PE Week Wire, Dec. 14, 2006

I typically fall back on “Just Linking Around” columns when I’m faced with major deadlines on the print side. No real change today, except I don’t feel quite as lazy since the first two links are to things I wrote (plus, there was lots of news to compile this morning). Anyway, happy linking:

*** If you plan to drop $600 on a Playstation 3 this holiday season, don’t view it as an investment in your child’s future delinquency. Just view it as an investment in your child’s future. After all, they could become a regular on the Major League Gaming circuit, which just scored $25 million from Oak Investment Partners.

*** BusinessWeek is reporting that the Blackstone/KKR/etc. consortium “walked away” from the Clear Channel bidding, once the price got too high. BusinessWeek is wrong.

*** Alex Haislip says that Black-Scholes is dead. Who’s to blame? Google.

*** Clint Chao of Formative Ventures does what GPs rarely do: Gives some advice to LPs. And it’s worth heeding.

*** PricewaterhouseCoopers says that 2007 could set a new record for M&A volume, with both strategic buyers and private equity firms expected to further accelerate activity.” I don’t usually link to press releases, but this one is fairly detailed.

*** Matt Marshall’s take on Sean Parker joining The Founders Fund. As a related note, expect the firm to target between $120 million and $150 million for its next fund.

*** The SEC has proposed revisions to the criteria for qualifying as accredited investors, which allows people to invest as individuals in private equity or hedge funds. It used to be $1 million of net worth or $200,000+ of annual income. It would now be $2.5 million in net worth, not counting the real estate value of one’s primary residence.

*** Al Shugart, a disk drive pioneer who later ran his own venture capital shop, has passed away at the age of 76.

Top Three

Quantas Airways Ltd., Australia’s largest airline company, has accepted a sweetened buyout offer from Macquarie Bank and Texas Pacific Group. The revised deal is worth Au$5.60 per share, whereas a previously-rejected offer came in at Au$5.50 per share, for a total value of around Au$11.2 billion.

Ophthonix Inc., a San Diego-based developer of vision assessment and correction technologies, has raised $35.1 million in Series D funding. DAG Ventures led the deal, and was joined by return backers Enterprise Partners Venture Capital, Kleiner Perkins Caufield & Byers, Gund Investment Corporation, InterWest Partners, Trex Enterprises and Wasatch Advisors’ Cross Creek Capital Fund. The company now has raised over $80 million in total VC funding.

Diamond Castle Holdings has closed its inaugural fund with $1.825 billion in capital commitments. The firm was founded in 2004 by former members of DLJ Merchant Banking, and already has committed $670 million of the fund capital to six companies: Catamount Energy Corp, Harbor Point Ltd., Buckeye Cash Checking, NES Rentals Holdings, PRC LLC and Bonten Media Group.

VC Deals

China Communications Services Corporation Ltd., a provider of telecom support services in China, has received a $50 million strategic investment from Cisco. CCS recently spun out from China Telecom, and is publicly traded in Hong Kong.

Kamino Logistics Group Ltd., a provider of global logistics and freight forwarding services, has raised $21 million in private equity funding from Solis Capital Partners of Newport Beach, California.

REVA Electric Car Company Pvt Ltd., an India-based electric car maker, has raised $20 million in new venture capital funding co-led by Draper Fisher Jurvetson and the Global Environment Fund. Edelweiss Capital advised REVA on the deal.

Glam Media Inc., a Brisbane, Calif.-based operator of a women’s fashion content and retail website, has raised $18.5 million in Series C funding, according to VentureWire. DAG Ventures led the deal, and was joined by return backers Accel Partners, Draper Fisher Jurvetson, Information Capital and WaldenVC.

Mercado Software Inc., a Pleasanton, Calif.-based provider of e-commerce search, navigation, and merchandising solutions, has raised $11.5 million in new funding. The Challenge Fund (Israel) and Consensus Group (UK) co-led the deal, and were joined by return backers Pitango Venture Capital, Eucalyptus, Star Ventures and Valley Venture Capital (f.k.a. Mofet). The deal includes a credit line from Lighthouse Capital Partners. The company has now raised over $70 million in total private funding.

