Soccer's biggest fans

Happy holidays. This is 2023’s final issue of Transacted. We’ll pick things back up in the new year, but here’s what we’ve got today…

• One headline deal and a look at the ongoing process for a stake in German soccer’s media rights

• The deal sheet, plus the latest 2024 venture outlook

1. H.I.G. picks up ZimVie spine business.

• ZimVie Inc. (Nasdaq: ZIMV) has agreed to divest its spine business in a $375 million deal with H.I.G. Capital. The transaction is structured as $315 million in up-front cash proceeds, plus a $60 million 10 percent promissory note.

• ZimVie was itself spun out of parent company Zimmer Biomet two years earlier, a combination of its spine and dental businesses. Now, the spine unit is seen as a drag on ZimVie’s faster-growing, higher-margin dental unit.

• Shareholders are big fans of the deal, sending ZimVie up nearly 60 percent this week. Management has said it plans to use proceeds to pay down debt.

• H.I.G. is picking up an assortment of core spine, motion preservation, and EBI bone healing product portfolios, with 2023E revenue of $408 million, down from last year’s $450 million. It’s got its hands full with what analysts say is a business that is rapidly losing share and has “no near-term path to return to market growth.”

Blackstone, CVC, and EQT have progressed to the final round of bidding in Deutsche Fussball Liga’s (DFL) sale process for a stake in its media rights. On offer is up to 8 percent of an entity holding broadcasting rights for the Bundesliga, Germany’s top-flight soccer league.

EQT’s initial proposal valued the asset at around €12.7 billion, edging out CVC’s €12.5 billion and Blackstone’s €11.9 billion, per Bloomberg.

Advent International also bid, though it fell short on valuation (€10.8 billion) and was not invited forward.

The current process follows two previously failed attempts by DFL to secure outside investment. Any deal requires approval of a two-thirds majority of the organization’s thirty-six members, some of whom have expressed reservations over both financial sponsor involvement and outside influence in their domestic league.

Part of the challenge is thanks to German enforcement of what’s known as a 50 + 1 ownership rule for soccer clubs, preventing majority ownership of teams by institutional investors. It’s a unique structure relative to Europe’s other domestic leagues, and, as a result, has largely insulated the Bundesliga from the influx of outside capital flowing into its counterparts in England, France, and Spain.

Part of the process of massaging member clubs’ support for the deal has included the addition of unique terms to any potential agreement. Bidders with a greater than 10 percent stake in a rival league are excluded from participation, as are any Middle East or Asia-based investors. Of note for the current group of sponsors, the successful purchaser is required to hold its stake for a minimum eight-year period.

With league approval secured just last Monday, bidding deal teams will be thankful that completed work on their already-submitted bid packages wasn’t rendered worthless for the third time—an added layer of competitiveness in an already tight sale process.

Though with the same parties participating in May’s attempt at a larger €4.5 billion stake sale, there were likely off-the-shelf resources to pull from this time around.

Use of Proceeds

The DFL plans to use the majority of proceeds to improve the league’s broadcast offering, with the end goal of growing its international presence.

Despite a level of on-field play that is comparable to other European leagues, Germany is desperately far behind its peers when it comes to international reach and monetization.

The €2.1 billion in annual international rights revenue brought in from England’s Premier League is more than ten times that of Germany. Despite member clubs’ deeply held reservations, there’s a growing consensus within the league that this disparity will ultimately make Bundesliga teams less competitive, lacking the resources and talent of European rivals.

“German football clubs and fans need to wake up and realize the league has to open up for investments, or else the gap to international rivals will widen,” said Gerhard Trosien, a professor emeritus for sports management at the Accadis University of Applied Sciences, in a comment provided to Bloomberg.

Private Equity’s Interest

Germany provides the latest opportunity to secure a foothold in live sports, a post-pandemic bright spot enjoying a prolonged bump in activity across both direct investments in teams as well as their leagues.

Should CVC prevail, it would add to its existing holdings across similar media deals with France’s Ligue 1 and Spain’s La Liga.

“We have witnessed significant demand for new and original content among fans, streaming platforms and networks, and this has driven sports-related businesses to require flexible and scalable capital to help fuel this secular growth,” says Ares Co-Head of U.S. Direct Lending Mark Affolter. His comments followed the firm’s 2022 launch of a dedicated $3.7 billion fund focused on debt and equity investments in sports, media, and entertainment.

