Happy New Year, Term Sheet readers.
Hope you had a wonderful holiday season and are (slowly) acclimating to waking up to your alarms again. Let’s start today with a quick catch-up on what’s happened in the last week.
UBER’S BIG DAY: SoftBank agreed to invest more than $7 billion in Uber for a 15% stake in the tech giant. According to media reports, $6.5 billion of the SoftBank investment will be at a 30% discount against Uber’s latest private valuation of $69 billion. (SoftBank is investing $1.25 billion at Uber’s current/higher valuation.) That’s a major deal at a significant discount. As one Term Sheet reader wrote to me, “Sounds like a down round to me! Happy New Year!”
If you remember, Bradley Tusk previously described the discounted tender offer to me as “a low blow.” He said, "I worry a little bit that the timing of the data breach story hit really close to the tender offer and might have served as an excuse to offer a lower price.”
Some other reasons cited for the steep discount include Uber’s scandal-ridden year, the company’s regulatory hurdles globally, and Uber’s sub-par financial performance.
On the other hand, the deal offers a way for antsy Uber investors to cash out ahead of its public offering, which is currently slated for 2019. It also helps pave the way for a much-needed company reset, including a stronger relationship between the management team and board (and a reinforcement of the leadership of Uber’s new CEO Dara Khosrowshahi). Rajeev Misra, CEO of SoftBank Investment Advisers, said the deal will close in January, and added that he has “tremendous confidence in Uber’s leadership and employees.”
Perhaps the most interesting factor here is that the deal gives SoftBank a financial incentive to support Uber — and not its competitors. “If the transaction didn’t go through, they could have allocated a significant amount of capital to Lyft,” said Jay Kahn, a partner at Light Street Capital Management.
Things won’t change overnight, but I believe this injection of capital and strategic support from SoftBank will steady Uber’s previously rocky path to its much-anticipated IPO.
CRYPTO HIGH: While we were all obsessively discussing Bitcoin at our family dinners, it wasn’t even one of the top 10 best-performing crypto-assets of 2017. Ripple, the cryptocurrency designed for banks and global money transfers, came in as No. 1 with a 36,018% gain. It would feel weird to say that Bitcoin didn’t perform well (with a whopping 1,318% rise), but we live in wild times.
The cause for Ripple’s explosion in the crypto world? My colleague Kirsten Korosec gives several reasons:
"It’s not totally clear. Ripple avoided some of the downward swings afflicting other cryptocurrencies, like Bitcoin this past week. However, the price rise could be due to recent partnerships with banks like American Express and new hires from Facebook and elsewhere. Hedge funds are also devoted to it. It could also be attributed to Japan, a nation that has been outwardly friendly toward cryptocurrencies."
MORE PE PREDICTIONS: In the last Term Sheet, I included private equity predictions for 2018 and asked to hear some from you. Term Sheet reader Arvin sent me a few more that caught my eye: 1) leverage in deals will decline thanks to rising interest rates and the tax cut bill, 2) a larger focus on healthcare investing, and 3) more PE activity in Japan (Term Sheet wrote about this in August. Read more here.) If you agree/disagree/have other opinions, send them to me via email or Twitter.
THE LATEST FROM FORTUNE...
• Silicon Valley’s next big idea: untreated drinking water (by David Z. Morris)
• Five big business trends to watch in 2018 (by Alan Murray)
• Emmanuel Macron vows to keep up the pace of French reform
• Warren Buffett won a $1 million bet (by Emily Price)
Smart lock maker Otto suspends operations. Why mutual fund fees are so high. Caterpillar fights to protect its Swiss-made profits. A $125,000 snow machine is the latest toy of the super-rich. A look inside the worst job in tech.
• TrendKite, an Austin, Texas-based provider of PR and media monitoring software, raised $11 million in funding, according to TechCrunch. Harmony Partners led the round. Read more.
• Breethe Inc, a Baltimore, Md.-based medical device firm, raised $3 million in funding. Investors include University of Maryland, Baltimore.
• SuperMeat, an Israel-based food tech startup developing lab-made chicken meat, raised $3 million in seed funding. Investors include New Crop Capital, Stray Dog Capital, and PHW.
PRIVATE EQUITY DEALS
• JLL Partners acquired Xact Data Discovery, a Mission, Kansas-based international provider of eDiscovery, data management and managed review services for law firms and corporations. Financial terms weren't disclosed.
• Rami Levi Chain Stores agreed to buy 20% of coffee and snack chain Cofix Group (TASE:CFX) at a company valuation of 105 million shekels ($30 million), according to Reuters. Read more.
• DFB Healthcare Acquisitions, a New York City-based blank check company backed by Deerfield Management, said it plans to raise $250 million in an offering of 25 million units priced at $10 a piece. Goldman Sachs and Deutsche Bank are joint bookrunners in the deal. The company plans to list on the Nasdaq.
• Solid Biosciences, a Cambridge, Mass.-based Duchenne muscular dystrophy treatment maker, filed for an IPO to raise up to $100 million. JPMC Strategic Investments, Perceptive Advisors, Bain Capital Life Sciences, RA Capital, and Biogen Capital back the company. J.P. Morgan, Goldman Sachs and Leerink Partners are joint bookrunners in the deal. The company plans to list on the Nasdaq as “SLDB.”
• ARMO Biosciences, a Redwood City, Calif.-based immunotherapies maker, filed for an IPO raising up to $86 million. Investors including Kleiner Perkins Caufield & Byers (19.6% pre-market), OrbiMed Advisors (18.9%), DAG Ventures(11%), and NanoDimensions(10%) back the company. Jefferies, Leerink Partners and BMO Capital Markets are joint bookrunners in the deal. The company plans to list on the Nasdaq as “ARMO.”
• ResTORbio Inc, a Boston-based clinical-stage biopharmaceutical company treating aging-related diseases, filed for an IPO of $85 million. Investors including OrbiMed, Fidelity Management & Research Company, Rock Springs Capital, Quan Capital and Nest Bio back the company. BofA Merrill Lynch, Leerink Partners, Evercore ISI and Wedbush PacGrow are joint bookrunners in the deal. The company plans to list on the Nasdaq as “TORC.”
• KKR will acquire PetVet Care Centers, a Westport, Conn.-based provider of veterinarian services for veterinary clinics and veterinary practice, from Ontario Teachers’ Pension Plan, L Catterton, and other existing shareholders. Financial terms weren't disclosed.
FIRMS + FUNDS
• Vector Capital, a San Francisco-based private equity firm, restructured Vector Capital II, Vector Capital III, and affiliated vehicles held by existing LPs, for approximately $450 million.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.