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ISSUE 16


Ardian nets $284M as growth fundraising returns to Earth


Ardian has closed its second growth equity fund on €230 million (about $284 million), more than tripling the size of its predecessor, which raised €70 million in 2014. The firm will use the cash to make both minority and majority investments of up to €25 million, operating primarily in Western Europe.


The vehicle is one of 12 growth funds to close across the US and Europe so far this year, per the PitchBook Platform. Here's a rundown of some of 2018's more notable growth equity efforts:


While those fundraising numbers are in line with historical figures in terms of both dollars and fund count, they pale in comparison to the spike in growth fundraising that occurred during 4Q 2017. In those three months alone, firms in the US and Europe raised more than $15.8 billion across 23 vehicles, per PitchBook data, both of which are easily highs from any quarter during the past five years.


The largest effort to close that quarter was TPG Growth Fund IV, which wrapped up with $3.7 billion in commitments in December. Olympus Partners also raised more than $3 billion for a fund of its own, while KKR, Apax Partners and Spectrum Equity were among the other firms to top the $1 billion mark for growth vehicles.


Believe it or not, more than 20% of all growth funds to raise $1 billion or more in the six years since the start of 2012 closed during 4Q 2017. It's a clear encapsulation of the fundraising frenzy that engulfed private equity throughout most of last year.


Ardian, meanwhile, has closed 15 investments so far this year, per the PitchBook Platform. Among the priciest was a reported $1.1 billion takeover of airport equipment maker Alvest in conjunction with Caisse de dépôt et placement du Québec.


By –PitchBook



Elon Musk's tunnel-boring company raises $112.5M


The Boring Company—Elon Musk's aptly named tunnel-boring business—has raised $112.5 million in equity funding in what appears to be its first publicized backing, per an SEC filing uncovered by PitchBook.


The only individuals listed on the filing are SpaceX director Steve Davis and Jared Birchall, a mysterious figure who previous filings have named as an executive at Neuralink, another one of Musk's spin-offs. The address listed on the filing, meanwhile, seems to belong to the law firm Carr McClellan.


The funds came mostly from Musk's own wallet, with the remainder coming from early employees, the company confirmed to PitchBook. The filing surfaced just days after a report that SpaceX is raising $507 million at a $25 billion valuation.


The Boring Company is building a network of low-cost tunnels for the Hyperloop transportation system, a theoretical idea made famous by Musk to launch pods through low-pressure tubes at more than 600 miles per hour, allowing for possibilities like a 30-minute trip from New York to Washington, DC. Boring is one of Musk's many ventures exploring the frontiers of new technologies:



He later said the company started off as a joke, per reports, "because it would be a funny name for a company.” In a very Musk-like manner, the company made headlines when it began selling $500 flamethrowers, a gimmick that ended up pulling in $3.5 million. The business made an additional $700,000 by selling 35,000 Boring Company hats.


Musk tweeted last June that The Boring Company had already finished the first segment of its tunnel in Los Angeles, which is slated to run from Los Angeles International Airport to Culver City, Santa Monica, Westwood and Sherman Oaks. Reports emerged in February that the company received a permit to begin digging at a new site in Washington, DC.


By–PitchBook


EU launches €2.1B VentureEU initiative to boost European VC


The European Commission and European Investment Fund have launched VentureEU, a continent-wide funds-of-funds programme aiming to give Europe's venture space a shot in the arm to the tune of €2.1 billion (about $2.6 billion).


The initiative will see the EU invest €410 million across six funds run by established managers, which will, in turn, raise up to an additional €1.7 billion to spread across European VC funds.


Isomer Capital and Axon Partners Group have already signed agreements to run a fund each, while settlements with Aberdeen Standard Investments, LFT, Lombard Odier Asset Management and Schroder Adveq are expected to conclude this year.


The VentureEU programme was initially announced in 2015 as part of the Commission's Capital Markets Union action plan, which has a goal of building a single market across the member states.


Why it matters


VentureEU is an indicator that, at least for Europe's continent-wide legislators, size matters in VC. The Commission and EIF expect the scheme to kick-start a further €6.5 billion of new investments in European startups and scale-up businesses.


For some, this will open the door for Europe to receive attention from institutional backers—usually only synonymous with North America and Asia—by increasing the size of the continent's VC funds.


"Our European venture capital funds are too small to compete," said ElzbietaBienkowska, the European Commissioner for internal market, industry, entrepreneurship and SMEs, as well as Poland's former deputy prime minister. "[They] are too small to attract major institutional—but also even more importantly—private investors."


The small size of Europe's VC funds has been recognised previously as one of the reasons that European late-stage funding is lacking.


The FoFs will also spread capital wider than is usually the case in Europe's venture scene, with each mandated to back funds and projects in at least four countries each. According to PitchBook's 2017 Annual European Venture Report, the UK and Ireland alone accounted for almost 37% of Europe's VC deals last year.


