term sheet

By Dan Primack
January 20, 2016

Random Ramblings

Private equity firm CVC Capital Partners has been slapped with a very troubling lawsuit from a former employee that alleges, among other things, inappropriate “fondling” by a senior executive, violations of the Family Leave Act and retaliation for reporting such behaviors.

The plaintiff is Lisa Lee, who joined CVC in 2009 as a director of investor relations (she previously had spent more than a decade with Merrill Lynch, Goldman Sachs and AT Kearney). She worked in the firm’s New York office until last February, when she claims she was fired without cause. Moreover, after taking a subsequent job with Providence Equity Partners, Lee claims that CVC found her to be in breach of a non-compete agreement, causing her to forfeit more than $10 million in compensation.

I’ve posted the full complaint here, and will be writing more in depth about it later today at Fortune.com. But a few opening notes from what I think will become a long-running story:

1. CVC has a few weeks to respond to the claims in court, and only will say that “the claims by this former employee are without merit, and we will defend our position vigorously.”

To be sure, I understand why CVC doesn’t want to go down the legal rabbit hole with a reporter, but its umbrella statement is silly in that it would technically mean that CVC finds no merit in Lee’s claims about such things as her age, employment history, or giving birth to twins in 2012.

Some specific CVC executives are accused of doing very specific things at very specific times ― which is quite different than more vague claims of discrimination or harassment. If Christopher Sadler didn’t “fondle… rear ends” of Lee and two other female staffers at a December 2010 holiday party at a dance club, then he should easily be able to say so. If Lee’s superior, Marc St. John, didn’t tell say: “You just don’t know how you are going to feel [after birth and maternity leave] and if you will want to come back” and repeatedly question her commitment to post-birth travel, then he could say so now. There is no legal penalty for telling the truth.

2. While the harassment and discrimination pieces of this case will generate industry buzz, it’s the financial piece that is extremely perplexing. Lee claims that she was fired last February, and took the job with Providence (not named in complaint) four months later. Upon taking the Providence job, CVC allegedly deemed it as breaching her non-compete agreement under CVC’s shareholder agreement, thus forfeiting her existing equity. Her actual contract with CVC has not yet been made public, but I’ve never heard of a non-compete being enforced against someone who was involuntarily terminated. In fact, Lee says she was deemed a “bad leaver,” even though her departure was insisted upon by the firm.

At the same time, however, Lee’s complaint is a bit disingenuous when it claims that her position at Providence isn’t competitive with her old role at CVC. Even though she is now technically in the “business development” group of Providence rather than an “investor relations” group, her main responsibility is fundraising. And when two big buyout firms are fundraising, they are often in pursuit of the same investors.

3. No comment from Lee, her attorney or Providence Equity.

• All about the premium: Oscar, the New York-based health insurance startup that recently reported 125,000 customers, is in the midst of raising a massive new venture round that could value the company at upwards of $3 billion. Fidelity is the lead investor, with Oscar already having secured more than $150 million in commitments.

The company ― co-founded by Joshua Kushner ― previously raised over $300 million from firms like Founders Fund, Google Ventures, Google Capital, Khosla Ventures, Wellington Management, Goldman Sachs, Formation 8 and General Catalyst. A spokesperson declined comment, natch. (Big thanks for reporting help on this one from Erin Griffith and Leena Rao.)

• China slowdown, full speed ahead: Norwest Venture Partners this morning announced that it has raised $1.2 billion for its thirteenth fund. This is the same amount it raised for Fund XII in early 2014 and, per usual for NVP, the only limited partner was Wells Fargo.

Senior managing partner Promod Haque was on a plane last night and unable to speak, but I did email over some questions. Here was his reply, when I asked how China’s economic slowdown affects NVP’s investment strategy and/or growth theses for portfolio companies.

