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Counting Down The Hours…
Very slow news day, as folks apparently are starting their weekends early. But I hate leaving you with nothing, so…
***First, a huge thanks to everyone who volunteered to donate items to our potential PE Week Wire Charity Auction. I’ve gotten emails offering over $10,000 in donations, and I’m hoping more items/ideas will keep rolling in over the weekend (more formal details should come next week).
There is, however, one type of item I haven’t seen yet, and which I’m really hoping for: Your time. For VCs, this could mean the opportunity for an entrepreneur to make a 45-minute elevator pitch. For LBO pros it could mean lunch with a prospective MBA candidate. PR folks could offer a free consultation. Be creative..
*** What is it about emerging VC managers in Texas being unable to raise funds? First it was Techxas Ventures suspending fund-raising, and now Tejas Ventures is shutting down after failing to secure enough capital commitments for its $75 million-targeted debut vehicle. Rob Adams, an Austin Ventures and TL Ventures alum who co-founded Tejas last year, believes that the issue is more about being an emerging manager than it is about being from Texas: “Everyone out there claims to have emerging manager programs, but very few emerging managers have actually gotten funding, except for Shasta Ventures, Ignition Partners and Union Square Ventures. Those groups all have GPs with 20 years of combined experience and 15 exits, while we have 15 combined years of experience and just a few exits.”
Interesting complaint, and one that I’ve heard consistently from emerging managers over the past year (particularly when I discuss the evils/existence of LP overhang). I’ll do some number crunching on this and report back on Monday.
*** One of the stumbling blocks to U.S.-China economic harmony has to do with intellectual property (IP) protection, and how the Chinese government doesn’t seem terribly interested in it. Battery Ventures, however, has just discovered that identity theft can also be a problem.
As first reported in today’s Private Equity Insider, a new China-based website has emerged that is a virtual carbon copy of the Wellesley, Mass.-based Battery Ventures website, down to the names of individual partners (apparently real Battery headshots used to be on there, but have since been replaced). Check out the comparison between the real site and the fake one.
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Top Three |
BrainCells Inc., a San Diego-based drug company focused on neurology, has raised $17.7 million in Series A funding. The deal is structured whereby Braincells has received $8 million, and is guaranteed the remaining $9.7 million if it reaches certain milestones. Technology Partners and seed backers Oxford Bioscience Partners and Bay City Capital co-led the deal, and were joined by A.M. Pappas & Associates, Neuro Ventures and various individuals. www.braincellsinc.com
Tejas Ventures is in the final stages of shutting down, after being unable to secure enough capital commitments for its inaugural fund. The Austin, Texas-based firm was launched in July 2004 by Austin Ventures alumni Rob Adams and Chris Grafft, and planned to make seed, early and expansion-stage investments into software and software-enabled services companies. News of the closure was first reported by the Austin-American Statesman. www.tejasventures.com
The Kauffman Fellows Program has formed a partnership with the UK Department of Trade and Industry, in order to recruit British venture capital firms to sponsor Kauffman Fellows in 2006. www.kauffmanfellows.org
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VC Deals |
Control4 Corp., a Salt Lake City-based, has raised $15 million in third-round funding. Foundation Capital led the deal, and was joined by return backers Frazier Technology Ventures, Thomas Weisel Venture Partners and vSpring Capital. www.control4.com
Troika Networks Inc., a Westlake Village, Calif.-based provider of network-based storage services, solutions and enabling technologies, has raised $14.4 million in Series B funding. Return backers included Anthem Ventures Partners, Draper Fisher Jurvetson, DynaFund Ventures, Hamilton Technology Ventures and Windward Ventures. Troika has raised over $90 million in VC funding since its 1998 inception, including a Series A recap deal last year. www.troikanetworks.com
SeeControl Inc., a San Mateo, Calif.-based provider of B2B inventory and asset visibility solutions, has raised first-round VC funding from Altos Ventures, Peninsula Equity Partners, Stanford University, Wilson Sonsini Goodrich & Rosati, Western Technology Investment and Larry Mohr (founder of Mohr, Davidow Ventures). www.seecontrol.com
Filmnight Ltd., a UK-based film bricks-and-clicks film retailer, has raised an undisclosed amount of new VC funding from NewSmith Asset Management. www.filmnight.com
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Buyout Deals |
Gecis, an India-based business process outsourcing company previously known as GE Capital International Services, has agreed to acquire Creditek Corp., a Parsippany, N.J.-based order-to-cash cycle and enterprise receivables management company. No financial terms were disclosed for the deal, which is expected to close within 30 days. GE sold a 60% stake in Gecis earlier this year to General Atlantic and Oak Hill Capital Partners, while Creditek is controlled by Parthenon Capital and General Atlantic. www.gecis.com www.creditek.com
ABN AMRO Capital has bought Dutch specialty chemicals distributor IMCD Group NV from AlpInv*st Partners for an undisclosed amount. www.imcdgroup.com
Code Hennessy & Simmons has acquired a majority equity position in American Asphalt & Grading Co., a provider of integrated infrastructure construction services to the Southern Nevada residential homebuilding market. No financial terms were disclosed. www.aaandg.com www.chsonline.com
Bridgepoint has sold UK-based Molten Brown Ltd., a UK-based provider of luxury goods focused on the personal care market, to Kao Corp. of Japan for Gbp170 million. www.moltonbrown.co.uk
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PE-Backed IPOs |
Bronco Drilling Company Inc., an Oklahoma City-based provider of contract land drilling services to the oil and natural gas industries, has set its proposed IPO terms to 4.7 million common shares being offered at between $14 and $16 per share. It plans to trade on the Nasdaq under ticker symbol BRNC, with Johnson Rice & Co. and Jefferies & Co. serving as lead underwriters. The company was formed in June 2001 by affiliates of Wexford Capital, which holds a 100% pre-IPO ownership stake. www.broncodrill.com
Quintana Maritime Ltd., a Houston-based provider of drybulk marine transportation services, priced million shares at per share, for a total IPO take of approximately. It will trade on the Nasdaq under ticker symbol QMAR, while Citigroup and Morgan Stanley co-underwrote the IPO. Quintana was controlled by First Reserve Corp. prior to the offering.
Landof Leather, a UK furniture retailer 50% owned by SB Capital, is planning a Gbp37.5 million public flotation later this month that would value the company at around Gbp77.6 million.
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PE-Backed M&A |
Martin Dawes Systems, a UK-based provider of CRM software solutions, has acquired Lavastorm Technologies Inc., a Boston-based provider of revenue and business assurance software. No financial terms were disclosed. Lavastorm had raised over $65 million in total VC funding from firms like Hummer Winblad Venture Partners, Oak Investment Partners, Telus Ventures and Lehman Brothers. www.martindawessystems.com www.lavastormtech.com
VeriSign Inc. (Nasdaq: VRSN) has acquired Reston, Va.-based security intelligence company iDefense for approximately $40 million in cash. IDefense was backed by Dorset Capital. www.verisgn.com www.idefense.com
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Firm & Fund News |
Altos Ventures of Menlo Park, Calif. is raising $100 million for its third fund, according to a regulatory filing. It already has secured $37.42 million in commitments from LPs like Duke Management Co., Northwestern Mutual Life Insurance Co. and Fairview Capital. Altos is using Thomas Capital Group as its placement agent. www.altosvc.com
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Human Resources |
Ken Fletcher has joined the M&A/corporate finance practice of Starlight Capital Inc. of Washington D.C. He is co-founder of the VC-based event forum CapitalVenue, and previously spent more than two years with the U.S. Small Business Administration. www.starlightcapital.com
Jonathan Nyce, former chairman and CEO of Epigenesis Pharmaceuticals Inc., yesterday was convicted of manslaughter and tampering with evidence in connection with the January 2004 slaying of his wife. Nyce served as chairman and CEO of Epigenesis until 2003, when VC backers reportedly forced him out of the company.
THURSDAY, JULY 14
Random Ramblings
A few notes while awaiting the arrival of Home Contractor #2 (for those keeping score, Home Contractor #1 was an abject failure):
* I began the week with a plan to write about “blank check” acquisition companies filing for IPOs, with a particular emphasis on those formed, or supported, by private equity firms. Recent examples include MDC Acquisition Corp. (McCown De Leeuw& Co.) and Confluence Acquisition Partners I (SV Life Science Advisors and Pequot Capital). Lots of questions here, including why certain firms would raise public money instead of simply investing out of existing private funds/raising new private funds. Just seems strange in a SarbOx-tinged era of PE pros talking about the value of staying private (kind of like the fizzled BDC explosion of early 2004). Unfortunately, I’ve spent absolutely no time yet on the matter, but wanted to let you know that I was at least thinking about it, if not actually researching it yet. Please send in all thoughts and observations.
* A couple of you asked why yesterday’s column was devoted to Omniture’s VC deal instead of to Colin Powell joining Kleiner Perkins. Two answers: (1) I figured you could read about Powell elsewhere, if interested. There have been 41 print stories on the “hire,” plus countless blog posts. If this was basically a PR move – as some cynics have suggested – it certainly worked. That said, I can’t quite figure why Kleiner would need additional PR. (2) I really don’t think it’s that big of a deal. Sure Powell is a big name the big contacts (hence the massive coverage), but Kleiner and other VC firms have lots of big names in their LP base. Powell looks like he’s going to be a bit more hands-on, which is good for Kleiner, but it’s not like he’s transitioning into a fulltime GP role. This will be like Jack Welch at Clayton Dubilier, not like Bill Weld at Leeds Weld or Joe Montana at Champion Ventures (and there still is no apt comparable! to Bono’s general partner title with Elevation Partners) .
* Hey West Coasters: On Tuesday, July 26, I’ll be giving the keynote address at PricewaterhouseCoopers’ Private Equity CFO Summit in San Francisco. Sure it means that I don’t actually get to eat lunch, but I can double up on the cocktails at night.
* Bessemer Venture Partners passed on FedEx seven times? Wow.
* A quick list of some VC deals in the pipeline.
* Finally, I’m interested in doing a charity auction of sorts via the Wire, whereby readers would donate items, other readers would bid on them, and all the proceeds would go to a non-profit (I’ve got two in mind, both of which have a bit of a business angle). Sports tickets, free tee times, dotcom memorabilia and the like. If anyone has something they might be willing to part with, please let me know ASAP via email. It won’t be binding, but I just want to get a sense of what’s out there…
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Top Three |
The Carlyle Group and Eurazeo have entered into exclusive negotiations with LBO France to sell their 100% stake in Groupe Terreal, a France-based maker of clay construction products, for 860 million euros. www.eurazeo.com www.terreal.com
FiberTower Corp., a San Francisco-based provider of backhaul services for wireless carriers, has raised $150 million in private equity funding. The deal included $55 million from Crown Castle International Corp. (which now holds a 32% stake), and other participation from Oak Investment Partners and Affiliates, Tudor Investment Corp., Goldman, Sachs & Co. and Meritech Capital Partners. www.fibertower.com
IGN Entertainment Inc., a Brisbane, Calif.-based provider of community-based Internet media and services for video gaming, has filed to raise $200 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol IGNT, with Deutsche Bank and Lehman Brothers serving as lead book-running managers. IGN was a public company until being taken private following a 2003 buyout led by Great Hill Partners. Great Hill holds a 40.3% pre-IPO stake, while other significant shareholders include Liberty Mutual Insurance Co. (23.8%) and Banc of America Capital Inv*stors (10.3%). www.ign.com
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VC Deals |
Vitae Pharmaceuticals Inc., a Ft. Washington, N.J.-based drug company, has raised $15 million in VC funding. Return backers include Atlas Venture, New Enterprise Associates, Prospect Venture Partners, Venrock Associates and Wellcome Trust. The company has now has $90 million in total VC funding since its 2001 inception, including a $34 million infusion earlier this year. www.vitaepharma.com
Immune Control Inc., a Conshohocken, Pa.-based drug company focused on the treatment of multiple myeloma and other immunological diseases, has raised $11.3 million in Series A funding. Participants included Domain Associates, BioAdvance Ventures (managed by Quaker BioVentures), NewSpring Capital and Anthem Capital. www.immunecontrol.com
Homestead Clinical Corp., a Seattle-based biotech formed by local incubator Accelerator Corp., has raised an undisclosed amount of Series A funding. Participants included Accelerator sponsors MPM Capital, Amgen Ventures, OVP Venture Partners, ARCH Venture Partners, Versant Ventures and Alexandria Real Estate Equities. www.acceleratorcorp.com
Telefonica Celular del Paraguay SA, a subsidiary of Millicom International Cellular SA, will receive $15 million in funding from The International Finance Corp., the World Bank Group‘s private sector arm. www.ifc.org
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Buyout Deals |
Charlesbank Capital Partners has acquired Walco International Inc., a Westlake, Texas-based distributor of animal health products, from Bain Capital. No financial terms were disclosed. The buyout is Charlesbank’s first investment out of its sixth fund, which closed with $900 million last month. www.walcointl.com
Permira has sold its control position in German car maker Grammer AG to unnamed institutional inv*stors in Europe. The deal also included a sale by members of the Grammer family. In total, the transaction involved a sale of 83% of Grammer for 205 million euros, with Deutsche Bank serving as placement agent. www.grammer.de
Hellman & Friedman has completed its $1.1 billion buyout of DoubleClick Inc. (Nasdaq: DCLK). JMI Equity also contributed equity to the deal. www.doubleclick.com www.hf.com
Eurazeo has acquired Financiere Galaxie SAS – owner of European budget hotel chain B&B Hotel — from Duke Street Capital and other shareholders. No financial terms have been disclosed.
Carlyle Venture Partners has acquired Dulles, Va.-based software provider Compusearch Software Systems Inc. for an undisclosed amount. American Capital Strategies provided senior term loans, senior subordinated notes and equity. www.compusearch.com
The Blackstone Group and Battery Ventures have increased their bid for a 20% equity stake in the New York Mercantile Exchange (NYMEX) from $180 million to $200 million, according to Dow Jones.
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PE-Backed IPOs |
CryoCor Inc., a San Diego-based maker of a catheter system for cardiac arrhythmias,, priced 3.71 million common shares at $11 per share, for a total IPO take of approximately $40.81 million. It had been planning to sell 3.15 million shares at between $11 and $13 per share, and used W.R. Hambrecht’s Open IPO distribution method. CryoCor has raised $46.5 million in total VC funding since being spun out of CryoGen in 2000, including a $27.5 million Series D round in 2003. Significant shareholders include MPM Capital, Healthcare Equity Partners, OrbiMed Advisors and William Blair Capital Partners. www.cryocor.com
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PE-Backed M&A |
TV Works, a joint venture of Comcast Corp. and Cox Communications Inc., has acquired MetaTV Inc., a Mill Valley, Calif.-based software services company. No financial terms were disclosed. MetaTV has raised around $62 million in total VC funding since its 1999 inception, from firms like Rosewood Capital, Redpoint Ventures, Liberate Technologies, Hearst Corp. Comcast Interactive Capital, Saints Ventures and Atrium Capital. www.comcast.com www.metatv.com
MarketResearch.com Inc., a New York-based source of market research reports and services, has acquired competitor MindBranch Inc. of North Adams, Mass. for an undisclosed amount. MarketResearch.com is backed by Axalon Ventures and Tribune Ventures, while MindBranch has raised VC funding from Berkshires Capital Inv*stors. www.marketresearch.com www.mindbranch.com
Raabe Co. LLC, a Menomonee Falls, Wis.-based manufacturer of custom matched touch-up paints, has acquired competitor Foxcolor Inc. of Oshkosh, Wisconsin. No financial terms were disclosed. Raabe is a subsidiary of Huron Capital Partners portfolio company Quest Specialty Chemicals Inc. www.huroncapital.com
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Firm & Fund News |
Aberdare Ventures of San Francisco has secured nearly $130 million in limited partner commitments for its $150 million-targeted third fund, according to a regulatory filing. LPs include CalPERS, DuPont Pension Trust and Princeton University. In a February filing, the firm reported $113 million in commitments. www.aberdare.com
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Human Resources |
The Carlyle Group has hired three professionals for its U.S. venture and growth capital team. They are: Stephen Bailey, a managing director who previously served as VP of corporate development for Dell Inc. and was a former principal with Dell Ventures; Charles Moore, a principal who previously was a managing director with Perseus LLC; and David Lam, a vice president who previously was director of business development with network storage company Panasas Inc. www.carlyle.com
Bruce Lohn has joined Norwest Equity Partners as an operating partner, focused on the distribution and logistics markets. He is a partner with Minneapolis-based BCL Equity Partners, and previously served as co-founder, president and COO of former NEP portfolio company CTC Distribution Services (acquired by R.R. Donnelley & Sons in 2000). www.nep.com
Amal Johnson has joined Mill Valley, Calif-based market research company MarketTools Inc. as CEO. She previously served as a founding partner of Lightspeed Venture Partners. www.markettools.com
Craig Hoffman has been named a managing director with UCC Consulting Corp., a New York-based provider of M&A and strategic advisory services to companies with core assets in intellectual property. Hoffman previously founded Hoffman & Co LLC. www.ucccapital.com
Greg Staples has joined Deutsche Asset Management‘s insurance asset management group as a senior portfolio manager responsible for fixed income portfolios for insurance clients. He has spent the past twenty years at Mutual of New York, where he was a senior managing director responsible for such asset classes as private equity, asset-backed securities, mortgage-backed securities, money markets and I-grade credit. www.deutsche-bank.com
Stephen Smith has stepped down as president and CEO of Universal Underwriters Group, an Overland Park, Kansas-based unit of Zurich Financial Services Group that is being acquired for approximately $1.1 billion by Hellman & Friedman, Farallon Capital Management, GIC Special Investments and members of Universal Underwriters Management (including Smith himself). www.universalunderwriters.com
WEDNESDAY, JULY 13
It’s A Big Deal
Huge news day, with Colin Powell “joining” Kleiner Perkins, Baidu.com filing to go public and AIG managing to close its Highstar fund while so much else is falling down around it. To me, though, the day’s biggest blurb (in substance, not in length) is that on-demand web analytics company Omniture raised $40 million in Series C funding. That is simply an enormous amount of money in the web analytics space, considering that Google reportedly grabbed Urchin for just $30 million, and that WebSideStory only raised $44 million in total VC funding before going public last year. Since I’m running very short on time, a couple of bullet points of interest about this company and deal
* Omniture certainly could have raised money on the public markets, had it tried. WebSideStory is currently trading at around $16.30 per share, which is nearly double its IPO price of $8.50 per share. Moreover, it’s gotten some very big-name customers (just added Ford Motor Co.) and was profitable before launching a fairly extensive growth initiative. So why not go public? Is it the dreaded SarbOx?