Part of the increased interest is thanks to the emergence of lucrative streaming deals that have more favorable economics than legacy broadcasting. For streamers, there’s a greater willingness to pay up for what are highly sought-after sports assets in the fight for new customer acquisition.

“Our view is that there is incredible growth across these sectors. It’s really driven by valuations ascribed to original content,” Affolter said. The DFL hopes its on-field original content can secure a much-needed capital injection.

• Coupang and Greenoaks agreed to invest $500 million in struggling luxury retailer Farfetch, beating out a competing package from Apollo.

• Aon agreed to buy NFP, a property and casualty broker, from Madison Dearborn Partners and HPS in a $13.4 billion deal.

• General Atlantic is in discussions over a deal to acquire infrastructure investor Actis, with around $12.7 billion in assets under management.

• Deutsche Bahn (DB: DB) has launched a sale process for its logistics business DB Schenker, which could fetch up to €20 billion.

• Koch Industries agreed to acquire Iowa Fertilizer Co. from OCI for $3.6 billion.

• BGM Ventures acquired a minority stake in Sara Happ, Inc., an indie beauty brand.

• Carlyle and Insight Partners acquired supply chain risk software provider Exiger, backed by Carrick Capital Partners.

• EQT agreed to acquire Zeus, a manufacturer of polymer components used in minimally invasive medical procedures, for around $3.4 billion.

• First Reserve acquired AP4 Group, a provider of industrial gas and steam turbine maintenance services.

• SpiceJet expressed interest in acquiring Go First and is preparing an offer for the bankrupt Indian airline.

• Hop Lun, backed by Platinum Equity, acquired RW Designs, an LA-based swimwear design house and manufacturer.

• Nikko Asset Management is in late-stage talks to acquire a stake in Tikehau Capital, a French asset management firm, with the goal of launching an Asia-focused private credit JV.

• ADM (NYSE: ADM) has agreed to acquire dairy flavor solutions provider Revela Foods from New Heritage Capital. ADM has also agreed to acquire Fuerst Day Lawson, a UK-based food ingredients and flavorings manufacturer backed by Highlander Partners

• Salesforce (NYSE: CRM) has agreed to acquire Spiff, a cloud-based sales commission and compensation management platform with venture backing from Salesforce Ventures, Kickstart Fund, Lightspeed Venture Partners, Norwest Venture Partners, Next World Capital, Peterson Partners, Album VC, Pipeline Capital Partners, Stripes, Crew Capital, and Epic Ventures.

• Brookfield has engaged Banco Santander and Société Générale to sell certain wind and photovoltaic plants owned by portfolio company Saeta Yield, expected to fetch around €1.5 billion.

• FirstService Corporation (TSX: FSV) acquired Roofing Corporation of America, backed by Soundcore Capital Partners, for $413 million.

• Snowflake acquired Samooha, a startup developing a data collaboration and privacy tool that raised $12.5 million this year from backers including Snowflake, Altimeter, and Cowboy Ventures.

• Cevian Capital has kicked off an activist campaign against UBS, purchasing a more than 1 percent stake for around €1.2 billion.

• Huatai Securities is evaluating strategic options, including a potential sale, for its US asset management unit AssetMark Financial (NYSE: AMK).

• LondonMetric Property (LSE: LMP) and LXI REIT (LSE: LXI) are in discussions over a potential merger that would create a combined entity valued at around £3.9 billion.

• BWT Logistics, a national B2B warehousing and transportation business backed by Bluejay Capital Partners, has acquired International Express Trucking, a regional 3PL in the North Carolina market.

• GI Partners has agreed to buy DQE Communications, a Pittsburgh-based fiber-optics provider owned by Duquesne Light.

• J.C. Flowers closed a $125 million minority investment in Capital Funding Bancorp, a bank focused on healthcare and multifamily lending.

• Sentinel Capital Partners acquired High Bar Brands, a manufacturer and distributor of branded aftermarket products for heavy-duty trucks and trailers, from Heartwood Partners.

• Alchemy and Triton are preparing to sell Lebara, a London-based mobile network operator that offers low-cost international calls and mobile data plans.

