term sheet

By Dan Primack
April 18, 2016

Random Ramblings

Some notes before I head out to cheer on thousands of sneaker-clad masochists…

• Yahoo? On Friday we reported that there wouldn’t really be 40 bidders for Yahoo come today’s first-round deadline. In fact, we suggested that the actual number would come in below ten.

Maybe we were even a bit too optimistic. The WSJ reported late last night that several strategic suitors ― including at least two that held face-to-face meetings with Yahoo management ―have bailed. Among those listed by WSJ were Google parent Alphabet, AT&T, Comcast, IAC/Interactive and Fortune parent Time Inc.

Still in the mix is front-runner Verizon, along with likely solo bids from private equity firms KKR and TPG Capital (both of which would tap LP co-invests) and a private equity pairing of Bain Capital with Vista Equity Partners. It’s also possible that The Daily Mail could still hook up with one of those financial bidders, or one that hasn’t yet been publicly mentioned.

One thing I do wonder is if Verizon may be getting any cold feet about a deal that almost certainly would require massive layoffs, at the very time when it is in the midst of the nation’s largest labor strike in years…

• Two other quick thoughts: (1) Yahoo caught a very bad timing break in that Silver Lake likely would have taken a more serious look, if not for its ongoing focus on (and commitment to) the Dell-EMC transaction. (2) Starboard Value is indirectly to blame for how messy this process became, with Yahoo believing it needed to have its bankers contact far more potential buyers than is normal, so as to head of possible accusations of running a noncompetitive auction.

• Golden gate: Today’s big deal is that The Capital Partnership has agreed to acquire Northgate, the California-based venture capital and private equity fund-of-funds and direct investment manager with $4.8 billion in assets under management.

The press release says that Capital Partnership (based in London and Dubai) will acquire 100% in Northgate from India’s Religare Enterprises and Northgate management, but I’m told that the “100%” part is related to drag-along rights without the existing Religare contract. Northgate management, via an ESOP plan, is expected to soon own more of Northgate than it had previously.

• Today in Theranos: Elizabeth Holmes sat down for a taped interview with The Today Show’s Maria Shriver, which aired this morning. In it, the Theranos founder and CEO said that she is “devastated that we did not catch and fix these issues faster,” but that she has “no doubt” her blood-testing startup will survive. She and the company continue to await word from regulators as to if the latest fixes to its California facility are sufficient, and if she and her company’s president will be allowed to continue running the business.

• Shutting Shuddle: On Friday we mentioned the demise of Shuddle, a VC-backed  car service app aimed at families and senior citizens. I reached out to VC backer Kirsten Green (Forerunner Ventures) to ask what happened and if there were lessons to be learned for other service startups and their investors. Her reply, in part:

“We made what I would characterize as incredible strides towards demonstrating the demand and validity of the business model, in the last 6 months in particular, but we failed to secure capital given:

1. Fears of competition. This was particularly frustrating as this concern had as much to do with missing the true product we were offering as anything. Shuddle was not another on-demand company (by definition it was not on-demand) and more importantly it was not just a transportation service but more a family service than anything, along the lines of Care.com or UrbanSitter…

2. Perception that this was a 1% product. Not true if you looked at who the users were. And even than, yes, prices were higher than ideal. Instead of falsely pricing a product and subsidizing the other half of the equation (drivers), we chose to consider legit contribution margins, but they would come down in time with scale..
To me there is a clear ‘lesson’ of late, which I believe we identified in the process of creating priorities at Shuddle: balance growth aspirations with business model validation.  What good is demonstrating demand if you are unlikely to be able to offer the service at that price in the future?  Last year investors were turned on by growth, this year people want to understand how and when you will make money – which I am all in favor of! Also worth noting that my inbox was flooded yesterday with parents expressing disappointment, despair, frustration that the service would be no longer.” 

THE BIG DEAL

• The Capital Partnership (based in London and Dubai) has agreed to acquire 100% of the ownership in Northgate Capital, a California-based venture capital and private equity fund-of-funds and direct investment manager with $4.8 billion in AUM, from India’s Religare and certain members of Northgate’s management team. No financial terms were disclosed. www.northgatecapital.com


VENTURE CAPITAL DEALS

• Transactis, a New York-based provider of electronic billing and payment solutions, has raised $30 million in Series E funding from Capital One, Fifth Third, PNC, TD Bank, Wells Fargo and Safeguard Scientifics. www.transactis.com

• ClassDojo, a San Francisco-based online platform for teachers to share behavioral and other classroom information with parents, has raised $21 million in Series B funding. General Catalyst led the round, and was joined by GSV Capital, Reach Capital and SignalFire. www.classdojo.com

• HomeToGo, a New York-based search engine for vacation rentals, has raised $20 million in Series B funding. Insight Venture Partners led the round, and was joined by return backers DN Capital and Acton Capital Partners. www.hometogo.com

• Jugnoo, an on-demand auto-rickshaw ride service in India, has raised $10 million in Series B funding. Backers include Snow Leopard, Rocketship.vc and Paytm. Read more.

