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Intel’s STAR Market Win—For Now: Term Sheet

Intel Capital, the venture arm of Intel, has a stake in Montage worth over $1 billion—at least for now.Intel Capital, the venture arm of Intel, has a stake in Montage worth over $1 billion—at least for now.
Intel Capital, the venture arm of Intel, has a stake in Montage worth over $1 billion—at least for now.Getty Images

China's new tech board soared 140% on its first day in a rally that created at least three new billionaires—but largely excluded foreign investors from its list of beneficiaries.

Yet U.S.-based chip-making giant Intel became a major winner.

In particular, Intel's venture capital subsidiary Intel Capital, paid $175.1 million for what is now a 9% stake in a fellow chipmaker, Montage Technology, according to filings with the Shanghai Stock Exchange. That stake is now worth $1.1 billion after shares of the Shanghai-based company jumped 206% between its first day of trading and Wednesday, valuing the company around $12.5 billion—representing a return of 528% for Intel.

The highest performing stock, Anji Microelectronics Technology, rose 400% on its first day in comparison.

It's not the first time Montage has paid off for Intel. Prior to owning its current stake, Intel had bought shares in the company for an unspecified price, and later sold off its stake in Montage for about $44.4 million in cash. The first investment came during the Shanghai-based firm's Series B round in 2007. Intel sold a portion of that stake for $10 a share during Montage's IPO in 2013, netting about $2.5 million pre-expenses. 

A year later, Intel was paid an estimated $41.9 million for its remaining stake in the company when Montage was taken private just over a year later by a consortium: Chinese government-backed Shanghai Pudong Science and Technology Investment Co., as well as China Electronics Corporation(the prices was $22.60 a share or $693 million for the whole company).  

There are some restrictions, however. Under the terms of the new IPO on the STAR Market, Intel cannot sell its Montage stake for at least three years. And in the meantime, it's likely the stake will weather volatility that has come to define mainland Chinese equity markets. 

Read the full story.

APPLE TAKES THINGS IN HOUSE: Intel failed to crack the smartphone wireless modem business. Now Apple is hoping it can. The iPhone maker acquired Intel’s modem business for $1 billion. As Fortune’s Aaron Pressman reports:

The iPhone maker will get the rights to all of Intel's intellectual property around modems, as well as some 2,200 new employees, along with all of their offices and equipment. Intel was the sole supplier of modems for last year's iPhones, but Apple didn't buy the business to supply the next few years of iPhone upgrades. It already struck a new, multi-year deal with Qualcomm for modem chips in April. Instead, the purchase will allow Apple to develop its own modem technology, gradually, over the next few years.

The acquisition "will help expedite our development on future products and allow Apple to further differentiate moving forward," Johny Srouji, Apple's senior vice president of hardware technologies, said in a statement.

That's a long-term win for Apple that's consistent with the company's long-time strategy to "own and control" the primary technologies inside its products. The strategy was publicly set out by Apple's late CEO Steve Jobs back in 2004 and repeated by current CEO Tim Cook about 10 years ago. As one example, Apple bought mobile chip designer P.A. Semi in 2008 and started making its own processor chips for the iPhone in 2010.

Analysts agreed it would take several years of significant effort for Apple to develop its own modem chips, based on Intel's efforts, that would equal or exceed Qualcomm's products. "I don't see these assets translating into anything that has the chance to challenge Qualcomm for three to five years," says Patrick Moorhead, a semiconductor industry analyst and president of Moor Insights & Strategy.

The deal isn't much of a loss for Qualcomm, at least for the next few years, though.”

Housekeeping: While Polina is out, please send deals to Lucinda.shen@fortune.com.

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VENTURE DEALS

Standard Cognition, a San Francisco-based maker of autonomous checkout technology, raised $35 million in Series B funding. EQT Ventures led the round, and was joined by investors including Initialized Capital, CRV, and Y Combinator. 

Brainly, a Krakow, Poland-based peer-to-peer learning platform, raised $30 million in funding. Naspers, led the round and was joined by investors including Runa Capital and Manta Ray.

