March 25th, 2019

DealBook Briefing: Mueller’s Done, but Trump Still Faces the Law

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The special counsel, Robert Mueller, did not find evidence that President Trump coordinated with Russia to influence the 2016 election, Attorney General William Barr said yesterday. But the White House still faces legal challenges.

Mr. Trump claimed victory from the report, which concluded Mr. Mueller’s two-year investigation into the Russia issue. Especially comforting to the president: Mr. Mueller did not recommend additional indictments of his inner circle.

The president was not found to have obstructed justice, Mr. Barr added, saying that the special counsel did not find enough evidence. But the report did not exonerate Mr. Trump on this accusation, as Mr. Mueller did not provide a verdict either way.

Mr. Trump derided the inquiry as an “illegal takedown that failed,” and demanded that those responsible for it face additional scrutiny. That triumphalism ran counter to advice from aides.

But the White House isn’t in the clear yet. Congressional Democrats pledged to continue pursuing investigations into Trump and his allies. And prosecutors in New York City are still investigating an array of issues that touch on Mr. Trump’s business and political dealings.

The markets may get a small boost from the end of the investigation, according to analysts who spoke to CNBC.

China’s top economic policymakers have promised more market-based competition and international trade, in the latest sign that the country is eager to end its trade war with the U.S., Keith Bradsher of the NYT writes.

The promises being made were significant. Officials at the China Development Forum, the country’s premier annual economic policy conference, spoke of increasing imports, a desire for more foreign investment and a willingness to allow foreign financial firms to own larger stakes in their Chinese competitors.

They may sound familiar, however. “Chinese officials have said for years that they were ready to allow foreign competitors to enter their market on a more equal footing,” Mr. Bradsher writes. “The promises made over the weekend in many cases repeated pledges that have been made before.”

But China now has other reasons to embrace openness. “In addition to a trade war that is hitting the country’s exporters, China’s economy has also been hurt by private sector business leaders who have become increasingly cautious in recent months about making new investments,” Mr. Bradsher adds.

The promises will most likely feature in trade talks. American and Chinese officials are scheduled to hold trade talks in Beijing in the coming days, and another round of talks in Washington the following week.

The airplane maker is taking more steps to convince the authorities and customers that fixes for its 737 Max 8 jets — two of which have crashed in recent months — are near.

It tested a software update for the Max 8 aircraft with pilots from five airlines over the weekend, the NYT reports. Using flight simulators, the pilots were able to safely land planes suffering from problems believed to have brought down Lion Air Flight 610 last year.

And the company outlined other software fixes that are meant to eliminate flaws in an automated piloting program at the heart of the crashes. Boeing also said that it would now make two previously optional safety features on the planes free of charge.

But Boeing is facing heat from Congress over the safety-certification process that cleared the Max 8 for flight. Lawmakers are concerned about how much responsibility the company held for certifying the safety of its own planes.

More Boeing news: How the company rushed to roll out the 737 Max to catch up with Airbus. Why the crashes highlight the challenges of adding modern software to older technology. And why JPMorgan Chase economists worry about broader fallout from Boeing’s problems.

The yield curve is essentially the difference between interest rates on short-term government bonds and long-term government bonds. Since 1960, every time that it has inverted — when long-term rates were lower than short-term rates — a recession has followed.

It happened on Friday.

More on that from Matt Phillips of the NYT:

• “The yield on the 10-year Treasury note tumbled to 2.44 percent Friday, its lowest level since January 2018. That was just below the 2.45 percent yield on three-month Treasury bills.”

• “Research from the Federal Reserve Bank of San Francisco has cited the yield difference between three-month Treasury bills and 10-year Treasury notes — which inverted Friday — as the most reliable predictor of recession risk.”

• “On Friday, the S&P 500 fell 1.9 percent, as stock market investors grew concerned about the outlook for economic growth. It was the second-worst drop for the market this year.”

Don’t hyperventilate. Some parts of the yield curve have not yet inverted, and experts say the inversion doesn’t necessarily predict economic collapse. “A model is just a model,” Campbell Harvey, a Duke University finance professor, told the NYT. “It’s not an oracle. It helps us forecast the future, but it might at any point fail.”

With smartphone sales stagnating, Apple is making a push to make money from services. And today, we find out what that looks like, as the company makes a series of announcements about its moves into the world of media. Here’s what to expect:

• Video streaming. According to the WSJ, Apple has “used a $1 billion budget to buy dozens of original TV shows in hopes it can land a breakout hit,” and plans to announce tie-ups to offer $9.99 subscriptions for channels like HBO and Showtime. Original content would reportedly “be delivered in a new TV app that staff have been calling a Netflix killer,” and also require a subscription.

• News. The company’s new news-subscription service is expected to cost $9.99 a month and provide “access to more than 200 magazines — including Bon Appétit, People and Glamour — as well as newspapers,” according to the WSJ.

• And maybe games? Bloomberg suggests that the company might even announce “a premium games subscription for its App Store.” This wouldn’t be the cloud gaming of the kind announced by Google last week, but bundles of games for the iPhone and iPad.

You can watch the event here, starting at 1 p.m. Eastern.

The British prime minister is struggling for control and respect as she tries again to gain Parliament’s support for her Brexit deal this week.

Her week starts with a tense cabinet meeting, with her Conservative Party in “uproar after ministers discussed replacing her as leader just weeks before the Brexit deadline,” according to the FT.

Lawmakers will then try to undermine her control of Brexit, when they vote later today on a plan “to take control of the legislative agenda for a single day,” Bloomberg explains. “This would allow lawmakers to express support for different options ranging from a second referendum to a customs union with the E.U. and even canceling Brexit.”

She’s still hawking her Brexit deal. But meetings over the weekend with high-profile Euroskeptic lawmakers, including Boris Johnson and Jacob Rees-Mogg, failed to gain their backing. That means she still lacks the support needed to win a third vote on her proposal.

As the S.E.C. and Elon Musk continue to fight in court over his tweeting, the Tesla C.E.O. fired back on Friday. His latest argument: the agency is incorrectly interpreting a settlement agreement between the two.

Mr. Musk’s insists his tweet review process is O.K. In his view, he is supposed to only run tweets containing material information about Tesla by an in-house lawyer — and he is free to determine what qualifies. An earlier draft of the settlement, offered by the S.E.C., would have required him to run all public statements by a lawyer. He rejected that proposal.

He also says the tweet that drew the ire of the S.E.C. wasn’t controversial. His comment about Tesla production forecasts, he argues, contained information that had previously been made public, and was made after stock markets closed for the day. But the S.E.C. says that’s an after-the-fact rationalization.

It’s up to a judge to decide whether Mr. Musk violated the settlement and should be held in contempt. The S.E.C. has declined to ask for a hearing on the matter, The Verge reports, since it believes it has already made its case.

Silicon Valley’s business model pretty much relies on pervasive screens being a good thing. But Big Tech’s most successful executives increasingly spend lots of money to shelter themselves from the digital reality they helped create, Nellie Bowles of the NYT reports, potentially creating a new class divide.

• At first, tech products like Facebook and Gmail were democratic: They were the same no matter who you were, and they were free. Companies extolled the value of widespread laptop use in schools, arguing that they were preparing kids for the future.

• But now schools that are short of cash, like those in Kansas, focus on screens, not human interaction. And low-income elderly patients rely on digital avatars to keep them company.

• Meanwhile, Ms. Bowles writes, “As wealthy kids are growing up with less screen time, poor kids are growing up with more. How comfortable someone is with human engagement could become a new class marker.”

• “The wealthy can afford to opt out of having their data and their attention sold as a product. The poor and middle class don’t have the same kind of resources to make that happen.”

The Democratic senators Elizabeth Warren and Sherrod Brown called on banking regulators to oust Tim Sloan as Wells Fargo’s C.E.O.

President Trump plans to nominate Stephen Moore, an economic adviser and frequent critic of the Fed, as a governor of the central bank. (Here’s why he might be a poor choice.)

Citigroup fired eight traders in Hong Kong for reportedly misleading clients.


• Uber is reportedly set to buy Careem, a Middle Eastern competitor, for about $3.1 billion this week. (Bloomberg)

• Pinterest’s I.P.O. filing showed that it’s a rare Silicon Valley unicorn — one that isn’t bleeding money. (NYT)

• ICYMI: Everything you need to know about the Lyft I.P.O. (DealBook)

• Naspers, the South African internet giant, plans to spin off its stake in Tencent and other international holdings into a new publicly held company. (Bloomberg)

• The telecom equipment maker Avaya is reportedly considering a $5 billion takeover offer from a private equity firm. (Reuters)

Politics and policy

• How “Medicare for all” would disrupt the entire health care industry. (NYT)

• House Democrats like Representative Alexandria Ocasio-Cortez plan to pressure banks into taking stands on issues like gun violence and climate change. (Politico)

• Energy executives celebrated the appointment of one of their allies to the No. 2 spot at the Interior Department, according to a recording of a 2017 industry meeting. (Politico)


• Microsoft’s president, Brad Smith, says that in the wake of the Christchurch shooting it’s time to consider Big Tech’s legal responsibilities. (Microsoft)

• Volvo’s C.E.O. says that rolling out autonomous vehicles prematurely could “kill a technology that might be the best lifesaver in the history of the car.” Also: Waymo’s autonomous taxi fleet has reportedly suffered plenty of close calls and frequent rider complaints. (FT, Information)

• Mike Lynch, the former C.E.O. of the British software company Autonomy, faces new criminal charges of wire fraud, securities fraud and conspiracy. (Bloomberg)

• The European Commission is expected to pursue a plan to manage the risk of using Huawei telecom hardware, defying calls from the U.S. to simply not use it. (FT)

• Banks are using A.I. to spot rogue traders before they even act. (FT)

Best of the rest

• Silicon Valley venture capitalists are taking victory laps as unicorns like Lyft and Uber go public. (NYT)

• Tyson has recalled 69,000 pounds of chicken strips after metal fragments were found in them. (NYT)

• Sweden is expected to force its banks to continue offering customers cash transactions. (FT)

• The O.E.C.D. recently tried to quantify the global counterfeiting industry. Its conclusion: The business represented as much as 3.3 percent of global trade in 2016. (Axios)

Thanks for reading! We’ll see you tomorrow.

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March 24th, 2019

Reasons why you may want to rethink investing in the Uber, Lyft, Pinterest IPOs

Levi Strauss & Co. CEO Chip Bergh rings the opening bell on New York Stock Exchange (NYSE) during the company's IPO in New York, U.S., March 21, 2019.

Lucas Jackson | Reuters

Levi Strauss & Co. CEO Chip Bergh rings the opening bell on New York Stock Exchange (NYSE) during the company’s IPO in New York, U.S., March 21, 2019.

For multiple companies, it’s the moment they’ve been waiting for: The window has opened for them to go public.

You’ve probably heard the names, including Levi Strauss, which made its public market debut this week. Ride-sharing businesses Lyft and Uber, among other companies, are also teed up to go public in the coming months.

But if you’re thinking you want to invest in these stocks, experts generally have one word of advice: Wait.

“IPOs aren’t just about, ‘Oh, I want to invest in the things I know,'” said Kathleen Smith, principal and manager of IPO ETFs at Renaissance Capital. “It’s about, ‘How do I make money investing in these?”

“It doesn’t do any good to own something when you’re losing money in it.”

In today’s market, chances are that buying in on a newly public stock could be a losing proposition. Financial experts say there are several reasons why.

March 24th, 2019

Here’s what you should know about the IPO process

Despite the rush of IPO headlines as of late, the process has actually grown less common.

Between 2000 and 2018, an average of 110 companies went public each year, compared with more than 300 a year between 1980 and 2000. “It’s a dramatically lower number, even though the economy is much bigger than it was 30 years ago,” Ritter said.

That’s mainly because companies increasingly have other ways than the public market to raise money. “There’s been an explosion in the private capital available to companies,” Rodgers said.

And some companies are going public without an IPO — but through a process called a direct listing, in which shares are offered directly to public investors without the underwriting of a Wall Street bank.