Novazone Inc., a Livermore, Calif.-based provider of clean technology solutions for food and water, has raised $7 million in Series B funding. Chrysalix Energy led the deal, and was joined by return backers Foundation Capital and Grauer Capital. The company’s technologies include ozone-based applications for cold storage and disinfection.

EnviroTower, a Toronto-based provider physical water conditioning technology, has raised Cnd$8.5 million in new venture capital funding co-led by NGEN Partners and return backer XPV Capital.

HyperQuality Inc., a Seattle-based contact center quality assurance firm, has raised $10 million in Series B funding. Ignition Partners led the deal, and was joined by return backers Miramar Venture Partners, Rustic Canyon, and Divergent Ventures.

World Energy Labs, a San Francisco–based electrochemical diagnostic software and instrumentation company serving global markets in energy, life sciences and structural corrosion analysis, has raised $5.4 million in Series B funding from Expansion Capital Partners.

ConjuGon Inc., a Madison, Wis.-based drug company focused on the treatment of antibiotic resistant bacterial infections, has raised $3.3 million in VC funding. Rosetta Partners led the deal, and was joined by returning angel backer Wisconsin Investment Partners.

ERA Biotech, a Barcelona, Spain-based company focused on improving the manufacturing of of recombinant proteins in cultured cells has raised Euro 1.4 million in convertible note funding. Participants included Invertec, Reus Capital Riesgo, Talde Capial II and Uninvest.

Buyout Deals

Windstream Corp. (NYSE: WIN), the company formed by the combination of Alltel Corp.’s fixed-line phone unit and Valor Communications Group Inc., has agreed to sell its telephone directories publishing business to Welsh, Carson, Anderson & Stowe for an enterprise value of $525 million.

KKR and Permira have emerged as the favorites to win the auction for German broadcaster for ProSiebenSat.1 Media, according to multiple press reports. The deal would value ProSiebenSat.1 at around Euro 6 billion.

EMI Group PLC (LSE: EMI) has ended talks to be acquired by Permira. According to Bloomberg, this is Permira’s fifth straight failed attempt to acquire a publicly-traded company in Britain. The previous four were Britvic PLC, McCarthy & Stone PLC, De Vere Group PLC, W.H. Smith PLC and HMV Group PLC.

Carousel Capital has acquired Axium Healthcare Pharmacy Inc., a Lake Mary, Fla.-based provider of specialty pharmacy services. No financial terms were disclosed for the deal, which includes participation by senior company management. Allied Capital provided financing.

Dunedin Capital Partners has agreed to acquire the WFEL business of Hamilton Sundstrand, a subsidiary of United Technologies Corp. (NYSE: UTX). No financial terms were disclosed. WFEL is a UK-based designer and manufacturer of tactical military bridges.

MuniServices LLC, a Fresno, Calif.-based provider of revenue enhancement services to state and local governments, has completed its management buyout from parent company MBIA (NYSE: MBI). The Central Valley Fund provided $4.5 million of senior subordinated notes to help finance the transaction. Seidler Capital advised management.

Skyview Capital has agreed to acquire the U.S. photocopier business of TRM Corp. for $9.2 million.

PE-Backed IPOs

NewStar Financial Inc., a Boston-based provider of debt financing for middle-market businesses, priced 12 million common shares at $17 per share (forecast of 11 million shares at $15-$17), for an IPO take of approximately $204 million. It will trade on the Nasdaq under ticker symbol NEWS, while underwriters included Goldman Sachs, Morgan Stanley, Citigroup and Wachovia Securities. Shareholders include Capital Z Partners, Corsair Capital, JPMorgan Capital and Northwestern Mutual Life Insurance Co.

MEDecision Inc., a Wayne, Pa.-based provider of medical management solutions to healthcare payers and regional health information organizations, priced 4.7 million common shares at $10 per share, for an IPO take of approximately $47 million. This comes in below an already-reduced forecast of 5.5 million shares at between $11.50 and $13.50 per share. It will trade on the Nasdaq under ticker symbol MEDE, while Cowen & Co. and CIBC world Markets served as co-lead underwriters. Medecision has raised $38.4 million in VC funding from firms like Grotech Capital Group, Stockwell Fund, Liberty Ventures, DWS Investment and Britannia Business Expansion Fund.

