Random Ramblings
E-commerce company Gilt Groupe last week was acquired by Hudson’s Bay Co., the Canadian parent company of Saks Fifth Avenue, for $250 million in cash. It’s a much lower valuation than Gilt has received from its venture capital investors ― thus prompting several stories about how Gilt is emblematic of how several unicorns are about to become unicorpses.
Yes, Gilt raised money back in early 2011 at a valuation above $1 billion. In fact, it did so before companies like Airbnb, Snapchat or Uber. But unlike most of its fellow unicorns, Gilt had left its stable long before Hudson’s Bay came calling.
New York-based Gilt laid off 10% of its employees in 2012 and soon shuttered and sold some of its non-core verticals. In 2013 it switched CEOs. And then came February 2015, when the company raised $46 million in new venture capital funding. The deal was a recapitalization at a post-money valuation just north of $600 million (per VC Experts). Existing investors saw their preferred shares convert to common. In other words, investor hope for Gilt had dimmed at the very time that most other tech startups ― including in the e-commerce space ― were watching their valuations skyrocket.
This isn’t to say that Gilt won’t go down as a cautionary tale. And I’m certainly not ignoring private-market valuation contraction or what I see to be the folly of startups not going public when they had the chance.
But Gilt simply isn’t of the same vintage of most other unicorns, which means that it was riding different trend waves. As such, its (relative) failure should not be used as predictive evidence of what will or won’t happen to other companies that have been valued at $1 billion. There are more differences than similarities, even if they both disappoint in the end.
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THE BIG DEAL
• Shire PLC (LSE: SHP) has agreed to acquire Baxalta Inc. (NYSE: BXLT) for $32 billion in cash and stock. Read more.
VENTURE CAPITAL DEALS
• Zai Labs, a Shanghai-based drug developer whose lead candidate is focused on treating liver cancer, has raised more than $100 million in Series B funding. Advantech Capital led the round, and was joined by OrbiMed Advisors, Sequoia Capital China, Qiming Venture Partners and TF Capital. www.zailaboratory.com
• Kymeta Corp., a Redmond, Wash.-based developer of satellite communication antennas and systems, has raised $62 million in Series D funding. A group of undisclosed strategic partners were joined by return backers Bill Gates, Lux Capital, Kresge Foundation and Osage University Partners. www.kymetacorp.com
• V-Wave Ltd., an Israel-based developer of an implantable, interatrial shunt for the treatment of heart failure, has raised $28 million in Series B funding. Johnson & Johnson Development Corp., TriVentures, Pura Vida Investments and BioStar Ventures were joined by return backers BRM Group, Pontifax and Edwards Lifesciences. www.vwavemedical.com
• Lodo Therapeutics Corp. has been formed by Accelerator Corp. to develop therapeutics derived from Accelerator’s metagenomics-based small molecule discovery platform. It also has raised $17 million in Series A funding from Accelerator New York’s investment syndicate partners: ARCH Venture Partners, Eli Lilly and Company, Harris & Harris Group, Inc., Innovate NY Fund, Johnson & Johnson Development Corp., The Partnership Fund for New York City, Pfizer Venture Investments, Watson Fund and WuXi PharmaTech. The Bill & Melinda Gates Foundation also participated. www.acceleratorcorp.com
• Aelix Therapeutics, a Barcelona-based developer of immunotherapies against HIV infection, has raised €11.5 million in Series A funding. Ysios Capital led the round, and was joined by Johnson & Johnson Development Corp. and Caixa Capital. www.aelixtherapeutics.com
• Mambu, a Berlin-based SaaS product development and deployment platform for financial services providers, has raised €8 million in Series B funding. Backers include Acton Capital Partners and CommerzVentures. www.mambu.com
• The Big Know, a Minneapolis-based digital learning platform “built to change the way brands interact with consumers,” has raised $3 million in Series A funding led by LFE Capital. www.thebigknow.com
PRIVATE EQUITY DEALS
• The Abraaj Group has acquired a “significant minority stake” in Cellulose Processing, a manufacturer and distributor of baby diapers and feminine sanitary pads in Algeria. No financial terms were disclosed. www.abraaj.com
• Confie Seguros, a personal insurance company focused on Hispanic consumers, has made three new acquisitions: Most Insurance (Tampa, Fla.), Fair Price Insurance (Bronx, NY) and Duane Sammons Insurance Center (Bellingham, Wash.). No financial terms were disclosed. Confie Seguros is a portfolio company of ABRY Partners. www.confieseguros.com
• Health & Safety Institute, a Eugene, Ore.-based portfolio company of The Riverside Co., has acquired SafeTec Compliance Systems Inc., a Vancouver, Wash.-based provider of web-based chemical compliance solutions. No financial terms were disclosed. www.hsi.com