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Rodgers, who worked on the recent direct listing of music-streaming service Spotify, said the option makes sense for companies that already have a robust shareholder base and no need for immediate capital. “It’s essentially leaping into life as a public company without doing an offering,” he said.

Many executives are also not eager for the scrutiny — including swarms of analysts, government regulation and constant coverage in news media — that comes with becoming a public company, Rodgers said.

“Your life going forward is lived under a microscope,” he said.

March 24th, 2019

DealBook Special: Everything You Need to Know About the Lyft I.P.O.

Good Sunday morning, and welcome to a special edition of the DealBook Briefing, where we’ll take a deep dive into Lyft’s upcoming public offering. It’s the first of many decacorns about to go public. (Was this email forwarded to you? Sign up here.)

Lyft plans to make its public market debut in the coming week. The car sharing company’s I.P.O. will be the first of many highly valued tech companies that are expected to hit American stock exchanges this year.

Uber, Slack, Postmates and Pinterest have all filed documents with the S.E.C. to list shares. Palantir, Peloton and possibly Airbnb are expected to follow later this year.

America’s most successful start-ups have remained off-limits to most investors for years:

• Venture capital cash allowed America’s current wave of unicorns to eschew the public markets — and the spotlight that comes with them.

• That means a large portion of investors have been unable to buy a slice of the fastest-growing start-ups.

With Lyft’s I.P.O., that’s about to change, which explains much of the excitement it is generating. Here’s your cheat sheet for the offering.


Today’s DealBook Briefing was written by Stephen Grocer in New York and edited by Jamie Condliffe in London.


Founded by Logan Green and John Zimmer in 2007, Lyft was initially called Zimride and focused on pooling riders for long-distance trips. In 2012, Mr. Green and Mr. Zimmer renamed the company Lyft and shifted the business toward providing short trips, mimicking taxi rides.

Here’s how it sizes up today:

Lyft gave 18.6 million people at least one ride in the last quarter of 2018, up from 6.6 million in late 2016.

It has a 39 percent share of the United States ride-sharing market, based on estimates by the Japanese e-commerce company Rakuten, which is an investor in Lyft. That is up from 22 percent in 2016. But Lyft has been offering discounts to riders ahead of its offering, and the company warned: “We believe that much of the growth in our rider base and the number of drivers on our platform is attributable to our paid marketing initiatives.”

Lyft only operates in the U.S. and Canada, unlike Uber, which has operations across the globe.

But it has matched its rival’s innovation, by developing self-driving car technology and expanding into short-term bike and scooter rentals.

Lyft will list its shares on the Nasdaq under the ticker of, er, “LYFT.”

The company expects to be valued at as much as $23 billion. It plans to sell about 35.4 million shares, including the additional shares allotted to the underwriters, at between $62 to $68 a piece. At the high-end of that range, it will raise $2.4 billion.

That’s well above the $15.1 billion that private investors valued it at during a financing round in June.

And it would make it one of the largest I.P.O.s in the past 10 years. At a $23 billion valuation, Lyft’s offering would rank as the fifth largest since the financial crisis, and among the largest ever for American technology start-ups — only Facebook’s I.P.O. in 2012 would be larger.

JPMorgan Chase, Credit Suisse and Jefferies are the lead underwriters of the I.P.O. for Lyft. Goldman Sachs and Morgan Stanley, the top underwriters of tech I.P.O.s recently, are both working on Uber’s offering.

In all, Lyft will have 29 underwriters for its I.P.O., 13 (or 45 percent) of which are firms owned or led by women, minorities and military veterans. By comparison, such firms accounted for 30 percent of the underwriters Facebook selected for its I.P.O. and 14 percent for Snap’s.

After going public, the company will have two classes of stock: class A shares, which carry one vote each, and class B shares, which carry 20 votes. Lyft plans to sell only class A shares in the offering.

Lyft’s two founders will hold the Class B shares. That means that Mr. Green, the C.E.O., and Mr. Zimmer, the president, will own roughly 5 percent of the company’s outstanding stock but control nearly 49 percent of its voting shares.

This is quite normal in Silicon Valley. Facebook and Google went public with a dual-class structure that gave outside shareholders one vote per share and insiders 10 votes per share. Snap went further: It issued only nonvoting shares during its 2017 I.P.O.

But the practice is increasingly controversial among governance experts. Kenneth Bertsch, the executive director of the Council of Institutional Investors, said in a letter to Lyft’s outside board members: “The principle of one-share, one-vote is a foundation of good corporate governance and equitable treatment of investors.”

Companies with dual-class stock structures outperformed those with a single stock structure in recent years, according to some studies. But prior to 2010, studies show, such companies didn’t perform as well.

Lyft is growing quickly. Its revenue more than doubled to $2.16 billion last year from 2017.

Its losses are also increasing, though not nearly as quickly. The company reported a loss of $911 million last year, up from $688 million in 2017. Total costs and expenses were $3.1 billion in 2018, up 77 percent from $1.8 billion in 2017.

Uber’s losses are smaller in percentage terms. Lyft’s rival, which has disclosed its finances for several years even though it is not public, said in February that it lost $1.8 billion in 2018 on net revenue of $11.3 billion.

Bookings, which represent fares less taxes, tolls and tips, surpassed $8 billion last year for Lyft, 76 percent more than in 2017. (In 2018, Uber increased its bookings to $50 billion, up 45 percent from 2017.)

Lyft plans to funnel some future profits into ethical investing. In its pitch to investors, it says it expects “to invest the greater of 1% of our profits or $50 million annually toward our social impact efforts.”

The risk factor section of any I.P.O. prospectus acts as a warning label for investors. Lyft’s is no different, but it offers a discussion of regulatory and data security issues that could become a recurring theme in this year’s I.P.O.s.

Rivals: The company faces a long list of competitors on several fronts. Uber, Gett (along with its acquisition Juno) and Via are its main ride-sharing rivals, along with regular taxi companies and automotive manufacturers, such as BMW, that are looking to enter the sector. Its bike and scooter sharing business faces competition from Lime, Bird and Uber’s acquisition Jump. And Waymo, Apple, Baidu, Uber and a number of other tech and auto companies compete with it on autonomous vehicles.

Regulation: Lyft says its industry is “rapidly evolving and increasingly regulated.” It warns investors that it has “been subject to intense regulatory pressure from state and municipal regulatory authorities across the United States and Canada, and a number of them have imposed limitations on or attempted to ban ride sharing.”

Labor: Lyft’s million-plus drivers are independent contractors, not employees. Legal actions that classify them as employees “could have an adverse effect on our business, financial condition and results of operations,” the company says.

Autonomous driving: Among the biggest risks involved in the push to driverless cars is getting beaten in the race. The first companies to offer autonomous ride sharing “are expected to have long-term advantages compared with traditional non-autonomous ride sharing offerings,” Lyft says.

For Lyft’s current shareholders and employees, the I.P.O. could provide a windfall. Here’s a rundown of who stands to gain.

Mr. Green and Mr. Zimmer will hold stakes in the company that are set to be worth $570 million and $390 million, respectively.

The Japanese e-commerce giant Rakuten is Lyft’s biggest shareholder, with a 13 percent stake. At $68 a share, its holdings would be valued at $2.1 billion. It will own 11.6 percent of Lyft’s stock after the I.P.O.

General Motors invested $500 million in Lyft in 2016. That stake could be worth as much as $1.27 billion at the time of the I.P.O.

The fund giant Fidelity is Lyft’s third largest shareholder. Its stake could be worth as much as $1.26 billion.

Alphabet owns 12,828,964 shares, most of them purchased by its venture capital arm, CapitalG. That stake is worth $870 million at the high end of the range.

The venture capital firm Andreessen Horowitz was among the earliest investors in Lyft. At $68 a share, the firm’s stake will be valued at just over $1 billion.

Governments and money managers have made a push to improve gender diversity on corporate boards. Last fall, California, where Lyft is headquartered, became the first state to require its publicly held corporations to include women on their boards.

Lyft will have three women on its board:

Valerie Jarrett. The former senior adviser to President Barack Obama has been on Lyft’s board since July 2017.

Maggie Wilderotter. The former chief executive of the telecom company Frontier Communications joined Lyft’s board in May 2018.

Ann Miura-Ko. The co-founder of Floodgate Fund, a venture capital firm, has served on the board since June 2016.

Rounding out the board of directors are: its chairman, Sean Aggarwal, of Soar Capital; Ben Horowitz of Andreessen Horowitz; David Lawee of CapitalG; and Hiroshi Mikitani of Rakuten.

Lyft and Uber are unlike any other businesses, Shira Ovide of Bloomberg Opinion writes. That “makes it difficult for potential investors to feel confident that they’re paying the right price given the potential reward and the potential risk that the on-demand ride business isn’t financially viable or as large as optimists believe.”

Lyft’s investors “will need to strap themselves in for what may be long periods of rather ugly numbers,” according to Heard on the Street’s Dan Gallagher. That’s because “decacorns tend to share two characteristics: plenty of money and a propensity to spend it in a race to build up share.”

“Investors may still want to decide between” Lyft and Uber, argues Richard Beales of Breakingviews. “If their fear of missing out allows them to look past the absence of foreseeable profit at either company, though, it’s hard to see any sensible course other than to put money on both.”

“The last time a fast-growing, lossmaking tech company tried this hard to persuade Wall Street to judge it by its own measure of profits, things didn’t end well,” the FT’s Richard Waters writes. He is referring to Groupon.

An I.P.O. prospectus often features an idealistic, sometimes corny, letter from the company’s founders about their vision for the firm. Here are a couple of choice cuts from Lyft’s letter:

“The Y in Lyft. The why in what Lyft is doing is most important to us, as well as the cities and communities we serve, and it will always be our company’s North Star. Lyft’s mission is to: improve people’s lives with the world’s best transportation.”

“Lyft has the opportunity to deliver one of the most significant shifts to society since the advent of the car. We do not take that lightly, and we intend to lead this shift with integrity, humanity and strong execution.”

Thanks for reading! We’ll see you on Monday.

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March 24th, 2019

Hey, Look at Me! I’m a Venture Capitalist.

SAN FRANCISCO — For Rick Heitzmann, a venture capitalist at FirstMark Capital, the moment is now.

Two companies that FirstMark invested in years ago, Pinterest and Postmates, have filed paperwork to go public. Pinterest unveiled an offering prospectus on Friday. A third company, Airbnb, is expected to do the same within the next year. All are likely to be embraced by Wall Street, generating huge profits for FirstMark.

Which means it’s time for Mr. Heitzmann, whose New York investment firm has kept a relatively low profile, to consider hiring a public relations agency.

The flood of initial public offerings is an occasion for FirstMark to “tell our story,” he said. “We have been part of some of the more successful start-ups in the last several years and have been instrumental to their growth, often as the first investor. That’s a good story to tell.”

Across tech land, investors who helped nurture “unicorns,” the start-ups valued at more than $1 billion, are now getting ready to embody a different animal metaphor: the peacock.

That’s because the companies they bet on years ago — such as Uber, Lyft, Pinterest, Slack, Postmates and Peloton — are preparing to list on the stock market, which would create a bonanza of returns, the likes of which Silicon Valley hasn’t seen for years.

For venture capitalists, that means it is time to stop walking a tightrope of self-promotion. For years, many did not want to look as if they were taking credit for the success of the start-ups they backed. And they did not want to make it seem that the truckloads of money they stood to make were more important than their start-ups’ high-minded missions.

So they sent fawning congratulatory tweets, posted generic blog posts to Medium and name-dropped their deals on one of a dozen interchangeable V.C. podcasts. They “thought led” and became “thinkfluencers.”

Now that they’re ready to shed the false modesty, some investors are calling in the pros.

Ann Miura-Ko, a partner at the venture capital firm Floodgate, recently worked with the public relations firm OutCast to spotlight her “special relationship” with the ride-hailing company Lyft. Ms. Miura-Ko invested in Lyft in 2010, when it was called Zimride, and her firm owns about 1.5 million shares in the company. That stake could be worth as much as $102 million when Lyft goes public, which could happen this week.

Ms. Miura-Ko said Lyft’s I.P.O. would validate Floodgate’s strategy of investing in companies when they are just starting, before the bigger venture firms get involved.

“We’ve had great exits along the way, but this is the real proof point,” she said. “We think it’s important to Floodgate’s story.”

When asked about hiring a public relations firm, Ms. Miura-Ko deflected. Later, she said, “Every person has their own way of developing a megaphone.”

In a follow-up statement, she added, “I’m a teacher and an investor, I have a Ph.D. in math modeling, and I think like an engineer, so thinking about myself and my business from a branding and marketing perspective doesn’t come naturally to me, but these are important factors in the success of all kinds of businesses all over the world, which is why I engaged OutCast to help me think through and formalize both the Floodgate brand and my professional brand.”

OutCast declined to comment.

In Silicon Valley, some public relations firms said they had noticed more queries from venture capitalists in the last month. Mike Moeller, founder of Aircover Communications, a public relations firm, said it had been busier than normal with cold calls from venture firms that were trying to stand out.

“Some firms are realizing, ‘Huh, maybe awareness doesn’t just magically grow on trees,’” he said.

“They’re realizing they need to be part of this conversation,” added John Kuch, a public relations executive at Moxie Communications Group. With so much money in tech, “folks who have been conservative are getting out there even more.”

For years, venture capitalists on Sand Hill Road, the epicenter of the venture industry in Menlo Park, Calif., were a more buttoned-up lot. Few used public relations firms. Many investors looked askance at talking to the press.

But that changed as venture capital increasingly became a reputation game. Venture firms such as Andreessen Horowitz, which was co-founded by the Netscape wunderkind Marc Andreessen, hired their own public relations staff.

Some venture firms built out entire media divisions. First Round Capital, for example, created a digital magazine, First Round Review, which publishes entrepreneurial profiles, advice and lessons. Other investors have found time between start-up pitches and board meetings to publish books, deliver TED talks and amass huge followings on Twitter.

Still, nothing crowns them as much as being associated with a unicorn company that goes public. When Facebook went public in 2012, venture capitalists who had invested in the social network solidified their reputations as rainmakers — and also were set for life. They included Jim Breyer of Accel Partners, David Sze of Greylock Partners and Peter Thiel of Founders Fund.

“A $9 Billion Jackpot for Facebook Investor,” one headline screamed about Mr. Breyer in 2012, marveling at how he had turned a $12.7 million investment in the social network into a pile of gold.

That kind of name recognition gives investors an edge over competition in new deals. Promotion is part of the game, said Lisa Wu, a partner at Norwest Venture Partners. “If you don’t do it, you miss out,” she said.

Trevor O’Brien, who is working on a start-up in San Francisco, said entrepreneurs also looked at whether a venture capitalist had invested in any unicorns.

“V.C.s showcasing logos from big investments does matter in terms of signaling credibility and experience,” he said, adding that while it is not the only factor, “it checks a box.”

Alongside Ms. Miura-Ko and Mr. Heitzmann, this wave of I.P.O.s will likely raise the profiles of Jeff Jordan, a partner at Andreessen Horowitz who backed Airbnb and Pinterest, and Alfred Lin, a venture capitalist at Sequoia Capital who invested in Airbnb.

Mr. Heitzmann said FirstMark was not embarking on a promotion effort because of trouble raising new funds or getting into good deals. Instead, founders of younger companies that FirstMark has invested in have suggested he try to raise the firm’s profile for their sake.

“Portfolio companies have said, ‘If you guys had a better brand, it would help me recruit,’” he said.

Ms. Muira-Ko said she didn’t do any personal branding when Floodgate started in 2010 because there wasn’t much competition to invest in the very young companies that the firm was targeting.

“You didn’t have to think about it,” she said.

But now it’s a lot noisier. Ms. Miura-Ko was recently told by students at Stanford University, where she teaches classes about start-ups, that to stand out, she should create her own channel on Discord, a chat app for gamers. She was amused by the suggestion but didn’t follow it, she said. Why? Because it didn’t feel authentic to her personal brand.

March 23rd, 2019

Euphoric IPO market may be a troubling sign for stocks

Billion-dollar private companies are stampeding to go public this spring. But fear, not excitement, may be driving the herd.

After a slow first quarter for public offerings, denim giant Levi Strauss kicked off its debut this week, with shares popping 31 percent on the New York Stock Exchange.

The ride-hailing service Lyft is next up to bat, and is expected to hit a $23 billion valuation when it lists on the Nasdaq next week. The social media app Pinterest has moved up its timeline to list, filing its IPO prospectus with the SEC on Friday.

Uber, with a jaw-dropping $120 billion target valuation, is planning to release its filing and kick off an IPO roadshow in April, according to Reuters. Slack and Palantir are also on deck in 2019.

But a re-energized, euphoric IPO market is not necessarily a bullish sign, according to some industry experts. It could indicate private investors in these companies want to cash in their chips.

This month’s excitement traces back to the end of last year. A lot of these companies could have listed in the second half of 2018 but put it off. Then came December, the worst month for stocks since the Great Depression.

Larry McDonald, managing director of ACG Analytics, said Silicon Valley clients he has spoken with behind the scenes regretted not listing before the December dip.

“They should have done these deals all last year, and they put it off,” said McDonald, who is also the editor of the Bear Traps Report. “The beatings that these guys took for not bringing those deals in the third quarter were substantial.”

Beatings mostly took the form of criticism on their risk management, McDonald said. But luckily for the start-ups, comments from the Federal Reserve have saved the day. The Fed has suggested no rate increases would come this year — after indicating in December that two could take place. The newest stance sent stocks higher, providing a solid backdrop for these companies to now go public.

Many private equity and venture capital investors are now “panicked to just get out,” McDonald said.

Today’s IPOs are essentially, a “very bright private equity crowd desperately hitting a fleeting late cycle bid after missing that bid in Q4 and looking down the barrel of a 20 percent U.S. equity market drawdown,” McDonald said.

Among those late stage signals: A slowing global economy and bond market signaling recession ahead.

On Friday, the spread between the 3-month Treasury bill yield and the 10-year note rate turned negative for the first time since 2007 — inverting the so-called yield curve — according to Refinitiv Tradeweb data. That happens when short- term rates surpass their longer-term counterparts and the phenomenon is widely considered by investors as an indicator of a recession coming in the near future.

The Dow closed more than 400 points lower Friday following the Federal Reserve’s cautious outlook earlier in the week.

Until Levi Strauss, the first quarter had been a slow one for IPOs, partially due to the government shut-down. The Securities and Exchange Commission — in charge of green-lighting IPOs — was closed until Congress and the president struck a deal to fund the government. Companies looking to go public couldn’t file necessary IPO paperwork for the 35-day shutdown.

To be sure, the barrage of IPOs could also be timing. Companies want to go public before the summer hits and Wall Street workers take vacation. Getting to market in the second quarter ensures that their “roadshow,” or series of presentations to investors across major U.S. cities, gets enough attention before the summer.

Larry Haverty, managing director at LJH Investment Advisors said the first-quarter rush to go public is “greed more than fear.”

“That will keep happening until the lights are turned off,” Haverty told CNBC in a phone interview. “IPO booms almost never end well.”

Based on the over-subscription of Lyft’s IPO and successful Levi’s entry, he said investment bankers are likely looking to rush these deals out the door. Bankers are likely telling clients, “the window is open but this Lyft and Levi Strauss is a period of insanity and we better get in on this.”

“It’s finance 101 — make hay while the sun shines,” Haverty said. “If you’re a tech company looking at selling stock now, there’s no reason on God’s green Earth that you wouldn’t sell it.”

March 22nd, 2019

Pinterest Is Rare ‘Unicorn’ Preparing an I.P.O. Without Hemorrhaging Cash

In a move that has become common among tech firms, Pinterest plans to divide its stock into two classes, giving its founders, top executives, employees and directors 20 votes per share. New investors will get one vote per share.

Because Pinterest makes money from online advertising, it is a competitor to Facebook, Instagram, Amazon, Google, Twitter and Snap. In its prospectus, Pinterest listed those companies as competitors, as well as Allrecipes, a recipe website; Houzz, a home-improvement website; and Tastemade, a cooking content company.

Some rivals are not increasing their revenue as quickly as Pinterest, said Kathleen Smith, a principal at Renaissance Capital, a manager of exchange-traded funds for I.P.O.s.

“Like Snap, Pinterest is in the cross hairs of Facebook, and Facebook has always fought a nasty battle against Snap by copying everything it did,” she said, adding that anyone evaluating Pinterest’s stock should consider that competitive threat.

Pinterest was started in Silicon Valley by Ben Silbermann, the company’s chief executive; Evan Sharp; and Paul Sciarra. Mr. Silbermann, 36, previously worked at Google. Pinterest grew out of Cold Brew Labs, a tech incubator founded by the three men in 2008.

Although many unicorns made rapid growth their top priority, Mr. Silbermann favored what he calls “quality growth.” That meant he tried to build Pinterest slowly and steadily, even as its growth started to soar in 2011. “Pinners,” as users are known, essentially used Pinterest to create collagelike mood boards that expressed their aspirations.

Today, pinners pin activities such as what they wear or what they are making for dinner, as well as ideas for remodeling a home or their wedding, or passions like bookmarking and other craft projects.

March 22nd, 2019

UPDATE 1-Image sharing website Pinterest files for IPO

(Adds details on financials)

March 22 (Reuters) – Pinterest Inc, the owner of the image search website known for the food and fashion photos that its users post, filed for an initial public offering with U.S. regulators on Friday, looking to tap into a red-hot market for new stock offerings.

The company, which plans to list under the symbol “PINS” on the New York Stock Exchange, set a placeholder amount of $100 million to indicate the size of the IPO. The final size will change. Reuters previously reported it could raise up to $1.5 billion in the IPO.

The filing comes a day after jeans maker Levi Strauss & Co’s blockbuster debut, and ahead of ride-hailing service providers Lyft Inc and Uber’s much-awaited listings.

Pinterest said its annual revenue in 2018 was $755.9 million, up 60 percent compared to 2017. It reported a net loss of $62.97 million, up from a net loss of $130 million a year earlier.

Pinterest was valued at $12 billion in its last fundraising round in 2017. The company said in the filing on Friday that it reaches more than 250 million monthly active users, two thirds of whom are female.

Goldman Sachs and JP Morgan are the lead underwriters on the IPO. (Reporting by Diptendu Lahiri in Bengaluru and Liana B. Baker in New York; Editing by Sriraj Kalluvila)

March 22nd, 2019 March 22nd, 2019

Pinterest files for IPO

March 22 (Reuters) – Pinterest Inc, the owner of the image search website known for the food and fashion photos that its users post, filed for an initial public offering with U.S. regulators on Friday, looking to tap into a red-hot market for new issues.

The company, which plans to list under the symbol “PINS” on the New York Stock Exchange, set a placeholder amount of $100 million to indicate the size of the IPO. The final size could be different.

The filing comes a day after jeans maker Levi Strauss & Co’s blockbuster debut, and ahead of ride-hailing service providers Lyft Inc and Uber’s much-awaited listings.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Sriraj Kalluvila)

March 22nd, 2019

Pinterest releases S-1 for IPO

Pinterest in popular with moms: It claims that 80 percent of its total audience in the U.S. is made up of women ages 18-64 with children, citing an independent study by Comscore.

In its S-1 filing, Pinterest said one risk factor is that it could fail to penetrate new demographics. Still, Pinterest flaunts its coveted user demographics, claiming more than half of all U.S. millennials. Pinterest said “eight out of 10 moms” are on its platform, adding that “are often the primary decision-makers when it comes to buying products and services for their household.”

“In the United States, more people use Pinterest to find or shop for products than on social networks, according to a survey by Cowen and Company,” according to the filing. This will put Pinterest head-to-head with Instagram, which just this week announced a new shopping feature to encourage users to buy directly from their platform.

