Some items to kick off your Tuesday…
• Debt data: Yesterday we noted how Thomson Reuters LPC said that average equity portions of leveraged buyouts are at a four-year high, hitting 45.7% in Q2. What we neglected to mention was that same report showed that the average debt-to-EBITDA multiple last quarter was 5.8x, which comes in a couple of ticks below the Fed guidance of 6x.
We also checked in with S&P LDC, which reports a 43% average equity contribution for Q2 2016 and a 5.4x average debt/EBITDA multiple (the latter of which was up just slightly from Q1).
There is certainly an argument to be made that these two statistics are related. If banks really are getting religion on the Fed guidance (remember, S&P put the Q3 15 figure at 6.19x), then it would stand to reason that private equity firms must contribute more equity to get deals done. And, to extend the causation one step further, it might also be why private equity deal-making continues to slump. After all, leverage has historically been a major driver of LBO returns…
• Taxing task: In order to satisfy its new $14.5 billion tax bill in Ireland, all Apple needs to do is sell a mere 126,086 of its highest-end Apple Watch. In terms of Apple’s future tax strategy, my favorite was tweeted out this morning by @gooderdle: “They can always just turn the brand into a religion and put the headquarters on a boat…”
• On the docket: Today we could get a New York court ruling on the massive lawsuit (effectively) between Caesar’s bondholders and the gaming company’s private equity backers, Apollo Global Management and TPG Capital. The two firms could be on the hook for upwards of $5.1 billion in claims.
• DD done: Yesterday’s big Silicon Valley story was that Alphabet executive David Drummond is officially off the board at Uber, three years after he joined as part of a large investment in the ride-hailing company by Google Ventures (the same round in which TPG Capital joined, with David Bonderman also joining the board). The official announcement came just hours after Amir Efrati of The Information reported that Drummond had been shut down of Uber board meetings for the past year, due to Uber’s concerns about conflicts of interest. Four notes on this:
1. Word is that Efrati might have undersold how long Drummond has been persona non grata in Uber’s boardroom. Also worth noting that Efrati’s article suggests Uber might be shirking some of its info responsibilities to GV (which retains a board observer seat) ― echoing similar (albeit private) complaints from some earlier investors.
2. The idea that there is conflict between Uber and Alphabet/Google isn’t terribly surprising. Two years ago I wrote about this very thing, although my focus was on local logistics rather than autonomous autos.
3. There has been zero explanation from Google or Uber as to why Drummond has officially remained on the board all of this time, given his lack of tangible involvement. And, given the timing, it sounds like Efrati’s story embarrassed both companies into formal action.
4. What is particularly amazing here is that Uber CEO Travis Kalanick continues to completely dominate his board, even though he doesn’t have the technical voting structure to do so (e.g., Zuckerberg, etc.). UPDATE: I’ve subsequently learned that Kalanick does, indeed, have super voting rights. This was granted during the 2013 investment round.
THE BIG DEAL
• Ritchie Bros. Auctioneers Inc. (NYSE: RBA) has agreed to acquire IronPlanet Inc., a Pleasanton, California-based operator of an online marketplace for used heavy equipment and trucks. The deal is valued at approximately $758.5 million.
IronPlanet has raised over $100 million in VC funding from firms like Accel Partners, Kleiner Perkins, Caterpillar, Dyncorp, Marubeni Corp., IGNITE Group, Volvo Construction Equipment and Windspeed Ventures. Last year it merged with with Cat Auction Services, an alliance of Caterpillar and several of its independent dealers. Read more.
VENTURE CAPITAL DEALS
• Arcus Biosciences, a Hayward, Calif.-based cancer immunotherapy startup, has raised $70 million in Series B. Google Ventures, Invus Group, Stanford University and DROIA Oncology Ventures were joined by return backers like Column Group, Foresite Capital, Celgene and Novartis. The company previously raised $50 million. Read more.
• LogRhythm, a Boulder, Colo.-based cybersecurity company, has raised $40 million in new equity financing. Existing backer Riverwood Capital Management led the round, and was joined by Adams Street Partners, Siemens Venture Capital, Delta-v Capital, Exclusive Ventures. Silver Lake Waterman also provided $10 million in new debt financing. The company also said that it has indefinitely postponed its IPO plans, after reports last year that it was prepping an offering that could value the company at around $1 billion. Read more.