Company CEO Josh James says that the issue is one of flexibility. An IPO, he argues, could stifle Omniture’s ability to invest in sales, marketing, R&D, etc. To James, public=profitability pressure, and he doesn’t believe that he can build a market leader while always being concerned about moving from red to black (the company was once profitable, but currently is not due to the aforementioned growth initiative). Ditto for potential acquisitions, which James wouldn’t comment on, but which are almost a sure bet.
* If not an IPO now, could an acquisition come later? The reality is that there are only a handful of potential acquirers for a company like Omniture (Microsoft, SalesForce.com and, possibly, Google, comes to mind). More importantly, however, folks who know Josh James suggest that he’d have to be dragged kicking and screaming into an M&A situation, no matter how lucrative. He’s clearly got a single-track vision about Omniture becoming the undisputed market leader in web analytics (this isn’t just CEO/PR lip-service), and the idea of letting someone else take over would be anathema. In other words, expect this to be the last round of private funding, with an IPO in 2007 or 2008.
* What happened while BAVP worked? Rory O’Driscoll, the general partner with BA Venture Partners who led the Omniture deal, says that he first looked at Omniture a 1.5 years ago, for a round that ultimately was led by Hummer Winblad. When it came to due diligence this time around, however, he was beset by a number of unforeseen circumstances. First, the stock price of WebSideStory dropped about 23% in Mid-May, and didn’t recover for another month. Next, Google bought Urchin and immediately cut prices for Urchin customers. There also was a patent violation lawsuit brought against Omniture (and lots of other companies) by NetRatings. Despite all of this, O’Driscoll continued to believe in his initial assessment The WebSideStory trouble was temporary, he thought, and the revised Urchin pricing actually matched what BAVP had estimated in its market model. He declined to comment on the lawsuit.
* What is BAVP’s vision for the web analytics space, particularly when it comes to search behemoths like Google and Yahoo: This is the only place where things get a bit confusing from a future value perspective. On the one hand, O’Driscoll and market analysts say that while Google/Urchin clearly provide competition, the ultimate market leaders will be Omniture, WebSideStory and, possibly, Webtrends (there are lots of smaller players, but they’re getting gobbled up quickly). Why? Because companies will want to buy from dedicated providers. In other words, just because a company uses Google for keyword search, doesn’t mean that it will want them to break down website visitor demographics into various silos.
* OK, the “one throat to choke” theory doesn’t apply. But there is a bit of contradiction, in that Omniture and its peers are busy trying to provide all sorts of ancillary functions, including bid management, email, etc. If customers want just a dedicated provider, then why add all these bells and whistles? Isn’t Omniture trying to lure customers with a theory it believes is flawed when coming from Google? It’s a question I didn’t hear a great answer to yesterday, but I’m keeping my ears open.
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Top Three |
Omniture Inc., an Orem, Utah-based provider of web analytics, has raised $40 million in Series C funding. BA Venture Partners led the deal, and was joined by Attractor Investment Management and return backer Hummer Winblad Venture Partners. www.omniture.com
The Blackstone Group has agreed to buy Lego Co.‘s four LegoLand amusement parks for 375 million euros. The parks are based in England, Germany, California and Denmark. www.blackstone.com www.lego.com
Colin Powell, former U.S. Secretary of State, has joined venture capital firm Kleiner Perkins Caufield & Byers as a strategic limited partner. www.kpcb.com
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VC Deals |
Icrossing Inc., a Scottsdale, Ariz.-based search engine marketing company, has raised $13 million from new company backers RRE Ventures and Generation Partners. The company had received a $28 million VC infusion in 2000 at a post-money valuation of approximately $103 million. www.icrossing.com
Redfern Integrated Optics, an Australia-based maker of optical transmitters for the telecom and data switch markets, has raised US$6.2 million in third-round funding from Advent International, Tallwood Venture Capital, TMT Ventures and Redfern Photonics Pty Ltd. www.redfernintegrated.com
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Buyout Deals |
DoubleClick Inc. (Nasdaq: DCLK) has received shareholder approval for its proposed acquisition by private equity firm Hellman & Friedman. The deal is valued at $1.1 billion, or $8.50 per share. JMI Equity is also contributing equity to the buyout. www.doubleclick.com www.hf.com
TA Associates has completed a $50 million majority recap of Quantitative Analytics Inc., a Chicago-based provider of database integration and analysis solutions to the financial services industry. www.qaisoftware.com www.ta.com
3i Group has agreed to buy UK-based parking services company National Car Parks Ltd. (NCP) from Cinven for approximately Gbp555 million. www.ncp.co.uk
General Atlantic and Quadrangle Group have agreed to acquire Dice Inc., a provider of online recruiting services for tech, engineering and security-cleared professionals. No financial terms were disclosed for the deal, which will result in GA and Quadrangle each holding an equal ownership position. The Wall Street Journal, however, reports that the price tag is around $200 million. www.dice.com
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PE-Backed IPOs |
Focus Media Holdings Ltd., a Shanghai, China-based out-of-home advertising network, has priced 10.1 million American depository shares (ADS) at $17 per share (above its $14-$16 offering range), for a total IPO take of approximately $171.1 million. The company will trade on the Nasdaq under ticker symbol FMCN, with Goldman Sachs and CSFB served as lead underwriters for the offering. Significant shareholders include Goldman Sachs, 3i Group, Draper Fisher Jurvetson and Softbank Corp. www.focusmedia.com.cn
Baidu.com Inc., a Beijing, China-based Chinese language Internet search engine provider, has filed to raise $80 million via an IPO of American depository shares (ADS). It plans to trade on the Nasdaq under ticker symbol BIDU, with Goldman Sachs (Asia) and CSFB serving as lead underwriters. Significant shareholders include Draper Fisher Jurvetson (28.1% pre-IPO stake), Integrity Partners (11%), Peninsula Capital (10.1%) and IDG Technology Ventures (4.9%) and Google Inc. (2.6%). www.baidu.com
Net Mobile AG, a Germany-based mobile technology company, yesterday priced 2.2 million shares at 8.50 euros per share, for a total IPO take of approximately 18.7 million euros. The company will trade on the Munich stock exchange, and OTC in Frankfurt. Shareholders include Wellington Partners (20% post-IPO stake) and Shamrock Holdings. www.net-m.de
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PE-Backed M&A |
ChannelAdvisor Corp., a Morrisville, N.C.-based provider of channel management solutions, has acquired SearchMarketing, a Seattle-based provider of natural and paid search optimization solutions for online merchants. No financial terms were disclosed. ChannelAdvisor has raised over $33 million in total VC funding, including an $18 million infusion earlier this year at a post-money valuation of approximately $23 million. Backers include Advanced Technology Ventures, Kodiak Venture Partners, TriState Investment Group, eBay Inc., Atlantis Group and Southern Capitol Ventures. www.channeladvisor.com
Xanodyne Pharmaceuticals Inc., a Florence, Ky.-based drug company, has won the bankruptcy auction for the pharmaceuticals division of aaiPharma Inc. (OTC BB: AAIIQ). The purchase price is $209.25 million, which is $40 million more than an original stalking horse offer announced when aaiPharma filed for Chapter 11 on May 10, 2005. Xanodyne also committed to purchasing up to $30 million of services to be provided by aaiPharma’s development services division over the next three years. Xanodyne has raised over $38 million in VC funding from Blue Chip Venture Co., Essex Woodlands Health Ventures and HealthCare Ventures. www.xanodyne.com www.aaipharma.com
Assay Designs Inc. of Ann Arbor, Mich. has acquired Stressgen Bioreagents Corp., a British Columbia-based maker of antibody and protein kits for life science research. No financial terms were disclosed for the deal, which was sponsored by Assay Designs shareholder Ampersand Ventures. Stressgen received VC funding in 1998 from Vector Fund Management. www.assaydesigns.com www.stressgen.com
Jobster Inc., a Seattle-based provider of targeted job advertising services, has acquired WorkZoo Inc., Fountain Valley, Calif.-based vertical search engine for job seekers. No financial terms were disclosed. Jobster has raised VC funding from Ignition Partners and Trinity Ventures. www.jobster.com www.workzoo.com
MindShift Technologies Inc., a Fairfax, Va.-based, has acquired Union Square Technology Group LLC, a New York-based provider of IT systems integration and other services to the legal sector. No financial terms were disclosed for the deal, although MindShift did say that Union Square had approximately $8 million in annual revenue. MiondShift has raised over $120 million in VC funding from firms like Bessemer Venture Partners, Columbia Capital and Fidelity Ventures. www.mindshift.com
Celenese Corp. (NYSE: CE) has received European Union approval for its proposed $492 million buyout of Canadian chemicals company Acetex Corp. Celenese is controlled by The Blackstone Group. www.blackstone.com
HB Performance Systems Inc., a braking systems maker acquired last month by Nautic Partners, has acquired the assets of Sun Metal Products, a Warsaw, Ind.-based maker of rims and wheel-sets for mountain bikes. No financial terms were disclosed for the deal, except that structured financing was provided by M&I Bank, LaSalle Bank and JPMorganChase. www.hayesbrake.com
Investment Technology Group Inc. (NYSE: ITG) has agreed to acquire The MacGregor Group, a Boston-based provider of trade order management technology to the global financial market. The all-cash deal is valued at approximately $230 million, and is expected to close within the next 60 to 90 days. Private equity firms Bain Capital, Commonwealth Capital and The Audax Group own approximately 43% of Macgregor. www.itginc.com www.macgregor.com
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PIPEDeals |
Solexa Inc. (Nasdaq: SLXA), a Hayward, Calif.-based genetics analysis company, has received $24 million in new PIPE funding, including approximately $10.8 million from prior VC backers Abingworth Management, Amadeus Capital Partners, Oxford Bioscience Partners and SV Life Sciences. The funding represents a second close to a $32.5 million deal announced earlier this year. www.solexa.com
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Firm & Fund News |
AIG Global Investment Group has held an $800 million final close on its AIG Highstar Capital II fund, which is a group of buyout vehicles formed to back infrastructure (including energy) and related assets and businesses. Limited partners include Principal Life Insurance Co., Everest Reinsurance Co., Mars Retirement Trust, Lexington Insurance Co., British Columbia Investment Management Corp., Kamil Holdings and Pioneer Group Ltd. The initial Highstar fund closed in November 2000 with capital commitments of $406 million. www.aig.com
Castle Harlan Australian Mezzanine Partners (CHAMP) is nearing a final close of between Au$900 million and Au$1 billion for its latest fund, according to Australian press reports. www.champequity.com
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Human Resources |
Ronan Cunningham has joined The National Pensions Reserve Fund of Ireland as head of private equity. He previously was a partner in the London office of Adams Street Partners.
Jane Wheeler has joined Evercore Partners as a senior managing director. She most recently served as a managing director with Morgan Stanley, where she headed their securities and financial technology I-banking business. www.evercore.com
Henry Tsang and David Cheng have joined Bear Stearns Asia Ltd. Tsang joins as group president and senior managing director, after previously having co-founded Search Asian Mezzanine Capital). Cheng joins as a managing director, and most recently served as co-head of I-banking with CITC Capital Markets. www.bearstearns.com
Brookwood Financial Partners of Beverly, Mass. has promoted firm co-founder Eve Trkla to the position of chief operating officer and partner. Her previous titles were CFO and senior managing director.
PricewaterhouseCoopers has named Gordon Medeiros as lead partner in its Transaction Services group in Minneapolis. He has spent the past five years as a partner in the firm’s Boston Transaction Services group. www.pwc.com
TUESDAY, JULY 12
Tuesday Talk-Back
Yesterday’s subscriber milestone was so exciting here at Wire Central that I forgot about Friday’s promise of a brief feedback column. So you are owed two things, dear reader, an apology and a remedy. I’m sorry, and here:
First up is the George Soros/Tom Davis/Washington Nationals matter, which led regular respondent Philip to write: “Who would ever believe that a partisan politician would ever try to make life difficult for a political opponent? I suspect that if you tried to list all the times where that kind of action took place that many of your subscribers would not be able to receive the PE Week Wire that day.Emails greater then 10 MB in size are bounced back by my ISP.
On a more industry-specific matter, there were a handful of opinions on the strategic review at CalPERS. Justin writes: “While CalPERS is obviously seems important because of its size and existing fund portfolio, the private equity market wouldn’t miss a beat if it decided to never again make a single private equity [fund commitment]… because there are so many other institutions trying to get into the space, and being shut out.” Val adds: “What could be interesting about the review is how it forecasts the future of LBO and VC fund sizes. Does it expect LBO funds to keep growing exponentially, so that CalPERS needs to significantly raise its LBO allocation and lower its VC allocation for years like 2007, 2008 and 2009?
Finally, a response to Frank Strong’s guest column, from PR guy Tony: “I hate the term ‘PR’ because it makes me think of press-release factories and ribbon cuttings. I face the question all the time, ‘What kind of experience do you have in our industry?’The big PR firms sell their slick answers, and it’s what a lot of companies unfortunately want to hear: ‘Oh, our PR Module #123456 was designed specifically for your industry.’ I tell people the truth: we’re experts in delivery. We get your messages to the eyes and ears of your intended audience whether that’s VC, prospects, or current customers. A good PR person/firm should be experts in shipping – we take the container (your message) from point A to point B. In fact, I really don’t care what’s in the container, but you can be sure it’s going to be delivered safely, accurately and on time. That’s how companies! get value out of their PR assets; otherwise, they’re buying PR Module #123456.
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Top Three |
Motricity Inc., a Durham, N.C.-based provider of mobile content and solutions, has raised $30 million in Series F funding. Advanced Equities Inc. led the deal, and was joined by return backers Technology Crossover Ventures, New Enterprise Associates and Intel Capital. The company has raised over $60 million in total VC funding, including a $27 million infusion in October 2004. www.motiricity.com
Omnicare Inc. (NYSE: OCR) has agreed to acquire excelleRx Inc., a Philadelphia-based provider of pharmaceutical care services to hospice patients, for $268.75 million. ExcelleRx shareholders include LLR Partners, Primus Venture Partners and Wachovia Capital Associates. www.omnicare.com www.excellerx.com
Cesar Zalamea has retired from his post as president and CEO of AIG Global Investment Group, and is expected to launch an Asia-focused private equity fund. In related news, John Chu has been named chairman of AIGGIG Asia and Ada Tse has been named president and CEO of AIGGIG. Both Chu and Tse will continue to be based in Hong Kong. www.aig.com
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VC Deals |
RaySat Inc., a Vienna, Va.-based provider of satellite antennas for vehicles, has raised $27 million in second-round funding. Apax Partners led the deal, and was joined by return backers Benchmark Capital and Israel Seed Partners. www.raysat.com
Primera Biosystems Inc., a Providence, R.I.-based developer of gene expression analysis systems and assays, has raised $11 million in Series A funding. Participants included MPM Capital, Burrill & Co. and the Malaysian Technology Development Corp. www.primerabio.com
Spanlink Communications Inc., a Minneapolis-based provider of customer interaction solutions that leverage VoIP technology, has raised $12 million in Series A funding from BlueStream Ventures and Split Rock Partners. www.spanlink.com
Zensys, a wireless networking technology company with offices in Copenhagen and Upper Saddle River, N.J., has raised $16 million in third-round funding. Bessemer Venture Partners led the deal, and was joined by return backers Palamon Capital Partners and Vaekstfonden. www.zen-sys.com
Azaleos Corp., a Redmond, Wash.-based provider of a messaging solution appliance, has raised $6 million in Series B funding. Ignition Partners led the round, and was joined by return backer Second Avenue Partners. www.azaleos.net
CaseNET Inc., a Waltham, Mass.-based developer of care management software for workers’ compensation and healthcare organizations, has raised an undisclosed amount of Series A funding led by Sigma Partners. www.casenetinc.com
Third Screen Media, a Boston-based provider of mobile advertising and marketing software, has raised $3 million in new VC funding. TD Capital Ventures led the deal, and was joined by Blue Chip Venture Co. www.thirdscreenmedia.com
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Buyout Deals |
Gyrus Group PLC is expecting to close its acquisition of American Cytoscope Makers Inc. from Fox Paine & Co. on July 21. The deal is valued at approximately $500 million (88% of which will be in cash). ACMI is a Southborough, Mass.–based medical device company focused on urology and gynecology. www.acmicorp.com
Apax Partners has made a 900 million euros bid for Spanish baked goods company Panrico, which tops existing offers from Permira, CVC, Vista Capital and PAI Partners, according to newspaper Expansion. www.panrico.com
Grupo Auna SA, a Spanish telecom company, has received a pair of buyout bids valued at nearly 7 billion euros each, according to The Wall Street Journal. The consortia are: Providence Equity Partners (lead), Carlyle Group, Blackstone Group and Permira; and KKR (lead), Goldman Sachs and BC Partners. The KKR-led group is looking to acquire Grupo Auna in one piece, while Providence is offering a split plan (the second part of which includes Spanish cable company Grupo Corporativo Ono).
