BLPA’s Rearview Mirror: Alibaba Rules

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September 21, 2014

St FrancisWe’re now spending a lot of time with a Company that recently went public, VRBO, out of Austin, TX. VRBO has to have the best customer service of any company I have recently dealt with. And I’ve been dealing with quite a few.

My property manager has had major family issues, which is leading her to shut down the business. My guess is that VRBO, HomeAway and AirBnB have cut into rentals, making it a more difficult business. That, coupled with the fixed costs and few regulatory matters related to handling money, have made the business just too much. Something that I can identify with in a major way.

So, now I’m busy putting up my own website, updating the VRBO website, and putting other procedures in place. In addition, I’m actively investigating the “Connected Home” and am eager to hear Apple’s plans, that were alluded to in its iPhone 6 debut.

In New Hampshire, we use Home Seer, whose major weakness is the dependance on a PC, and can be quirky. Taos has flaky power, so a system that will automatically restart when the power comes back on, and has low power requirements so it can operate for a decent period on a UPS is required. I’m also looking into SimpliSafe, which you can read about in this newsletter.

Life’s a-changing and sometimes it’s a wicked fast sprint, just to catch up.

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

The news this week was Scotland, Alibaba, and quadruple witching. All of which went, as forecast, though not without some nail biting. Scotland is still part of the U.K., Alibaba jumped from $68 to $93 per share [on Friday], and the quadruple witching passed on.

Adobe (ADBE: Nasdaq) achieved revenue of $1,005b vs. $995m YoY, and earnings of $44.7m and $0.09 per share vs. $83.0m and $0.16 per share. The stock fell.

Rackspace (RAX: NYSE) announced that they had taken themselves off the market—and the stock fell seven points.

Oracle announced earnings, but the management transition is what got all the news. Sales of $8.8b vs. 8.4b, and Net income of $0.64 per share vs. $0.59 per share. Larry moved up to Chairman & CTO and Safra Catz and Mark Hurd will be co-CEOs.

Finally, it appears the Fed will continue their slow march upward,with the emphasis on slow. Still, lots of hand ringing that the market has been propelled solely by low rates and stock buybacks, with a lot of murmuring about the sky falling in.

IPOs[2]

Descriptions from Companies’ S-1 SEC filings.

Alibaba was the sole non-pharma/medical related IPO of the five IPOs. Three of the five IPOs are based outside the United States.

Alibaba (BABA: NYSE) sold 320.1m shares at $68 per share to raise $21.8b at a valuation of $168b. The stock closed at $93.89 per share.

  • We operate Taobao Marketplace, China’s largest online shopping destination, Tmall, China’s largest third-party platform for brands and retailers, in each case in terms of gross merchandise volume, and Juhuasuan, China’s most popular group buying marketplace by its monthly active users, in each case in 2013 according to iResearch. These three marketplaces, which comprise our China retail marketplaces, generated a combined GMV of RMB1,833 billion (US$296 billion) from 279 million active buyers and 8.5 million active sellers in the twelve months ended June 30, 2014.

Israel-based Foamix Pharmaceuticals (FOMX: Nasdaq) sold 6.7m shares at $6 per share to raise $40.m at a valuation of $119m. The stock closed at $6.15 per share.

  • We are a clinical-stage specialty pharmaceutical company focused on developing and commercializing our proprietary minocycline foam for the treatment of acne, impetigo and other skin conditions. Our lead product candidates, FMX101 for moderate-to-severe acne and FMX102 for impetigo, are novel topical foam formulations of the antibiotic minocycline. Our clinically and statistically significant Phase II clinical trial results demonstrate that our minocycline foam, FMX101, provides a faster, more effective treatment than the reported results for oral minocycline, the current standard of care for moderate-to-severe acne, and does so with fewer side effects. Based on these results, we believe that FMX101 has the potential to become the new standard of care for the moderate-to-severe acne market

Netherland-based ProQR Therapeutics (PRQR: Nasdaq) sold 7.5m shares at $13 per share to raise $97.5m at a valuation of $271.7m. The stock closed at $16.37 per share.

  • We are an innovative biopharmaceutical company engaged in the discovery and development of RNA-based therapeutics for the treatment of severe genetic disorders, with an initial focus on Cystic Fibrosis, or CF. Utilizing our unique, proprietary RNA repair technologies, we believe we will be able to treat genetic disorders in which a single protein is defective due to certain types of genetic mutation.

 

Tokai Pharmaceuticals (TKAI: Nasdaq) sold 6.5m shares at $15 per share to raise $97.5m at a valuation of $311.4m. The stock closed at $18.39 per share.

  • We are a clinical-stage biopharmaceutical company focused on developing novel proprietary therapies for the treatment of prostate cancer and other hormonally-driven diseases. Our lead drug candidate, galeterone, is a highly selective, multi-targeted, oral small molecule drug candidate that we believe has advantages over existing prostate cancer therapies.

 

Civitas Solutions (CIVI: Nasdaq) sold 11.7m shares at a price of $17 per share to raise $199m at a valuation of $628m. The stock closed at $16.59 per share.

