PE Week Wire, Dec. 5, 2006

The 4th Annual Internship Rodeo has begun, for first-year MBA candidates in search of summer internships in the private equity market. Thirty-four firms are participating this year, including shops that focus on venture capital, growth equity, leveraged buyouts, funds-of-funds, real estate, investment banking, M&A and secondary transactions.

The listings can be found in the MBA Forum section of, under the Internship folder of the Employment section. To enter the MBA Forum, you must have an Access Code specific to your business school. If you do not have such a code, please contact the head of your PE/VC Club. If that fails, you also can email us (but please ask them first).

If you are a private equity firm that still wants to offer a summer internship, please send me an email with your firm type, firm location and any other relevant info. Also let me know if you want your firm name disclosed. I will accept/post new listings through the end of this week.

DealMakers Survey

If you’re a professional who already has a job (i.e., no need for internship rodeos), I ask that you please take a few moments to participate in the Bi-Annual ACG/Thomson DealMakers Survey. The Survey asks you about the current and projected deal-making environment, and explores whether the booming M&A market will continue in the first-half of 2007. The Survey will be live until December 15, with the results being announced here, in Buyouts Magazine and on the ACG website in early January.

It only takes five minutes to complete, with mass participation being the key to robust data. I thank you in advance. You can access the Survey at:

New at

• Alex Haislip on Google’s waffling over its promise not to develop a corporate VC program. Alex also provides a bunch of interesting VC-related video links.

• Ari Nathanson on Oversubscription Overkill

• I provide some background to yesterday’s “news” that a private equity trade association is being formed.

• Mark Cecil wants to know how important it is to Diversify Your LP Base

• And, as always, news and analysis updated throughout the day…

Top Three

Kyphon Inc. (Nasdaq: KYPH) has agreed to acquire St. Francis Medical Technologies Inc., an Alameda, Calif.-based developer of motion-preserving technologies and procedures for orthopedic and neurological spine surgery. The deal includes a $525 million upfront cash payment at closing, plus the possibility of revenue-based earn-outs totaling $200 million. St. Francis had been in registration for a $86.25 million IPO, and had raised over $27 million in VC funding from firms like U.S. Venture Partners, Versant Ventures and Essex Woodlands Health Ventures.

Fremont Partners and Texas Pacific Group have agreed to acquire Nashville, Tenn.-based insurance company Direct General Corp. (NasdaqGS: DRCT). The total transaction price is $628.2 million (including leverage), with Direct General shareholders to receive $21.25 per outstanding share (28.71% premium to yesterday’s closing price). SunTrust Robinson Humphrey served as financial advisor to the special committee of Direct General’s board of directors in connection and provided a fairness opinion to Direct General, while Bear, Stearns acted as financial advisor to Fremont and TPG.

Kenneth Leet has agreed to join Cerberus Capital Management as president of European operations. Leet is a veteran Goldman Sachs banker who most recently was serving as senior advisor to Ford Motor Co. He will remain as a special advisor to Ford.

VC Deals

Cathay Industrial Biotech Ltd., a Shanghai, China-based developer of new molecules for use in nylons, fragrances, anticorrosive materials and automobile powder coating, has raised $52 million in Series B funding. New backers include Goldman Sachs, Gramineae Holdings Co., GM Inv*stment Co. and New Horizon Evergreen Inv*stment Co. Returning shareholders include BioVeda China, HBM BioVentures and Pudong Science and Technology Inv*stments. The company raised $26 million in Series A funding earlier this year.

Cylex Inc., a Columbia, Md.-based developer of in vitro diagnostic products for measuring immune activity, has held an $18.4 million first close on its third round of VC funding. Channel Medical Partners and Canaan Partners co-led the deal, and were joined by First Analysis and return backers Cahn Medical Technologies, Calvert Venture Fund, Chesapeake Emerging Opportunities, Early Stage Enterprises, NJTC Venture Fund, Roche Venture Fund and The Washington Dinner Club.

Replay Solutions, a Foster City, Calif.–based provider of testing automation solutions for software development, has raised around $4.12 million in Series A funding co-led by Hummer Winblad Venture Partners and Partech International.

Xceleron Ltd., a UK-based provider of drug development services to the life-science market, has raised Gbp2 million in second-round funding. Return backers include Close Ventures and Foursome Inv*stments. It had raised Gbp2 million from Close and Foursome in April 2005.

Solace Systems, an Ottawa-based provider of value-added services routing solutions, has raised an undisclosed amount of Series C funding. Genuity Capital Partners led deal, and was joined by Teachers’ Private Capital.

Buyout Deals

3M (NYSE: MMM) has completed the sale of its Asia-Pacific pharmaceutical operations to Ironbridge Capital and Archer Capital (both of Australia) for $349 million.

