Random Ramblings
Some quick notes to kick off your Wednesday:
• The big hike: The Federal Reserve is expected to raise interest rates today. For context, Term Sheet didn't exist the last time this happened. Neither did peHUB, for that matter. Or iPhones.
I've previously mentioned how near-zero rates have helped create the "unicorn" class, by encouraging crossover investors to chase yield. As such, it would stand to reason that a rate hike would make such financing harder to come by -- basically exacerbating a problem currently borne of too few successful exits.
And it will do so, but only on the margins. Check this out from our economics reporter, Christopher Matthews:
A recent survey of economists by the Blue Chip Economic Indicator predicted short term interest rates would only hit 1.25% by the end of 2016. The Fed itself is predicting that the Fed’s interest rate in the long-run will settle at about 3.5%, or roughly half its average rate from 1970 through 2007.
And there’s a good shot that the Fed’s rate doesn’t even get that high. The Fed has consistently overestimated how high it may raise rates. A recent Wall Street Journal poll of sixty-five economists, for instance, showed that roughly half believe that the Fed will be forced by economic conditions to bring interest rates back down to zero within the next five years.
In other words, many crossover investors will continue searching for yield in all the strange places. Interest rates will add to the headwinds for both unicorns and wannabe unicorns, but it won't be the gust that knocks them over.
• Couch critic: Last night's GOP debate was framed around national security, so I fully expected that most of the conversation would be about foreign policy engagements. But doesn't economic health -- including energy policy, which had a major development yesterday with the oil export ban being lifted -- also play a role in national security? Or gun/mental health policy? There were a lot of substantive discussions in the two-plus hours, but the general framing seemed myopic.
• From the filings: Berkshire Partners has agreed to acquire Archive Systems Inc., a Fairfield, N.J.-based provider of document and records management solutions, according to an FTC filing. Existing shareholders include Edison Partners. No comment from any of the involved parties.
• Answer Key: Yesterday I asked you to name the new healthcare VC group that is being launched by a pair of private equity pros (who are maintaining their day jobs)? Your hint was that the principals aren't based in Boston, New York or San Francisco.
As a few of you correctly replied, the PE pros in question were Bryan Cressey and former Sen. Bill Frist. That said, I may have overstated a bit by calling it a "VC group." Nashville-based Frist tells me that the pair -- who are partners with Chicago-based Cressey & Co. -- are creating a structure (and hiring at least one staffer) to manage their personal, early-stage healthcare investments (most of which, to date, have been made independently of one another). There are no current plans to raise any sort of third-party fund.
THE BIG DEAL
• BATS Global Markets, a Lenexa, Kansas-based securities exchange operator, has filed for a $100 million IPO. It plans to trade on the BATS Exchange under ticker symbol BATS, with Morgan Stanley and Citigroup serving as lead underwriters. The company previously priced an IPO in 2012, but canceled the offering due to a subsequent software glitch that decimated its share value. Read more.
VENTURE CAPITAL DEALS
• Vroom, a Grand Prairie, Texas-based online used car sales startup, has raised $95 million in new equity funding in Series C funding. No investors were identified, but the company previously raised capital from backers like Catterton Partners, General Catalyst Partners and T. Rowe Price. In related news, Vroom has agreed to acquire rival Texas Auto Direct. Read more.
• Digital Guardian, a Waltham, Mass.-based data protection platform, has raised $66 million in new VC funding. LLR Partners, Mass Mutual Ventures and Siemens Financial Services were joined by return backers GE Pension Trust, Fairhaven Capital Partners, Loring Wolcott & Coolidge, Special Situation Funds and Brookline Venture Partners. www.digitalguardian.com
• Clover Health, a San Francisco-based health insurance startup, has raised $35 million in Series B funding led by Sequoia Capital. This comes just three months after the company raised $100 million in equity and debt funding led by First Round Capital. Read more.
• Blue River Technology, a Sunnyvale, Calif.-based, has raised $17 million in Series B funding. Pontifax AgTech led the round, and was joined by Syngenta Ventures , Monsanto Growth Ventures and return backers Data Collective Venture Capital, Khosla Ventures and Innovation Endeavors. www.bluerivert.com
• Trustlook Inc., a San Jose, Calif.-based mobile security provider for the Android platform, has raised $17 million in Series A funding. Trustbridge Partners led the round, and was joined by Sparkland Ventures, Linear Capital Partners and return backer Danhua Capital. www.trustlook.com
• Sophia Genetics, a Swiss “data-driven medicine” startup, has raised $15 million in Series C funding led by Omega Pharma founder Marc Coucke. www.sophiagenetics.com
• Profusa Inc., a South San Francisco-based developer of internal biosensor technology for continuous monitoring of body chemistry, has raised $13.2 million in Series B funding. 3E Bioventures (China) led the round, and was joined by return backers Asset Management Ventures and Qihoo 360. www.profusacorp.com
• Oration, a Foster City, Calif.-based developer of software for helping employers and employees save money on pharmacy costs, has raised $11.2 million in Series A funding. Backers include DFI Venture, Google Ventures, Adreessen Horowitz, Chicago Ventures, Data Collective, Work-Bench, Arsenal Ventures Partners and TIE Angels. Read more.
