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

To find today’s trendiest emerging market, head to Beijing. And then bear hard west, for a few thousand miles.

What you’ll find is the so-called MENA region, which stands for Middle East and North Africa. Billions of dollars are being committed, with some firms like Carlyle setting up dedicated funds and most I-banks putting dedicated MENA staffers on the ground.

ButMENA feverhassteered clear of Iraq — both under Saddam Hussein’s totalitarian reign and under the chaotic democracy that followed his removal. Save for infecting one patient.

That patient is Scimitar Global Ventures, which targets VC and private equity opportunities in Romania, Morocco and (yes) Iraq. Ok, they aren’t buying up grocery stores in central Baghdad, but nonetheless are willing to venture into the calmer parts of Northern Iraq.

I was unsuccessful yesterday in speaking with either of Scimitar’s partners — former JPMorgan Private Bank pros Scott Oger and Zachery Venegas — but did chat briefly with an outside spokesmanBarry Schwartzthis morning. He said that the firm is undergoing some sort of reorganization, which will keep its principals quiet until December or January. “They will definitely resurface,” he said.

My first thought was that this was code for “SEC marketing restriction,” but that’s highly unlikely as all of Scimitar’s money comes from European and MENA investors. So let’s just call it kinda strange. Nonetheless, Schwartz did confirm that Scimitar has made multiple investments in the Kurdish sections of Northern Iraq. So we’ll circle back in a few months, as it’s always interesting to see what’s happening on the emerging market fringe.

*** Yesterday’s I linked you to a WSJ story on how VC and buyout firms bring in more money on fees than on carry. But the link didn’t work. So now I’ll just link you to the actual research, which was conducted by two Wharton professors. Plus a little commentary by yours truly. Be sure to add yours as well…

*** The venture capital industry has lost half of its active firms since the 2000 peak. Read more here.

*** Make sure to check out the peHUB First Read each morning. It’s like a daily version of my “Just Linking Around” columns, and up each morning by 8:30am ET.

*** We haven’t done a Feedback column in forever. So let’s put it on the calendar for Monday. Whaddya wanna say?

*** Have a great weekend. Go Sox. Go Pats. And keep those anti-Sox and (now) anti-Pats emails coming from New York, Pittsburgh, Philly, etc… Good diversion during the workday.

Top Three

Cadbury Schweppes reportedly has turned down a second offer for its beverages unit, due to concerns over the financing package. The offer had been in the range of $13 billion to $14 billion, from a group that included Blackstone Group, KKR and Lion Capital. The move indicates that Cadbury Schweppes will proceed with a de-merger rather than a sale.

Azul Systems Inc., a Mountain View, Calif.-based network processing company, has raised $40 million in Series F funding. According to a regulatory filing, this is the first close of a deal that could total $69.6 million. JVax Investment Group was joined by return backers Accel Partners, Austin Ventures, ComVentures, Credit Suisse, Meritech Capital Partners, Redpoint Ventures and Worldview Technology Partners. Azul has now raised around $172 million in total VC funding since 2003. Its enterprise server appliances deliver compute and memory resources as a shared network service to transaction-intensive applications.

Third Rock Ventures has closed its debut fund with $378 million in capital commitments. The Boston-based firm will focus on early-stage life sciences opportunities. It was founded by four ex-Millennium Pharma executives, including former Millennium CEO Mark Levin, who also was a onetime partner with Mayfield Fund until 1994.

VC Deals

Kewego, a French video-sharing website, has raised $6.9 million in Series B funding. CDC Enterprises led the deal, and was joined by return backer Banexi Ventures Partners.

ThromboVision Inc., a Houston, Texas-based biomedical diagnostics company, has raised $4 million in Series A funding. National Healthcare Services led the deal. ThromboVision’s first product is a disposable test kit and a point-of-care base unit, designed to help physicians individualize antiplatelet therapy that they use to prevent heart attacks, strokes and stent occlusions.

GetSatisfaction Unlimited Inc., provider of crowdsourcing customer service, has raised $1.3 million in first-round funding. Backers include First Round Capital, O’Reilly AlphaTech Ventures, Adaptive Path and individual angels Jeff Clavier, Mike Brown and Jason Schultz. In addition, the company got some cash from founder Thor Muller’s mom, despite his “protestations.” News of the funding was first reported by VentureBeat.

Open Kernel Labs, provider of operating systems and virtualization technology for embedded systems, has raised $2.15 million in Series A funding from Neo Technology Ventures. Open Kernel has offices in both Chicago and Sydney, Australia., a national network of community-based websites where residents can share local content, has received an undisclosed amount of strategic funding from Idearc Media Corp., publisher of the Verizon Yellow Pages and operator of In related news, Idearc has acquired the URL.

iProfile, a provider of business intelligence and lead generation services for the enterprise tech industry, has raised an undisclosed amount of private equity funding led by Virgo Capital. iProfile has offices in both Palo Alto and London.

