The sky is gray, I’ve been named Person of the Year (or was it you?) and a much-needed vacation is just five business days away. In other words, it’s time for the final Monday Mouth-Off of 2006:
First up are a bunch of responses to last Tuesday’s column, about that proposed $600 million direct VC allocation from the Teacher Retirement System of Texas. Philip writes: “TRS has fiduciary responsibilities, and therefore, if TRS can show that direct investing is in the best interests of the members of the state retirement system, then they should be involved in direct investing. If they can’t, then they shouldn’t. Since they have no record, I can see the plaintiffs’ lawyers lining up to cash in after a disastrous effort. At best, they should start with an extremely small direct investing program to demonstrate a true track record, and then gradually build the program through time. The problem with that approach is that it wouldn’t get money to work fast enough for the politicians.”
NCD: “At the end of the day, this endeavor will only be as successful as the people who are attracted to run it. How many exceptional GPs are going to jump up and down to work at a political slush fund with implicit pressure to put dollars to work in the predecessor political slush fund? I’m sure there will be an ‘independent’ board of directors over-lording these decisions too, composed of those whose credentials include being political hacks and big campaign donors. Your gut on this one is right. . .”
Jeremy: “What you describe as Stephen Straus’s idea of an in-state fund of funds has been done in Iowa, Michigan, Utah and Arkansas (at least). Typically, the state passes legislation authorizing the program and appointing a manager and incetivizes investors by offering up state tax credits as a guarantee of a negotiated return to the investor.The investor class in a lot of these deals is more typically someone seeking lender-like returns (because the state will not guarantee through tax credits more than a debt-like return), but I can imaginea part guaranteed, part non-guaranteed (the additional upside) return with a small carry (because it’s a fund of funds) to the manager. Maybe this is exactly what Straus has proposed (I’m not familiar), but it’s been done, in at least one ca! se, by Texas’ neighbor to the east.”
*** Brian writes in on a link to Alex Haislip’s claim that Google has killed Black-Scholes: “I understand that Google’s program is somewhat unique, but seriously, Google killed Black-Scholes by “creating a market for stock options?” Are we just ignoring the CBOE and every other options exchange on the planet and giving Google full credit for the idea of trading derivatives? I don’t mean to be antagonistic, but I’m just tired of people reading way too much into what Google is doing, and I’ll bet Google is as well.” You’re not alone Brian. You can follow the conversation at peHUB.com.
*** More than a dozen Australians wrote in to let me know that airline company Qantas is spelled without a “u.” As Jeffrey said: “It may sound petty, but Qantas is an issue of national pride here in Australia – as is the spelling of its name.”
*** A bunch of emails about the continued troubles at PCG. Larry writes: “You hit this one square on the head, as you have been for over a year. I wish there was video of the PCG spokesman saying that losing Scopelleti and Keck won’t have any ‘significant impact on its operations.’ No way he could have pulled that off with a straight face.”
Jarvis has a question about my statement that “Any client who doesn’t now follow Oregon’s lead is either a fool or already on vacation.” He writes: “Which category do you think New York City will fall into?” I shudder to think…
*** Finally, an important administrative note. Longtime readers will remember that the Wire used to come from a slightly different email address: Daniel.primack@tfn.com. That account – and all @tfn.com accounts – is being officially retired on Wednesday. If you continue to use it for white-listing purposes or to contact me, please change to the Daniel.primack@thomson.com address. Thanks…
New at www.peHUB.com:
Amanda Williams Palmer, editor of European Venture Capital Journal, joins the Editorial Blogging effort. She argues that European VCs spend less on their homerun portfolio companies than do U.S. VCs.
Dennis Shelly on Far-REACHing Chemical Regulations…
New event listings in our Calendar Section.
