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Term Sheet — Monday, December 1

Random Ramblings

Some quick notes as we settle back in after the very long weekend…

• Just a horse? Last month I wrote about how few tech “unicorns” have seen their valuations fall below $1 billion, thus giving credence to the unpopular opinion that VCs know what they’re doing. But, in the spirit of updated accuracy, it seems that another unicorn is about to lose its wings.

Hortonworks, a Palo Alto, Calif.-based Hadoop platform for storing and analyzing big data, today set its IPO terms to 6 million shares being offered at between $12 and $14 per share. That would set a valuation range of between $496 million and $579 million — compared to the $1 billion+ valuation Hortonworks received just this past March co-led by BlackRock and Passport Capital. Other company shareholders include Yahoo (19.6% pre-IPO stake), Benchmark (15.8%), Index Ventures (8%), Teradata (7%) and Hewlett-Packard (5.9%).

• Vox Media, an online publisher whose brands include SB Nation and The Verge, last night announced that it has raised $46.5 million in new growth equity funding led by General Atlantic (at a reported post-money valuation of $380 million). I spoke this morning with Zach Kaplan, a General Atlantic vice president who will be joining the Vox board of directors. A few notes:

  • General Atlantic invested $45 million, with existing shareholders Accel Partners and Khosla Ventures filling out the round.
  • General Atlantic has been in regular contact with Vox for several years, but didn’t have an opportunity to invest in the last round because it was effectively an insider transaction led by Accel’s growth fund (its early-stage fund was an original investor in 2008).
  • Even though Vox is very focused on creating viral content, between 30% and 35% of its traffic still comes in via its homepages (via both web and mobile).
  • Neither Kaplan nor I can think of a VC-backed original journalism company that has gone public in the past decade, but he believes some of the current crop (Vox, Vice, Buzzfeed, etc.) are poised to change that. One big reason, he says, is that while such companies are known for disrupting legacy media, they also are using native advertising and other techniques to disrupt the upstream creative agency model.
  • There are some major discrepancies between Vox’s claimed user metrics (via internal Google Analytics numbers) and the numbers made public by Comscore. Kaplan: “We’re very comfortable with the internal metrics… I don’t want to be harsh, but Comscore is increasingly a statistic that doesn’t matter because of what it misses in terms of mobile and global. Advertisers and buyers still use it, but from a due diligence perspective, we care more about the internal Google Analytics and Quantcast figures.

• Deal (almost) done: There are several reports that Centerbridge Partners has agreed to acquire IPC Systems Inc., a Jersey City, N.J.–based provider of network services and trading communication technology to the financial markets community, from Silver Lake Partners for more than $1.1 billion. I’m hearing the same, and expect a formal announcement within the next 24 hours. Silver Lake originally acquired IPC in 2006 for $800 million from GS Capital Partners, so we could be looking at nearly a 50% appreciation (albeit a bit lower than the $1.4 billion Silver Lake reportedly had been seeking).

• Your thoughts: Very interested to hear what energy-focused investors think about the recent oil price drop, particularly in terms of how it will affect M&A activity and new company formation in the sector. If you have something to share but would prefer not to be quoted, please just let me know in your email.

THE BIG DEAL

• Altice SA (Amsterdam: ATC) has agreed to acquire the Portuguese assets of Brazilian telecom company Oi SA for approximately €7.4 billion, beating out a joint bid from Apax Partners and Bain Capital. Read more.

VENTURE CAPITAL DEALS

• Ascendis Pharma AS, a Denmark-based developer of technology to create “prodrugs that provide for the predictable and sustained release of an unmodified parent drug,” has raised $60 million in Series D funding. Sofinnova Ventures, OrbiMed Advisors and Vivo Capital co-led the round, and were joined by Janus Capital Management, Venrock, RA Capital Management, Rock Springs Capital and Sectoral Asset Management. www.ascendispharma.com

• Narrative Science, a Chicago-based provider of “automated narrative generation for the enterprise,” has raised $10 million in new VC funding. USAA led the round, and also entered into a software licensing agreement with Narrative Science. Return backers include Sapphire Ventures, Jump Capital and Battery Ventures. www.narrativescience.com

• Pieris AG, a Munich-based developer of protein therapeutics, has raised €6.6 million in fifth-round funding. Investors include Ally Bridge Group and return backers OrbiMed, The Global Life Science Ventures, BioM Venture Capital, Gilde Europe Food & Agribusiness Fund and BayTech Venture Capital. www.pieris-ag.com

PRIVATE EQUITY DEALS

• Apax Partners and KKR are considering a joint bid for British mobile operator EE, if the company is not acquired by BT Group (LSE: BT). Read more.