• Zillion Group, a Norwalk, Conn.-based provider of digital health engagement solutions, has raised $28 million in Series C funding led by TwinFocus Capital Partners. www.zillion.com
• Glint, a Redwood City, Calif.-based real-time employee engagement platform, has raised $27 million in Series C funding. Meritech Capital Partners and Bessemer Venture Partners co-led the round, and were joined by return backers Norwest Venture Partners and Shasta Ventures. The company previously raised $23 million. www.glintinc.com
• BBOXX, a London-based off-grid solar company, has raised $20 million in Series C funding. New investors MacKinnon, Bennett & Co., ENGIE Rassembleurs d’Energies and KawiSafi Ventures were joined by return backers Khosla Impact Fund, Bamboo Finance and DOEN Foundation. www.bboxx.co.uk
• Behalf, a New York-based commercial payment platform for small businesses, has raised $27 million in Series C funding. Viola Growth led the round, and was joined by return backers Sequoia Capital, Spark Capital, MissionOG, and Vintage. www.behalf.com
• Livspace, an India-based home design and furnishing startup, has raised $15 million in Series B funding. Bessemer Venture Partners led the round, and was joined by fellow return backers Jungle Ventures and Helion Venture Partners. www.livspace.com
• Blackwood Seven, a Copenhagen-based predictive sales modeling platform, has raised €13.5 million in new VC funding. Backers include JOLT Capital, Sunstone Capital, Conor Venture Partners and the Danish Growth Fund. www.blackwoodseven.com
• Shyft Analytics, a Waltham, Mass.-based provider of cloud data and analytics for the global life sciences industry, has raised $12.5 million in Series B funding. Backers include McKesson Ventures, Medidata Solutions and return backers Health Enterprise Partners and Milestone Venture Partners. www.shyftanalytics.com
• Intsights, an Israel-based provider of cybersecurity solutions focused on the dark web, has raised $7.5 million in Series A funding. Blumberg Capital led the round, and was joined by The Blackstone Group, Wipro Ventures and Glilot Capital Partners. www.intsights.com
• GOAT, a Cuilver City, Calif.-based mobile marketplace for used and collectible sneakers, has raised $5 million in new VC funding. Matrix Partners led the round, and was joined by return backers Upfront Ventures and Webb Investment Network. Read more.
• DogHero, a Brazilian dog-sitting startup, has raised $3.1 million in Series A funding. Monashees Capital led the round, and was joined by seed backer Kaszek Ventures. Read more.
• Revelator, an Israel-based online platform for distributing, selling and licensing music, has raised $2.5 million in Series A funding. Exigent Capital led the round, and was joined by Digital Currency Group and Reinvent. Read more.
• Camino Financial, a Los Angeles-based online credit marketplace focused on extending small business loans to Hispanic-owned businesses, has raised $2 million in new VC funding. Collaborative Fund and Hunt Holdings co-led the round, and were joined by Comcast Ventures Catalyst Fund and Impact America Fund. www.caminofinancial.com
• Genvid Technologies Inc., a New York-based provider of tools for developers to use in e-sports broadcasts, has raised $1.5 million in seed funding, March Capital Partners led the round, and was joined by OCA Ventures. www.genvidtech.com
• Galactic Exchange Inc., a Menlo Park, Calif.-based developer of deployment and management software for Hadoop/Spark based infrastructures and associated analytics applications, has raised an undisclosed amount of seed funding from Floodgate and Signia Venture Partners. www.galacticexchange.io
• Senic, a German developer of hardware and software that lets users “more easily interact with their smart homes,” has raised an undisclosed amount of seed funding from Target Partners. The company is a Y Combinator alum. www.senic.com
PRIVATE EQUITY DEALS
• Arbor Investments has acquired Dunn Paper Inc., a Port Huron, Mich.-based provider of made-to-order specialty papers and tissues for the food packaging and consumer product markets, from Wingate Partners. No financial terms were disclosed. www.dunnpaper.com
• Brookfield Asset Management is nearing an agreement to acquire natural gas distribution network Nova Transportadora do Sudeste SA from Petroleo Brasileiro SA for between $5.5 billion and $6 billion, according to Bloomberg. First Reserve Corp. and Singapore sovereign wealth fund GIC also are said to be part of the purchasing consortium. Read more.
