Random Ramblings ("Look out below" edition)
Over the weekend, someone asked my why the stock markets were going down. I told him it was because they had previously gone up. Seemed like as legitimate an explanation as any (and saved me from spending an hour discussing Chinese economic tumult, why falling oil prices are causing counterintuitive mayhem and how Janet Yellin should write a cautionary tale about the dangers of procrastination).
So I'm not here to tell you things are going to continue to spiral, or that everything is going to be okay. I have no actual idea (nor does anyone else, including those on TV saying to buy or sell).
That said, I am getting the sense from talking to folks in the private markets that a lot of stuff is being put on hold until we get more clarity. Big funding rounds, leveraged buyouts and IPOs. It helps that there is a relative paucity of such stuff anyway in the dog days of August, which means Labor Day should be the major marker. If things have settled down, then all systems reignite. If not, we could see a rash of stranded unicorns (seeya VC tourists!), broken buyout deals (hello Delaware Chancery Court!) and an IPO market in which only the most fundamentally sound or insignificant dare play (Uber, but for night sweats). Oh, and there also is the prospect of the dreaded 'denominator effect' returning to cause problems for VC/PE firms that had planned to raise new funds in early 2016.
But I'm not ready to go all RIP Good Times quite yet. Maybe soon, but not yet. If for no other reason than it's unclear how the stock swoon will harm the actual economy, any more than the recent bull market helped it. Lack of apparent correlation goes both ways, you know...
• Compounded interest: Three years ago there was a national outbreak of fungal meningitis that was blamed for dozens of deaths, and eventually traced back to a (supposedly) sterile drug compounding lab just miles from my home office. The situation eventually led to new FDA regulations that created a new category of sterile drug outsourcing facilities. Among them was Pharmedium, which Clayton Dubilier & Rice acquired in 2014 for around $900 million (producing a 6x return for its PE investors from 2007). At the time, $900 million seemed pricey, born of market dislocation. Today, it looks like a smart move, as the post-Ameridose industry growth appearing to have been sustained.
So, with that as pretext, Bain Capital today is expected to announce the creation of a rival to Pharmedium. It’s called QuVa Pharma Inc., and will be led by a team pulled out of JHP Pharmaceuticals. The company already has purchased its first manufacturing facility in Sugar Land, Texas -- one that qualifies under the new regs -- from Healix (which will refocus around its core infusion therapy business), with plans to use it as the first of a series of facilities.
No financial terms are being disclosed, except that Bain will be majority holder and that the equity commitment includes reserves for future acquisitions.
• From the trail: Donald Trump yesterday came out in favor of changing the tax treatment on carried interest, during an interview on CBS's Face The Nation. When speaking of hedge fund managers, Trump said: "They are energetic. They are very smart. But a lot of them - they are paper-pushers. They make a fortune. They pay no tax. It's ridiculous, okay?"
Also worth noting, however, that Trump in the past month has seemingly endorsed both a flat tax and progressive taxation. So maybe we just need to give this a few days to marinate...
THE BIG DEAL
• Sycamore Partners has agreed to acquire Belk Inc., a Charlotte, N.C.-based, family-owned fashion department store operator, for approximately $3 billion. www.belk.com
VENTURE CAPITAL DEALS
• Mirantis, a Mountain View, Calif.-based provider of OpenStack solutions, has raised $100 million in new VC funding. Intel Capital led the round, and was joined by Goldman Sachs and return backers August Capital, Insight Venture Partners, Ericsson, Sapphire Ventures and WestSummit Capital. Read more.
• AgBiome, a Durham, N.C.-based developer of agricultural products to improve crop productivity, has raised $34.5 million in Series B funding. New investors include The Bill & Melinda Gates Foundation, The University of Texas Investment Management Co., Pontifax Global Food and Agriculture Technology Fund. Return backers include Polaris Partners, ARCH Venture Partners, Harris & Harris Group, Innotech Advisers, Monsanto Growth Ventures and Syngenta Ventures. www.agbiome.com
• Everything But The House, a Cincinnati-based, has raised $30 million in Series B funding. Greenspring Associates led the round, and was joined by return backers Greycroft Partners and Spark Capital. Read more.