• Amazon (Nasdaq: AMZN) is in talks with Sinclair Broadcast Group (Nasdaq: SBGI) about taking a stake in its Diamond Sports television networks.

• Thomas Jefferson, a Philadelphia-based health system, has agreed to acquire Lehigh Valley Health Network, a partnership that would create a 30-hospital system.

• Bird, the e-scooter company, filed for Chapter 11 bankruptcy and has confirmed $25 million of DIP financing from MidCap and other existing lenders.

• Flynas, a Saudi Arabia-based budget airline, has hired banks to prepare for a Riyadh IPO.

• Lightmatter, a developer of photonic chipset technology, raised $155 million in Series C-2 funding. GV and Viking Global Investors co-led.

• EDH Healthcare, a management and consultancy firm focused on healthcare networks for self-insured employers, has raised $92 million in new growth capital from Insight Partners, valuing the company at $1 billion.

• Harvey, a provider of AI-powered legal tech tools, raised an $80 million Series B at a $715 million valuation. Elad Gil and Kleiner Perkins co-led, with participation from OpenAI's Startup Fund, Sequoia Capital, and existing backers.

• SimSpace, a provider of cybersecurity training and digital replicas of IT infrastructure, raised $45 million in new funding led by L2 Point Management.

• NewLeaf Symbiotics, a developer of agricultural biologicals and biostimulants, raised $45 million in Series D funding led by Gullspång Re:food, with participation from Otter Capital Partners, S2G Ventures, Leaps by Bayer, and existing investors.

• Atavistik Bio, a developer of precision allosteric therapeutics designed via its AMPS metabolite-protein screening platform, raised $40 million in new funding. The Column Group, Lux Capital, and Nextech Invest participated.

• Halcyon, a platform designed to defeat ransomware, raised $40 million in Series B funding led by Bain Capital Ventures.

• Unnatural Products, a biotech specializing in AI-driven drug discovery, raised $32 million in Series A funding. Merck Global Health Innovation Fund and ARTIS Ventures co-led, with participation from First Spark Ventures, The Venture Collective, Humain Ventures, LongeVC, and Not Boring Capital.

• Agtonomy, a developer of autonomous solutions for agriculture, raised $22.5 million in Series A funding from Momenta, Doosan Bobcat North America, and Toyota Ventures.

• ScaleOps, an automated system managing Kubernetes resources, raised $21.5 million in new funding. Lightspeed, NFX, and Glilot Capital Partners led.

• KnownWell, a weight-inclusive healthcare provider, raised $20 million in Series A funding. Andreessen Horowitz led, with participation from Flare Capital Partners and other existing backers.

• Sweetch Energy, a developer of technology to produce energy from saltwater, raised €25 million ($28 million) in Series A funding led by Revolution Environnementale et Solidaire, with participation from EDF, Demeter Investment Managers, Go Capital, and Positive Future Capital.

• ImpriMed, a precision medicine startup for canine and feline blood cancers, raised $23 million in Series A funding led by SBVA, with participation from HRZ Han River Partners, SK Telecom, KDB Silicon Valley, Ignite Innovation Fund, Samyang Chemical Group, Murex Partners, and Byucksan.

• Soum, an online marketplace for secondhand goods in the Middle East, raised $18 million in Series A funding. Jahez Group led, with participation from Isometry Capital, Khwarizmi Ventures, Alrajhi Partners, and Outliers Venture Capital.

• Hurr, a peer-to-peer fashion rental platform, raised £7.9 million ($10 million) in new funding led by Praetura Ventures, with participation from Octopus Ventures, Ascension, and D4 Ventures.

• Lingrove, a developer of compostable biomaterials, raised $10 million in Series B funding from Lewis & Clark Agrifood, Diamond Edge Ventures, Bunge Ventures, and SOSV.

• Farcana, a Web3 multiplayer gaming studio, raised $10 million in seed funding. Animoca Brands, Polygon Ventures, and Fenbushi Capital led, with participation from Merit Circle, Rarestone Capital, MMPro Trust, Unpopular Ventures, Kapo Capital, Emchain, Hasu Capital, and Dravus Investment.

• TuMeKe, a computer vision platform specializing in ergonomic workstation risk assessment, raised $10 million. Intel Capital led the round.

• Strike Graph, a SaaS platform for security compliance, raised $1.5 million in additional funding (on top of a $7 million Series A in May) from Madrona Venture Group, Information Venture Partners, and Rise of the Rest.

