G.P. Texas Pacific, Kleiner Perkins, Bain Form Web Co. –

In yet another marriage of venture and buyout skills, the partners at Texas Pacific Group this month teamed with one of Silicon Alley’s most respected and prestigious venture capital firms, Kleiner Perkins Caufield & Beyers, and Boston consulting firm Bain & Co., to form eVolution Global Partners LLC.

Executives at Texas Pacific would not disclose terms of the new venture.

eVolution is dedicated to helping large international corporations implement Web initiatives through connections with technology companies, service companies and international capital providers. The firm will focus its initiatives in Europe, Asia, Latin America and the United States. A source close to Texas Pacific said the new company has a couple of deals “in the pipeline” but declined to give further details. This is Texas Pacific’s and Kleiner Perkin’s second co-investment this month. The two firms were part of a group of investors that took private Seagate Technology Inc., a maker of computer disk drives (See story p. 1).

Another recent venture that has seen a traditional buyout firm team up with a VC firm includes Palo Alto, Calif.-based Accel Partner’s partnership with executives at Kohlberg Kravis Roberts & Co. to form Accel-KKR Internet Co., which also is aimed at large, “old-economy” companies (BUYOUTS March 6, 2000, p. 3).

All About Dotcoms

True to its new-found enthusiasm for technology, Texas Pacific is hitting the technology pavement again this month. The firm invested $175 million in Convergent Communications, a business-to-business provider of broadband based services, with affiliates of Sandler Capital Management. The deal gives Texas Pacific approximately 25% stake in the company. Convergent was advised by Warburg Dillon Read, LLC.

Under the terms of the deal, Texas Pacific and Sandler Capital will purchase $175 million of newly issued 8% convertible preferred stock, which is convertible into common stock at a price of $13 per share. The investors will receive 700,000 warrant exercisable at $20 per share and 1.17 million warrants exercisable at $25 per share. Two Texas Pacific partners and one other investor will be represented on the company’s board of directors.

Convergent Communications, a provider of voice and data network services, is based in Colorado and had annual revenues of $160 million last year.

“The company already has some good built-in assets, very strong customer base that can help leverage the company into a much higher margin of products,” said Jeff Shaw, a partner at Texas Pacific. “We saw a lot of interesting value with the company and with its new CEO, who has a very strong background within the industry, we became very excited about the prospects for the company,” said Shaw. Convergent this month announced Joseph Zell as its new president and chief executive officer.

Shaw said equity for the fund came out of its third fund and stapled fund, TPG Partners III LP and T3 Partners LP. Those funds are approximately 20% invested, said Shaw.

Texas Pacific was founded in 1993 and has offices in Fort Worth, Texas and San Francisco, Calif.