On deals and dealmakers.

By Erin Griffith
December 12, 2016

TWINKIE RETURN, LAYOFF WATCH, AND THE NEW AUSTERITY

The New York Times published a big feature on private equity over the weekend. It takes a slightly lighter touch than certain past magazine covers… A few takeaways:

• We are going to be trying to find new, accessible ways to explain private equity, and why people should care about it, to the average person, forever. This article uses Apollo Global Management and Metropoulos & Company’s turnaround of Hostess — a blockbuster 13x return in four years — to illustrate the point. It doesn’t mention that 13x is not a typical return for a PE firm.

• The article stops short of accusing Apollo of maliciously killing jobs and sucking value out of an organization like a vampire, since Hostess was already bankrupt when Apollo came along. However, it does criticize PE’s use of dividends and tax credits, and tiptoes around the awkward pension tension: PE firms often take investments from the very unions whose jobs they may be eliminating.

• Thanks to the big PE IPOs of the last ten years, we actually have some transparency on how much money private equity bosses make. And it’s a lot. More than tech CEOs. More than bank CEOs. More than Larry Ellison, who is in a category of his own. I’m not sure how long that will last, though. Every person on this list (except maybe the bottom two) is near retirement; that’s why they took their firms public to begin with. I don’t see their successors taking home $800 million salaries.

• Hostess has a long history with private equity and with bankruptcy, and it’s not over yet. The company didn’t fare so well under its prior PE owners, Ripplewood Holdings. (For more background on that, read Fortune’s feature on it from 2012.) And now Apollo has passed it off to another firm, Gores Group.

• What’s Up With Windrose: A month ago, Term Sheet reported that Windrose Advisors, a Waltham-Mass.-based wealth management firm serving family offices, endowments and foundations, had laid off a portion of its staff, including two key players from its alternatives investment team: Andy Gribbel, a director of the firm’s private equity practice, and Kathleen Kisler. I’ve since heard from multiple sources that the firm hasn’t told its clients about the change, and bizarrely, has added the profiles of the laid off staffers back to its website.

• The New Austerity: The employee perks at Google are legendary, and they’ve always included an over-the-top holiday gift for every employee. In the past, the company has surprised its 70,000 employees with Nexus phones, Android smartwatches, and Chromebooks.

This year employees speculated they might get Google’s new Pixel phones or a Google Home unit, the company’s competitor to Amazon’s Echo. But they forgot: They don’t work for Google anymore. They work for Alphabet. Instead of a shiny new gadget, Alphabet employees got an email.

Last week Bloomberg published a bruising story about the new, cost-conscious regime of Alphabet, driven by its corporate re-organization and its ex-Wall Street CFO, Ruth Porat. Shortly after the story hit, employees were informed that their holiday gift this year was a donation to charity, Fortune has learned. Alphabet donated $30 million worth of Chromebooks, phones, and associated tech support to schools on its employees’ behalf.

Alphabet likely would have spent around the same amount of money on its holiday gifts, so it’s not exactly a cost-saving move. But the decision signals a shift in culture for the company, from perks run amok to responsible corporate citizen. An Alphabet spokeswoman declined to comment.

• Layoff Watch: On Friday I published a round-up of all the startups that have undergone year-end layoffs in recent weeks, including one that wasn’t in previous editions of Term Sheet: Delphix, a provider of data visualization software. The company confirmed it off 40 employees, though multiple sources say the total was higher.

Delphix has raised $119 million from Fidelity Investments, Icon Ventures, Greylock Partners, Summit Partners, Lightspeed Venture Partners, In-Q-Tel, The Kraft Group, and Credit Suisse NEXT Investors.

In a statement, the company said, “Our refreshed executive team also reflects the evolving market opportunity. With these changes, Delphix is well positioned to continue helping hundreds of the world’s largest organizations become more agile and innovate at greater speed.”

• New Fund Alert: Bill Gates has gathered some bold-faced billionaire names for his new cleantech fund, Breakthrough Energy Ventures Fund. That includes: John Doerr, Jack Ma, Vinod John Arnold, Jeff Bezos, and Hasso Plattner  My colleague Kirsten Korosec has the scoop on the $1 billion vehicle here.

 


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VENTURE DEALS

BlueRock Therapeutics, a Toronto-based regenerative medicine company, raised $225 million in Series A funding from Bayer (DB:BAYN) and Versant Ventures.

Houseparty, a San Francisco and Tel Aviv-based maker of a group video chat app, raised $50 million in new funding, according to the Wall Street Journal. Sequoia Capital led the round, with participation from existing investors Aleph, Comcast Ventures and Greylock Partners. Houseparty was previously known as Life on Air, the company behind video broadcasting app Meerkat. Read more.

Dynamic Signal, a San Bruno, Calif.-based provider of workplace communication tools, raised $25 million in new funding from Akkadian Ventures, Microsoft Ventures and Focus Ventures, Trinity Ventures, Venrock, Rembrandt, and Time Warner.

