Some assorted notes to kick off your Tuesday...
• Big raise: Software-focused private equity firm Thoma Bravo, a private equity firm focused on software and tech-enabled services companies, yesterday said that it has closed its twelfth flagship fund with $7.6 billion in capital commitments. So I spent some time on the phone with managing partner Orlando Bravo, and here are a few takeaways:
1. This fund is significantly larger than past Thoma Bravo efforts, although not quite to the extent you might think. The firm raised about $1.3 billion for Fund X and nearly $3.7 billion for Fund XI, but then later buttressed both of them with "opportunities funds" in order to take advantage of increased deal-flow (due largely to cloud-driven market consolidation).
2. Bravo acknowledges that the multi-year Nasdaq run could mean his firm risks buying near a market top ― the private equity index for buying software companies has been increasing on a straight line since 2000, save for the financial crisis" ― and does believe we're at a peak in areas like "plain vanilla ERP software." That said, he still remains optimistic in value upside for cybersecurity and service vertical companies.
3. Thoma Bravo has been among the firms that occasionally busts through the Fed's leverage guidance, so I asked for his thoughts on the 6x quasi-rule. His reply: "In general I believe the concept is a good concept, since there are times when people are willing to take crazy, undue risks... but leverage multiples are not really clean, because a company you're buying may have $60 million in current EBITDA, but you believe your strategy will mean the company has $120 million in EBITDA if you buy it, and another firm maybe sees $80 million. I hope the regulatory environment and lenders themselves can adjust to that reality."
4. Bravo says that his firm has intentionally stayed away from the growth equity market, disliking the lack of control in such deals and the current competitive environment.
• Speaking of tech-focused buyout firms: Vista Equity Partners has not yet closed its new flagship fund, which many had expected to finish up just before Labor Day. LPs still expect it to (easily) hit its $10 billion cap, if not a bit more
• Bloody awful: In March we wrote about the collapse of Atherotech, an Alabama blood testing company that had been owned since 2010 by private equity firm Behrman Capital. It was a bizarre story that involved the company effectively being drained of capital by the misdeeds of a rival and a regional bank that apparently cared little for its local community.
Now, Behrman Capital is named as the sole defendant on a class action lawsuit brought by two former Atherotech employees, claiming that they were fired in violation of the WARN Act (it previously was co-defendant on a related case, which was voluntarily dismissed). There also is a parallel class proof of claim case against the current Atherotech entity, which is controlled by creditors.
As for the case against Behrman, it will have to prove that the private equity firm not only was a "single employer," but also that it would have been reasonable to have given Atherotech employees 60 days notice of their possible layoff. Through a spokesman, the private equity firm declined comment.
• Recommended reading: Lauren Smiley of BackChannel has a deep dive on the mess at Rothernberg Ventures, which apparently has rebranded as Frontier Tech Venture Capital. Basic rule: If you call an LP meeting amid reports that your firm is collapsing and under SEC investigation, perhaps you should let your LPs ask questions at said meeting.Read Lauren's piece by going here.
• Game Time: Our charity softball game at Fenway Park over the summer was rained out, but has now been rescheduled for Sept. 26 at 2pm. Because of the change of date, some of our original players can no longer participate. So if you'd like to play some ball at Fenway with some fellow Term Sheet readers, and donate to a very good cause ($909 per player), please let me know ASAP via email at email@example.com.
• Correction: Yesterday we incorrectly identified the title being given by KKR to David Welsh, who is joining the firm's tech-focused growth equity platform after eight years with Adams Street Partners. He will be a managing director.
THE BIG DEAL
• TPG Capital and Canada Pension Plan Investment Board each have agreed to invest $250 million for a combined 17% stake in the Bermuda-based parent company of Viking Cruises. Credit Suisse served as placement agent. www.vikingcruises.com
VENTURE CAPITAL DEALS
• Claroty, a New York and Israel-based provider of operational technology network protection, has raised $32 million in new VC funding. Backers include Bessemer Venture Partners, Innovation Endeavors, Market LLC, ICV, Red Dot Capital Partners and Mitsui & Co. www.claroty.com
• Cato Networks, an Israel-based “software-defined and cloud-based network with built-in enterprise security,” has raised $30 million in Series B funding. Greylock Partners led the round, and was joined by Singtel Innov8 and return backers U.S. Venture Partners, Aspect Ventures and company co-founders Schlomo Kramer and Gur Shatz. www.catonetworks.com
• Gitlab, an open-source code collaboration platform, has raised $20 million in Series B funding. August Capital led the round, and was joined by return backers Khosla Ventures and Y Combinator. Read more.
