Deals round-up…………………………….

The following deals are a selection of those appearing in the private equity and venture capital statistics section on page 54.

PRIVATE EQUITY

3i on Target Express

UK parcel express company Target Express has been subject to another buyout, thought to be worth GBP220 million. This time 3i bought into the company in a secondary leveraged buyout structure enabling Legal & General Ventures (LGV) to exit its LBO made in March 1998 for GBP174 million ($334 million). KPMG cut itself a slice of the action on both occasions having in 1998 worked for Target Express alongside Rickitt Mitchell & Partners and most recently as adviser to 3i. In addition to 3i Gresham Trust also provided equity and Fuji Bank and Rabobank provided debt. 3i has put an equity stake of GBP50 million into the business in comparison to LGV’s GBP30 million almost two years ago.

Target Express is forecast to achieve a turnover of GBP100 million in 2000. It operates express delivery of business to business consignments to destinations around the UK. It also offers a delivery service to other European countries through an alliance, Net Express Europe. Target Express, which has 42 depots in the UK and Ireland, focuses on servicing businesses in high growth sectors such as IT, pharmaceuticals and electronics. Richard Campin led the team at 3i.

Full house for CSFB PE

Credit Suisse First Boston Private Equity also transacted a secondary buyout this month. Its deal was a GBP400 million ($626 million) purchase of the bingo and gaming business of Gala Group. CSFB Private Equity took equity in the transaction alongside PPM Ventures and Royal Bank Development Capital. The management retained their 10 per cent equity stake.

The original 1997 deal involved an acquisition consideration of GBP279 million and some GBP300 million in total funding; PPM Ventures led the syndicate of equity investors. Financing of this latest buyout is assisted by GBP200 million senior debt arranged by JP Morgan and a GBP100 million high yield bond led by Credit Suisse First Boston.

Gala Group was formed following the management buyout of Gala Clubs from Bass. Gala Clubs became Gala Group following the acquisitions of Ritz in 1998 for GBP36 million and Jarglen in 1999. Terms were not disclosed on this latter transaction.

French turnaround for Carlyle?

US venture capital house The Carlyle Group has taken an undisclosed equity stake in Otor in exchange for FFr300 million (a46 million). The Otor group is the second largest manufacturer of corrugated cardboard packaging in France. Estimated sales for 1999 were FFr2.43 billion, although as in 1998 the group is not expected to make a profit again. Otor has 28 production sites in Europe and a worldwide network of licenses.

This is The Carlyle Group’s second investment in France, previous investments include the

Genoyer Group buyout worth GBP168.2 million in 1998 and a minority (4.9 per cent) investment in Le Figaro in April 1999.

TeamSystem for Palamon

Palamon Capital Partners (PCP) has taken an undisclosed stake in Italian-based TeamSystem. This is the second investment from PCP’s a400 million ($386 million) first fund raising last year. TeamSystem is a provider of accounting, tax and payroll management software products and services for small and mediumsized companies. It has, says PCP, current growth rates of 20 per cent per annum.

PCP was set up last year by Hoffman and Elson, both ex-Warburg Pincus, to invest in fast growing small companies in Europe with the eventual aim of a stock market flotation.

Rank rid of Odeon

On February 21, the entertainment and leisure group Rank sold its cinema group Odeon to Cinven for GBP280 million ($438 million). Goldman Sachs advised rank group and Cinven was advised by Ashurst Morris Crisp. Odeon has 75 sites and employs 4,300 people. Cinven is understood to be merging its most recent acquisition with that of ABC Cinemas (made in 1996), although the merged group will operate only under the Odeon name. ABC Cinemas has 57 sites and 1,300 employees. Back in November last year Rank first made it known that it was looking for a buyer for Odeon.

United Biscuits’ unusual LBO

United Biscuits has been sold to a consortium of private equity and corporate investors for $2.46 billion (a2.5 billion). In a complex structure the advisers were as follows. For United Biscuits Morgan Stanley and Allen & Overy, and for the purchasing consortium Norton Rose and Linklaters & Alliance provided legal counsel and financial advisory came from Deutsche Bank, J Henry Schroder & Co, Lazards, Lehman Brothers, and Merrill Lynch International.

