PE Week Wire: Fri., Sept. 21, 2007

AthenaHealth is the only VC-backed IPO to price in all of September. In fact, it’s the only PE-backed IPO to price in all of September, as not a single buyout-backed offering has made the cut. Not too shabby for a company that lost over $10 million over the past twelve months, and has only around $80 million in annual revenue.

But that’s where the good IPO news ends – as it seems that underwriters Goldman Sachs and Merrill Lynch left a lot of money on the table.

AthenaHealth priced around 6.19 million shares at $18 per share, which was above its estimated $14-$16 range. But then demand surged, with the stock opening at a whopping $30 per share. It finished its first day of trading at $35.50 per share, which is 97% higher than it had priced 24 hours earlier. And it’s up even higher this morning!

It’s probably enough to make AthenaHealth sick to its stomach (“I came down with a case of the lockups”). I’m sure the banks based their IPO price on financial forecasts, but what about institutional demand? Did anyone notice that traders seem to view AthenaHealth more like the next SalesForce than like the next AllScripts (which has 3.5x the revenue and is now trading lower)? It’s like AthenaHealth is the anti-Blackstone Group — whichonly priced high because of institutional demand.

AthenaHealth is based in Watertown, Mass., and provides online business services for physician practices. It had raised nearly $50million in VC funding from Oak Investment Partners (17.3% pre-IPO, 13.7% post-IPO), Draper Fisher Jurvetson (14.8% / 12.5%), Venrock (14.8% / 12.4%), and Cardinal Partners (12.6% / 9.4%). Oak sold 276,085 of its 4.6 million shares via the IPO, while Cardinal unloaded 402,834 of its 3.36 million shares.

*** The lack of PE-backed IPOs in September is probably worth its own column. Reminds me of early 2001, when I was interim editor of the now-defunct IPO Reporter newsletter. Always fun trying to fill empty pages when there is virtually nothing going on… although at least this time we do have some filings.

*** Spent some time on the phone Wednesday with Rep. Tom Reynolds (R-NY), who is the most vocal opponent of a change to carried interest tax treatment. I plan to discuss our conversation in this space on Monday, and also hope to post a precursor on peHUB later today. In short: I still disagree with Reynolds’ position, but he articulates his rationale far better than does the guy I agree with (Rep. Sandy Levin).

*** A VC posed the following question to me last night about investment intent: How many of a VC’s successful portfolio companies end up with the same business model as what the original investment was based on? Maybe worth some sort of survey…

*** Bart Schachter had lunch at Google yesterday, and writes about it at peHUB.

*** I’ve been writing about clean coal companies – and the relative lack of them – for more than a year. So it’s good to see that GreatPoint Energy raised $100 million yesterday. I’d actually heard about the deal last week (and hinted at it on peHUB), but was sworn to secrecy. Actually, I got told about it over beers, which is a confidential condition in my book… Anyway, some details here.

Top Three

NewPage, a coated paper company owned by Cerberus Capital Management, has agreed to buy the North American paper mills operation of Norwegian forestry firm Stora Enso Oyj (NYSE: SEO). The deal is valued at $2.07 billion, including $1.5 billion in cash, with Stora also receiving a 19.9% stake in the NewPage.

Kohlberg Kravis Roberts has agreed to sell Italian auto parts maker FL Selenia to Malaysia’s Petronias for €1 billion. The deal is expected to close by the end of November, and comes less than two years after KKR bought the business from Vestar Capital Partners for €835 million.

Sigma Partners has closed its eighth fund with $500 million in capital commitments. peHUB has the scoop.

VC Deals

PeopleCube Inc., a Waltham, Mass.-based provider of on-demand calendaring, resource and event management software, has raised $17 million in venture recap funding from Truffle Capital (France) and Big Bang Ventures (Belgium).

BBSpace, a Chinese online business portal, reportedly has raised $11 million in VC funding led by IDG Venture Capital. BBSpace is part of Chinese enterprise software company SuperData.

Solar Power Partners Inc. has secured $6 million of a $6.2 million Series A round, according to a regulatory filing. Globespan Capital Partners led the deal, with Globespan partners Barry Schiffman and Ullas Naik joining the SPP board of directors. The Mill Valley, Calif.-based company develops, owns and managers a distributed network of mid-size commercial solar energy facilities that is remotely managed from a central location.

Donnerwood Media Inc., a San Francisco-based online entertainment company, has raised $5.4 million in Series C funding from Battery Ventures and Transcosmos, according to a regulatory filing. Donnorwood publishes the online game Tringo, and also recently launched an avatar-building website called Meez.

MeeVee Inc., a Burlingame, Calif.-based provider of online video entertainment search solutions, has raised $3.5 million in Series D funding, according to a regulatory filing. Listed shareholders include return backers include Bay Area Equity Fund, Defta Partners, FCPR Israel Discovery Fund, Labrador Ventures, Rothschild Ventures and WaldenVC.