Pinterest said its user growth had been negatively impacted in the second quarter of 2018 due to Facebook’s decision to change its login authentication systems. Pinterest noted that its reliance on other services including Facebook and Google could be a risk factor for the business.

“[I]f Facebook or Google discontinue single sign-on or experience an outage, then we may lose and be unable to recover users previously using this function, and our user growth or engagement could decline,” according to the filing.

Pinterest also notes that regulators in the U.S. and the European Union could enact more legislation that would hold it accountable for failure to comply with content removal requirements. Regulators have been even more focused on social media companies in the past week after a graphic video of a mosque shooting in New Zealand continued to pop up on several platforms even after the original live stream was removed. Pinterest took steps to reduce the spread of misinformation about vaccines on its platform last month when it suspended search results for related terms when it found out false anti-vaccine information was spreading on its service.

Like many other tech companies, including Google and Facebook, the company will offer two classes of stock. Class A shares will receive one vote per share, while Class B shares will receive 20 votes per share. Pinterest’s filing did not list the breakdown of stock ownership among its executive officers and directors.

Pinterest’s prospectus comes after similar filings from Lyft, the ride-sharing company, Zoom, a video conferencing company, and PagerDuty, a tech company whose service helps companies respond quickly when their websites experience outages. Other tech companies including Uber, Slack and Palantir are also expected to go public this year.

March 22nd, 2019

M&A wrap: Harris Williams, Spark, Zoosk, Shaquille O’ Neal, Papa John’s, March Madness

Hiter Harris co-founded Harris Williams, a Richmond, Virginia-based investment bank, in 1991.

Hiter Harris co-founded Harris Williams, a Richmond, Virginia-based investment bank, in 1991.

Photo credit: Damion Hamilton

Harris Williams has won Mergers & Acquisitions’ 2018 M&A Mid-Market Award for Investment Bank of the Year. The Richmond, Virginia, investment bank, co-founded by Hiter Harris (pictured), completed 87 transactions in 2018, the most in firm history, up more than 22 percent from two years prior. The year’s aggregate sell-side transaction value of more than $31 billion topped the year prior by more than 28 percent and exceeded 2016’s total aggregate transaction value by more than 50 percent. Harris Williams experienced strong momentum with strategic and financial buyers located across the U.S., Europe and Asia; more than 20 percent of the firm’s clients were privately-held companies. Harris Williams completed the most buy-side transactions in firm history, a 56 percent increase from 2017. Demonstrating growth, the firm hired 97 full-time employees, for a total of 315 employees at the end of the year, and welcomed the largest analyst and associate classes in firm history. Since its founding in 1991, Harris Williams says it “has been devoted to execution excellence, fostering longstanding relationships, and acting as a thoughtful partner to clients. The firm’s unique approach ensures that our clients benefit from our collective expertise, acting as one firm to provide guidance that is specifically tailored to achieve the right results, the right way.”

Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Harris Williams, award winners include: Nike, Fortive, TA Associates, the Riverside Co., Monroe Capital, Goodwin and Luminate Capital Partners’ Hollie Haynes and more. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.

Related: Read more about Mergers & Acquisitions‘ three annual special reports, including the M&A Mid-Market Awards, the Rising Stars of Private Equity, and the Most Influential Women in Mid-Market M&A.

Deal news
Shaquille O’Neal is joining the board of pizza chain Papa John’s International Inc. (Nasdaq: PZZA) and is investing in nine restaurants in the Atlanta area. The former NBA star has also entered into a marketing agreement with the company and has agreed to pitch the brand. Read the full story by Bloomberg News: Shaquille O’Neal joins Papa John’s board, invests in restaurants.

Spark Network, owner of Christian Mingle, Jdate and other online dating brands, is buying dating app developer Zoosk in a deal that values the target at around $255 million. “North America has been a key strategic market for Spark, and the focal point for our growth initiatives,” says Sparks CEO Jeronimo Folgueira. Advisors to Zoosk include: Piper Jaffray (NYSE: PJC) and Fenwick & West. Spark is being advised by Morrison & Foerster.

Insight Venture Partners has bought a stake in enterprise software services provider PDI. PE firms Genstar and TA Associates are keeping minority stakes in the target. Willkie Farr & Gallagher LLP represented Insight Venture Partners.

Brown & Brown Inc. (NYSE: BRO) has bought Medval LLC, a Medicare secondary payer services provider, from Cobalt Ventures, the private equity subsidiary of Blue Cross and Blue Shield of Kansas City. Cobalt Ventures is being advised by Bailey Southwell.

May River Capital-backed Hunt Valve Co. has acquired Montreal Bronze Ltd, a supplier of marine valves. EC M&A advised Hunt Valve.

Stella Point Capital-backed Vereco has bought CyngergisTek’s managed print services business for $30 million. Fried, Frank, Harris, Shriver & Jacobson represented Vereco.

For deal announcements, see The weekly wrap: FIS, Janney, Peak Rock.

For more on PE fundraising, see PE fundraising scorecard: Allegiance Partners, Maven Equity, Tower Arch.

Featured content
On Day 2, three No. 1 seeds, including No. 1 overall seed, the Duke University Blue Devils, play their first game of the 2019 NCAA Tournament. This year, March Madness offers fans unprecedented access to online betting, thanks to a May 2018 U.S. Supreme Court ruling. More Americans are expected to place bets on the college basketball tournament than the Super Bowl, with the American Gaming Association’s predicting that about $8.5 billion in wagers will be placed on the tournament. Online betting and data companies, including sportsbooks from DraftKings, FanDuel and Caesars, are drawing basketball fans and interest from investors. M&A is rampant throughout the sector. Here’s a look at recent online gaming and sports data deals.

Related: March Madness: DraftKings, FanDuel, Action Network draw fans, dealmakers.

Private equity-backed buyers of advisory firms have dominated the RIA headlines for the past two years. Aggressive dealmakers KKR and Stone Point Capital, which bought Focus Financial in 2017, exemplify the trend. But private equity firms aren’t the only major players in the hyper-competitive M&A space, which is coming off its second straight record-breaking year. Deep-pocketed, owner-controlled, strategic RIA buyers, led by Captrust Financial Partners, are also flexing their considerable M&A muscle and proving to be quite attractive to sellers. Read the full story: RIA buyers challenge private equity for deal dominance.

What’s driving adaptive reuse, and how can private equity tap into this increasingly common but misunderstood and under-analyzed property segment? Adaptive reuse, which involves repurposing a building designed originally for something else, is fast becoming a global phenomenon; from turn-of-the-century warehouses to castles to train stations, developers and investors have untapped enormous value from obsolete building stock. Read the full story: Why private equity investors should consider adaptive reuse.

Technology M&A is thriving, and private equity firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service. To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology: Francisco Partners, Genstar, Great Hill, HGGC, Insight, LLR, Riverside, Silver Lake, TA and Vista.

Related: 10 private equity firms share strategies for tech M&A.

In Mergers & Acquisitions’ annual look at strategic buyers, we see significant deals aimed at enhancing the customer relationship, including Inc.’s (AMZN) purchase of PillPack, Nike Inc.’s (NYSE: NKE) acquisitions of Invertex Ltd. and Zodiac Inc. and Target Corp.s’ (NYSE: TGT) acquisition of Shipt. Technology plays a key role in many transactions. But while technology is enabling developments, it’s not an end unto itself for many corporations. Instead, strategic buyers are using innovations as a means to achieve goals. Based on analyzing hundreds of recent deals, Mergers & Acquisitions has identified seven goals corporate dealmakers hope to accomplish through M&A transactions today: Integrate data with software; improve the customer experience and relationship; expand and improve distribution; process payments more efficiently; leverage tech trends, like autonomous vehicles; make manufacturing processes more efficient; and achieve better outcomes and efficiencies in healthcare. “Strategics have been really active,” says John Neuner, managing director, Harris Williams. “They are aggressive in pursuing the assets they want, as long as it fits within their strategy. Scale is critical to them, and they have to meet consumer demands by adding new capabilities.”

Related: 7 reasons why smart companies Amazon, Nike, Target are doing M&A.

Mergers & Acquisitions profiles the top 28 investment banks of 2018, with KPMG, Houlihan Lokey, Goldman Sachs (NYSE: GS), William Blair and Lincoln International ranking as the five most active investment banks in private equity-backed deals. The list is based on volume of completed PE-backed deals, with PitchBook as the data provider. It was a good year for dealmaking, with activity in the U.S. middle market exceeding $400 billion, the first year to achieve the milestone.

Related: Top investment banks in PE-backed deals: KPMG, Houlihan, GS, William Blair
Related: M&A soared in 2018; companies confident about dealmaking in 2019.

Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital’s Sarah Bradley, Kayne Anderson Capital Advisors’ Nishita Cummings and Pelham S2K Managers’ Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women.

Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

Exponent Women LLC is hosting an evening of networking and conversation with leading economists at the New York office of Alliance Bernstein on April 4. Speakers include Lindsey Piegza, chief economist, Stifel Fixed Income, and Kathleen Fisher, head of wealth and investment strategies, Alliance Bernstein.

Innovation Works is holding its second annual AI/Robotics Venture Fair in Pittsburgh from on May 15 and 16.

ACG New York, ACG Boston and ACG Philadlephia are holding the Industrial Conference with Value Creation at the Infor in New York on June 6. The event is part of the Northeast Industry Tour.

Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.

Demitri Diakantonis

Demitri Diakantonis

Demitri Diakantonis joined SourceMedia in 2015 and serves as Managing Editor of Mergers & Acquisitions. He covers all aspects of middle-market dealmaking, with a focus on strategic buyers and the consumer and retail sectors, and writes The Buyside column.

March 22nd, 2019

Shaquille O’Neal joins Papa John’s board, invests in restaurants

Photo credit: Bloomberg News

Papa John’s International Inc. has added a Hall of Fame center.

Shaquille O’Neal is joining the board of the struggling pizza chain and investing in nine restaurants in the Atlanta area, according to a statement on Friday. The former NBA star has also entered into a marketing agreement with the company and has agreed to pitch the brand.

The company will own about 70 percent of the Atlanta joint venture, with O’Neal holding the rest. He is expected to invest about $840,000 of the $2.8 million anticipated acquisition costs for the restaurants, Papa John’s said in a filing. O’Neal will get about $8.25 million over three years for the endorsement agreement.

The pizza chain, which recently got an investment from activist fund Starboard Value, is trying to mount a comeback after a sales slump and scandal that tarnished its brand.

Founder John Schnatter, whose image had once been deeply ingrained in the pizza chain’s marketing, agreed earlier this month to resign from the board and dismiss a lawsuit related to his departure last year as chairman. The company, already facing slowing sales, saw its woes grow last summer after the controversial executive used a racial slur on a conference call. Schnatter is the company’s biggest shareholder.

O’Neal will be paid half of the endorsement fees in cash and half in stock over the three-year term.