• NavVis GmbH, a Munich-based, has raised €7.5 million in Series B funding. Target Partners led the round, and was joined by Don Dodge (Google) and return backers MIG Fonds and Bayerische Beteiligungsgesellschaft. www.navvis.com
• Faction, a Denver-based provider of hybrid, private, and public cloud solutions, has raised $6 million in new equity and debt financing. Existing shareholders Meritage Funds and Sweetwater Capital provided the equity, while Ares Capital Corp. provided the debt. www.factioninc.com
• Inthera Bioscience, a Swiss developer of small molecule therapies for solid tumors, has raised $3.7 million in new VC funding. MS Ventures led the round, and was joined by Dutch Aglaia BioMedical Ventures, Danish Novo Seeds and EVA Basel.
• Sundar, a New York-based global sourcing platform for design-based industries, has raised $1.3 million in seed funding. New Enterprise Associates led the round, and was joined by Techstars Ventures, Correlation Ventures and individual angels. www.sundar.io
• iFlix, a Netflix-like service for Southeast Asia, is seeking to raise $150 million in new VC funding, according to TechCrunch. Read more.
PRIVATE EQUITY DEALS
• Bravo Sports Corp., a Santa Fe Springs, Calif.-based portfolio company of Transom Capital, has acquired Pro-Tec, a San Diego-based maker of branded skateboarding helmets and other action sports protective gear. No financial terms were disclosed. www.bravosportscorp.com
• Catalyst Investors has led a $47 million majority equity investment in Datavail, a Broomfield, Colo.-based provider of remote database administration services. Other participating investors include Tahosa Capital, Lumerity Capital Partners and return backers Boulder Ventures, Meritage Funds and MC Investment Fund. www.datavail.com
• Cinven and KKR are among the prospective bidders for SABMiller’s European beer brands, including Peroni and Grolsch, according to Bloomberg. The brands are being sold off in preparation for SABMiller’s mega-marker with AB InBev, and also are expected to get strong looks from Japan’s Asahi Group Holdings and Spain’s Mahou-San Miguel Group. Bids are due next month. Read more.
• Eberspaecher, a family-owned German auto parts maker, has been soliciting bids for a majority equity stake in its exhaust business that could value the unit at more than $1.1 billion, according to Reuters. Among those reported to be circling are 3i Group, KPS Capital Partners, PAI Partners and Triton. Read more.
• EQT Partners has acquired FocusVision, a Stamford, Conn.-based provider of live video transmissions of qualitative research. No financial terms were disclosed. Sellers include SV Investment Partners. This represents EQT’s first mid-market deal in the U.S.
www.focusvision.com
• General Atlantic has acquired a minority stake in Barteca Holdings, a South Norwalk, Conn.-based wine bar and restaurant operator. No financial terms were disclosed. www.barteca.com
• Kount Inc., a Boise, Idaho-based provider of online and mobile fraud detection and prevention solutions, has secured an $80 million growth equity investment from CVC Capital Partners. www.kount.com
• Li Tong Group, a Hong Kong-based provider of reverse supply chain management services for the tech and telecom markets, has raised $45 million in funding from Olympus Capital Asia.
www.litong.com
• McCarthy Capital has sponsored a recapitalization and growth equity investment in Seven10 Storage Software LLC, a Lawrence, Mass.-based provider of enterprise software-defined-storage solutions and automated file migrations. No financial terms were disclosed. www.seventenstorage.com
• Nimes Capital has agreed to acquire Togo’s Eateries Inc., a San Jose, Calif.-based quick-serve sandwich chain with 251 locations in six states, from Mainsail Partners. No financial terms were disclosed. www.togos.com
• PAI Partners has entered into exclusive negotiations to purchase Groupe B&B Hotels, a France-based chain of budget hotels throughout Europe, from The Carlyle Group and Montefiore Investment. www.hotel-bb.com
• Providence Equity has acquired a majority stake in Abacus Data Systems Inc., a San Diego-based provider of law firm software. No financial terms were disclosed.
www.abacuslaw.com
• The Riverside Company has invested an undisclosed amount in The Marena Group, a Lawrenceville, Ga.-based manufacturer of medical-grade compression garments, shapewear and activewear. www.marenagroup.com
• Upstream Rehabilitation Inc., a Birmingham, Ala.-based provider of outpatient rehabilitation services, has raised an undisclosed amount of equity funding from Revelstoke Capital Partners.