• Great Hill Partners has sponsored a recapitalization of RxBenefits, a Birmingham, Ala.-based provider of pharmacy benefits administration solutions for small to mid-sized, self-insured employers. No financial terms were disclosed. www.rxbenefits.com
• Healthline Media, a San Francisco-based health information site, has raised $95 million in growth equity funding from Summit Partners. The deal separately capitalizes Healthline Media from VC-backed Healthline Networks, with HM general manager David Kopp to serve as CEO. www.healthline.com
• Nordic Capital has acquired Cint AB, a Swedish provider of supply chain management and audience management solutions for market researchers and publishers. No financial terms were disclosed. Sellers include Creandum, Cipio Partners, DE Capital and Prime Ventures. www.cint.com
• PWNHealth LLC, a New York-based diagnostic testing company sponsored by EDG Partners, has acquired Bind Health, a New York-based provider of genetic testing solutions. No financial terms were disclosed. Sellers include Blueprint Health. www.pwnhealth.com
• The Riverside Company has acquired The Dermatology Group, a dermatology-focused physician practice management company with 16 company affiliated locations throughout Northern and Central New Jersey. No financial terms were disclosed. www.riversidecompany.com
• Worldwide Flight Services., an Irving, Texas-based portfolio company of Platinum Equity Partners, has agreed to acquire New York-based cargo handling company Consolidated Aviation Services. No financial terms were disclosed. www.wfs.aero
• Seaborn Networks has secured $500 million in project finance for Seabras-1, a transoceanic subsea fiber optic cable system directly connecting points of presence (POPs) in New York City and São Paulo, Brazil. Seabras-1 is jointly owned by Seaborn Networks and private investment firm Partners Group. www.seabornnetworks.com
IPOs
• Clearside Biomedical Inc., an Alpharetta, Ga.-based developer of therapies to treat blinding diseases of the eye, has filed for a $57.5 million IPO. It plans to trade on the Nasdaq under ticker symbol CLSD, with RBC Capital Markets serving as lead underwriter. The pre-revenue company last month announced $20 million in Series C funding. Shareholders include Hatteras Venture Partners (28.4% pre-IPO stake), RMI Investments (12.5%), Santen Pharmaceutical Co. (9.2%), GRA Venture Fund (7.2%), Aju IB Investment, Cormorant Asset Management, Perceptive Advisors and Rock Springs Capital Management. www.clearsidebio.com
• Elevate Credit Inc., a Fort Worth, Texas-based provider of online credit solutions to non-prime consumers, has set its IPO terms to 3.6 million shares being offered at between $20 and $22 per share. It would have an initial market cap of around $638 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol ELVT, with UBS, Jefferies and Stifel serving as lead underwriters. It reports a $20 million net loss on $300 million in revenue for the first nine months of 2015, compared to a $44 million net loss on $180 million in revenue for the year-earlier period. Shareholders include Sequoia Capital (27.5% pre-IPO stake) and Technology Crossover Ventures (22.4%). www.elevate.com
EXITS
• Bain Capital has agreed to sell its 50% stake in Jupiter Shop Channel, a Japanese home shopping network, to Jupiter Telecom Co. No financial terms were disclosed, although a local media report put the value north of $830 million. In related news, mobile operator KDDI (Tokyo: 8433) agreed to purchase another 5% stake in Jupiter Shop from Sumitomo Corp. (Tokyo: 8053), which held the other 50% stake. Read more.
• China National Chemical Corp. (aka ChemChina) has agreed to acquire German machinery manufacturer KraussMaffei Group for approximately $1 billion from Onex Corp. Read more.
• Madison Dearborn Partners has hired Barclays to find a buyer for Sage Products LLC, a Cary, Ill.-based maker of medical and hygiene products, according to LBO Wire. The deal could be worth more than $1.6 billion, based on the company’s reported EBITDA of $140 million. www.sageproducts.com
OTHER DEALS
• The Innovation Network Corp. of Japan (INCJ), a government-backed fund, has offered a $1.71 billion bail-out investment for struggling electronics maker Sharp Corp. (Tokyo: 6753), according to the Nikkei daily. Sharp also reportedly is seeking to refinance around $1.27 billion in existing debt. Read more.
• Kakao Corp., a South Korean messaging app maker, has offered to acquire listed Korean music streaming service company Loen Entertainment for around $1.5 billion. Read more.
• Laing O'Rourke, a UK-based engineering and construction company, is seeking a buyer for its Australian operations, which could be worth more than US$1 billion. Read more.
• Mogujie.com, a Chinese fashion e-commerce company, has agreed to acquire Tencent-backed rival Meilishuo.com, according to the WSJ. The combined company plans to seek new outside funding at around a $3 billion valuation. Existing Mogujie.com shareholders include Ping An Ventures, Hopu Investment Management, Trust Bridge Partners, Qiming Venture Partners, Hillhouse Capital Management, IDG Capital Partners and Banyan Fund. Read more.