And, as always, news and analysis updated throughout the day…
Top Three
Biomet Inc. (Nasdaq: BMET), a Warsaw, Ind.–based maker of musculoskeletal medical products, has agreed to be acquired for around $10.9 billion by a private equity consortium that includes Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and Texas Pacific Group. Biomet shareholders would receive $44 per outstanding share, which is a 27% premium over Biomet’s stock price on April 3, which is when the first news reports of a possible sale emerged. Biomet confirmed three says later that it had retained Morgan Stanley as an advisor. www.biomet.com
Apollo Management has agreed to acquire real estate franchisor Realogy Corp. (NYSE: H) for $30 per share. The entire deal is valued at approximately $9 billion, including around $1.6 billion in assumed debt and approximately $750 million of other liabilities. Apollo is committing $2 billion of equity, and has secured leveraged financing commitments from JPMorgan, Credit Suisse and Bear Stearns. Evercore Partners served as financial advisor to Realogy. www.reology.com
Double Fusion Inc., a San Francisco-based in-game advertising network and technology provider, has raised $26 million in third-round funding. Norwest Venture Partners led the deal, and was joined by return backers Accel Partners and Jerusalem Venture Partners. Strategic participants included Time Warner, Hearst Corporation, IDG Ventures Pacific and Sedona Capital. www.doublefusion.com
VC Deals
GlassHouse Technologies Inc., a Framingham, Mass.-based provider of storage consulting and services, has expanded its Series D round to $33 million. It previously had raised around $24 million through the tranched-out round, with backers including GrandBanks Capital, Jafco, Kodiak Venture Partners, Paladin Capital Management, Shiprock Capital and Sigma Partners. www.glasshousetech.com
Attributor, a Redwood City, Calif.-based provider of online content licensing technology, said that it has raised more than $10 million over two rounds of funding from Sigma Partners, Selby Venture Partners, Draper Richards, First Round Capital and Amicus Capital. www.attributor.com
Predictive Biosciences, a Lexington, Mass.-based developer of biomarker and assay technology for cancer diagnostics, has raised $10 million in Series A funding co-led by Highland Capital Partners and IDG Ventures Boston. www.predictivebiosci.com
inQ Inc., an Agoura Hills, Calif.–based provider of outsourced online live chat sales solutions, has raised $7.75 million in Series C funding. Partech International and Emergence Capital were joined by return backers Dolphin Equity Partners, Hudson Ventures and Vertrue. www.inq.com
RemoteReality Corp., a Westborough, Mass.-based provider of intelligent omni video systems, has raised $7.3 million in Series A funding. Batelle Ventures and Chart Venture Partners co-led the deal, and were joined by Battelle affiliate fund Innovation Valley Partners. www.remoterealty.com
Solid Information Technology Ltd., a Cupertino, Calif.-based provider of a distributed data management platform, has raised Euro 4 million in new VC funding from existing shareholders Apax Partners and CapMan. www.solidtech.com
PixSense, a Santa Clara, Calif.-based provider of mobile photo and video management solutions, has raised $5.4 million in Series A funding co-led by ATA Ventures and Innovacom. www.pixsense.com
StarNet Interactive Inc., operator of tween girl community websites like KiddoNet, has raised $2.7 million in Series A funding led by Leo Capital. The deal follows StarNet’s spinout from Gteko Ltd., which recently was acquired by Microsoft. www.kiddonet.com
Buyout Deals
Court Square Capital Partners and Weston Presidio have agreed to acquire Denver-based specialty chemical manufacturer MacDermid Inc. (NYSE: MRD) for $35 per share. The transaction is valued at over $1.3 billion, including assumption or repayment of approximately $301 million of debt. Company chairman and CEO Daniel Leever is participating alongside the equity sponsors, while Court Square managing partner Joseph Silvestri is a director of MacDermid and also is involved in the merger. www.macdermid.com
Tenaska Power Fund has completed its $1.64 billion acquisition of six power plants from Constellation Energy (NYSE: CEG). www.tenaska.com
3i Group has agreed to acquire substantially all of Dutch careers classified and B2B magazine group VNU Business Media Europe from VNU, which is controlled by a private equity consortium that includes AlpInvest Partners, Blackstone Group, Carlyle Group, Hellman & Friedman, KKR and Thomas H. Lee Partners. No financial terms were disclosed www.vnu.com www.netratings.com
3i Group has acquired European chemical distributor Azelis Group from Cognetas (f.k.a. Electra Partners Europe) for Euro 315 million. Azelis was formed in 2001 via the merger of Novocherm (Italy) and Arnaud (France). www.3i.com www.azelis.com
The Blackstone Group and Reliance Communications may bid more than $14 billion for Indian cell phone carrier Hutchison Essar from Hong Kong-based Hutchison Telecommunications, according to Bloomberg.
