NJ unloads controversial VC investment
The New Jersey Division of Investments has quietly sold its stake in a venture capital fund managed by General Catalyst Partners, following allegations of impropriety related to a political contribution from General Catalyst “executive-in-residence” and current Massachusetts gubernatorial candidate Charlie Baker.
Fortune has learned that the sale agreement was inked back in August, and closed within the past several weeks. It may be publicly disclosed tomorrow during an open State Investment Council meeting. No word yet on the buyer, although a source says that the sale price was around 1.5x of cost.
Here was a brief backgrounder on the situation that we wrote back in May:
In April 2011, Baker joined Cambridge, Mass.-based venture capital firm General Catalyst as an “executive-in-residence” (XIR). One month later, he made a $10,000 donation to The New Jersey Republican State Committee, apparently in reciprocal gratitude for help that New Jersey Gov. Chris Christie gave Baker during a failed 2010 gubernatorial run. Four months later, General Catalyst began soliciting capital for a new fund from New Jersey’s state pension system. The pension’s investment staff recommended a $20 million commitment that December, with General Catalyst ultimately agreeing to accept $15 million (the fund was oversubscribed, so not all investors could get their desired allocations).
And then nobody paid any attention until late last week, when Pando published a piece suggesting that the aforementioned timeline violated both state and federal “pay-to-play” rules. Baker’s campaign and General Catalyst both have defended their actions as perfectly legal, largely arguing that “executives-in-residence” like Baker are not subject to pay-to-play restrictions because Baker was not an actual General Catalyst employee, let alone someone with decision-making power.
In that same piece, we suggested that Baker and General Catalyst likely were in compliance with SEC rules but that he may well have violated the more-stringent New Jersey law.
One week later came word that NJ pension officials asked state attorneys to review the situation, with the job ultimately falling to the Treasury Department's auditor. That report has not yet been finalized or provided to pension officials, who chose to sell the fund position anyway.
"If the report finds that there was a violation, then [DOI] would be forced to sell and might not be able to get the same price, so it made sense to sell now," explains a source familiar with the situation. It remains unclear if the sale negates public release of the auditor's report.
The General Catalyst fund includes investments in such companies as Snapchat and Warby Parker.
A spokeswoman for General Catalyst declined to comment, except to say that the firm has been cooperating with New Jersey. A NJ Treasury spokesman declined comment, while a Baker campaign spokesman has not yet returned a request for comment.
• Quasi-related: I'm expecting to be writing some other stuff pertaining the the NJ pension system later today at Fortune.com, so be sure to check back later today.
THE BIG DEAL
• Heineken (Amsterdam: HEIA), a Dutch brewer with a $44 billion market cap, said yesterday that it has rejected a takeover offer from SABMiller (LSE: SAB). This morning, the WSJ reported that Anheuser-Busch InBev is in talks with banks to finance a buyout of SABMiller, in a deal that could be valued at more than $120 billion Read more.
VENTURE CAPITAL DEALS
• Square, the San Francisco-based payments company led by Jack Dorsey, has raised $100 million in new funding at a valuation of nearly $6 billion, according to a Delaware filing obtained by VCExperts.com and shared with Fortune. Read more.
• Inrix Inc., a Kirkland, Wash.-based provider of real-time traffic information technology, has sold a 10% equity stake for $55 million to Porsche Automobil Holding.The company previously raised around $78 million in VC funding from August Capital, Bain Capital Ventures, Kleiner Perkins and Venrock. www.inrix.com
• Palantir, the secretive big data company known for its relationships with the CIA and NSA, has raised more than $50 million in new venture capital funding, according to an SEC filing. This brings the round total up to $444 million, as the Palo Alto, Calif.-based company appears to have held multiples closes since late last year. Read more.
