The sun is shining, China's economy is slowing and Peyton is less than a week from retiring. In other words, it's time for some Tuesday Talk-Back.
• First up are some emails on the issue of designated lender counsel, or the practice through which private equity firms select and pay for outside law firms that represent lenders on their deals.
DS: “I worked in European leveraged finance (at two of the largest underwriters in London) for most of my career and this is something that has been standard over here for at least 10-12 years. While it was sometimes irritating, it was rarely an issue and banks did have some ability to argue against using a designated counsel in the very unusual cases where it was a problem… Individual partners at the big law firms in London typically work only for banks or for PE houses, not both, and we (at the banks) would rarely if ever 'allow' a non-banking partner to be our designated counsel… Also, breaching fiduciary obligations (or being seen as providing less than impartial services) and jeopardising those bank relationships would be a commercial risk for a law firm - more so than just a purely - hard to prove - legal risk.”
Kevin: "It's kind of like being Ben on The Bachelor, but all of the women were handpicked by his mom."
Lonnie: "Maybe we need to stop referring to private equity as 'financial engineering,' and call it 'financial and legal engineering.'"
• Sam on Barstool Sports story: "I don't know which would have surprised me more: Reading about Barstool in Term Sheet, or reading about Term Sheet in Barstool."
• Dan on Brynwood Partners buying Sunny D: "The Sunny Delight brands and the Juicy Juice that they already owned are a godsend to parents with children with Type 1 diabetes. They are a source of quick sugar (carbs) that is easily transported and ingested to bring low blood sugars up to normal. I doubt they view that as a deep market but I probably bought a truckload during my son’s 12 years so far with the disease."
• Some emails on the CalPERS hedge fund column. Baker: “For your the back-of-envelope math, wouldn't you need to consider the returns generated from wherever they moved the proceeds from liquidating the HF assets? I would have guessed that they didn't just hold that ~$3bn in cash. So, instead of using 7% for forgone HF returns, you'd need to use (7% minus returns from wherever they moved the money), and for HF fees, you'd only use (HF fees minus fees from wherever they moved the money). For 'wherever they moved the money', maybe you could just use their fund averages.”
Anon: “The CAFR doesn't report any PE carry. I guess transparency only counts when the press is looking.”
Tolm: "CalPERS has a plethora of data and information, what they don't have is qualified people to utilize the data. The result is unusual statements like the one made in regards to the hedge fund portfolio. Another result is a cavalcade of requests to GPs involved with CalPERS for data already received in the normal course of business. However, as noted via the stories in this column, an expanse of data without the knowledge of how to use it is more dangerous than helpful.”
• Recommended reading: On Friday I posted a piece about how an African-American private equity fund manager lost his job after advocating for a law that would have increased pressure on New York public pensions to invest in minority and women-owned businesses. At issue was implicit pressure put on his firm by public pension officials, and now New York taxpayers are on the hook for $15 million in restitution. Please check out the post by going here.
THE BIG DEAL
• JD.com (Nasdaq: JD), China’s second largest e-commerce company, has raised $1 billion in minority equity funding for its consumer finance subsidiary, JD Finance. Investors included Sequoia Capital China, China Harvest Investments and China Taiping Insurance. The new deal values JD Finance at $7 billion. Read more.
VENTURE CAPITAL DEALS
• Big Switch Networks, a Santa Clara, Calif.-based provider of “hyperscale-inspired networking” for data centers, has raised $48.5 million in Series C funding. Morgenthaler Ventures, Silver Lake Waterman, Accton, CID Group and MSD Capital were joined by return backers like Index Ventures, Khosla Ventures, Intel Capital and Redpoint Ventures. www.bigswitch.com
• Theracos Inc., a Marlborough, Mass.-based developer of drugs to treat Type II diabetes, has raised $25 million in new equity and debt funding. No investor information was disclosed. Read more.
• Telensa Ltd., a UK-based developer of “smart city” applications like LED-based street lighting, has raised $18 million in new venture capital and debt funding from Environmental Technologies Fund and Silicon Valley Bank. Read more.
• Neura, a personalization service for the Internet of Things, has raised $11 million in Series A funding. AXA Strategic Ventures and Pitango Venture Capital co-led the round, and were joined by Liberty Israel Venture Fund and Lenovo Group. The company has offices in Israel and Silicon Valley. www.theneura.com
• Estimote, a maker of RF beacons for creating “contextually rich mobile experiences,” has raised $10.7 million in Series A funding. Javelin Venture Partners led the round, and was joined by Box Group, Commerce Ventures, Digital Garage and Homebrew. The company has offices in San Francisco and Poland. www.estimote.com
• EiQ Networks, a Boston-based provider of SaaS security and continuous security intelligence services, has raised $9.55 million in Series C funding led by Arrowroot Capital. www.eiqnetworks.com
• ALICE, a mobile platform for guests to engage with hotel services and staff, has raised $9.5 million in Series A funding. Expedia led the round, and was joined by Laconia Ventures, 645 Ventures and the founders of NeueHouse. www.aliceapp.com
• MVPindex Inc., a Dallas-based social media index and measurement platform for sports and entertainment, has raised $7 million in Series A funding. Backers include KB Partners. www.mvpindex.com
• Indus OS (f.k.a. Firstouch), an India-based startup that tweaks the user interface and other parts of the Android operating system for rural India, has raised $5 million in Series A funding led by Omidyar Network. Read more.
