PE Week Wire, Feb. 1, 2007

VSP Capital lives on. Ok, not really, but some of its former partners are still doing deals together.

The latest is San Francisco-based Doppleganger, a onetime VSP portfolio company (then known as Evil Twin Studios) that provides avatar-based IM environments for music fans in conjunction with entertainment and media companies. VSP sold its stake via a controversial auction to former venture partner Vince Vannelli, and the company subsequently raised $8.5 million in Series B funding from Trident Capital and return backers DFJ and Draper Richards.

Now Doppleganger is closing in on a $5 million Series C round led by Greycroft Partners, a New York-based firm whose West Coast office is run by former VSP partner Dana Settle. It’s already listed as a portfolio company on Greycroft’s website, while a regulatory filings shows that Vannelli remains a director. Other directs include Van Toffler of MTV Networks, Andreas Stavropoulos of DFJ and Evangelos Simoudis of Trident. I left voicemail messages with Settle, Vannelli and Doppleganger CEO Andrew Littlefield, but haven’t heard back.

In related news, it seems that the legal maelstrom related to VSP’s implosion are still going strong. Documents from the San Francisco Superior Court indicate that Joanna Rees-Gallanter and John Hamm (who allegedly lied to other partners about being in a relationship) are still engaged in suits and countersuits with both Vannelli and fellow ex-VSP pro Matt Crisp. And for the sake of forwarding addresses, Rees-Gallanter was last spotted in October giving away Wi-Fi routers, as part of her new gig overseeing U.S. operations for FON USA.

*** I often get emails from junior PE pros who want to know which public pension funds provide IRR information online. My guess is that they’re in charge of crunching the numbers to support the inevitable “top quartile” argument.

I’m actually going to put a comprehensive guide online later today, but have traditionally said that CalPERS has the best data. Maybe not the most accurate – I have no way to judge – but at least the most comprehensive. It’s worth noting, however, that the Pennsylvania Public School Employees’ Retirement Board might be the best for ongoing fundraising info.

When the PSERS board adopts fund commitment recommendations – as it did earlier this week – it releases lengthy reports on each new fund. This often includes fund targets, IRRs from past funds and investment strategy info. In the case of New Mountain Capital III, for example, it released eight pages worth of info. This reporter offers a sincere note of gratitude…

*** Earlier in the week, I mentioned that some well-known VCs had personally invested in a… ahem, adult toy company. Alex Haislip has the full scoop, including identities and an interview with one of them.

*** The answer to yesterday’s first quiz question was H.I.G. Capital. Congrats to the four of you who got it right.

*** So Carlyle bailed on Elkcorp when the bidding got too high. Not necessarily too surprising, particularly if you remember how Carlyle also left the SunGard consortium for similar reasons. Now the raise is on Blackstone with Equity Office. If it chooses to match or best Vornado again, expect some serious industry repercussions. Specifically, it will embolden dissident shareholders to challenge future public-to-private offers as “too low.” I’m not saying Blackstone should or shouldn’t do it (I don’t know their internal return projections), but their decision will matter beyond this one deal.

*** Speaking of feedback, thanks for the volumes of email and posted comments about how to improve both PE Week Wire and peHUB. Some very innovative ideas – and a bunch that were so obvious I had never thought about them. One quick note, however, for the handful of folks who requested a research archive of old issues: We have one. It’s at peHUB, and costs just $124 for the year. It includes all PE Week Wire back-issues, plus all peHUBH content. You can sign up with a credit card here.

Top Three

Vornado Realty Trust has again raised the ante for Equity Office Properties Trust, by raising its bid to $56 per share. This tops a revised $54 per share offer from The Blackstone Group, which originally had bid $48.50 per share. No matter who wins, the final sale price will represent the largest leveraged buyout in history.

The Carlyle Group has bowed out of the bidding for Dallas-based roofing and building products company ElkCorp (NYSE: ELK). Carlyle had originally offered to buy the company for $38 per share, but was then topped by a $40 per share offering from Building Materials Corp. of America. Carlyle raised its offer to $40.50 per share, again got topped, and raised it once more to $42 per share. But the latest BMC offer of $43.50 per share was too rich for Carlyle, which will receive a $29 million termination fee.

HydroPoint Data Systems Inc., a Petaluma, Calif.-based provider of water management systems, has raised $19 million in Series C funding. RockPort Capital Partners led the deal, and was joined by Chrysalix Energy Venture Capital. VC Deals

Prosensa Holding BV, a Dutch biotech company focused on RNA interference therapeutics using exon skipping technology, has raised $18 million in Series A funding. Abingworth Management and Life Science Partners co-led the deal, and were joined by return backer Medsciences Capital.

