement could come soon.
The bottom line: Consolidation is a constant in the paper industry, as neither Smurfit nor WestRock are strangers to M&A. And there are some secular tailwinds, as more consumers demand alternatives to plastics. - But there also is urgency. When the pandemic was raging, paperboard prices and usage skyrocketed. Now those trends have slowed or even reversed, putting new pressure on providers.
| | | | | | | | Venture Capital Deals | | 🌎 Boston Metal, a Boston-based developer of sustainable steelmaking solutions, raised $262m in Series C funding from Aramco Ventures, M&G Investments, Goehring & Rozencwajg, Baillie Gifford and insiders Breakthrough Energy Ventures, Microsoft's Climate Innovation Fund, BHP Ventures and Prelude Ventures. https://axios.link/3EpILSu 🚑 Apollo Therapeutics, a British biotech that seeks to "translate fundamental medical research into medicines," raised $226.5m in Series C funding. Patient Square Capital led, and was joined by M&G, Rock Springs Capital and two undisclosed U.S. public pension funds. https://axios.link/3PqiXMj 🚑 Inceptive, a Palo Alto, Calif.-based biological software startup led by former Google AI engineer Jakob Uszkoreit, raised $100m from Nvidia and Andreessen Horowitz. https://axios.link/45YsWOg • Mill Industries, a San Bruno, Calif.-based food recycling startup, secured $70m of a Series C round targeting a total of $100m, per Axios Pro. Prelude Ventures is leading, with other backers to include Breakthrough Energy Ventures, Lowercarbon Capital, GV and Energy Impact Partners. https://axios.link/3LevlfU 🚑 Ibex Medical Analytics, an Israeli cancer pathology diagnostics company, raised $55m in Series C funding led by 83North. www.ibex-ai.com 🌎 Certa, an SF-based vendor management startup focused on ESG compliance, raised $35m in Series B funding. Fin Capital Vertex Ventures Southeast Asia & India co-led, and were joined by Tru Arrow Partners, BDMI, Aglae Ventures, Mantis VC and GOAT Capital. https://axios.link/3EsRyTx • Clara Analytics, a Santa Clara, Calif.-based provider of insurance claims optimization solutions, raise $24m in Series C funding. Spring Lake Equity Partnersled, and was joined by insiders Aspen Capital Group, Oak HC/FT and QBE Ventures. www.claraanalytics.com • MyZoi, a UAE-based financial services startup for migrant workers, raised $14m from SC Ventures and SBI Holdings. https://axios.link/482aZjK 🚑 Noetik, an SF-based AI drug discovery startup focused on immune-oncology, raised $14m in seed funding. DCVC led, and was joined by Zetta Venture Partners, 11.2 Capital, Catalio Capital Management, Epic Ventures, Intermountain Ventures, North South Ventures, CJNV BioVentures, Viswa Colluru and Hummingbird Nomads Fund. www.noetik.ai 🌎 Spiritus, a developer of materials to absorb carbon dioxide from the air, raised $11m. Khosla Ventures led, and was joined by Page One Ventures. https://axios.link/3PwnQUd • Strise, a Nordic anti-money laundering startup, raised $10.8m in Series A funding led by Atomico. https://axios.link/3sP2IPR ⚡ Arbor, a digital energy startup, raised $9m in seed funding. First Round Capital led, and was joined by Obvious Ventures and Spring Tide. https://axios.link/3ZabHrh • Treyd, a Swiss trade finance and contract platform, raised €9m in Series A extension funding from Nineyards Equity, Antler, Zenith VC and J12 Ventures. www.treyd.io • Bandana, a New York-based jobs marketplace focused on low-wage workers, raised $3.8m in seed funding co-led by General Catalyst and Craft Ventures. https://axios.link/48hEVbV ⚡ Skyqraft, a Swedish energy infrastructure inspections startup, raised $3.8m from Subvenio Invest, Neptunia Invest and Antler. www.skyqraft.com • Automat, a provider of custom automations for SMBs, raised $3.75m in seed funding. Initialized Capital led, and was joined by Goodwater Capital, YC, Khosla Ventures and Schox. www.runautomat.com • Loops, a developer of an email platform for SaaS, raised $3.2m. Craft Ventures led, and was joined by Altman Capital, SV Angel, Liquid2, Soma, Box Group, and Twenty-Two Ventures. www.loops.so 🚑 Pumpspotting, a Kittery, Maine-based breastfeeding support platform, raised $2.2m in seed funding, per Axios Pro. Sincere Corporation and Maine Venture Fund co-led, and were joined by Unum Business Ventures and Maine Technology Institute. https://axios.link/3R7HKpx ⚡ Florrent, an Amherst, Mass.