PE Week Wire: Fri., March 2, 2007

The rain is pounding, the public markets are slumping (to be kind) and we’re just two weeks away from our annual March Madness competition. In other words, it’s time for Friday Feedback.

First up are some responses to Tuesday’s column, which discussed the copyright infringement lawsuit filed by Sequoia Capital against ComVentures. Fred writes: “Methinks Sequoia is taking its design talent and uniqueness a bit too seriously… If a portfolio company (B2B no less) came to their VC to claim a competitor was imitating their site, and they were going to fight it, any sensible VC would say, “You have more important things to do. It’s a web page — will you lose one cent of business from what they done? Get back to work.”

Dwight: “I think Sequoia is overreacting, but shouldn’t a tech VC firm like ComVentures have enough developer contacts that it could hire one to build an original site? The server logs you posted make it seem like the ComVentures site was built in-house, and it’s unlikely that any independent developer would ever agree to such blatant infringement. The developer might ask to know what other sites ComVentures ‘liked,’ but not which ones they want to ‘copy.’”

Mike: “The VSP Memorial Trophy is hilarious, but ComVentures has a lot of work to do before even approaching the self-destructiveness of VSP…”

*** Aubrey with (yet another) plug for Colorado: “I thought long and hard about going back to Silicon Valley after grad school, both in product manager jobs and in law, but elected to come to Boulder because it seemed like a vibrant technology community with great entrepreneurial spirit, engineering talent and venture capitalists (that and I like to ski 30 days a year and the weekend commute to Tahoe was killing me).So far, it’s been fabulous. I love the work I do with startups, both corporate and licensing deals, and there really are great software, hardware, Internet services and even biotech businesses here.And the quality of life it starting to appeal to other tech professionals too, despite the great opportunities in California — seems like I meet more and more Bay Area tech refugees at every event I attend.”

*** Cole: “I heard you on NPR last night, and thought you did a great job breaking down why rehab facilities are appealing to private equity firms. But did you notice that the segment began with a clip of Britney Spears? Has she ever been your lead-in before?” No, but we could use one more big speaker at Buyouts Symposium East… I’ll have my people call her people.

*** Joe on David Rubenstein’s presentation at Super Return: “I don’t have an opinion as to whether Mr. Rubenstein is correct or not in his conclusion that there will be a softening and not a crash. I hope that he is correct however. As a credit manager for a Fortune 100 company, I continue to watch the bankruptcy trends and look for evidence of any impending bank pullbacks or tightening. My biggest fear is that there will be a large, unforeseen bankruptcy that causes the banks to tighten credit and move to a role of calling loans rather than renegotiating covenants. I know that the cycle of loose credit will come to an end as the global economic cycle evolves. My big concern is that an LBO miscalculation will be a catalyst.”

*** Related to yesterday’s brief discussion of emerging markets fundraising, K asks: “I am curious as to why you weren’t surprised by major grow in PE fundraising for Africa. The Middle East growth I can understand—petro-dollars, etc. But sub-Saharan Africa?” I was a bit surprised K, but it was really the Latin American growth that floored me. Why? Because investors were burned in Latin America very recently, whereas sub-Saharan Africa is more of an unknown quantity. I guess I just figured that Latin America would have to wait in line behind other emerging markets, rather than joining them in the same position.

*** Have a great weekend everybody… Let’s talk again on Monday.

Top Three

Texas Pacific Group reportedly has sold airline catering company Gate Gourmet to Merrill Lynch. No financial terms have been disclosed. TPG bought Gate Gourmet from Swissair in 2002 for around $900 million.

Gaia Interactive Inc., a San Jose, Calif.-based virtual space “hangout” geared towards young people, has raised $12 million in Series B funding, according to a regulatory filing. DAG Ventures was joined by return backers Benchmark Capital and Redpoint Ventures.

Nikko Principal Investments and Vision Capital have sold UK motorway services group RoadChef to a subsidiary of Israel-based Delek Real Estate. The total deal is valued at approximately £425 million, including assumed debt.

VC Deals

AeroScout Inc., a San Mateo, Calif.-based provider of WiFi-based enterprise visibility solutions, has raised $21 million in Series C funding. This space reported last week that the deal was in progress, based on a regulatory filing. Menlo Ventures led the deal, and was joined by Greylock Partners and return backers Intel Capital, Cisco Systems, Pitango Venture Capital and Star Ventures. The company previously raised around $28.2 million since its 1999 inception.

Fulcrum Microsystems Inc., a Calabasas, Calif.-based developer of clockless circuit architecture for fabless semiconductors, has raised $16.8 million in Series D funding. Return backers include Infinity Capital, New Enterprise Partners, Palomar Ventures and Granite Ventures.

Akros Silicon Inc., a Folsom, Calif.-based fabless semiconductor company, has raised $10.1 million in Series B funding. Levensohn Venture Partners led the deal, and was joined by return backers Bay Partners, SPM Capital and U.S. Venture Partners.

La La Media Inc. has raised $5.7 million in Series B funding, according to a regulatory filing. Return backers include Bain Capital Ventures and Ignition Partners. The Palo Alto, Calif.-based company operates an online music store where music fans can trade CDs they own for CDs they want for $1 a CD.

Mapflow, a Dublin, Ireland-based provider of location-aware software to the insurance, transport and location services markets, has raised $5.1 million in new VC funding led by SOSventures. The deal also includes up to $6.6 million in possible earn-outs, while selling shareholders include company founder Simon Dick, company chairman Stephen Cloonan and Trinity Venture Capital.

