☕️ Barbarians’ VC bargains

VCs squirm as PE demands hefty returns upfront

July 05, 2024

Good morning.

“Barbarians at the gate” investors are muscling into VC territory, and not all suits are happy. As Capital Brief’s Bronwen Clune reports, Quadrant and Federation Asset Management are examples of PE shops throwing around terms that would make a banker blush, demanding hefty returns before anyone else sees a dime.

In one instance, Chris Hadley’s Quadrant unsuccessfully demanded a bonkers “annual coupon on top of the preference stack, with a right to step in and replace management,” while Cameron Brownjohn’s Federation got a four times liquidity preference in its Sendle deal.

It’ll be interesting to see if the power move, which does help bridge the bid-ask gap, becomes contagious or if VC-land shuts the door to the “barbarians”.

ASX as at market close. Commodities and crypto in USD.

🏆 LOI Subscriber #TBD

Market movers

It’s been a while since we’ve seen Magellan Financial Group among the top stock market performers for the day. So it was nice to see shares closing 6% higher yesterday after it posted a microscopic dip in FUM to $36.6b in June, down from $36.7b in May.

The fund manager managed to juggle net retail outflows of $0.2b with net institutional inflows of the same amount. But it was their performance fees for FY24 skyrocketing to $19m to leave FY23’s $11.5m in the dust what really impressed.

The quick sync

  • The CEO of Grok Ventures is plotting a pivot – opening it up to outside investors, and sees wealthy Americans “really interested” in Mike Cannon-Brookes’ $40b Sun Cable project. (AFR)

  • Amazon Web Services $2b agreement to build high-security data centres for defence and intelligence agencies comes after a long and twisty journey. (Capital Brief)

  • Nearly a quarter of Australia’s energy consumption is from heat used in industrial processes, most of which is powered by fossil fuels. (Capital Brief)

  • Airtasker inks two deals in two weeks with Australian media companies, swapping equity for advertising to build an $11m war chest. (AFR)

  • AOFM chief puts banks on notice as bond trading probe heats up. (AFR)

Trading floor

M&A

  • Saudi Aramco and Adnoc are eyeing Santos for a possible acquisition to bolster their global gas investments. (Capital Brief)

  • Kogan.com and QBD Books are interested in acquiring the assets of collapsed online bookstore Booktopia. (AFR)

  • Infratil has increased its stake in CDC following a valuation update tied to CDC's expanded pipeline, revealed during Infratil's $1.07bn equity raise in June. (Capital Brief)

  • Whiteoak Growth Fund has acquired a majority stake in Datanova, its third technology investment since 2020. (AFR)

  • The ACCC has flagged concerns over Lendlease's sale of residential communities to Stockland and Supalai, noting potential competition issues in several regions. (Capital Brief)

  • The federal government is investing $2bn in a decade-long partnership with AWS to enhance Australia's cyber capabilities, creating up to 2,000 jobs with a new Top Secret Cloud. (Capital Brief)

  • Anglo American's Grosvenor mine fire in Queensland has delayed the sale of its $7.4bn Australian coal assets, originally targeted to conclude by year-end, due to the mine's closure lasting several months. (The Australian)

Capital Markets

  • Domino’s Pizza and Arcadium Lithium are likely candidates for removal from the ASX100 in September, per Wilsons Advisory. (The Australian)

VC

  • Breakthrough Victoria has invested $3m in Melbourne's Millibeam, a 5G semiconductor startup focusing on mmWave technology. (Startup Daily)

People moves

  • Brookfield has promoted Sophie Fallman, Ruban Kaneshamoorthy, and Danny Poljak to enhance its presence and fundraising in the APAC region. (AFR)

☝️ Know about a deal or people move we don’t? Hit reply.

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