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Term Sheet — Friday, January 9

Random Ramblings

Some notes as we head into the weekend…

• Follow-up: Earlier this week we discussed the relationship between TPG Capital and its yogurt-making portfolio company Chobani, in terms of fees that were (or weren’t) accruing to limited partners. More specifically, the NY Times reported that TPG investors were “paying twice” for work being done by TPG partner Kevin Burns, who also is serving as interim COO of Chobani. Basically the story alleged that Burns was still being paid his regular salary (derived from fund management fees) while TPG also was receiving from Chobani “a separate fee based on the partner’s work on the particular investment” — and using a shadowy internal “recovery” group to shield much of that separate fee from LP sharing arrangements.

The story was quite worrisome to me from an LP fairness perspective, but I’ve since learned that it’s overblown.

Michael Gonda, Chobani’s VP of corporate communications, says that Chobani is not paying Burns any sort of salary or stipend for his work at the company. He also says that Chobani is not paying TPG any sort of fee for the work Burns is doing at the company. Instead, Chobani’s only Burns-related remuneration is for travel and expense costs, as Burns lives in California and Chobani is based in upstate New York. TPG declined to comment, although a source familiar with the firm’s Chobani relationship seconded Gonda’s comments.

• Unicorn watch: Today’s top story is that data storage company Box has updated its IPO registration documents, as it kicks off its much-delayed roadshow. At the middle of its expected range, the company would be valued at around $1.43 billion. That wouldn’t make it an undercorn, but would mean that is worth well less than the $2.4 billion mark it received last summer in a new funding round led by TPG — or even from the $2 billion valuation it secured in a December 2013 funding round. Also worth noting that Box quietly asked all of its shareholders last month to re-execute 180-day lockup agreements and FINRA questionnaires — as the original documents were set to expire at the end of 2014.

• Recommended reading: Greg Roumeliotis of Reuters has an interesting piece up on how a large Texas public pension fund handled potential conflicts when the son of one of its private equity portfolio managers went to work at The Blackstone Group. Read it here.

• Glass half-full: Today’s jobs report was strong in top-line numbers (+252k, unemployment rate down to 5.6%), but very weak in terms of hourly wages (-$0.05). Obviously there is some basic economic disconnect there, as a growing labor market should put upwards pressure on wages. But, in terms of shor-tterm spending power, that wage figure should be offset for many by falling gas prices. If you lose 5 cents per hour and work a 40-hour week, you come out down $2 for the week. But if you fill up a 10-gallon car today as compared to one month earlier, you would save $4.87…

• Have a great weekend… Go Pats!


• Box, a Los Altos, Calif.-based provider of cloud content management and collaboration solutions, has set its IPO terms to 12.5 million shares being offered at between $11 and $13 per share. It would have an initial market cap of around $1.43 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol BOX, with Morgan Stanley serving as left-lead underwriter.

Box reports a $129 million net loss on $121 million in revenue for the first nine months of 2014, compared to a $125 million net loss on $68 million in revenue for the year-earlier period. Shareholders include DFJ (23.1% pre-IPO stake), US Venture Partners (11.7%), General Atlantic (7.7%), Coutue Management (6.8%), Scale Venture Partners (6.7%), Bessemer Venture Partners (5%) and TPG Capital. Read more.



• Privateer Holdings, a Seattle-based holding company focused on acquiring marijuana-related businesses, has raised $75 million in new funding (including some convertible debt) led by Founders Fund. Read more.

• Aduro Biotech Inc., a Berkley, Calif.-based immune-oncology company, has raised $51.4 million in Series D funding. Backers include OrbiMed Advisors, Janus Capital Management, Franklin Advisers, Jennison Associates, Foresite Capital Management, Clough Capital Partners and The Morningside Group. Leerink Partners served as placement agent. Aduro is developing live, attenuated, double-deleted Listeria monocytogenes and cyclic dinucleotide technology platforms for initiating innate immune responses and driving targeted immune responses against cancer.

• Rethink Robotics, a Boston-based maker of industrial robots, has raised $26.6 million in Series D funding. GE Ventures led the round, and was joined by Goldman Sachs and return backers Bezos Expeditions, CRV, Highland Capital Partners, Sigma Partners, Draper Fisher Jurvetson and Two Sigma Ventures.