www.upstreamrehabilitation.com
IPOs
• LightBeam Electric Co., a Sausalito, Calif.-based operator of clean and renewable electric generation projects, has withdrawn registration for a $100 million IPO. The pre-revenue company originally filed its S-1 back in April, and did not provide an explanation for its decision. LightBeam had planned to trade on the NYSE with BMO Capital Markets, Macquarie Capital and RBC Capital Markets serving as lead underwriters.www.lightbeamelectric.com
EXITS
• ESG Solutions, a Houston-based subsidiary of Spectris PLC (LSE: SXS), has acquired Spectraseis Inc., a Canadian provider of surface-based seismic technology for the fracking market. No financial terms were disclosed. Sellers include DBO Capital, Energy Capital Management and Norsk Hydro Technology Ventures. www.esg.ca
• RPX Corp. (Nasdaq: RPX) has agreed to acquire Inventus Solutions Inc., a Dallas-based provider of e-discovery services to law firms, Fortune 1000 law departments and government agencies, from Clearlake Capital Group for $232 million in cash. www.inventus.com
• TSG Consumer Partners has completed its previously-announced $217 million sale of ThinkThin, a Los Angeles-based maker of "wholesome protein-rich foods," to Glanbia PLC (ISE: GL9). www.thinkproducts.com
OTHER DEALS
• AstraZeneca (LSE: AZN) has agreed to acquire global rights to respiratory drug Roflumilast from Japan’s Takeda Pharmaceutical (Tokyo: 4502) for $575 million. Read more.
• Bizfi, a New York-based online small business finance platform, has secured a $65 million structured financing facility from Metropolitan Equity Partners. www.bizfi.com
• COFCO of China is in talks to acquire the 49% it doesn’t already own of Noble Group’s (Singapore: N21) agribusiness unit for between $700 million and $750 million, according to Reuters. Read more.
• Global Payments Inc. (NYSE: GPN) has agreed to acquire Princeton, N.J.-based payment technology company Heartland Payment Systems Inc. (NYSE: HPY) for $4.3 billion in cash and stock (working out to around a 21% premium over yesterday’s closing price). Following the deal, Global Payment stockholders would own around 84% of the combined entity. Read more.
• Halliburton Inc. (NYSE: HAL) and Baker Hughes Inc. (NYSE: BHI) pushed back the deadline for completing their $35 billion merger, after the Department of Justice raised more concerns about the deal’s impact on competition in the sector. Read more.
• Microchip Technology Inc. (Nasdaq: MCHP) is the previously-unidentified party that made a $3.8 billion unsolicited cash takeover offer for Amtel Corp. (Nasdaq: AMTL), which Amtel said was superior to an existing cash and stock agreement with UK-based Dialog Semiconductor PLC, according to Reuters. Read more.
• James Packer, an Australian billionaire, is in talks with private equity firms and pension funds about taking some casino assets of Crown Resorts Ltd. (ASX: CWN) private, according to Bloomberg. Read more..
• State Power Investment Corp. of China has agreed to acquire Pacific Hydro, an Australia-based operator of renewable energy assets, from IFM Investors for an undisclosed amount. Read more.
FIRMS & FUNDS
• Barclays PLC (LSE: BARC) has launched a strategic review of its African business, which could result in a sale of some or all operations, according to the FT. Read more.
• Great Rock Capital Partners has launched as a Westport, Conn.-based investment management firm that will provide asset based and asset-backed loans for middle-market companies. It is led by CEO and chief investment officer Stuart Armstrong, a GE Capital veteran who most recently was president of Great American Group's specialty lending division. www.greatrockcapital.com
• Slack, a cloud-based workplace collaboration software "unicorn," has launched an $80 million VC fund focused on startups that complement its technology. The fund is being launched in partnership with many of Slack's existing venture backers. Read more.
Moving In, On & Up
• James Clark has joined the KU Endowment Association, the asset management and fundraising arm of The University of Kansas, as a senior vice president of investments. He previously led private equity and real asset strategies at Fiduciary Research & Consulting and, before that, was director of private investments at the Kauffman Foundation. www.kuendowment.org
• Russell Fradin, former president and CEO of SunGard Data Systems, has agreed to join private equity firm Clayton, Dubilier & Rice as an operating partner, effective April 1, 2016. www.cdr-inc.com
• Goldman Sachs said that John Vaske, co-chairman of natural resources investment banking, will become the firm’s third co-chair of global M&A, joining Tim Ingrassia and Paul Parker. www.goldmansachs.com
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