PE Week Wire, Dec. 13, 2006

I’ve run out of analogies to describe Pacific Corporate Group. So now I’ll just use an adjective: Dysfunctional.

For the uninitiated, PCG is a La Jolla, Calif.-based private equity consultant and fund-of-funds manager with an unparalleled ability to chase away top talent. Names like Mike Moy, Kelly DePonte, Scott Vollmer, Craig White and Peter Martenson litter its roster of dearly departed. Just this past September, managing directors Monte Brem, Tara Blackburn and Steve Moseley quit after being unable to resolve firm economics and governance issues with PCG chief Chris Bower. European managing director Michael Russell left soon after, and last month business development head Michael Underhill also resigned. The common thread here is Bower’s “King of the Castle” mentality, but that’s another stor! y for another time.

The story for this morning is that two more MDs are gone: David Scopelliti and Tom Keck. These two were cited by PCG as folks who would help right the ship in the wake of all those earlier departures, and by all indications they were helping to do the job. More than one ex-PCG pro had noted to me how things finally appeared to have stabilized (“Seems like PCG is on life number nine.”).

Multiple sources tell me that both Scopelliti and Keck were pushed, after expressing serious reservations over many of the same issues that had caused the September exits. This means that they are not under any non-compete agreements, unlike Brem, Blackburn, etc.

It also means that PCG is now without two of the four members of the management committee it created just two months ago. Again, dysfunctional. PCG advisory clients already were expressing serious concerns over the turnover – Oregon even issued a new RFP – and the firm has now booted the very people designated to cure its ills. Any client who doesn’t now follow Oregon’s lead is either a fool or already on vacation.

Neither side is saying much. PCG claims that it does not expect these moves to have significant impact on its operations (perhaps it also no longer expects spring to follow winter), while Scopelliti and Keckwould would only confirm that the pair is no longer employed by PCG.

*** The “did the U.S. spy on Princess Diana” mystery has an odd private equity angle, with reports that any eavesdropping might actually have been aimed at onetime Diana beau – and former LBO kingpin – Teddy Forstmann. Either way, it’s more than a bit disturbing.

*** This space has detailed a bunch of recent departures at Apax Partners U.S., but today we’ve got an addition to announce: Peter Jeton has joined the firm as chief operating officer, after previously having served in a similar position with troubled Boston firm Heritage Partners.

*** Google remembers everything. That’s the lesson just learned by The Founders Fund, a Silicon Valley venture firm founded by former PayPal execs. The firm mistakenly posted a press release on its website, announcing the hiring of former Facebook, Plaxo and Napster whiz kid Sean Parker as a new managing partner. It pulled it down soon after, but the Google cache mechanism kept it online long enough for blog ValleyWag to find it yesterday… A revised press release came out late last night.

*** Venture Capital Journal is putting the finishing touches on its year-end issue, and per usual is soliciting one-line predictions about the 2007 venture capital market. Either pithyor prescient will work, with the best ones being a combination of the two. Just reply to this email with your predicition…

*** I’ve got a couple of other stories I’m working on, but don’t have quite ready to print. I’ll post them at later today.

New at

Bart Schachter of Blueprint Ventures on the Next/Last Great Venture Exit.

John Neuner of Harris Williams & Co. on Contrarian Plays.

Feedback on yesterday’s column about the proposed Texas Teachers’ fund.

Alex Haislip links around Silicon Valley.

As always, news and analysis updated throughout the day…

Top Three

Quantas Airways Ltd., Australia’s largest airline company, has rejected an Au$10.9 billion buyout offer from Macquarie Bank and Texas Pacific Group.

Electrawinds NV, a Belgium-based renewable energy company, has raised Euro 30 million from 3i Group, in exchange for a minority ownership position.

IPG Photonics Corp., an Oxford, Mass.-based maker of fiber lasers and amplifiers, priced nine million common shares at $16.50 per share ($13.50-$15.50 forecast), for an IPO take of approximately $148.5 million. It will trade on the Nasdaq under ticker symbol IPGP, while Merrill Lynch and Lehman Brothers served as co-lead underwriters. Private equity backers include TA Associates, Merrill Lynch, Apax Partners, Winston Partners, Robertson Stephens and Marconi Ventures.