• Frazier Healthcare Partners has agreed to acquire a 60% equity stake in Matrix Medical Network, a health assessment subsidiary of Providence Service Corp. (Nasdaq: PRSC). The deal values Matrix Medical at $537.5 million, with Providence retaining the other 40% position. www.prscholdings.com
• H.I.G. Capital has acquired two related companies: CXtec, a Syracuse, N.Y.-based provider of refurbished networking, telephony hardware and data center cabling; and Teracai Corp., a Syracuse-based provider of IT infrastructure solutions. No financial terms were disclosed. www.higcapital.com
• KKR has agreed to acquire Calabrio, a Minneapolis-based provider of customer engagement and workforce optimization software. No financial terms were disclosed, but the WSJ reports that it’s an all-equity deal valued at around $200 million. Sellers include Bluestream Ventures and Split Rock Partners. www.calabrio.com
• PlayPower Inc., a Huntersville, N.C.-based provider of play, sport and recreation facilities and equipment, has acquired Playworld, a Lewisburg, Penn.-based commercial playground equipment manufacturer. No financial terms were disclosed. PlayPower is a portfolio company of private equity firm Littlejohn & Co. www.playworldsystems.com
• TSG Consumer Partners has agreed to acquire Duckhorn Wine Co., owner and operator of six wineries in Napa Valley, from GI Partners. No financial terms were disclosed. www.duckhorn.com
• Capstar Financial Holdings, a Nashville, Tenn.-based commercial bank, has filed for a $46 million IPO. It plans to trade on the Nasdaq under ticker symbol CSTR, with Keefe Bruyette & Woods and Sandler O’Neill + Partners serving as lead underwriters. www.capstarbank.com
• Advent International has retained Morgan Stanley and BTG Pactual to find a buyer for its control stake in TCP Terminal de Contêineres de Paranaguá SA, Brazil’s second-busiest container port, according to Reuters. Read more.
• AthenaHealth (Nasdaq: ATHN) has acquired Patient IO, an Austin, Texas-based medical patient engagement app. No financial terms were disclosed. Patient IO had raised $4.32 million in VC funding since its 2013 formation, from AthenaHealth, Techstars, Geekdom, Mercury Fund and RPM Ventures. www.patientio.com
• Cisco (Nasdaq: CSCO) has agreed to acquire ContainerX, a San Jose, Calif.-based developer of technologies to help companies manage and integrate containers across data centers. No financial terms were disclosed. ContainerX raised $2.7 million in seed funding last year from General Catalyst, Greylock Partners and Caffeinated Capital. www.containerx.io
• H.I.G. Capital has agreed to sell the International School of Europe, operator of K-12 schools in Italy with over 1,800 students, to Inspired, a UK-based schools group sponsored by investment firm Educas. No financial terms were disclosed for the deal, which is expected to close in mid-September. www.inspired.co.uk
• Liu Zhongtian, founder of a Hong Kong-listed aluminium products maker, has agreed to acquire Cleveland-based Aleris Corp. for $2.33 billion (including $1.22 billion in assumed debt). Aleris currently is owned by Oaktree Capital and Apollo Global Management, via debt restructurings related to its 2009 bankruptcy (through which prior equity owner TPG exited). Read more.
• Amware Fulfillment LLC, a Lawrenceville, Ga.-based provider of customized warehousing and fulfillment solutions to SMEs, has completed a debt refinancing that included an undisclosed amount of first lien capital from Capital Southwest Corp. and second lien capital from Avante Mezzanine Partners. Amware is a portfolio company of Rotunda Capital Partners, while Livingstone arranged the refi. www.amwarelogistics.com
• Mondelez International Inc. (Nasdaq: MSLZ) has formally ended its efforts to acquire The Hershey Co. (NYSE: HSY), in a merger that could have been valued at upwards of $25 billion. Read more.
• Royal Dutch Shell is selling some of its Gulf of Mexico assets for $425 million to EnVen Energy. Read more.
FIRMS & FUNDS
• Rev1 Ventures, a seed-stage firm focused on Columbus, Ohio, has closed a new fund with $22 million in capital commitments. Read more.
MOVING IN, ON & UP
• David Liu and Julian Wolhardt are leaving KKR at year-end to launch a new China-focused investments firm. Liu has been KKR’s co-head of Asia private equity, a group that now will be led solely by Ming Lu. Hong Kong-based Wolhardt had served as KKR’s regional leader for mainland China and Taiwan. KKR also announced several new Asia hires: Ashish Shastry (ex-Northstar Group) as head of Southeast Asia; Zhen Ji (ex-CITIC Capital) as managing director of KKR China; Hyoung Seok Lim (ex-McKinsey & Co.) as managing director of KKR Korea and Rob Yang (ex-Blackstone Group) as managing director of KKR Real Estate in Greater China. www.kkr.com
• Julia Schottenstein has joined New Enterprise Associates as an associate. She previously was an analyst with Qatalyst Partners. www.nea.com
Share today’s Term Sheet: