Happy Monday!
Big deal: Sarah Pringle and Milana Vinn have a big scoop on PE Hub this morning. Marlin Equity is prepping VirginPulse in a deal that could value the employee wellness company at more than $2 billion, according to the story.
A sale now would represent a fairly quick flip for Marlin, which acquired the company in 2018. A $2 billion valuation is likely required for Marlin to achieve a decent return on the investment, the story said. Check out the story here.
VirginPulse, founded in 2004, seeks to create healthier, more productive workforces using mobile apps and wearable devices to track health and fitness metrics for employee-members, offering incentives to fuel behavior.
The company was backed by Richard Branson’s Virgin Group and Insight Venture Partners, which led a $92 million funding found in May 2015. The owners started exploring a sale in 2018. Marlin acquired VirginPulse in May 2018 and at the time merged the business with RedBrick Health, a health engagement tech company already backed by Marlin.
Also …
If Marlin is able to sell the company this year, it would be subject to the three-year carried interest rule that was part of the 2017 tax reform package. Under the rule, carried interest generated from the sale of companies owned for under three years are subject to the ordinary income tax rate, which can be as high as 37 percent. Carry on investments held for three years or more are hit with the capital gains tax rate of 20 percent.
Timing here makes this deal a perfect example of a trend I wrote about last week of GPs choosing to waive carry on exits of investments held under three years. They push carry off to subsequent investments in a fund with the hopes of recouping their share of profits on future exits. Check out the story here.
Have you seen this strategy at work? I’m not clear if it’s actually been used yet. Reach me with thoughts at cwitkowsky@buyoutsinsider.com.
Fund: Francisco Partners, which has been under a harsh spotlight for its past investment in cyberweapons business NSO Group, is gearing up for its biggest fundraising yet. The firm, based in San Francisco, is expected to launch its next flagship fund, along with its second smaller-market-focused pool called Agility, in the second quarter, sources said. Check out my story here for the targets and other particulars.
Francisco acquired NSO Group, an Israeli maker of spyware, in 2014. The company has come under fire for its work with authoritarian governments. NSO founders, along with Novalpina Capital, bought a majority stake in the company from Francisco last year at a valuation of just under $1 billion, New York Times reported at the time.
Mamba: Sad news out of California yesterday that NBA legend Kobe Bryant died in a helicopter crash along with his 13-year-old daughter Gianna. Along with his incredible basketball career, Bryant launched a venture capital firm called Bryant Stibel in 2013. The firm raised Bryant Stibel Value-Growth Platform and the $1.7 billion non-control platform Bryant Stibel Permira Growth Opportunities. Bryant Stibel has made some major investments, including in Alibaba, Dell Technologies, Epic Games and LegalZoom.
Top Scoops
Texas Municipal Retirement System at its January meeting approved an additional $25 million commitment to an FTV Capital fund that it invested in last year, Teddy Grant reports on Buyouts. Read it here.
Teleo Capital acquired Industrial Defender, which provides cybersecurity and compliance software for critical infrastructure providers, from Capgemini America. Check out our news brief here.
Teleo was formed by ex-Marlin Equity executive George Kase. Teleo is raising its debut fund with a target of $200 million, according to a Form D fundraising filing.
Have a great Monday! Reach me with tips n’ gossip, trends, feedback, The Drama, book recommendations or whatever at cwitkowsky@buyoutsinsider.com, on Twitter or find me on LinkedIn.
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