The Carlyle Group has agreed to sell UK-based broadband satellite company Inmedia Communications Ltd. to Arquiva. No financial terms were disclosed. Carlyle acquired Inmedia through its Carlyle Europe Venture Partners fund via an April 2004 leveraged buyout. www.inmedia.co.uk
Veronis Suhler Stevenson has agreed to acquire, recap and merge employee-screening companies ePredix Inc. and Qwiz Inc., according to The Deal. The entire transaction is estimated to be worth approximately $100 million (including leverage). www.vss.com
CapMan has agreed to acquire a 68% ownership position in Inflight Service Europe AB, a Sweden-based travel retail company. Company founders and management will retain minority stakes. No deal terms were disclosed, although CapMan did say that Inflight Service had 2004 revenue of 138.6 million euros. www.capman.com www.inflightservice.se
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PE-Backed IPOs |
Pike Electric Corp., a Mt. Airy, N.C.-based provider of outsourced electric distribution and transmission services, has set its proposed IPO terms to 13.5 million common shares being offered at between $14 and $16 per share. The company plans to trade on the NYSE under ticker symbol PEC, with Citigroup and JPMorgan serving as lead underwriters for the offering. Pike Electric was acquired in 2002 by Lindsay Goldberg & Bessemer, which plans to sell over 3 million shares in the IPO. Lindsay Goldberg & Bessemer also will receive a $4 million management agreement termination fee once Pike Electric goes public. www.pike.net
Paetec Corp., a Fairport, N.Y.-based communications services provider, has set its proposed IPO terms to approximately 11.54 million common shares being offered at between $12 and $14 per share. It plans to trade on the Nasdaq under ticker symbol PAET, with Morgan Stanley and Merrill Lynch serving as lead underwriters for the offering. Significant shareholders include Madison Dearborn Partners, The Blackstone Group and Kline Hawkes & Co. www.paetec.com
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PE-Backed M&A |
Good Technology Inc., a Santa Clara, Calif.-based provider of wireless handheld computing software and services, has acquired key assets and engineering talent of JP Mobile Inc., a Dallas-based provider of wireless handheld computing solutions. No financial terms were disclosed. Good Technology has raised over $200 million in VC funding since its 2000 inception, from firms like Kleiner Perkins Caufield & Byers, BA Venture Partners, Benchmark Capital, Clearstone Venture Partners and CrossBridge Venture Partners. JP Mobile has raised over $52 million in VC funding since its 1995 inception, from firms like Baker Capital, Bantry Bay Ventures, Global Technology Ventures, Inv*stor AB, Network Associates, Odyssey Investment Partners and Pacesetter Capital Group. www.good.com www.jpmobile.com
CommPartners Inc., a Las Vegas-based VoIP facilitator, has acquired TPC Networks, a River Vale, N.J.-based company that buys and sells carrier transport minutes. No financial terms were disclosed, although VentureWire puts the price tag at “under $5 million.” CommPartners has raised private funding from Fleming Securities, Gallagher Equity Management and Circle F Funds. www.commpartners.us
GT Brands Holdings LLC, a New York-based seller of fitness and weigh-loss products, has filed for Chapter 11 protection. The company is controlled by Quadrangle Group, and has agreed to be acquired by Gaiam Inc. for $40 million.
Phoenix Brands LLC, a Stamford, Conn.-based portfolio company of Lehman Brothers Merchant Banking, has agreed to acquire the heavy-duty laundry detergents brands of Colgate-Palmolive Co. (NYSE: CL). No financial terms have been disclosed for the deal, which is expected to close later this quarter.
U.S. Maintenance, a Norristown, Pa.-based portfolio company of Sterling Investment Partners, has completed a $77 million refinancing related to its acquisition of Network Services Management Inc. www.sterlinglp.com
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Firm & Fund News |
Montagu Private Equity has closed its third fund with 2.26 billion euros in limited partner commitments. This is the UK-based firm’s first fund-raising effort since spinning out of HSBC in March 2003, although HSBC came back aboard as a limited partner. The fund will back European mid-market companies, and was raised with the help of Guggenheim in the U.S. and Deloitte outside of the U.S. www.montaguequity.com
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Human Resources |
Ronald Rittenmeyer has left his managing director post with The Cypress Group, just five months after coming aboard. The former president and CEO of Safety-Kleen Corp. now will serve as executive vice president of service delivery with Electronic Data Systems Corp. (NYSE: EDS).
Ron Bell has joined UK-based Palamon Capital Partners as chief financial officer. He previously served as financial director for Compass Partners International. www.palamon.com
Stephen Crawford has resigned as co-president of Morgan Stanley (NYSE: MWD). In related news, Zoe Cruz has been named acting president. www.morganstanley.com
Laura Roden has joined The Angels’ Forum as a managing director, focused on deal-flow and angel membership. She previously served as president and CEO of the Silicon Valley Association of Startup Entrepreneurs (SVASE), where she will remain as chairwoman. www.angelsforum.com
Karl Wiemer has joined has joined Stroock & Stroock & Lavan LLP as special counsel in the firm’s corporate practice group. He previously served as of counsel to in the New York office of Bingham McCutchen. www.stroock.com
TMONDAY, JULY 11
24,000 and Counting…
Every time the PE Week wire adds another thousand subscribers, I like to remind you that these daily missives are just a speck on the vast universe that is Private Equity Week. To gain access to the whole ball of content, however, you must become a paid subscriber. So whip out that corporate credit card and sign up. You’ll get the weekly print publication and unlimited access to our website’s protected sections, within which you’ll find in-depth deal news, fund news, market analysis and proprietary data. Plus, it even has bylined stories of mine, minus all of those Wire-like typos. Just tap the “Subscribe” button at the right-hand side of this email, or email Ingrid Olsen. She also can help you get a subscription to the bi-weekly Buyouts Magazine, or the monthly glossy Venture Capital Journal.
Also, anyone interested in getting their message out to 24,000+ subscribers should contact our ad maven Naz Bayazit. As always, thanks for reading…
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Top Three |
CoreValve, a Paris, France-based maker of a delivery system for percutaneous heart valave replacement, has raised $24 million in Series B funding. Apax Partners led the deal, and was joined by HealthCap. The company now has raised a total of $30 million, including a $6 million first-round infusion that included individual angels and Sofinnova Partners. www.corevalve.com
AIG Highstar Capital, a private equity unit of American International Group Inc., has agreed to sell the Southern Star natural gas pipeline system to General Electric Co. and Caisse de depot et placement du Quebec for $362 million. The deal also would include the assumption of approximately $476 million in debt and preferred stock, with GE holding a 60% ownership stake and Caisse holding the remaining 40 percent. AIG Highstar acquired Southern Star in 2002 from The Williams Cos., and GE’s Energy Financial Services acquired 2 percent of the company’s equity of in 2003.
The Founders Fund has been launched with $50 million in initial limited partner commitments. The San Francisco-based firm will focus on emerging companies in the consumer Internet space, and currently has two partners: Peter Thiel, co-founder and former CEO of PayPal, and fellow PayPal co-founder Ken Howery. Luke Nosek, another PayPal co-founder, serves as a venture partner. www.thefoundersfund.com
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VC Deals |
Digital Map Products Inc., a Costa Mesa, Calif.-based developer of Web GIS software applications, has raised $3 million in Series C funding led by Titan Investment Partners. www.digitalmapproducts.com
MetaLincs Corp., a Mountain View, Calif.–based provider of electronic discovery software, has raised $8.75 million in Series A funding. Participants included ArrowPath Venture Partners, Newbury Ventures and Rembrandt Venture Partners. www.metalincs.com
MobileAccess Networks Inc., a Vienna, Va.-based provider of in-building wireless solutions, has raised $6 million in Series D funding. Return backers include HarbourVest Partners, Pitango Venture Capital, Poalim Ventures, Eurofund and CDB Web Tech. MobileAccess has raised over $45 million in total VC funding since its 1998 inception. www.mobileaccess.com
Zipcar Inc., a Cambridge, Mass.-based car-sharing service, has raised $10 million in its first institutional round of funding. Benchmark Capital led the deal. www.zipcar.com
Pepscan Systems BV, a Dutch drug discovery and development company, has raised 5 million euros in first-round funding. PPM Oost led the deal, and was joined by Lupus Ventures, Wageningen Business Generator and Technofund Flevoland. www.pepscan.com
Minth Group Ltd., a China-based automotive parts manufacturer, has received a $27 million private equity funding commitment from Baring Private Equity Asia Ltd. www.bpepasia.com
Posit Science Corp., a San Francisco-based neurology company, has raised around $14.52 million in Series B funding (including conversion of promissory notes), according to a regulatory filing. Return backers include Aberdare Ventures, Draper Fisher Jurvetson and VSP Capital. www.positscience.com
SnapIn Software Inc., a Bellevue, Wash.-based provider of mobile phone software has raised $3 million in Series B funding, according to a regulatory filing. Backers include Seapoint Ventures, Frazier Technology Ventures, Oak In*stment Partners and Hunt Ventures. www.snapin.net
LGC Wireless, a San Jose, Calif.-based provider of in-building wireless networking solutions, has raised $11 million in mezzanine funding round led by Rembrandt Venture Partners. The company has raised $91 million in total private funding since its 1996 inception. www.lgcwireless.com
ECI Biotech, a Worcester, Mass.-based maker of sensors for consumer and medical products, is preparing to close on $2.5 million in new VC funding, according to The Boston Globe. www.ecibiotech.com
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Buyout Deals |
Allied Capital Corp. has acquired Norwesco Inc. from Norwest Equity Partners and Brockway Moran & Partners for $160 million. Norwesco is a St. Bonifacius, Minn.–based manufacturer of plastic agricultural and septic tanks, and became a portfolio company of Norwest and Brockway Moran in October 1998. www.norwesco.com
The Neiman Marcus Group Inc. (NYSE: NMG.A, NMG.B) will hold a special shareholders meeting on August 16 at 8am EST, in order to vote on the proposed $5.1 billion company acquisition by Texas Pacific Group and Warburg Pincus. www.neimanmarcusgroup.com
Circle Graphics, a Longmont, Colo.-based large-format digital printing company specializing in billboards, has received an undisclosed amount of private equity funding from TA Associates. www.circlegraphicsonline.com
ABN AMRO Capital has acquired Dutch holiday parks operator Roompot from Bencis Capital Partners for an undisclosed amount. Company management will retain a minority shareholding position. Bencis has originally acquired Roompot in March 2003. www.roompot.nl
Kohlberg Kravis Roberts & Co. and Silver Lake Partners are the leading bidders for Agilent Technology Inc.’s (NYSE: A) semiconductor products business, according to The Wall Street Journal. The auction is expected to fetch up to $2.5 billion, with other bidding consortiums including Bain Capital/Warburg Pincus and Texas Pacific Group/CVC Partners/Francisco Partners.
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PE-Backed IPOs |
Accentia BioPharmaceuticals Inc., a Tampa, Fla.-based drug company focused on respiratory disease and oncology, has reduced its proposed IPO price range from $11-$13 per share to $8-$10 per share. It still plans to offer 6.25 million common shares, with Jefferies & Co. serving as lead underwriter. Significant shareholders include The Hopkins Capital Group, McKesson Corp. and Pharmaceutical Product Development Inc. www.accentia.net
Maidenform Brands Inc., a Bayonne, N.J.-based intimate apparel maker, has set its proposed IPO terms to 10 million common shares to be offered at between $14 and $16 per share. It plans to trade on the NYSE under ticker symbol MFB, with USB Investment Bank and Credit Suisse First Boston serving as lead underwriters. Ares Management holds a majority position in Maidenform, due to a May 2004 buyout from Oaktree Capital Management, which still maintains a minority position. AIG also is listed as a minority shareholder www.maidenform.com
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Firm & Fund News |
Primus Pacific Partners is planning to raise $1 billion for an inaugural fund that will inv*st in Asian financial services companies, according to Reuters. The firm is being run by David Olsen, former CEO of Guggenheim Merchant Banking and onetime chairman of Asia-Pacific banking for CSFB. Other managing directors include Guocang Huan, former head of Asia-Pacific banking for HSBC, and Wing-Fai Ng, former head of strategy for Fubon Financial.
Shuaa Partners, the private equity arm of Dubai-based I-bank Shuaa Capital, has held a $160 million first close on its inaugural leveraged buyout fund. A final close on $200 million in expected to occur within the next several months.
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Human Resources |
Macquarie Funds Management has hired three alternative asset pros who previously worked with Pacific Corporate Group: Peter Martenson, division director; Eric Becker, associate director; and Rick Fratus, associate director. They will be based near San Diego, while the team’s other six members remain in Australia. www.macquarie.com
Mezzanine Management, a UK-based mezzanine and private equity provider, has promoted Valerie Lebreton to the position of managing director. It also has hired former BancBoston Capital pro Christian Heidl as an investment director. The firm plans to recruit additional individuals as it focuses on more self-sponsored transactions. www.mezzanine-management.com
Neil Cox has joined MK Capital has a venture partner. He previously served as an executive vice president of Science Applications International Corp. (SAIC), responsible for next-generation technologies and networks for both wired and wireless businesses. www.mkcapital.com
Cooley Godward announced that it will open an office in Washington D.C., to be staffed by a trio of new partners who previously were partners with DLA Piper Rudnick Gray Cary: Maggie Kavalaris, Michael Marinelli and Tami Howie. www.cooley.com
Scott Plumridge has joined private equity firm The Halifax Group as a Washington, D.C.-based vice president. He previously founded an educational publishing business and, before that, served as an associate with Chartwell Investments. www.thehalifaxgroup.com
FRIDAY, JULY 8
Random Ramblings
Back in July 2001, I wrote a feature piece for Buyouts Magazine about J.H. Whitney & Co., the Stamford, Conn.-based private equity firm that, at the time, was simply known as Whitney & Co. The article could be best characterized as an accident report, as in: “There was a major accident today, and it is currently unclear if the driver will survive.” The driver, of course, was Whitney & Co. itself, which was at the tail end of a tumultuous year that saw poor returns, disappointing fund-raising results, a failed global expansion strategy and at least eleven personnel defections (including Bill Dawson, who was supposed to replace the void left by Michael Brooks’ defection to Venrock, and Joe McCullen, who was supposed to spearhead a new Boston office).
True to the form of any struggling enterprise in denial, Whitney & Co. sent a shoot-the-messenger memo to limited partners, blaming their bad press on bad reporting. Almost no one bought it.
Why dredge all of this up again today? Because I think there is a good chance that Whitney & Co. might finally be on the precipice of regaining its venerable reputation. In other words, the messenger comes bearingg gifts this time. Let’s look at the old problems, and provide an update:
1. Returns: Whitney’s fourth fund was a disaster. It has a negative 28.8% IRR as of last Sept. 30 (according to CalSTRS), which is just slightly better than the negative 29.8% IRR it had at the end of March 2004 (according the Private Equity Intelligence, which put it as a fourth quartile fund). Its fifth fund, however, is a success. CalSTRS gives it an IRR of 13.35% as of last Sept. 30, at which point it was 85% called down. PE Intelligence gives it first quartile status from March 2004 with a 16.4% IRR. Lots of existing public and private exits, plus a pending IPO for RBC Bearings Inc.
2. Fund-Raising: Fund V came in far under target ($1.1 billion of a targeted $2 billion), but Whitney & Co. seems to be doing far better this time around for Fund VI. It is targeting $650 million with a $750 million cap, and already had $550 million as of late April, according to a regulatory filing. Whitney & Co. didn’t return calls or emails left yesterday, but I wouldn’t be surprised if a final close has either already happened, or is in soft circle status. Return backers include CalSTRS ($75m), PSERS ($50m) and the University of Michigan ($25m).
3. Global expansion strategy: Whitney & Co. apparently has lost its onetime desire to become The Carlyle Group, so this is now a non-issue.
4. Personnel defections: This is the only place where some questions remain. Whitney & Co. is featuring a number of partners not around when Fund V closed, and also will soon say goodbye to a pair of managing partners: Bill Laverack and Michael Stone, who were considered to be two-thirds of “Three Amigos” at Whitney & Co., along with firm chief Peter Castleman (who remains in charge). LPs I’ve spoken with have expressed some concern over these departures, although add that Castleman has always been viewed as the firm’s top decision-maker.
*** Seems I was too optimistic in thinking that the strategic review of CalPERS’ alternative investment management program would be done by next month. I spoke briefly yesterday with Mike Moy, managing director of Pension Consulting Alliance, which was retained by CalPERS to do the review (specifically, Mike is in charge of conducting all of the interviews). He said that the results and recommendations definitely won’t be presented in August, and agreed that early fall was far more likely. This helps further explain the likely Grove Street/California Emerging Ventures timing shortfall.
*** We now have interns helping out a bit with the news section. Big kudos and thanks to Victor, Lauren and Megan.
*** Steve Bailey ofThe Boston Globe is articulately correct, per usual.
*** Gary Rivlin of the NY Times, however, continues to frustrate by making good points with poor examples (remember the Tourist VC column?). He correctly argues today that certain state pension systems are unable to access top-tier VC funds, because they are new to the market and don’t have enough existing relationships. But then he cites such states as Washington. Huh? Washington has VC and PE fund commitments going back to the mid-1980s. How on earth does this qualify as a “Johnny-come-lately?”
*** Monday Mouth-Off coming up when we return, so send those comments in… have a great weekend.
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Top Three |
Insight Equity of Southlake, Texas has closed its first leveraged buyout fund, with $250 million in limited partner commitments. Once general partner capital and partner co-investments are included, the firm will have in excess of $300 million in available capital. It plans to focus on middle-market companies which are underperforming due to operational problems, with a particular focus on companies with considerable manufacturing or distribution activities. www.insightequity.com
Plaxo Inc., a Mountain View, Calif.-based provider of email contact management software, has raised around $6.72 million in Series D funding, according to a regulatory filing. Return backers include Sequoia Capital, Cisco Systems and Globespan Capital Partners. www.plaxo.com
Current Communications Group LLC, a Germantown, Md.-based broadband-over-power line service provider, has received venture capital funding from Goldman Sachs, Google Inc. and The Hearst Corp. No financial terms were disclosed, although The Wall Street Journal reports that the deal is valued at around $100 million. www.currentgroup.com
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VC Deals |
Sypherlink Inc., a Dublin, Ohio-based enterprise software company focused on data-sharing, has raised $3.4 million in Series A funding, according to a regulatory filing. Backers include Reservoir Venture Partners and Battelle Ventures. www.sypherlink.com
Cenzic Inc., a Santa Clara, Calif.-based provider of enterprise software and services for automated application security assessment, has raised $15 million in Series C funding, according to a regulatory filing. Advanced Technology Ventures was joined on the deal by return backers Hummer Winblad Venture Partners, JK&B Capital and Mohr, Davidow Ventures. Cenzic has raised approximately $32 million in total VC funding since its 2000 inception. www.cenzic.com
Potentia Semiconductor Corp. (f.k.a. Potentia Power Systems), an Ottawa, Canada-based power management company, has raised US$8 million in new VC funding. Backers included VenGrowth Private Equity Partners, Kodiak Venture Partners and Teachers’ Private Capital. www.potentiapower.com
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Buyout Deals |
Eurazeo has entered exclusive talks to acquire European budget hotel chain B&B Hotel from Duke Street Capital and other shareholders. No financial terms have been disclosed.