• Konux, a German industrial IoT startup, has raised $7.5 million in Series A funding from New Enterprise Associates, VC MIG, UnternehmerTUM and individual angels like Andy Bechtolsheim. www.konux.com

• Beekeeper, a platform for mobile workforces, has raised $5 million in VC funding. FYRFLY Venture Partners led the round, and was joined by b-to-v Partners, Polytech Ecosystem Ventures and individual angels. www.beekeeper.io

• TabMo, a French mobile marketing company, has raised €4 million from Ardian and Generis Capital. www.tabmo-group.io


PRIVATE EQUITY DEALS

• Chuze Fitness, a San Diego-based fitness chain, has raised an undisclosed amount of private equity funding from Main Post Partners. www.chuzefitness.com

• Elite Comfort Solutions, a foam platform sponsored by Arsenal Capital Partners, has acquired certain foam production assets from North Carolina-based Hickory Springs Manufacturing Co. for an undisclosed amount. www.arsenalcapital.com

• Forterra Building Products, a portfolio company of Lone Star Funds, has acquired U.S. Pipe, a Birmingham, Ala.-based provider of ductile iron pipe products for water distribution and water management applications in North America, from Wynnchurch Capital and Comvest Partners. No financial terms were disclosed. www.uspipe.com

• Janalakshmi Financial Services Ltd., an Indian microfinance group, has raised $150 million in new equity funding. TPG Capital led the round, and was joined by fellow return backers Morgan Stanley Private Equity Asia, Havells India, and Vallabh Bhansali. The company also announced $60 million in secondary equity transactions that will provide partial liquidity to some existing investors. www.janalakshmi.com

• Mister Car Wash, a Tucson, Ariz.-based portfolio company of Leonard Green & Partners, has acquired seven Venture Car Wash locations in Mississippi. No financial terms were disclosed. www.mistercarwash.com

• Macquarie Group has agreed to acquire the Maher Terminals New Jersey container terminal business from Deutsche Bank’s RREEF infrastructure investment unit. No financial terms were disclosed. Read more.

• Patriot Environmental Services, a Los Angeles-based provider of environmental services in the Western U.S., has raised an undisclosed amount of growth capital financing led by Angeleno Group and existing backer Solace Capital Partners. www.patriotenvironmental.com

• PDC Brands, a Stamford, Conn.-based portfolio company of Yellow Wood Partners, has acquired Original Additions, a UK-based maker of beauty accessory brands, from LDC. No financial terms were disclosed. www.pdcbrandsusa.com

• Sage Midstream Ventures, a Houston-based midstream energy infrastructure acquisition and development platform, has secured up to $500 million in equity commitments from Stonepeak Infrastructure Partners. www.sagemidstream.com

• Vista Equity Partners has agreed to acquire CVent Inc. (NYSE: CVT), a Tysons Corner, Va.-based cloud-based enterprise event management company, for $1.65 billion in cash. The $36 per share deal represents a 69% premium over Friday’s closing price. Sellers would include Insight Venture Partners, which holds nearly a 4.4% equity stake. www.cvent.com

• XIO Group of London has agreed to acquire J.D. Power & Associates, a Costa Mesa, Calif.-based market research firm, from McGraw Hill Financial (NYSE: MHFI) for $1.1 billion. Read more.


IPOs

• BioCardia Inc., a San Carlos, Calif.-based regenerative medicine company focused on developing therapeutics for cardiovascular diseases, has withdrawn its IPO registration due to “market conditions.” The company originally filed in June 2015, with plans to price around 3.85 million shares at between $12 and $14 per share. Cantor Fizgerald was serving as lead underwriter. www.biocardia.com

• Floor & Décor, a Smyrna, Ga.-based hard surface flooring retailer owned by Ares Management and Freeman Spogli & Co., has withdrawn registration for a $100 million IPO. No explanation was provided. The company had originally filed for its IPO in November 2014, with BofA Merrill Lynch listed as left lead underwriter. www.flooranddecoroutlets.com

• Three companies are expected to price IPOs on U.S. exchanges this week, according to Renaissance Capital. They are: SecureWorks, American Renal Associates and MGM Growth Properties. Read more.


EXITS

• Oracle (Nasdaq: ORCL) has acquired Croswise, an Israel-based provider of cross-device identification mapping solutions, for around $50 million. Crosswise had raised around $5 million in VC funding from firms like PErag Ventures, ZhenFund, Giza Venture Capital, OurCrowd and Horizons Ventures. Read more.

• Vestis Retail Group, a portfolio company of Versa Capital Management, announces plans to wind down retailer Sport Chalet in order to focus more resources on its Eastern Mountain Sports and Bob’s Stores brands. Vestis is a portfolio company of Versa Capital Management. www.versa.com


OTHER DEALS

• AstraZeneca (LSE: AZN) is preparing a takeover bid for Medivation (Nasdaq: MDVN), a San Francisco-based prostate cancer drug-maker that recently rejected a takeover offer from Sanofi (Paris: SAN), according to The Times of London. Medivation is currently valued at around $8.4 billion. Read more.

• Mobify, a Vancouver-based mobile customer engagement platform, has acquired Vancouver-based AI specialist Pathful, according to Fortune. Mobify recently raised C$10 million in venture funding led by Acton Capital Partners. Read more.


FIRMS & FUNDS

• Z9 Capital, a Miami-based VC firm led by Benzion Aboud, has raised $25 million for a new fund focused on South Florida-based startups. www.z9capital.com


MOVING IN, ON & UP

• Andreas Beroutsos has stepped down as EVP of private equity and infrastructure with Caisse de depot et placement du Quebec, which he joined in 2014 from McKinsey & Co. In a statement, Beroutsos said he wanted to spend more time with his family in New York. Read more.

• Stuart Gulliver will step down as CEO of HSBC in 2018, according to The Sunday Times. Read more.

• Chris Ragazzo has joined Stanwich Advisors as a managing director. He previously was a partner with Abbott Capital. www.stanwichadvisors.com

• Shravan Thadani has joined Trive Capital as a vice president. He previously was a VP with Sequel Holdings. www.trivecapital.com

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