Bloomberg News

March 22nd, 2019

The weekly wrap: FIS, Janney, Peak Rock

Target Acquirer Value ($millions) Synopsis Worldpay Inc Fidelity National Information Services Inc 35031.9 Fidelity National Information Services Inc (FIS) definitively agreed to merge with Worldpay Inc (Worldpay), a Cincinnati-based provider of payment processing services, in a stock swap transaction valued at $35. 032 billion. FIS offered $11 in cash and 0.9287 common share per Worldpay common share. Based on FIS’ closing stock price of $108.88 on 15 March 2019, the last full trading day prior to the announcement, each Worldpay share was valued at $112. 117. Upon completion, FIS and Worldpay shareholders were to own 53% interest and 47% stake in the merged entity, respectively. Rabobank Narosevillecalifornia Mechanics Bankwalnut Creekcalifornia 2100.0 Mechanics Bank, Walnut Creek, California (Mechanics), a unit of Ford Financial Fund II LP, definitively agreed to merge with Rabobank NA, Roseville, California (Rabobank), a Roseville-based commercial bank, from Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, for an estimated $2.1 billion. Originally, in November 2018, Rabobank, was rumored to be seeking a buyer for its retail and wealth management operations. HFF Inc Jones Lang LaSalle Inc 1958.2 Jones Lang LaSalle Inc (JLL) definitively agreed to acquire the entire share capital of HFF Inc (HFF), a Dallas-based full-service commercial real estate financial intermediary, for a total $1.958 billion. JLL offered $24.63 in cash per share and 0.1505 common share per HFF share. Based on JLL’s closing stock price of $163.02 on 18 March 2019, the last full trading day prior to the announcement, each HFF share was valued at $49. 165. Upon completion, JLL and HFF were to own 87% and 13% in the combined entity respectively. Nexstar Media Group Inc-Television Stations(11) TEGNA Inc 740.0 TEGNA Inc definitively agreed to acquire 11 television stations of Nexstar Media Group Inc (Nexstar), an Harrisburg-based television broadcaster, for $740 million in cash. Concurrently, EW Scripps Co definitively agreed to acquire 8 television stations and WPIX TV of Nexstar. Tronox Ltd-North American Titanium Dioxide Business Ineos Enterprises Ltd 700.0 Ineos Enterprises Ltd of the UK, a unit of INEOS Ltd, definitively agreed to acquire North American titanium dioxide business of Tronox Ltd (Tronox), a Kwinana Beach-based manufacturer of pigments, for $700 million. The transaction was a condition to the completion of the acquisition of titanium dioxide business of National Titanium Dioxide Co Ltd by Tronox. Nexstar Media Group Inc-Television Stations(6) EW Scripps Co 505.0 EW Scripps Co definitively agreed to acquire 6 television stations of Nexstar Media Group Inc (Nexstar), an Irving-based television broadcaster, for a total $505 million. Concurrently, TEGNA Inc and Scripps definitively agreed to acquire 11 television stations and WPIX TV station of Nexstar, respectively. Cree Inc-Lighting Products Business IDEAL Industries Inc 310.0 IDEAL Industries Inc definitively agreed to acquire lighting products business of Cree Inc, a Durham-based manufacturer of semiconductors and related device, for an estimated $310 million. The consideration was to consist of $225 million in cash and up to $85 million in profit-related payments. Powervision Inc Alcon Laboratories Inc 285.0 Alcon Laboratories Inc, a unit of Nestle SA, acquired Powervision Inc, a Belmont-based manufacturer of ophthalmic goods, for $285 mil. 1st Global Inc Blucora Inc 180.0 Blucora Inc agreed to acquire 1st Global Inc, a Dallas-based portfolio manager, for a total $180 million in common stock. Agilecraft LLC Atlassian Corp PLC 154.0 Atlassian Corp PLC planned to acquire Agilecraft LLC, a Georgetown-based provider of computer systems design services, for $154 million in cash. Nexstar Media Group Inc-WPIX TV Station EW Scripps Co 75.0 EW Scripps Co (Scripps) definitively agreed to acquire WPIX TV station of Nexstar Media Group Inc (Nextstar), an Irving-based television broadcaster, for a total $75 million. Concurrently, TEGNA Inc and Scripps definitively agreed to acquire 11 and 6 TV Stations in Nextstar, respectively. SBT Bancorp Inc,Simsbury,Connecticut Liberty Bank,Middletown, Connecticut 70.8 Liberty Bank,Middletown, Connecticut definitively agreed to to acquire the entire share capital of SBT Bancorp Inc, a Weatogue-based commercial bank, for $51. 32 per share in cash or a total of $70.75 mil. MachNV LLC Curaleaf Holdings Inc 70.0 Curaleaf Holdings Inc (Curaleaf) of Canada definitively agreed to acquire MachNV LLC, a Las Vegas-based retailer, for a total $70 million. The consideration was to consist of $25 million in cash, $45 million in Curaleaf common shares and an undisclosed amount in profit-related payments. Confluence Cos Inc-North Main Apartments Oakmont Properties 67.0 Oakmont Properties acquired North Main Apartments of Confluence Cos Inc, a Golden-based property constructor, for a total $67 mil. Tactical Communications Group LLC Curtiss-Wright Corp 50.0 Curtiss-Wright Corp acquired Tactical Communications Group LLC, a Tewksbury-based software publisher, for $50 million in cash. LLC Vdc-Mgg Holdings LLC 45.0 Vdc-Mgg Holdings LLC planned to acquire LLC, a Las Vegas-based provider of ecommerce information services, from GreenSpun Media Group, ultimately owned by Niche Media Inc. The Dental Care Plus Group DentaQuest LLC 41.5 DentaQuest LLC, a unit of Delta Dental Plan of Boston, planned to acquire The Dental Care Plus Group, a Cincinnati-based dentist’s office operator, for a total $41.5 mil. Grand Bank NA Inc,Hamilton,NJ First Bank,Hamilton,NJ 19.4 First Bank,Hamilton,NJ definitively agreed to acquire the entire share capital of Grand Bank NA Inc, a Hamilton-based commercial bank, for an estimated $19. 4 mil, in a stock swap transaction. HCP Medical Office Buildings LLC-Mid-America Surgery Center CNL Healthcare Properties II Inc 15.4 CNL Healthcare Properties II Inc, a unit of CNL Financial Group Inc, acquired america surgery center of HCP Medical Office Buildings LLC-Mid, a Long Beach-based lessor of nonresidential buildings, for a total $15.4 mil. Las Vegas Xpress Inc-X Wine Railroad Excursion Train United Rail Inc 0.5 United Rail Inc acquired x wine railroad excursion train of Las Vegas Xpress Inc, a Las Vegas-based commuter rail systems operator, for a total $0.5 mil. Equiday Inc Allovue Inc Allovue Inc acquired Equiday Inc, a Rockville-based provider of education budget planning services. Option Care Enterprises Inc BioScrip Inc BioScrip Inc definitively agreed to merged with Option Care Enterprises Inc, a Deerfield-based provider of home health care services, from Walgreen Co, ultimately owned by Walgreens Boots Alliance Inc, in exchange for undisclosed BioScrip’s new common shares. Servpro Industries Inc Blackstone Group LP Blackstone Group LP was rumored to be planning to acquire Servpro Industries Inc, a Gallatin-based provider of commercial repair and restoration services, in a leveraged buyout transaction. The terms of the transaction were not disclosed, but according to sources close to the transaction, the value was estimated at $1 bil. American Lumber Distributors & Brokers Inc Boise Cascade Co Boise Cascade Co planned to acquire American Lumber Distributors & Brokers Inc, a Birmingham-based building material dealer. Owen Group Inc Bureau Veritas SA Bureau Veritas SA of France acquired Owen Group Inc, a Los Angeles-based provider of construction consulting services. Terms were not disclosed. MedEval Clinic LLC Cb2 Insights Inc Cb2 Insights Inc of Canada agreed to acquire MedEval Clinic LLC, outpatient care center operator for undisclosed cash and common shares. Capital Pumping LP Concrete Pumping Holdings Inc Concrete Pumping Holdings Inc, a unit of Industrea Acquisition Corp, definitively agreed to acquire Capital Pumping LP, an Austin-based concrete pumping contractor. Sterling Services Continental Services Inc Continental Services Inc, a unit of INFOCUS Marketing Inc, acquired Sterling Services, a Canton-based provider of food management and corporate catering services. Assist Megacorp Inc Conversocial Inc Conversocial Inc planned to acquire Assist Megacorp Inc, provider of custom computer programming services. Hemmelgarn & Sons Inc Cooper Farms Inc Cooper Farms Inc acquired assets Hemmelgarn & Sons Inc, a Coldwater-based producer of chicken eggs. Barrington Place At Somerset,Montgomery,AL Core Pacific Advisors LLC Core Pacific Advisors LLC acquired Barrington Place At Somerset, a Montgomery-based lessor of real estate property. Terms were not disclosed. Caesars Entertainment Corp Eldorado Resorts Inc Eldorado Resorts Inc was rumored to be planning to acquire the remaining stake, which it did not already own, in Caesars Entertainment Corp, a Las Vegas-based casino hotel operator. Integrated Print & Graphics Inc-Assets Ennis Inc Ennis Inc signed Letter of Intent {LoI} to acquire assets of Integrated Print & Graphics Inc, a South Elgin-based provider of graphic design services. ELMCO Engineering Inc Femco Machine Co Femco Machine Co, a unit of Saugatuck Associates, acquired ELMCO Engineering Inc, an Indianapolis-based manufacturer of commercial and service industry machinery. Logans Gap Wind LLC Firstar Development LLC Firstar Development LLC, a unit of US Bancorp, Minneapolis,Minnesota, planned to acquire Logans Gap Wind LLC, a Blanket-based alternative energy sources establishment, from Pattern Energy Group Inc. Standard & Poors Investment Advisory Services Goldman Sachs Asset Management LP Goldman Sachs Asset Management LP, a unit of Goldman Sachs Group Inc, planned to acquire Standard & Poor’s Investment Advisory Services, portfolio manager, from S&P Global Market Intelligence, ultimately owned by S&P Global Inc. Terms were not disclosed. American Process Inc Graal Bio Investimentos SA Graal Bio Investimentos SA of Brazil, a unit of Graninvestimentos SA, acquired the remaining 75% interest, which it did not already own, in American Process Inc, an Atlanta-based manufacturer of petrochemicals. Imaging3 Inc Grapefruit Boulevard Investments Inc Grapefruit Boulevard Investments Inc signed a Letter of Intent {LoI} to merge with Imaging3 Inc, provider of ambulatory health care services, in a reverse takeover transaction. Upon completion, GBI and Imaging3 were to own 80% and 20%, respectively, in the merged entity. KMI Insurance LLC Hanson Insurance Group Hanson Insurance Group acquired KMI Insurance LLC, a McMinnville-based insurance agency. Lighthouse 360 Henry Schein One LLC Henry Schein One LLC, jointly owned by Internet Brands Inc and Henry Schein Inc, acquired Lighthouse 360, a New York City-based provider of data processing and hosting services, from Inc, owned by Website Pros Inc. Terms were not disclosed. RiteHealth Solutions Inc Hub International Ltd Hub International Ltd, a unit of Hellman & Friedman LLC, acquired RiteHealth Solutions Inc, a Lafayette-based insurance agency. Terms were not disclosed. Green Grow Farms Inc Iconic Brands Inc Iconic Brands Inc entered into a letter of intent {LOI} to acquire Green Grow Farms Inc, manufacturer of medicinals and botanicals. Chemscan Inc In-Situ Inc In-Situ Inc acquired Chemscan Inc, a Waukesha-based manufacturer of measuring and controlling devices. FIG Partners LLC Janney Montgomery Scott LLC Janney Montgomery Scott LLC, a unit of Penn Mutual Life Insurance Co, agreed to acquire FIG Partners LLC, an Atlanta-based investment banking and equities research firm. Playa Realty & Management LLC JWB Real Estate Capital LLC JWB Real Estate Capital LLC acquired Playa Realty & Management LLC, a Ponte Vedra Beach-based residential property manager. Adell Corp Kinderhook Industries LLC Kinderhook Industries LLC acquired Adell Corp, a Sunnyvale-based manufacturer of protective door edge guards, in a leveraged buyout transaction. Western Industries Plastic Products LLC LJC Investments IV LLC LJC Investments IV LLC, a unit of Littlejohn Capital LLC, acquired Western Industries Plastic Products LLC, a Winfield-based manufacturer of plastics and rubber industry machinery, from Speyside Equity LLC. JMP Credit Advisors LLC Medalist Partners LP Medalist Partners LP acquired a 50.1% interest in JMP Credit Advisors LLC, an Alpharetta-based provider of sales financing services, from JMP Securities LLC, ultimately owned by JMP Group Inc. The Big Lead Minute Media Ltd Minute Media Ltd of the UK acquired The Big Lead, provider of online news services. NYK Terminals (North America) Inc MIP III Bluefin B Holdco LP MIP III Bluefin B Holdco LP acquired NYK Terminals (North America) Inc, an East Brunswick-based provider of logistics consulting services, from NYK Ports LLC, ultimately owned by Nippon Yusen Kabushiki Kaisha. The Financial Xchange LLC MLF Financial Group Co Mlf Financial Group Co acquired The Financial Xchange LLC, a Bethesda-based provider of data processing and hosting services. Terms were not disclosed. Apartment Properties,Philadelphia,PA(7) Morgan Properties Trust Morgan Properties Trust acquired Apartment Properties, a Philadelphia-based lessor of residential buildings and dwellings. Mmds Mobile X-Ray National Mobile X Ray LLC National Mobile X Ray LLC acquired Mmds Mobile X- Ray, an Asheville-based diagnostic imaging center operator. Terms were not disclosed. Republic Midstream LLC Nuevo Midstream Dos LLC Nuevo Midstream Dos LLC, a unit of ArcLight Capital Partners LLC, definitively agreed to acquire Republic Midstream LLC, a Houston-based intermediator. Newell Brands Inc-Process Solutions Business One Rock Capital Partners LLC One Rock Capital Partners LLC definitively agreed to acquire Process Solutions Business of Newell Brands Inc, a Hoboken-based manufacturer and wholesaler of consumer and commercial products, in a leveraged buyout transaction. Kroger Co-Turkey Hill Business Peak Rock Capital LLC Peak Rock Capital LLC definitively agreed to acquire Turkey Hill business of Kroger Co (Kroger), a Cincinnati-based supermarket operator, in a leveraged buyout transaction. Originally, in August 2018, Kroger was seeking a buyer for its Turkey Hill business. Eby-Brown Co LLC Performance Food Group Co Performance Food Group Co, a unit of Blackstone Group LP, definitively agreed to acquire Eby-Brown Co LLC, a Naperville-based wholesaler and retailer of consumer products. Instant Data Centers LLC ScaleMatrix Holdings Inc ScaleMatrix Holdings Inc acquired Instant Data Centers LLC, a Chandler-based provider of micro data centers support services. Triple Aim Ventures LLC Signify Health LLC Signify Health LLC acquired Triple Aim Ventures LLC, a San Antonio-based provider of data processing and hosting services. Terms were not disclosed. DH Pump & Supply LLC Standard Industrial Manufacturing Partners LLC Standard Industrial Manufacturing Partners LLC, a unit of Hicks Equity Partners LLC, merged with DH Pump & Supply LLC, a Weatherford-based manufacturer of nickel and tungsten carbide coated metal plungers. Terms were not disclosed. Sabre Industries Inc The Jordan Co LP The Jordan Co LP definitively agreed to acquire Sabre Industries Inc (Sabre), an Alvarado-based manufacturer of steel pipes and tubes, from Kohlberg Investors VII LP (Kohlberg), ultimately owned by Kohlberg & Co LLC, in a secondary buyout transaction. Originally, Kohlberg acquired Sabre, in a leverage buyout transaction. Polychem Corp The Sterling Group LP The Sterling Group LP acquired Polychem Corp, a Mentor-based manufacturer of commercial and service industry machinery, from Magellan Energy Ltd, in a leveraged buyout transaction. Epiq Systems Inc-Court Reporting Business Veritext Legal Solutions Veritext Legal Solutions acquired court reporting business of Epiq Systems Inc, a Kansas City-based provider of custom computer programming services. Terms were not disclosed. Center for Diagnostic Imaging Inc{CDI} Wellspring Capital Management LLC Wellspring Capital Management LLC acquired Center for Diagnostic Imaging Inc, a Minneapolis-based diagnostic imaging center operator, from Insight Imaging Inc, ultimately owned by Black Diamond Capital Management LLC. Terms were not disclosed. Utica East Ohio Midstream LLC Williams Partners LP Williams Partners LP, a unit of The Williams Cos Inc, acquired the remaining 38% stake, which it did not already own, in Utica East Ohio Midstream LLC, producer of crude petroleum and natural gas, from its joint venture partner M3 Midstream LLC. US M&A Deals Announced March 15 to 21, 2019
March 22nd, 2019