Permira has entered exclusive talks to sell UK restaurant chain Little Chef to Out of Town restaurant chain founder Lawrence Wosskow for between Gbp53 million and Bgp55 million, according to The Financial Times. Permira originally acquired Little Chef as part of its Gbp712 million acquisition of Travelodge in 2003, and had been said to be looking for Gbp50 million. www.little-chef.co.uk
Thales SA is in talks to sell its optical components business to private equity firm Candover, according to French newspaper La Tribune. The business has annual revenue of 150 million euros, and employs around 1,400 people.
J.W. Childs has agreed to acquire acute-care hospital operator Cornerstone Healthcare Group from National Senior Care Inc. According to The Deal, Childs will pay approximately $160 million, with losing bidders including Carlyle Group, Triumph Healthcare (owned by TA Associates) and Regency Hospital Co. (owned by Waud Capital Partners).
SunTx Capital Partners has acquired Huron Inc., a Lexington, Mich.-based manufacturer of precision components for the automobile industry. The deal also included $3 million in senior subordinated notes and $500,000 in preferred equity from Fifth Street Capital.
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PE-Backed IPOs |
AtriCure Inc., a West Chester, Ohio-based developer of surgical devices to create precise lesions in soft tissues, has set its proposed IPO terms to 4 million shares being offered at between $12 and $14 per share. It plans to trade on the Nasdaq under ticker symbol ATRC, with UBS and Piper Jaffray lead managing the offering. The company has raised around $26.2 million in VC funding since its 1999 inception, from firms like Camden Partners, Charter Ventures, Foundation Medical Ventures and U.S. Venture Partners. www.atricure.com
Hercules Offshore Inc., a Houston-based provider of liftboat and shallow-water drilling services to the oil and gas industry, has filed to raise $172.5 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol HERK, with Credit Suisse First Boston and Citigroup serving as lead underwriters. Lime Rock Partners is the company’s controlling shareholder, while Greenhill Capital Partners also holds a sizable position.
Search Consultancy Group, a Scottish executive recruitment company controlled by 3i Group, reportedly has canceled its planned Gbp40 million IPO on AIM, citing market conditions.
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PE-Backed M&A |
Triax Holdings LLC, a platform company formed by Allied Capital to acquire and develop specialty pharmaceutical products focused on dermatology, has acquired Spear Pharmaceuticals Inc., a Ft. Myers, Fla.-based generic dermatological drug manufacturer. The deal was financed through $77 million from Allied, which took the form of subordinated notes and private equity. Triax management also participated with a minority equity interest, plus Triax secured $56 million in senior note funding from Callidus Capital Finance, which plans to syndicate a portion of the facility. www.alliedcapital.com www.spearpharmarceuticals.com
Millipore Corp. (NYSE: MIL) has agreed to acquire NovAsepticAB, a Sweden-based provider of aseptic processing applications for biotech and pharmaceutical manufacturing operations. The deal is valued at approximately Sek720 million ($91 million) in cash, and is expected to close within the next 45 days. NovAseptic has received VC funding from Priveq Partners. www.millipore.com www.novaseptic.se
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Firm & Fund News |
Weinberg Capital Partners, a French private equity firm launched by former Pinault Printemps Redoute executive Serge Weinberg, has held a 380 million euros first close on its inaugural fund. The vehicle is being marketed with a 500 million euros target.
Advantage Capital Partners has raised $23 million for its Texas CAPCO Fund, which will fund Texas-based businesses with fewer than 100 employees. www.advantagecap.com
Reservoir Capital has agreed to acquire the private equity fund-of-funds arm of Capital Z, according to Private Equity Insider.
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Human Resources |
Marcos Rodriquez, managing member of Palladium Equity Partners, has been named chairman of The Robert Toigo Foundation, a nonprofit organization focused on helping ethnic minorities pursuing careers in finance. Rodriguez replaces Doug Fleming, managing director of JPMorgan Investment Management Co. www.toigofoundation.org
Cesar Baez has resigned as head of alternative investments with the New Jersey Division of Investments, according to Private Equity Insider. New Jersey just made its first-ever private equity fund commitments last month.
THURSDAY, JULY 7
It goes without saying, but my prayers and well-wishes are with the people of London this morning. This also includes editorial colleagues in our London office at 33 Aldgate House, which has been seen in the background during much of this morning’s television coverage.
If you know of private equity-related people affected, injured or – God forbid – murdered through today’s attacks, please pass on the information so that it can be shared with your fellow readers. It can be a grim business, but also a time when people put aside petty differences (business, political, etc.) and provide communal support.
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Top Three |
Royal Philips Electronics (NYSE: PHG) has agreed to acquire Stentor Inc., a Brisbane, Calif.-based provider of picture archiving and communications systems used for storing, managing and distributing digital radiology images in hospitals and healthcare facilities. The deal is valued at approximately $280 million in cash. Sentor has raised over $25 million in VC funding since its 1998 inception, including a $20 million infusion in August 2000 at a post-money valuation of around $83 million. Backers include Sanderling Vetures, Lancet Capital, University of Pittsburgh and EMC Investment Corp. Stentor has been in registration for a $69 million IPO since last November. www.philips.com www.stentor.com
Town Sports International Holdings Corp., a New York-based health-club chain operator, has filed to raise $172.5 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol CLUB, with Credit Suisse First Boston and Deutsche Bank Securities serving as lead underwriters. Significant shareholders include Bruckmann, Rosser, Sherrill (38.4% pre-IPO stake), Farallon Capital Partners (20.6%) and Canterbury Mezzanine Capital (10.6%). www.nysc.com
NextHop Technologies Inc., a Mountain View, Calif.-based provider of network software solutions for Internet infrastructure manufacturers and service providers, has raised $10.5 million in Series B funding. Return backers include New Enterprise Associates, Duchossois Technology Partners, Labrador Ventures and Parker Price Venture Capital. NextHop has raised $35 million in total VC funding since its 2000 inception. www.nexthop.com
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VC Deals |
The Boonty Co., a New York-based provider of digital video game distribution solutions, has raised $10 million in Series B funding. Rothschild Gestion and SPEF Venture were joined by return backers OTC Asset Management and Entrepreneur Venture. www.boonty.com
Service-now.com, a San Diego-based provider of on-demand IT service and asset management solutions, has received $2.5 million in Series A funding from JMI Equity Fund. www.service-now.com
CompassCare Inc., a Lake Forrest, Ill.-based provider of cost and treatment delivery management software for the outpatient healthcare industry, has raised $2.75 million in Series B funding. Hopewell Ventures led the deal with a $2 million commitment, and was joined by return backer Draper Fisher Jurvetson. www.compass-care.com
Expresso Fitness Corp., a Sunnyvale, Calif.-based supplier of interactive software for Internet-enabled cardio-fitness systems, has raised $4.5 million in Series B funding led by Enterprise Partners. www.expressofitness.com
Fiberxon Inc., a Santa Clara, Calif.-based developer of optical modules and transponders for the construction of high-speed communication networks, has raised $20 million in Series C funding. Greylock and return backer Apax Partners co-led the deal. www.fiberxon.com
NeoPhotonics Corporation, a San Jose, Calif.-based producer of active and passive optical components, has received $1 million in additional VC funding from Harris & Harris Group Inc.
EPGI Firecreek Inc., an oil production company with offices in Scottsdale, Ariz. and Torquay, England, has received a private equity funding commitment of up to $25 million from Dutchess Private Equities Fund II. The financing will be drawn over a three-year period.
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Buyout Deals |
JC Flowers & Co., a UK-based buyout firm run by former Goldman Sachs pro Christopher Flowers, has won the auction for Dutch bank NIB Capital, according to Reuters. The article adds that the $2 billion euros price tag cited in a recent Wall Street journal article is “exaggerated.”
Charterhouse Capital Partners reportedly has won the auction for UK-based – and publicly-traded — washroom services company PHS Group, with a Gbp600.4 million bid. Charterhouse had owned PHS prior to a 2001 IPO. www.charterhouse.co.uk
Allied Capital Corp. (NYSE: ALD) has agreed to sell its 65.7% stake in Housecall Medical Resources Inc. to Amedisys Inc. (Nasdaq: AMED) for $106.4 million. Housecall Medical is a Knoxville, Tenn.-based provider of home healthcare and hospice services, and was acquired by Allied Capital in November 2002, as part of a divestiture by former parent Adventist Health Systems. Harris Williams & Co. advised Housecall Medical on the sale to Amedisys. www.housecall.com
MVC Capital Inc. (NYSE: MVC) has sponsored the buyout of General Electric‘s Ohmeda brand suction and oxygen therapy business unit (GE-SOT). MVC Capital also has agreed to acquire GE-SOT’s largest supplier – Quire Cogswell-Aeros Instruments Inc. – and plans to merge both businesses into a new entity named Ohio Medical Corp. MVC Capital provided a total of $17 million in equity capital for the deals, with additional equity commitments coming from Champlain Capital, Guggenheim Corporate Funding and Imperial Capital. Guggenheim Corporate Funding served as lead arranger for the transaction’s debt financing. www.mvccapital.com
3i Group received European Union approval for its proposed buyout of a majority stake Italian toy maker Giochi Preziosi SpA.
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PE-Backed IPOs |
\New Flyer Industries Inc., a Winnipeg, Canada-based manufacturer of heavy-duty transit buses, has filed for an IPO of income deposit securities. The offering would price on the Toronto Stock Exchange, and could generate upwards of Cdn$350 million. The company was acquired last year by Harvest Partners and Lightyear Capital, from KPS Special Situations Fund. www.newflyer.com
Genco Shipping & Trading Ltd., a New York-based dry-bulk carrier, has set its proposed IPO terms to 11.5 million common shares to be offered at between $24 and $27 per share. It plans to trade on the Nasdaq under proposed ticker symbol GSTL, with Jefferies & Co. and Morgan Stanley serving as lead underwriters. Oaktree Capital Management serves as the company’s controlling shareholder, via an entity called Fleet Acquisition Co.
Hoku Scientific Inc., a Honolulu, Hawaii-based developer of fuel cell technologies, has saiod that it will look to price 4.2 million shares via its proposed IPO of common stock. It plans to trade on the Nasdaq under ticker symbol HOKU, with Piper Jaffray serving as lead underwriter. Significant shareholders include Lava Ventures and the Hawaiian Electric Co. www.hokuscientific.com
Coffeville Resources Inc., a Kansas City-based petroleum refiner and marketer, has withdrawn registration for its proposed $300 million IPO, due to the acquisition of certain subsidiaries by a third party. Pegasus Capital Advisors is the company’s largest shareholder.
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PE-Backed M&A |
Parametric Technology Corp. (Nasdaq: PMTC) has agreed to acquire Arbortext Inc., an Ann Arbor, Mich.-based provider of enterprise publishing software solutions. The all-cash deal is valued at $190 million, and is expected to close later this month. Arbortext has raised approximately $55 million in venture capital funding from firms like Norwest Venture Partners, Invesco Private Capital and North Coast Technology Inv*stors. www.ptc.com www.arbortext.com
Global Energy Decisions LLC, a Boulder, Colo.-based provider of IT solutions to the energy industry, has acquired KW International Ltd., a London-based provider of energy trading and risk management software. No financial terms were disclosed. KWI was a portfolio company of Insight Venture Partners. www.kwi.com
Vernalis PLC (Nasdaq: VNLS) has agreed to acquire Ionix Pharmaceuticals Ltd., a UK-based analgesic drug discovery company. The all-stock deal is valued at approximately Gbp12.5 million. Ionix has raised VC funding from Apax Partners and The Wellcome Trust. www.vernalis.com www.ionixpharma.com
PlayNetwork Inc., a Redmond, Wash.-based provider of in-store entertainment solutions, has completed its all-stock merger with Crows Nest Entertainment Inc., a Seattle-based digital signage and systems integration company. PlayNetwork has raised VC funding from Chartwell Capital Management, Talon Opportunity Fund, Velocity Capital Management and Cedar Grove Investments. Silicon Valley Bank provided financing for the merger. www.playnetwork.com
Vigilar Inc., an Atlanta-based IT security consultancy, has acquired Intense School, a Ft. Lauderdale, Fla.-based IT and security training organization. No financial terms were disclosed. Vigilar has raised $4.5 million in VC funding from firms like McLeod Ventures and eLaunchpad. www.vigilar.com www.intenseschool.com
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PIPE Deals |
Sirna Therapeutics Inc. (Nasdaq: RNAI), a Boulder, Colo.-based biotech company, has held an initial closing on a $28 million PIPE deal. The round includes approximately $9 million from existing shareholders Sprout Group, Oxford Bioscience Partners and Venrock Associates. www.sirna.com
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Human Resources |
Elliot Swan is no longer a managing director with TD Capital Ventures, according to the firm’s website.
Andrew Harrison has joined Celtic House Venture Partners as an associate in the firm’s Toronto office. He previously served as an associate with Primaxis Technology Ventures. www.celtic-house.com
Todd Peterson has joined Nixon Peabody LLP as a partner on the business practice group’s private equity team. He previously was a partner with Salans. www.nixonpeabody.com
Pierre LeComte has joined TSG Consumer Partners as a vice president. He previously led strategic diligence teams in the private equity practice of Bain & Co. www.tsgconsumer.com
Ben Choi has joined In-Q-Tel as a senior associate, after previously having worked with RRE Ventures. www.in-q-tel.org
James Unruh, managing principal of private equity merchant bank Alerion Capital Group, has joined CSG Systems International Inc. as a Class III director. He replaces former CSG Systems CEO and chairman Neal Hansen, who has resigned. CSG is an Englewood, Colo.-based provider of billing and customer care solutions for the cable television, broadcast satellite, mobile and fixed wire-line markets. www.csgsystems.com
David Kornblau has been named first vice president and head of regulatory affairs at Merrill Lynch & Co. www.ml.com
WEDNESDAY, JULY 6
Random Ramblings
Notes as I wait for the contractor to return for Day 2 of what was only supposed to be a half-day job:
*** A few days before taking off for Italy, I had lunch (read: beer and shrimp) with someone who mentioned that the California Public Employees’ Retirement System (CalPERS) might be getting ready to part ways with Grove Street Advisors, the Wellesley, Mass.-based consultancy that makes most of the pension giant’s venture capital fund commitments. If true, it would be huge news, since CalPERS is the world’s second most active private equity investor (behind AlpInvest, depending on the euro-dollar conversion rate). So I made my obligatory calls/emails to folks at CalPERS and Grove Street, which responded with a collective “Huh?” The person I emailed at Grove Street, in all honesty, responded with a concerned “Huh,” but a “Huh?” nonetheless.
It seems the germ of this rumor concerns the fact that CalPERS is in the midst of a strategic review of its entire Alternative Investment Management (AIM) program, which includes its relationship with consultants/advisors like Grove Street (not to mention Pacific Corporate Group, LP Capital Advisors, Wilshire Associates, Bank of America and others). This is essentially a follow-up review to something McKinsey & Co. put together for CalPERS in 2000, and was formally announced during an investment committee meeting in February. At the time, the review’s results and recommendations were expected to be presented during either June or August’s meeting. Since June has already passed, expect the presentation to occur next month.
CalPERS has been extraordinarily tight-lipped as to how the process is going – keeping any and all details from its retained consultants – so it’s impossible to know the end game. It is entirely possible that CalPERS will ultimately keep the status quo, which is good news for groups like Grove Street. On the other hand, it could opt to bring its VC program in-house. For outside analysts like me, it’s simply crystal without a ball right now.
Which brings us back to why my beer buddy had heard that the relationship with Grove Street was ending, even though no one outside of the CalPERS review group would have any idea (and, remember, the review recommendations are not binding). This is just a best guess, but the answer probably comes down to the final report coming out in August instead of in June. Grove Street has a preset amount of cash it can commit to VC funds, and it likely will run out of dry powder before receiving an additional allocation (assuming that CalPERS opts to provide one). It is important to note, however, that this likely shortfall is calculated after taking into account follow-on commitments for existing general partnerships. So no severing/changing of the relationship as of yet (and quite possibly not at all), but rather a brief timeout.
You can read CalPERS’ official announcement of the review at: www.calpers.ca.gov/apps/board/invest/200502.asp (copy and paste it into your browser).
*** It’s good to know that the special counsel on the Valerie Plame outing believes that “Journalists are not entitled to promise confidentiality — no one in America is.” Very comforting to sources/patients/clients/parishioners of journalists, doctors, lawyers, clergy.
