The Information : Tiger Global Tried to Sell VC Fund Stakes in Latest Sign of St

Tiger Global Tried to Sell VC Fund Stakes in Latest Sign of Strategy Shift

THE TAKEAWAY
  • Tiger Global has tried to sell some stakes in VC funds that specialize in young startups, as the once-prolific startup investor backs away from a strategy designed to increase exposure to these fledgling firms.

Tiger Global Management, the most prolific investor in private tech companies during the recent boom, also invested in dozens of venture capital firms as it sought to forge closer ties to the young startups those funds backed. But in recent months, the New York–based investment firm has been looking to dump some of those VC fund stakes.

The firm has been working with banks to sell some of its VC fund investments to firms that specialize in the secondary market for private tech stocks and venture funds, according to a person with direct knowledge and two others who were briefed about it. Tiger partners last year committed at least $80 million to the VC funds, one of these people said, including Better Tomorrow Ventures, Chapter One Ventures and Moxxie Ventures.

The specific stakes Tiger is looking to sell and whether it completed any sales couldn’t be learned.

The VC-stake sale discussions follow a bruising year for the firm, which has invested more than $24 billion in private startups since early 2020. Last year, as stock markets collapsed, Tiger slashed the value of its private tech portfolio, according to its fundraising documents, which were reported by The Information.

While it’s not uncommon for investors in VC firms—known as limited partners—to sell their stakes, Tiger’s attempt may reflect the tougher fund-raising environment for venture capital. The sale of venture fund stakes by LPs tends to be more common during bear markets when they don’t believe their investment returns will increase or because they need cash sooner than expected. Wealthy individuals and endowments also may sell VC stakes to balance their portfolio after finding themselves overexposed to private tech startups after the severe drop in public stocks last year.

LPs in VC funds are free to sell their stakes unless the LP agreement they signed prohibits it. Still, some venture capitalists say they frown upon such stake sales.

The VC fund stakes are from a fund Tiger raised, Crescent, which pooled personal capital from Tiger staff to invest in the VCs, according to a person familiar with the matter. Because tech valuations have declined, Tiger may have to sell the VC stakes at a discount to the original commitment amount.

Nonetheless, Tiger could use the proceeds to invest in its new venture fund, which it is currently raising. Tiger previously told at least one founder it needed to pare back its commitments to seed investors because the partners wanted to instead use some of their personal capital for the firm’s next fund, The Information earlier reported. Tiger’s employees usually invest a large sum in the firm’s own funds.

Strategy Change

For Tiger, the move away from VC funds comes as the investment firm pulls back from rapid-fire dealmaking, particularly in mature startups. After inking more than 300 deals in 2022, Tiger has participated in just 12 deals so far this year, according to financial data firm PitchBook.

The firm also has lowered the target size of its current venture fund to $5 billion from $6 billion, The Wall Street Journal reported in February, after closing a new $12.7 billion fund last year.

The strategy of investing in small VC funds arose early last year as Tiger and other large VC investors turned from backing startups on the cusp of an initial public offering to investing more in young startups for whom public offerings might be years in the future—when stock markets will presumably have recovered. In backing funds that specialize in seed investments for startups, Tiger aimed to increase its access to promising young companies.

Tiger’s partners had planned to invest just over $300 million in these sorts of funds every year, The Information reported. But during the course of 2022, the souring stock market and a negative response from Tiger’s own LPs prompted the firm to curb those ambitions. Tiger called several of the fund managers to whom it had given verbal or written promises and said it wanted to reduce those commitments, The Information previously reported. In several instances, Tiger proceeded with the seed-fund investments as planned and did not attempt to scale back, some fund managers said.

FT : Norway’s long-term energy dilemma

Norway’s long-term energy dilemma
While its gas exports rise in importance, Oslo faces pressure to expand greener sources of power

The helicopter carrying the heads of Nato and the European Commission flew in thick cloud off the Norwegian coast, right until it reached the Troll gas platform when the sky brightened up almost miraculously.