Following bid talks announced early October last year Finalrealm, a company formed for the acquisition of United Biscuits and backed by Cinven, Deutsche Bank Capital Partners, and Paribas Affaires Industrielles launched a recommended offer to acquire the entire issued share capital of United Biscuits Holdings plc. The terms of the offer were GBP2.65 or a4.18 in cash per share, equivalent to a total of $1.256 billion or E1.981 billion.

In December last year Burlington Biscuits, a company backed by US venture capital house Hicks, Muse, Tate Furst and the Nabisco Corporation, agreed to acquire United Biscuits Holdings plc via a tender offer valued at an increased $1.2 billion.

On February 29, Burlington Biscuits and Final realm announced they had agreed in principle to a combination of the offers. And on March 20 a definitive agreement was entered into which essentially resulted in Hicks, Muse, Tate Furst and the Nabisco Corporation joining the Finalrealm consortium in the bid for United Biscuits. It was also agreed that an associate of Finalrealm would acquire control of Burlington Biscuits which holds a 29.9 per cent stake in United Biscuits. An unlikely solution but for the presence of two trade buyers in the transaction. The overall value of the deal is understood to be $2.5 billion.

Pinewood Studios sold to 3i

Pinewood Studios has been sold to an investor group comprising Michael Grade, former UK terrestrial television boss at Channel 4, and Ivan Dunleavy, the group was backed by 3i. 3i bought the studios from Rank group for GBP62 million ($97 million) in a leveraged buyout transaction.

Funding for the transaction consisted of GBP55.3 million in cash and GBP6.5 million in an interest free loan note that is repayable in 2007. Speculative press coverage prior to the announcement of the deal had put Michael Grade in the frame but not with 3i and only offering GBP50 million.

Spanish Internet for NWEP

NatWest Equity Partners has announced its first Internet investment in Spain – it is an undisclosed minority stake in Future Space SL. Future Space is a global IT solutions services company specialising in Internet integration and developing technology. NWEP invested Ptas500 million (a3 million) in the company.

The growth plans of Future Space, which was founded in 1996, include opening a fourth office in Barcelona, in addition to those in Madrid, Bilbao and Valladolid. Personnel is expected to increase from 65 to 100.

VENTURE CAPITAL

Pricoa Buyonet

Buyonet International has received a $5 million (a5.15 million) round of funding from Pricoa Capital Group, the European mezzanine and private equity arm of Prudential Insurance Company of America, and $1 million from AB Bure, the Swedish investment company. Buyonet, set up in 1997, provides download and transaction related services to online retailers. Most of the business is concerned with electronic software delivery (ESD.) Forrester Research expects the ESD market to grow from its current level of $87 million to $1.3 billion, or roughly 40 per cent of online software sales, by 2004.

This is Bure’s third round of investment in Buyonet. The current funds are earmarked to expand in key markets such as UK, Germany, France, US, and Latin America. A further round of fund raising is expected soon.

Geri Keniston, who joined from the ESD channel at OnLine Interactive in 1998, is president of the US operations. The management team is led by Freddy Tengberg, who founded the company, and Jonas Nordlund as chairman. Nordlund has launched several media ventures in Scandinavia and is regarded as the pioneer of commercial teletext in Sweden and Norway.

NeSBIC says LetsBuyIt

NeSBIC’s Converging Technologies & e-Commerce Fund (CTe), which is about to close fund raising at a250 million ($242 million), has invested in Netherlands-based LetsBuyIt.com. Set up in April 1999 LetsBuyIt.com enables geographically dispersed consumers to come together as a unit and buy items at bulk purchase discounts. For example, palm pilots costing GBP300 were discounted to GBP250 for a maximum of 30 buyers, the offer runs for a fixed period and is closed if a full allocation is made prior to that date. The site was initially launched in Sweden but has since expanded to 13 European countries and currencies.

NeSBIC’s CTe fund is sponsored by Fortis, which has made a E50 million commitment.

Startup funds for Dataroam

Dataroam, the UK-based Wireless Application Service Provider (WASP), has received GBP5 million ($7.8 million) of startup funding from AIM-listed NewMedia SPARK and the Carphone Warehouse’s $50 million Wireless Internet Portfolio. This first round of funding will be used to launch in the UK and there are plans to raise additional funds to facilitate launches in Europe. Dataroam was advised in this first financing by law firm Lovells and Barchester Ventures.

