PE Week Wire: Fri., Dec. 14, 2007

The snow has fallen, (some of) the cheaters have been exposed and I’m just days away from hanging with the in-laws down in Costa Rica. In other words, it’s time for the final Friday Feedback of 2007.

BUT… Before we begin: I’m asking you for one additional thought. Specifically, give me one private equity prediction for 2008. It can be broad or narrow, VC, buyout or other. Consider it your holiday gift to me, unless you’ve already bought a Premium Membership to peHUB (which can translate into actual holiday gifts to others, from me). Just send your prediction via email, or post them here.

*** Ok, first up are some reader thoughts on, which I wrote about yesterday. First up is VC J, who writes: “A bunch of people we have turned down, get to ‘vote’ on our ‘track record,’ with no knowledge of the objective data? What a joke… How about “percentage of backed CEOs who become multi-millionaires.” That’s the relevant metric…. This is Gresham’s law applied to private equity.”

Entrepreneur Nari: Small wonder that both VC journalists and VCs don’t like TheFunded. VC returns are hardly the concern of entrepreneurs trying to raise their first round of VC capital. TheFunded upsets the high and mighty positions that VCs seem to be enjoying so far. As for journalists like you, it is competition… Finally something that really puts some accountability into how VCs treat their reasons for living: Entrepreneurs and startup companies. When we have an impression of Mark Y of Firm X being a complete idiot and jerk, we now realize that we are not imagining things… Hundreds of others also feel the same way. Priceless information I cannot get from anywhere, far less from PE Week Wire and other such publications.

Jason: “I agree with your assessment that TheFunded has lots of potential, but it is obviously a work in progress. Not only does it need some quantitative metrics, but it also needs a larger statistical sample before including firms in its ‘rankings.’ VCs meet with dozens of companies each year, if not more. To compare them based on just ten or so ‘reviews’ seems insufficient.” Good point Jason, and one that Fred Wilson also makes this morning.

*** Next are some replies to Tuesday’s column on Human Rights and Private Equity, vis-à-vis the SEIU’s latest salvo against The Carlyle Group. Brendan: “I agree with your three-legged stool analogy, but I am highly skeptical of the efficacy of an American company trying to change a foreign sovereign power. We heard this song and dance before with Google submitting to search result censorship in China. Dicey proposition.” Keith: “Please spare me the BS about the United States having a ‘questionable’ human rights record. We are the world leader on issues of human rights. To compare us to Abu Dhabi is offensive, and says more about your politics than it does about the Carlyle group.” Roger: “I think SEIU is reaching, but Carlyle’s reply was severely lacking.! In fact, it almost sounds like Carlyle didn’t really think about human rights at all when taking the money, and now just hopes the issue gets quietly dropped. If not, why not make a more compelling defense of its decision?”

*** Lots of thoughts on The War on Greed film (watch in our new Video section). Steve: “Greenwald has joined the long chorus of ‘reformers’ who can point out a symptom of a problem, but really has no idea what caused it or how to solve it. ‘Do Something’ is an empty call to action, and the fact is that Greenwald pursues wealth to do his “job” the same as Kravis. We are an entire world of prostitutes. Kravis is just the best paid prostitute.”

Jeff: “I don’t like the premise that ‘because I haven’t achieved my wildest dreams, it’s unfair that anyone else does.’ Bill Gates gets much less heat, I would guess because of his very public and substantial philanthropic giving. I, too, would like to see people have a more compassionate character but that starts with me contributing my time and money to charitable causes. It doesn’t start with judging and condemning everyone who is less compassionate.”

Dave: “Fact is, if a job is easy and enjoyable, lots of people will want to do it. As a result, the pay will suck. If a job is tortuous, difficult, or extremely complicated, it will pay well. We are the sum of our choices. If a person wants to earn lots of money that will limit many other choices they make (time, career, relationships). Fortunately, not everything is measure in dollars, and I venture to guess that people who help others are deeply rewarded in a non-monetary way.

*** Finally, lots of interest in The Carissa Project (watch documentary trailer in our new Video section). Good to see the Wire readership step up for a worthy cause.

If you still want to get involved, please email As George wrote: “What a wonderful story to share. Carissa is special. While many toil in anonymity of community development capital, few have such a compelling pathway. Helping others to understand and reach out can multiply into such great benefits, particularly in a pluralistic society.