• Kateeva, a Menlo Park, Calif.-based maker of production equipment for OLED displays, has raised $38 million in Series D funding. Samsung Venture Investment Corp. led the round, and was joined by return backers Sigma Partners, Spark Capital, Madrone Capital Partners, DBL Investors, New Science Ventures and VEECO Instruments Inc. (Nasdaq: VECO). www.kateeva.com
• Scholar Rock, a Cambridge, Mass.-based biotech startup focused on “niche modulators that selectively target protein growth factors in the disease microenvironment,” has raised $20 million in Series A funding. ARCH Venture Partners led the round, and was joined by EcoR1 Capital, The Kraft Group and return backers Polaris Partners and Timothy Springer. www.scholarrock.com
• Kinnek, a New York-based marketplace for small businesses to find suppliers and manage purchasing, has raised $10 million in Series A funding. Matrix Partners led the round, and was joined by seed backers Sierra Ventures, Version One Ventures, Naval Ravikant, CrunchFund, Richard Chen, TriplePoint Ventures and Benjamin Ling. www.kinnek.com
• Cloudyn, a San Francisco–based provider of cloud monitoring and optimization solutions, has raised $4 million in new VC funding. Titanium Investments led the round, and was joined by return backer RSeed. www.cloudyn.com
• Molecular Templates Inc., a Georgetown, Texas-based developer of biologic therapeutics, has raised $3.5 million in new Series C funding from AJU IB Investment. The round total is now $12 million, following a 2013 first close from Excel Venture Management and Santé Ventures. www.moleculartemplates.com
• TrustedCompany.com, an online review site for ecommerce businesses in Southeast Asia and India, has raised $1 million in VC funding. Tengelmann Ventures led the round, and was joined by 500 Startups and existing shareholder Asia Venture Group. www.trustedcompany.com
• QuanTemplate, a London–based provider of cloud-based analytics software for the wholesale insurance market, has raised an undisclosed amount of seed funding from backers like Anthemis Group. www.quantemplate.com
PRIVATE EQUITY DEALS
• Antin Infrastructure Partners has acquired Roadchef, a UK-based motorway service area company, from Delek Petroleum. No financial terms were disclosed. www.roadchef.com
• Catalina Marketing, a St. Petersburg, Fla.-based personalized digital media company, has agreed to acquire Cellfire, a San Jose, Calif.–based provider of load-to-card digital coupons in the consumer packaged goods market. The deal reportedly is valued at around $100 million. Berkshire Partners holds a majority stake in Catalina, while Hellman & Friedman holds a minority position. Cellfire had raised around $26 million in VC funding from Storm Ventures, Silver Creek Ventures and Menlo Ventures. www.catalinamarketing.com
• Empeiria Capital Partners has acquired JL Bryan Equipment & Lease Services and Tank Partners LLC, both of which are Texas-based makers of storage tanks and related products. No financial terms were disclosed. www.empeiria.com
• Heck Foods, a UK-based maker of premium sausage, has raised £1 million in funding from Panoramic Growth Equity. www.heckfood.co.uk
• Milestone Partners has acquired eCommission Financial Services Inc., an Austin, Texas–based provider of real estate commission financing solutions. No financial terms were disclosed, except that TCF Capital Funding provided $13 million of senior debt to support the acquisition. www.ecommission.com
• Savola Group, a Saudi Arabian food producer, has hired J.P. Morgan to advise on a possible bid for Americana, a listed Kuwaiti operator of fast-food and fast-casual restaurants that has a market cap in excess of $4 billion, according to Bloomberg. Other bidders include TPG Capital and a joint offer from CVC Capital Partners and KKR. Read more.
• Trive Capital has acquired LARK Industries Inc., a provider of outsourced interior design centers and installation services for residential and commercial builders in the Western U.S. No financial terms were disclosed. www.resdesign.com
IPOs
• Civitas Therapeutics Inc., a Chelsea, Mass.-based developer of a Parkinson’s disease treatment that leverages a respiratory delivery platform, has set its IPO terms to 5 million shares being offered at between $14 and $16 per share. It would have an initial market cap of approximately $363 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol CVTS, with J.P. Morgan and BofA Merrill Lynch serving as co-lead underwriters. It has raised around $120 million in VC funding, from Longitude Capital Partners (19.9% pre-IPO stake), Canaan Partners (18.9%), Bay City Capital (10.5%), Foundation Healthcare Partners (10.2%), RA Capital (9.6%), Alkermes Inc. 7%) and Wellington Management (6.5%). www.civitastherapeutics.com
• Eyegate Pharmaceuticals Inc., a Waltham, Mass.-based developer of ophthalmologic drugs, has set its IPO terms to 1.92 million shares being offered at between $12 and $14 per share. It would have an initial market cap of approximately $92 million, were it to price in the middle of its range. Shareholders include Ventech (44.7% pre-IPO stake) and Natixis Private Equity (12.1%). www.eyegatepharma.com
• Freshpet Inc., a Seacaucus, N.J.-based provider of refrigerated pet foods, has filed for a $100 million IPO. Goldman Sachs and Credit Suisse are serving as lead underwriters. The company reports an $11 million net loss on nearly $40 million in revenue for the first half of 2014, compared to a $10 million net loss on nearly $29 million in revenue for the year-earlier period. Shareholders include MidOcean Partners and Tyson Foods. www.freshpet.com
• Medley Management Inc., a New York-based asset management firm with around $3.3 billion in AUM, has set its IPO terms to 6 million shares being offered at between $20 and $22 per share. It plans to trade on the NYSE under ticker symbol MDLY, with Goldman Sachs and Credit Suisse serving as co-lead underwriters.
