Repeat greetings from New York City, where this morning we are using a different email provider and have a slightly different look (hopefully it will improve mobile rendering). If our changes have created any new problems, please be sure to let me know. Now some notes…
• New firm alert: Bob Knibb and Jesse Liu have stepped down as partners with Arlington Capital Partners, in order to launch a new Washington, D.C-based private equity firm focused on lower middle-market companies in the tech, aerospace/defense and industrial/advanced manufacturing sectors.
It’s being called Washington Capital Partners, and also includes Hagen Saville, co-founder and former CEO of MCG Capital. Knibb had co-founded Arlington Capital Partners back in 1999, while Liu had been there since 2003.
• Another new firm alert: Andrew Ward is quietly launching a new energy sector-focused private equity firm, after nearly 15 years as a partner with Riverstone Holdings (where he was on the management and investment committees). His deals at Riverstone included Gibson Energy, HES International, Kinder Morgan, Magellan, Mistral Energy, Niska Gas Storage, PVR Partners and USA Compression.
• Metamorphosis: Metamorphic Ventures has a new name and a new fund. The New York-based seed investment firm today is rebranding as Compound, which it believes is a better reflection of its investment strategy evolution from B2B mobile transformation startups (i.e., the intersection of digital media and digital commerce) to one that also encompasses such developments as cloud computing and consumer-facing mobile developments.
It also is announcing a $50 million third fund, and the addition of Dan Zigmond (director of analytics at Facebook) as a board partner. This is a bit smaller than the $70 million raised for Fund II, but Compound co-founder David Hirsch says that’s because the firm strayed a bit from its seed-stage knitting last time around (going more “full stack early-stage) and is pulling back. He also mentions that there has been a definite decrease in seed-stage valuations over the past year, save for startups led by serial entrepreneurs with demonstrable wins on their resumes.
• Twitter talk. Lots of speculation this week about Twitter soliciting takeover bids, from possible suitors like Disney, Google and Salesforce (the latter of which actually makes more sense than it might seem at first blush). Presumably a sale would mean the exit of Jack Dorsey, at least as CEO, which means he could focus full-time on his other CEO gig at Square. But so far this week, Square shareholders don’t seem to care one way or another. It opened at $11.58 per share on Monday, and closed trading yesterday at $11.64 per share.
As an aside, Jim Cramer mentioned on CNBC this morning that some folks in Silicon Valley are now comparing Twitter to MySpace, which obviously is not meant as a compliment. But I just don’t see it. MySpace had lots of contemporary rivals (Facebook, Friendster, Bebo, etc.), at least one of which did the job much better. Twitter rivals (including product offerings from Google and Facebook) basically fell by the wayside, and there don’t seem to be any startups taking direct aim. Perhaps this lack of direct competition has become problematic for Twitter (i.e., less urgency to innovate), but that doesn’t make it MySpace 2.0.
• Aftermarket: Yesterday we mentioned a Renaissance Capital stat about how aftermarket performance of U.S. IPOs have under-performed the S&P 500 in 2016. This prompted an important contextual follow-up from Renaissance’s Kathy Smith: “It is true that going back to January 1 it has lagged the S&P. That is because returns were so poor in January/mid-February and thus the IPO window was closed for issuance. Since mid-February to date, the IPO ETF has been outperforming significantly. This explains why the IPO window began opening up in the 2Q and 3Q this year.”
THE BIG DEAL
• Bain Capital and The Blackstone Group are in talks to acquire Team Health Holdings (NYSE: TMH), a Knoxville, Tenn.-based provider of outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers, according to the WSJ. Team Health shares jumped on the report, giving it a market cap of around $2.8 billion. Read more.
VENTURE CAPITAL DEALS
• Clearpath Robotics, a Canadian developer of unmanned vehicles for industrial applications, has raised $30 million in new VC funding. iNovia Capital led the round, and was joined by Caterpillar Ventures, GE Ventures, Eclipse Ventures, RRE Ventures, and Silicon Valley Bank. Read more.
