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Term Sheet — Wednesday, April 20

Apr 20, 2016

Random Ramblings

Some notes to kick off your Wednesday:

• Answer Key: Yesterday I asked you to name the well-known venture capitalist who just launched a hedge fund on the side. The anwer was Chamath Palihapitiya, a former Facebook executive and founder of venture firm Social Capital.

Palihapitiya declined to confirm or discuss the new effort, citing regulatory restrictions. But recent SEC filings show that an umbrella organization called Social Capital PEP Management will launch next month, with plans to house both the existing venture capital funds (which have $1.27 billion in total AUM) and a new long/short public equities effort.

No target size is listed for the hedge fund business, which it seems will be led by Palihapitiya and new Social Capital partners Carl Anderson and Sakya Duvvuru. Anderson previously was a managing director and portfolio manager with Glynn Capital Management. Duvvuru spent the past three years managing the portfolio for Weaving Capital, a small long/short hedge fund that managed money for Palihapitiya and other Social Capital employees (unlike the new effort, which will manage third-party capital).

In January 2015, Palihapitiya tweeted that Weaving was up 21.24% for 2014 and at +73.3% since inception. Most other tweets associated with Weaving Capital referred to publicly-held technology companies, but it is unclear if the new Social Capital hedge fund will focus exclusively on tech. Perhaps Palihapitiya will share more details on May 4 at the annual Sohn Investment Conference in New York, where he is scheduled to speak. Or maybe he'll just brag about the Golden State Warriors, in which he holds an ownership interest...

• Deal data: Global mid-market M&A, defined as deals valued at upwards of $500 million, was down 5.1% year-over-year in Q1, according to Thomson Reuters. This includes a 10.% dip for U.S. targets. In terms of small-cap M&A (<$50m), there was a 2.3% global drop and a whopping 45.6% decrease for U.S. targets.

• That's So Mavens: Re/Code and others are reporting that the joint bid for Yahoo from Bain Capital and Vista Equity Partners includes involvement from several former company executives, including ex-interim CEO Ross Levinsohn (a onetime VC who was pushed aside for Marissa Mayer).

According to Reuters, other private equity bids came from Apax Partners, Apollo Global Management (yeah, that surprises me too), Warburg Pincus and TPG Capital. Plus Cerberus-backed YP Holdings. One new strategic name that emerged yesterday was Japan's Rakuten, although Verizon remains in pole position.

• Buy gold (plated lettering): My Fortune colleague Steve Gandel sat down yesterday with Donald Trump for an interview. Among the takeaways:

(1) Trump believes Janet Yellen has done a "a serviceable job" as Fed chair, but he'd "be more inclined to put other people in" when her term expires. (2) Trump does not believe the Fed should raise interest rates. (3) He walked back recent comments to the Washington Post about wanting to eliminate the national debt within eight years, saying instead that "you could pay off a percentage of it, depending on how aggressive you want to be."

Here is Steve's post. A full transcript will be posted tomorrow, along with a new Fortune cover story on how Trump runs his business, and what it says about how he would lead the country.

THE BIG DEAL

• Apex Technology  of China and PAG Asia Capital have agreed to acquire Lexmark International Inc. (NYSE: LXK), a Lexington, Ky.-based maker of printers and other hardware and software solutions, for approximately $3.6 billion. The $40.5o per share deal represents a 30% premium to where Lexmark stock was trading on October 21, 2015, which is the day before it announced plans to explore strategic alternatives. In addition to Apax and PAG Asia Capital, the investor consortium also includes Legend Capital. Read more.

VENTURE CAPITAL DEALS

•  Cabify, a Madrid-based ride-hailing app that is active in both Spain and Latin America, has raised $120 million in Series C funding led by Japan’s Rakuten at a $320 million post-money valuation. Read more.

•  Second Genome Inc., a South San Francisco-based drug developer that leverages microbiome science, has raised $42.6 million in Series B funding. Pfizer Venture Investments and Roche Venture Fund co-led the round, and were joined by Digitalis Ventures, Adveq, LifeForce Capital, MBL Venture Capital, the Mayo Clinic and return backers Advanced Technology Ventures, Morgenthaler Ventures and the Seraph Group. www.secondgenome.com

•  Brighter, a Santa Monica, Calif.-based online marketplace that connects users with dentists, has raised $21 million in Series D funding. General Catalyst led the round, and was joined by DAG Ventures and return backers Mayfield, Benchmark and Tenaya Capital. www.brighter.com

•  PrecisionHawk Inc., a Raleigh, N.C.-based provider of data and safety services for the commercial drone industry., has raised $18 million in Series C funding. Verizon Ventures, USAA, NTT Docomo Ventures and Yamaha Motor Ventures were joined by return backers Intel Capital, Innovate Indiana Fund and Millennium Technology Value Partners. Read more.

•  1mg, an India-based online pharmacy and platform for finding medical labs, has raised $16 million in Series B funding. Maverick Capital Ventures led the round, and was joined by return backers Sequoia Capital India and Omidyar Network. Read more.