• Apollo Global Management has agreed to acquire Presidio Holdings Inc., a New York–based, from American Securities. No financial terms were disclosed. www.presidio.com

• Ares Management has acquired Farrow & Ball, a UK–based provider of paints and wallpaper, from European Capital Ltd. No financial terms were disclosed. www.farrowball.com

• Bridgepoint has agreed to acquire Gondola Group, a UK-based operator of 245 ASK Italian and Zizzi restaurants, from Cinven for £250 million. www.gondolaholdings.com

• British Car Auctions, a UK-based used car company owned by Clayton Dubilier & Rice, is seeking to raise at least £148 million in new debt to refinance existing loans and to pay out a shareholder dividend, according to Reuters. The move comes after BCA postponed IPO plans. Read more.

• CVC Capital Partners, Rhone Capital and Pamplona Capital Management each are bidding to acquire Denmark-based Scandinavian Tobacco Group, the world’s largest maker of cigars, according to Bloomberg. The deal could be valued at around $2 billion. J.P. Morgan is managing the process on behalf of STG owners Skandinavisk Holding and Swedish Match AB. Read more.

• EQT Partners has agreed to acquire Musti ja Mirri Group Oy, a pet food and accessories retailer operating in Finland and Sweden, from Vaaka Partners Oy. No financial terms were disclosed. www.eqt.se

• Kellogg Co. (NYSE: K) has increased its offer for listed Egyptian biscuit maker Bisco Misr to $11.50 per share, compared to an already-increased $11.27 per share bid from private equity firm Abraaj Group. Read more.

IPOs

• LendingClub Corp., a San Francisco-based peer-to-peer lending marketplace, has set its IPO terms to 57.7 million shares being offered at between $10 and $12 per share. It would have an initial market cap of approximately $3.97 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol LC, with Morgan Stanley and Goldman Sachs are serving as co-lead underwriters. LendingClub reports a $16 million net loss on $87 million in revenue for the first half of 2014, compared to $1.7 million in net income on $37 million in revenue for the year-earlier period. It has raised nearly $400 million in VC funding from such firms as Norwest Venture Partners (16.5% pre-IPO stake), Canaan Partners (15.9%), Foundation Capital (12.8%), and Morgenthaler Venture Partners (9.2%). www.lendingclub.com

• Momo Inc., a Chinese mobile-based social networking platform, has set its IPO terms to 16 million shares being offered at between $12.50 and $14.50 per share. The company plans to trade on the Nasdaq under ticker symbol MOMO, with Morgan Stanley listed as left-lead underwriter. It reports an $8.2 million net loss on $13.89 million in revenue for the first six months of 2014. Shareholders include Alibaba (20.7% pre-IPO stake), Matrix Partners China (19.9%) and Sequoia Capital (5.6%). Read more.

• Metaldyne Performance Group Inc., a Plymouth, Minn.-based manufacturer of engine, transmission, and driveline, has set its IPO terms to 15.38 million shares being offered at between $18 and $21 per share. It would have an initial market cap of around $1.3 billion, were it to price in the middle of its range. The company plans to trade on the NYSE ticker symbol MPG, with Goldman Sachs, BofA Merrill Lynch and Deutsche Bank serving as lead underwriters. American Securities acquired Metaldyne in late 2012. The company reports $38 million in net income on $1.18 billion in revenue for the half of 2014. www.metaldyne.com