Troll, Norway’s largest gasfield, has certainly proved its worth to Europe in recent months, providing about 10 per cent of the gas needs of the continent, including the UK. Ursula von der Leyen, president of the commission, and Nato secretary-general Jens Stoltenberg came as much to thank Norway for increasing the flow of gas to get through a difficult winter as send a message to Russia not to try to sabotage any North Sea infrastructure.

The hosts on the platform — Norwegian prime minister Jonas Gahr Støre, and Equinor chief executive Anders Opedal — were all smiles as they took their two guests 300 metres below sea level to the bottom of one of the platform shafts. But behind the bonhomie, there are also big differences in emphasis on what the energy future might look like.

Since the start of the Ukraine war, Norway has displaced Russia as Europe’s biggest source of gas. Along with its main oil and gas group, state-controlled Equinor, Norway has argued increasingly that it is the democratic supplier of choice to the continent. For years, it had sought to position itself as being able to deliver barrels of oil with one of the lowest carbon footprints in the world (if that is not an oxymoron). Now, it has hit on this new argument to stand out from more autocratic suppliers such as Qatar and Saudi Arabia.

“It’s a reality, it speaks for itself,” said Støre as the North Sea wind buffeted the platform, pointing to figures showing Norway now supplies 30 to 40 per cent of Europe’s gas. “Norway is a Nato ally, a democratic partner and that brings stability and predictability both to Europe and the UK.”

Equinor may be investing in wind power and other green technology, but it also sees a decent future for gas and oil. Opedal pointedly said on the platform that Troll would continue producing beyond 2050, which is the target date for the EU to be carbon neutral.

Oil and gas exploration in Norway continues almost unabated despite a government agreement with a small leftwing party to not open up any new areas during this parliamentary term. In January, Oslo offered a record number of blocks in existing areas in the Arctic for companies to explore.

Europe is grateful in the short term for Norway’s increased gas production in the past year. Von der Leyen repeatedly gave thanks to “our friends” in Norway while on the platform. But the EU’s overarching current goal is to achieve net zero emissions and so it wants to accelerate its push towards green technologies, putting an emphasis on the likes of wind power and hydrogen rather than gas in the mid to long term. “Of course, the future is renewables,” said von der Leyen.

That leads to some tensions in the discussions. People involved in negotiations between Norway and Europe say the EU appears reluctant to commit to large gas volumes for a long period. Norway would ideally also like to get an EU imprimatur for its aggressive petroleum plans in the Arctic, recognising that now might be its time of maximum leverage given Europe’s thirst for gas.

Støre is keen to present a different side of Norway, too. His government speaks warmly about offshore wind, even though Norway hugely lags behind other North Sea countries such as the UK and Denmark on this.

He also talks up the prospects for carbon capture and storage. An early Norwegian attempt at this failed. But several efforts including one involving Equinor in the North Sea are now taking place. Finally, Norway is pushing hydrogen. Eventually, it will be so-called green hydrogen made using renewable energy. But, before that, Oslo is heavily backing blue hydrogen where gas is used and the carbon captured and stored.

“All that will be the future; gas is the transition technology,” said Støre. Within a few years, he added that it might be possible to spy offshore wind farms within a kilometre or two of Troll while carbon might be injected into the seabed a similar distance away.

But standing on a platform that still earns about $80mn a day at current gas prices, there is a sense that Norway has little incentive to turn its back prematurely on the industry that made it rich, even as interest in green energy rises. There is little doubt that this sector will stay lucrative in the short run but questions abound over whether Norway is moving fast enough for its longer-term future.