*** By now, you probably have received two issues of our new Asian Private Equity News. If you have a colleague who wants to sign up, just have them send an email to the publication’s editor Jerry Borrell at jborrell1@yahoo.com
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Top Three |
Concerto Software Inc., a Westford, Mass.-based provider of contact center solutions, has agreed to acquire Aspect Communications Corp. (Nasdaq: ASPT) for approximately $1 billion, or $11.60 per outstanding share of Aspect common stock. Upon the deal’s close, Aspect will no longer be publicly traded, while Concerto will continue to be controlled by Golden Gate Capital, Oak Investment Partners and company management. www.concerto.com www.aspect.com
TCW/Crescent Mezzanine has merged with Canterbury Mezzanine Capital, with Canterbury serving as Los Angeles-based TCW’s New York office. TCW/Crescent is approximately 75% invested out of its current fund, while Canterbury no longer has any dry powder. The combined firm is expected to launch a new fund-raising effort later this year. www.tcwgroup.com www.canterburycp.com
WhenU.com Inc., New York-based provider of Internet advertising solutions, has raised $15 million in additional Series Afunding from Trident Capital. This follows a $20 million first close from earlier this year, with backing from ABS Capital Partners and Access Technology Capital. www.whenu.com
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VC Deals |
Cognima Ltd., a UK-based provider of mobile imaging solutions, has raised $12 million in new VC funding. Crescendo Ventures led the deal, and was joined by return backers Atlas Venture, TLcom Capital Partners and TTP Ventures. Cognima has raised approximately $21 million in total VC funding since its 2001 inception. www.cognima.com
Zappos.com Inc., a Las Vegas-based online shoe retailer, has raised $15 million in additional VC funding from return backer Sequoia Capital. Zappos.com now has raised $35 million in total VC funding from Sequoia. www.zappos.com
Vortis Technologies Ltd., a Scotland-based developer of wireless antenna technology, has raised $500,000 in seed-stage funding. Scottish Enterprise led the deal, and was joined by the Bank of Scotland. As part of the deal, Vortis becomes the parent company of San Francisco-based Myers Johnson Inc. Vortis is a product of the Global Entrepreneurs Programme, a new U.K. Trade & Investment initiative. www.scottish-enterprise.com www.entrepreneurs.gov.uk
RigNet Inc., a Houston, Texas-based provider of managed communications services to the oil and gas industry, has raised $6 million in Series C funding. Sanders Morris Private Equity Group was joined on the deal by return backers the Altira Group and Energivekst. www.rig.net
National Guardian Security Services Inc., a Norwalk, Conn.-based provider of electronic security solutions to multi-location businesses, has received a $10 million private equity commitment from LLR Partners. www.nationalguardiansecurity.com
Aternity, an Israel-based developer of automated discovery and isolation of IT infrastructure and service problems, has raised $7.5 million in first-round funding, as first reported in The Financial Times. Vertex Venture Capital and Genesis Partners co-led the deal, and were joined by Portview Communications and Clal Industries & Investments Ltd. www.aternity.com
O-pen AS, a Denmark-based developer of display technologies, has raised 6 million euros in additional VC funding from InnovationsKapital, Vaekstfonden and Seed Capital Denmark.
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Buyout Deals |
Barclays Private Equity reportedly has sponsored a Gbp46 million management buyout of upscale UK shoe retailer Kurt Geiger, in exchange for a 72% ownership position. The selling party is Harrods chief Mohamed Al Fayed. www.kurtgeiger.com
Cerberus Capital Management and JC Flowers & Co. have entered the bidding for Dutch bank NIB Capital NV, according to The Wall Street Journal. Each firm has offered 2 billion euros in separate bids, joining existing offers from Fortis NV and General Electric.
Goldman Sachs Capital Partners has received European Union approval to buy the cable assets of Italy-based Pirelli & Co. SpA for approximately 1.3 billion euros (including debt). www.pirelli.com
FleetCor Technologies Inc., a Norcross, Ga.-based provider of fleet card processing solutions for the business fleet industry, has received $75 million in private equity funding from Bain Capital, according to various press reports. The infusion is part of a financial recap that also includes a $130 million term loan and a $30 million credit facility raised by JP Morgan Chase Bank and PNC Bank. The deal was expected to provide some liquidity for existing shareholders Summit Partners, GCC Investments and Advantage Capital Partners. Summit remains FleetCor’s largest shareholder, while Summit and Bain combined hold a control position. www.fleetcor.com
Kohlberg Kravis Roberts & Co. and Spanish cable operator ONO are considering a joint bid for Auna Operadores de Telecommunicaciones SA‘s cable business, according to La Gaceta de los Negocios. The two organizations currently are leading rival bids for Auna’s cable assets, with KKR teamed with Goldman Sachs Capital Partners, and ONO’s consortium including The Carlyle Group and Providence Equity Partners. Auna’s controlling shareholders are looking for bids in the range of 11 billion euros.
BC Partners and Cinven Group have completed their 4.34 billion euros buyout of Amadeus Global Travel Distribution SA, a Spain-based travel reservations company, from airline operators Air France, Iberia Lineas Aereas de Espana SA and Deutsche Lufthansa SA. The buying consortium is named Wam Acquisition SA, and now holds a 98.7% stake in Amadeus. www.amadeus.com
The Riverside Co. has acquired Welltec AS, a Danish manufacturer of intervention tools for the oil and gas industry. Co-inv*stors on the deal included Babson Capital Management (on behalf of parent Mass Mutual Life Insurance) and Welltec founder and CEO Jorgen Hallundbaek, who contributed 45% of the deal’s equity. No financial terms were disclosed.
Universal Studios Japan Co. Ltd., an operator of a movie theme park in Osaka, Japan, has agreed receive $179 million in private equity funding from Goldman Sachs Capital Partners. A related deal also will include a private equity infusion from Japan Developmental Bank.
Avnet Inc. (NYSE: AVT) has completed its $663 million acquisition of San Diego-based semiconductor distributor Memec Group Holdings Ltd. from majority shareholder Permira. Memec will operate within Avnet Electronics Marketing, and former chairman of the Memec board of directors Peter Smitham will now sit on the Avnet Board. Memec currently is in registration for a $100 million IPO, but that registration is expected to be withdrawn. www.avnet.com www.memec.com
ProLogis (NYSE: PLD) has sold its French operations to Murilleau Monceau, a special purpose vehicle of private equity firm Paluel Marmont Capital. The deal is part of ProLogis’ effort to exit the temperature-controlled logistics market, and is valued at approximately $40 million. www.prologis.com
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PE-Backed IPOs |
MWI Veterinary Supply Inc., a Meridian, Idaho-based distributor of animal health products, has set its proposed IPO terms to around 4.33 million shares to be offered at between $14 and $16 per share. The company plans to trade on the Nasdaq under ticker symbol MWIV, with Banc of America Securities serving as the offering’s lead underwriter. MWI Veterinary was formed in June 2002, after private equity firm Bruckmann, Rosser, Sherrill & Co. bought out MWI Veterinary Supply Co. from Agri Beef Co. www.mwivet.com
Adams Respiratory Therapeutics Inc., a Chester, N.J.-based drug company focused on respiratory diseases, has set its proposed IPO terms to around 7.08 million common shares being offered at between $14 and $16 per share. It plans to trade on the Nasdaq under ticker symbol ARxT, with Morgan Stanley and Merrill Lynch serving as lead underwriters. Adams Respiratory has raised over $30 million in total venture capital funding, with significant shareholders including Equity Group Inv*stors, Perseus-Soros, Tullis-Dickerson & Co., Merrill Lynch Ventures, Talon Equity Partners and Marquette Venture Partners.
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PE-Backed M&A |
Oracle Corp. (Nasdaq: ORCL) has agreed to acquire ProfitLogic Inc., a Cambridge, Mass.-based provider of retail profit optimization solutions. No financial terms were disclosed for the deal, which is expected to close later this month. ProfitLogic has raised around $38 million in total VC funding from firms like Athena Technology Ventures, Bain Capital, Battery Ventures, General Catalyst Partners and JPMorgan Partners. www.oracle.com www.profitlogic.com
Tyco International Ltd. (NYSE: TYC) has agreed to acquire Vivant Medical Inc., a Mountain View, Calif.-based developer of surgical devices to help treat brea*t cancer. The deal is being done through Valleylab, a division in Tyco’s healthcare segment, and is valued at $66 million in cash at close, plus up to $35 million in possible milestone payments. Vivant Medical has raised over $23 million in total VC funding since its 1998 inception, including a $6.5 million Series D infusion in 2003 at a post-money valuation of approximately $16.5 million. Backers include Three Arch Partners, Pacific Venture Group, Johnson & Johnson Development Corp., Adams Street Partners, Lightspeed Venture Partners and California Technology Ventures. www.tyco.com www.vivantmedical.com
Hain Pure Protein Corp., a joint venture of Pegasus Capital Advisors and natural foods provider The Hain Celestial Group Inc. (Nasdaq: HAIN), have completed their acquisition of the poultry processing facility assets of Fredericksburg, Pa.-based College Hill Poultry. No financial terms were disclosed. www.hain-celestial.com
Inwido AB, a portfolio company of Swedish private equity firm Ratos AB, has agreed to acquire fellow window maker Lenhovdafonster AB for an undisclosed amount. www.ratos.se
SCP Global Technologies, a Boise, Idaho-based, has agreed to sell its single-wafer HF-last immersion technology and clean/dry IP to Applied Materials Inc. (Nasdaq: AMAT) for an undisclosed amount. SCP Global is a portfolio company of 3i Group and VantagePoint Venture Partners. www.scpglobal.com www.appliedmaterials.com
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Firm & Fund News |
The Carlyle Group has opened its third office in China. This one is in Beijing, and features four investment professionals – two focused on growth capital, one focused on buyouts and one focused on real estate. www.carlyle.com
Macquarie Bank Group has closed its Macquarie European Infrastructure Fund with 1.5 billion euros, from limited partners like Pension Fund KBC, Suez-Tractabel Pension Fund, Northwestern Mutual, Canada Pension Plan Investment Board, Germany’s HSH Nordbank, ABP of the Netherlands, British Airways Pension Fund, Oslo Pensjonsforsikring, Generali of Italy and CDP. The fund already has begun to back various infrastructure assets, including transport assets, electricity and gas transmission and distribution networks, water and sewerage companies, communications infrastructure and renewable energy assets. www.macquarie.com/uk
The Blackstone Group has begun marketing a $500 million distressed debt fund, according to Private Equity Analyst.
TUESDAY, JULY 5
Running Late, Per Usual
I had two options this morning: (A) Work at my office, whose exterior is currently doubling as a film set for Martin Scorsese or (B) Work from home, which was supposed to be undergoing some minor renovation of its own. I went with B, which turned out badly, since the contractor showed up early, and then spent a good hour explaining why the job can’t actually be done today. In short, bad choice, and too little time left to write a decent column. But I’d hate to leave you with nothing, so…
*** Last Friday’s edition asked you to identify the private equity professional who is about to work for his fourth firm in less than a year. The answer is Craig White. White made his name with private equity consultancy Callan Associates, before leaving for Pacific Corporate Group in late 2004. After just three months, however, White bailed on PCG. Immediate speculation was that he would join up with Scott Vollmer, a fund-of-funds manager who, at the time, was negotiating his own exit from PCG. Instead, White signed on as a vice president with Sacramento-based LP Capital Advisors, which was founded by a pair of former KPMG transaction services folks (in large part to work with CalPERS).
Just last month, however, White was asked to leave LP Capital Advisors, after the firm began to feel that White was actively looking for new employment. In other words, he was pushed because he was looking to jump. No formal word yet on his new destination, but the smart money is on a new firm Vollmer is starting, now that he has extricated himself from his employment arrangement with PCG.
*** My colleague Lawrence Aragon has written a bit about Bill Burnham’s initial analysis of how much money Kleiner Perkins and Sequoia made from the Google IPO. Burnham has since provided an update of his own.
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Top Three |
ABN AMRO has agreed to acquire Priory Group from Doughty Hanson & Co. for approximately 1.29 billion euros (inclusive of leverage). Priory Group is a UK-based independent provider of mental healthcare and specialist education services, with 1,700 beds spread over a network of 40 facilities. It was acquired by Doughty Hanson in 2002 for Gbp306 million (including Gbp116 million of equity). www.prioryhealthcare.co.uk
Time Warner Inc. (NYSE: TWX), Goldman Sachs and Apax Partners are prepping an $11.7 billion bid for UK television broadcaster ITV, according to multiple press reports.
Micromuse Inc. (Nasdaq: MUSE) has agreed to acquire GuardedNet Inc., an Atlanta-based security management software company, for $16.2 million in cash. GuardedNet has raised approximately $14 million in VC funding since its 1999 inception, from firms like Imlay Investments and M/C Venture Partners. www.micromuse.com www.guarded.net
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VC Deals |
Cymfony Inc., a Watertown, Mass.-based provider of market intelligence and consumer-generated media analysis, has raised $7 million in Series D funding. Ascent Venture Partners led the deal, and was joined by return backers Trident Capital and Hearst Interactive. The company has raised over $31 million in total VC funding since its 1996 inception. www.cymfony.com
Zaplink Inc., a stealth-mode software development company, has raised over $1.22 million in Series A funding from Mayfield, according to a regulatory filing. The company currently is working out of Mayfield’s office in Menlo Park, Calif.
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Buyout Deals |
Heritage Partners has completed its sale of The Butler Co., a Dublin, Ohio-based provider of animal health products to veterinarians, to Oak Hill Capital Partners. Subsequent to the sale, Butler Co. merged with fellow animal health products company Burns Veterinary Supply Inc., which is owned by the Darby Group of Cos. Oak Hill and Darby now hold equal stakes in the combined company, renamed Butler Animal Health Supply LLC. www.butlerahs.com
The Blackstone Group has completed its sale of CD and DVD retailer The Columbia House Co. to BMG Direct, a division of DirectGroup Bertelsmann. No deal terms were disclosed. Blackstone originally acquired Columbia House from AOL Time Warner and Sony Corp. in 2002, with both sellers retaining a minority ownership position. www.blackstonegroup.com www.columbiahouse.com
Apax Partners and Altamir & Cie have received French regulatory approval for their proposed acquisition of a 39.5% stake in France-based, coal-powered cogeneration company Sechilienne-Sidec from Air Liquide. The deal is valued at approximately 162.33 million euros.
Castle Harlan is in advanced talks to buy the Polypipe building supplies unit of UK engineering group IMI PLC, according to The Times of London. The deal would be valued at approximately Gbp300 million. www.imi.plc.uk www.castleharlan.com
Barclays Private Equity has agreed to sell France-based mayonnaise and olive oil company Bénédicta to AXA Private Equity and company management. No pricing terms were disclosed for the deal, which will include financing arranged by Fortis Banque France and Capazanine. Barclays originally acquired Bénédicta from Unilever in a 42 million euros MBO. www.axaprivateequity.com
The Carlyle Group is considering a bid for Germany-based diesel-engine maker MTU Friedrichshafen, according to Financial Times Deutschland.
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PE-Backed IPOS |
MDC Acquisition Partners Inc., a Menlo Park, Calif.-based blank check acquisition company focused on the consumer and business services industries, has filed to raise $80 million via an IPO, with Wedbush Morgan Securities serving as lead underwriter. Much of MDC’s management team shares a common background and history with private equity firm McCown De Leeuw. This includes MDC chairman and CEO Robert Hellman (managing director and CEO of McCown De Leeuw), MDC director Matthew Carbone (managing director with McCown) and MDC management council chairman George McCown (co-founder and managing director of McCown). www.mdcpartners.com
TopoTarget AS, a Danish drug company focused on oncology, has completed its IPO on the Copenhagen Stock Exchange, raising Dk258.75 million (approx. $41.27 million). Venture backers include DVC Deutsche Venture Capital, BankInv*st and HealthCap. www.topotarget.com
Travelplanet.pl SA, a Poland-based online travel agency, has completed an IPO. The company was controlled by MCI Management SA prior to the offering. www.travelplanet.pl
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PE-Backed M&A |
Classified Ventures has acquired HomeGain Inc. an Emeryville, Calif.–based online realtor. No financial terms were disclosed. Classified Ventures is a strategic joint effort of Belo Corp. (NYSE: BLC), Gannett Co. Inc. (NYSE: GCI), Knight Ridder (NYSE: KRI), The McClatchy Co. (NYSE: MNI), Tribune Co. (NYSE: TRB) and The Washington Post Co. (NYSE: WPO)ton Venture. HomeGain has raised over $57 million in VC funding from Technology Crossover Ventures, BancBoston Ventures, J&W Seligman & Co., Rustic Canyon Partners and Intuit Corp. www.classifiedventures.com www.homegain.com
Callenberg Group AB, a portfolio company of private equity firm Segulah AB, has acquired ABB Automation Technology’s Marine Ventilation business unit for an undisclosed amount. www.callenberg.se
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Fund & Firm News |
Euroventures has closed its Euroventures Hungary III fund with 51 million euros. It plans to invest in both growth capital and buyout deals for businesses in Hungary and other Central European counties. Limited partners include ABN AMRO Capital, the European Bank for Reconstruction and Development, Lombard Odier Darier Hentsch & Cie and a Hungarian pension fund managed by Credit Suisse Life & Pensions. www.euroventures.hu
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Human Resources |
Carter Griffin has joined Reston, Va.-based VC firm Updata Partners as a principal. He previously served as co-founder and CEO of Brivo Systems Inc., an Arlington, Va.-based security systems provider for organizations that need to protect multiple buildings and facilities. www.updata.com
Karl-Heinz Woerle reportedly has resigned as CEO of Austrian car parts company Forstinger, after an inability to resolve a contract dispute with company owner – and UK-based private equity firm – Bridgepoint. www.forstinger.net
Century Park Capital Partners has made the following new hires: Guy Zaczepinski joins as a vice president from ACI Capital; Jennifer McIntosh joins as controller from Worldview Technology Partners; and Peter Kim joins as an analyst from Chanin Capital Partners. In other Century Park news, the firm has promoted Steve Tembley to vice president. www.centuryparkcapital.com
Edmund Truell has decided to resign as chairman of Duke Street Capital, according to PrivateEquityOnline. He will instead focus on a new effort related to “serving pension issues.” www.dukestreetcapital.com
******************
Correction: Last Friday’s edition should not have referred to Apax Partners’ new 4.3 billion euros fund as its sixth fund. While the fund name is Apax Europe VI, the firm has — overall — raised well over 20 different vehicles.