“Our investment thesis is not influenced by the ecosystem in China or for that matter, even the general economic environment. Our investment thesis is motivated by innovation driving new infrastructure, new business solutions that change productivity and behavior. The U.S. has always been a major source of innovation and the earliest adopter. Therefore, current developments in China don’t change our investment thesis. China of course will eventually be an adopter of these U.S.-led innovations. In general, our business is more focused on innovation cycles versus financial cycles, and we believe now is a great time to invest in the next wave of innovation across multiple sectors.”

• Quiz time: Can you name the VC-backed cloud company that IBM has quietly acquired for more than $100 million? Hint: It’s based on the West Coast.

• Survey says: Term Sheet has again teamed up with Semaphore on its 8th annual Confidence Survey of private equity and venture capital professionals. The goal is to gauge industry expectations for 2016, and results will be published here early next month. It only takes a few minutes to fill out, and I ask that you do so by going here. Thanks in advance…


THE BIG DEAL

• Univision, the private-equity backed media company currently in registration for an IPO, has acquired a control stake in The Onion, a Chicago-based satirical media group (yes, this is a real story). Read more.


VENTURE CAPITAL DEALS

• Meituan-Dianping, a Chinese group deals and food delivery company, has raised $3.3 billion in new funding at an $18 billion valuation. Backers include DST Capital, Canada Pension Plan Investment Board, TBP Capital, Baillie Gifford, Yuan Capital Management, Capital Today, Temasek and Tencent. The company was formed last fall after Meituan (backed by Alibaba) merged with Dianping (backed by Tencent). Read more.

• LendUp, a San Francisco-based direct lender focused on non-prime borrowers, has raised $150 million in Series B equity and debt funding. The equity tranche was co-led by Susa Ventures and Data Collective, which were joined by Google Ventures, QED, Kapor Capital, Yuri Milner, SV Angel, Eagle Cliff, Bronze Investments and Victory Park Capital. The debt came via a second credit facility from Victory Park. www.lendup.com

• Deezer, a France-based on-demand music streaming service, has raised €100 million in new VC funding. Access Industries led the round, and was joined by Orange. Read more.

• FreedomPop, a Los Angeles-based provider of wireless voice and data services, has raised $50 million from undisclosed investors. Existing shareholders include Intel, Partech Ventures, DCM Capital, Mangrove and Axiata Group. www.freedompop.com

• JFrog, a Santa Clara, Calif.-based provider of open-source, on-premise and SaaS cloud solutions for software management and distribution in the enterprise, has raised $50 million in new VC funding. Scale Venture Partners, Sapphire Ventures, Battery Ventures, Vintage Investment Partners and Qumra Capital. Existing shareholders include VMWare and Gemini Ventures. www.jfrog.com

• Instart Logic, a Palo Alto, Calif.-based provider of application delivery solutions, has raised $45 million in Series D funding. Geodesic Capital led the round, and was joined by StartX, Harris Barton Asset Management, Telstra Ventures and return backers Hermes Growth Partners, Andreessen Horowitz, Four Rivers Group, Kleiner Perkins Caufield & Byers and Tenaya Capital. www.instartlogic.com

• BlueVine, a Palo Alto, Calif.-based cloud provider of credit lines for small businesses, has raised $40 million new VC funding. Menlo Ventures led the round, and was joined by Rakuten, Lightspeed Venture Partners and 83North. Read more.

• Patreon, a San Francisco-based way for social media content creators and other artists to receive support from fans, has raised $30 million in Series B funding. Thrive Capital led the round, and was joined by Allen & Co. and return backers Charles River Ventures, Index Ventures, Accomplice and Freestyle Capital. www.patreon.com

• Kumu Networks, a Palo Alto, Calif.-based wireless “full duplex” startup, has raised $25 million in new VC funding. Verizon, Deutsche Telekom, Cisco Systems and Swisscom were joined on the deal by return backers NEA, Khosla Ventures and Third Point Ventures. Read more.