>>> US Research Calls

Research Calls

  • Upgrades:
    • Accenture (ACN) upgraded to Buy from Hold and added to Stock Focus List and Equity Income Buy List at Edward Jones
    • Clean Energy Fuels (CLNE) upgraded to Outperform from Mkt Perform at Raymond James; tgt $6
    • Commercial Metals (CMC) upgraded to Buy from Neutral at BofA Securities; tgt raised to $60
    • ConocoPhillips (COP) upgraded to Hold from Sell at Societe Generale; tgt $105
    • Douglas Emmett (DEI) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $15
    • Dutch Bros (BROS) upgraded to Outperform from Neutral at Wedbush; tgt $37
    • First Citizens BancShares (FCNCA) upgraded to Buy from Sell at UBS; tgt raised to $1206
    • Fluence (FLNC) upgraded to Buy from Neutral at Guggenheim; tgt $25
    • H&M (HNNMY) upgraded to Equal-Weight from Underweight at Morgan Stanley
    • InflaRx (IFRX) upgraded to Outperform from Market Perform at LifeSci Capital
    • Livent (LTHM) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $27
    • Sallie Mae (SLM) upgraded to Overweight from Underweight at Morgan Stanley; tgt raised to $15
    • Meta Platforms (META) upgraded to Buy from Hold at Argus; tgt $270
    • Outotec Oyj (OUKPF) upgraded to Buy from Neutral at Citigroup
    • Secure Energy Services (SECYF) upgraded to Outperform from Sector Perform at National Bank Financial
    • Sealed Air (SEE) upgraded to Buy from Neutral at UBS; tgt $59
    • The Cigna Group (CI) upgraded to Strong Buy from Outperform at Raymond James; tgt $350
    • Trimble (TRMB) upgraded to Buy from Hold at Edward Jones
    • UnitedHealth (UNH) upgraded to Strong Buy from Outperform at Raymond James; tgt raised to $630
    • Wartsila (WRTBY) upgraded to Overweight from Equal-Weight at Morgan Stanley
    • Zions Bancorp (ZION) upgraded to Outperform from Neutral at Robert W. Baird; tgt $60
  • Downgrades:
    • AbbVie (ABBV) downgraded to Hold from Buy at Argus
    • Albemarle (ALB) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $195
    • Ascendis Pharma (ASND) downgraded to Perform from Outperform at Oppenheimer
    • Assa Abloy (ASAZY) downgraded to Sell from Neutral at Citigroup
    • Bloom Energy (BE) downgraded to Outperform from Strong Buy at Raymond James; tgt lowered to $25
    • European Wax Center (EWCZ) downgraded to Neutral from Outperform at Robert W. Baird; tgt $21
    • Kinross Gold (KGC) downgraded to Underperform from Buy at BofA Securities; tgt $4.70
    • On (ONON) downgraded to Neutral from Outperform at Robert W. Baird; tgt $33
    • Steel Dynamics (STLD) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $123
    • Xponential Fitness (XPOF) downgraded to Neutral from Outperform at Robert W. Baird; tgt $34
  • Others:
    • Aker Solutions (AKRTF) initiated with an Outperform at RBC Capital Mkts
    • Arhaus (ARHS) initiated with an Outperform at TD Cowen; tgt $11
    • Ascendis Pharma (ASND) removed from Focus List at Citigroup; tgt lowered to $146
    • CymaBay Therapeutics (CBAY) initiated with an Outperform at William Blair
    • Edgewell Personal Care (EPC) initiated with a Neutral at UBS; tgt $47
    • Fox Factory Holding (FOXF) initiated with a Neutral at ROTH MKM; tgt $126
    • GCM Grosvenor (GCMG) initiated with an Overweight at Piper Sandler; tgt $10
    • Old Second Bancorp Inc. (OSBC) initiated with an Overweight at Stephens; tgt $18
    • SolarEdge Technologies (SEDG) initiated with a Buy at Janney; tgt $351
    • Subsea 7 SA (SUBCY) initiated with an Outperform at RBC Capital Mkts
    • The Vita Coco Company (COCO) initiated with a Buy at Craig Hallum; tgt $25
    • United Airlines (UAL) placed on 30-day Catalyst Watch at Citigroup
    • VICI Properties (VICI) initiated with a Buy at Mizuho; tgt $35
    • Wyndham Hotels & Resorts (WH) initiated with a Buy at Deutsche Bank; tgt $79

