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Term Sheet — Wednesday, September 7

Random Ramblings

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• Dell deal done: Dell and EMC this morning announced that their mega-merger has closed, nearly one year after initial press reports of combination talks (albeit around 18 months after the discussions actually began). I’ll have more about this on the website soon ― as will my colleague Barb Darrow, who spoke with Michael Dell within the past hour ― but I wanted to share a few notes on the financial angle, given that it initially seemed fantastical that Dell could ever find the $50 billion or so in debt that was required to purchase EMC.

1. The final financing package is neither investment grade nor high-yield. Instead, it’s a hybrid of the two ― a structure that lead banker J.P. Morgan and Dell sponsor Silver Lake only arrived at after several earlier machinations (including an original hope that the entire thing could be done investment grade, even though Dell’s credit is generally viewed less favorably). The key on the investment grade side was to use company collateral to raise the ratings, including the promise of several divestitures that would reduce the overall debt load. Also important was that Michael Dell was contributing a whole lot of equity, thus better enabling the crossover rating and making this sort of structure unlikely to be repeated for a more traditional leveraged buyout.

2. The final package included $13 billion of bank loans (compared to $12b target), $20 billion of investment-grade loans ($16b target, $100b in subscriptions), $5 billion in lower-grade bank loans ($8b target) and just over $3 billion of high-yield loans ($7b target).

3. One thing that particularly aided in the debt sale was the knowledge that Dell-EMC would take a long time to close, due to regulatory processes in the U.S. and China. That gave J.P. Morgan the flexibility to sell each of the tranches one at a time (in the aforementioned order), using a base of early buyers to persuade later buyers. In addition, the capital markets happened to improve over the time period. However, the slow roll also caused some market confusion, sparking media reports that the debt sale process was stalled. Adding to the troubles was the change in management at Barclays, which included a sale of some bridge loans that new CEO Jes Staley didn’t particularly like holding. Those reports ended up causing Dell to lose some bank loan orders (although the overall tranche was upsized by $1 billion).

4. When Michael Dell and Silver Lake originally took Dell Inc. private in 2013, we wrote about how that deal’s debt structure allowed the company to keep its financials secret. Going forward, I’m a bit unclear on how transparent the company will be (outside of issues related to its VMWare tracking stock). Michael Dell told Barb Darrow this morning that Dell will be a “publicly reporting” company, but my understanding is that the new bonds have major deferrals in their registration requirements ― to the point that they don’t force Dell to become a public filer for years (versus the normal six months).

• Personnel move: Hunter Peterson has stepped down as a partner with Trinity Hunt Partners, after more than a decade with the Dallas-based private equity firm. His next stop is a partnership role with The Riverside Company.

• Time’s up: We reported in March that Jack Daly was leaving Goldman Sachs, where he led a merchant banking group that made control investments in large industrial companies, in order to join TPG Capital as head of industrials. It seems like Daly’s garden leave must have ended, because TPG made the move official yesterday in a press release.

• Politically predictable: Back in June, I suggested that Indiana Gov. Mike Pence should resign his day job, because pay-to-play rules would prevent many investment managers from contributing to the Trump/Pence presidential ticket.

With this in mind, Goldman Sachs has now banned all partner-level employees from “engaging in political activities and/or making campaign contributions to candidates running for state and local offices, as well as sitting state and local officials running for federal office.” (h/t Politico.)

The rules do not, of course, affect the Clinton/Kaine campaign, as neither of them are running for state office, nor are they sitting state officials.

• New firm alert: Long Venture Partners has launched as a VC firm focused on consumer-related big data and AI startups. It is expected to focus on Silicon Valley-based startups, but with a cross-border emphasis on leveraging China.

Long VP is co-led by Sam Yu, a onetime investment pro with Chinese venture firm SAIF Partners, and Ernestine Fu, who remains listed as a venture partner with Alsop Louie Partners (where her deals have included Gfycat and Wickr). According to an SEC filing, Long Venture Partners is raising upwards of $50 million for its debut fund, with $20 million already committed.

• Package deal: Online pharmacy PillPack yesterday disclosed in an SEC filing that it has secured $31.1 million of what could be a new $40 million VC round. We’ve since learned a few things:

(1) The deal is being done at a pre-money valuation of approximately $330 million, which makes this an up-round over the company’s Series C infusion from last summer. (2) The round remains open, and there is a chance that it could end up closer to $50 million than $40 million. (3) The company now has around 400 employees, up from just 100 at this time last year.