Novatium Solutions Pvt Ltd., a Chennai, India-based provider of affordable computer solutions in India, has raised an undisclosed amount of VC funding from New Enterprise Associates. The company says that it “delivers computing to the home with a thin network computing device that moves complexity to the central server, providing the user with appliance-like simplicity.”

Buyout Deals

Crestview Partners has acquired a 17.43% stake in UK-based investment firm Martin Currie. No financial terms. As part of the deal, entities affiliated with Jacob Rothschild also acquired a 7.47% stake.

Sallie Mae said yesterday that it expects its buyout suitors to honor their commitments. The statement same after a NY Times report that the buyers may bail on the $25 billion buyout, which would incur a $900 million breakup fee.

PE-Backed IPOs

Merrill Corp., a St. Paul, Minn.-based provider of financial printing and publishing solutions, has withdrawn its filing for a $253 million IPO, citing “adverse market conditions.” It had originally filed in February 2006, with Credit Suisse and Deutsche Bank serving as co-lead underwriters. DLJ Merchant Banking Partners holds a majority interest in Merrill Corp., based on a 1999 take-private buyout.

ZARS Inc., a Salt Lake City-based developer of non-invasive drug delivery technologies, has postponed its IPO until next week. It plans to sell five million common shares at between $14 and $16 per share, and trade on the Nasdaq under ticker symbol ZARS. Cowan & Co. and CIBC World Markets are serving as co-led underwriters. The company has raised around $33 million in total VC funding since 2000, from firms like Draper Fisher Jurvetson (23.1% pre-IPO stake), Wasatch Ventures (7.6%), vSpring (5.4%), ePlanet Ventures, CDIB BioScience Venture Management and Tenex.

MAP Pharmaceuticals Inc., a Mountain View, Calif.-based developer of inhaled drug products for respiratory and CNS diseases, has set its IPO terms to five million common shares being offered at between $14 and $16 per share. It would have an initial market cap of approximately $308 million, if it prices at the high end of its range. The company plans to trade on the Nasdaq under ticker symbol MAPP, with Merrill Lynch and Morgan Stanley serving as co-lead underwriters. It has raised around $107 million in total VC funding since its 2003 formation, including a $50 million Series D round earlier this year. Shareholders include Perseus-Soros Biopharmaceutical Fund, Pequot Ventures, Brookside Capital, Skyline Ventures and D.W. Shaw Group.

PE Exits

Ariba Inc. (Nasdaq: ARBA) has agreed to acquire Procuri Inc., an Atlanta-based provider of on-demand supply management solutions. The deal includes an up-front $93 million cash and stock payment, including $14 million in cash that will be placed in escrow to secure indemnity obligations of Procuri stockholders. Ariba also will pay off around $8 million of Procuri’s debt. Procuri has raised $22.5 million in VC funding from Advent International and Insight Venture Partners.

Raytheon Co. (NYSE: RTN) has agreed to acquire Oakley Networks Inc., a Salt Lake City-based provider of information leakage detection and prevention. No financial terms were disclosed. Oakley had raised around $29 million in VC funding, from firms like Kleiner Perkins Caufield & Byers, Fidelity Ventures and DAG Ventures.

Segulah has agreed to sell AB Previa, a Swedish provider of occupational health services, to Tryg I Danmark, which owns the TrygVesta insurance group and SATS fitness chain. No financial terms were disclosed.

TomoTherapy Inc. (Nasdaq: TTPY) has filed for a secondary offering of 8.5 million shares, which would currently be valued at approximately $213 million. Merrill Lynch is serving as lead underwriter. Sellers include Venture Investors, Avalon Technology, The Endeavors Group, Open Prairie Ventures, Ascension Health Ventures and the Wisconsin Alumni Research Foundation . TomoTherapy is a Madison, Wis.-based developer of cancer treatment systems that use on-board CT imaging and conformal radiation therapy.

Firms & Funds

Quad Partners is raising up to $150 million for its second fund, according to a regulatory filing. It already has secured over $47 million. The New York-based firm focuses on private equity investments in the education industry, and previously received LP commitments from such groups as Auda, CMS Companies, Goldman Sachs, HarbourVest, Landmark Partners, Merrill Lynch, Morgan Stanley and Partners Group and others.

Human Resources

CapMan has made a series of management changes: Kaisa Arovaara has been named CFO and head of a new Internal Services unit. Partner Jerome Bouix will transfer to head of the Investor Services unit. Torben von Lowzow has been named partner (previously with HSH Gudme Corporate Finance). Senior partner Kai Jordahl, HR director Hilkka-Maija Katajisto and legal council Martti Timgren have all been named members of the managenet group.

Peter Lee has joined Prism VentureWorks, where he will be based in Los Angeles and focus on digital media opportunities. He previously was with Clearstone Venture Partners.

Lehman Brothers announced that Erin Callan will become CFO. She joined the firm in 1995, and most recently had been responsible for global hedge fund coverage. Lehman also said that Chris O’Meara would become global head of risk management, while Madelyn Antoncic will assume the newly-created role of global head of financial market policy relations.