Linsalata Capital Partners has recapitalized Wellborn Forest Products Inc., an Alexander City, Ala.-based maker of semi-custom hardwood cabinets for the residential market throughout the eastern United States. No financial terms were disclosed for the deal, which was done in partnership with Wellborn president and CEO Tim Wellborn.

The Riverside Company has acquired Medic First Aid International Inc., a Eugene, Ore.-based provider of CPR and first-aid emergency care training programs. No financial terms were disclosed.

Butler Capital Partners has agreed to acquire the European industrial fibers business of Rhodia SA for an undisclosed amount.

Dubai International Capital reportedly is in talks with Liverpool Football Club and Athletic Grounds PLC about a potential investment. The British football club is estimated to be worth around Gbp450 million.

PE-Backed IPOs

Salamander Energy PLC, a UK-based upstream oil and gas exploration and production company focused on Southeast Asia, has raised $200 million via an IPO on the London Stock Exchange. It has a market capitalization of $405 million. Salamander raised $22.6 million in VC funding from 3i Group in September 2005, in exchange for a 15% ownership position.

CompBenefits Corp., a Roswell, Ga.-based provider of dental and vision benefit plans, has filed for a $150 million IPO. It plans to trade on the Nasdaq under ticker symbol CBEN, with Goldman Sachs and Banc of America Securities serving as co-lead underwriters. Shareholders include TA Associates (24.05% pre-IPO stake), GTCR (19.25%), Nautic Partners (11.49%) and Wolverine Investment (10.42%).

Pegas Nonwovens, a Czech artificial fabrics maker, plans to raise up to Euro 264 million via an IPO in both Prague and Warsaw. Pamplona Capital Partners is the company’s majority shareholder, while ING is serving as lead underwriter.

PE Exits

Reed Business Information, a unit of Reed Elsevier, has agreed to acquire Inc., a Watertown, Mass.–based online lead generation company. No financial terms were disclosed. BuyerZone had raised over $26 million in VC funding since 1999, from firms like Commonwealth Capital Ventures, Flagship Ventures, Womens Growth Capital Fund, BancBoston Ventures and Bessemer Venture Partners. The Jordan, Edmiston Group advised RBI on the deal, while BuyerZone was advised by Jefferies Broadview.

Abertis Infraestructuras SA has agreed to acquire a 32% stake in listed French satellite company Eutelsat SA for Euro 1.07 billion. The deal is being supported by Eutelsat shareholders Texas Pacific Group, Spectrum Equity Investors, GS Capital Partners and Cinven.

PE-Backed M&A

Arcapita has invested $68 million to acquire and merge Atlanta-based 3P Delivery Inc. and Portland, Ore.-based General Transportation Services Inc., which both are asset-light providers of last-mile logistics services of heavy goods for major retailers in the U.S.Fortress Credit Corp. provided debt financing for the combined transaction, while EVE Partners served as financial advisor to 3P Delivery and Source Cos. served as financial advisor to

Independent Living Services Ltd., a Scotland-based provider of acute domiciliary care, has acquired Home Concern (Scotland) Ltd. No financial terms were disclosed for the deal, which was partially financed by ILS backers ISIS Equity Partners and Bank of Scotland.

Meritain Health Inc., an Amherst, N.Y.–based provider of health plan management services, has acquired Westport, Conn.-based health services holding company CBSA Performax. No financial terms were disclosed, except that goldman Sachs arranged financing. Meritan Health is a division of Caxton-Iseman portfolio company Prodigy Health Group.

Human Resources

Kelvin Liu has joined Invesco as a principal in the firm’s private equity fund-of-funds group. Liu spent the last seven years as director of North American operations for TIF Ventures, a $1.3 billion Singaporean fund-of-funds. Previously, he was the director of the National Science and Technology Board.

Frank Dejonckheere has joined Cogent Partners as a vice president in the firm’s New York office. He has eight years of private equity I-banking experience, primarily with Merrill Lynch and Citigroup in London.

Len Brooks has been named vice chairman of Trenwith Securities, the middle-market I-banking arm of Trenwith Group. He previously was head of UBS I-Bank’s global private equity placement group and group head of PaineWebber’s private capital group.

GE has named Michael Chen as president and CEO of its global media and communications unit. He previously was general manager for GE Aviation Services’ global airports and U.S. aviation group.

Chris Williams has joined GulfStar Group as a managing director. He previously was founder of Chris Williams Consulting.

CapitalSource announced that senior investment officer Eleanore Clarage will open and manage a new office in Cincinnati, Ohio.

Cezary Stypulkowski has joined JPMorgan as a managing director of Central and Eastern European I-banking. He previously served as CEO of insurance company PZU SA and, before that, as CEO of Bank Handlowy.

Nicholas Politan has joined the New York office of Gibson, Dunn & Crutcher LLP as a partner. He previously was co-chair of Bingham McCutchen’s project and structured finance group, and will continue to focus on domestic and cross-border energy-related transactions.