Some quick notes to kick off the week…
• The song remains the same: I haven’t written about private equity for years, but one thing that’ll never change is the industry’s love of clichés. Usually it’s a sports metaphor or a war metaphor—blocking and tackling, hitting singles and doubles, dry powder. But Saturday’s New York Times story on the pressure for private equity firms to become broker-dealers (“Private Equity’s Free Pass“) has a new one:
“Investors and market professionals are best served when we’re all singing from the same hymnal.”
Downright poetic. That’s Marlon Q. Paz, of Locke Lord, who advises buyout shops on becoming broker dealers. The issue is getting more attention as regulators scrutinize private equity fees. KKR is a broker-dealer, as is TPG, Blackstone and Apollo, but most other firms are not.
Thoughts, Term Sheet readers? (Especially those of you in the middle market.) The big, publicly-traded firms seem fairly resigned to the fact that they need to be increasingly transparent and willing to get ahead of regulatory issues, perhaps giving up some fees or changing the nature of their core business in the process. Correct me if I’m wrong, but that mentality doesn’t seem to have trickled down to the rest of the industry.
• Inversion watch, part one: Hospira, an $8.6 billion medical supplier, is nearing an inversion deal, if it wins the $5 billion acquisition of Danone’s medical nutrition business. What do you call an inversion-related spin-off? A “spinversion.” I wish I was joking.
• Inversion watch, part two: Destination Maternity, which owns the A Pea in the Pod and Motherhood Maternity chains, made two bids for struggling British maternity clothing chain Motherhood earlier this year. The proposed deal was an attempted inversion, but the bids weren’t accepted. Now, Motherhood will focus on its turnaround efforts.
• Merger Monday: Two large deals with no direct ties to PE or VC. Zillow is buying its rival, Trulia, for $3.5 billion; read more on Fortune.com. Dollar Tree is buying its competitor Family Dollar for around $8.5 billion, thanks to Carl Icahn; read more on Fortune.com.
• Time to stop backing consumer apps? Evidence continues to mount that we’ve hit Peak App. Not only do mobile phone users max out at around 26 apps, but a new report from VisionMobile, covered by TechCrunch, shows more than half of iOS apps and more than 64% of Android apps are not making enough money to survive as viable businesses. Call it a “disappearing middle class” of apps.
On one hand, who cares? The cost of building an app is in the low thousands, and many of these things don’t launch with the hopes of becoming sustainable businesses. They’re hobbies, experiments, or extensions of a brand’s marketing efforts. Still, the disparity between app money makers and the rest of the pack is remarkable: 1.6% of apps make up the vast majority of revenue in the app stores. And 24% of the developers surveyed are interested in making money but haven’t made a dime. It is competitive out there.
• On the flip side: Enterprise deals are way, way up, driven by follow-on investments. The first half of 2014 saw $5.4 billion in deal volume, which matches the amount raised for all of last year.
THE BIG DEAL
• Virgin America, a California-based airline, has filed an S-1 to raise $115 million in an IPO. The company is majority owned by Cyrus Capital Partners, L.P., with entrepreneur Richard Branson as a partial owner. Barclays and Deutsche Bank Securities will underwrite the offering. Read more at Fortune.com.
VENTURE CAPITAL DEALS
• Bart Decrem, founder of the Tapulous, the gaming startup which sold to Disney, has raised $920,000 for a company called Hobby, according to an SEC filing. Rob Theis of Scale Venture Partners, which also invested in Tapulous, is listed as a director in the entity.