Dataroam will host, manage and implement packaged software solutions that allow companies to communicate with field staff to improve customer service levels, and allow customers use of affordable mobile solutions accessed via the Internet. Dataroam’s services will be provided over existing mobile networks and the Internet using technologies including WAP.

Dataroam was founded in November last year by Simon Gibbs, a previous director of strategy at Cable & Wireless.

Anadyne Microelectronics starts up

UK-based Anadyne Microelectronics has received startup financing of GBP3.2 million from 3i and Quester. Motorola, which conducted six years of research and development, product trials and test marketing on Anadyne Microelectronics’ product has received a minority stake in the company in exchange for its IPR and know-how. Advisers for the equity investors on the deal were legal: Addleshaw Booth & Co, financial due diligence: Ingram Forrest Associates, market due diligence: Arthur D Little, IP due diligence: Robert Franks. The management team was advised by Hammond Suddards and KPMG.

Anadyne Microelectronics will develop semiconductor products based on field programmable analogue technology. The chips and associated programming software will enable a flexible approach to analogue system design that will reduce the development time and manufacturing costs. Areas of application include control systems, signal processing and communications equipment.

Anadyne Microelectronics was founded by two e-Motorola managers: Ian Macbeth, a technical director and co-inventor of the underlying technology, and Ludwig Klingenbeck, the sales and marketing director.

Buytel goes in for second round

Buytel, a leader in the application of voice verification technology that was established in 1996, has raised IGBP2 million in its second round of funding. The funding was led by Trinity Venture Capital, part of Reihill Venture Capital Group, which invested IGBP1.1 million (a2.5 million). The remaining IGBP900,000 came from FLV Fund. FLV Fund gets a 4.5 per cent stake in The Keaney Company, which holds 100 per cent of Buytel.

Buytel’s technology platform VoicevaultTM records and verifies voice pattern using patented technology. Users do not require any hardware or software other than a telephone. According to Buytel, the electronic verification software market is estimated at $100 billion of which voice verification will account for $5 billion.

Buytel is planning to list on Nasdaq and an European stock exchange next year.

Goldman wants Webrewards

Airmiles took to the web with webmiles in March last year. Webmiles, which owns WebRewards, has sold an undisclosed stake in itself to Goldman Sachs for DM10 million (a5.1 million) in exchange for equity. This is the company’s second round of financing. The first round was provided by Wellington Partners, a venture capital firm that specialises in Internet investments. Webmiles issues points to online customers to encourage loyalty, these points can be exchanged for rewards. To date webmiles has signed over 35 partner companies to the scheme in Germany.

This latest round of fund raising will be used to expand activities in Germany and expand internationally.

First Russian web investment Ozon.ru

Trigon Capital, a Baltic States and northwestern Russia-based investment bank, says it has made the first venture capital financing in Russian e-commerce. The investment of $3 million (a3.1 million) relates to Ozon, which is based in St Petersburg and was founded by a Russian software house Reksoft. The share issue in Ozon was placed by Trigon Capital with Barings Vostok Capital Partners and their partners UFG. This includes a commitment for additional financing this year.

Ozon’s business plan is to expand its current product range, which currently includes books, videos, and journals, to include items such as music CDs. Ozon can be reached at www.o3.ru

Ozon was launched in April 1998 having been set up in January of that year.

PipingHotNetworks.com gets $6 million

An Atlas Ventures-led syndicate has raised $6 million venture capital funding for PipingHotNetworks, a company that is a provider of broadband fixed wireless systems for the delivery of high capacity data services, including high speed Internet and “always-on” connectivity to small- and medium-sized enterprises, home office and residential users. Atlas Ventures syndicate includes Kennet Capital and Convergence Holdings plc.

The PipingHot solution combines a range of standard based mainstream technologies, including those already used in digital television and cable modems to transmit broadband data services to the end users premises via a small external antenna.

PipingHotNetworks management team is as follows; Tim Pickup who had global responsibility for Ericsson’s transmission and cable portfolio is chief operating officer while Nigel King, formerly director of systems at Nortel’s fixed wireless division, leads a development team of 25 engineers. Also in the team is Christopher Cabot as chief financial officer. Cabot was part of telecommunications corporate finance groups at Lehman Brothers and Alex Brown.