• Quandl, a Toronto-based data platform for investment professionals, has raised C$12 million in Series B funding. Nexus Venture Partners led the round, and was joined by return backer August Capital. www.quandl.com
• RackWare, a Fremont, Calif.-based provider of enterprise cloud management solutions, has raised $10 million in Series B funding. Signal Peak Ventures led the round, and was joined by return backers Kickstart Seed Fund and Osage Venture Partners. www.rackwareinc.com
• Crop Enhancement Inc., a Cambridge, Mass.-based provider of “sustainable chemistry formulations for agriculture applications,” has raised $8.5 million in Series B funding. MLS Capital and 1955 Capital co-led the round, and were joined by Bandgap Ventures and return backer Phoenix Venture Partners. www.crop-enhancement.com
• Point, a Palo Alto, Calif.-based home equity investment platform, has raised $8.4 million in Series A funding led by return backer Andreessen Horowitz. Other investors include Ribbit Capital, Bloomberg Beta, Vikram Pandit and Laurence Tosi. www.point.com
• OpenClassrooms, a French ed-tech platform focused on professional training and certification related to digital skills, has raised €6 million in new VC funding. Backers include BPI, Citizen Capital and return backer Alven Capital. Read more.
• Sourcery, a San Francisco-based digital payments and commerce platform for the food and hospitality industry, has raised $5 million in new VC funding. Marker LLC led the round, and was joined by Steadfast Capital. www.getsourcery.com
• Oath Craft Pizza, a Boston-based fast casual restaurant operator, has raised $4.5 million in Series A funding led by Breakaway. www.oathpizza.com
• InstaVR Inc., a San Francisco-based VR authoring, publishing and analysis startup, has raised $2 million in Series A funding led by The Venture Reality Fund. www.instavr.co
• Glory Sports International, a New York-based kickboxing league, has raised an undisclosed amount of Series B funding. Yao Capital (yes, Yao Ming's VC firm) led the round, and was joined by Liberty Global and return backer Twin Focus Capital. www.glorykickboxing.com
PRIVATE EQUITY DEALS
• Bain Capital, KKR and MBK Partners have moved into the second round of an auction for Japanese auto parts maker Calsonic Kansei Corp. (Tokyo: 7248), which has a market value of around $2.4 billion, according to Reuters. The bids would be for Nissan Motor Co.’s 41% stake, with the winning bidder expected to make a public tender for the remaining shares. Read more.
• The Carlyle Group and Atlas Merchant Capital have slowed their talks over acquiring Barclays PLC’s African business, according to Bloomberg. At issue, reportedly, are Carlyle’s concerns that Barclays would be reluctant to sell the unit to Atlas Merchant, because it is led by former Barclays CEO Bob Diamond. There also are regulatory approval worries. Read more.
• Centerbridge Partners and Friedman Fleischer & Lowe have agreed to acquire the vision unit of Highmark Health for approximately $2 billion, according to Reuters. Read more.
• Citigroup Inc. has received several private equity bids for its Canadian subprime lending business, which could be valued north of C$400 million, according to The Globe and Mail. Among the suitors is Ontario Teachers’ Pension Plan. Read more.
• Global Infrastructure Partners has agreed to acquire a 20% stake in listed Spanish natural gas distribution company Gas Natural SDG SA for approximately $4.3 billion. Sellers Repsol and Criteria each would unload 10% positions in the deal. Read more.