Pendo, a Raleigh, N.C.-based developer of product engagement software, raised $20 million in Series B funding. Spark Capital led the round, and was joined by Battery Ventures, Contour Venture Partners, Core Capital Partners, IDEA Fund Partners and Salesforce Ventures.

Tact, a Redwood City, Calif.-based developer of sales automation software for enterprises, raised $15 million in Series B funding. Upfront Ventures led the round, and was joined by Microsoft Ventures, Kevin Efrusy of Accel Partners, and Satish Dharmaraj of Redpoint Ventures.

QGel, a Lausanne, Switzerland-based biomaterials company developing synthetic gels for 3D in vitro growth of miniature human organs and tumors, raised $12 million in funding.

ApoGen Biotechnologies, a Seattle-based company that develops drugs for cancer treatment, raised $7 million in Series A funding. Investors include Accelerator Corporation, AbbVie Ventures, Alexandria Venture Investments, ARCH Venture Partners, Eli Lilly and Company, Johnson & Johnson Innovation – JJDC, Watson Fund, WRF Capital, and WuXi PharmaTech.

Mojio, a Vancouver-based company that builds software for connected cars, raised an additional $7 million in Series A funding, bringing the round’s total to $15 million. This item has been corrected to note that Mojio builds software, not hardware.

Lunar Way, a Danish banking mobile app, raised €4.2 million ($4.4 million) in new funding. SEED Capital Denmark led the round, with participation from a number of unnamed angel investors and Nykredit, according to TechCrunch. Read more.

 Zepl, a data analytics company formerly known as NFLabs, raised $4.1 million in Series A funding. Vertex Ventures led the round, and was joined by Translink Capital, Specialized Types, and Big Basin Capital.

Blackmore Sensors and Analytics Inc., a Bozeman, Mont.-based developer of Lidar engines, raised $3.5 million in Series A funding. Next Frontier led the round, and was joined by Millennium Technology Value Partners.

Wallarm, a Menlo Park, Calif. cybersecurity company and Y-Combinator alum, raised $2.3 million in funding, according to TechCrunch. Investors include Partech Ventures and Gagarin Capital, enterprise security experts, and YC partners. Read more.

Investoo.com, a London-based online education company that offers Forex, Binary Options and CFD courses, raised $2 million in funding from Optimizer Invest, Kinetic Investments and Right Casino’s Sam Miranda.

Grab, a Singapore-based ride-hailing company, raised an undisclosed amount of funding from Honda, a Japanese automaker, as part of its $750 million Series F series, which was announced in September. Read more at Fortune.


PRIVATE EQUITY DEALS

AnaCap Financial Partners, a London-based private equity firm, has agreed to acquire Barclays’ (LSE:BARC) French retail banking business, according to Reuters. Read more.

Aden + Anais, a New York City marketer of fabric products for infants and toddlers owned by Swander Pace Capital, has acquired Halo Innovations, a Minnetonka, Minn. manufacturer of wearable blankets for babies. Financial terms were not disclosed.

Blue Wolf Capital Partners, a New York-based private equity firm, has acquired the assets of Extreme Plastics Plus, a Fairmont, W.Va environmental containment company that serves the domestic oil and gas industry. Financial terms were not disclosed.

Vaco Healthcare, a Brentwood, Tenn.-based provider of staffing, consulting, and recruiting services for the biotech and medical industries backed by QUAD-C Management, has acquired Pivot Point Consulting, a Bellevue, Wash.-based healthcare IT consulting company.


OTHER DEALS

Boeing (NYSE:BA) has signed a deal to sell 80 airplanes to Iran for $16.6 billion. Read more at Fortune.

CBS (NYSE:CBS) and Viacom (NASDAQ:VIA) will not go through with their proposed merger, according to CNBC. Shari Redstone, vice chair of the board for both companies, has decided to keep Viacom independent. Read more.

21st Century Fox, a New York City-based media company, reached a preliminary deal to acquire full control of Sky, a London-based satellite broadcasting and media company, for (£11.2 billion ($14.1 billion), according to Bloomberg. 21st Century Fox already owns 39% of Sky. Read more.

Amundi, a French asset manager, has agreed to buy UniCredit’s (BIT:UCG) asset-management division Pioneer Investments for €3.6 billion ($3.8 billion), according to Reuters. Read more.

Sibanye Gold, a South African producer of gold, has acquired Stillwater Mining, a Billings, Mont.-based miner of platinum and palladium, for $2.2 billion.

Philips, a Dutch technology company, has agreed to sell an 80% stake in Lumileds, its San Jose, Calif.-based LED components and car lighting business, to Apollo (NYSE:APO) for $1.5 billion in cash in a deal that values the company at $2 billion including debt. Read more at Fortune.

