BIG COMPANY DISEASE
Good morning. Here’s some news:
Notable exit: Loews Corporation has agreed to buy Consolidated Container Company from Bain Capital for $1.2 billion. Bain acquired the company in 2012 for $800 million from Vestar Capital Partners. (Vestar had owned the asset since 1997.)
Rough math says Bain’s getting a 1.5x return, though that’s not taking into account what Bain spent rolling up two smaller competitors: Envision Plastics Industries LLC and Ecoplast Corp.
Bain began shopping the asset in September of last year, initially asking for $1.5 billion, according to Bloomberg. Read more here.
Notable CFO shortage: One thing holding tech’s billion-dollar startups back from going public? A Chief Financial Officer, according to The Information. Experienced tech CFOs are getting out of the game after taking their companies public, joining corporate boards, rather than taking on new roles at startups. From The Information:
The list of companies considered potential IPO candidates that don’t have CFO hires is long, and includes Tanium, Qualtrics, Cloudflare, Anaplan, Stitch Fix, Illumio, Gusto, Freshdesk and Jam City. Some of the largest private companies like Uber and Slack also have notably still not hired CFOs.
Valley die-hards – the investment firms that refuse to open satellite offices in New York or Boston or L.A., say they don’t want to go to a board meeting they can’t drive to, and believe all the good deals will find to them on Sand Hill Road eventually – may scratch their heads at this problem.
One longstanding argument in favor of starting your company in the Bay Area (or moving it there later) is not just the region’s wealth of engineering talent. You can find that in Montreal or Columbus or Chattanooga, too. It’s that San Francisco has a roster of crucial business executives who have experience scaling a product into a massive technology company. Chris Dixon of Andreessen Horowitz made this point clearly: “You can just pull them off the shelf and slot them in.”For now, the CFO shelves are looking bare and tech companies are looking to non-traditional candidates…
Notable leverage surplus: Leverage on deals is creeping up, according to Reuters. A third of buyout loans in the first quarter had more than 7x leverage. That’s the second-highest level since just before the financial crisis in 2007, when more than half of private equity deals had leverage about 7x.
Notable tax move: Reversions are the new inversions. If the House tax proposal’s border adjustment tax happens, that’s going to hurt a lot of companies with U.S. customers. Tax experts are expecting some of them to acquire U.S. companies to get around that problem, according to CNBC: “Several mergers and acquisitions advisors who requested anonymity said they've already been speaking with clients about a similar strategy.”
Notable broken deal: LeEco has called off its $2 billion acquisition of TV maker Vizio, which should come as no surprise to Term Sheet readers because we’ve been predicting it since last fall. The company blamed regulatory headwinds for the broken deal, which could very well be the case, but it doesn’t help that LeEco is also facing a huge cash crunch (its CEO told employees last year that LeEco has “big company disease.”)
Before LeEco Vizio offered Vizio $2 billion, it was on track to go public. The company was only shooting for a $1 billion valuation in its IPO. Variety reports that the company isn’t likely to resume its IPO plans given the recent turmoil at fellow gadget company GoPro.
Notable data point: Given the excitement around IPOs (A VC recently declared on CNBC that this would be the best year for IPOs since the dotcom boom!), I wondered the Q1 data might show we crossed some kind of unicorn threshold, where more billion-dollar companies exited than new ones were given billion-dollar valuations. Alas, data released this morning from CB Insights shows the Age of Unicorns is still going strong. According to CB Insights, six billion-dollar companies exited, but 10 new ones were given their horns. (Note: A sub-billion-dollar exit counts if the company was once valued above $1 billion, as with Amazon’s deal for Souq.com.)
The data also shows a slowdown in early stage investing, which doesn’t match the anecdotal evidence I saw last week: “Early-stage deal share also fell to a 8-quarter low of 24%, while later-stage deal share climbed to a high of 11%.”
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• Mobvoi, a Shanghai, China-based AI company developing peech recognition technology, raised $180 million in Series D funding, according to China Money Network. Volkswagen Group China, a subsidiary of Volkswagen (XTRA:VOW3), led the round. Read more.
• Kymeta, a Redmond, Wash. developer of satellite communication antennas and systems backed by Bill Gates and Lux Capital, among other investors, raised $73.5 million in new funding, according to an SEC filing.
• Branch, a Palo Alto, Calif. startup that helps developers build links connecting websites and apps, raised $60 million in Series C funding from Playground Ventures, according to TechCrunch. Read more.
• Simple Contacts, a New York mobile app that allows users to renew their contact lens prescriptions, raised $8 million in Series A funding. Goodwater Capital led the round, and was joined by Justin Kan, Notation Capital, Autonomous Ventures, and Steven Cohen. Read more at Fortune.