• Enable Injections Inc., a Cincinnati-based developer of wearable large volume injectors for subcutaneous delivery of biologics and high-volume drugs, has raised $30 million in Series A funding led by ORI Healthcare Fund. www.enableinjections.com
• DiCentral Corp., a Houston-based provider of B2B integration and supply chain management solutions, has raised $15 million in Series A funding led by Kayne Partners. www.dicentral.com
• Moxe Health, a Madison, Wis.-based platform for “bi-directional flow of information between healthcare payers and providers,” has raised $5.5 million in Series A funding led by Safeguard Scientifics. www.moxehealth.com
• Wine n Dine, a New York-based “food-centric social discovery app” for restaurants and dishes, has raised $2.5 million in seed funding from Jordache Ventures, The Chetrit Group and Melo7 Tech Partners. www.winendine.com
• VRChat, a San Francisco-based social VR platform, has raised $1.2 million in seed funding from HTC, Rothenberg Ventures, GREE VR Capital and Brightstone Venture Capital. www.vrchat.net
PRIVATE EQUITY DEALS
• BlackRock and TPG Capital are among those showing early interest in acquiring a 49% stake in state-owned SriLankan Airlines Ltd., according to Reuters. Read more.
• The Carlyle Group has acquired Cupa Group, a Spain-based maker of slate and stone products for roofing and other applications. No financial terms were disclosed. Sellers include Abanca. www.carlyle.com
• Episerver, an Oakbrook Terrace, Ill.-based provider of cloud-based digital experience management solutions, has acquired two companies: Optivo, a German provider of omnichannel campaign management and customer intelligence solutions from Deutsche Post AG; and Peerius, a London-based provider of omnichannel personalization in the cloud, from shareholders like Beringea. No financial terms were disclosed for either deal. www.episerver.com
• GFL Environmental Inc., a portfolio company of Hawthorn Equity Partners, has acquired Rizzo Environmental Services Inc., a Sterling Heights, Mich.-based provider of solid waste collection services, from Kinderhook Industries. No financial terms were disclosed. www.gflenv.com
• Grey Mountain Partners has agreed to acquire Kronos Foods Inc., a Glendale Heights, Ill.-based Mediterranean food manufacturer and distributor, from Prospect Partners. No financial terms were disclosed. www.kronosproducts.com
• Industrial Growth Partners has acquired Southern Petroleum Laboratories Inc., a Houston-based provider of lab analysis, measurement and allocation services of hydrocarbon products for the oil and gas industry, from Hastings Equity Partners. No financial terms were disclosed. www.spl-inc.com
• Investcorp is in talks to acquire Agromillora Group, a Spanish olive and fruit tree business, from Nazca Capital, according to Bloomberg. The deal could be worth around €200 million. Read more.
• Linden Capital Partners has acquired ProPharma Group, an Overland Park, Texas-based provider of outsourced medical information, pharmacovigilance and compliance consulting services to the life sciences industry. No financial terms were disclosed. Sellers include Jump Capital. www.propharmagroup.com
• Montagu Private Equity has entered into exclusive negotiations to acquire Aqua Lung, a provider of personal aquatic equipment for recreational and professional use, from Air Liquide (Paris: AI). www.airliquide.com
• New Water Capital has acquired The Worth Collection Ltd., a New York-based direct-to-consumer women’s fashion apparel company, from L Catterton. No financial terms were disclosed. www.worthny.com
• Parthenon Capital Partners has sponsored a majority recapitalization of BillingTree, a Phoenix-based provider of payments solutions to the healthcare, ARM and financial services industries. No financial terms were disclosed. www.billingtree.com
• Permanent TSB of Ireland is nearing a deal to sell the remainder of its Capital Home Loans mortgage portfolio to Cerberus Capital Management, according to Reuters. Read more.
• Permira has agreed to acquire Tricor Holdings Ltd., the share registry business of Hong Kong-based Bank of East Asia, for approximately $838 million. Read more.