VC Deals

Venda Ltd., a London-based provider of managed ecommerce and CRM solutions, has raised $20 million in Series A funding. Investor Growth Capital led the deal, and was joined by returning seed backer GF Private Equity Group.

Vativ Technologies Inc., a San Diego-based provider of DSP-based semiconductor solutions for the digital television market segment, has raised $10 million in Series C funding. Intel Capital led the deal, and was joined by fellow return backers Redpoint Ventures, Mission Ventures, InnoCal Venture Capital, Forrest Binkley Brown and the Viterbi Group. Vativ has raised $37 million in total VC funding.

Scanbuy Inc., a New York-based provider of wireless commerce solutions, has raised $9 million in Series B funding from firms like Longworth Venture Partners, Masthead Venture Partners and Hudson Venture Partners. The company also named Jonathan Bulkeley, former CEO of, as its new CEO.

Primaeva Medical Inc., a Palo Alto, Calif.-based developer of a dermatological device to remodel model skin tissue and remove/reduce wrinkles, has raised $7 million in Series B funding from insiders Delphi Ventures and Frazier Healthcare Ventures, according to VentureWire.

Softscape Medical Technologies Inc., a St. Louis Park, Minn.-based developer of medical devices to improve endoscopic procedures, has raised $4 million in Series A funding co-led by Thomas McNerney & Partners and Accuitive Medical Ventures.

TrialPay Inc., a San Jose, Calif.-based developer of a payment platform that allows a company’s customers to access premium content and services by participating in relevant offers, has raised $3.1 million in Series A funding led by Battery Ventures, according to a regulatory filing.

Phreesia Inc., a New York–based provider of medical patient self-service intake and education systems, has raised around $3 million in Series A funding. HLM Venture Partners led the deal, and was joined by Long River Ventures.

mVisible Technologies Inc., a Deerfield Beach, Fla.-based provider of mobile content delivery solutions, has secured $2.7 million of a $3.2 million Series A round led by Enterprise Development Corp. of Boca Raton, according to a regulatory filing.

Buyout Deals

Silver Lake Partners and Texas Pacific Group have agreed to acquire travel reservations company Sabre Holdings (NYSE: TSG) for $5 billion, including around $550 million in assumed debt. Sabre shareholders will receive $32.75 per share, or a 30% premium over the company’s average closing pricein the 60 days ending December

Celanese Corp. (NYSE: CE) has agreed to sell its oxo products and derivatives businesses — including European Oxo GmbH, a joint venture between Celanese AG and Degussa AG — to Advent International for Euro 480 million. The oxo derivative chemicals business of Celanese has approximately 1,100 employees, earns revenues of approximately $700 million and has EBITDA margins of about 10 percent. EOXO, which has approximately 200 employees, has non-consolidated revenues of approximately $700 million and contributes $5 million to $10 million of equity earnings to Celanese annually.

Olympus Partners has agreed to buy WII Components Inc. from Behrman Capital for an enterprise value of $295.5 million. WII Components is a St. Cloud, Minn.-based outsourced manufacturer of hardwood and engineered wood doors and components to the North American kitchen and bath cabinet market. Behrman acquired a majority stake in April 2003.

Countrywide PLC, a U.K. property and financial services company, announced that it has agreed to a Gbp941 million management buyout offer sponsored by 3i Group.

Trivest Partners has sponsored a recapitalization of Box-Board Products Inc., a Greensboro, N.C.-based manufacturer of custom corrugated products. No financial terms were disclosed. Box-Board has nearly $50 million in annual revenue.

The Chandler family is speaking with private equity firms about bidding on at least part of Tribune Co., according to The New York Times.

Lone Star Steakhouse (Nasdaq: STAR) shareholders approved a $27.35 per share buyout offer from Dallas-based Lone Star Funds.

iPay Technologies, an Elizabethtown, Ky.–based provider of Internet bill payment services to community financial institutions, has completed a recapitalization co-sponsored by Spectrum Equity Investors and Bain Capital Ventures. No financial terms were disclosed. William Blair & Co. advised iPay on the deal, while leveraged financing was provided by CIT Lending Services.