Teledyne Technologies (NYSE:TDY) has agreed to buy E2V Technologies (LSE:E2V) for £620 million ($780 million) in cash. At 275 pence per, Teledyne’s offer represents a 48% premium on E2V’s closing price on Friday.

Zurich Insurance Group (SWX:ZURN) has agreed to acquire Cover-More Group (ASX:CVO) for A$741 million ($551.16 million), according to Reuters. Read more.

Generator Hostels, a London-based youth hostels operator, is readying to sell itself in a deal valued at up to $500 million, according to a report in the Wall Street Journal. Brookfield Asset Management (TSX:BAM.A) and TPG, a Fort Worth, Texas-based private equity firm, are said to be finalists in the bidding process. Read more.

Newell Brands (NYSE:NWL) has agreed to acquire Sistema Plastics, a New Zealand-based  food storage container manufacturer, for NZ$660 million (US$470 million), and Smith Mountain Industries, a Forest, Va.-based home fragrance products company, for $100 million.

Ve Interactive , a UK ad tech company, has acquired Crave & Lamb, a UK creative agency, for £3 million ($3.8 million), according to Tech.eu. Read more.

 


IPOS

Gores Holdings II, a blank check company formed by The Gores Group, plans to raise up to $375 million in an IPO by offering 37.5 million shares for $10 each, for a total market value of $469 million.

 


EXITS

KKR (NYSE:KKR) is close to reaching a deal to sell Capsugel, a Morristown, N.J.-based drug capsule maker, to Lonza Group AG (SWX:LONN) for $5 billion. Read more at Fortune.

Delivery Hero, a Berlin-based food delivery company, has agreed to acquire fellowBerlin-based meal delivery service, Foodpanda, according to Bloomberg. Both companies are backed by Rocket Internet. Financial terms were not disclosed. Read more.

Gauge Capital has recapitalized and invested in Infosoft, a Milwaukee, Wis.-based a provider of regulatory compliance and recruitment solutions. Financial terms were not disclosed. As part of the deal, Tom McKelvey, Whitney Bowman and James Jackson of Gauge Capital have joined Infosoft’s board of directors.

Scottish Equity Partners has sold Skyscanner, a Scotland-based travel search company, to China-based Ctrip, an online travel services provider. Financial terms were not disclosed.

EQT VI has agreed to acquire Independent Vetcare, the third largest vet services provider in the UK, from private equity firm Summit Partners.

Apax Partners, a London-based investment firm, has agreed to acquire Apax France and Nordic Capital’s respective stakes in Unilabs, a Switzerland-based medical diagnostics leader. Financial terms were not disclosed.

Platte River Equity, a Denver-based private equity firm, has acquired a majority stake in Tiger-Sul Products, a Shelton, Conn.-based manufacturer of sulphur fertilizers and crop performance products, from H.J. Baker & Bro.


FIRMS + FUNDS

Bill Gates, billionaire philanthropist and co-founder of Microsoft, raised $1 billion for the Breakthrough Energy Ventures Fund, a new fund that will focus on clean energy. Investors in the fund include John Doerr, Jack Ma, Vinod Khosla, John Arnold, Jeff Bezos, and Hasso Plattner. Read more at Fortune.

Providence Strategic Growth Capital, an affiliate of Providence Equity Partners, raised $640 million for its second fund, PSG Fund II.

Adveq, a Zurich-based asset manager investing in private equity, raised €462 million ($490 million) for Adveq Europe VI, its sixth fund that will target primary, secondary and co-investments in the European small buyout segment.

Bill Maris, the founder and former CEO of GV (formerly Google Ventures), said he’s no longer pursuing a $230 million fund focused on health care called Section 32, according to Recode. Last week, Recode reported that Maris was in the midst of fundraising. Read more.

KarpReilly, a Greenwich, Conn.-based consumer-focused lower mid-market private equity firm, raised $200 million for its third fund, according to an SEC filing.

LAUNCHub Ventures, a Sofia, Bulgaria-based seed stage venture firm, has closed its second fund at €18 million ($19.1 million), according to TechCrunch. Read more.

Polychain Capital, a San Francisco-based fund focused on assets that have both an underlying technology and a tradeable asset (like bitcoin), raised a $10 million fund from Andreessen Horowitz, Boost VC, Union Square Ventures, and other undisclosed investors, according to CoinDesk. Read more.

Jim Kim, a co-founder of venture capital firm Formation 8, has partnered with former Lightbank partner Paul Lee to form a new firm called Builders, according to an SEC filing. The firm plans to raise $200 million for its first fund.

Microsoft Ventures, Microsoft’s (NasdaqGS:MSFT) venture arm, has launched a fund focused on AI startups. The fund has already invested an undisclosed amount in Element AI, a Montreal-based research lab started by Yoshua Bengio.


NEW JOBS

Parker Barrile has joined Norwest Venture Partners as a partner on its venture team.


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