• New Relic, a San Francisco-based provider of application performance management solutions for the enterprise, has set its IPO terms to 5 million shares being offered at between $18 and $20 per share. It would have an initial market cap of approximately $876 million, were it to price in the middle of its range. The company plans to trade on  the NYSE under ticker symbol NEWR, with Morgan Stanley and J.P. Morgan serving as lead underwriters. The company reports a net loss of $19.4 million on $39 million in revenue for the six months of 2014 ending Sept. 30, compared to an $18.5 million net loss on nearly $22 million in revenue during the year-earlier period. New Relic has raised around $270 million in VC funding from Benchmark (22% pre-IPO stakjje), Trinity Ventures (13.6%), Insight Venture Partners (5.6%), Tenaya Capital (4.9%), BlackRock, Passport Capital, T. Rowe Price, Dragoneer Investment Group and Allen & Company. www.newrelic.com

• Workiva LLC, an Ames, Iowa-based provider of cloud-based business reporting solutions, has set its IPO terms to 7.2 million shares being offered at between $13 and $15 per share. It would have an initial market cap of approximately $553 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol WK, with Morgan Stanley and Credit Suisse serving as lead underwriters. The company reports a $28 million net loss on $82.5 million in revenue for the first nine months of 2014, compared to a $22.5 million net loss on $61.6 million in revenue for the year-earlier period. Investors include Bluestem Capital. www.workiva.com

EXITS

• Accella Performance Materials Inc., a maker of polyurethane systems and recycled rubber products, has sold a set of specialty assets to PolyOne Corp. (NYSE: POL) for an undisclosed amount. Accella is a portfolio company of Arsenal Capital Partners. www.dashmulticorp.com

• Intel (Nasdaq: INTC) has acquired PasswordBox, a San Francisco and Montreal-based developer of a digital password management solution. No financial terms were disclosed. PasswordBox had raised $6 million in Series A funding led by OMERS Ventureswww.passwordbox.com

• TA Associates and Banco Leonardo have hired Credit Suisse and Fenchurch Advisory Partners to find a buyer for their combined majority stake in French asset manager DNCA Finance, according to peHUB. Read more.

OTHER DEALS

• AXA Group (Paris: CS) has agreed to acquire a 77% stake in listed Nigerian insurer Mansard for €198 million. www.mansardinsurance.com

• CTPartners Executive Search Inc. (NYSE: CTP) has completed its previously-announced acquisition of Austrian executive search firm Neumann. No financial terms were disclosed. www.ctnet.com

• Deutsche Annington Immobilien (DB: ANN), a German residential real estate company, has agreed to acquire Luxembourg-based Gagfah (XTRA: GFJ) for approximately €3.9 billion in cash and stock. The combined company would own around 350,000 residential property units. Read more.

• John Laing Infrastructure Fund (LSE: JLIF) has offered to acquire the investment portfolio of British construction company Balfour Beatty (LSE: BBY) for £1 billion. Read more.

FIRMS & FUNDS

• EQT Partners is seeking to raise between €250 million and €300 million for its first mid-market direct lending fund, according to Dow Jones. www.eqt.se

• Renaissance Holding of Turkey has agreed to jointly invest $400 million into Russian companies, alongside the Russian Direct Investment Fund. The 50/50 joint venture would utilize a public-private partnership model, with a focus on such sectors as healthcare and real estate. Read more.

 

MOVING IN, UP, ON & OUT

• Steven Davis has joined law firm Proskauer as a London-based corporate partner with a focus on M&A. He previously led the corporate practice at King & Wood Mallesons. www.proskauer.com

• Carolyn Hanigan and Alina Costica DiMeglio have joined Swander Pace Capital, a private equity firm focused on consumer products, as VP of marketing and VP of investments, respectively. Hanigan had been with SPC until 2011, when she left to lead marketing for portfolio company Merrick Pet Care. DiMeglio recently received her MBA from Wharton, and previously was an associate with Kohlberg & Co. www.spcap.com

• Haroun van Hövell, a managing director with energy-focused Riverstone Holdings, has agreed to join Kohlberg Kravis Roberts & Co., according to LBO Wire. www.kkr.com

• Amit Srivastava has joined Canadian cleantech investment firm Cycle Capital Management as a senior partner. He previously was managing partner and CEO of Entrepia Ventures. www.cyclecapital.com

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