• Hua Medicine Ltd., a Shanghai-based developer of therapeutics for diabetes and CNS disorders, has raised $25 million in Series B funding. Ally Bridge Group led the round, and was joined by Frontline BioVentures, TF Capital and return backers ARCH Venture Partners, Venrock, Fidelity, WuXi Ventures and SAIL.

• Welltok Inc., a Denver-based health optimization platform, has raised $12 million in new Series D funding (bringing the overall round total to $37 million). Hearst Health Ventures and Catholic Health Initiatives provided the new funding. Existing backers include NEA, IBM, Qualcomm Ventures, Emergence Capital Partners, InterWest Partners, Miramar Venture Partners and Okapi Venture Capital.

• DiaCarta Inc., a Hayward, Calif.-based translational genomics and molecular diagnostics startup, has raised $8 million in Series A funding from BioVeda China Fund.

• Reach Influence, a Royal Oak, Mich.-based retail analytics startup, has raised $5 million in VC funding. Vineyard Capital Group led the round, and was joined by Detroit Venture Partners.

• VHX, a platform that helps independent video-makers sell their work, has raised $5 million in Series B funding. Comcast Ventures led the round, and was joined by Lerer-Hippeau Ventures, Lowercase Capital, Union Square Ventures, Keith Calder and Alexis Ohanian.

• Ingenious Med, an Atlanta–based provider of a patient encounter platform, has raised an undisclosed amount of new equity funding from Ascension Ventures, Heritage Group and Kaiser Permanente Ventures. The new investors join return backer North Bridge Growth Equity, which acquired a majority stake in Ingenious Med last October.


• Convergint Technologies, a Schaumburg, Ill.–based portfolio company of KRG Capital Partners, has acquired Beacon Security and Communications Ltd., a UK-based provider of security solutions to global Fortune 500 companies. No financial terms were disclosed.

• Coppenrath & Wiese, a German maker of frozen cakes, has received takeover interest from several private equity firms, according to Reuters. The deal could be worth around €400 million, with suitors including Cinven, CVC Capital Partners, EQT Partners and Montagu Private Equity. Read more.

• Crossing Rocks Energy Partners LLC has been formed via an equity commitment from Natural Gas Partners. Crossing Rocks will focus on acquiring, developing and monetizing North American oil and gas related assets primarily in the Mid-continent,East Texas and Permian basins.

• Dianne’s Fine Desserts, a Newburyport, Mass.-based provider of frozen thaw-and-serve desserts for the foodservice industry and restaurants, has acquired Daystar Desserts LLC, an Ashland, Va.-based provider of branded and private label cheesecakes, bar cakes and mason jar cakes. No financial terms were disclosed. Dianne’s Fine Desserts is a portfolio company of Superior Capital Partners.

• eSolutions Inc., an Olathe, Kansas–based provider of healthcare technology and analytics solutions, has raised a “significant” amount of equity funding from Francisco Partners. The deal is expected to close later this quarter.

• Flexpoint Ford has acquired a majority stake in Top Rx, a Bartlett, Tenn.-based generic pharmaceuticals distributor. No financial terms were disclosed.

• Industrial Growth Partners has acquired North American Substation Services LLC, an Altamonte Springs, Fla.-based provider of mission-critical power transmission and distribution infrastructure services. No financial terms were disclosed.

• Pfingsten Partners has acquired Burton Saw and Supply, a Eugene, Ore.-based maker of consumable products and equipment to saw mills and wood product manufacturers. No financial terms were disclosed.

• Pinnacle Midstream LLC, a Houston-based midstream energy company, has secured a $20 million equity commitment from BP Partners, a private equity fund sponsored by T. Boone Pickens. Pinnacle Midstream is led by J. Greg Sargent, founder and former CEO of TransTex Gas Services (sold to Eureka Hunter Holdings). Sargent and a group of undisclosed individuals have committed to invest an additional $5 million in the company.

• Royal Adhesives & Sealants, a portfolio company of Arsenal Capital Partners, has acquired the assets of Advanced Polymers International, a Syracuse, N.Y.-based maker of microsphere-based adhesives, from PCI Paper Conversions. No financial terms were disclosed.