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • DLO -8.5%, SGH -2.1%, SMPL -2.1%, SDRL -0.7%, WMT -0.4% (guidance)

Other news:

  • RBBN -6.7% (files $250 mln mixed shelf)
  • WAL -5.4% (provides Q1 financial update)
  • SAFE -0.7% (files mixed shelf)
  • NE -0.7% (prices senior notes)
  • MSI -0.7% (to Appeal CMA's Unprecedented Final Decision)

Analyst comments:

  • ALB -2.8% (downgraded to Underperform from Neutral at BofA Securities)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • KRUS +8.3%, CAG +2.4%, RGP +0.5%

Other news:

  • DRS +5.8% (awarded $1.0 bln contract)
  • WBX +5.7% (stock offering)
  • JNJ +2.9% (paying $8.9 bln in talc litigation claims)
  • BBDC +2.8% (CFO steps down; appoints new CFO)
  • GRTS +2.8% (Presentations Evaluating Self-amplifying mRNA (samRNA) Against SARS-CoV-2 at ECCMID 2023)
  • AGO +2.7% (Assured Guaranty's Asset Management Business to combine with Sound Point Capital Management)
  • HUT +2.2% (reports 131 Bitcoin mined in March)
  • PLTR +2% (Palantir Technologies and Microsoft (MSFT) expand cloud partnership to public sector)
  • BLU +2% (Positive Results from its Phase 1 Bioavailability Equivalence Study)
  • AUPH +1.9% (announces promising topline data from renal biopsy sub-study of the aurora trial)
  • PBI +1.8% (Hestia Capital Management calls for company to replace CEO according to WSJ)
  • LDI +1.3% (Announces Settlement and Cooperation Agreement with Anthony Hsieh)

Analyst comments:

  • LTHM +2.9% (upgraded to Buy from Neutral at BofA Securities)
  • SLM +2.2% (upgraded to Overweight from Underweight at Morgan Stanley)
  • SEE +2% (upgraded to Buy from Neutral at UBS)

>>> Europe : Brokers Upgrades & Downgrades - 5th of April 2023 V2(+)

>>> Up
* Acciona Raised to Overweight at Barclays; PT 233 euros
* Alfa Laval Raised to Buy at SEB Equities; PT 430 kronor
* Atlas Copco Raised to Buy at Handelsbanken
* Attendo Raised to Buy at SEB Equities; PT 40 kronor
* Axfood Raised to Buy at ABG; PT 285 kronor
* CAF Raised to Outperform at Oddo BHF; PT 33 euros
* DWS Raised to Buy at Citi; PT 33.50 euros
* Endomines Finland Raised to Accumulate at Inderes; PT 5.50 euros (+)
* Know IT Raised to Buy at Handelsbanken
* Metso Outotec Raised to Buy at Citi
* Neoen Raised to Equal-Weight at Morgan Stanley; PT 32 euros
* S Immo Raised to Buy at SRC Research; PT 18 euros
* Siemens Raised to Buy at SocGen; PT 185 euros
* SIG Group Raised to Buy at Stifel; PT 26.70 Swiss francs

>>> Down
* Addnode Group AB Cut to Hold at SEB Equities; PT 125 kronor
* H&R Cut to Sell at DZ Bank; PT 5 euros
* J. Martins Cut to Market Perform at Bernstein; PT 22 euros
* K+S Cut to Hold at Stifel; PT 22 euros
* Mycronic Cut to Hold at Handelsbanken

>>> Initiation
* Acciona Energia Rated New Equal-Weight at Barclays; PT 40 euros
* Aker Solutions Reinstated Outperform at RBC; PT 48 kroner
* Seacrest Petroleo Bermuda Rated New Outperform at Itau BBA
* Stroeer Rated New Buy at SocGen; PT 65 euros
* Subsea 7 Reinstated Outperform at RBC; PT 161 kroner
* Technip Energies Reinstated Sector Perform at RBC; PT 24 euros