Oco Inc., a Waltham, Mass.-based provider of on-demand business intelligence software, has raised $14.5 million in Series C funding. Highfields Capital Management led the deal with a $10 million investment.

Serious Inc., a New York-based provider of digital publishing and marketing services, has raised $14 million co-led Greenhill SAVP and North Hill Ventures.

Honest Tea, a Bethesda, Md.-based maker of organic bottled tea, has raised $12 million in private equity funding from Inventages Venture Capital and distributor Stonyfield Farm Inc.

rPath Inc., a Raleigh, N.C.-based provider of a platform for creating and maintaining software applications, has raised $9.1 million in Series B funding. Return backers include General Catalyst Partners, North Bridge Venture Partners and the Wakefield Group.

Brilliant Telecommunications Inc., a Campbell, Calif.-based provider of network timing protocol server technology, has raised $7.1 million in Series A funding. Onset Ventures led the deal, and was joined by Asset Management, Draper Associates, Draper Richards and Intellect Capital Ventures.

Symphogen, a Copenhagen-based developer of recombinant polyclonal antibodies, has raised Euro 5 million from Gilde Healthcare Partners. The company now has raised a total of US$85 million.

GigaSpaces Technnologies Ltd., a New York-based provider of a single platform for end-to-end scalability of high performance and distributed applications, has raised $5 million in Series C funding. Existing shareholder BRM Capital led the deal, and was joined by Intel Capital and new backer FTVentures.

PremiTech, a Copenhagen-based provider of end-user-based IT management solutions, has raised $4 million in funding from existing shareholders NorthCap Partners and Dansk Erhvervsinvestering.

ICx Technologies Inc., a Washington, D.C.-based provider of homeland and military security solutions, has raised $3.5 million in Series A funding led by Wexford Capital, according to a regulatory filing

DimDim Inc., a Burlington, Mass.-based provider of open-source Web conferencing, has raised $2.4 million in Series A funding, according to a regulatory filing. Backers include Index Ventures and Nexus India Capital.

Voluntis, a France-based healthcare software vendor focused on patient relationship management, has raised Euro 2 million in VC funding from CapDecisif, CIC Vizille Capital Innovation and SHAM.

GigaLogix Inc., an Oakland, Calif.-based provider of XML routing and parsing technology, has raised around $1.4 million in Series A funding from True Ventures and ThomVest International.

Desi Hits, a San Francisco-based operator of a multimedia South Asian entertainment portal, has raised $1 million in Series A funding from Draper Fisher Jurvetson and Trident Capital.

Buyout Deals

First Reserve Corp. has sold Aquilex Corp. to Harvest Partners for an undisclosed amount. Aquilex is a Norcross, Ga.-based energy service provider specializing in refining, nuclear and fossil power generation and waste to energy.

Platinum Equity is the favored bidder for bankrupt Delphi Corp.’s steering and halfshaft division, with a preliminary bid reported to be valued at around $560 million. The two firms continue to negotiate.

Palladian Capital Partners has acquired shareholder services business EquiSearch Services from ChoicePoint (NYSE: CPS). No financial terms were disclosed.

Oak Hill Capital Partners has completed its sale of Westlake, Ohio-based truck stop operator TravelCenters of America Inc. to Hospitality Properties Trust (NYSE: HPT) for approximately $1.9 billion. Oak hill acquired TA in November 2000, while other shareholders include Olympus Partners, Monitor Clipper Partners and TCW/Crescent Mezzanine.

MidOcean Partners has completed its $450 million acquisition of Sbarro Inc., a Melville, N.Y.–based quick-service Italian restaurant company with over 1,000 locations. The deal included leverage from Credit Suisse and Bank of America.

Brockway Moran & Partners has agreed to acquire Tri-Star Electronics International Inc. from Odyssey Investment Partners and Allied Capital, according to an antitrust clearance notice from the FTC. Tri-Star is an El Segundo, Calif.-based maker of interconnect products for the aerospace and defense markets.

LVMH Moet Hennessy Louis Vuitton SA has agreed to acquire Ford Motor Co.’s Aston Martin brand, according to German trade publication Autobild. Ford would retain a 15% stake following the deal, although no financial details were reported. Other interested suitors had include Alchemy Partners, Texas Pacific Group, Permira and One Equity Partners.

