Has CFIUS become a tool for crony capitalism?
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It’s not uncommon to see federal agencies rise in times of crisis: The CIA was birthed from World War II, while the Federal Reserve was formed in 1913 following a string of financial panics.
In this administration, amid a technological arms race against China and other nations, the Committee on Foreign Investments in the United States has dramatically ramped up its power. Also known as CFIUS, the organization has the ability to block acquisitions it deems detrimental to national security. It’s rarely invoked that since its creation in 1975, but in the Trump era, CFIUS has become dinner-table lingo: It blocked China’s Ant Financial from acquiring money transfer service MoneyGram in 2018, and also has a key say in the deal to sell a part of TikTok to a consortium of U.S. investors including Oracle and Walmart.
While national security as a blanket term is all well and good, CFIUS itself and its ability to stay impartial is under question. As my colleague Jeff John Roberts writes for Fortune’s November 2020 issue:
“B]The TikTok saga, which could see a prominent supporter of President Trump obtain a big stake in the app (Term Sheet note: Oracle founder Larry Ellison is known to be a Trump supporter), is also stoking a backlash among critics who see CFIUS as a powerful tool for crony capitalism.”
Even those who share the President’s hawkish views on China have been disturbed by his advocacy for TikTok to be owned in part by Oracle—raising concerns that the wall between CFIUS and the executive branch is showing cracks.
Of course, what happens post-election is certainly up in the air.
LEE FIXEL RAISES HIS SECOND FUND IN LESS THAN FOUR MONTHS: It’s a blistering pace for any fund. Addition, the venture shop of Tiger cub Lee Fixel (known for successful bets in Peloton and Flipkart), filed to raise $1.4 billion for its second fund last week. Except, as it turns out, Addition had already raised that $1.4 billion less than four months after securing $1.3 billion for its debut vehicle, per the Financial Times. Fixel does not plan to invest out of the second fund until next year, per the report.
Addition has not been shy about dealmaking in the pandemic: It recently led a $110 million round in Lyra Health, a mental health-care benefits company, as well as a $200 million round in Snyk, a developer security company.
Fortune’s latest Reinvent podcast focuses on the reinvention of the NBA and its incredible season. From its cancellation in March due to COVID-19, to its resumption last summer in the renowned “bubble” at Disney World in Florida, the NBA accomplished this incredible logistical feat in the midst of a pandemic and tremendous social unrest. The episode features exclusive excerpts from Adam Lashinsky’s interview with NBA commissioner Adam Silver. An additional guest is Mehdi Bentanfous, managing director of Kinexon (the company that created the tracing/monitoring bands that everyone in the bubble wore). Listen here.
- Hyperscience, a New York-based maker of process-automation software, raised $80 million funding. Tiger Global Management led the round.
- Future, a San Francisco-based digital personal training fitness platform, raised $24 million in a Series B funding. Trustbridge Partners led the round and was joined by investors including Kleiner Perkins and Caffeinated Capital.
- Silent Eight, a Singapore-based company seeking to prevent money laundering and terrorism financing, raised $7.5 million in new funding. OTB Ventures led the round and was joined by investors including Koh Boon Hwee (General Partner of Altara Ventures) and SC Ventures.
- AiFi Inc, a Santa Clara, Calif.-based maker of autonomous store technologies, raised $15 million in funding from Qualcomm Ventures, Cervin Ventures, TransLink Capital, and and Plum Alley.
- Wayflyer, a New York and London-based an eCommerce revenue-based financing and marketing analytics platform, raised $10.2 million in seed funding. QED Investors led the round and was joined by investors including Speedinvest and Middlegame Ventures.
- Blubrake, an Italy-based e-mobility company, raised $6 million in Series A funding. e-Novia led the round and was joined by investors including Progress Tech Transfer.
- Canela Media, a New York-based digital media tech company, raised $3 million in funding. BBG Ventures and Reinventure Capital led the round and were joined by Mighty Capital, Angeles Investors, Portfolia’s Rising America Fund and Alumni Ventures Group.
- Partners Group agreed to acquire a significant equity stake in Telepass S.p.A, a European electronic toll collection ("ETC") services provider. The deal gives Telepass an enterprise value of over €2 billion ($2.3 billion).
- I Squared Capital agreed to acquire the telecom infrastructure division of GTT Communications (NYSE: GTT), a Virginia-based provider of telecommunications and internet services, for about $2.15 billion.
- Brookfield Asset Management will acquire a near 20% stake in American Equity Investment Life Holding Co (NYSE: AEL), a Des Moines, Iowa-based life insurer, creating a partnership aimed at warding off an unsolicited bid Athene Holding (NYSE:ATH) and Massachusetts Mutual Life Insurance Co. Read more.
- Prometheus Group, backed by Genstar Capital, acquired Utopia Global, a Mundelein, Ill.-based data governance and migration company. Financial terms weren't disclosed.
- Thoma Bravo agreed to acquire a controlling stake in AxiomSL, a New York-based provider of risk management and regulatory solutions for banking, investment management, broker dealers and commodity trading institutions. Financial terms weren't disclosed.
BREAKUPS AND HANGUPS
- Bansk Group agreed to acquire Woodstream, a Lancaster, Pa.-based maker of pest control and animal containment products, from Vestar Capital Partners. Financial terms weren't disclosed.
- Lee Equity Partners has agreed to acquire Simplicity Group, a Summit, an N.J.-based financial products distribution business, from Aquiline Capital Partners. Financial terms weren't disclosed.
- Altice USA (NYSE: ATUS) raised its bid for Cogeco (TSX: CGO) and Cogeco Communications (TSX: CCO), two Canadian telecommunications businesses, to $8.4 billion after a $7.8 billion proposal was rejected. Read more.
- Traton, Volkswagen’s truck business, raised its bid to takeover Navistar International Corp (NYSE: NAV), a Lisle, Ill.-based maker of trucks and buses, to $44.50 per share from $43, or about $3.7 billion.
- First Citizens BancShares Inc (Nasdaq: FCNCA) plans to acquire CIT Group Inc (NYSE: CIT), a New York-based regional bank, in a deal valued at $2.2 billion.
- Andrew Forrest, an Australian mining billionaire, acquired R.M. Williams, a bootmaker, from LVMH Moet Hennessy Louis Vuitton. The deal was valued at the equivalent of about $135 million. Financial terms weren't disclosed. Read more.
- Nextdoor, a San Francisco-based social network for sharing information and trading goods among neighbors, is weighing an IPO that would value it between $4 billion to $5 billion, per Bloomberg citing sources. Investors include Benchmark, Greylock Partners, Kleiner Perkins, Riverwood Capital, Axel Springer and Tiger Global Management. Read more.
- Opthea, an Australia-based maker of therapies for retinal diseases, raised $128.2 million in an offering of 9.5 million ADS (10% sold as warrants to acquire ADSs at the offering price) priced at about $13.50 apiece. Read more.
- Billtrust, a Lawrenceville, N.J.-based payments automation company, agreed to go public via merger with South Mountain Merger Corp, a SPAC, valuing it at about $1.3 billion.
- dMY Technology Group III, a blank check company seeking an app business, filed ro raised $250 million. Read more.
- Turmeric Acquisition Corp, a blank check company formed by MPM Capital seeking a biotech target, raised $85 million. Read more.
- LLR Partners closed LLR Equity Partners VI with $1.8 billion including GP commitments.
- EQT named Marc Brown, former Microsoft corporate vice president, as partner and head of EQT Growth.