Mason Wells has completed its acquisition of The Oilgear Co. (Nasdaq/NMS: OLGR) for $15.25 per share. Oilgear is a Milwaukee–based provider of technology for the design and production of fluid power components and electronic controls. www.oilgear.com
MidOcean Partners has sponsored a recapitalization of Totes-Isotoner Corp., a designer and marketer of branded cold-weather accessories like gloves and footwear. No financial terms were disclosed. MidOcean will take a majority ownership stake, while existing Totes shareholders Bruckmann, Rosser, Sherrill & Co. and company management will retain a minority stake. Credit Suisse advised Totes on the deal, and also provided financing. www.midoceanpartners.com www.totes-isotoner.com
Argus Capital Partners has acquired a majority stake in GTX Hanex Plastic, a Poland-based manufacturer of polyethylene terephthalate preforms, bottles and films, from Montluc Holdings. No financial terms were disclosed. www.arguscapitalgroup.com www.hanex.com.pl
Hermes Private Equity has acquired an undisclosed stake in French holiday park company Siblu Holdings Ltd. The deal is valued at Gbp100 million, with leverage being provided by Barclays Leveraged Finance. www.hermesprivateequity.co.uk
Industrial Opportunity Partners of Chicago has acquired the assets of Center Manufacturing Inc., a Byron Center, Mich.–based manufacturer of vehicle components, including welded tubular assemblies for motorcycles, all-terrain vehicles, automotive seat frames and automotive instrument panel tie bars. No financial terms were disclosed. www.centermfg.com
Primary Capital has sponsored a Gbp17.5 million refinancing for portfolio company Yo Sushi, a UK-based Japanese conveyor-belt restaurant brand. No financial terms were disclosed. www.primaryeurope.com
PE-Backed IPOs
Aruba Networks Inc., a Sunnyvale, Calif.-based provider of wireless LAN technology, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol ARUN, with Goldman Sachs and Lehman Brothers serving as co-lead underwriters. It has raised around $86 million in total VC funding from firms like Artis Capital Management, Matrix Partners, Sequoia Capital, Trinity Ventures and WK Technology Funds. www.arubanetworks.com
NorthernStar Natural Gas Inc., a Houston, Texas-based owner and operator of LNG receiving/importation terminals on the West Coast of the United States, has filed for a $125 million IPO. It plans to trade on the Nasdaq under tickler symbol NSNG, with Citigroup serving as sole underwriter. Shareholders include MatlinPatterson and Ritchie Capital. www.northernstar-ng.com
Claymont Steel Holdings Inc. (f.k.a. CitiSteel), a Claymont, Del.-based non-union maker of custom discrete steel plate, has increased the number of shares being offered in its planned IPO from 6.25 million to 7.25 million. It still plans to price the shares at between $15 and $17 each. H.I.G. Capital holds a 99.3% pre-IPO position. www.citisteel.com
PE-Backed M&A
Hemscott Group Ltd., a UK-based provider of financial data and investor relations services, has merged with i-Deal LLC, a UK-based provider of capital markets workflow solutions. The combined company has been named Ipreo LLC, and will have 2006 revenue of approximately $100 million. It also has agreed to acquire Marketpipe, a UK-based provider of fixed income new-issue software solutions. Hemscott went private earlier this year, following a buyout by Veronis Suhler Stevenson, while i-Deal backers include Citibank and Merrill Lynch. www.hemscottdata.com
Blonder Tongue Laboratories Inc. (AMEX: BDR) has sold its Texas-based private cable television business, BDR Broadband, to DirecPath, a joint venture between Hicks Holdings LLC and The DIRECTV Group Inc. The deal was valued at approximately $3.1 million. www.blondertongue.com
