PE Week Wire: Fri., Feb. 22, 2008

Snow is falling, ballplayers are reporting and I’m working on my birthday (in lieu of flowers, please send something more valuable). In other words, it’s time for Friday Feedback!

Nearly 2,000 of you yesterday clicked on the link about my new favorite (fake) startup, which is a “retailer” of t-shirts with VC-centric sayings, Things like “You had me at nanotech” or “your idea made me puke in my mouth a little.”

Well reader Shannon has a challenge to the non-VCs among you: Come up with good slogans for private equity t-shirts. His offering is: “Risk? That’s what lenders are for.” So get cracking, and send ‘em over to me. I’ll publish the best ones, and might even get a couple made up for Quiz Time prizes or giveaways at the next peHUB Shindig…

Ok, now getting down to more important feedback business: The Velocity Interactive story.

First up is Casey: “Great reporting Dan. I had been wondering how these two groups found each other, and why the General Atlantic platform fell apart.

Nathan: “You’ve hit a new low Dan (which I didn’t think was possible). There was no value to airing out this dirty laundry, except to further attack people you clearly have a personal objection to.”

LP: “I’m one of the LPs who didn’t know about this until after the fact, and you hit the nail on the head: We’re in a complete Catch-22. The irony is that I’d have seriously considered investing in any of those other VC firms you said that Ross and Jon talked to, had they become partners there. They are very smart and standup guys who only lack VC know-how. Too bad they picked the wrong tutors.”

John: “Two dead firms merging? Isn’t that like tying two rocks together to see if they will float?” There were lots of variations on this theme, including two anchors, two concrete weights tied around one’s ankles, etc.

Eric: “I think it’s got to be clear that Jon and Ross are now the linchpins to making this work… and on past performance, they will.”

Lisa: “Your story left me wondering how often things like this go on at venture capital firms (or private equity firms), but we just don’t hear about it. We all know that most people don’t leave ‘for personal reasons’ or to ‘spend more time with their families.’ Is this the exception, or is this the rule?” Good question Lisa, and I’d say it’s both. ComVentures has a particular history of trouble, particularly when it comes to personnel. But you’re also right that there are a lot of nasty partnership “divorces” that are successfully kept behind closed doors. But always feel encouraged to spill the beans, via our anonymous tip line…

As an addendum to all this, I mentioned in Tuesday’s email column that Velocity had just closed a new deal. It’s for Radar Networks, a semantic Web company that will announce the full round details on Monday. I spoke yesterday with company CEO Nova Spivack, who had commented over at VentureBeat that the whole issue was needless “gossip.” Go here for more on Radar, including Nova’s thoughts on taking money from Velocity.

Bruce: “You should keep track of all the VC-backed and PE-backed companies that fail this year, to see which industry did worse. I’d take private equity, especially if you include the dollars invested.” I think that’s a good idea Bruce, and a safe assumption.

Publishing Note: I’ll be flying out to Colorado next Monday morning, for the VC in the Rockies event that begins on Wednesday (got a few things to do first, like skiing). Buyouts research editor Eamon Beltran will pinch-hit on the news. I’ll be posting at peHUB later that day, and back here Tuesday morning… Have a great weekend…

Top Three

Bridgepoint has agreed to acquire a majority stake in Pret A Manger, a UK-based retail chain of ready-to-eat sandwiches, salads and drinks. The deal is valued at £345 million, which is about £100 lower than the original asking price. Company founders and management reinvested as part of the deal, while Goldman Sachs also acquired a minority stake (it advised Bridgepoint on the deal). Sellers included McDonald’s, which acquired a 33% stake in 2001. Pret A Manger had 2007 sales of £223 million.

Delphi has agreed to sell its North American bearings business to a unit of Hephaestus Holdings Inc., a maker of forged parts for the North American automotive industry. The deal is subject to bankruptcy court approval, and is separate from a previously announced sale of Delphi’s wheel bearings business to Resilience Capital Partners. No financial terms were disclosed. Hephaestus is a portfolio company of KPS Capital Partners.

John Palfrey of Harvard Law School has joined Highland Capital Partners as a venture executive. Palfrey studies intellectual property in digital media, and will focus on both existing Highland portfolio companies and new opportunities.

VC Deals

Ausra, a Palo Alto, Calif.–based developer of a utility-scale solar thermal power plant, has secured $30 million in venture debt, according to CNet. It also is planning to raise $15 million in follow-up funding from shareholders Khosla Ventures and Kleiner Perkins Caufield & Byers, prior to putting together a round that could be worth up to $150 million. The company raised over $40 million in VC funding last year.

Miles Electric Vehicles, a Santa Monica, Calif.-based electric car manufacturer, has raised $15 million in VC funding led by Angeleno Group.

Arieso Ltd., a UK-based provider of wireless network optimization solutions, has raised £5 million in Series B funding. Oxford Capital Partners and Qualcomm Ventures co-led the round, and were joined by return backers Add Partners and Top Technology.

eMar, a Chinese online advertising company, has raised $10 million in Series B funding, according to PaidContent. Backers include CDH Investments and Walden China.

Population Genetics Technologies Ltd., a UK-based developer of new technologies for population studies, has raised £3.8 million in first-round funding. Backers include Auriga Partners, Noble Fund Managers and company founders. The company also announced that it has named Mel Kronick as CEO. He previously was a division R&D manager at both Agilent and Applied Biosystems.

BioIQ, a Santa Barbara, Calif.-based healthcare IT company focused on diagnostic wellness solutions, has raised $2.5 million in Series B funding. Great Pacific Capital led the round., an online comedy content startup, has raised an undisclosed amount of first-round funding. Walden VC led the deal, and was joined by Prism VentureWorks. was founded by Dean Valentine, former president and CEO of United Paramount Network and, before that, president of Walt Disney Television.

Teranetics Inc., a Santa Clara, Calif.-based provider of ICs for Ethernet transport,announced that it has raised $25 million in Series D funding. peHUB first reported on the deal last week, based on a regulatory filing. LSI Corp. was joined by return backers Columbia Capital, Granite Global Ventures, Global Catalyst Partners, Venrock and U.S. Venture Partners. The company previously had raised $53 million since 2003, including a $20 million Series C round in October 2006 at a post-money valuation of approximately $85 million.

Buyout Deals

Vestar Capital Partners has completed its $1.1 billion buyout of Radiation Therapy Services Inc., an operator of radiation therapy centers. RTS was delisted from the Nasdaq at close of trading yesterday. Leveraged financing for the transaction and refinancing of assumed debt was arranged by Wachovia Capital Markets, BNP Paribas Securities Corp. and Sumitomo Mitsui Banking Corp. Wachovia also served as advisor to RTS on the deal.

Nike Inc. (NYSE: NIKE) has agreed to sell its Bauer Hockey subsidiary to Kohlberg & Co. and Canadian businessman W. Graeme Roustan for $200 million. Bauer makes branded ice hockey products like skates, sticks and helmets. Lazard advised Nike on the process.

Terra Firma reportedly is in talks with French industrial group Suez to launch a £1.5 billion counter offer for the waste management company Biffa PLC. Earlier this month Biffa’s board accepted a formal 350 pence-a-share offer valuing the company at £1.2 billion, from a private equity consortium that included Montagu and Global Infrastructure Partners.

BaltCap has acquired the assets of Interinfo Holding SCA in Estonia, Latvia and Lithuania. No financial terms were disclosed. Interinfo is a Norway-based yellow pages publisher owned by TPG Capital.

Brysam Global Partners has acquired a 9.9% interest in Vozrozhdenie Bank, a Russian financial institution based in Moscow. No financial terms were disclosed.

Canbriam Energy Inc. has launched as an oil & gas exploration company focused on selected hydrocarbon basins in the U.S. and Canada. It is being sponsored by up to $300 million in equity from Warburg Pincus, ARC Financial Corp. and company management.

PE-Backed IPOs

Transoma Medical Inc., a St. Paul, Minn.-based maker of implantable wireless vital sign monitors, has withdrawn its IPO. It had previously postponed the offering, due to unfavorable market conditions. Transoma had planned to price four million common shares at between $14 and $16 per share, which could have given it an initial market cap of up to $290 million. Transoma filed to trade on the Nasdaq under ticker symbol TSMA, with Piper Jaffray and Thomas Weisel Partners serving as co-lead underwriters.

Transoma has raised just over $38 million in total VC funding, from firms like Polaris Venture Partners (24.47% pre-IPO stake), Canaan Partners (20%), Affinity Capital Management and Cross Creek Capital.

PE Exits

EMC Corp. (NYSE: EMC) has agreed to acquire Pi Corp., a Seattle-based provider of personal information management software. No financial terms were disclosed. The seller is Warburg Pincus, which co-founded Pi Corp. in 2003 with former Microsoft executive Paul Maritz. Martiz will stay with EMC as president and general manager of the company’s new Cloud Infrastructure and Services division.

Parallel Investment Partners has sold Action Sports Media to Learfield Sports and ISP Sports. No financial terms were disclosed. Action Sports Media is an Alcoa, Tenn.-based collegiate sports marketing company. It was advised on the sale by Morgan Keegan & Co.

Battelle Memorial Institute has acquired Optimer Photonics Inc., a company spun out of Battelle in 2001 to commercialize electrooptic waveguide components for the telecom industry. No financial terms were disclosed. Optimer Photonics had raised over $10 million in VC funding from Battelle, Mitsubishi Corp. and Primaxis Technology Ventures.

PE-Backed M&A

Alexander Mann Solutions, a global provider of recruitment process outsourcing solutions, has acquired Capital Consulting, a recruitment process outsourcing company operating in Europe and the Asia-Pacific region. No financial terms were disclosed. Graphite Capital sponsored a management buyout of Alexander Mann three months ago.

Ipreo, a New York-based provider of market intelligence and productivity software to corporations and I-banks, has acquired CapitalBridge, a provider of global market intelligence, analytics and investor relations solutions. The seller was Huntsworth PLC. No financial terms were disclosed. Ipreo is a portfolio company of Veronis Suhler Stevenson.

Firms & Funds

ABRY Partners is raising up to $1.35 billion for its sixth fund, according to a regulatory filing. It already has secured nearly $700 million in commitments. ABRY is a Boston-based private equity firm focused on the media sector.

Water Street Healthcare Partners is gearing up to raise its second fund with a $600 million target, according to LBO Wire. The Chicago-based firm closed its debut fund with $400 million in 2006, and focuses on mid-market healthcare companies. Limited partners include Goldman Sachs, Adams Street Partners, Allianz Group and PPM America.

Human Resources

Michael Melnick has joined CMEA Ventures as a principal in the firm’s energy and materials practice. He previously served as chief commercial officer and executive VP of operations at Assay Designs, a provider of assay development for drug development and translational research.

Brette Simon has joined the Los Angeles office of Jones Day as a partner in the law firm’s private equity practice. She previously was a partner with of Sheppard Mullin Richter & Hampton.