• Mylio, a Bellevue, Wash. provider of a subscription photo management software, raised $25 million in funding from an undisclosed Chinese company.
• Ninjacart, a Indian online platform that connects farmers, manufacturers, and brands, raised Rs 37 crore ($5.5 million) in funding, according to the Economic Times. Investors include Mistletoe, NRJN Family Trust, Accel Partners, Qualcomm Ventures, and M&S Partners. Read more.
• Beamery, a London provider of recruiting software, raised $5 million in funding. Index Ventures led the round, and was joined by Edenred Capital Partners, GP Ventures, and LocalGlobe.
• Fleet, an Adelaide-based satellite company, raised A$5 million ($3.8 million) in funding, according to Mashable. Investors include Blackbird Ventures, Atlassian co-founder Mike Cannon-Brookes, and Horizon Partners. Read more.
• Smart Sparrow, a San Francisco educational technology company, raised $4 million in funding. Investors include Moelis Australia Asset Management, OneVentures, and Uniseed.
• Jetty, a New York insurtech startup, raised $4 million in seed funding, according to the Chicago Business Journal. Investors include Ribbit Capital, Box Group, Social Capital, SV Angel, Red Swan, MetaProp NYC, and Solon Mack Capital. Read more.
• Popular Pays, a Chicago marketplace that connects brands with influencers, raised about $3 million in Series A funding, according to the Chicago Tribune. GoAhead Ventures led the round, and was joined by Pallasite Ventures and Hyde Park Angels. Read more.
HEALTH + LIFE SCIENCES DEALS
PRIVATE EQUITY DEALS
• CVC, Carlyle, Advent and Bain Capital are among the bidders expected to make an offer to buy The Body Shop, a London-based skin-care line, from L'Oréal, according to the Financial Times. The cosmetics giant is working with Lazard on the sale process, which it hopes will value the business at as much as €1 billion ($1.1 billion). Read more.
• Palladium Equity Partners invested in Kar Nut Products Company, a Madison Heights, Mich. manufacturer of branded trail mix. Terms weren’t disclosed.
• AEA Investors recapitalized National Carwash Solutions, a Grimes, Iowa-based provider of car wash operating services. [A previous version of this item misidentified where National Carwash Solutions is headquartered.]
• North Bridge Growth Equity made a $60 million minority investment in Lucid, a New Orleans audience platform.
• Volta Global invested in Context, a New York City unisex health and beauty brand.
• Cérélia Group, a French producer of chilled dough backed by IK Investment Partners, acquired English Bay Batter, a Vancouver-based bakery business that makes pastries sold across North America. Financial terms weren’t disclosed.
• LeEco announced its planned $2 billion acquisition of Vizio, an Irvine, Calif.-based high-definition TV manufacturer, has fallen apart due to “regulatory headwinds.” Read more at Fortune.
• Supervalu (NYSE:SVU) agreed to buy Unified Grocers for $375 million (or about $114 million in cash and $261 million in net debt.)
• Unic Capital Management, a subsidiary of Sino IC Capital, agreed to acquire Xcerra (Nasdaq:XCRA) for $580 million in cash.
• Altice USA, the U.S. arm of French cable company Altice, filed plans to go public. The Wall Street Journal reports the offering could raise more than $1 billion, valuing the company at $20 billion. BC Partners and Canada Pension Plan Investment Board own 30% of Altice USA and may sell as much 10%. The IPO will be led by Citigroup, Goldman Sachs, J.P. Morgan and Morgan Stanley. Read more.
• Atkins Nutritional Holdings, which sells low-carb packaged foods and is owned by Roark Capital Management, agreed to go public by merging with blank-check company Conyers. The combined company will be called Simply Good Foods, and plans to trade on the Nasdaq under the ticker symbol SMPL. As part of the deal, Roark Capital will exit its investment, receiving $730 million, which includes 10.3 million shares of Simply Good Foods common stock valued at $10 per share.
FIRMS + FUNDS
• The Riverside Company sold a minority stake in the firm to Parkwood, a limited partner in multiple Riverside funds. Parkwood’s acquisition of just under 10% of the firm will be all primary capital.
• SV Life Sciences, a Boston-based private equity and venture capital firm, has renamed itself SV Health Investors. In addition, the firm announced it raised $400 million for its sixth fund.
• Skyview Capital, a middle-market private equity firm, is launching Skyview Ventures, a venture capital arm that will focus on seed, angel, A, B, and C investment rounds. Matt Thompson will lead the investment arm.
• Edge Capital Partners promoted Whit Davis, Paul Robertson and Dennis Sabo to partner.
• Joe Vallee joined O2 Investment Partners as an associate.
• Freestyle Capital promoted Jenny Lefcourt to general partner.
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