Buyout Deals

AlpInvest Partners and Advent International have co-sponsored a management buyout of Nucletron, a Dutch radiation oncology company, from Delft Instruments. No financial terms were disclosed.

Falfurrias Capital Partners has acquired a control stake in Charlotte, N.C.-based quick-service chain Bojangles Restaurants. No financial terms were disclosed for the deal, which also included participation by Carolina Panthers founder Jerry Richardson. Bojangles generated over $500 million in 2006 revenue, from its 386 locations. Falfurrias closed its debut fund earlier this year with $97 million. It was founded by former Bank of America CEO Hugh McColl Jr. former BoA CFO Mark Oken.

Natixis Global Asset Management has agreed to acquire AlphaSimplex Group LLC, an investment management firm founded by MIT Sloan finance professor Andrew Lo. No financial terms were disclosed for the deal, which keeps Dr. Lo on board as chairman and chief scientific officer.

PNC Equity Partners has acquired Bacharach Inc., a New Kensington, Pa.-based manufacturer of gas detection equipment, according to LBO Wire. No financial terms were disclosed. PNC recently closed its second fund with $272 million.

Technology Crossover Ventures has sponsored a minority recapitalization of TradingScreen, which provides a trading service platform to institutional investors on a software-as-a-service model. No financial terms were disclosed. Continental Investors and other undisclosed investors also participated. FT Partners advised TradingScreen on the deal.

Bento Nouveau Company Ltd., a Canadian provider of take-out sushi, has received an undisclosed amount of funding from Whitecastle Private Equity Partners.

PE-Backed IPOs

Varolli Corp., a Seattle-based provider of SaaS interactive customer communications solutions, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol VRLI, with Lehman Brothers and JPMorgan serving as co-lead underwriters. The company was founded in 1999 as AlertOnline, and later was renamed Par3 Communications. It has raised around $33 million in VC funding from firms like Draper Fisher Jurvetson (30.1% pre-IPO stake), BlueRun Ventures (21.7% pre-IPO stake), InterWest Partners (19.3%), Timberline Venture Partners (5.5%) and Staenberg Venture Partners.

Pogo Jet Inc., a Chicopee, Mass.-based on-demand jet charter service focused on the East Coast, has filed for a $103.5 million IPO. It plans to trade on the Nasdaq under ticker symbol POGO, with W.R. Hambrecht serving as lead underwriter (via its OpenIPO process). Backers include Tiger Partners (30.82% pre-IPO stake), Village Ventures, Worcester Capital Partners and Long River Capital Partners.

PE Exits

HP has agreed to acquire MacDermid ColorSpan Inc., a Minnetonka, Minn.-based manufacturer of wide-format digital inkjet printers. The seller is MacDermid Printing Solutions LLC, a Denver-based portfolio company of Court Square Capital Partners and Weston Presidio.

IBM has completed its acquisition of Princeton Softech Inc. from Apax Partners and LLR Partners for an undisclosed amount. Princeton Softech is a Princeton, N.J.-based developer of data management software.

PE-Backed M&A

ActivStyle Inc., a Minneapolis-based medical supply company focused on incontinence products, has acquired Senior Care Services Inc., a Grand Junction, Colo.-based provider of incontinence products to Medicaid patients. No financial terms were disclosed. ActivStyle is owned by The Riverside Company.

BSG Alliance Corp., an Austin, Texas-based provider of software-as-a-service solutions for the enterprise, has acquired Kalivo Inc., a provider of SaaS collaboration solutions. No financial terms were disclosed. BSG has raised $16 million in VC funding from Foundation Capital, Hummer Winblad Venture Partners and Powershift Group.

Firms & Funds

Barclays Private Equity has raised €2.4 billion for its third European mid-market buyout fund. Barclays Capital provided €650 million for the fund, which follows a €1.65 billion vehicle that closed in 2005. That fund is now more than 85% invested, with more than 25% of drawn capital already returned to limited partners.

The California Public Employees’ Retirement System (CalPERS) has committed $546 million to Standard Life Investments Ltd., which will invest the money in European middle-market buyout funds.

New Enterprise Associates has moved most of its East Coast investment staff to a new office in Chevy Chase, Maryland. The group used to be split between a Baltimore and Reston, Va. office – with Baltimore now housing just administrative staff, and Reston having been shuttered. The firm also has offices in Menlo Park, Bangalore and Shanghai.

Human Resources

Vikrant Sawhney has joined The Blackstone Group as a managing director in the firm’s private equity group. He will lead Blackstone’s financing and capital markets activities, and help oversee certain credit market-related investment activities. He previously was a managing director in Deutsche Bank’s financial sponsors group.

Scott Peppard has joined the Missouri State Employees’ Retirement System as manager of alternative investments, according to LBO Wire. He previously was deputy CIO for the Kansas Public Employees Retirement System.