PE fundraising scorecard: Allegiance Partners, Maven Equity, Tower Arch

Name of Issuer Date of First Sale Total Offering Amount Patriot Global Ventures, LP 3/12/2019 Indefinite Ceres Group Holdings, LLC 3/5/2019 $4,500,000 GIP CAPS Blue Co-Invest, L.P. 3/8/2019 $10,625,000 Onex Fox LP First Sale Yet to Occur Indefinite Onex Fox Co-Invest LP First Sale Yet to Occur Indefinite EquityZen Growth Technology Fund LLC – Series 371 3/18/2019 $227,195 SVP2, LLC 3/5/2019 $4,000,000 Bluestone Funding I LLC 3/11/2019 $30,000,000 Recurring Capital Fund II, L.P. 2/1/2019 Indefinite SP Ventures Fund 3, LLC 3/4/2019 $100,000,000 Shelter Growth Term Fund II LP 3/4/2019 Indefinite Shelter Growth International Term Fund II LP 3/4/2019 Indefinite MVP LS FUND CVIII LLC First Sale Yet to Occur $2,000,000 MVP LS FUND CIX LLC First Sale Yet to Occur $2,000,000 MVP LS FUND CX LLC 3/20/2019 $2,000,000 NEW ASIA GROWTH, L.P. First Sale Yet to Occur Indefinite Schechter Private Capital Fund I, LLC – Series M 3/5/2019 Indefinite CB Celtic Topco, L.P. 3/7/2019 Indefinite MVP ES FUND LIX, LLC First Sale Yet to Occur $2,000,000 MVP ES FUND LX, LLC First Sale Yet to Occur $2,000,000 MVP ES FUND LVIII, LLC First Sale Yet to Occur $2,000,000 Eagle Income Fund II, LLC First Sale Yet to Occur $10,000,000 HarbourVest Dover Street X Investment L.P. First Sale Yet to Occur Indefinite Dover Street X L.P. First Sale Yet to Occur Indefinite Dover Street X Feeder Fund L.P. First Sale Yet to Occur Indefinite Dover Street X AIF SCSp First Sale Yet to Occur Indefinite Origami Opportunities Fund IV, L.P. 3/8/2019 $500,000,000 Origami Opportunities Fund IV Offshore, L.P 3/8/2019 $500,000,000 HarbourVest Access – Dover Street X LLC First Sale Yet to Occur Indefinite RPM Fund I LP 11/9/2018 $300,000,000 Raven Asset-Based Opportunity Fund IV LP 6/15/2018 $450,000,000 TOWER ARCH PARTNERS II (Q), LP 3/5/2019 $400,000,000 TOWER ARCH PARTNERS II, LP 3/5/2019 $400,000,000 AJ NASHVILLE PHASE II OPPORTUNITY FUND LLC 3/1/2019 $113,333,333 AJ NASHVILLE PHASE I OPPORTUNITY FUND LLC 3/1/2019 $56,666,66 SITUS PARTICIPATION VEHICLE LLC 2/28/2019 $513,888 GHK SITUS INVESTORS LLC 2/28/2019 $502,778 RIVER WASHINGTON, L.P. First Sale Yet to Occur $250,000,000 Crown Europe Small Buyouts V S.C.S. 2/28/2019 Indefinite Gateway Privileged Fund LLC 3/8/2019 $120,000,000 Sonoma Brands III, L.P. First Sale Yet to Occur Indefinite Sonoma Brands III Select, L.P. First Sale Yet to Occur Indefinite CataCap II K/S 12/28/2018 $7,552,973 Union Lake Transportation Partners LLC 3/6/2019 Indefinite Advanced Life Settlement Portfolio 2019-7, LLC First Sale Yet to Occur $50,000,000 Crown Europe Small Buyouts V Plc First Sale Yet to Occur Indefinite Brown Advisory Investors 2019 AGAL LLLP 2/28/2019 Indefinite Amadeus GI LP 2/13/2019 Indefinite ZEPHYRUS AVIATION PARTNERS I (OFFSHORE), L.P. 2/13/2019 $300,000,000 EagleTree Partners V (Offshore) A, LP First Sale Yet to Occur $1,100,000,000 Engaged Capital Co-Invest VI-D, L.P. 3/5/2019 Indefinite HHEP-Oilfield Expendables LP 2/28/2019 $3,321,737 AG Net Lease Realty Fund IV, L.P. 3/4/2019 Indefinite MAVEN EQUITY PARTNERS FUND I, L.P. First Sale Yet to Occur Indefinite MAVEN STRATEGIC FUND I, L.P. First Sale Yet to Occur Indefinite 7 Points Capital Group LLC 3/5/2019 $5,000,000 SLP Voltage Co-Invest, L.P. First Sale Yet to Occur Indefinite Twenty Two Ventures Fund II, LP First Sale Yet to Occur $10,000,000 ALLEGIANCE PARTNERS A, LP First Sale Yet to Occur $200,000,000 ALLEGIANCE PARTNERS B, LP First Sale Yet to Occur $200,000,000 Partners Group Direct Equity 2019 (USD) C-I, L.P. First Sale Yet to Occur Indefinite Knilo Co-Investment (No. 1) AB 2/19/2019 $87,605,993 Knilo Co-Investment (No. 2) AB 2/19/2019 $46,789,212 Rivermont Enterprise Emergent Communities Fund I LP 12/21/2018 Indefinite Private Equity Regulation D Filings (New Notices) March 15 to 21, 2019 Source: SEC Filings
March 22nd, 2019

DealBook Briefing: Rajat Gupta Won’t Say Sorry

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Rajat Gupta was once a member of the financial elite: the head of McKinsey, a board member of Goldman Sachs and an adviser to Bill Gates. Then he was convicted in 2012 of tipping an insider-trading ring. Now Mr. Gupta, who served two years in prison, has spoken to Andrew about his plight.

Mr. Gupta still says he’s innocent of securities fraud, despite having been convicted of illegally slipping the hedge fund manager Raj Rajaratnam confidential information about Goldman Sachs. His only regret? Being a little too loose-lipped about corporate secrets.

Mr. Gupta forgave Mr. Rajaratnam when the two shared prison time. “We played Scrabble in prison together. We played chess. We had breakfast together,” Mr. Gupta told Andrew.

But he definitely hasn’t forgiven Preet Bharara, the prosecutor who put him behind bars. “Go after the hedge funds and their circle, play up the story in the press, and maybe no one would notice that the big banking executives were continuing to walk free,” Mr. Gupta wrote in a new book, out next week.

Since being released three years ago, Mr. Gupta has done some consulting in India, but hasn’t reconnected with many business associates from his previous life. “I didn’t want to put them in a difficult position,” he said.

But he’s learning to move on. “Don’t get too attached to anything — your reputation, your accomplishments or any of it,” Mr. Gupta told Andrew. “This thing unjustly destroyed my reputation. That’s only troubling if I am so attached to my reputation.”

European leaders have pushed back the deadline for Britain’s exit from the bloc, giving Prime Minister Theresa May and British lawmakers more time to avoid a no-deal Brexit, Stephen Castle and Steven Erlanger of the NYT write.

“Britain’s exit date will be pushed back to May 22 if next week Mrs. May can persuade lawmakers in Parliament to accept her plan for leaving the bloc, which they have already rejected overwhelmingly, not once but twice.”

“If she cannot persuade lawmakers to accept her plan, Mrs. May will get a shorter delay in exiting the European Union — until April 12. But Britain could stay in the bloc longer if it decides it needs more time for a more fundamental rethink of Brexit.”

The E.U. doesn’t want Britain to crash out. But officials “made it clear that it is for Britain to make serious choices, and soon, and that failure should not be laid at the door of Brussels,” Mr. Castle and Mr. Erlanger write.

More: Over two million people have signed a petition to cancel Brexit. And Britain’s Financial Conduct Authority warned that the finance industry still faces big risks in a no-deal scenario.

The embattled plane maker will install an extra safety alarm in its 737 Max jets after two fatal plane crashes. But it’s unclear whether that, together with a forthcoming software upgrade, will be enough to prevent future catastrophes.