• Eventure Interactive, a Costa Mesa, Calif.-based app development company, has raised $4.275 million in funding, $1.275 million of which came from angel investors and high net worth individuals, $3 million of which came from Kodiak Capital Group. www.eventure.com
• Universal Education Group, also known as Wanxue Education, has raised a Series C round of financing from Baidu with participation from HAO Capital, and Doll Capital Management. The deal size was not disclosed. www.wanxue.cn
• Decision Lens, a provider of prioritization and resource optimization software, raised $6.5 million in funding, which includes a $4.4 million Series-A Preferred round led by Vision Thinkers and $2.1 million in debt. www.decisionlens.com
• WideOrbit Inc., a San Francisco-based provider of advertising software for media companies, acquired Admeta, a programmatic sell-side platform service provider based in Sweden. WideOrbit, which has acquired a string of ad-tech companies, has raised $34.5 million in venture funding from Khosla Ventures, Mayfield Fund, Greycroft Partners, Hearst Ventures. Meredith Corporation, Liberty Corporation and the New York Times. www.wideorbit.com
• Whill, a San Carlos, Calif.-based scooter maker, has raised $6 million in venture funding in a round that has the ability to go up to $11 million, according to an SEC filing. whill.jp
• CardioDX, a cardiovascular genomics company based in Palo Alto, has raised $21 million in a round of funding that has room to go up to $25 million. The company had raised $200 million in funding previously from investors including V-Sciences Investments, Longitude Venture Partners, Artiman Ventures, Kleiner Perkins Caufield & Byers, JPMorgan Direct Venture Capital and MDV-Revelation. www.cardiodx.com
• ChoiceStream, a Boston-based programmatic media-buying company, has raised $7.5 million in Series B funding, led by New York-based Fred Alger Management. www.ChoiceStream.com.
• Leanplum, a San Francisco-based mobile app analytics company a $4.8M round of funding from Shasta Ventures. The startup has raised seed funding from TechStars, Kima Ventures, VoiVoda Ventures and angel investors. leanplum.com
• Kontakt.io, a Poland-based Beacon hardware and software provider, has raised $2 million from Sunstone Capital. kontakt.io
• Marinanow, a Sardinia, Italy-based service for booking berths on boats, has raised EUR 370,000 ($497,000) in venture investment from led by United Ventures. www.marinanow.com
• Mattersight Corp. (NASDAQ: MATR), a provider of enterprise analytics, will raise $12 million in a private placement of up to 2,891,566 shares of Common Stock priced at $4.15 per share. www.mattersight.com
• Easy Taxi, a mobile taxi app in Latin America, Africa, Middle East and Asia, raised $40 million in Series D funding led by Phenomen Ventures with participation of Tengelmann Ventures. Easy Taxi was founded by Rocket Internet, the incubator company started by the Samwer brothers. www.easytaxi.com
• Emulate, a Cambridge, Mass.-based provider of personalized medical technology, has raised $12 million in Series A funding led by NanoDimension with Cedars-Sinai Medical Center. www.emulatebio.com
• Orange Chef Co., a “smart kitchen” startup based in San Francisco, Calif., has raised an investment of undisclosed size from M7 Tech Partners, the investment arm of professional athlete Carmelo Anthony. theorangechef.com
PRIVATE EQUITY DEALS
• 5.11 Tactical, a Modesto, Calif-based maker of law enforcement gear, is considering an IPO that could value the company up to $800 million. TA Associates acquired a majority stake in the company in 2007 for $200 million. Read more at Fortune.com.
• Total Safety, a Houston, Texas-based provider of safety and compliance services owned by Warburg Pincus, has acquired Z-Safety Systems, a Brussels-based safety monitoring company doing business as Z-Monitoring. www.z-systems.be
• KKR has agreed to refinance Radnor, Penn.-based Preferred Sands, a frac sand and resin technology company servicing the oil and gas industry which nearly went bankrupt. The deal will include debt and equity of more than $680 million from KKR’s Special Situations fund. www.preferredsands.com
• Cont-Mid Group, LLC and Tiffin Holdings, LLC, family-owned and operated manufacturers of custom-engineered metal fasteners based in Park Forest, Ill., have sold to Monomoy Capital Partners, for an undisclosed price. Monomoy acquired the companies through its second vehicle, Monomoy Capital Partners II, L.P. www.contmid.com
• Apax Partners will invest INR 5 billion ($84 million) into Cholamandalam Investment and Finance Company Ltd, an Indian financial services business which operates under the corporate umbrella of the Murugappa Group. www.cholamandalam.com
• EV Offshore Limited, a UK-based maker of video cameras for the oil and gas industry, has refinanced itself via The Royal Bank of Scotland, following a GBP 69 million ($117 million) management buyout by private equity firm Dunedin.