(4) One of the new investors is Astral Capital, which is a new Boston-based firm founded by Jon Karlen. Also notable that Karlen is a former partner with Accomplice (the spun-out tech team of Atlas Venture) — while PillPack’s existing board includes two of his former colleagues, Accomplice partner Jeff Fagnan and now-Accel partner Fred Destin.


• Best Logistics Technologies Ltd., a Chinese logistics company, has raised $650 million in new equity funding. CITIC Private Equity led the round, and was joined by Fosun International, China Development Bank, Cainiao Smart Logistics Network (a unit of Alibaba) and existing shareholders Goldman Sachs and CDH Investments.


• GoSpotCheck, a Denver-based field execution management platform, has raised $16.5 million in Series B funding. Insight Venture Partners led the round, and was joined by return backer Point Nine Capital.

• Cheddar, a live news and entertainment startup, has raised $10 million in new VC funding. Return backer Lightspeed Venture Partners led the round, and was joined by new investors Comcast Ventures and Ribbit Capital.

• MP Objects BV, a Dutch provider of customer chain control SaaS, has raised $10 million in growth equity funding from Updata Partners.

• Media Startup X, an stealthy startup from Politico co-founder Jim VandeHei, has raised around $10 million in VC funding from firms like Lerer Hippeau Ventures and NBC Universal. Read more.

• DailyPay Inc., a New York-based provider of daily payment solutions to employees and contractors, has raised $5 million in Series A funding. RPM Ventures led the round, and was joined by Draper Frontier and Inspiration Ventures.

• Intensity Analytics, a Warrenton, Va.-based data security startup, has raised $5 million in VC funding from undisclosed investors.

• kWh Analytics, a San Francisco-based risk management platform for the solar industry, has raised $5 million in Series A funding. Anthemis Group led the round, and was joined by ENGIE.

•, a Finnish provider of video call performance analytics, has raised $3 million in Series A funding led by True Ventures. Read more.


• A-1 Machine Manufacturing Inc., a Santa Clara, Calif.-based maker of machines components and systems for the flat-panel display and semiconductor equipment markets, has raised an undisclosed amount of funding from Graycliff Partners.

• Brookfield Asset Management has agreed to acquire a 90% stake in natural gas distribution network Nova Transportadora do Sudeste SA from Petroleo Brasileiro SA for $5.2 billion, according to Reuters. Singapore sovereign wealth fund GIC and British Columbia’s pension fund also are participating. No word on the involvement of private equity firm First Reserve, which Bloomberg previously reported was part of the consortium. Read more.

• Electric Guard Dog LLC, a Columbia, S.C.-based portfolio company of Snow Phipps Group, has acquired the assets of Perimeter Security Systems LLC, a Ventura, Calif.-based regional provider of electric security fencing, from WSB & Co. No financial terms were disclosed.

• Leeds Equity Partners has merged four portfolio companies – Covenant Review, LevFin Insights, CapitalStructure and PacerMonitor — into Fulcrum Financial Data LLC, which will provide real-time news, covenant analysis and data content for the credit markets.

• MBK Partners and TPG Capital have submitted a joint bid for Wharf T&T Ltd., a provider of fixed-line telecom services in Hong Kong, according to Bloomberg. The deal could be valued at around $1 billion, with the private equity consortium bidding against SmarTone Telecommunications Holdings (HK: 315). Read more.

• Platinum Equity has acquired Fabcon, a Savage, Minn.-based manufacturer of precast, pre-stressed concrete wall panels for nonresidential construction applications, from the company’s founders. No financial terms were disclosed.

• Sciens Building Solutions, a provider of fire detection and security services, has acquired WSA Systems-Boca Inc., a Boca Raton, Fla.-based designer and installer of maintenance services for fire detection and clean agent fire suppression systems. No financial terms were disclosed. Sciens is a portfolio company of Huron Capital Partners.

• Total SA (Paris: FP) has developed a short-list of bidders for its electronic materials unit Atotech, and may choose a winner of the $3 billion auction by month’s end, according to Bloomberg. Those making the final cut reportedly include The Carlyle Group, CVC Capital Partners and a joint offer from BC Partners with Cinven. Read more.