• SoundCloud, a Germany-based social audio platform reportedly has raised around $35 million in debt funding from Tennenbaum Capital Partners. The deal includes an option to borrow another $70 million. SoundCloud previously raised more than $100 million in equity funding from firms like Kleiner Perkins Caufield & Byers, The Chernin Group, Index Ventures, Institutional Venture Partners, Doughty Hanson and Union Square Ventures. Read more.
FIRMS & FUNDS
• GMB Mezzanine Capital has closed its third fund with $270 million in capital commitments. www.gmbmezz.com
• Nautic Partners has closed its eighth middle-market private equity fund with $900 million in capital commitments. www.nautic.com
• Resilience Capital Partners, a Cleveland-based private equity firm focused on the lower middle-markets, has closed its fourth fund with $350 million in capital commitments. www.resiliencecapital.com
• Stonepeak Infrastructure Partners, a New York-based private investment firm focused on the North American infrastructure market, has closed its second fund with $3.5 billion in capital commitments. www.stonepeakpartners.com
Moving In, On & Up
• Deepak Advani has joined Hellman & Friedman as a San Francisco-based managing director. He previously was general manager of IBM Commerce. In other Hellman & Friedman news, the firm has promoted both Zita Saurel (London) and Stuart Banks (London, general counsel for Europe) to managing director. www.hf.com
• Bill Anderson has joined Evercore’s investment banking group as a senior managing director and global head of the firm’s strategic shareholder advisory business. He previously was a partner in the M&A unit of Goldman Sachs. www.evercore.com
• Carsten Beck has joined Austin, Texas-based private equity firm Peak Rock Capital as a Brussels-based principal. He previously was a London-based director of investment banking at Barclays. www.peakrockcapital.com
• Jin-Yong Cai has joined TPG Capital as a partner, effective Feb. 1. He previously was CEO of the International Finance Corp., and at TPG will focus on projects and companies “that help to accelerate the economic growth of frontier and emerging markets.” www.tpg.com
• The Carlyle Group announced that Stephen Wise has been named global head of the firm’s healthcare investment team. He had been promoted last February to co-head of the group alongside Karen Bechtel, who will continuity to serve as a managing director with Carlyle. www.carlyle.com
• Jay Desai has joined Kainos Capital, a private equity firm focused on food and consumer businesses, as a managing director and head of business development. He previously was senior VP of strategy at Crossmark Inc., a portfolio company of Warburg Pincus. www.kainoscapital.com
• Zeke Emanuel has joined Oak HC/FT as a venture partner. Emanuel is an oncologist and former healthcare advisor to the U.S. Office of Management and Budget, who currently chairs UPenn’s Department of Medical Ethics and Health Policy. www.oakhcft.com
• Graham Emmett has joined H.I.G. Capital as a London-based director on the firm’s real estate team. He previously was with Cheyne Capital. www.higcapital.com
• George Mackie has joined PeopleMatter, a Charleston, S.C.-based provider of talent management software, as CEO. He previously was a venture partner with Noro-Mosely Partners and, before that, was CEO of Insource Contract Services. www.peoplematter.com
• Montreaux Equity Partners has promoted Michael Matly to managing director. He joined the firm in 2012, and sits on the boards of portfolio companies Kareo, Pure Life Renal and Pulmonx. www.mepvc.com
• Sean Murphy has joined Harvest Partners as a principal in the firm’s non-control private equity unit. He previously was with Angelo Gordon. www.harvestpartners.com
• Bernhard Nann, former CEO of Opera Solutions, has joined Golden Gate Capital as an operating executive. www.goldengatecap.com
• Ali Rahmatollahi has joined Palamon Capital Partners as a partner. He previously was with Morgan Stanley as an executive director of financial sponsors. www.palamon.com
• Leighton Read has joined Brandon Capital Partners, an Australia-based life sciences VC firm, as a venture partner and head of BCP’s new office in Palo Alto, Calif. Read previously co-founded Affymax NV and was a managing member with Alloy Ventures. www.brandoncapital.com.au
• Joshua Resnick has joined SV Life Sciences as a Boston-based partner. He previously was president and managing partner of MRL Ventures Fund. www.svlsa.com
• Bill Richter has joined Madrona Venture Group as a venture partner. He previously was president of the Isolon storage unit of EMC Corp. www.madrona.com
• Robert Toth has joined CCMP Capital Advisors as a managing director. He previously was president, CEO and chairman of Polypore International Inc., which was acquired last year for $2.9 billion by
Asahi Kasei Corp. (TSE:3407). www.ccmpcapital.com
• Peter van der Meer has joined Silver Lane Advisors as a managing director and head of insurance investment banking. He previously served in similar roles with Guggenheim Securities. www.silverlane.com
• Feliks Zarotsky has joined private equity firm Soundcore Capital Partners as a partner. He previously was a VP at Tower Three Partners and, before that, was with Sun Capital Partners. www.soundcorecap.com
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