• The Riverside Company has invested in Censis Technologies, Inc., a Franklin, Tenn.-based provider of surgical instrument tracking and sterile processing workflow software for hospitals and ambulatory surgical centers. Terms were not disclosed. www.censis.net
• GE Energy Financial Services, a division of the multinational conglomerate, has invested equity in three Atria Power wind projects in Ananthapur and Betul, India. www.ge.com
• OfficeTeam, a Surrey, U.K.-based office product supplier, has agreed to sell to Better Capital, a London-based private equity firm, for £80 million ($135 million). www.roberthalf.com
• CDS Topco BV, a supplier of direct-to-home satellite pay TV services under the name M7, has agreed to sell a majority stake in itself to Astorg Partners. Providence Equity Partners and Airbridge Investments B.V. own the asset and will continue to be minority shareholders after the sale. www.m7group.eu
• TangoMe Inc., privately held Mountain View, Calif.-based maker of a mobile messaging app, has completed a $8 million secondary offering of common stock through NASDAQ Private Market and Sharespost. www.tango.me
• Dental Corporation of Canada Holdings Inc., a Toronto-based group of dental practices, has taken a $121 million investment from Imperial Capital Group of Toronto and OPTrust Private Markets Group. www.dentalcorp.ca/
• Wilmington Capital Management Inc., a Toronto-based firm, has agreed to sell 611,220 Class A Shares to Brookfield Asset Management Inc. in a private transaction. www.brookfield.com/
• Xero, a cloud accounting company based in Wellington, New Zealand, has announced its plans to go public in the U.S. in 2015. The company, which is publicly listed in New Zealand and Australia, has secured $244 million in private funding from Valar Ventures, Matrix Capital and SPP. www.xero.com
• BookLamp, a Boise-Idaho-based book analytics company, has been acquired by Apple. The company had raised $900,000 in venture funding from local investors. www.booklamp.org
• Actis sold a 9% stake in Alexander Forbes Group Holdings, a South African financial services business, on the Johannesburg Stock Exchange. The firm holds a remaining 4% stake. www.alexanderforbes.co.za
• Swell, a talk radio streaming app, is nearing a deal to sell to Apple for around $30 million, Recode reported. Swell is backed by $7.2 million in venture funding from DFJ, Google Ventures and InterWest Partners.
FIRMS & FUNDS
• Garage Technology Ventures, a Los Altos, Calif,-based venture firm, has added two anchor investors for its fifth fund, which has an undisclosed target. www.garage.com
• Hutton Collins Partners is seeking to sell stakes in third fund, a EUR 600 million ($808 million) vehicle closed in 2009. The fund has invested in equity and debt. Campbell Lutyens & Co. will run the sale process, according to Bloomberg. www.huttoncollins.com
• UniCredit, the Italian bank, is nearing a sale on EUR 1.5 billion ($2 billion) worth of its private equity investment portfolio to SwanCap Partners, Reuters reported. This follows the bank’s first sale of private equity assets last year. www.unicreditgroup.eu
• Sankaty Advisors, a credit investment firm owned by Bain Capital LLC, will acquire a $1.3 billion debt portfolio from J.P. Morgan Chase & Co.’s Global Special Opportunities Group. KKR, Apollo Global Management and Blackstone Group had expressed interest in the asset. www.sankaty.com
MOVING IN, UP, ON & ON
No moves today.