•  Bugcrowd Inc., a San Francisco-based provider of crowdsourced enterprise security solutions, has raised $15 million in Series B funding. Blackbird Ventures led the round, and was joined by Industry Ventures, Salesforce Ventures and return backers Rally Ventures, Costanoa Venture Capital and Paladin Capital Group. www.bugcrowd.com

•  Takipi, an Israel-based developer of code debugging solutions for developers, has raised $15 million in Series B funding. Lightspeed Venture Partners led the round, and was joined by return backer Menlo Ventures. www.takipi.com

•  Enterome Bioscience SA, a Paris-based developer of drugs and diagnostics based on the gut microbiome, has raised €14.5 million in Series C funding. Return backers Seventure and Lundbeckfond Ventures co-led the round, and were joined by new investor Nestlé Health Science. www.enterome.com

•  TapInfluence, a Boulder, Colo.-based provider of influencer marketing automation solutions, has raised $14 million in new VC funding. Noro-Moseley Partners led the round, and was joined by Knollwood Investment Advisory, MergeLane and return backers Grotech Ventures and Access Venture Partners. www.tapinfluence.com

•  Yummy Express, a Beijing-based provider of online-to-offline logistics and operations services, has raised $10 million in Series C funding. ClearVue Partners led the round, and was joined by SBCVC.

•  CareerFoundry, a Berlin-based online school for tech careers, has raised $5 million in Series A funding from Tengelmann Ventures, Bauer Venture Partners and IBB Beteiligungsgesellschaft. www.careerfoundry.com

•  SkySafe, a San Diego-based startup that can disable drones flying where they shouldn’t, has raised $3 million in seed funding. Andreessen Horowitz led the round, and was joined by Founder Collective and SV Angel. Read more.

•  Wootric, a San Francisco-based in-app platform “measuring customer happiness,” has raised $2.6 million in Series A funding. Cloud Apps Capital Partners led the round, and was joined by CSC Upshot. www.wootric.com

PRIVATE EQUITY DEALS

•  American Securities has acquired North American Partners in Anesthesia, a Melville, N.Y.-based anesthesia management company, from Moelis Capital Partners. No financial terms were disclosed. www.napaanesthesia.com

•  Battery Ventures has agreed to acquire Goldleaf Enterprise Payments Inc. (f.k.a. Alogent Corp.), an Alpharetta, Ga.-based provider of enterprise payment processing software, from Jack Henry & Associates (Nasdaq: JKHY). No financial terms were disclosed. www.jackhenry.com

•  Francisco Partners has agreed to acquire SintecMedia, an Israeli provider of cloud-based media management software, from Riverwood Capital for around $400 million, according to Calcalist. Read more.

•  GI Partners has completed its previously-announced acquisition of Netsmart Technologies Inc., an Overland Park, Kansas-based healthcare IT company, from Genstar Capital. The deal was being done in partnership with Allscripts Healthcare Solutions (Nasdaq: MDRX), which merged its homecare software group with Netsmart (creating a combined company with more than $250m in annual revenue). The deal was valued at around $950 million, of which $612 million was being financed via new leveraged loans. www.ntst.com

•  Goldman Sachs and Bass Pro Shops are partnering on a takeover bid for Cabela’s Inc. (NYSE: CAB), a Sidney, Neb.-based hunting and fishing products retailer, according to Reuters. Cabela’s has a current market cap of around $3.6 billion. Read more.

•  GP Investments Acquisition Corp. (Nasdaq: GPIA), a unit of Brazil’s GP Investments, has agreed to acquire World Kitchen LLC, maker of Pyrex and Corelle kitchenware, for $566 million in cash and stock. Sellers would include Oaktree Capital Management and W Capital Partners. www.worldkitchen.com

•  One Rock Capital Partners has agreed to acquire the Hawaii refinery of Chevron Corp. (NYSE: CVX). No financial terms were disclosed. As part of the deal, all Chevron gas stations in Hawaii will become Texaco stations. www.chevron.com

•  United Language Group Inc., a Minneapolis-based backed by Northern Pacific Group, has agreed to acquire Merrill Brink International, the language services division of Merrill Corp. No financial terms were disclosed.

•  Valtris Specialty Chemicals, an Independence, Ohio-based portfolio company of H.I.G. Capital, has acquired Akcros Holdings Ltd., a UK-based provider of specialty chemicals used as additives in the production and processing of polymers, paint, and coatings. No financial terms were disclosed. www.valtris.com

IPOs

•  MGM Growth Properties LLC, a gaming property REIT backed by MGM Resorts, raised $1.05 billion in its IPO. The company priced 50 million shares at $21 per share (high end of range), and will trade on the NYSE under ticker symbol MGP. Read more.

•   Saudi Arabian Oil Co. (a.k.a. Aramco) has picked J.P. Morgan and M Klein & Co. to lead manage its eventual IPO, according to Bloomberg. Read more.

EXITS

•  Investcorp has agreed to sell CSIdentity, an Austin, Texas-based provider of identity theft protection solutions to businesses and government agencies, to Experian (LSE: EXPN) for $360 million. www.csid.com

FIRMS & FUNDS

•  Crunchfund, the seed-stage VC firm co-founded by Michael Arrington, is raising upwards of $30 million for its third fund, according to a regulatory filing.

MOVING IN, ON & UP

•  Rich Gallivan has joined Mizuho Bank Americas as a managing director and head of TMT investment banking for North America. He previously was with Barclays as a managing director and head of global software and enterprise solutions. www.mizuhobank.com

•  Neil Johnson has been named non-executive chairman and director of Electra Private Equity, a London-listed private equity firm. He succeeds interim chair Kate Barker. Read more.

•  Rafi Syed has joined Khosla Ventures as a principal. He previously was COO of Maven Clinic and, before that was a senior associate with Bessemer Venture Partners and a product manager at Foursquare. www.khoslaventures.com

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