• ScaleArc, a Santa Clara, Calif.-based provider of database load balancing software, has raised $20 million in Series C-1 funding. Bain Capital Ventures led the round, and was joined by Accel, Trinity Ventures and Nexus Ventures. www.ScaleArc.com

• ZipLine Medical Inc., a Campbell, Calif.-b ased developer of noninvasive surgical skin closure devices, has raised $19 million in new VC funding. MVM Life Science Partners led the round, and was joined by return backer China Materialia LLC. www.ziplinemedical.com

• ChatWork, a Japan-based chat platform for Asia businesses, has raised $12.5 million in Series B funding led by Jafco Ventures. www.chatework.com

• Adestra, a London-based provider of marketing technology software and services, has raised $7.2 million in new VC funding from the Business Growth Fund. www.adestra.com

• Send Anywhere, a Korea-based free P2P file-sharing platform, has raised $6 million in Series A funding from Rakuten. Read more.

• Greatist, a provider of health and wellness content to millennials, has raised $4.5 million in Series A funding. Floodgate led the round, and was joined by individual angels. Read more.

• LoanHero Inc., a San Diego-based online lender, has raised $2.5 million in new seed funding led by Alsop Louie Partners and Mucker Capital. www.loanhero.com


PRIVATE EQUITY DEALS

• Audax Group has acquired the pressurized polyurethane doam adhesives business of 3M (NYSE: MMM). No financial terms were disclosed. www.3m.com

• Bioclinica, a Newtown, Penn.-based provider of clinical trials services, has acquired Clinverse Inc., a Raleigh, N.C.-based provider of financial lifecycle automation solutions for the clinical trials market. No financial terms were disclosed. Sellers included Edison Partners and Hatteras Venture Partners. BioClinica shareholders include Ampersand Capital Partners, JLL Partners and Water Street Healthcare Partners.  www.bioclinica.com

• Electronic Payment and Services Private Ltd., an ATM provider in India, has raised an undisclosed amount of minority equity funding from Apis Partners. www.electronicpay.in

• iM Square, a London-based portfolio company of Amundi, Eurazeo and La Maison, has acquired a 20% equity stake in Polen Capital Management, a Boca Raton, Fla.-based growth equity firm. www.imsquare.co.uk\

• Linsalata Capital Partners has acquired a majority stake in Glynlyon Inc., a Chandler, Ariz.-based provider of tech-enabled secular and faith-based education curriculum for pre-K-12 students. No financial terms were disclosed. www.glynlyon.com

• Maroon Group, an Avon, Ohio-based portfolio company of CI Capital Partners, has acquired CNX Distribution, a Hurst, Texas-based distributor of specialty chemicals. No financial terms were disclosed.
www.maroongroupllc.com

• Platinum Equity has agreed to acquire PAE, an Arlington, Va.-based provider of global logistics and stability operations, technical services and national security solutions, from Lindsay Goldberg. No financial terms were disclosed. www.pae.com

• Spectrio, an Oldsmar, Fla.-based portfolio company of The Riverside Company, has acquired Vital Media, a Charlotte, N.C.-based provider of on-hold marketing messaging and digital signage services to the automotive market. No financial terms were disclosed. www.spectrio.com

• Varsity Brands, a portfolio company of Charlesbank Capital Partners, has acquired Lids Team Sports, an Indianapolis-based seller of athletic apparel and equipment to schools and youth sport programs, from Genesco Inc. (NYSE: GCO). No financial terms were disclosed. www.lidsteamsports.com

• Weld North Holdings has acquired a control stake in Intellify Learning, a Boston-based cloud platform for learning analytics and data management services. No financial terms were disclosed. www.intellifylearning.com

• Wynnchurch Capital has formed Wynnchurch Industries, a new acquisition and investment platform focused on the industrial materials sector. It will be led by Grant Beard, former CEO of Wolverine Advanced Materials LLC. www.wynnchurch.com


IPOs

• BeiGene Ltd., a Beijing-based developer of immune-oncology therapeutics, has set its IPO terms to 5.5 million American depository shares being offered at between $22 and $24 per share. It plans to trade on the Nasdaq under ticker symbol BGNE, with Goldman Sachs, Morgan Stanley and Cowen & Co. serving as lead underwriters. The company reports a $15.8 million net loss on $2.8 million in revenue for the first six months of 2015. BeiGene has raised over $170 million in VC funding from Baker Brothers Life Sciences (25.8% pre-IPO stake), Hillhouse Capital (9.9%), Merck Sharp & Dohme Research (7.7%) and CTIC Capital Partners (6.4%). www.beigene.com


EXITS

• Penske Media has acquired Indiewire, a Brooklyn-based online community for independent filmmakers and fans, from SnagFilms. No financial terms were disclosed. SnagFilms shareholders include Comcast, NEA, Case Foundation Ventures and Ted Leonsis. Read more.