-based developer of ultracapacitors made from hemp, raised $2.1m in pre-seed funding, per Axios Pro. MassVentures led, and was joined by MassMutual Catalyst Fund, AIN Ventures, Tale Venture Partners, NextFab Ventures and Boston Impact Initiative. https://axios.link/3PtjCfL • Kotani Pay, a Nairobi-based crypto payments startup focused on remittances, raised $2m in pre-seed funding. P1 Ventures led, and was joined by DCG/Luno and Flori Ventures. https://axios.link/3EtnOpO | | | | | | | | A message from Axios | | What's next for dealmaking | | |  | | | | Discover why 59% of dealmakers expect valuations to decline this year and what challenges remain for VC, M&A and PE. Download whitepaper now. | | | | | | Private Equity Deals | | • ABB Technology Ventures acquired a minority stake in WindESCo, a Boston-based provider of analytics software for wind turbines. www.abb.com • Altice is in talks to sell its French data centers to Morgan Stanley Infrastructure Partners for around €1b, per Les Echos. https://axios.link/3PsUfL5 • Bain Capital agreed to buy Harrigton Process Solutions, a Chino, Calif.-based distributor of industrial flow control process solutions, from Nautic Partners. www.hipco.com • Consortium Brand Partners acquired a majority stake in Draper James, an apparel brand that had raised $17m from Reese Witherspoon, Forerunner Ventures, Stone Canyon Industries, Lago Innovation Fund, G9 Ventures, GingerBread Capital and JH Industries. https://axios.link/3Z8biWb • Francisco Partners invested in Accela, a San Ramon, Calif.-based provider of cloud software for government clients. www.accela.com • Frontenac invested in City Line, a West Haven, Conn.-based specialty foodservice distributor. www.citylinefoods.com 🚑 Grant Avenue Capital invested in CREO, a Durham, N.C.-based strategic consultancy for the life sciences and health care markets. www.creoinc.net 🌎 H2 Green Steel of Sweden raised around €1.5b to build its flagship plant from Hy24, Altor, GIC and Just Climate. https://axios.link/3qVbI5L • The Jordan Co. acquired Soteria Flexibles, a Carol Stream, Ill.-based flexible packaging manufacturer, from Ardian. www.redi-bag.com • Meazure Learning, a Birmingham, Ala.-based portfolio company of Gryphon Investors, acquired Examity, a Newton, Mass.-based online proctoring company, from Great Hill Partners (which retains an equity stake). www.meazurelearning.com ⚡ Octopus Energy, a British firm backed by CPP Investments, invested in Norwegian offshore wind farm developer Deep Wind Offshore. https://axios.link/3RbNAqb • Qatar Investment Authority will invest about $1b for a 1% stake in Indian retail group Reliance Retail Ventures. https://axios.link/3Z80WW7 • Rocket Software, a Waltham, Mass.-based portfolio company of Bain Capital, acquired German data integration software provider B.O.S. www.rocketsoftware.com 🌸 Staple Street Capital agreed to acquire Delaware Valley Floral Group, a Sewell, N.J.-based supplier of fresh cut flowers and floral supplies, from its founding family. www.dvflora.com • Star Leasing, an Indianapolis-based portfolio company of I Squared Capital, agreed to buy Roseland, N.J.-based Commercial Trailer Leasing for a reported $1.6b (including debt). https://axios.link/3sOZg7S • ZMC acquired InProduction, a Warrenville, Ill.-based provider of temp seating, staging and related services for live events. www.inproduction.net | | | | | | | | Public Offerings | | 🎾 Amer Sports, a Finnish maker of Wilson tennis rackets and other sports gear, is planning to file for an IPO that could raise up to $3b at a $10b valuation, per Bloomberg. The company is owned by China's Anta Sports Products. https://axios.link/487rw67 • Jala Group, a Chinese cosmetics maker, is prepping a Hong Kong IPO that could raise up to $500m, per Bloomberg. https://axios.link/3PblNTU • Smith Douglas Homes, a Woodstock, Ga.