From – PitchBook


Time Warner CEO says AT&T merger needed to compete with internet titans


Time Warner Chief Executive Jeff Bewkes on Wednesday defended his company’s planned merger with telecoms firm AT&T as necessary to compete effectively for advertising with internet giants like Google and Facebook.

Bewkes told Judge Richard Leon, who will decide if the $84.5 billion deal may go forward, that the U.S. Justice Department was wrong to say that AT&T would be reluctant to license Time Warner’s TV and movie content to rivals, causing blackouts, in order to win over new customers to AT&T subsidiary DirecTV.


“I think it’s ridiculous,” said Bewkes, who has been CEO for more than 10 years. “If our channels are not in distribution we lose lots of money (from lost subscriptions and advertising).”


He said that “one percent, less than one percent, maybe two percent” of subscribers would drop their pay TV subscription because of a blackout, far below the 12 percent estimated by an economist for the government who testified earlier in the trial.


Bewkes argued it was in Time Warner’s best interest financially to license its television channels, which range from movies to CNN to sports, broadly online.


He said Time Warner had been hampered in innovating and advertising because it does not have the granular information about viewers held by pay TV and internet companies.


With digital advertising, Chevrolet, for example, can target car ads at people looking to actually buy a car, he said.


AT&T has said a key benefit of owning Time Warner is that it can take data about its 141 million U.S. wireless subscribers and 25 million video subscribers and marry it with Time Warner’s programming to enable advertisers to target TV ads.


Targeted TV ads, also known as addressable TV, have yet to go mainstream because they involve renegotiating carriage deals with programmers and distributors, said Brian Wieser, an analyst at Pivotal Research.


Targeted TV could represent more than $100 billion in revenue by 2030 for companies that offer it, according to an April Credit Suisse report, which called it “a largely overlooked benefit of the AT&T/Time Warner transaction.” The ads can be sold at triple the price of regular ads.


“The Google/Facebook duopoly has such a strong hold on the market, I think it’s important that there is healthy competition and that we aren’t just forced to invest in two places,” said Tim Villanueva, head of media strategy for Fetch, an ad agency focused on mobile, whose clients include eBay and Lululemon. He said he was interested in using the new platform.


Advertisers’ spending on TV ads in 2018 is expected to be around $70 billion, a 1.45 percent increase from three years ago, according to research firm eMarketer.


ALREADY INNOVATING?


In cross examination, Justice Department lawyer Claude Scott pointed to efforts that Time Warner was already making to move into targeted advertising and online distribution, including contracting with tech companies, an apparent attempt to call into question the need for the megamerger.


Scott referred to Bewkes’ compensation package, noting that he would be leaving the company when the deal closed and that he owned more than 2 million Time Warner shares. AT&T’s deal for Time Warner is about a 35 percent premium over the market price.


The trial has seen a parade of witnesses testifying about how the merger would affect them. Executives from smaller pay TV companies talked about how important it was to have access to Time Warner’s movies and television shows.


The trial, which began in mid-March in U.S. District Court in Washington, is expected to wrap up this month.


From – Reuters



Xiaomi Is Said to Tap Citic for CDR, Plans IPO Filing Next Month


Xiaomi Corp. has picked China’s Citic Securities to handle its issuance of Chinese depositary receipts as the smartphone maker prepares to file for an initial public offering in Hong Kong, people familiar with the matter said.


The Beijing-based company may file for a public listing as soon as next month and is targeting a valuation of about $100 billion, said one of the people, asking not to be identified because the matter is private. The CDR is most likely to come after the IPO in Hong Kong and its size is yet to be decided, said the person.


Xiaomi could be the biggest IPO since Alibaba Group Holding Ltd.’s $25 billion debut in 2014. The smartphone maker, which once fetched a valuation of $45 billion, suffered through a challenging 2016 and then bounced back by revamping its sales model and expanding in India, where it rivals Samsung Electronics Co. as the biggest vendor.


Xiaomi has chosen Morgan Stanley, Goldman Sachs Group Inc., Credit Suisse Group AG and Deutsche Bank AG for its IPO, people familiar with the matter have said.


Xiaomi declined to comment on its listing plans. A representative for Citic didn’t respond to a request for comment.


China’s government has encouraged its technology companies to issue CDRs so that citizens will be able to invest in the country’s fastest-growing companies. Its brightest stars, including Alibaba and search giant Baidu Inc., have chosen to debut in New York because of the more flexible regulations and abundant capital abroad. Final rules for CDRs have yet to be worked out, which may delay Xiaomi from issuing shares in mainland China at the same time as Hong Kong.


With CDRs, companies that already trade on overseas exchanges, including Alibaba and Tencent Holdings Ltd., would issue securities that could be purchased in mainland China. The country unveiled a pilot program earlier this month, aiming to bring back the most valuable overseas-listed giants.


Xiaomi’s co-founder and chief executive officer Lei Jun hailed CDRs as “an excellent idea” in a recent interview with Bloomberg News, calling it “a great policy innovation.”


From – Bloomberg





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