• Solovis, a Dallas-based provider of multi-asset class portfolio management and reporting solutions, has raised $3.25 million in new VC funding. Edison Partners led the round, and was joined by MissionOG, OCA Ventures, Timberline Venture Partners, Northwestern University and Jeremie Bacon. www.solovis.com
PRIVATE EQUITY DEALS
• Aquiline Capital Partners has agreed to acquire a majority stake in Wellington Insurance Group, a Fort Worth, Texas-based risk distribution business focused on residential property insurance. No financial terms were disclosed. www.wellingtoninsgroup.com
• Arsenal Capital Partners has acquired a majority stake in BioreclamationIVT, a Westbury, N.Y.-based provider of biological and in vitro products to biopharma, diagnostic and biotech organizations. www.arsenalcapital.com
• Brentwood Associates has acquired the Boston Proper direct-to-consumer business of Chico’s FAS Inc. (NYSE: CHS). No financial terms were disclosed. www.bostonproper.com
• Bridgepoint has agreed to acquire Smyk, a Poland-based chain of children’s apparel and toy stores, from Empik Media & Fashion for around $258.25 million. Read more.
• FlexPrint, a Mesa, Ariz.-based provider of managed print solutions, has raised an undisclosed amount of private equity funding from Oval Partners. www.flexprintinc.com
• Lone Star Funds has acquired A Wireless, a Greenville, N.C.-based wireless retailer with over 600 stores in 31 states, from Atlantic Street Capital. No financial terms were disclosed. www.zwireless.com
• Marlin Equity Partners has acquired The Surveillance Business, a maker and seller of surveillance equipment, from Cobham PLC (LSE: COB). No financial terms were disclosed. TSB has offices in the UK and Tampa, Florida. www.marlinequity.com
• AveXis Inc., a Dallas-based developer of gene therapies for patients with severe genetic and orphan diseases like spinal muscular atrophy, has filed for a $115 million IPO. It plans to trade on the Nasdaq under ticker symbol AVXS, with Goldman Sachs and Jefferies serving as lead underwriters. Shareholders in the pre-revenue company include PBM Capital (15% pre-IPO stake), Deerfield Management (9.9%), JDH Investment Management (9.5%), Roche Finance (8.4%), White Rock Capital Partners (6.6%), Third Security (6.6%), T. Rowe Price (5.4%), Venrock (5.3%), Janus Capital Management, Adage Capital Management, RA Capital Management, QVT Financial, Rock Springs Capital Management, Foresite Capital Management, RTW Investments and Boxer Capital. AveXis has raised over $75 million in VC funding. www.avexisbio.com
• Oncobiologics, a Cranbury, N.J.-based developer of biosimilar therapeutics, has filed for a $115 million IPO. It plans to trade on the Nasdaq under ticker symbol ONS, with Jefferies and Barclays serving as lead underwriters. The company has raised over $43 million in VC funding, from firms like Perceptive Advisors, Cormorant Global Healthcare Master Fund, Longwood Capital Partners, venBio Select Fund, Proximare Lifesciences Fund, OSSB Pharma Fund and MIH Fund. www.oncobiologics.com
• PLX Pharma Inc., a Houston-based developer of an oral drug delivery system that is designed to increase safety and efficacy, has set its IPO terms to 3.8 million shares being offered at between $17 and $19 per share. It would have an initial market cap of around $169 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol PLXP, with Maxim Group serving as sole underwriter. Shareholders include Integra Venture (6.6% pre-IPO stake) and Aurus Bios Fondo de Inversion Privado (6.3%). www.plxpharma.com
• No exit news this morning.
• Barclays PLC (LSE: BARC) has sold a majority stake in its offshore trust business to an investor group led by the Sarikhani and Nielsen families. No financial terms were disclosed. The business will be renamed ZEDRA, with Barclays retaining a 19.9% ownership position. Read more.
• Barclays PLC (LSE: BARC) is planning to launch a sale for some of its 62% stake in Barclays Africa Group (JSE: BGA), which houses most of its Africa business, according to the WSJ. Read more.
• Crédit Agricole (Paris: ACA) said that it is exploring the sale of stakes in more than three dozen regional banks, in deals that could generate upwards of $19 billion. Read more.
• Ericcson (Nasdaq: ERIC) has agreed to acquire FYI Television, a Grand Prairie, Texas-based provider of entertainment metadata and rich media content. No financial terms were disclosed. Headwaters MB managed the process. www.fyitelevision.com
• Suncor Energy (TSX: SU) has agreed to acquire Canadian Oil Sands (TSX: COS) for approximately C$4.24 billion (or C$6.6b, including debt). Read more.
FIRMS & FUNDS
• Danhua Ventures, a Palo Alto, Calif.-based VC firm, is raising upwards of $200 million for its second fund, according to a regulatory filing.
• Trucks Ventures is raising upwards of $20 million for its debut fund, according to a regulatory filing. It already has secured around $8 million. The San Francisco-based firm is led by Reilly Brennan (executive director of the Revs Program at Stanford University) and Jeff Schox (founder of Schox Patent Group).
Moving In, On & Up
• Jevan Anderson has joined Wells Fargo as a managing director and co-head of technology M&A. He previously held a similar role with RBC Capital Markets. www.wellsfargo.com
• Gareth Harvey has joined Angelo, Gordon & Co. as a managing director and global head of investor relations. He previously was global head of IR for Fortress Investment Group’s liquid markets business. www.angelogordon.com
• Lightyear Capital has promoted Daniel Freyman to managing director. He joined the private equity firm in 2007 from Credit Suisse. www.lycap.com
• Paul Smith is stepping down as CEO of Ignite, a UK-based tech accelerator he founded in 2011. He’ll be succeeded by current Ignite managing director Tristan Watson. Read more.
• Suzanne Streeter has joined Partners Capital as a senior investment principal, and head of North America private equity. She previously was a managing director of fund investments and advisory with Babson Capital Management. www.partners-cap.com
• Anant Vashi has joined Headwaters MB as a vice president. He previously was director of business development with Quest Specialty Chemicals. www.headwatersmb.com
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