-based homebuilder, filed for an IPO. It plans to list on the NYSE (SDHC) and reports $59.5m of net income on around $350m in revenue for the first half of 2023. https://axios.link/45F7GNW | | | | | | | | SPAC Stuff | | • Freight Farms, a Boston-based vertical farming company, agreed to go public at an implied $147m valuation via Agrinam Acquisition Corp. (TSX: AGRI.U). Freight Farms raised around $57m in VC funding, from firms like Spark Capital, Stage 1 Ventures, Alkaline Partners, Aliaxis and Ospraie Ag Science. www.freightfarms.com | | | | | | | | Liquidity Events | | • ActiveFence, an Israeli online integrity startup, is acquiring Spectrum Labs, a content moderation AIstartup. ActiveFence has raised $100m from Highland Europe, CRV, Norwest Venture Partners, Grove Ventures, Vintage Investment Partners and Resolute Ventures. Spectrum Labs raised $45m from Intel Capital, Munich Re Ventures, Gaingels, OurCrowd, Harris Barton, Wing VC, GFC, Greycroft, Ridge Ventures and Super{set}. https://axios.link/3r7arbJ • Tenable (Nasdaq: TENB) agreed to acquire Ermetic, an Israeli cloud infrastructure entitlement manager, for upwards of $265m (including $240m in cash). Ermetic raised over $80m in VC funding from firms like Accel, Qumra Capital, Norwest Venture Partners, Target Global, Accel, Forgepoint Capital, Glilot Capital Partners and Splunk Ventures. www.ermetic.com | | | | | | | | More M&A | | • Alteryx (NYSE: AYX), an Irvine, Calif.-based data analytics software provider with a $2.5b market cap, hired Qatalyst to find a buyer, per Reuters. https://axios.link/44I3Imb • Anduril, a defense-tech company most recently valued by VCs at $8.5b, acquired Blue Force Technologies, a Morrisville, S.C.-based maker of autonomous fighter jets. https://axios.link/44I4Ciz 🎵 Apple (Nasdaq: AAPL) acquired BIS Records, a Swedish classical music record label. https://axios.link/3RfKYYp ⚡ Chubu Electric Power (Tokyo: 9502) agreed to buy an unspecified stake in NuScale Power (NYSE: SMR), a Portland, Ore.-based maker of modular nuclear reactors. https://axios.link/3LdkDGh • Intact Financial (TSX: IFC) agreed to buy the brokered commercial lines unit of Direct Line (LSE: DLG) for £520 upfront. https://axios.link/3PbQLLA • Nestle (Swiss: NESN) agreed to buy Brazilian chocolate brand Kopenhagen for around $600m, per local media reports. https://axios.link/462QAJo • Pepper Money (ASX: PPM) agreed to acquire HSBC's NZ$1.4 billion mortgage portfolio in New Zealand. https://axios.link/462I9Ov ⚡ Peyto Exploration & Development (TSX: PEY), a Canadian natural gas group, agreed to buy the Canadian assets of Spain's Repsol (Milan: REP) for US$468m. https://axios.link/45BN6hg • Steve Cohen, the hedge fund manager and NY Mets owner, will own the fourth team in TGL, the new golf league being developed by Tiger Woods and Rory McIlroy. https://axios.link/44CD7al • Wolverine Worldwide (NYSE: WWS) agreed to sell its U.S. leathers business to New Balance for about $6m. It also will sell its Hush Puppies IP in China, Hong Kong and Macau to sublicensee Beijing Jiaman Dress Co. for about $59m. https://axios.link/46iwL19 | | | | | | | | Fundraising | | 🌎 World Fund, a European climate tech VC firm, raised more than €50m in new fund capital from LPs like KfW Capital and Ignitis Group. www.worldfund.vc | | | | | | | | It's Personnel | | • Stew Campbell left Norwest Venture Partners to join TCG as a partner. www.tcg.co • Laurie Coben joined Rockefeller Capital Management as a managing director and senior banker. She previously was an energy banker with Guggenheim Securities. https://axios.link/3P4sVl7 • Keith Janosky joined Riverwood Capital as CFO and head of investor relations. He previously served in the same roles at Khosla Ventures. www.riverwoodcapital.com • Joff Redfern, former chief product officer at Atlassian, joined Menlo Ventures as a partner. www.menlovc.com • Camille Ricketts joined Emergence Capital as an operating partner. She previously led marketing and comms for First Round Capital. www.emcap.com • Javier Saade joined Presidio Investors as an operating partner. He's the SBA's former head of investment and most recently was on the board of SoftBank's SPAC. www.presidioinvestors.com 🚑 Maneet Singh (ex-Goldman Sachs) and Jon Swope (SVB) are joining Barclays as health care investment bankers, per Bloomberg. https://axios.link/3Z8HMQ1 • Marcie Vu joined Greycroft as the VC firm's first SF-based partner, per Axios Pro. She previously led consumer tech for Qatalyst Partners. https://axios.link/3Px27LW • Claire Yun (ex-Noon Energy) and Jillian Noel (Genera Fusion) joined venture firm Piva Capital as investors. www.piva.vc | | | | | | | | Final Numbers | | | | | | | | | | A message from Axios | | What's next for dealmaking | | | | | | | | Discover why 59% of dealmakers expect valuations to decline this year and what challenges remain for VC, M&A and PE. 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