  • We are the leading national provider of home- and community-based health and human services to must-serve individuals with intellectual, developmental, physical or behavioral disabilities and other special needs.

Mergers & Acquisitions[3]

Click on the highlighted text for more deal information.

I’m embarrassed to say it, but Concur Technologies must be the biggest company that I’ve never heard of. It’s gone after an interesting category: T&E. Their claim is that up to twenty percent of expenses claimed are questionable. That seems high to me—only that the poor employee must not have crossed a ‘t’ or dotted an ‘i’. Cheating on your expenses is just plain stupid.

Software

Concur Technologies a travel and entertainment expense management cloud-based company, is being acquired by SAP for $8.3b.

GrabCAD, a 3D CAD collaboration platform, is being acquired by Stratasys for $100m.

FeedHenry, a leading enterprise mobile application platform provider, is being acquired by Red Hat, a leading provider of open source solutions for $82m.

Communications

Brazillian telecommunications company, Global Village Telecom (GVT), is being acquired by Telefonica for 7.2b EUR.

Stonestreet One, a developer of bluetooth and bluetooth software products, is being acquired by Qualcomm Atheros.

Retail

Design Within Reach, a contemporary furniture design company, is being acquired by Herman Miller for $154m. This seems like a very low price, which means DWR is probably unprofitable. Herman Miller wants to tap DWR’s more mainstream, but upper end consumer distribution network.

Social

Pheed, a social media platform, is being acquired by mobli, a photo and video platform, for $40m.

Metacloud, which deploys and operates private clouds for global organizations, is being acquired by Cisco.

Belgium

Belgium ticketing company, Sherpa.be is being acquired by Ticketmaster.

Russia

Vkontake, Russia’s largest social network, is being acquired by Mail.Ru Group for $1.5b.

Private Placements[4]

Media

JW Player, which claims to be the world’s most popular online video player [that you have never heard of], raised a $20m Series C round.

Kin Community, the #1 multi-channel women’s community on YouTube, raised a $12m Series C round. This is an interesting gamble, as so many have moved away from YouTube due to the inability to retain ownership of their brand.

Software/Systems/Apps

Fastly, a “fast” content delivery network (“CDN”), raised a $40m Series C round.

Docker, the startup behind the open source app container, raised a $40m Series C round. According to Data Center Knowledge, “The company sells an array of tools that help developers take an application through all the stages between development and deployment without worrying about infrastructure configuration requirements.[5]

Ping Identity Corporation, which provides secure and single sign-on solutions, raised a $35m Series G round.

TouchPal, which makes the TouchPal X keyboard raised a $20m Series C round. Simply put, it takes your finger sweeps on the keyboard and interprets them into words, phrases and sentences. Nuance went after the company for patent infringement, and just recently lost.

eSentire, which provides cyber security technology and services, raised a 14m CAD Series C round.

RJMetrics, which offers business intelligence for eCommerce, SaaS and Mobile businesses, raised a $16m Series B round.

Sidecar, a ride sharing app, raised a $15m Series C round.

CrowdFlower, a “people-powered data enrichment platform,[6]” raised a $12m Series C round. Truthfully, I have read the company description, and still only have a vague idea of what the company does and how they do it.

Hazelcast, the leading open source in-memory data grid, raised an $11m Series B round. You ask “What is an in-memory grid.” I believe these guys coined the term: In-Memory Data Grids are often used with Databases in order to improve performance of applications, to distribute data across servers, clusters and geographies and to manage very large data sets or very high data ingest rates. (from Hazelcast website)

Swrve, a marketing optimization platform for mobile apps, raised a $10m Series B round.

Automation

PrecisionHawk, an information delivery company that uses small lightweight drones and cloud-based software to collect, process and analyze aerial data[7], raised a $10m Series B round. The Company has multiple locations: Indiana, North Carolina, Texas, Canada, the United Kingdom and Australia.

Nanotechnology

Arkansas-based Nanomech, which is basically a coatings company, raised a $12m Series B round. I met the founder, Ajay Malshe at a Nanotechnology Conference five years ago. You always wonder if these companies can garner the staying power. Apparently they have.

Smart Home

Leeo, which focuses on the smart home, raised $37m. Could they be one of Apple’s smart home developers? The timing of the investment announcement is probably not a coincidence. BTW, they’re in stealth mode.

Retail

LightSpeed Retail, which has developed a point of sale system with the iOS operating system, using the iPad and iPhone,raised a $35m Series B round.

Jet, a secretive eCommerce startup, raised a $20m Series A round.

ClassPass, which allows any user to go to a class at any gym for $99 per month for 10 classes, raised a $12m Series A round.

India

Quikr India, a classified ads company, raised a $60m Series G round.

China

Woqu.com raised a $20m Series B round.

Daojia, a food delivery company in eight cities, raised a $50m Series D round. JD.com, China’s eCommerce giant, led the investment.

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All the best,

Margaret Johns

Founder & Chairman

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

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Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area. Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office. She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs. When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

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We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

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This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat

[2]Renaissance Capital

[3] TechCrunch and company websites

[4] TechCrunch and company websites

[5] Data Center Knowledge (“DCK”)

[6] Company website

[7] MarketWatch