• Golden Gate Capital has acquired Tronair, a Holland, Ohio-based maker of ground support equipment for aircraft, from Levine Leichtman Capital Partners. No financial terms were disclosed. www.goldengatecap.com
• LG Lugar de Gente, a Brazilian HR software company owned by H.I.G. Capital, has acquired rival E-Guru Serviços em Tecnologia Educacional for an undisclosed amount. www.eguru.com.br
• Motion Dynamics Corp., a Fruitport, Mich.-based maker of precision wire-based components for the medical device, industrial and aerospace markets, has raised an undisclosed amount of private equity funding from Vance Street Capital. www.motiondc.com
• Nautic Partners has acquired Vantage Mobility International, a Phoenix-based manufacturer of wheelchair accessible vehicles. No financial terms were disclosed. Sellers include Evergreen Pacific Partners. www.vantagemobility.com
• Periscope Equity has made a “significant investment” in CISCOR Inc., a Norman, Okla.-based provider of life safety monitoring, notification and emergency call solutions to the rapidly growing assisted living facility market. No financial terms were disclosed. www.ciscor.com
• Providence Strategic Growth has acquired Untangle Inc., a Sunnyvale, Calif.-based provider of network security for small and mid-sized businesses. No financial terms were disclosed, except that Providence will contribute additional growth capital. www.untangle.com
• Quad Analytix, a portfolio company of Fig Tree Partners, has acquired Wiser, a San Francisco-based provider of retail pricing solutions. No financial terms were disclosed. www.quadanalytix.com
• Skyview Capital has acquired Digital Fuel, a provider of IT infrastructure spend and cost optimization software, from VMware Inc. (NYSE: VMW). No financial terms were disclosed. www.skyviewcapital.com
• Versa Capital Management has acquired Silver Airways LLC, a Ft. Lauderdale, Fla.-based commercial airline operator. No financial terms were disclosed. Sellers include Victory Park Capital Advisors. www.gosilver.com
• Valvoline Inc., a Lexington, Ky.-based branded automotive lubricant company being spun out by Ashland Inc. (NYSE: ASH), has set its IPO terms to 30 million shares being offered at between $20 and $23 per share. It would have an initial market cap of approximately $4.3 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol VVV, with BofA Merrill Lynch, Citigroup and Morgan Stanley serving as underwriters. Valvoline reports $133 million of net income on $936 million in revenue for the six months ending March 31, 2016, compared to $90.5 million of net income on $973 million in revenue for the year-earlier period. www.valvoline.com
• Apex Technology and PAG Asia Capital are in talks to sell the software unit of Lexmark International, a company that the two firms acquired earlier this year for $3.6 billion, according to Bloomberg. The deal could be valued at upwards of $1 billion. Read more.
• GTCR has hired UBS to find a buyer for Camp Systems, a Merrimack, N.H.-based maker of aircraft maintenance tracking software, according to Bloomberg. A deal could warner upwards of $2 billion. GTCR paid $675 million to purchase Camp Systems from Warburg Pincus in 2012. Read more.
• OpenText (Nasdaq: OTEX) has agreed to acquire the enterprise content division of Dell-EMC, a portfolio company of Silver Lake, for $1.62 billion. Read more.
• Teads, a New York-based video advertising platform, has acquired Brainient, a London-based interactive video startup. NO financial terms were disclosed. Last month, Teads raised $47 million in debt financing from BNPP, Bank of China, HSBC, Banque Palatine and BPI. Brainient backers include Credo Ventures, Atlas Venture, Estag Capital and 500 Ventures. Read more.
• Prosek Partners, a New York-based PR and financial communications firm, has acquired Los Angeles-based Muirfield Partners. No financial terms were disclosed. www.prosek.com
• Renesas Electronics (Tokyo: 6723) has agreed to acquire Intersil (Nasdaq: ISIL), a Milpitas, Calif.-based chipmaker, for around $3.2 billion in cash. The $22.50 per share deal represents a 14% premium to yesterday’s closing price for Intersil stock, and is expected to close by the end of next June. Read more.
FIRMS & FUNDS
• AirTree Ventures of Australia has raised A$250 million for a new early-stage VC fund and an opportunity fund. www.airtree.vc
• Lewis & Clark Ventures, a St. Louis-based VC firm, has raised $20 million for a new fund focused on agricultural tech startups. www.lewisandclarkventures.com
• TPG Capital is raising upwards of $1 billion for a global social impact fund, as first reported by the NY Times. Read more.
MOVING IN, ON & UP
• Robert Goldstein has joined McDermott Will & Emery as the New York head of its private equity team and corporate practice. He previously spent 17 years with Schulte Roth. www.mwe.com
• Mark Jenkins has joined The Carlyle Group as a managing director and head of global credit, plus a member of the firm’s management committee. He previously was a senior managing director and global head of private investments with Canada Pension Plan Investment Board. www.carlyle.com
• Dan Kim and Joe Tremblay have joined IMF Investors as business development directors in Chicago and New York, respectively. Kim previously was an associate partner for the global private equity and infrastructure group and Aon Hewitt Investment Consulting, while Tremblay was director of marketing at Talara Capital Management. www.ifminvestors.com
• George Parry and Kurt Lentz have joined Atlantic Street Capital as principals, while Sarah Robson has joined as VP of business development. Parry previously was a VP with Corinthian Capital Group, Lentz was a principal with Sun Capital Partners and Robson was a director at Axial. www.atlanticstreetcapital.com
• Adam Sokoloff has joined The Carlyle Group as a Washington, D.C.-based private equity executive focused on deals for the firm’s mid-market buyout and long-dated funds, according to Bloomberg. He previously led financial sponsors for Jefferies Group, but left back in March. Read more.
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