H.I.G. Capital and AmTrust Financial Services Inc. (Nasdaq:AFSI) have completed their $0.75 per share acquisition of Warrantech Corp. (OTC BB: WTEC), a Bedford, Texas–based provider of service contracts and after-market warranties.

Parallel Investment Partners has completed the recapitalization of Moosejaw Mountaineering and Backcountry Travel Inc., a multi-channel retailer of premium outdoor apparel and equipment.No financial terms were disclosed. Moosejaw was advised by Financo.

Apax Partners has agreed to acquire a 27% stake in listed French computer services group GFI Informatique, by backing a Euro 56 million rights issue. Apax said that it will not seek to acquire a control position.

PE-Backed IPOs

Xtent Inc., a Menlo Park, Calif.-based developer of stent systems, prices 4.7 million common shares at $16 per share ($16-$18 range), for an IPO take of approximately $75.2 million. It will trade on the Nasdaq under ticker symbol XTNT, while Piper Jaffray served as lead underwriter. Xtent has raised around $75 million in total VC funding since its 2002 inception, including a $30 million Series D round last year at a post-money valuation of around $160 million. Backers include Morgenthaler Partners, Advanced Technology Ventures, Latterell Venture Partners and St. Paul Venture Capital.

Wuyi International Pharmaceutical Company Ltd. has completed an IPO on the Hong Kong Stock Exchange. The Chinese drug company raised $18 million last year from Orchid Asia.

MySQL AB, a Sweden-based developer of an open-source database, is planning to go public by year-end, according to an interview with company CEO Marten Mickos in Computer Business Review. The company has raised $39 million in VC funding last year from firms like Institutional Venture Partners, Intel Capital, SAP Ventures and Presidio STX, Benchmark Capital and Index Ventures.

PE Exits

EQT Partners has sold Swedish point-of-care patient testing company HemoCue to Quest Diagnostics Inc. (NYSE: DGX) for approximately $420 million in cash.

Tessera Technologies Inc. (Nasdaq: TSRA) has agreed to acquire Eyesquad., a Tel Aviv, Israel–based provider of digital auto-focus and optical zoom solutions for camera phones and other electronic products that integrate cameras. The deal is valued at $18 million in cash. Eyesquad raised just under $5 million in 2004 from Adara Venture Partners and BayTech Venture Capital.

PE-Backed M&A

Aptuit Inc., a Greenwich, Conn.-based provider of streamlining and support services for drug developers, has completed its acquisitions of solid-state chemistry companies EaglePicher Pharmaceutical Services LLC and SSCI Inc. No financial terms were disclosed. Aptuit is backed by Welsh, Carson, Anderson & Stowe and Temasek Holdings.

Firms & Funds

Peninsula Equity Partners of Menlo Park, Calif. is raising up to $150 million for its second early-stage venture capital fund, according to a regulatory filing. It already has secured $36 million in capital commitments from LPs like Indiana State University and Procific.

Originate Ventures has launched as a South Bethlehem, Pa.-based firm focused on early-stage and emerging growth companies in Eastern Pennsylvania. It has been seeded with $5 million from the New PA Venture Capital Investment Program, and is planning to raise at least another $15 million from third parties.

Victory Acquisition Corp., a New York-based blank check acquisition company has filed for a $250 million IPO. It plans to trade on the AMEX, with Citigroup serving as lead underwriter. Most of Victory’s management team was involved in a prior SPAC called Endeavor Acquisition Corp., which purchased American Apparel Inc. last December. Those managers include: Chairman Eric Watson, also chairman of Cullen Investments Ltd.; President Jonathan Ledecky, founder of U.S. Office Products and; Director Edward Matthias, a partner and managing director of The Carlyle Group.

Human Resources

Enrico Picozza has joined HLM Venture Partners of Boston as a venture partner. Picozza co-founded HTS Biosystems Inc., and previously held leadership positions with both Perkin Elmer and Applied Biosystems.

Steven Goldberg has been named president and CEO of Vidient Systems Inc., a Sunnyvale, Calif.-based developer of behavior recognition and video analytics software used in security and safety applications. He previously was an entrepreneur-in-residence with Venrock Associates and, before that, was vice president of R&D for Nokia’s Internet Communications division. Vidient founder Brooks McChesney will transition from chairman and CEO to executive vice president of strategy and corporate development.

Weston Presidio has promoted Chip Baird to the position of partner. He joined the firm in 2001 as a principal.

In Memoriam

Gordon Macklin has passed away at the age of 79 from unknown causes. He was a founder of Nasdaq, and also served as chairman of H&Q and helped run VC firm White River Partners.