PE-Backed IPOs: The Strong and the Weak
A few of you wrote in yesterday asking variations on the following question: “Why did buyout-backed IPO volume soar in the first half of 2005, while VC-backed IPO volume stalled?” I decided to tackle this question in Monday’s print edition of PEW, but here are a few quick thoughts:
The most popular explanation for this discrepancy is that the public markets have been fearful of technology plays, which disproportionately affects VC-backed offerings. As with many popular explanations, this one rings false. From an anecdotal perspective, many of the second-quarter’s buyout-backed deals were from – you guessed it – the technology sector. Companies like Rackable Systems, New Skies Satellite Holdings and Kenexa. Oh, and the largest buyout-backed IPO of Q2 was a $605 million offering from NeuStar, which provides technology services to the telecom industry.
The tech=misery argument also doesn’t work when you crunch the numbers. While it is true that there have only been 24 tech-focused IPOs (all inclusive) on U.S. exchanges in 2005, there were only 37 for all of 2004. In other words, tech is on pace to have more 2005 IPOs than it did in 2004. Now compare that to the overall VC-backed IPO market, which has featured just 20 offerings in 2005, compared to 93 last year. At this rate, there would be well less than half the number of 2005 VC-backed IPOs as there were in 2004. In other words, tech doesn’t seem to be the difference maker.
A better industry culprit would be biotech, which remains anathema to most buyout firms. There only have been 16 biotech IPOs so far in 2005, compared to 49 in 2004 (almost all of which were VC-backed).
In general, however, the answer seems to be that today’s public market buyers are most interested in basic company characteristics like size, profitability, maturity, etc. In each of these cases, the average buyout-backed company (turnarounds-in-process excluded) is preferable to a VC-backed company. The old paradigm of underlying assets vs. underlying vision.
It also is worth noting that the LBO/VC-based IPO volume divergence isn’t just being prompted by mutual fund managers and I-bankers (i.e. buyers). VCs themselves (i.e. sellers) seem less interested in IPOs than do their buyout peers, since the typical VC-backed IPO doesn’t produce much shareholder liquidity until at least a few months down the line – and almost no one is terribly optimistic about the NYSE or Nasdaq’s short-term performance future. Thus the dual-track option many VCs have employed, whereby they explore M&A opportunities even while their company is in registration for an IPO. Buyout firms, on the other hand, have much more flexibility to sell shares in an IPO, since individual firms often hold a much higher percentage of pre-IPO shares. Plus, so many of the mega-LBO deals are simply financial engineering jobs, so even delayed liquidity is simply icing on a cake that already has returned its initial capital commitment.
*** A couple of folks in Cambridge, Mass. are looking to raise $100 million for the first-ever early-stage VC fund dedicated exclusively to Real Simple Syndication (RSS). Bloggers have, understandably, expressed great cynicism, given that the effort seems far too narrow and that RSS is a technology that can improve/help create other products, but not a product in itself (remember how poorly those Java-focused funds did in the late 1990s?). One of the group’s principals gives a stirring defense to SiliconBeat.com, but it’s not yet enough to convince me. But I’m not an accredited inv*stor, so it will be interesting to see LP reaction. My advice? Pitch this thing all over the West Coast, but avoid Europe. RSS just doesn’t yet seem to have caught the fancy of those across the pond.
*** Please indulge me joining the journalistic chorus hoping that Time Inc. changes its mind about revealing Matt Cooper’s sources. Horrible precedent, with the future of national security-related investigative journalism hanging in the balance.
*** Can you guess who is about to work for his fourth employer in less than a year? I’ll share that on Tuesday, when the PE Week Wire returns from its holiday weekend.
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Top Three |
Vestar Capital Partners is raising up to $3.5 billion for its fifth private equity fund, according to a regulatory filing. The Monument Group is serving as placement agent. www.vestarcapital.com
Sealy Corp., a Trinity, N.C.-based mattress maker, has filed to raise $402.5 million via an IPO of common stock. Citigroup and JPMorgan are serving as lead underwriters. Sealy is controlled by Kohlberg Kravis Roberts & Co., which bought the company last year in a $1.5 billion buyout from a consortium that included Bain Capital, Charlesbank Capital Partners, JPMorgan Partners, CIBC Argosy Merchant Fund and BancBoston Capital. Bain still holds a small minority position. Once priced, the IPO will trigger a $10.5 million management agreement termination fee. www.sealy.com
Farrokh Billimoria has left the general partnership of Artiman Ventures, a Palo Alto, Calif.-based VC firm. The former Sprout Group GP did not return an email request for comment on his departure. www.artimanventures.com
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VC Deals |
Everypoint Inc., a Boston-based studio for wireless infotainment applications, has raised $4 million in Series A funding. The deal was co-led by Prism Venture Partners and TD Capital Ventures. www.everypoint.com
Teledvance Communications Inc., a Louisville, Ky.-based provider of IT communications solutions, has raised $15 million in new venture capital funding. MK Capital led the deal, and was joined by First Analysis Corp. and unnamed individuals. www.teledvance.com
Nanoplex Technologies Inc., a Mountain View, Calif.-based developer of nanoparticle-based products, has raised over $2.5 million in Series B funding, according to a regulatory filing. No participating VC firms are listed, although Sam Colella, a managing director with Versant Ventures, is listed as a director. www.nanoplextech.com
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Buyout Deals |
Rhone Capital has completed its acquisition of a majority interest in vacuum cleaner company Rexair Inc. from Jacuzzi Brands Inc. (NYSE: JJZ) for $170 million. Jacuzzi retained a 30% interest in Rexair, while senior Rexair management provided equity alongside Rhone Capital. www.rexair.com
Yellowstone Capital has sold Grayloc Products LLC to Oceaneering International Inc. (NYSE: OII) for approximately $41 million. Grayloc is a Houston, Texas-based manufacturer of clamp connectors for the oil & gas industry. www.grayloc.com
Lightyear Capital has sold its controlling interest in Ripon Cogeneration LLC for Countryside Power Income Fund for approximately $96 million. Ripon owns and operates two gas-fired cogeneration plants in California. It was acquired by Lightyear – in partnership with company management – from Tractbel Power Inc. (subsidiary of Suez SA) in January 2004. www.lycap.com
Litorina Kapital, a Sweden-based private equity firm, has agreed to acquire a 75% interest in PAX Electro Products AB, a Swedish maker of fans and vents. No financial terms were disclosed.
Arcapita Inc. has acquired Cypress Communications Holding Company Inc. (OTC BB: CYHI) for approximately $41.5 million. Cypress is an Atlanta-based provider of converged voice and data communications, and will de-list its stock from the public markets. www.arcapita.com www.cypresscom.net
Belgium has begun talks, and signed a memorandum of understanding, to sell a near-50% stake in its postal system to CVC Capital Partners and the Danish postal service. No financial terms have been disclosed.
Ivan Taranov, a Russian brewery controlled by Allied Partners and Texas Pacific Group, is on the block for around $400 million, according to Reuters.
CVC Capital Partners and Inveralia are planning to sell their 70% stake in Spanish Burger King and Pizza Hut franchiser Zena Grupo de Restauracion SA, according to Expansion. No financial terms are being disclosed for the offer, although the report puts the entire company’s value at between 200 million euros and 300 million euros. It is being shopped on the private equity secondary market.
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PE-Backed IPOS |
TAL International Group Inc., a Purchase, N.Y.-based provider of inter-modal freight containers, has filed to raise $201.25 million via an IPO of common stock. It plans to trade on the NYSE under ticker symbol TAL, with Credit Suisse First Boston, Deutsche Bank Securities and Jefferies & Co. serving as lead underwriters. TAL International is controlled by The Jordan Co., with other significant shareholders including Fairholme Partners, Seacon Holdings Ltd., Edgewater Private Equity and JZ Equity Partners. www.talinternational.com
IntraLinks Inc., a New York-based provider of software for managing and distributing confidential financial documents via the Internet, has filed to raise $50 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol ILNX, with JPMorgan and UBS serving as lead underwriters. The company has raised over $110 million in VC funding since its 1996 inception, with significant shareholders including TowerBrook Inv*stors (f.k.a. Soros Private Equity), Reuters, Canaan Partners, Apax Partners and Rho Ventures. www.intralinks.com
Quintana Maritime Ltd., a Houston, Texas-based provider of dry-bulk marine transportation services, has set its proposed IPO terms to 16.7 million common shares being offered at between $14 and $16 per share. It plans to trade on the Nasdaq under ticker symbol QMAR, with Citigroup and Morgan Stanley serving as lead underwriters. Quintana was formed earlier this year by First Reserve Corp., American Metals & Coal International Inc. and chairman Corbin J. Robertson.
Consolidated Communications Illinois Holdings Inc., a Mattoon, Ill.-based rural local exchange carrier in Illinois and Texas, has set its proposed IPO terms to around 16.67 million common shares being offered at between $14 and $16 per share. It plans to trade on the NYSE under ticker symbol CNSL, with Credit Suisse First Boston and Citigroup serving as lead underwriters. The company is owned, in equal parts, by Central Illinois Telephone, Providence Equity Partners and Spectrum Equity Investors. www.consolidated.com
ITC Holdings Corp., a Novi, Mich.-based electricity transmission company, has set its proposed IPO terms to 12.5 million common shares being offered at between $19 and $21 per share. It plans to trade on the NYSE under proposed ticker symbol ITC, with Lehman Brothers, CSFB and Morgan Stanley serving as co-lead underwriters. ITC Holdings originally was the transmission unit of DTE Energy, but was bought out in 2002 for $610 million by Kohlberg Kravis Roberts & Co. and Trimaran Capital Partners. www.itctransco.com
Hittite Microwave Corp., a Chelmsford, Mass.-based maker of integrated circuits, modules and subsystems for RF, microwave or millimeter-wave applications, has set its proposed IPO terms to 4.5 million common shares being offered at between $14 and $16 per share. The company plans to trade on the Nasdaq under ticker symbol HITT, with Lehman Brothers serving as lead underwriter. Hittite raised a $15 million Series A funding round in 2000 led by Summit Partners, at a post-money valuation of approximately $148 million. www.hittite.com
BlogChina is planning to price an IPO on the Nasdaq next year that could value the company at more than $1 billion, according to the South China Morning Post. The report says that BlogChina has more than two million users, raised $500 million in seed capital last year from Softbank Asia Infrastructure Fund, and is planning to close another $10 million in funding from both Chinese and U.S. backers later this month.
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Fund & Firm News |
Apax Partners has closed its latest private equity fund with 4.3 billion euros. It had been targeting 4 billion euros, with a 4.5 billion euros cap. www.apax.com
The Blackstone Group is looking to raise $667 million for its second mezzanine fund, according to a regulatory filing. As of the June 24 filing, the New York-based private equity firm reported $314 million in commitments. www.blackstone.com
Banca Popolare di Milano has agreed to merge its BPM Private EquitySGR unit with Wise Venture SGR, and retain a 20% stake in the combined firm.
Butler Capital Partners has held a 320 million euro final close on its France Private Equity III fund, which will target control positions in companies with enterprise values of between 50 million euros and 300 million euros. www.butlercapitalpartners.com
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Human Resources |
David Lund has joined Hercules Technology Growth Capital Inc., a business development company focused on VC-backed tech companies, as vice president of finance and senior corporate controller. He most recently served as corporate controller for Rainmaker Systems Inc. In related news, current Hercules CFO Dennis Wolf has decided to “pursue other opportunities,” and will resign effective next month. www.herculestech.com
Ray Hood has joined SensorLogic Inc., an Addison, Texas-based provider of machine-to-machine platforms, as CEO. He previously served as managing partner of tech inv*stment firm Rodin Management, and as founder and CEO of logistics software company EXE Technologies Inc. SensorLogic is backed by VC firms like Boston Millennia Partners, Sevin Rosen Funds, Hunt Ventures, Star Ventures Management and STARTech. www.sensorlogic.com
Nassim Usman has joined Morgenthaler Ventures as an entrepreneur-in-residence, focused on biotech opportunities. He most recently served as senior vice president and chief operating officer of onetime Morgenthaler portfolio company Sirna Therapeutics Inc. (Nasdaq: RNAI). www.morgenthaler.com
THURSDAY, JUNE 30
Take a Number
Q2 2005 will be over shortly, so it’s time to commence with the pre-postmortem. In other words, I’ve got some numbers for ya.
First up is LBO deal volume, courtesy of the good folks at Buyouts Magazine (disclaimer: I am one of the aforementioned good folks). Business continued to boom in Q2, with 203 buyout transactions worth a disclosed value of $38 billion (leverage included). This represents the fifth straight quarter of $38 billion or more, which was a record when it first occurred in Q2 2004. Moreover, Q2 2005 will likely end up slightly higher than the $38 billion mark, as additional info comes in and a handful of deal closes sneak in under tonight’s deadline. Largest deal was the $4.9 billion purchase of film studio MGM by Sony Corp., Providence Equity Partners, Texas Pacific Group and DLJ Merchant Banking. If you’d like a handy chart, check out a press release that will hit the wires later today. If you’d like even more handy charts – including ones detailing the continuing escalation of LBO fund-raising – pick up ! Monday’s print edition of Buyouts Magazine (actually, you can’t really pick it up unless you have a subscription, so get one of those).
Buyout-backed IPO figures are also in, as no more of them are expected to price today. Nineteen buyout-backed companies priced on U.S. exchanges in Q2, for a total take of approximately $3.48 billion. This is a major decrease from last quarter’s record-busting $6.2 billion, but still was good enough to place second on the all-time list. Plus, the actual issuance volume was the highest since 20 buyout-backed companies priced in Q4 1997. The largest offering came just two days ago, when NeuStar Inc. (NYSE: NSR) netted $605 million, with over $500 million of it going to (former) majority shareholder Warburg Pincus.
The VC-backed IPO market wasn’t as strong, however, according to figures released this morning by Thomson Venture Economics and the National Venture Capital Association. Just 10 companies raised $714.1 million, which is down just barely from Q1’s $720.7 million for 10 companies, but is the lowest combined IPO take for VC-backed companies since Q2 2003.
In terms of aftermarket performance, the average buyout-backed IPO was trading up 12.75% as of market close yesterday, while the average Q2 VC-backed IPO was trading up approximately 9 percent.
*** Just saw this stuff on Microsoft possibly buying Gator-maker Claria, and don’t quite know what to make of it.
*** And speaking of VC-backed IPOs, Bill Burnham tries to figure out just how much money was made on Google.
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Ripplewood Holdings has told Maytag Corp. (NYSE: MYG) that it now has the right to terminate its $14 per share merger agreement, and to receive a $40 million termination fee. The correspondence comes after Maytag received a $16 per share offer from a consortium that includes Bain Capital, Blackstone Group and Chinese appliance company Haier America Trading. Ripplewood claims that Maytag’s discussions with the second group could provide grounds for exercising the termination clause, while Maytag disagrees. www.maytag.com
Bill Stensrud, a managing director of Enterprise Partners Venture Capital, has been named CEO of Muze Inc., a New York-based digital content management company that Enterprise Partners VC acquired this past May. Stensrud already had been serving as company chairman, and will replace Muze founder Paul Zullo. www.epvc.com www.muze.com
NeuStar Inc. (NYSE: NSR), a provider of clearinghouse services to the North American telecom market, finished its first day of public market trading at $26 per share, or 18.18% higher than its $22 per share IPO price. Shoe retailer DSW Inc. (NYSE: DSW) closed 26.84% higher at $24.10 per share, while blood coagulation monitoring systems maker HemoSense Inc. (Nasdaq: HEM) closed flat at $5.50 per share. www.neustar.biz www.dswshoe.com www.hemosense.com
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VC Deals |
Xceive Corp., a Santa Clara, Calif.-based provider of RF-to-broadband tranciever ICs, has raised $13.5 million in Series C funding. Sequoia Capital led the deal, and was joined by return backers Alliance Ventures, BA Venture Partners and Ignite Group. www.xceive.com
MoreMagic Solutions Inc., a Newton, Mass.-based provider of content enabling, charing and payment solutions, has raised around $4.13 million in Series D funding. Return backers included Battery Ventures, Vision Capital and Liberty Mutual. MoreMagic has raised $22.8 million in total VC funding since its 1997 inception. www.moremagic.com
Beliefnet Inc., a New York-based operator of a religion-focused website, has raised $7 million in Series C funding, according to a regulatory filing. Participants included Softbank Capital and return backer Blue Chip Venture Co. www.beliefnet.com
Beceem Communications Inc., a Santa Clara, Calif.-based wireless broadband technology provider, has raised $9.6 million in Series B funding, at a post-money valuation of approximately $35.6 million. Backers include Walden International, Sequoia Capital and Global Catalyst Partners. www.beceem.com
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Buyout Deals |
Bear Stearns Merchant Banking Partners has acquired a minority ownership position in Stuart Weitzman Holdings LLC, a Ft. Lauderdale, Fla.-based designer, manufacturer and seller of luxury women’s shoes and handbags. No financial terms were disclosed, although the NY Post reports that Bear Stearns paid in excess of $100 million for a 35% to 45% stake. Financo served as financial advisor to Stuart Weitzman on the deal. www.stuartweitzman.com
Segulah, a Sweden-based private equity firm, has acquired Skansa Prefab Mark AB from SkansaABfor approximately $43 million. Skansa Prefab Mark makes and sells prefabricated products in concrete for sewage, drainage and paving. www.segulah.se
Square D Co., a subsidiary of Schneider Electric has agreed to acquire Juno Lighting Inc. (Nasdaq SC: JUNO) for approximately $610 million. The deal will represent an exit for private equity firm Fremont Partners, which beneficially owns 75% of Juno’s stock. www.junolighting.com
Kohlberg Kravis Roberts & Co. has pulled portfolio company Mannesmann Plastics Machinery from the auction block, after failing to receive high enough bids, according to Reuters. KKR bought the company in 2002 from Siemens. www.mpm-group.com
Fairmont Capital and Windjammer Capital Inv*stors have retained Houlihan Lokey Howard & Zukin to run an auction for Shari’s Management Corp., according to The Deal. Shari’s Management operates a chain of casual dining restaurants in the Pacific Northwest.