OTHER DEALS

• BTG Pactual has entered into exclusive talks to sell its Swiss private bank to Zurich-based EFG, according to the FT. A deal could be valued at around $1.2 billion. Read more.

• Enovation Partners has acquired Cleantech Group, a San Francisco and London-based “network for developing sustainable innovations in energy.” No financial terms were disclosed. www.cleantech.com

• Equinix (Nasdaq: EQIX) has completed its $3.8 billion acquisition of TelecityGroup PLC, a UK-based retail colocation provider with more than 40 data centers in Europe. As part of the deal, TelecityGroup has delisted from the LSE, where it had traded under ticker symbol TCY. www.telecitygroup.com

• Flywire (f.k.a. PeerTransfer), a Boston-based provider of global payment solutions for the education industry, has acquired ScholarFX, a Toronto-based processor of tuition, room and board payments for international students attending educational institutions in Canada. No financial terms were disclosed.’Flywire has raised over $40 million in VC funding from firms like Bain Capital Ventures and Spark Capitalwww.peertransfer.com

 

• Microchip Technology (Nasdaq: MCHP) has agreed to acquire San Jose, Calif.-based chipmaker Atmel (Nasdaq: ATML) for nearly $3.6 billion ($7 per share in cash & 1.15 MCHP shares per Amtel share), with Amtel paying $137 million to terminate an existing merger agreement with Dialog Semiconductor (XTRA: DLG). The Dialog deal valued Amtel higher, but included only $4.65 per share in cash. Read more.

• Puppet Labs, a Portland, Ore.-based provider of IT automation software, has secured $22 million in venture debt funding from Silicon Valley Bank. The company previously raised around $86 million in VC funding from Cisco, Google Ventures, Kleiner Perkins Caufield & Byers, Triangle Venture Capital Group, True Ventures and VMware. www.puppetlabs.com


FIRMS & FUNDS

• Norwest Venture Partners has closed its thirteenth fund with $1.2 billion in capital commitments from sole limited partner Wells Fargo. www.nvp.com

• SoftTechVC is raising upwards of $100 million for its third seed-stage fund, and another $30 million for a fund that will support later-stage rounds in existing portfolio companies, according to regulatory filings. The Palo Alto, Calif.-based firm also has promoted both Steph Palmeri and Andy McLoughlin to partner. www.softtechvc.com


Moving In, On & Up

• Emergence Capital has promoted Santi Subotovsky to general partner. He joined the firm in 2010, and has led its investments in such companies as Zoom.us, CrunchBase, Civitas Learning, Restorando, Quasar, Top Hat, and Xapo. www.emcap.com

• Greg Maletsky has joined Acacia Partners, an Austin, Texas-based private equity firm, as a partner. He previously was with Waveland Investments. www.acaciapartnersllc.com

• Monument Group, a Boston-based fund placement firm, has promoted both Meredith Gendron (Boston) and Niklas Amundsson (Hong Kong) to partner. www.monumentgroup.com

• Steve Murray has joined Revolution Growth as a partner. He previously was with Softbank Capital. www.revolution.com/growth

• Ken Ziman has joined Lazard as a New York-based managing director in the firm’s restructuring unit. He previously was a partner with law firm Skadden, Arps, Slate, Meagher & Flom. www.lazard.com

Share today’s Term Sheet:
http://fortune.com/newsletter/termsheet

SPONSORED FINANCIAL CONTENT

You May Like