EXITS
• Cognizant Technology Solutions Corp. (Nasdaq: CTSH) has agreed to acquire TriZetto Corp., an Englewood, Colo.–based provider of healthcare IT and service solutions, from Apax Partners for $2.7 billion in cash. www.trizetto.com
• Givex, a Toronto-based provider of cloud-based information services, has acquired Marqui, a Vancouver–based provider of content management and digital design services. No financial terms were disclosed. Marqui shareholders included GrowthWorks and Ventures West. www.givex.com
• GS Capital Partners and Quadrangle Group have agreed to sell Norwegian cable company Get AS for approximately $2.2 billion to listed Danish telecom operator TDC. www.get.no
• Micro Focus International (LSE: MCRO) has agreed to acquire The Attachmate Group Inc., a Houston, Texas-based provider of mainframe computer solutions, for approximately $2.35 billion (including assumed debt). Attachmate shareholders include Francisco Partners, Golden Gate Capital, Elliott Management and Thoma Bravo. Following the deal, Micro Focus shareholders would own around 60% of the combined company. www.attachmategroup.com
• Neiman Marcus has agreed to acquire fashion ecommerce site Mytheresa.com from Acton Capital Partners and the company founders. Mytheresa also has a physical store in Munich that is part of the deal. Read more.
• Weather Channel Cos. has spoken with bankers at J.P. Morgan and Goldman Sachs about strategic options, including a possible sale, according to Bloomberg. The company was acquired in 2008 for around $3.5 billion by The Blackstone Group, Bain Capital and NBCUniversal. Read more.
OTHER DEALS
• Danaher Corp. (NYSE: DHR) has agreed to acquire Nobel Biocare Holding AG (Swiss: NOBN), a Zurich-based provider of implant-based dental restorations, for approximately $2.2 billion in cash. www.danaher.com
• Microsoft (Nasdaq: MSFT) confirmed that it has acquired Mojang, the Swedish gaming company responsible for Minecraft, for $2.5 billion. www.microsoft.com
• Sinpoec Corp., China’s state-owned oil refiner, has agreed to sell around a 30% stake for $17.5 billion to a group of investors that include Harvest Fund Management, China Life Insurance, Tencent Holdigns, Fosun International, ENN Energy Holdings, Haier Electronics Group, RRJ Capital and Hopu Investment Management.
• ZF Friedrichshafen of Germany has agreed to acquire U.S. auto parts supplier TRW Automotive Holdings Corp. (NYSE: TRW) for $105.60 per share, or approximately $12 billion, according to Reuters. Read more.
FIRMS & FUNDS
• The GovTech Fund has launched as a $23 million VC fund for government-focused tech startups. So far it has made four investments: SmartProcure,MindMixer, SeamlessDocs, and AmigoCloud. www.govtechfund.com
MOVING IN, UP, ON & OUT
• Jolyon Dove has joined Montagu Private Equity as a director focused on portfolio company operations. He previously spent 15 years as a London-based partner with Bain & Co. www.montagu.com
• Michael Hart has joined The Carlyle Group as a managing director and president of Carlyle GMS Finance, a business development company focused on middle-market investing. He previously was with Blackrock Solutions as a managing director and co-head of U.S. advisory within the financial markets advisory group. www.carlyle.com
• Mahboob Hossain has joined The California Public Employees’ Retirement System as a senior portfolio manager focused on private equity co-investments, according to peHUB. He previously was with CalSTRS. Read more.
• Thomas Wicky and Matthew Kane have joined Z Capital Partners as a managing director/operating partner and director/deputy general counsel, respectively. www.zcap.net
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http://fortune.com/2014/09/15/term-sheet-monday-sept-15