Citigroup Venture Capital has received European Union approval for its proposed sale of German electronics and engineering company Flender Holding GmbH to Siemens AG for 1.2 billion euros. www.flender.com
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PE-Backed IPOS |
Silicon Motion Technology Corp., a Taiwan-based fabless semiconductor company focused on the multimedia consumer electronics market, priced its IPO of 6.7 million American depository shares at $10.50 per ADS, for a total take of approximately $70.35 million. It plans to trade on the Nasdaq under ticker symbol SIMO, with Deutsche Bank Securities serving as the offering’s lead underwriter. Shareholders include Concord Venture Capital Group, Capital Bright Investments, Smartinvest Consultants and Bewise Investments.
Telenet, a Belgian cable television operator, reportedly will meet today to discuss a possible public market flotation. Venture capital firm GIMV holds a 14.9% stake in Telenet. www.telenet.be
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Fund & Firm News |
Flywheel Ventures, an early and seed-stage VC firm based in Santa Fe, N.M., has closed its first institutional fund with $31 million. Limited partners include the Kauffman Foundation, New Mexico State Inv*stment Council, the McCune Foundation, Hunt Holdings, the New Mexico Small Business Inv*stment Corporation and the New Mexico State University Foundation. www.flywheelventures.com
The CaliforniaPublic Employees’ Retirement System (CalPERS) has committed $75 million to Blum Capital Partners III. www.calpers.com
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Human Resources |
Vivek Paul has joined Texas Pacific Group as a partner. He will be focused on venture capital opportunities, including those that involve TPG’s Asian affiliate Newbridge Capital. Paul most recently served as president and CEO of Bangalore, India-based IT outsourcing company Wipro Ltd., where he remains vice chairman.
Hunter McCrossin has joined private equity firm Friend Skoler & Co. He previously was an inv*stment manager with the Duke Management Co. (DUMAC). www.friendskoler.com
Grove Street Advisors, a Wellesley, Mass.-based private equity consultancy, has promoted both Frank Angella and Christopher Yang to the position of general partner. Each man previously served as a principal. Angella joined Grove Street in 2001, after having received his MBA from Harvard Business School. Before that, he co-founded a VC-backed spinout from Shell UK called Biocode Inc. Yang also joined in 2001 after receiving his JD from Harvard Law School, and an MBA from MIT Sloan School of Management. He previously was with an early-stage Softbank affiliate called I-Group. www.grovestreetadvisors.com
CVC Capital Partners has promoted both Jonathan Feuer and Rob Lucas to the position of managing partner. Feuer joined CVC in 1998, while Lucas signed on in 1996. www.cvceurope.com
WEDNESDAY, JUNE 29
Random Ramblings
*** Coller Capital is back with its Global Private Equity Barometer report, and the results are heartening. Only 37% of institutional inv*stors plan to increase their allocations to alternative assets over the next year, which is a significant drop from the 56% who said they planned to do so in last year’s report. Still too high by about 37%, but it’s good to see some LPs recognizing that more money doesn’t necessarily produce better returns. Other interesting findings include: 73% of respondents want to increase their number of GP relationships in Asia-Pacific; 45% have opted to not re-up with an existing GP over the past year and; LPs are more satisfied with buyout returns than VC returns, with a 54% majority “dissatisfied” with European VC returns. Finally, Coller always ranks the “attractiveness” of various asset classes over the next 12 months. Check out the placement of numbers 3 and 4… I! would have thought it would be the other way around:
1. European Buyouts
2. Asia-Pacific Buyouts
3. North American Venture
4. North American Buyouts
5. Asia-Pacific Venture Capital
6. European Venture Capital
*** Lots of lucrative exit news today, including a pair of IPOs that priced above expectations, and some sales with simply staggering ROI. How staggering? Take the case of Telfort BV, a Dutch mobile network operator that Netherlands-based Greenfield Capital Partners bought in 2003 for just 25 million euros (of which only 13 million euros was cash). Greenfield sold a 52% position in the company last year to Dutch entrepreneur Marcel Boekhoorn for around 200 million euros, and now could cash out its remaining position as part of a 980 million euros sale to KPN NV. If my math is correct (and potential leverage is conveniently excluded), Greenfield’s original 13 million euros commitment might soon be worth around 670 million euros, which is a return of approximately 51.5X. Not too shab! by…
*** Tom Davis now says that there will be no repercussions to Major League Baseball if the Washington Nationals are sold to the prospective ownership group including George Soros (plus private equity firm ABRY Partners). Worth noting, however, that reports of his clarification (made via an aide) don’t include any mention of Davis’ implicit threat to deny public funding for a new ballpark in D.C. Again, the whole thing is simply reprehensible, particularly when Davis has received campaign contributions from members of a rival ownership consortium.
*** I didn’t have much time for reading in Italy, but I highly recommend Charlie Wilson’s War by George Crile. Fascinating and gripping piece of investigative journalism about the U.S. government’s covert role in helping the Mujahideen in Afghanistan drive out the Soviets, and the unintended consequences (although it’s a bit light on that last part).
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Top Three |
KPNNV has agreed to acquire Dutch mobile network operator TelfortNV for approximately 980 million euros. Greenfield Capital Partners holds a 48% ownership position in Telfort. www.telfort.nl
Berkshire Partners has agreed to sell its 74% stake in The Holmes Group Inc. to Jarden Corp. (NYSE: JAH) for approximately $625 million. The deal is structured with $420 million in cash, and 4.1 million of Jarden common stock. Holmes Group is a Milford, Mass.–based maker and distributor of home environment and small kitchen electric products under brand names like Bionaire, Crock-Pot and White Mountain. Berkshire originally acquired The Holmes Group The deal is expected to close sometime next quarter, with company founder and CEO Jerry Kahn also selling his position. www.theholmesgroup.com
NeuStar Inc., a Sterling, Va.-based provider of clearinghouse services to the North American telecom market, priced its IPO of 27.5 million common shares at $22 per share, for a total take of approximately $605 million. The company originally planned to price just 25 million shares at between $18 and $20 per share. It will trade on the Nasdaq under ticker symbol NSTR, while Morgan Stanley, CSFB and JPMorgan served as co-lead underwriters for the IPO. NeuStar was founded in 1996 as an operating division of Lockheed Martin Corp., and was acquired in 1999 in a management buyout lead sponsored by Warburg Pincus. Warburg held a 71.59% pre-IPO stake, while other significant shareholders include MidOcean Partners (13.95%) and ABS Capital Partners (5.93%). www.neustar.biz
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VC Deals |
SoundBite Communications Inc., a Burlington, Mass.-based provider of on-demand, hosted customer communications solutions, has raised $8.5 million in Series D funding. Commonwealth Capital Ventures led the deal, and was joined by return backers North Bridge Venture Partners and Mosaic Venture Partners. www.soundbite.com
PicksPal Inc., a Mountain View, Calif.-based stealth-mode computer technology company, has raised $2 million in Series A funding from Canaan Partners, according to a regulatory filing.
AirPlay Network Inc., a Carmel, Calif. designer and seller of cell phone-based interactive games, has raised $4.02 million in Series A funding, according to a regulatory filing. Participants included Redpoint Ventures and Qualcomm.
IPLogic, a Latham, N.Y.-based network systems integrator, has received $1.5 million in funding from DeltaPoint Capital Management and the New York State Common Retirement Fund. www.iplogic.com
Torax Medical Inc., a Maple Grove, Minn.-based medical device company focused on digestive disorders, has raised $10 million in Series B funding. Thomas, McNerney & Partners led the deal, and was joined by Sanderling Ventures and Mayo Medical Ventures.
TV Head Inc., a Los Gatos, Calif.-based interactive television games channel, has raised $2 million of a $3 million Series A funding round from Apax Partners, according to a regulatory filing.
ProofPoint Inc., a Cupertino, Calif.-based provider of messaging security solutions for large enterprises, has raised $2 million in Series D funding, according to a regulatory filing. The company has raised $38 million in total VC funding since its 2002 inception, from firms like Benchmark Capital, Meritech Capital Partners, Mohr, Davidow Ventures, RRE Ventures and Redwood Partners. www.proofpoint.com
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Buyout Deals |
The JAL Group, a Milan, Italy-based maker of professional safety shoes and boots, has been acquired by a consortium that includes Bank of America and Goldman Sachs. No deal terms were disclosed. AlixPartners assisted The JAL Group on the restructuring transaction.
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PE-Backed IPOs |
DSW Inc., a Columbus, Ohio-based discount shoe retailer, priced its IPO of 14.06 million common shares at $19 per share (above its $15-$17 offering range), for a total take of approximately $267.14 million. The company will trade on the NYSE under ticker symbol DSW, while Lehman Brothers served as lead underwriter for the IPO. DSW is backed by both Cerberus and Back Bay Capital Funding. www.dswshoe.com
HemoSense Inc., a San Jose, Calif.-based maker of blood coagulation monitoring systems for the management of warfarin medication, priced its IPO of 3.5 million common shares at $5.50 per share (below its $8-$10 offering range), for a total take of approximately $19.5 million. The company will trade on the Nasdaq under ticker symbol HEMO, while W.R. Hambrecht & Co. and Lazard Capital Market served as lead underwriters for the IPO. HemoSense had raised around $40 million in VC funding since its 1997 inception, from significant shareholders like MPM Capital, Vanguard Ventures, W Capital Partners and GC Technology Fund. www.hemosense.com
Rockwood Holdings Inc., a Princeton, N.J.-based chemicals company, has set its proposed IPO terms to around 20.41 million common shares being offered at between $23 and $26 per share. It plans to trade on the NYSE under ticker symbol ROC, with Goldman Sachs and CSFB serving as co-lead underwriters. Kohlberg Kravis Roberts & Co. is Rockwood’s majority shareholder, with DLJ Merchant Banking Partners holding a minority stake. www.rockwoodspecialties.com
Advanced Life Sciences Holdings Inc., a Woodridge, Ill.-based pharmaceutical company, has set its proposed IPO terms to 4.5 million common shares being offered at between $11 and $13 per share. The company plans to trade on the Nasdaq under ticker symbol ADLS, with C.E. Unterberg Towbin and ThinkEquity Partners serving as lead underwriters. Advanced Life Sciences was recapped last December, with Flavin Ventures taking a majority ownership position. Flavin Ventures is a business accelerator run by Advanced Life Sciences founder and CEO Michael Flavin, but it also has other portfolio companies. Abbott Labs is also a significant shareholder. www.advancedlifesciences.com
EnterpriseInv*stors reportedly is planning to exit Polish juice maker Argos Nova via a floatation on the Warsaw Stock Exchange in mid-2006.
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Firm & Fund News |
Robert W. Baird & Co. has opened a Boston satellite office, located at 1 Post Office Square. It also has hired Leslie Cheek as a Boston-based managing director on its I-banking financial sponsor coverage team. Cheek previously served as a managing director in the I-banking group of SunTrust Robinson Humphrey. www.rwbaird.com
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Human Resources |
Mark Wiseman has joined the CPP Inv*stment Board as vice president of private inv*stments. He previously was responsible for the private equity fund and co-inv*stment program at the Ontario Teachers’ Pension Plan. www.cppib.ca
Jonathan Fram has joined DCM-Doll Capital Management as an entrepreneur-in-residence. He will focus on the digital media and communications spaces. He most recently served as a managing member of Metric Capital, and previously held senior roles with France Telecom, eVoice, Net2Phone and Bloomberg. www.dcmvc.com
Parthenon Capital has promoted Marc Rubin to the position of principal. He joined the Boston-based private equity firm in 1999 as a senior associate, and in January 2002 moved to San Francisco to help open a West Coast office. www.parthenoncapital.com
Dekkers Davidson has joined Fidelity Ventures as a venture partner, where he will focus on the IT and communications markets. He previously has served in top management positions with such companies as Cetacean Networks and Rogers Wireless. www.fidelityventures.com
Todd Hellman has joined Headwaters MB, a Denver-based middle-market merchant bank, as a managing director. He most recently co-founded I-banking firm The Metcalf Group LLC, and before that worked for UBS Warburg. www.headwatersmb.com
Stephen Cutler is rejoining law firm Wilmer Cutler Pickering Hale & Dorr, after having served as director of the SEC’s division of enforcement. He will begin work this fall, as co-chair of the firm’s securities department. www.wilmerhale.com
Amish Mehta, a partner with Vector Capital, has stepped down as interim CEO of Vector portfolio company Corel Corp. (Nasdaq: CORL), after having served in the role since October 2003. He will be replaced by IBM veteran David Dobson, but will stay on as company chairman. www.corel.com
3i Group has bolstered its Hong Kong office by hiring two vice presidents and two associates, according to PrivateEquityOnline. They are: Daizong Wang joins as a VP from Goldman Sach’s Hong Kong-based I-banking group; Jae Kim will be a VP focused on Korea, after having worked with Intel Capital; Bonnie Lo joins as an associate from Merrill Lynch Asia Pacific; and Jason Yin is a new associate previously with Riverlake Partners. In addition to the new hires, existing 3i Group pro Dominic Orchand will relocate from London to Hong Kong, where he will become director of Asian business development. www.3i.com
TUESDAY, JUNE 28
Un-National…
A handful of items after a day of inbox cleansing:
***Roll Call reported yesterday that Major League Baseball is receiving indirect pressure from certain GOP lawmakers, in regards to its upcoming sale of the Washington Nationals franchise (formerly the Montreal Expos, and currently owned by MLB itself). The auction currently involves around eight known bidders, including a consortium made up of Boston-based private equity firm ABRY Partners, serial sports club owner Jonathan Ledecky, New York real estate developer Marc Cohen and, yes, conservative scourge George Soros. The paraphrased gist of the comments by folks like Congressman Tom Davis (R-VA) was: “Hey MLB, if you sell to our political opponent, we’re going to make life very unpleasant for you and your tax-exempted friends. particularly if you want a build a publicly-financed stadium in a District whose purse-strings are controlled by Congress.”
I had been wondering for a while if Soros’ political activities would ever affect his business activities, and even raised the issue when Soros Private Equity Partners was spun out earlier this year without the Soros name attached. But, at the time, I assumed we’d be talking about pure business/shareholder interests here, where the dollar is generally king. So long as George offered the most green, he’d be fine (save for certain cases of private companies with particularly partisan ownership). I never considered that a member of Congress would be so bold – and so abusive of his power – to suggest that a “company” like the Washington Nationals would be penalized for the political activities of its owner (fyi: ABRY Partners president Royce Yudkoff is a regular GOP donor). Imagine the precedent this could set in terms of other companies with liberal owners who want to do business in D.C.
That said, an argument could be made that a Soros-owned Nationals wouldn’t need federal funding for a new stadium, since Soros has so much cash on hand. Undoubtedly true, but every MLB team owner is extremely wealthy – by definition – and Davis did not extend his comments to prospective ownership groups that include, say Frederick Malek (founder of Thayer Capital Partners and friend of President Bush). Hey, I’m all for preventing public dollars for building private stadiums, but only if applied for public interest purposes, not for political ones.
A few of Davis’ colleagues basically laughed off the matter when asked by Roll Call, but I hope some of his colleagues give him and his like-minded peers a sharp rebuke. The future of D.C.’s future financial prosperity could, in part, depend on it.
*** Early tomorrow morning, PE Week Wire readers will be getting a weekly update on private equity news in Asia, coincidentally titled Asian Private EquityNews. We felt the timing was ripe for this weekly synopsis, given the number of foreign and homegrown private equity firms ramping up their activity in Asia. Moreover, in Venture Capital Journal senior editor Jerry Borrell, we have a qualified editor who spends half his time in Asia and is well tapped into the region’s private equity market. The first edition or two will come from my email address, so you shouldn’t have any sp*m-blocker issues, but in future editions it will come from the publication itself. If you have any feedback, please don’t hesitate to tell me or, better yet, pass it along to Editor Jerry Borrell (jerry.borrell@thomson.com). Thanks.
*** Finally, some sad news from the VC community: Bill Elfers, founder of legendary venture firm Greylock, passed away last Tuesday at the age of 87. Bill launched Greylock in 1965, after having worked with American Research and Development for 18 years. He is survived by his wife of 60 years, Ann, son William, daughters Joanne and Jane, plus six grandchildren and one great-grandchild.
A memorial service will be held on Tuesday, July 21 at St. Andrews Episcopal Church in Wellesley, Mass., at 2pm. In lieu of flowers, the family requests that donations be made to Newton-Wellesley hospital, c/a Joan Archer; 2014 Washington St.; Newton, Mass. 02462.
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Top Three |
Cisco Systems Inc. (Nasdaq: CSCO) has agreed to acquire NetSift Inc., a San Diego-based provider of content processing technology. The deal is valued at approximately $30 million in cash and Cisco options, and is expected to close by the end of July. NetSift was founded in June 2004, and has received $3 million in VC funding from Enterprise Partners Venture Capital. www.cisco.com www.netsift.com
Innovative Silicon Inc., a Santa Clara, Calif.-based provider of embedded memory technology solutions, has raised $16 million in Series B funding. Austin Ventures led the deal, and was joined by return backers Highland Capital Partners, Auriga Partners and Index Ventures. www.innovativesilicon.com
American Capital Strategies Ltd. has paid $30 million to acquire NPC Inc., a designer and manufacturer of rubber pipe-to-manhole connectors for sewer and drainage systems. The selling party was private equity firm The Riverside Co., while Goldsmith Agio Helms represented NPC on the sale. American Capital’s inv*stment takes the form on equity, a senior term C loan and senior subordinated d*bt, in exchange for an 89% shareholding. NPC management also contributed equity capital to the deal. www.npc.com
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VC Deals |
GridApp Systems Inc., a New York-based provider of database infrastructure management solutions, has raised $5 million in Series A funding. Ascend Venture Group led the deal with a $4 million commitment, while Advantage Capital Partners provided the remaining $1 million. www.gridapp.com
ReVolt Technology AS, a Norway-based developer of rechargeable battery solutions, has raised 7 million euros in first-round funding. Participants included Northzone Ventures, Sofinnova Partners, TVM and Viking Ventures. www.revolttechnology.no
DbMotion Ltd., an Israel-based provider of virtual patient records technology, has raised $10.2 million in Series B funding. Gemini Israel Funds led the deal, and was joined by return backers Vertex Venture Capital and Pitango Venture Capital. www.dbmotion.com
HelioVolt Corp., an Austin, Texas-based solar energy technology company, has raised $8 million in Series A funding from New Enterprise Associates. www.heliovolt.com
Exagen Diagnostics Inc., an Albuquerque, N.M.-based molecular diagnostics company, has raised $7 million in Series B funding. Tullis-Dickerson & Co. led the deal, and was joined by fellow return backers vSpring Capital and Wasatch Ventures. Exagen previously raised $5.7 million in a Series A funding round early last year. www.exagendiagnostics.com
Netcordia Inc., an Annapolis, Md.-based provider of network analysis and diagnostic tools, has raised $3 million in first-round funding from Novak Biddle Venture Partners. www.netcordia.com
ServiceSource Corp., a San Francisco-based provider of outsourced sales solutions for technology companies, has raised $10 million in venture capital funding from Benchmark Capital.
