Payments startup Square Inc plans ‘imminent’ IPO filing -Reuters

(Reuters) – Payments startup Square Inc plans to file for an “imminent” initial public offering, according to a source familiar with the situation, potentially putting it an a position to be a public company by the end-of-year holiday season. Square, which has pioneered the use of instant payments over smartphones, is one of the most richly valued companies in Silicon Valley, worth an estimated $6 billion based on its most recent round of funding. Earlier Friday, Fortune reported that Square would file for an IPO in the next two weeks. A spokesman for Square declined comment. Market turmoil of the type seen in August, when the Dow Jones Industrial Average closed down 588 points in a single day, could derail IPO plans. Square has become one of the most scrutinized start-ups in Silicon Valley. Many venture capitalists have privately questioned whether it is really worth the $6 billion valuation. The doubters have cited heavy competition and tight margins in the payments business. An IPO will provide a quick answer to that question, as well as guidance for many of the other private start-up companies dubbed “unicorns,” meaning their valuation is $1 billion or more. CB Insights, a venture-capital tracker, says more than 130 such companies now exist. Overall, the climate for venture-backed IPOs has weakened this year, with just 44 venture-backed companies listing on public markets in the first half of the year, according to the National Venture Capital Association. That compares with 66 in the first half of 2014. Earlier this year, Square had filed for a “confidential” IPO, which lets companies with under $1 billion in annual revenue file registration documents and go through a Securities and Exchange Commission review without public scrutiny. After the review, if the company wishes to continue with an IPO, it makes a public filing. Goldman Sachs will serve as lead underwriter, with Morgan Stanley and JPMorgan Chase also participating, Fortune reported. Square’s IPO comes at a critical time for Chief Executive Officer Jack Dorsey, who is also interim CEO of Twitter Inc . Dorsey has not dismissed becoming permanent CEO of Twitter while staying at Square, but Twitter’s board has said that its next CEO needs to be solely focused on that company. (Additional reporting by Yasmeen Abutaleb in San Francisco; Editing by Meredith Mazzilli, Bernard Orr and David Gregorio)

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Payments startup Square Inc plans ‘imminent’ IPO filing -Reuters

Audax offers two fee/carry options for latest flagship fund

Audax Group offers a choice of management fee/carried interest structures in its next flagship private equity fund: a 1 percent management fee and 30 percent carried interest rate, or the standard 2 and 20, according to an LP with knowledge of the fund. Audax is in market with Audax Private Equity Fund V, which has a cap of $2.25 billion, according to two LPs who have heard the fund pitch. Fund V collected about $1.5 billion as of earlier this month, the second LP said. The GP will commit “several hundred million dollars” to the fund, according to the first LP. It’s not clear if the $2.25 billion cap includes the GP commitment. Audax did not respond to a request for comment. Audax filed a Form D with the SEC on August 11. The filing did not disclose the target or amount raised. It listed Geoffrey Rehnert and Marc Wolpow as executive officers on the fund. About two-thirds of LPs who have committed to the fund so far chose the traditional 2 and 20 structure, the first LP said. “You can argue this either way,” the LP said. “[With 1 and 30] you’re better aligned with the manager, but you’re paying a headline-busting 30 percent carry. I’m a fan of giving the GP his due once he’s [returned] over a certain level. The ability to pay lower fees up front has you better aligned with the manager.” The two LPs expressed concern about the jump in fund size, which is an 80 percent increase from the $1.25 billion Audax raised for Fund IV in 2012. That prior fund generated a 20.77 percent internal rate of return and a 1.25x multiple as of March 31, according to alternative assets data provider Bison. Audax’s third private equity fund, which closed on $1 billion in 2007, generated a 14.6 percent net IRR and a 1.7x multiple as of Dec. 31, according to the California Public Employees’ Retirement System. Several firms this year have boosted fund sizes well beyond their previous vehicles, including American Industrial Partners, which is expected to close its sixth fund on $1.75 billion, more than double the $717.5 million it raised for Fund V. Likewise, Clearlake Capital Group closed its fourth flagship fund on $1.38 billion, a big leap from the $785 million it raised for Fund III in 2012; Genstar collected $2 billion earlier this year for its seventh fund, doubling the amount it raised for its prior fund in 2012; and Vista Equity Partners is targeting between $750 million and $1 billion for its sophomore credit fund, four to five times more than the $200 million it raised for the debut credit fund. Action Item: Read the Audax Fund V Form D here: http://1.usa.gov/1L8Zz0D Photo courtesy of Shutterstock

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Audax offers two fee/carry options for latest flagship fund