Visible Measures Inc., a Cambridge, Mass.-based provider of application monitoring software, has raised $5 million in Series A funding led by General Catalyst Partners, according to a regulatory filing.

FixYa Ltd., an Israel-based online technical support startup, has raised $4 million in second-round funding from Pitango Venture Capital and Mayfield Fund, according to Globes Online.

Aurora Biofuels Inc., a Berkeley, Calif.-based biodiesel startup, has raised $3.21 million in Series A funding, according to a regulatory filing. Backers include Oak Investment Partners and Noventi Sorgenia Ventures.

LegiTime Technologies Inc., a Westport, Conn.-based developer of a mobile security framework, has raised nearly $2.5 million in Series A funding from MBBi Capital and Connecticut Innovations.

Lingotek, a Provo, Utah-based provider of meaning-based translation solutions, has raised $1.6 million in Series A-2 funding. Canopy Ventures led the deal, and was joined by return backer Flywheel Ventures.

Wesabe Inc., a Berkeley, Calif.-based operator of a personal finance management website, has raised $700,000 in first-round funding from O’Reilly AlphaTech Ventures.

TargeGen Inc., a San Diego-based drug company focused on kinase inhibitors for the treatment of edema and angiogenesis-related diseases, is finishing up a $40 million Series D round, according to VentureWire. No additional details were disclosed. The company previously had raised $70 million in VC funding since 2002, from firms like BB Biotech Ventures, H&Q Healthcare Capital Management, Forward Ventures, Enterprise Partners, William Blair Capital Partners/Chicago Growth Partners, CDP Capital Technology Ventures, VantagePoint Venture Partners, China Development Industrial Bank and A.M. Pappas & Associates.

Buyout Deals

Genesis Capital has acquired Ultramatic Sleep of Canada, a supplier of electric adjustable beds. No financial terms were disclosed.

Ford Motor Co. has agreed to sell APCO to Stone Point Capital and APCO management. No financial terms were disclosed. APCO is a marketer and administrator of extended vehicle service contracts and warranties sold by automotive OEMs.

Hunt Private Equity Group and Fenwick Capital have acquired Poseidon Enterprises Inc., a Charlotte, N.C.-based seafood distributor. No financial terms were disclosed.

Texas Pacific Group has completed its $450 million acquisition of the Transfusion Therapies business of Baxter International Inc. (NYSE: BAX). Maverick Capital also participated alongside TPG. The Transfusion Therapies business includes a global product portfolio of manual and automated blood-collection products and storage equipment, as well as five manufacturing facilities located in Haina, Dominican Republic; La Chatre, France; Maricao and San German, Puerto Rico; and Nabeul, Tunisia.

Audax Group is in negotiations to acquire Total Automated Solutions Inc. from Industrial Growth Partners, according to LBO Wire. TAS is a Cleves, Ohio-based provider of industrial testing, measurement and assembly equipment.

Key Principal Partners has acquired majority ownership of MC Assembly, a Melbourne, Fla.-based provider of electronic manufacturing services. No financial terms were disclosed. As part of the transaction, MC assembly founder Charles Rossi will retire as CEO, with COO George Moore taking over.

UnumProvident Corp. (NYSE: UNM) has completed its sale of subsidiary GENEX Services Inc. to a fund managed by Stone Point Capital. No financial terms were disclosed. GENEX is a Wayne, Pa.-based provider of workers’ compensation and medical cost containment services. It was acquired by UnumProvident in 1997.

Graham Partners has acquired Atlas Aerospace and Vitron Manufacturing, and merged them into a single company called Aerostructures Acquisition LLC. Headquartered in Wichita, Kan., and Phoenix, Ariz, respectively, Atlas and Vitron are manufacturers of high-precision machine parts, assemblies and spares to original equipment manufacturers. The acquisitions were partially financed via $22.5 million in subordinated note and equity co-investment from Golub Capital.

PE Exits

Citi has acquired Ecount Inc., a Conshohocken, Pa.-based provider of corporate prepaid card solutions. No financial terms were disclosed. Selling shareholders include Cross Atlantic Capital Partners, which had led an $11 million VC round in February 2001 (ECount’s only institutional round).

Firms & Funds

Alpine Investors of San Francisco has closed its third private equity fund with $125 million in capital commitments, according to a regulatory filing.

Kline Hawkes & Co. of Los Angeles is raising up to $250 million for a growth equity fund, according to a regulatory filing.

Eureka Growth Capital of Philadelphia has closed its second fund with $130 million in capital commitments.

Fairmont Capital is raising up to $125 million for a new private equity fund, according to a regulatory filing. The Yorba Linda, Calif.-based firm focuses on middle-market consumer businesses. Fortress Group is serving as a placement agent.

H.I.G. Capital is raising its first European fund, and firm co-founder Sami Mnaymneh will relocate to London. This news was first reported in PE Week Wire early last month.

Human Resources

Ravi Ramanan has joined The Blackstone Group as an executive director in the firm’s portfolio management group. He previously was a senior vice president of “functional excellence” at Solectron Corp.

Steven Pinsky has been named private equity practice leader with J.H. Cohn LLP, where he previously had worked in the M&A service practice.

Thomas Kent and Anthony Princi have joined Paul, Hastings, Janofsky & Walker LLP as partners in the firm’s finance and restructuring practice. They previously were with Orrick, Herrington & Sutcliffe LLP.


Correction: Rustic Canyon Partners did not acquire Lason from Charterhouse Group. The correct acquiror was HandsOn Ventures, which used an acquisition vehicle called Rustic Canyon II! .