Obagi Medical Products Inc., a Long Beach, Calif.-based pharma company focused on the aesthetic and therapeutic skin health markets, priced 5.35 million common shares at $11 per share ($13-$15 forecast), for an IPO take of approximately $58.9 million. It will trade on the Nasdaq under ticker symbol OMPI, whiled JPMorgan served as lead underwriter. Stonginton Partners was listed as the company’s majority shareholder.

Oncogenex Technologies Inc., a Vancouver-based drug company focused on cancer therapeutics, has filed for a $48 million IPO. It plans to trade on both the Nasdaq and TSX, with RBC Capital Markets serving as lead underwriter. Shareholders include Ventures West, BDC Venture Capital, GrowthWorks, HIG Capital and Milestone Medica Corp.

PE-Backed M&A

Precision Parts International, a Rochester Hills, Mich.-based manufacturer of metal-formed components, has acquired Merit Gear Corp., an Antigo, Wis.-based precision gear maker. No financial terms were disclosed. PPI is owned by First Atlantic Capital, while Merit Gear was represented on the deal by Emory & Co.

GroSolar, a White River Junction, Vt.–based solar energy company, has acquired Energy Outfitters, a Grass Points, Ore.-based solar energy distribution company. No financial terms were disclosed. GroSolar has raised venture capital funding from Calvert Social Venture Partners and SJF Ventures.

Great Hill Partners has agreed to acquire a minority interest in Freightquote Inc., a Lenexa, Kan.-based provider of freight transportation information, according to VentureWire and a Federal Trade Commission report. Freightquote has raised around $45 million in VC funding since its 1998 inception, from firms like Menlo Ventures and Morgan Stanley Venture Partners. It also recently had a lawsuit dismissed with prejudice, which it had filed against the Department of Homeland Security.

PE Exits

Neiman Marcus Group has completed its sale of hand-bag maker Kate Spade to Liz Claiborne Inc. (NYSE: LIZ) for $124 million (including to-be-retired debt). Neiman Marcus was acquired last year in a $5.1 billion public-to-private buyout by Texas Pacific Group and Warburg Pincus.

Firms & Funds

SAM Private Equity announced that its team has agreed to buy itself out, and spin off into a new independent entity called Emerald Technology Ventures. The Switzerland-based venture capital firm will continue to focus on clean-tech opportunities, with former parent company Robeco to serve as majority shareholder.

Shackleton Ventures Ltd. has formed as a direct private equity secondaries firm, and has acquired the secondaries business formerly owned by AIM-listed Strathdon Investments PLC. Shackleton managing partner Hugh Stewart previously ran the Strathdon business.

Human Resources

Richard Markee has joined Bear Stearns Merchant Banking as an operating partner focused on the retail market. He most recently served as vice chairman of Toys ‘R’ Us, and before that was vice president of merchandising with Target.

Karen Chung has joined The Barish Fund as a director in the firm’s Wellesley, Mass. office. She previously was TA Associates.

Philippe Botteri has joined Bessemer Venture Partners as a senior associate in the firm’s Menlo Park, Calif. office. He previously spent eight years with McKinsey & Co., including as a senior engagement manager in its Silicon Valley high-tech practice.

Brian Lipson has joined real estate private equity firm Rubenstein Partners as a managing principal, effective January 2. He previously served as CIO of Trizec Properties from January 2005 through the closing of Trizec’s October 2006 acquisition by Brookfield Properties and the Blackstone Group.

Robert Blumenfeld has joined Bryant Park Capital Valuation Services, an affiliate of Bryant Park Capital, as a managing director. He previously was president of ARG Recovery, a valuation and business consulting advisory.


Correction: Softscope Medical Technologies, which raised $4 million in Series A funding, had its name misspelled in yesterday’s edition.