Segulah has acquired Isaberg Rapid, a Swedish maker of staples and staplers, from Industrivarden. No financial terms were disclosed, except that Isaberg Rapid had 2005 revenue of around US$131 million and EBITDA of US$8.5 million.

Citigroup Venture Capital International and Partners in Life Sciences have completed their acquisition of Turkish drug production company Biofarma from Selcuklu Holding and the Oncel Family. Garanti Bankasi provided leveraged financing, but no additional terms were disclosed.

VCG Inc., a Roswell, Ga.-based provider of staffing software, has completed a $17.55 million recapitalization, according to a regulatory filing. Remaining shareholders include Jefferson Capital Partners, C&B Capital and Equity South Partners.

Moneta Energy Services Ltd., a Canadian gas marketing startup, has raised an undisclosed amount of initial capital from Kestrel Energy Partners LLC, an energy investment firm funded by Yorktown Partners.

PE-Backed IPOs

Akrion Inc., an Allentown, Pa.-based provider of batch-immersion and single-wafer wet cleaning systems for the semiconductor industry, has withdrawn registration for a proposed $50 million IPO. The company blamed “current market conditions,” even though the original S-1 form had been filed in 2004. The company lists Sunrise Capital Partners and Westar Capital Partners as significant shareholders.

PE-Backed M&A

DemandTec Inc., a San Carlos, Calif.-based provider of consumer-centric merchandising software, has acquired TradePoint Solutions Inc., a Pleasanton, Calif.-based provider of online deal management software linking manufacturers, sales agencies and retailers on one platform. No financial terms were disclosed. DemandTec has raised around $50 million in total VC funding since 1999 — including a 2003 infusion at a $166.8 million post-money valuation – from firms like Altos Ventures, Athena Technology Ventures, Cargill Ventures and Crosspoint Venture Partners.

Primavera Systems Inc., a Bala Cynwyd, Pa.-based provider of project and portfolio management software, has acquired two companies: ProSight Inc., a Portland, Ore.-based provider of portfolio analysis solutions, and Pertmaster Ltd., a UK-based risk analysis and mitigation solutions company. No financial terms were disclosed. Francisco Partners and Insight Venture Partners acquired a majority stake in Primavera earlier this year, while ProSight has raised VC funding from such firms as BRM Capital, Genesis Partners, Giza Venture Capital, Prism Capital and Sequoia Capital.

Apex Companies LLC, a Rockville, Md.-based environmental services firm, has acquired The SI Companies, an Arlington, Ill.-based environmental consulting and water utility maintenance firm. No financial terms were disclosed. Apex is a portfolio company of Blue Point Capital Partners.

PE Exits

JPMorgan Partners has agreed to sell around 3.01 million shares of (Nasdaq: FLWS) back to the company. The repurchase price is $5.21 per share (7% discount to last Friday’s closing price), or around $15.69 million.

Micron Technology Inc. (NYSE: MU) has acquired the Image Sensor business of Avago Technologies for approximately $53 million, plus the possibility of additional earn-outs. Avago is a San Jose, Calif.-based semiconductor company owned by KKR and Silver Lake Partners.

Other Deals

Abbott Labs (NYSE: ABT) and Enanta Pharmaceuticals have signed a global agreement to jointly develop and commercialize hepatitis C virus (HCV) NS3 and NS3/4A protease inhibitors. Upon closing, Entanta will receive a $57 million upfront payment, which includes both cash and an equity investment, while the entire deal could be worth more than $250 million. Enanta is a Watertown, Mass.-based drug developer that has raised around $90 million in VC funding from firms like Advent International, AlpInvest Partners, Alpha Associates, BioVentures Investors, Global Biomedical Partners, Lancet Capital, Oxford Bioscience Partners, TVM Capital and Wheatley Partners.

Human Resources

Sean Parker is joining The Founders Fund as a managing partner. Parker is a co-founder of such companies as Facebook, Napster and Plaxo.

Kristen Mary has joined the London office of mid-market private equity firm GI Partners as director of investor relations. She previously was a partner with MVision Private Equity Advisers.

Srinath Narayanan has joined Canaccord Adams as a principal in the firm’s West Coast technology I-banking group. He previously worked for Kaufman Brothers.