• Aether Fuels, a climate tech firm focused on sustainable liquid fuel production, raised $8.5 million in pre-Series A funding from JetBlue Ventures, TechEnergy Ventures, Doral Energy Tech Ventures, Foothill Ventures, and Xora Innovation.

• Hydrogrid, a developer of software for hydropower plant optimization, raised $8.5 million in Series A funding led by Inven Capital and Karma Ventures, with participation from CNB Capital and SET Ventures.

• Salvador Technologies, a provider of cyberattack recovery solutions, raised $6 million in new funding led by Pico Venture Partners, with participation from Pitango VC and Sarona Partners.

• Salt Labs, a developer of workforce engagement and loyalty software, raised $8 million in new funding led by Third Prime.

• Netris Pharma, a biotech developing monoclonal antibodies to target drug resistance in oncology, raised €7.5 million in a Series A extension to reach €24.4 million overall for the round. New backers EIC Fund contributed the additional funding.

• Chefaa, an Egyptian pharmacy benefits platform, raised $5.25 million led by Newtown Partners and Global Brain, with participation from GMS Capital, Verod-Kepple, and M3.

• Hakbah, a Saudi-based fintech platform offering digitized savings clubs, raised $5.1 million in Series A funding led by VentureSouq, with participation from new investors M-Capital and Bunat Ventures, and existing backers Global Ventures and Aditum Investment Management.

• Annea, a developer of engineering reliability platforms for renewable energy infrastructure, raised €2.75 million in seed funding led by Voyager Ventures, with participation from Innoport and Faber Ventures.

• Liminal Space, an entertainment design company, raised $2.5 million in bridge funding from Luminus Management, Avex USA, and Hibino Corporation.

• TômTex, a company developing sustainable alternatives to traditional leather, raised $2.25 million in seed funding. Happiness Capital led, with participation from SOSV, Parley for the Oceans, Earth Venture, and MIH Capital.

• Friendlier, a provider of reusable packaging systems, raised C$5 million in seed extension funding. Relay Ventures and Garage Capital co-led.

• Biorithm, a women's health medtech developing an obstetric care monitoring platform, raised $3.5 million in Series A funding led by Adaptive Capital Partners and SEEDS Capital, the investment arm of Enterprise Singapore.

• Metrion Biosciences, a contract research organization specializing in ion channel drug discovery, raised £2.5 million from Maven Capital Partners and £1 million from existing investor Gresham House Ventures.

• Forte, a provider of a mental health platform, raised $3.3 million in seed funding led by AlignPact, with participation from Cubit Capital, Fairbridge Park, and Sovereign's Capital.

• Crescenta, a platform for investing in private equity funds, raised €2 million led by KFund, with participation from FJ Labs.

• BDT & MSD Partners raised $3.2 billion for a new real estate credit fund.

• Turnspire Capital raised a $275 million lower middle market buyout fund.

• Baird Capital raised $218 million for its latest venture fund.

• Rally Ventures raised $240 million for its fifth venture fund.

• Neon, founded by former 8VC partner Kimmy Scotti, is targeting $250 million for its debut venture fund.

• Achieve Partners raised $167 million for an ed tech-focused venture fund.

• SoftBank sold $100 million venture vehicle Open Opportunity Fund, focused on underrepresented founders, to its managing partner Paul Judge, alongside former SoftBank COO Marcelo Claure.

• Revo Capital is targeting $100 million for its third venture fund.

• Springdale Ventures raised $40 million for a new early-stage consumer-focused fund.

1. Pitchbook’s 2024 venture outlook.

• Pitchbook says there are reasons to be optimistic for early-stage investors looking ahead to the new year. — Our analysts’ outlook on the venture market in 2024, Pitchbook

2. Traders at ExodusPoint, Millennium, and Citadel take lead on the basis trade.

• Bloomberg examines a government debt trade that uses up to 50x leverage to profit from the spread in pricing between treasuries and futures contracts. — The Hedge Fund Traders Dominating a Massive Bet on Bonds, Bloomberg

3. The last word before the holidays: what CEOs have planned this December.

• The FT checks in with execs to see what they have on the calendar for next week. — From cold water swimming to bison grilling: how CEOs spend Christmas, Financial Times

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