Greetings from Cleveland, where I just landed after a flight without WiFi (despite assurances from the airline, gate attendant, etc.). On the upside, our flight attendant apologetically offered me a free alcoholic beverage for breakfast. So just time for some notes, and a slightly abbreviated news section…
• Huh? That’s the question I’ve gotten from a lot of people who have asked why I’m spending this week in Cleveland (and next week in Philly). No, I’m not becoming a political reporter. Nor a protest groupie. The short explanation as to why I’m helping Fortune cover the conventions is that I did it four years ago because of Romney (i.e., the private equity angle), which means I kinda/sorta know my way around these things. Plus, there are usually a bunch of investor types hanging around. My goal for Term Sheet is to continue business as usual, but clearly there will be a bit of a different feel…
• Pence and Cents: Back when Chris Christie entered the presidential race in late 2014, we discussed the fundraising challenges he would face due to SEC pay-to-play rules that effectively prevent sitting governors from raising campaign cash from investment advisors which do business with state pension funds (or which solicit such business). Christie obviously isn’t on a ballot anymore, but the same issue could bite Donald Trump, now that he has named Indiana Gov. Mike Pence as his running mate.
In short, Trump/Pence will not be allowed to directly raise money from such notable supporters as RNC speaker Tom Barrack (Colony Capital) and Wilbur Ross (WL Ross), both of whose firms count Indiana public pensions among their limited partners. Trump backers can bypass this rule by donating directly to the Republican Party or to Trump-affiliated super PACs – although too much of the latter could cause the SEC to expand its rules going forward. Pence also could step down as governor, particularly given that he is no longer running for reelection and will spend most of his remaining term campaigning outside of Indiana…
• Deal data: Private equity firms pumped more money into public-to-private deals than at any other time since 2007, according to new numbers from Pitchbook Data. The approximately $54 billion worth of such deals is an 80% jump over the same period in 2015, and 18% of total private equity disbursements (highest percentage since first half of 2009). Moreover, eight of the ten largest deals in H1 2016 were public-to-privates.
• Just asking: Is there an argument that Vista Equity is becoming the private equity version of what Andreessen Horowitz was to the VC market three or four years ago? Namely in terms of being willing to pay top dollar for tech companies, due both to a secular investment thesis and also a belief that price discipline is often worth sacrificing in order to get what it believes will eventually be viewed as a bargain?
Obviously there are lots of differences between the two, but here is something one tech-focused buyout pro from a rival shop recently told me: “It used to be that if we were looking at an auction, my partners would always ask if strategics were involved – meaning that we were wasting our time. Now those same partners ask if Vista is involved.”
• Inactivist: Carl Icahn, the first big-name financier to publicly support Donald Trump, will not be in Cleveland this week.
• Oh brother, where art thou? Also not here in Cleveland is venture capitalist Josh Kushner, whose brother – New York Observer publisher Jared Kushner – is married to Ivanka Trump and appears to be one of her father’s closest political advisors. Josh’s firm, Thrive Capital, this morning announced that it has closed on its fifth fund with $700 million in capital commitments (hitting its target). As we’ve previously noted, Thrive is a major investor in Oscar, an healthcare insurance platform based on an Affordable Care Act that Trump has pledged to repeal. Also on the Oscar cap table is Founders Fund, the VC firm led by Trump supporter (and RNC speaker) Peter Thiel.
• Where in the World? Tomorrow afternoon in Cleveland I’ll be moderating a panel on what CEO transitions can, and cannot, teach the next president and his/her team. My panelists will include Sen. Bob Corker, former Mississippi Gov. Haley Barbour, Clay Johnson (head of personnel for 2000 Bush/Cheney transition team) and McKinsey & Co. partner Drew Erdmann. For more info, or to register, please go to http://firstyear2017.org/blog/RNC2016.
THE BIG DEAL
• SoftBank has agreed to acquire British chipmaker ARM Holdings (Nasdaq: ARMH) for approximately $32 billion. Read more.