Mixhalo, a San Francisco-based real-time audio platform, raised $10.7 million Series A funding. Foundry Group led the round, and was joined by investors including Sapphire Sport, Founders Fund, Defy Partners, and Cowboy Ventures,

Minute.ly, a Tel Aviv-based AI-driven video enhancement startup, raised $8 million funding. Investors included Infront and Ansonia Holdings Singapore B.V.

Agrivida, a Medford, Mass.-based agricultural biotech firm, raised $8 million in funding. Investors included Open Prairie, ARCH Venture Partners, Batios -Holdings Limited, Cultivian Sandbox, Syngenta Ventures, Maschhoff’s Agricultural Holdings, and Middleland Capital.

Intelligence Node, a New York-based company focused on retail analytics and pricing intelligence, raised $5.5 million in Series B funding. Investors included Cornerstone Fund, Calibre Ventures, MegaDelta Capital Advisors, and Orios Venture Partners.

Leafwire, a Denver-based cannabis business network, raised $1 million in seed funding. Investors included Network Ventures, Silverleaf Venture Partners, KEY Investment Partners, and One East Partners.

HEALTH AND LIFE SCIENCES DEALS

CIOX an Alpharetta, Ga.-based health information technology company, raised $30 million in funding. Merck GHIF  and New Mountain Capital led the round.

ArunA Bio, an Athens, Ga.-based maker of neural exosomes for neurodegenerative diseases, raised $13 million funding from investors including Eshelman Ventures.

VIDA Diagnostics, a Coralville, Iowa-based firm focused on AI and pulmonary care, raised an undisclosed amount of funding. UnityPoint Health Ventures was the investor.

PRIVATE EQUITY DEALS

AeroSafe Global, a Rochester, N.Y.=based cold-chain-as-a-service provider, raised $31.5 million in funding. Investors included Peloton Equity, Hamilton Lane, and Flexstone Partners. 

-The Carlyle Group and Stellex Capital Management agreed to acquire and merge Vigor Industrial, a Portland, Or.-based maritime services company and MHI Holdings, a Norfolk, Va.-based ship repair and maintenance firm. Financial terms weren’t disclosed.

-Maroon Group, backed by CI Capital, acquired Amsyn, a Nashua, N.H.-based distributor of specialty chemicals to the coatings, lubricants, nutraceutical, pharmaceutical, and electronics industries. Financial terms weren’t disclosed.

-Five Arrows Capital Partners recapped Averhealth, a Richmond, Va.-based provider of substance use disorder treatment care management. Financial terms weren’t disclosed.

-Colony Capital acquired Digital Bridge, an investor in firms focused on mobile and internet connectivity, for $325 million.

-A consortium led the round by Clearsky invested in Altamira Technologies, a McLean, Va.-based provider of analytics and engineering solutions to the U.S. defense community. Other investors included McNally and Nio Advisors. Financial terms weren’t disclosed.

-Wealth Enhancement Group, a portfolio company of Lightyear Capital, acquired Planning Solutions Group, a Fulton, Md.-based, financial advisory business. Financial terms weren’t disclosed.

Advent International plans to acquire Cobham, a U.K.-based maker of electronic warfare communication systems, for about 4 billion pounds ($5 billion).

OTHER DEALS

-Hello Alfred acquired building management technology platform, Bixby, a New York-based app for property managers.

EXITS

-Zambon plans to acquire Breath Therapeutics, a Menlo Park, Calif.-based firm focused on rare respiratory diseases, for as much as €500 million ($559 million) from Sofinnova Partners.

-Jollibee Foods Corp plans to acquire Coffee Bean & Tea Leaf for $350 million. Investors including Advent International and the Sassoon family are sellers. Read more.

-Locke Supply Co. acquired Richmond Electric Supply Co., a Richmond, Calif-based electrical wholesale distributor, from investors including RTK Family Capital. Financial terms weren’t disclosed.

-Toast acquired StratEx, a Chicago-based provider of HR and payroll software for restaurants, from Halyard Capital. Financial terms weren’t disclosed.

-DFW Capital Partners acquired Vertex Group, a London-based provider of customer management, from Oak Hill Capital and GenNx360 Capital Partners. Financial terms weren’t disclosed.

FUNDS

OSF Ventures raised $75 million for its second venture fund focused on improving health care.

PEOPLE

Gemspring Capital, a middle-market private equity firm, hired Donald Gerne as Managing Director on the investment team.