• Avegant, an Ann Arbor, Mich.-based developer of a “vivid reality near-eye display,” has raised $24 million in Series B funding. Lian Luo led the round, and was joined by The Bunting Family Fund and return backers Intel Capital and NHN Investment. www.avegant.com
• Reelio, a New York-based influencer marketing platform, has raised $5 million in Series A funding. Existing investors include Philipp Schindler, Lorne Michaels and Jason Glickman. www.reelio.com
• Get Smart Content, an Austin, Texas-based multi-channel personalization platform, has raised $3.5 million in new VC funding. Origin Ventures led the round, and was joined by return backers Chicago Ventures and Virgo Capital. www.getsmartcontent.com
• DaPulse, an Israeli provider of SaaS project management solutions, has raised $2.6 million in the first close of its Series A round from Genesis Partners and Entrée Capital. www.dapulse.com
PRIVATE EQUITY DEALS
• Anchorage Capital Partners is prepping a A$208 million takeover bid for Affinity Education (ASX: AFJ), an Australian childcare operator that recently rejected a takeover offer from G8 Education Group (ASX: GEM). Read more.
• The Blackstone Group has agreed to acquire a majority stake in Stearns Holdings LLC, a Santa Ana, Calif.-based national mortgage lender. No financial terms were disclosed. Company founder Glenn Stearns will retain a “significant ownership stake.” www.stearns.com
• Consolidated Investment Group has acquired the assets of Sicilian Chefs Inc., a Blackwood, N.J.-based maker of frozen Italian pastas, for an undisclosed amount. The company will be renamed Caesar’s Pasta Inc. www.ciginvest.com
• Kohlberg & Co. has agreed to acquire Osmose Utility Services Inc., a Tyrone, Ga.-based provider of structural integrity management services to power utilities and telecom companies. No financial terms were disclosed. www.osmose.com
• Mado, a Turkish ice cream brand, is seeking a private equity firm to acquire around half the company, according to Bloomberg. The founding Kambur family is in “advanced talks” with three firms about the deal, which would provide Mado with expansion capital. The company could be valued just north of $200 million. Read more.
• PlanSource, an Orlando, Fla.-based provider of cloud-based health exchange and benefits administration technology, has raised $70 million in minority equity funding from Great Hill Partners. www.plansource.com
• Providence Equity has agreed to acquire Studialis, a French provider of high-education institutions, from Bregal Capital, according to Reuters. No financial terms were disclosed. Read more.
IPOs
• ADS Waste Holdings Inc., a Ponte Vedra, Fla.-based non-hazardous solid waste collection and disposal services company backed by Highstar Capital, has filed for a $100 million IPO. It plans to trade under ticker symbol ADSW, with Deutsche Bank, Credit Suisse and Barclays serving as lead underwriters. The company reports a $19.3 million net loss on $685.5 million in revenue for the first half of 2015. www.advanceddisposal.com
EXITS
• AEA Partners is seeking a buyer for Shoes for Crews, a West Palm Beach, Fla.-based provider of footwear to food service industry workers, according to Bloomberg. A deal could be valued at upwards of $700 million. Read more.
OTHER DEALS
• No other deals this morning...
FIRMS & FUNDS
• Abraaj Group has closed its second private equity fund focused on North Africa with $375 million in capital commitments. Read more.
• The Blackstone Group is preparing to launch fundraising for its next private equity secondaries fund next month, just one year after closing its debut fund, according to peHUB. The target could be around $5.5 billion. Read more.
• Eurazeo SA (Paris: RF), a European investment firm, is considering a push into North American buyouts, according to Bloomberg. Read more.
• InnoSpring, a U.S.-China tech incubator based in Silicon Valley, has raised $10 million in strategic funding from Chinese auto parts maker Wanxiang Group. www.innospring.net
• Lakestar, a European early-stage VC firm led by Klaus Hommels, has closed its second fund with 350 million in capital commitments. Read more.
MOVING IN, UP, ON & OUT
• Todd Manley has joined Blue Coat Systems as senior director of business development. He previously spent seven months in the corporate development group of Hewlett-Packard and, before that, two years with Resources Global Professionals. www.bluecoat.com
• Versant Ventures, a San Francisco-based healthcare VC firm, has promoted Carlo Rizzuto to lead its newly-established New York City office. The firm also has formed Highline Therapeutics in New York, as its third biotech incubator. www.versantventures.com
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