*** Publishing Note: PE Week Wire will be published next week, but with Alex Haislip writing the columns and the Buyouts Magazine staff doing the news. We’ll then take off the week of December 24. I’ll be out of the country from next Tuesday until the 27th, and will resume Wire duties in the New Year (and will do some peHUB posting and TV spots in the interim). Have a great holiday season, and we’ll chat again soon…

Top Three

Boston Scientific Corp. (NYSE: BSX) has agreed to sell its Fluid Management and Venous Access business to Avista Capital Partners. The deal is valued at $425 million in cash, and is expected to close in Q1 2008.

Apptrigger Inc., a Richardson, Texas-based maker of an application session controller, has raised around $21.5 million in Series C funding. It already has called down the first $15.66 million, with the remainder being called down today. Return backers include Star Ventures, Sevin Rosen Funds, CenterPoint Venture Partners and Chisholm Private Capital. A new investor will participate in today’s closing, but it has not yet been identified.

Memsic Inc., an Andover, Mass.-based developer of semiconductor sensor and system solutions based on MEMS technology and mixed-signal circuit design, raised $60 million in its IPO. The company sold six million common shares at $10 per share ($11-$13 range), for an initial market cap of approximately $226 million. Memsic will trade on the Nasdaq under ticker symbol MEMS, while Citi served as lead underwriter. It had raised over $33 million in VC funding since 1999, from firms like Celtic House Venture Partners (16.1% pre-IPO stake), The Still River Fund (15.7% pre-IPO stake), InveStar Capital (13.7%), CID Group (5%) and Ironside Ventures.

VC Deals

Invidi Technologies Corp., a Princeton, N.J.-based provider of targeted advertising for broadband TV services, has raised $25 million in third-round funding. WPP Group led the round, and was joined by return backers EnerTech Capital, InterWest Partners and Menlo Ventures.

Zeugma Systems Inc., a Vancouver-based provider of broadband networking solutions, has raised US$22.5 million in Series B funding. Vertex Venture Capital led the round, and was joined by GTD Capital, BC Advantage Funds and return backers Granite Ventures, Ventures West, Yaletown Venture Partners, GrowthWorks Capital and BDC Venture Capital.

Tervela Inc., a New York provider of appliance-based messaging technology, has raised $20.2 million in Series C funding, according to a regulatory filing. Backers include Goldman Sachs, North Hill Ventures and Sigma Partners.

Lilliputian Systems Inc., a Wilmington, Mass.-based developer of fuel cells for wireless electronic devices, has raised just over $20 million in Series C funding, according to a regulatory filing. DAG Ventures was joined by return backers Atlas Venture, Kleiner Perkins Caufield & Byers and Rockport Capital Partners. The company had raised around $30 million in a Series C round two years ago, so this appears to be an addition. Calls to the company were not returned.

Ascendis Pharma AS, a Copenhagen-based drug improvement startup, has raised €17.6 million in Series A funding. Sofinnova Partners led the deal, and was joined by Gilde Healthcare Partners and Zweite TechnoStart Ventures.

Cempra Pharmaceuticals Inc., a Morrisville, N.C.-based developer of anti-infectives, has raised $10 million in Series B funding, according to a regulatory filing. Backers include Aisling Capital, Intersouth Partners, Optimer Pharmaceuticals Inc. and banker I. Wistar Morris III.

Oblong Industries Inc., a Los Angeles-based gesture recognition startup, has raised around $8.8 million in Series A funding led by Foundry Group, according to a regulatory filing. Brad Feld and Ryan McIntyre of Foundry have taken board seats.

Arcion Therapeutics Inc., a Lutherville, Md.-based drug company focused on pain management, has raised $8.85 million in Series A funding, according to a regulatory filing. Backers include InterWest Partners and CMEA Ventures.

Modiv Media Inc., a Quincy, Mass.-based provider of software that enables consumers to make purchases via mobile phone at participating merchants, has raised $8 million in Series A funding, according to a regulatory filing. Backers include Ignition Partners, Oak Investment Partners and SeaPoint Ventures.

Hi-G-Tek, a Rockville, Md.-based provider of RFID solutions for high-value cargo and sensitive materials, has raised $5.5 million in new VC funding from firms like L Capital Partners and Battelle Ventures. The company had raised a $10 million round in late 2006.

uiActive Inc., an Australian provider of network-based mobile phone software, has raised US$3.33 million in Series A-1 funding, according to a regulatory filing. Backers include Southern Cross Ventures and CM Capital.