The new feature warns pilots if a plane’s “angle of attack” sensors, which determine the pitch of the plane’s nose, disagree with each other. A faulty sensor is suspected of triggering anti-stall software that may have helped cause the Lion Air and Ethiopian Airlines crashes. Until now, this warning system was an optional extra on the Max jets.

But it’s only one of two features that experts say could help make the planes safer, according to the NYT. The other is an indicator that displays the sensors’ readings, which will remain an optional feature. Neither has been mandated by the F.A.A.

The move highlights Boeing’s practice of selling add-ons. The planemaker has made a lot of money by offering features as upgrades — some of which are important safety items, the NYT reports. (Among them: a backup fire extinguisher for the cargo hold and oxygen masks for the crew.)

But the damage continues to grow. Indonesia’s Garuda airline said today it was seeking to cancel a $4.9 billion order of Max 8 jets. “Our passengers, psychologically, they don’t trust flying with Max anymore,” a spokesman for the airline told the NYT.

Small countries, big companies and even just wealthy people can now turn to gun-for-hire hackers to settle their scores, according to an NYT investigation — turning the business into a multibillion-dollar industry.

Privatized cyberspying has taken off. Two companies — NSO, an Israeli company, and DarkMatter, based in the United Arab Emirates — have developed sophisticated espionage operations, helped by former government hackers on staff. They help governments perform legitimate law enforcement investigations.

But there’s a darker side. The Mexican government is suspected of using NSO tools to spy on its own citizens, including journalists and activists. Saudi Arabia has been accused of using NSO products to spy on associates of Jamal Khashoggi. And former DarkMatter employees told the NYT that the U.A.E. used the firm’s tools to spy on Ahmed Mansoor, a prominent human rights activist.

And it’s lucrative. “Francisco Partners, a private equity firm, purchased a 70 percent stake in NSO for $130 million in 2013. Last month, NSO’s co-founders raised enough money to buy back a majority stake in NSO at a valuation of just under $1 billion,” the NYT reports. Moody’s estimates that the so-called lawful intercept spyware market is worth $12 billion.

Intellectual property rules for new pharmaceutical products could derail President Trump’s push to get his revised North American Free Trade Agreement through Congress, Ana Swanson of the NYT reports.

• “While Mr. Trump secured Canada’s and Mexico’s signoff on the new agreement last year, the trade pact must be ratified by legislators in all three countries, including by Congress.”

• “Democrats, who now control the House, have already made it clear that they will not approve the new trade deal without significant changes to labor and environmental provisions.”

• “Now, they are also looking for revisions to the trade deal’s pharmaceutical provisions, in particular a measure providing an advanced class of drugs called biologics 10 years of protection from cheaper alternatives.”

• “A similar conflict over drug industry protections helped delay and ultimately sink the prospects for another trade deal, the Trans-Pacific Partnership.”

Jared Kushner, President Trump’s son-in-law, went to Saudi Arabia in October 2017 in his role as a White House adviser. But his brother, Josh, was there the day before on behalf of his investment firm, David Kirkpatrick of the NYT reports — raising questions about whether Jared could be evenhanded in dealing with the kingdom.

• “Josh Kushner had spent the three days before his brother’s arrival at an investor conference, where Prince Mohammed had promised to spend billions of dollars on a high-tech future for Saudi Arabia.”

• Jared Kushner cut ties to Josh’s venture firm, Thrive Capital, including by selling his interest in its funds, after he joined the Trump administration. Previously, he had appeared to be closely involved in Thrive’s operations. Meanwhile, Josh Kushner has kept his distance from his brother.

• But, Mr. Kirkpatrick writes, Jared “was nonetheless discussing American policy with the rulers of the kingdom at virtually the same time that his brother was talking business with their top aides.”

• “It is reasonable to question Jared Kushner’s ability to be impartial,” Kathleen Clark, a law professor at Washington University in St. Louis, told the NYT.

More Kushner news: Charles Kushner, the father of Jared and Josh, has publicly defended both his real estate company and Jared. And the chairman of the House Oversight and Reform Committee claimed that Jared uses WhatsApp for official government business.

Policy reversals at the Fed and the European Central Bank often catch economists off guard. But they can have a profound effect on nations that don’t use the dollar or the euro, the WSJ reports.

• “Switzerland and countries near the eurozone but not part of it — like Sweden and Denmark — rely on the bloc for much of their exports and imports.”

• “That makes growth and inflation highly dependent on the exchange rate.”

• “Central-bank stimulus tends to weaken a country’s exchange rate, so when the E.C.B. embraces easy-money policies, as it did two weeks ago, it tends to weaken the euro against other European currencies, such as the Swiss franc.”

• “Because the E.C.B. is so large, Switzerland and others can do little to offset it.”

As a result, small countries often adopt negative interest rates despite having otherwise healthy economies. That can be costly, particularly for commercial banks that have to pay the equivalent of billions of dollars to store funds.

As speculation swirls about the exact timing of Robert Mueller’s imminent submission of his special counsel report on the Russia investigation, James Comey, the former F.B.I. director, writes in an NYT Op-Ed what he hopes to see:

• “I have no idea whether the special counsel will conclude that Mr. Trump knowingly conspired with the Russians in connection with the 2016 election or that he obstructed justice with the required corrupt intent. I also don’t care.”

• “I am rooting for a demonstration to the world — and maybe most of all to our president and his enablers — that the United States has a justice system that works because there are people who believe in it and rise above personal interest and tribalism.“

• What Mr. Comey personally doesn’t want to see: an impeachment of President Trump, because “a significant portion of this country would see this as a coup.”

Wells Fargo directors are reportedly in talks to hire Harvey Schwartz, the former president of Goldman Sachs, as their bank’s next C.E.O.

Ford Motor hired Tim Stone, who was most recently the chief financial officer of Snap, as its next C.F.O., replacing Bob Shanks.

Freddie Mac has named David Brickman, its president, as its next C.E.O., replacing Donald Layton.

President Trump plans to name Michael Kratsios as his administration’s first chief technology officer.


• Shares in Levi Strauss jumped 31 percent in their first day of trading yesterday. The N.Y.S.E. relaxed its ban on jeans for the I.P.O. — but only for the day. (Reuters, WSJ)

• Pinterest reportedly plans to list on the N.Y.S.E. as soon as mid-April. (WSJ)

• Uber has reportedly picked the N.Y.S.E. for its I.P.O. (Bloomberg)

• Hyundai shareholders rejected Elliott Management’s campaign for board seats and a special dividend. (Reuters)

• Rent the Runway, the online clothing rental service, has raised $125 million at a $1 billion valuation. (NYT)

Politics and policy

• Americans are souring on the Trump tax cuts, in part because they’re receiving smaller refunds, new polling suggests. (NYT)

• Economic models, which often accurately predict presidential elections, suggest that President Trump would be re-elected if voting took place today. But economists predict a slowdown between now and 2020, which could change that. (Politico)

• Several big Democratic donors have reportedly told Joe Biden that they wouldn’t back him in the early stages of the party’s presidential primary, to see how the field shakes out. (CNBC)

• Margrethe Vestager, the E.U.’s antitrust chief, says she will run for president of the European Commission, hoping to succeed Jean-Claude Juncker. (FT)


• Facebook stored millions of user account passwords insecurely. Now might be a good time to read that deleting Facebook from your life isn’t as painful as you might expect. (NYT)

• The founder of 8chan, the website where the suspect in the Christchurch, N.Z., shooting posted a missive, thinks the site didn’t move fast enough to take down the message. And distributing the video of the shooting is a crime in the country. (WSJ, NYT)

• It looks like Tesla sales are falling. Also, the automaker has accused two groups of former employees of stealing trade secrets. (NYT, Verge)

• Walmart is building A.I. in a bid to compete with Amazon. (WSJ)

Best of the rest

• Michael Steinhardt, a former hedge fund mogul and leading donor to Jewish causes, has been accused of repeated sexual harassment. (NYT)

• Lawsuits against JetBlue claim that two of its pilots drugged and raped flight attendants. (NYT)

• Here’s everything you need to know about Modern Monetary Theory, but were too afraid to ask. (Bloomberg)

Thanks for reading!

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March 22nd, 2019

Soho House’s conversion of London’s Midland Bank into The Ned shows the appeal of adaptive reuse

Photo credit: Adobe Stock

What’s driving adaptive reuse, and how can private equity tap into this increasingly common but misunderstood and under-analyzed property segment? Adaptive reuse, which involves repurposing a building designed originally for something else, is fast becoming a global phenomenon; from turn-of-the-century warehouses to castles to train stations, developers and investors have untapped enormous value from obsolete building stock.

Adaptive reuse projects constitute between 1 to 2 percent of all commercial real estate space in the U.S.—and will likely increase to 4 percent over the next five years. What’s more, experts say that by 2023, adaptive reuse projects will make up a greater percentage of investment activity than self-storage and other select non-core property types.

While these projects often are associated with lifestyle trends, such as the renewed popularity of urban living, other, less-glamorous factors also are at play:

· The increased cost of land and construction for ground-up projects.
· A desire by cities to remove blight and reinvigorate their tax bases.
· An increased awareness of sustainability in development; and
· The seismic changes in retail, which have freed up vast amounts of empty retail and warehouse space.

While historic preservation projects are the most familiar reuse developments, adaptive reuse projects vary widely and are spread across markets of all sizes. In 2017, private equity-backed Soho House made a splash in London when it turned the former Midland Bank headquarters, built in 1924, into the swanky The Ned. In Kansas City, Ryan Companies transformed the 1965 Commerce Tower into a LEED Gold-certified 32-story vertical neighborhood, with commercial and residential use, as well as a day care facility, green space, and a university branch. In Brooklyn, Jamestown Properties, Belvedere Capital, Angelo Gordon, and Cammeby’s International currently are expanding adaptive reuse on the 16-building, 6 million square-foot Industry City complex.

The challenges of adaptive reuse
While such developments can be appealing to investors, adaptive reuse still faces some hurdles. For more capital to flow into this asset class, it is essential to have an industry-recognized definition of adaptive reuse coupled with a methodology for valuation and underwriting. CCIM Institute, in partnership with Alabama Center for Real Estate at the University of Alabama, has been instrumental in establishing a solid definition. To qualify as adaptive reuse, a project must include four factors:

1. Existing structure: While adaptive reuse projects may involve some level of new construction or an expansion/addition of space, they always start with an existing structure.

2. Functional and/or economic obsolescence: The old use is no longer productive or economically viable, and the tenants have left.

3. Change of use: The project/property must involve a repurposing of a prior structure and use, not a mere re-tenanting with tenant improvements. Defining the new use is vital for capital sources to perform proper valuations of the project.

4. Economic viability: The new project/property must pass the ultimate test of highest and best use. Not only does the reuse need to be physically possible and legally permissible, it also must be economically viable.

The underlying objective is to provide both regulators and capital providers the specificity needed for everything from tax codes and legal structures to valuations and due diligence. Ultimately, it also will pave the way for aggregation by private equity portfolios and REITs.

AdRu opportunities for PE
For those PE firms interested in ESG or socially responsible investing, adaptive reuse projects often tick all the boxes. These projects also tick the box for cost effectiveness. On average, AdRu projects are 15 to 20 percent cheaper and faster than new construction.

In addition, private equity firms can take advantage of a wide variety of incentives for these projects, such as new market or historic tax credits, TIFs, low-income housing tax credits, and opportunity zones. Cities also are becoming more creative with incentives offered. After all, no one wants vacant properties in their town.

Opportunity zones, in particular, are prime candidates for private equity and adaptive reuse deals. Looking at the available inventory in these newly defined opportunity zones – such as abandoned factories, warehouses, parking garages, and big boxes – these properties are perfectly suited for multifamily, mixed-use, hotel, or creative office projects.