SunGard has acquired Chinese financial services software company Shanghai Fudan Kingstar Computer Co.for an undisclosed amount. SunGard was acquired last year in a public-to-private buyout by Silver Lake Partners, AlpInvest, Bain Capital, Blackstone Group, Goldman Sachs, HarbourVest Partners, KKR, Providence Equity Partners and Texas Pacific Group. www.sungard.com
Healthy Foods Holdings, a portfolio company of Catterton Partners, has agreed to acquire Van’s International Foods Inc., a Vernon, Calif.-based maker and marketer of Van’s Waffles. No financial terms were disclosed. www.vanswaffles.com www.cpequity.com
PE Exits
Audax Group has sold Dynisco LLC to Roper Industries Inc. (NYSE: ROP) for $243 million. Dynisco is a Franklin, Mass.-based supplier of software and test, measurement and control technologies utilized in process industries. Harris Williams & Co. advised Dynisco on the sale. www.dynisco.com
FedEx Corp. (NYSE: FDX) has acquired ANC Holdings Ltd., a UK-based domestic express transportation company, for Gbp120 million. Sellers include LDC, the private equity division of Lloyds TSB Group. www.fedex.com
Thermo Fisher Scientific Inc. (NYSE: TMO) has acquired Cohesive Technologies Inc., a Franklin, Mass.-based manufacturer of advanced sample extraction and liquid chromatography products. No financial terms were disclosed, except that Cohesive has annual revenue of approximately $15 million. Cohesive had raised around $35 million in total VC funding since 1995, including a $9.5 million infusion in 2003 at a post-money valuation of around $37 million. Backers include Berkshires Capital, Dauphin Capital Partners, Hudson Venture Partners, Mitsubishi Corp., Oxford Bioscience Partners and Psilos Group Managers. www.thermofisher.com www.cohesivetech.com
Firms & Funds
EQT has closed its fifth general fund with Euro 4.25 billion in capital commitments. The Sweden-based firm will use the vehicle to make control plays for mid-market companies in Northern Europe. MVision Private Equity Advisors served as placement agent. www.eqt.se
J.F. Lehman & Co. has closed its second fund with $335.1 million in capital commitments. The New York-based firm focuses on middle-market opportunities in the defense, aerospace and maritime industries. www.jflehman.com
Argus Capital Partners has closed its second fund with Euro 262.73 million in capital commitments. It will focus on private equity opportunities in Central and Eastern Europe. www.arguscapitalgroup.com
Brait Private Equity of South Africa this week is expected to close its fourth private equity fund at around $900 million (including $700m in LP commitments and $150m in leverage), according to LBO Wire. www.brait.com
Highway 12 Ventures of Boise, Idaho is raising up to $100 million for its second fund, according to a regulatory filing. www.highway12ventures.com
Human Resources
Goldman Sachs has named Marc Spilker as head of its private equity and hedge funds unit, according to Blloomberg. He previously served as co-head of U.S. equities trading and as global head of volatility trading. His predecessor in the new position – George Walker – left in May to run asset management for Lehman Brothers. www.gs.com
Dan Magder has joined tech M&A boutique Updata Capital as a vice president in the firm’s Reston, Va. Office. He previously was a director of corporate development with Capital One. www.updata.com
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Correction: Michael Brous, who recently joined Yahoo has as a senior business developer manager, previously was co-founder of Jerusalem Global Ventures.
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