NanoTune Technologies Corp. has raised around $3.12 million in Series A funding led by Draper Fisher Jurvetson, according to a regulatory filing. The Mountain View, Calif.-based company says that it is “capable of precisely nanotuning and reproducing crucial silica based nanomaterials and smart devices to be used in a multitude of markets.”

SocialPicks Inc., a Mountain View, Calif.-based online community for stock market investors, has raised around $500,000 in Series A funding led by Bay Partners, according to a regulatory filing.

Buyout Deals

3i Group has agreed to acquire UK food and commodity testing company Inspicio PLC (AIM: IMP) for £228.6 million. Other bidders are reported to have included DLJ Merchant Banking and Clayton Dubilier & Rice.

Advent International has agreed to acquire a 70% stake in KAI Group, Bulgaria’s largest manufacturer of interior and exterior floor, wall and decorative ceramic tile. No financial terms were disclosed. KAI employs over 1,000 people, and produces of 14 million square meters of tiles per year, and also includes a transportation business and clay mining company.

Dinamia Capital Privado has agreed to buy Spanish private hospital Xanit Hospital in a €42 million leveraged buyout, according to Spanish press reports.

GTCR Golder Rauner and Encore FBO have agreed to buy the fixed base operator business of Landmark Aviation from Dubai Aerospace Enterprise. No financial terms were disclosed. Barclays Capital provided leveraged financing. Dubai Aerospace acquired Landmark Aviation from The Carlyle Group earlier this year for approximately $700 million, as part of a larger transaction. Encore LBO is a portfolio company of Platform Partners.

KKR has completed its acquisition of a 97.6% stake in Turkish shipping company UN Ro-Ro for around $1.28 billion.

Onex Corp. has completed its acquisition of Husky Injection Molding Systems Ltd. (TSX: HKY) for C$8.18 per share, which gives the deal a total equity value of approximately C$960 million. Husky is a supplier of injection molding equipment and services to the plastics industry.

PE-Backed IPOs

Intellon Corp., an Ocala, Fla.-based maker of ICs for powerline communications, raised $45 million in its IPO. It priced 7.5 million common shares at $6 per share ($9-$11 range), for an initial market cap of approximately $180 million, were it to price at the high end of its range. It plans to trade on the Nasdaq under ticker symbol ITLN, with Deutsche Bank Securities serving as lead underwriter. Shareholders include Fidelity Ventures, EnerTech Capital Partners, Comcast Interactive Capital, Goldman Sachs, Summerhill Ventures and UMC Capital.

Devax Inc., a Lake Forest, Calif.-based developer of drug-eluting stent systems, has withdrawn registration for an $85 million IPO. The company originally filed back in May, and did not give an explanation for the withdrawal. Bear Stearns and Thomas Weisel Partners had been serving as co-lead underwriters. Devax has raised around $48.5 million in total VC funding since 2001, from firms like HBM BioVentures (30.7% position), InterWest Partners (12.8%), U.S. Venture Partners (12.8%) and Rock Creek Partners (8.3%).

PE Exits

Atheros Communications Inc. (Nasdaq: ATHR) has agreed to acquire u-Nav Microelectronics, an Irvine, Calif.–based fabless maker of GPS chipsets and related software. The deal is valued at $54 million, including $15.4 million in cash and 1.28 million shares of Atheros common stock. It also includes various earnouts. U-Nav has raised nearly $35 million in VC funding since 2001, from firms like Shelter Capital Partners, Nordic Venture Partners, iSherpa Ventures and Trimble Navigation.

PE-Backed M&A

Zayo Bandwidth, a Louisville, Colo.-based regional provider of fiber-based network services, has acquired Citynet Fiber Network, the wholesale division of Citynet. This will be Zayo’s sixth acquisition in the past six months, and is expected to close next quarter. No financial terms were disclosed. Zayo earlier this year secured access to $225 million in private equity funding, from firms like Columbia Capital, M/C Venture Partners, Oak Investment Partners, Battery Ventures and Centennial Ventures. It also received an $85 million credit facility from CIT Group, CoBank and Hercules Technology Growth Capital.

Firms & Funds

The Blackstone Group has closed a credit liquidity fund with more than $1.3 billion in capital commitments.

Profit Equity has launched as a Dallas-based turnaround private equity firm. It plans to begin raising its debut fund early next year with a $200 million target, and is run by Insight Equity co-founder Ross Gatlin.

Human Resources

John St. Amand has joined Highland Capital Partners as a venture partner. He had been founder and CEO of Telica, a Highland portfolio company acquired by Lucent in 2004.