>>> Call
* Barclays Prefers US-Exposed European Utilities; Acciona Raised (+)
* Citi Still Underweight Traditional AMs, Raises DWS on De-Rating
* Direct Line Double-Upgraded at Citi as Motor Insurance Inflects
* Energy Services Sector Benefiting From Greater Demand, RBC Says
* H&M Gets Another Upgrade as MS Turns More Positive on Retail
* Meta Price Target Raised at Jefferies on Cost Cuts, Buybacks (+)
* Neoen Raised as Morgan Stanley Says Capital Increase Curbs Risks
* Wartsila Upgraded at Morgan Staney on Margin Improvement Levers

WSJ : Farallon Capital to Wage Proxy Battle at Biotech Firm

Farallon Capital to Wage Proxy Battle at Biotech Firm
Farallon has nominated three directors to the board of Exelixis

Hedge fund Farallon Capital Management is planning to wage a proxy battle at biotech company Exelixis Inc., EXEL 0.36% according to people familiar with the matter.

Farallon has nominated three director candidates that it flagged in a late-March securities filing, the people said. At the time, the firm hadn’t decided to move forward with a proxy fight and was still trying to work with the company. The window to nominate directors ran from Feb. 24 to March 26, according to proxy materials.

Farallon has a roughly 7.2% stake in Alameda, Calif.-based Exelixis, which develops cancer-fighting drugs, according to the filing. It has been an investor in the business since 2018.

Exelixis shares have fallen by more than a third since early 2018, though they are up about 20% so far this year. The stock closed Tuesday at $19.55, giving the company a market capitalization of roughly $6.3 billion.

Farallon has been in talks with Exelixis over the fund’s main issue, research and development spending, but the discussions recently fell apart, the people said. Farallon thinks Exelixis lacks focus in how it spends its R&D budget, which is expected to top $1 billion in 2023, the people said.

Farallon is typically not an activist investor. The San Francisco firm, with nearly $40 billion in assets under management, tends to keep its engagements with companies private.

Farallon previously pushed, along with other funds, for change at Toshiba Corp. A member of the firm ended up joining the Japanese industrial company’s board last June. (Toshiba just agreed to a $15 billion-plus private-equity buyout offer.)

Farallon argues that Exelixis has been unable to translate its library of cancer treatments into value for shareholders, delivering returns of less than 1% annually in the more than two decades since its initial public offering, according to the people.

Farallon wants the board to communicate a plan to deliver cash flows from its flagship product, known as cabozantinib, back to shareholders. It estimates the value of cabozantinib’s cash flow is more than $33 per share alone. (Exelixis in late March said it authorized the repurchase of up to $550 million of its common stock before the end of 2023.)

Farallon’s three nominees are Tom Heyman, formerly of Johnson & Johnson ; Dave Johnson, a managing partner at health-care-focused activist fund Caligan Partners LP; and Bob Oliver, the former chief executive of Otsuka America Pharmaceutical Inc.

There have been a number of proxy fights launched lately, but few have gone the distance.

Third Point LLC pulled plans to wage one at Bath & Body Works Inc. ; Nelson Peltz called off a proxy battle at Walt Disney Co. ; and Elliott Investment Management LP decided not to nominate directors at Salesforce Inc. after preparing to do so. Carl Icahn is in the midst of a proxy fight at biotech Illumina Inc.

>>> Stoxx 600 Pre-Market Indications

  • OMV (OMV TH) +0.9%
  • Maersk (DP4B TH) +0.7%
    • Maersk CEO Says Tech Spending to Fuel Gains in 2024: Berlingkse
  • H&M (HMSB TH) +0.3%
    • H&M Gets Another Upgrade as MS Turns More Positive on Retail
  • ASML (ASME TH) -1%
  • Kion (KGX TH) -1%
  • K+S (SDF TH) -1%
    • K+S Cut to Hold at Stifel; PT 22 euros
  • Nexans (NXS TH) -8.8%
    • Nexans Offering by Invexans Prices at EU80/Share