Adaptive reuse also can be an ideal solution for site selection for a private equity firm’s portfolio companies. Whether the company is expanding or relocating, adaptive reuse not only saves time and money, but can attract and retain a strong workforce. With the growing desirability of live-work-play lifestyles, particularly among millennials, the conversion of a unique property in the city or an urban satellite can be very attractive to this desired demographic.

The social goodwill and public relations benefits shouldn’t be underestimated either. Adaptive reuse brings jobs, economic activity, and people back into communities and often saves or transforms a beloved structure in the neighborhood.

Look to this combination of adaptive reuse and opportunity zone incentives as a powerful driver of growth in this asset class for years to come.

March 22nd, 2019

Rajat Gupta Is Unrepentant for His Crimes

Rajat Gupta had been moved to a larger part of the prison when he came face to face with his nemesis, Raj Rajaratnam.

Mr. Rajaratnam, a disgraced hedge fund manager, hadn’t always been Mr. Gupta’s nemesis. For a long time, they were close — so close that a jury was convinced Mr. Gupta had slipped him boardroom secrets so that Mr. Rajaratnam could trade on inside information.

Mr. Gupta — once a member of the financial elite as the head of McKinsey, a board member of Goldman Sachs and an adviser to Bill Gates — had been convicted of securities fraud in 2012 as part of Mr. Rajaratnam’s insider-trading ring. He was sentenced to two years in prison. And he had come to blame his plight on his former confidant.

Now both men were locked up in the same federal prison in Ayer, Mass., and they suddenly found themselves staring at each other.

Mr. Gupta, in his first interview since being released from prison three years ago, recalled the moment when he walked over to Mr. Rajaratnam on the prison grounds.

“I told him, ‘Raj, I am here because of you,’” Mr. Gupta told me. The men did not shake hands. “He’s not the apologizing type, so he didn’t say, ‘I’m sorry.’”

The two men strolled around the grounds. Then something weird happened.

“I forgave him,” Mr. Gupta said.

Today Mr. Gupta, a business pariah after the exposure of his stunning breach of corporate trust, not to mention his status as a convicted criminal, wants forgiveness, too — or at least to tell his side of the story.

The playbook for these sorts of attempted returns to public life is well established: Express contrition, forgive your tormentors, espouse the hard lessons learned.

That is not Mr. Gupta’s approach. He is aggressively unrepentant. He maintains he is innocent despite the jury verdict against him on three counts of securities fraud and one charge of conspiracy. (He was found not guilty on two other counts.)

Mr. Gupta’s book, “Mind Without Fear,” to be published next week, tells the story of how his career unraveled. It is a propulsive narrative filled with boldfaced names from business and politics. At times, it is a dishy score settler.

Mr. Gupta never testified at his trial, a decision he said he regretted. While he gives a full-throated self-defense in the book that is fuller than the one the jury heard, much of the outlines were already heard — and rejected — in court. The book requires the reader to suspend disbelief in the judicial system. Some readers may sympathize with him while others may find his arguments unconvincing.

Mr. Gupta recounts virtually every scene in the past decade of his life, from the moment he learned that he was under investigation (he got a phone call from the general counsel of Goldman Sachs while he was in line at airport security) to when he was released from prison.

The closest Mr. Gupta comes in the book, or in his interview with me, to acknowledging any error on his part is when he notes that he shouldn’t have trusted Mr. Rajaratnam and that he spoke a little too loosely when he discussed Goldman’s corporate secrets on a phone call that the F.B.I. secretly recorded.

Mr. Gupta, it seems, spent his time in prison trying to make the best of his circumstances — and occasionally hanging out with Mr. Rajaratnam.

“We played Scrabble in prison together. We played chess. We had breakfast together,” he told me. Most of their conversations were about “prison stuff, you know?”

“Sometimes we’d talk about Preet Bharara,” Mr. Gupta added.

Mr. Bharara was the crusading United States attorney for the Southern District of New York who prosecuted both Mr. Rajaratnam and Mr. Gupta. Mr. Rajaratnam, who was sentenced to 11 years in prison, “was obviously quite mad at him,” Mr. Gupta said.

Mr. Gupta is mad at Mr. Bharara, too. His book is filled with critical asides about Mr. Bharara and what Mr. Gupta believes was his prosecutorial overreach.

“Go after the hedge funds and their circle, play up the story in the press, and maybe no one would notice that the big banking executives were continuing to walk free,” he wrote. “That I, like many of those guys he targeted, was a fellow Indian only burnished his tough-guy aura.”

There is a reasonable argument to be made that Mr. Bharara didn’t do enough to pursue criminal cases against Wall Street executives and others responsible for causing the 2008 financial crisis. But it is pretty rich for Mr. Gupta — who spent years at the top of the Wall Street pecking order — to use that critique to cast himself as a victim.

The case against Mr. Gupta revolved around the day in the fall of 2008 when Warren Buffett agreed to make a crucial investment in Goldman Sachs, bolstering public confidence in the firm when such confidence was in dangerously short supply.

Sixteen seconds after Goldman’s board finished discussing Mr. Buffett’s soon-to-be-announced investment, Mr. Gupta called Mr. Rajaratnam. Mr. Rajaratnam then started buying Goldman shares. Explaining the well-timed purchases later in a taped phone call, he said he had heard “something good might happen to Goldman.”

Mr. Rajaratnam was never charged with crimes surrounding that Goldman trade; he was convicted of making other trades using illicit information. Unlike conventional insider tipsters, Mr. Gupta was never paid directly by Mr. Rajaratnam for spilling secrets. Instead, prosecutors told the jury, Mr. Gupta received other benefits or would in the future.

Mr. Gupta insists that the prosecution’s narrative is wrong. He says that he doesn’t remember speaking to Mr. Rajaratnam after the Goldman board meeting — maybe, he says, he spoke to his secretary — and that, if he did speak to Mr. Rajaratnam, he certainly didn’t divulge the pending Buffett news.

Now that he has served his two years in prison, Mr. Gupta wants to restart his life. He has been spending time with his family and doing some consulting work in India. He has not reconnected with many of his former friends and colleagues in the business world.

“I didn’t want to put them in a difficult position,” he said.

Mr. Gupta said he had learned some valuable lessons over the past decade: “Don’t get too attached to anything — your reputation, your accomplishments or any of it. I think about it now, what does it matter? O.K., this thing unjustly destroyed my reputation. That’s only troubling if I am so attached to my reputation.”

In the spirit of forgiveness, he said, he still has respect for Mr. Rajaratnam.

“I have to give him an extraordinary amount of credit,” Mr. Gupta told me near the end of our conversation. “Because he could have easily testified against me, made something up.”

March 21st, 2019

Levi’s Goes Public, With Jeans on the Trading Floor

For one day, the New York Stock Exchange was denim friendly.

Levi Strauss & Company, the company that traces its roots to the days of the California Gold Rush, started trading publicly on Thursday for the second time in its 165-year history.

Traders in New York were clad in denim pants and jean jackets, as the stock exchange suspended its prohibition on wearing jeans for the day. Levi’s also set up a “tailor shop” outside of the exchange where traders could personalize their denim.

The company’s shares, which were priced at $17 each, rose 32 percent in their first day of trading, ending the day at $22.41 and pushing Levi’s valuation above $8.5 billion.

“The floor looked awesome,” Charles V. Bergh, the company’s chief executive, said in a phone interview. “The irony is, there’s a sign when you walk onto the floor saying, ‘No jeans allowed.’”

Levi’s has been undergoing a turnaround for the better part of the past decade under Mr. Bergh, who joined the company in 2011. The company, based in San Francisco, has yet to return to its peak of the 1990s, but the executive has overseen an increase in sales to $5.6 billion last year, with net profit of $285 million.

[Being publicly traded is the latest chapter in the story of the 165-year-old company.]

“The job is not done, but this is a big step and acknowledgment of the progress that we’ve made,” Mr. Bergh said. “The vision I had was to be and be seen as the world’s best apparel company — and among the best companies in any industry — in part because that’s what the company was in the ’60s, ’70s and ’80s.”

The company was founded by Levi Strauss, who immigrated to the United States from Bavaria and set up shop in San Francisco in 1853 with a wholesale dry goods business. Twenty years later, he and a business partner received a patent for “waist overalls” with metal rivets at points of strain — a garment known today as the blue jean.

The company first listed its shares in the 1970s, but was taken private in 1985 through a leveraged buyout led by descendants of Strauss, known as the Haas family. They wanted to take a longer-term view of the business rather than focus on short-term results and fluctuations. Strauss died without children in 1902 and left the company to his nephews. Family members have controlled the business ever since.

Mr. Bergh said that Levi’s chose to return to public markets because of the renewed strength of the brand and its growth potential in categories like women’s apparel and international markets like China. Last year, tops accounted for 20 percent of the company’s sales while women’s apparel rose to 29 percent of revenue.

He also said that investors had responded positively to the company’s reputation as one that would take a stand on social issues, like its decision in the 1990s to pull financial support from the Boy Scouts of America after the organization refused to admit gay members and leaders. In recent years, Mr. Bergh has attracted attention, some of it critical, for speaking out about gun violence and advocating gun control legislation.

“There’s an acknowledgment that today consumers are buying brands that represent a good value, but they also buy into brands and companies that share their values,” he said.

Levi’s raised more than $100 million from the offering, which it plans to use for general corporate purposes and possibly for acquisitions, according to its regulatory filings. Much of the offering’s proceeds will go to the Haas family.

Members of the Haas family, known for their donations to the University of California, Berkeley, where the business school carries the family name, will hold about 80 percent of the voting shares after the offering.

Levi’s showing on Thursday makes it one of the better performing recent I.P.O.s. Since the start of last year, shares of companies listing on American exchanges rose, on average, 14 percent during their first day of trading.

The recent debuts of retailers have received a mixed reaction from investors. Shares of Farfetch, which went public last year, jumped 42 percent during their first day of trading. The stocks of Canada Goose and Duluth also performed well, rising 26 percent and 14 percent. Stitch Fix, though, finished essentially flat and J.Jill was down 3 percent.

March 21st, 2019

Indra Nooyi: ‘I’m Not Here to Tell You What to Eat’

When did you start thinking about the need for Pepsi to be more than a soda and snacks company?

The first recognition came, I think, in 2000, when I was head of strategy. The marketplace was changing. It was changing slowly, but we had to make some moves before it changed too fast. We could see articles on health and wellness were picking up speed.

We bought Quaker Oats in 2000 because we had no food brand that could play in the morning. It was also clear that beverage habits were changing. Our own employees’ consumption was changing. It went from regular Pepsi to Diet Pepsi and Pepsi Max. Everywhere you looked, you could see that consumption of low-calorie, zero-calorie products was increasing.

How do you get a big multinational company to buy into such a dramatic change in strategy?

If the C.E.O. doesn’t feel the change, as opposed to just talking about the change, people will see right through it. So the first thing I had to do was make sure that whenever I talked to employees about it, I shared experiences, observations, data. I talked about water shortages in parts of the world. I would show them examples of plastic waste, the lack of recycling programs and what that could do to the environment. And I would talk about people’s consumption of fat, sugar and salt.

We had town halls and invited the spouses of employees to come. At one in Egypt, a lady stood up and said, “My husband’s going to be mad I’m saying this, but I have a kid who’s 2, and I read every label, and I’m not willing to give my child all PepsiCo products.”

Plenty of people questioned the strategy. What made you stick with it?

Our board bought into the strategy. If your board is not on your side, it doesn’t work. But they said, “What you’re doing with the portfolio, what you’re doing with the whole environment and sustainability issue, what you’re going to do with the focus on diversity — this is the right way to move the company forward.”

And I told them: “This means that I’m not going to focus on beating every index. I’m going to focus on duration of returns, rather than level of returns for a short time.” And the board said, “Yes, that’s the right way to go at it.”

But if you’re really committed to health, why keep selling soda and chips?

Mountain Dew is a fantastic brand. It’s a great franchise. I’m not here to tell you what to eat or drink. My job is to give you a choice of products, between fun for you, better for you and good for you. I’ll give you nutritious products. I’ll give you low-calorie products. I’ll give you indulgent products.