Bellamax Inc., a Mountain View, Calif.-based provider of digital photo enhancement services, has raised $1.75 million in Series A-1 funding, according to a regulatory filing. It has raised $6.3 million in Series B funding at a post-money valuation of just under $12 million in early 2003. Company backers include BA Venture Partners and Apex Venture Partners. www.bellamax.com
Metatomix Inc., a Waltham, Mass.-based provider of enterprise resource interoperability solutions, is looking to raise $15.6 million in Series AA recap funding, according to a regulatory filing (the filing reports that the company already has secured at least $9.3m). The company has raised around $17 million in previous VC funding since its 2000 inception, from firms like Delta Ventures and Velocity Equity Partners. www.metatomix.com
Clarus Systems Inc., a San Francisco-based provider of automated testing solutions for VoIP, has raised $5 million in Series A recap funding. Trident Capital led the deal, and was joined by return backers Trinity Ventures and Mobius Venture Capital. Clarus has raised around $24 million in total VC funding since its 2000 inception. www.clarussystems.com
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Buyout Deals |
National Semiconductor Corp. (NYSE: NSM) has completed the dale of its cordless business unit to UK-based private equity firm HgCapital. No financial terms were disclosed for the deal, which was first announced in May. www.national.com www.hgcapital.com
Welsh, Carson, Anderson & Stowe has agreed to acquire a majority interest in Ozburn-Hessey Logistics, a Nashville, Tenn.-based third-party logistics provider. No financial terms were disclosed for the transaction, while also involved Bear Stearns as an advisor to OHL, and Morgan Stanley and Legg Mason as advisors to WCAS.
Fortis Private Equity and NIB Capital Principal Inv*stments have agreed to acquire a minority stake in Dutch postal services company Sandd. No financial terms were disclosed for the deal, which will not affect the majority shareholding position of Trimoteur Holding. www.sandd.nl
Societe du Louvre, a France-based luxury goods holding company, has received buyout interest from firms like Carlyle Group, PAI Partners, Blackstone Group and Eurazeo, according to Les Echos. www.societedulouvre.com
Summit Partners is looking for an I-bank to manage the sale of Azusa, Calif.-based portfolio company Physicians Formula Cosmetics Inc., according to The Deal. The asking price is expected to begin at $200 million. www.physiciansformula.com
Nautic Partners has acquired International Radiology Group, a provider of services to help insurers and healthcare providers manage the usage, cost and quality of diagnostic imaging services. Nautic provided $37 million of equity capital, while Merrill Lynch Capital provided an undisclosed amount of senior debt financing. IRG management also participated on the deal. www.nauticpartners.com
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PE-Backed IPOs |
Ruth’s Chris Steak House Inc., a Metairie, La.-based restaurant operator, has set its proposed IPO terms to 11.43 million common shares being offered at between $15 and $17 per share. It plans to trade on the Nasdaq under ticker symbol RUTH, with Banc of America Securities and Wachovia Securities serving as lead underwriters. Ruth’s Chris is controlled by private equity firm Madison Dearborn (79.3% pre-IPO position), while other significant shareholders include Wachovia and Goldman Sachs. www.ruthschris.com
RBC Bearings Inc., an Oxford, Conn.-based maker and marketer of plain, roller and ball bearings, has set its proposed IPO terms to around 8.17 million common shares being offered at between $14 and $16 per share. The company plans to trade on the Nasdaq under ticker symbol ROLL, with Merrill Lynch & Co. serving as lead underwriter. RBC Bearings lists Whitney & Co. as its primary equity backer. www.rbcbearings.com
Peninsula Pharmaceuticals Inc., an Alameda, Calif.-based drug company focused on anti-infective products, has withdrawn its proposed IPO. The move was expected, following April’s announcement that Peninsula would be acquired for $245 million by Ortho-McNeil Pharmaceuticals Inc., a subsidiary of Johnson & Johnson (NYSE: JNJ). www.peninsulapharm.com www.jnj.com
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PE-Backed M&A |
ION Trading Systems Inc., an Ireland-based provider of software solutions for trading on electronic fixed-income markets, has agreed to acquire Finvision Financial Systems AG, a Germany-based provider of analytics and pricing for fixed-income securities. No financial terms were disclosed. ION Trading is a portfolio company of TA Associates and Kairos Partners. www.iontrading.com www.finvision.com
Intcomex Inc., a Miami, Fla.-based distributor of IT parts in Latin America and the Caribbean, has acquired Centel SA de CV, a Mexico City-based IT distribution company founded in 1992. No financial terms were disclosed. Intcomex was acquired last year by Citicorp Venture Capital. www.intcomex.com
CurtCo Publishing, in conjunction with financial sponsors of Weston Presidio and TD Capital Communications Partners, has agreed to acquire the assets of San Diego Magazine Publishing Co., owner of San Diego Magazine. No financial terms were disclosed. www.curtco.com
GIMV has sold its ownership position in Belgian freight carrier Ecu-Line to company management and Allcargo. GIMV has been an Ecu-Line shareholder since 2000. www.gimv.be www.eculine.be
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Firm & Fund News |
Wilmer Cutler Pickering Hale & Dorr is opening a satellite office in Palo Alto, Calif., representing the corporate law firm’s first presence on the West Coast. The office will be led by former Weil, Gotshal & Manges attorney Curtis Mo, while existing Wilmer Cutler attorney Nader Mousavi will move to Silicon Valley from his current location in Boston. www.wilmerhale.com
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Human Resources |
David Jones has joined Southern Capitol Ventures as a principal. He previously served as a senior IT consultant for Deloitte Consulting, where he managed strategic tech projects for the Department of Homeland Security. www.southerncapitolventures.com
Strategem Partnering has promoted William Anderson to the position of analyst. He has been with the San Francisco-based firm since 2001, and tracks the software and Internet markets, plus assists with clients. www.strategem.com
MONDAY, JUNE 27
Tanned, Rested and Abdicating
In the midst of bicycling through Tuscany over the past two weeks, a fellow traveler turned to me and said: “Can you imagine all of the email we’re going to have when we get back?” Quite horrifying, really, particularly when I learned that the answer was well over 4,500 (much of which, of course, was sp*m). Thankfully, not all of the guest columns got published in my absence, so here is one more while I continue wading through the mess that is my inbox. It’s from regular respondent Frank Strong, who is marketing and communications director for business services management company Managed Objects Inc. (www.managedobjects.com). I’ll formally reclaim this space beginning tomorrow.
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“At the end of the day you can either discount cash flow or you can’t.”
So said my client, a hardcore telecom VC who had previously spent time at Bell Labs and held two graduate degrees, including distinction from Wharton. That was two years ago and I was working for a PR firm, attending B-school at nights and had asked him to weigh the value of my lesser known school’s reputation. His message was clear: There’s a better question to ask.
It’s easy to be impressed by credentials, but it’s what you can do that counts most. My former client used to say that his fund invested in both the team and the idea. In a moment, he demonstrated that he really believed his mantra, and he also drove home a point about the kind of PR service he expected from me.
Recently a website called alarm:clock slammed PR firms, calling them in no uncertain terms a waste of capital. A week or so later, a BusinessWeek writer weighed in, and offered a bit more balanced perspective – but from my view – it was certainly not a reprint-quality piece for a PR firm. I’ve since moved on and now work in-house for a venture-backed software company that also retains a PR firm, so I’ll offer a third opinion.
If you are a VC fund and want ink, more ink, or more positive ink and are wondering if you should you hire a PR veteran in-house or retain a PR firm – I’ll respectfully suggest that’s the wrong question to ask. Instead, find out what they can do. To that end, I’ll offer five ideas for doing just that:
Look for ideas not contacts. Forget the rolodex line – good reporters respond to good story pitches – it’s that simple. Ask for a list of 10 hypothetical “headlines they’d like to see.” If these are catchy, concise and compelling that’s indicative of the cognition and capacity to pitch a good story.
Ask for a writing sample. I don’t mean a press release but rather a list of questions. Provide the elevator spiel on a portfolio company, tell them you just made an investment and want to know what questions they have.then hand them a pencil. The questions ought to be similar to those you ask an investment prospect. What business pain does the company solve? What’s new or first or unique about this company? Who are your competitors? They lose points if they let you get away with saying there are no competitors. Questions like these will provide insight into how they think about developing a story and more importantly if they can find what’s ink-worthy about yours.
Make up a dumb PR idea. Then convey the idea with great enthusiasm during your first meeting. Everyone drinks Kool-Aid sometimes and you need someone with the intestinal fortitude to tell the emperor he needs new clothes – or at least some clothes.
Ask your portfolio companies for help. Your portfolio companies all have corporate communications folks and/or a PR firm on retainer. You’re out there helping to set up sales meetings for them – why not tap their experience and ask for their help in narrowing down the short list.
Add one point if they have an MBA. Subtract 10 if they have an MBA and can’t determine NPV without a spreadsheet.
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Top Three |
Meriton Networks Inc., an Ottawa, Canada-based provider of optical networking foundations, has raised US$54 million in Series C funding. VantagePoint Venture Partners and Nomura International co-led the deal, and were joined by return backers Desjardins Venture Capital Group, Newbury Ventures, Primaxis Technology Ventures, RBC Capital Partners, Sierra Ventures, VenGrowth and Venture Coaches/Skypoint Capital. www.meriton.com
Summit Partners, a Boston-based private equity firm, has closed two new funds. The first is a $3 billion vehicle focused on later-stage deals and buyouts of profitable, privately-held companies ($25m to $450m per company). The other is a $300 million venture capital fund ($5m to $25m per company). www.summitpartners.com
The New York State Senate on Friday passed a bill that would significantly increase the amount of state pension fund assets that could be invested into alternative assets like private equity and hedge funds, according to The New York Sun. The current limit is 15%, but the bill would raise that number to 25 percent. Current NY Comptroller Alan Hevesi supports the bill, although it is unknown if Gov. Pataki will sign it into law.
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VC Deals |
Cardiva Medical Inc., a Mountain View, Calif.-based developer of vascular closure devices, has raised $8.3 million in Series B funding. Stockton Partners led the deal, and was joined by return backers Sycamore Ventures, Harbinger VC Corp. and W.I. Harper Group. www.cardivamedical.com
Airimba Wireless Inc., a Clemson, S.C.-based ISP, has raised over $5 million in Series C funding, according to a regulatory filing. Return backers include Sevin Rosen Funds, Harbert Venture Partners and Noro-Moseley Partners. www.airimba.com
Ivrea Pharmaceuticals Inc., a Quincy, Mass.-based maker of skin care products, has raised $3 million of a $5 million Series A funding round, according to a regulatory filing. Backers include Atlas Ventures and Easton Hunt Capital Partners. www.ivreapharma.com
Cymetrix, an Irvine, Calif.-based provider of healthcare revenue cycle solutions, has received an undisclosed amount of private equity funding from Riordan, Lewis & Haden. www.cymetrix.com
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Buyout Deals |
Palladium Equity Partners has agreed to acquire Dallas-based TB Corp., parent of the Taco Bueno restaurant chain, from Jacobson Partners. No financial terms were disclosed for the deal, which is expected to close by early August.
Macquarie Bank of Australia has won the auction for British Broadcasting Corp.‘s digital media services unit BBC Broadcast, according to various press reports. The deal is valued at Gbp166 million, and represents a loss for fellow bidders Apax Partners, Exponent Private Equity and Thomson/Techicolor (unit of Thomson France).
Pactiv Corp. (NYSE: PTV) has agreed to sell substantially all of its North American and European protective and flexible packaging businesses to AEA Investors. The deal is valued at approximately $530 million (6.8x 2004 EBITDA), plus the assumption of certain liabilities, and is expected to close in the third quarter. www.pactiv.com www.aeainvestors.com
Eos Partners has sold its ownership position in New Breed Inc. to Warburg Pincus for an undisclosed amount. New Breed is a Greensboro, N.C.-based lead logistics and supply chain management company. www.newbreed.com
PPM Capital has agreed to acquire a majority ownership stake in JostGroup from Alpha Inv*stors for 320 million euros. JostGroup is a Germany-based transportation and logistics company. www.jostgroup.com
Cinven has retained UBS to find a buyer for UK-based gym chain Fitness First PLC, according to various press reporters. The auction could fetch upwards of Gbp800 million, which would double Cinven’s original inv*stment. www.fitnessfirst.com
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PE-Backed IPOs |
Eagle Test Systems Inc., a Mundelein, Ill.-based provider of automated test equipment for the semiconductor manufacturing industry, has withdrawn registration papers for its proposed $166.75 million IPO, citing “unfavorable market conditions.” TA Associates is the company’s majority shareholder. www.eagletest.com
Kenexa Corp., a Wayne, Pa.-based provider of human capital recruitment and retention solutions, priced 5 million common shares at $12 per share (below original $14-$16 offering range), for a total IPO take of approximately $60 million. It will trade on the Nasdaq under ticker symbol KNXA. SG Cowen served as lead underwriter for the IPO, with significant shareholders including Parthenon Capital (40% pre-IPO position), Wafra Partners (13.6%) and Westbury Partners (5.1%). www.kenexa.com
KKR Financial Corp., San Francisco-based real estate investment trust (REIT) managed by buyout firm Kohlberg Kravis Roberts & Co., priced 33.33 million common shares at $24 per share, for a total IPO take of approximately $800 million (it had only filed to price 29.17 shares at between $23 and $25 per share). It finished Friday trading up 2% at $24.50 per share. www.kkr.com
Burger King Corp. CEO Greg Brenneman told Reuters that his company may go public in 2006, although no firm plans have been made. The fast food giant is controlled by Bain Capital, Goldman Sachs Capital Partners and Texas Pacific Group.
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PE-Backed M&A |
IBM (NYSE: IBM) has acquired Meiosys Inc., a Palo Alto, Calif.-based provider of software that enables applications to be moved between servers without interruption. No financial terms were disclosed. Meiosys had raised over $12 million in total VC funding since its 2000 inception, including a $7.5 million Series D infusion in 2004 at a post-money valuation of approximately $30 million. Backers included Wellington Partners, Partech International, Cisco Systems, Alven Capital and Credit Lyonnais Private Equity. www.ibm.com www.meiosys.com
CompuPay Holdings Inc., a Miami, Fla.-based portfolio company of Willis Stein & Partners, has agreed to merge with fellow payroll outsourcing company PayMaxx Inc., of Franklin, Tenn. No financial terms were disclosed. www.compupay.com www.paymaxx.com
JPMorgan has agreed to acquire Neovest Holdings Inc., an Orem, Utah-based provider of trading technology and direct market access solutions. The selling group is led by CCP Equity Partners, and also includes Total Technology Ventures. No deal terms are being disclosed. www.neovest.com
Abraaj Capital, a Dubai-based private equity firm, has sold Middle Eastern courier company Aramex to Arab International Logistic for $186 million. Abraaj led a $65 million buyout of Aramex in 2003.
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Firm & Fund News |
The Carlyle Group has formed a three-man buyout team in Mumbai, India. It will be part of Carlyle’s overall Asian buyout organization, which currently manages a $750 million dedicated fund. The new India buyout team consists of: Rajeev Gupta, managing director and team head, who previously was head of I-banking (among other titles) for DSP Merrill Lynch; Raj Dugar, director, who previously was a founding director of the Merlion India Fund sponsored by Standard Chartered Private Equity and Temasek Holdings; and Manoj Dengla, a senior associate, who most recently served as an associate in the New York-based special situations group of Goldman Sachs. www.carlyle.com
Sequoia Capital of Menlo Park, Calif. has raised $185.75 million for its third venture capital fund focused on Israel, according to a regulatory filing. www.sequoiacap.com
Lion Capital (f.k.a. Hicks Muse Europe) has raised 820 million euros for its latest fund, according to Private Equity Online. The group split from its Dallas-based parent firm Hicks, Muse, Tate & Furst earlier this year. www.lioncapital.com
Parish Capital Advisors of Chapel Hill, N.C. has closed a new VC and LBO fund-of-funds with $420 million, according to VentureWire.
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Human Resources |
Thomas Ball has joined Austin Ventures as a venture partner. He will focus on early-stage IT companies, including application software, infrastructure software and tech-enabled businesses and consumer services. He previously served as co-founder and CEO of Openfield Technologies LLC. www.austinventures.com
David Williams has been named head of the valuation practice of Deloitte Financial Advisory Services LLP, a subsidiary of Deloitte & Touche USA LLP. He has led the Central Atlantic regional practice of Deloitte FAS since 2002. www.deloitte.com
Vineet Buch has joined BlueRun Ventures as a principal based in India. He previously served as an executive in Oracle‘s server technologies division. The Silicon Valley-based firm also has added Vasudev Bhandarkar as an India-based venture partner. He comes to BRV from wireless software company Unimobile, where he was chairman and CEO until the company was sold to EFI (Nasdaq: EFII). www.brv.com
Davis Polk & Wardwell has elected four new partners. They are: William Fenrich (litigation), Manuel Garciadiaz (capital market transactions), Leor Landa (private fund formation and marketing) and Brian Weinstein (litigation). In addition, the firm is welcoming back partners Charles Duggan and Scott Muller, who had been serving as associate counsel to President Bush (April 2004-March 2005) and general counsel of the CIA (2002-2004), respectively. www.davispolk.com
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