VENTURE CAPITAL DEALS
• Azalea Health, an Atlanta-based provider of revenue cycle enhancement software for healthcare practices, has raised $10.5 million in Series B funding. Kayne Partners led the round, and was joined by existing backer Intersouth Partners. www.azaleahealth.com
• Lifesum, a Stockholm-based health and nutrition tracking startup, has raised $10 million in new VC funding. Nokia Growth Partners led the round, and was joined by Draper Esprit, Bauer Media Group and SparkLabs Global Ventures. www.lifesum.com
• Modo Labs Inc., a Stamford, Conn.-based mobile engagement platform for creating campus and enterprise apps, has raised $10 million in Series B funding. Backers include Education Growth Partners, Storm Ventures and New Magellan Ventures. www.modolabs.com
• MarketInvoice, a UK-based P2P lending platform that transacts around outstanding invoices, has raised £7.2 million in new VC funding. MCI Capital led the round, and was joined by return backer Northzone. Read more.
• Civil Maps, an Albany, Calif.-based provider of 3D mapping technology for fully autonomous vehicles, has raised $6.6 million in seed funding. Motus Ventures led the round, and was joined by Ford Motor Co., Wicklow Capital, StartX Stanford and AME Cloud Ventures. www.civilmaps.com
• Scope AR, a San Francisco-based provider of augmented reality smart instructions and live support video calling solutions, has raised $2 million in seed funding from Susa Ventures, Presence Capital Fund and New Stack Ventures. www.scopear.com
• Magnetic Insight Inc., an Alameda, Calif.-based diagnostic imaging startup, has raised $3 million in seed funding. Sand Hill Angeles led the round, and was joined by the Stanford StartX Fund. www.magneticinsight.com
• Blocko, a Korean blockchain platform, has raised an undisclosed amount of new VC funding from Samsung SDS. www.blocko.io
• Darktrace, a London-based provider of enterprise cybersecurity software, has raised an undisclosed amount of new VC funding from Samsung SDS. Earlier this year, Darktrace raised $65 million in growth equity funding from KKR, TenEleven Ventures, SoftBank and Summit Partners. www.darktrace.com
• ZestFinance, a Los Angeles-based big data company focused on credit scoring, has raised an undisclosed amount of VC funding from Baidu.com. The company previously raised around $270 million in equity and debt financing from Lightspeed Venture Partners, Matrix Partners, Eastward Capital Partners, Kensington Capital, Upfront Ventures, Flybridge Capital Partners, Thiel Capital, Northgate Capital and Fortress Investment Group. Read more.
PRIVATE EQUITY DEALS
• Goldman Sachs and Bain Capital have agreed to acquire Carver Korea Co., a South Korean cosmetics maker, for an undisclosed amount. Read more.
• Suba Seeds USA Inc., a portfolio company of Paine & Partners, has acquired Brotherton Seed Company Inc., a breeder and producer of high quality pea and bean seeds for the North American processing market. No financial terms were disclosed. www.subaseeds.com
• Six companies are expected to price U.S. IPOs this week, per Renaissance Capital. They are: Patheon, TPI Composites, Audentes Therapeutics, Impinj, Tactile Systems Technology and Gemphire Therapeutics. Read more.
• Airgain, a San Diego-based provider of embedded antenna technologies, has filed for a $17.25 million IPO. It plans to trade on the Nasdaq under ticker symbol AIRG, with Northland Capital Markets serving as sole underwriter. The company reports $139,000 in net income on $8.5 million in revenue for Q1 2016. Shareholders include Gen3 Capital and Northwater Capital Management. www.airgain.com
• No exit news this morning.
• China National Chemical Corp. has agreed to acquire a 40% stake in crop protection company Adama Agricultural Solutions, an Israeli maker of crop protection products, from Discount Investment Corp. (Tel Aviv: DISI) for $1.4 billion (including debt). Read more.
• ExxonMobil (NYSE: XOM) has offered at least $2.2 billion to acquire InterOil (NYSE: IOC), besting an existing takeover offer by Australia’s Oil Search (ASX: OSH). Read more.
FIRMS & FUNDS
• Benhamou Global Ventures is raising upwards of $75 million for its third fund, according to a regulatory filing. So far it has secured just over $34 million in capital commitments. www.benhamouglobalventures.com
• Betaworks, a New York-based startup studio, is raising upwards of $75 million for a venture capital fund, according to a regulatory filing. www.betaworks.com
• Thrive Capital has closed its fifth fund with $700 million in capital commitments. Read more.
MOVING IN, ON & UP
• Loren Boston has joined MVision Private Equity Advisers as a senior managing director. He previously was president and COO of Hycroft LLC. www.mvision.com
Share today’s Term Sheet: