PE Week Wire: Fri., Jan. 4, 2008

Buyout pros and venture capitalists contributed over $1.5 million to presidential candidates during the first three quarters of 2007, but not a single greenback made it into the coffers of GOP caucus winner Mike Huckabee. Sam Brownback got money. Joe Biden got money. Chris Dodd got (lots) of money. But nothing for the bass-playing preacher, who last night smacked around former buyout kingpin Mitt Romney. I wonder if that will change if Huckabee somehow pulls out a strong showing in New Hampshire. Or is Huckabee actually the total antithesis of PE mindset: Liberal economic policy and conservative social policy…

Two quick Romney notes:

1. In his concession speech last night, he said: “In the next ten years, we’ll see more progress, more change, than the world has seen in the last ten centuries.” That currently qualifies as the New Year’s dumbest comment, and means Romney should hand back his VC credentials. Maybe someone else wrote that for Romney and he just read it, but that only means that he’s channeling Ron Burgundy rather than Ronald Reagan.

2. Romney has a strong new radio and TV spot in New Hampshire, featuring former Bain Capital colleague Bob Gay (who is now launching a new fund with Steve Young, among others). Gay tells a story of how his teenage daughter Melissa once went missing in New York City, and how Romney stopped Bain business in order to get everyone in on the search. Gay’s daughter was found safe and sound two days later. Powerful testimonial, even if Romney’s efforts weren’t actually what led to Melissa’s discovery.

*** Worth noting that Democratic winner Barrack Obama has raised the most money from VCs, and was second to Romney among buyout pros.

*** There was a NY Times report yesterday morning that social networking company Plaxo had retained an investment bank and was on the block for $100 million, but I later reported at peHUB that the company has not hired a bank, and already has an unsolicited offer for around $200 million. A source says that the company is seriously considering the offer, and is now kicking a few other possible tires.

Btw: Plaxo was all over the blogosphere yesterday, because of some new code that can help Facebook users scrape contact and other details from their friends. Seems Facebook was peeved, and revoked the membership of a tester (it’s since reversed its decision). Don’t know how this will play into M&A talks…

*** There apparently is a new class action lawsuit about buyout price fixing via club deals. It’s been filed here in Massachusetts, after failing to generate traction in New York. It doesn’t look any less silly 200 miles north.

*** I saw a report yesterday that UK-based private equity firm BC Partners plans to open an office in New York. Not sure if it will be for investment activities, or just to help portfolio companies better navigate the North American market. If the former, it is a very big deal. European firms have not traditionally gone global like their U.S. counterparts. It would mean a whole new group of competitors for Blackstone, KKR, et. al, were BC and others move in on their home turf. And competitors with access to cheaper capital, given the currency differentials…

*** Venture Capital Journal has released its 2007 Overexposed List, which are the seven people and things the editors got tired of seeing over and over again last year. Larry Aragon has posted it over at peHUB. Feel free to make your own suggestions in the comments section, or take issue with VCJ’s choices.

*** Yesterday’s issue had conflicting information about the new fund from Crestview Partners, which was my bad of pasting without cutting. For the record: Crestview has closed on $1.7 billion for its second fund, which is expected to close on north of $2 billion.

*** Also, two other corrections from the news section: American Capital is selling Ranpak to Odyssey Investment Partners, and Steve Price has promoted to senior investment officer for private equity at the Ohio PERS.

*** I’ll be moderating a panel at the Wharton Private Equity Conference on January 18. The topic is the U.S. Tax and Legal Environment’s Impact on Private Capital Competition, and my panelists include two attorneys, a professor and NVCA president Mark Heesen. Think we’ll discuss carry? In related news, I’m thinking of doing our second peHUB MeetUp the night before. I haven’t lived in Philly for a while, so I’d appreciate some venue suggestions (and perhaps even someone to help coordinate, like Formative Ventures did so admirably in San Fran).

*** Finally, best wishes to tech blogger (and onetime Wire pinch-hitter) Om Malik, who suffered a heart attack in late December. One of the best out there, and his voice has been missed over the past week. Come back soon Om, but not too soon…

Top Three

Meraki Networks, a Mountain View, Calif.-based developer of wireless mesh hardware and software, has raised $20 million in Series B funding. Backers include Sequoia Capital, DAG Ventures and Northgate Capital. The company also announced that it plans to deploy a city-wide wireless access network in San Francisco by year-end, which would provide free broadband access to every neighborhood.

Audax Group has acquired Northern Digital, a Waterloo, Ontario-based maker ofoptical and electromagnetic technology for image-guided surgical, industrial test, measurement and research applications. No financial terms were disclosed. BMO Capital Corp. advised NDI on the deal, and provided acquisition financing.

Montreux Equity Partners, a Menlo Park, Calif.-based VC firm focused on therapeutic-oriented life sciences companies, has closed its fourth fund with $250 million in capital commitments. Lazard Freres served as placement agent, while limited partners included Hamilton Lane.

VC Deals

Merlin Securities, a broker-dealer specializing in technology-driven prime brokerage services, has raised $20 million from Sequoia Capital.

Deeya Energy Inc., a Fremont, Calif.-based developer of energy storage devices for the load-shifting, uninterruptible power supply and renewable energy markets, has raised $15 million in Series B funding, according to VentureWire. New Enterprise Associates led the round, and was joined by return backers Draper Fisher Jurvetson, DFJ Element and Blue Run Ventures.

Pudding Media, a San Jose, Calif.-based voice monetization company, has raised $8 million in Series A funding co-led by Opus Capital and BRM Capital.

Follica Inc., a Boston-based developer of treatments for androgenetic alopecia, has raised $5.5 million in Series A funding. Interwest Partners led the deal, and was joined by return backer PureTech Ventures.

Stoke Inc., a Santa Clara, Calif.-based maker of convergence gateways for fixed and wireless broadband access technologies, has raised an undisclosed amount of new funding led by Reliance Technology Ventures Ltd., the corporate VC arm of India’s Reliance ADA Group. Return backers included Kleiner, Perkins, Caufield & Byers, Sequoia Capital, Integral Capital Partners and DAG Ventures. Prior to this round, Stoke had raised over $50 million.

Buyout Deals

American Industrial Partners has acquired the Brooks Instrument division of Emerson Electric Company. No financial terms were disclosed. Brooks is a Hatfield, Pa.-based maker of flow measurement and control devices to the low flow application market. It has manufacturing facilities in Hungary, France, the Netherlands and Japan.

Sun Capital Partners has completed its $80 million acquisition of Smokey Bones Barbeque & Grill from Darden Restaurants Inc. (NYSE: DRI). Smokey Bones is a restaurant chain with 73 locations.

PE-Backed IPOs

CGEN Digital Media Network Co. Ltd., a Shanghai-based operator of China’s largest in-store television advertising network, has withdrawn its IPO registration. The move comes because CGEN was acquired yesterday by Focus Media Holding. Ithad planned totrade on the Nasdaq, with Piper Jaffray serving as lead underwriter. CGEN hadraised nearly $28 million in VC funding from firms like TDF Capital (12.2% pre-IPO stake), Redpoint Ventures (11.9%), Jafco (10.9%), Sumitomo Corp. (5.7%) and Hotung Investments (5.4%).

PE Exits

NetAPP (Nasdaq: NTAP) has agreed to acquire Onaro Inc., a Boston-based provider of enterprise storage software. No financial terms were disclosed, but TechCrunch puts the price-tag at $120 million. Onaro has raised around $10 million in VC funding from Newbury Ventures and Cedar Fund.

WuXi PharmaTech (NYSE: WX), a Chinese provider of pharma outsourcing services, has agreed to acquire AppTec Laboratory Services Inc., a St. Paul, Minn.-based provider of lab testing services. The deal is valued at approximately $151 million, plus the assumption of $11.7 million in AppTec debt. AppTec has raised around $38 million in VC funding since 2001, from firms like Affinity Capital Management, Brightstone Capital, NewSpring Capital and Thomas, McNerney & Partners.

PE-Backed M&A

The Active Network, a San Diego-based online community and provider of application technology for active lifestyle/sports groups, has acquired event management software companies RegOnline and WingateWeb. No financial terms were disclosed. Active has raised $172 million in VC funding from firms like Canaan Partners, ESPN, ABS Ventures, North Bridge Venture Partners, Comdisco, Charles River Ventures, Performance Equity and Tao Venture Partners.

Firms & Funds

Citi Capital Strategies said that it will open a Boston office. It will be run by Greg Rush, former COO of Community News paper Co., which was acquired by GateHouse Media. Rush stayed on as regional COO of GateHouse Media New England, and had begun his career as a banker with Tucker Anthony and SunTrust Robinson Humphrey.

Human Resources

Larry Lasky has joined U.S. Venture Partners as a venture partner, focused on biopharma and biotech opportunities. Lasky was a founding scientist of Genetics Institute, now part of Wyeth Pharmaceuticals, and later joined Genentech. He has spent the past five years as a co-founding general partner of Latterell Venture Partners.

Clayton, Dubilier & Rice has promoted Kenneth Giuriceo and George Jaquette to partner.Both men worked at Goldman Sachs before joining CD&R in 2003 and 1999, respectively.

Mark Angelson, former CEO of RR Donnelley, has joined MidOcean Partners as chairman.

SV Life Sciences Advisers has promoted Darren Black to partner. He joined the firm in 2003 as a principal, and serves on the boards of Allegiance Hospice, CRI Worldwide, Vitalize, and Ricerca Biosciences.

First Reserve Corp. has promoted Rahman D’Argenio, Jeff Quake and Josh Weiner to the position of Director.

Trivest Partners has promoted Russ Wilson to principal. He joined the firm last year as an associate, after having spent time at both PNC Equity Management and Raymond James Investment Banking.