• Ariosa Diagnostics Inc., a San Jose, Calif.-based provider of genetic testing, has withdrawn its IPO registration. No explanation was provided. The company originally filed last March, and planned to offer 3.5 million shares at between $16 and $18 per share (initial market cap of $293m in middle of range). J.P. Morgan and Citigroup were serving as lead underwriters. Ariosa has raised over $50 million in VC funding from such firms as Venrock (39.1% stake), Domain Associates (24%), Meritech Capital Partners (9.4%) and Fidelity (6.5%).

• UTAC Holdings Ltd., a Singaporean chipmaker owned by TPG Capital and Affinity Equity Partners, is reviving its IPO plans for 2015, according to Reuters. A U.S. listing is possible. Read more.


• Aptuit, a portfolio company of Welsh, Carson, Anderson & Stowe, has sold its aseptic clinical manufacturing site in Glasgow, UK to Albany Molecular Research Inc. (Nasdaq: AMRI). It also has agreed to sell its West Lafayette, Ind.-based solid-state chemistry business to AMRI. The combined divestitures are valued at $60 million.

• Facebook (Nasdaq: FB) has acquired QuickFire Networks, a San Diego-based provider of online video traffic processing solutions, for an undisclosed amount. QuickFire had raised VC funding from Hillcrest Venture Partners.

• Dun & Bradstreet (NYSE: DNB) has acquired NetProspex a Waltham, Mass.-based provider of B2B professional contact data and data management solutions. No financial terms were disclosed. NetProspex shareholders included Edison

• Jost Group, a German truck and trailer parts maker owned by Cinven, has hired Rothschild to find a buyer, according to Reuters. A deal could be worth around €600 million. Read more.

• Moelis Capital Partners is planning to auction off NAPA Management Services Corp., a Roslyn Heights, N.Y.-based anesthesia and perioperative management company, for upwards of $600 million, according to Dow Jones. Read more.


• First Busey Corp. (Nasdaq: BUSE) has completed its previously-announced acquisition of Herget Financial, a Pekin, Ill.-based community bank with $279 million in assets as of year-end 2014. The deal was valued at $34.1 million in cash.

• Huron Consulting Group Inc. (Nasdaq: HURN) has acquired Sky Analytics Inc., a Framingham, Mass.–based provider of legal spend management software for corporate law departments. No financial terms were disclosed.

• Macquarie Group is in exclusive talks to purchase a portfolio of nearly 100 new planes from Dublin-based lessor AWAS for more than $4 billion, according to Reuters. Read more.

• Tripadvisor (Nasdaq: TRIP) has acquired Dutch online review and booking site Iens. No financial terms were disclosed, although local press reports put the value at nearly €10 billion. Read more.

• Virtus Partners LLC, a Houston-based provider of alternative asset collateral administrative services, has acquired Trade Settlement Inc., a New York-based primary and secondary loan trading settlement and documentation service provider. No financial terms were disclosed.

• XL Group PLC (NYSE: XL) has agreed to acquire Catlin Group Ltd. (LSE: CGL), a Bermuda-based Lloyd’s of London insurer, for approximately €2.8 billion in cash and stock. Read more.


• Ares Management has closed its previously-announced acquisition of Energy Investors Funds, an energy-focused investment firm with approximately $4 billion in assets under management.

• Fountain Healthcare Partners, a life sciences-focused VC fund with offices in Dublin and New York, has held an €85 million first close on its second fund. The overall target is €125 million.

• Morgan Stanley Credit Partners has raised approximately $1 billion in capital commitments for its second fund focused on corporate mezzanine debt for middle-market companies in Europe and North America.


• Bob Lefton and Bob Zollars have joined the growth buyout team of Frazier & Co. as a senior advisor and operating partner, respectively. Lefton is co-founder and executive chairman of DSI Renal, while Zollars is the chairman and former CEO of Vocera Inc.

• Michael Pulick has joined Warburg Pincus as an industry advisor in the consumer, industrial and services group. He previously was a senior executive with W.W. Grainger Inc. (NYSE: GWW).

• Dan Welch, former chairman and CEO of InterMune, has joined Sofinnova Ventures as an executive partner.

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