• Everbridge Inc., a Burlington, Mass.-based provider of critical communications and enterprise safety applications, has set its IPO terms to 7.5 million shares being offered at between $11 and $13 per share. It would have an initial market cap of approximately $323 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol EBVG, with Credit Suisse and BofA Merrill Lynch serving as co-lead underwriters. Everbridge reports a $6 million net loss on $35.6 million in revenue for the first half of 2016, compared to a $3.2 million net loss on $27.3 million in revenue for the year-earlier period. Shareholders include ABS Ventures (31.2% pre-IPO stake).

• Trade Desk Inc., a Ventura, Calif.-based self-serve digital ad platform, has set its IPO terms to 4.67 million shares being offered at between $14 and $16 per share. It would have an initial market cap of approximately $573 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol TTD, with Citigroup serving as left lead underwriter. Trade Desk reports $6.6 million of net income on $76 million in revenue for the first six months of 2016, compared to 5.7 million of net income on $42 million in revenue for the year-earlier period. Investors include IA Ventures (19.8% pre-IPO stake), Founder Collective (14.1%), Wellington Management (11.5%) and Highwind (7%).


• Advent International and Bain Capital raised around $1.3 billion via a partial sale of their minority stake in British payment processing company Worldpay Group PLC (LSE: WPG), besting estimates. Read more.

• Box (NYSE: BOX) has acqu-hired the team from Wagon Analytics, a San Francisco-based data analytics platform. No financial terms were disclosed. Wagon had been seeded by Fuel Capital, Harrison Metal Capital, Homebrew, Lerer Hippeau Ventures and SV Angel.


• Concept Laser, a German 3D printing company, has hired PJT Partners to find a buyer, according to Reuters. A deal could be worth more than €500 million. Read more.

• Carl Icahn has agreed to acquire the 18% stake he doesn’t already own in Michigan-based auto parts maker Federal-Mogul Holdings (Nasdaq: FDML) for $9.25 per share. Read more.

• iZettle, a Swedish provider of mobile point-of-sale solutions, has acquired Intelligentpos, a provider of inventory management software for the hospitality market. No financial terms were disclosed. iZettle has raised over $170 million in VC funding from firms like Creandum, Dawn Capital, Index Ventures, Northzone, Intel Capital, Zouk Capital and 83North. Read more.

• Toluna, a UK-based provider of online customer surveys, has acquired Crossense, an Israeli developer of online passive measurement tools. No financial terms were disclosed. Crosense was incubated by Nielsen. Read more.

• Volkswagen AG has acquired a 16.6% strategic stake in Navistar International (NYSE: NAV), a Lisle, Ill.-based maker of commercial and military trucks, for around $256 million. Read more.


• iBionext Growth Fund, a Paris-based VC firm focused on healthcare startups, has held a €46 million first close for its debut fund, which is targeting a total of €100 million.

• KKR is pre-marketing its third Asia buyout fund with a $7 billion target, according to Reuters. Formal fundraising is expected to kick off by year-end. Read more.

• OpCapita, a British turnaround firm, has closed its second fund with €350 million in capital commitments.

• Swander Pace Capital, a private equity firm focused on consumer products companies in North America and Britain, has closed its sixth fund with $510 million in capital commitments.


• Nicklaus Daley has joined Water Street Healthcare Partners as a vice president. He previously was an associate with CIVC Partners.

• Mark Grabowski has joined TPG Growth as a partner focused on consumer investments. He previously was with L Catterton. Read more.

• Stephanie Gaufin and Sandy McKinnon have joined growth equity firm Mainsail Partners as vice presidents. Gaufin previously was with Altamont Capital Partners, while McKinnon was with Francisco Partners.

• Brock Hardaway has joined Frazier Healthcare Partners as an operating partner on the firm’s growth buyout team. He previously was CEO of toxicology lab CEO of Millennium Health.

• Tom Iacono and Grace Kim have joined iCapital Network as chief financial officer and head of investor relations, respectively. Iacono previously spent more than a decade in various executive roles with General Electric, while Kim was with Fir Tree Partners.

• Spencer Potts and Ruth Lane have joined MidOcean Partners as head of business development and head of investor relations, respectively. Both previously were with CIFC LLC.

• John Roddy has joined Raymond James as a managing director and co-head of financial services investment banking. He previously was global head of Macquarie Capital’s financial institutions group.

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