• Tailwater Capital has made a $100 million equity commitment to help form Producers Midstream LP, a Dallas-based provider of midstream infrastructure solutions to upstream energy operators. www.tailwatercapital.com
• Torque Capital Group has agreed to acquire the North American and European light vehicle aftermarket business of Indiana-based Remy Inc. from BorgWarner (NYSE: BWA). No financial terms were disclosed. www.remyinc.com
• Warburg Pincus has agreed to acquire Ascentium Capital, a Kingwood, Texas-based equipment finance company with over $1.1 billion in assets. No financial terms were disclosed. www.ascentiumcapital.com
• Coupa Software Inc., a San Mateo, Calif.-based corporate spend management platform, has increased its IPO terms to 7.4 million shares being offered at between $16-$18 per share (previously was 6.7m shares being offered at $14-$16). It would have an initial market cap of approximately $818 million, were it to price in the middle of its revised range. The company plans to trade on the Nasdaq under ticker symbol COUP, with Morgan Stanley serving as left lead underwriter. Coupa reports a $24 million net loss on around $60 million in revenue for the first half of 2016, compared to a $25 million net loss on $34.5 million in revenue for the year-earlier period. It has raised over $160 million in VC funding from firms like Mohr Davidow Ventures (16.3% pre-IPO stake), Battery Ventures (16.2%), El Dorado Ventures (13.9%), BlueRun Ventures (12.7%), Crosslink Ventures (11.1%), ICONIQ (5.1%), Rally Ventures and T. Rowe Price. www.coupa.com
• GDS Holdings, a China-based data center operator, has filed for a $200 million IPO. It plans to trade on the Nasdaq under ticker symbol GDS, with Credit Suisse and J.P. Morgan serving as co-lead underwriters. It reports a $23.2 million net loss on $67.3 million in revenue for the first half of 2016. Shareholders include ST Telemedia (45.1% pre-IPO stake), SB China Venture Capital (18.1%) and Ping An Insurance (9.9%). www.gds-services.com
• Zhong An Online P&C Insurance, a Chinese online insurance brokerage, has picked Credit Suisse, J.P. Morgan and UBS to lead a Hong Kong IPO that could raise upwards of $2 billion, according to IFR. Read more.
• The Blackstone Group has agreed to sell Pactera Technology International, a Chinese IT outsourcing company, to a unit of HNA Group for $675 million in cash, according to the WSJ. Read more.
• CVC Capital and Leonard Green & Partners have hired Goldman Sachs to find a buyer for Leslie’s Poolmart Inc., a Phoenix-based swimming pool retailer that could be valued at nearly $2 billion (including debt), according to Reuters. Read more.
• Evolent Health (NYSE: EVH) has agreed to acquire Valence Health Inc., a Chicago-based provider of clinical integration and data management software, for approximately $145 million. Valence had raised around $45 million in VC funding from firms like Flare Capital Partners, GE Ventures, Heritage Group and North Bridge Growth Equity. www.valencehealth.com
• Nokia (NYSE: NOK) has acquired Eta Devices, a Cambridge, Mass.-based provider of power amplifier solutions for network base stations. No financial terms were disclosed. Sellers included the VC arm of Deutsche Telekom. Read more.
• Asahi Group Holdings (Tokyo: 2502) is planning to bid more than $4.87 billion to acquire SABMiller‘s (LSE: SAB) beer business in five Eastern European countries, according to the Nikkei business daily. Read more.
• Constellation Brands (NYSE: STZ) has agreed to acquire High West Distillery, a Utah-based whiskey distillery, for approximately $160 million. Read more.
• MUFG Investor Services has completed its previously-announced acquisition of Rydex Fund Services, a 1940-Act mutual fund administration business, from Guggenheim Partners. No financial terms were disclosed. www.mufg-investorservices.com
• Sompo, a listed Japanese insurer, has agreed to acquire property and casualty insurer Endurance Specialty Holdings (NYSE: ENH) for around $6.3 billion, or $93 per share. Read more.
FIRMS & FUNDS
• KKR is not planning to raise a second China-focused growth equity fund, according to Reuters, which adds that the firm instead will focus on “larger, more profitable buyouts” in China. Read more.
• Morgan Stanley is considering a secondary sale process for between $1 billion and $2 billion in alternative asset funds, including private equity and infrastructure funds, according to Private Equity International. Houlihan Lokey would manage the process. www.morganstanley.com
• MTS Health Investors, a healthcare-focused private equity firm, has closed its fourth fund with $365 million in capital commitments.
• Nazca Capital, a Spanish private equity firm, that that it is nearing a final close on its fourth fund at its €275 million hard cap. www.nazca.es
• Seacoast Capital has closed its fourth fund with $239 million in capital commitments. The firm makes equity and subordinated debt investments in lower middle-market companies, out of offices in Boston and San Francisco. www.seacoastcapital.com
• Tanarra Capital of Australia is raising up to A$250 million for a new credit fund focused on Asia loans, according to Reuters. It will be co-led by new hires Michael Tierney (ex-Credit Suisse) and Peter Szekely (ex-ANZ). Read more.
MOVING IN, UP AND ON
• Stephan Eberle has joined Scale Venture Partners as general counsel. He previously was deputy general counsel at Silicon Valley Bank. www.scalevp.com
• Simon Evers has joined law firm Crowell & Moring LLP as a London-based partner focused on M&A and other strategic corporate transactions. He previously was with Davis Polk & Wardwell LLP. www.crowell.com
• John Vaske is retiring from Goldman Sachs, where he serves as co-chairman of mergers and acquisitions. Read more.
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