PE Week Wire: Friday, July 25, 2008

If voters mirror the presidential preferences of PE Week Wire readers, then we’re going to have a very long night on November 4. Come morning, we’ll also have a President Obama.

Nearly 1,400 of you participated in yesterday’s unscientific poll, with the Illinois senator edging out John McCain 41%-40% among those who have already made up their mind. When “leaners” are taken into account, the lead expands slightly to 50%-48%.

This tightness is similar to what we saw in reader polling four years ago. One interesting discrepancy, however, is that 50% of yesterday’s respondents report having voted for George W. Bush, compared to just 43% for John Kerry. Maybe that other 7% went for Nader, but it’s unlikely given that 45% identified themselves as Republicans or Republican leaners (compared to 35% for Democrats or Democratic leaners).

Not surprisingly, most respondents picked the economy as the most important issue facing our next president (55%). Second was foreign relations (19%), while War in Iraq (9%) placed third. Only 34% said that their vote was partially dependent on which candidate would be better for the private equity industry.

*** It’s official: I’m hosting a mini-shindig next Wednesday night in Menlo Park (bigger one coming in SF this fall). Like last year, it will be held on the back patio of The Dutch Goose. Plenty of networking, beer and deviled eggs.

I had said we didn’t have a sponsor, but then the Palo Alto office of law firm Dorsey & Whitney stepped up. We like them, and appreciate the support.

The event is free, but space is very limited. You can RSVP here.

*** Speaking of next Wednesday, that’s the day that Bain Capital and Thomson H. Lee Partners will finally close on their buyout of Clear Channel Communications. Company shareholders overwhelmingly approved the deal yesterday, even though they’re getting $3.20 less per share than the last time they voted on it (10 months ago).

We’ll have to wait a while before learning if Bain and THL are still paying too much, so here’s an interim question: Did the PE firms have a say in Clear Channel singing conservative yakker Rush Limbaugh to a $400 million contract? One of those things I thought about while on vacation, but then forgot about until the shareholder vote. You’d think prospective owners get to throw in two cents about a new employee who’s going to be paid a whopping $50 million per year. Something for me to follow up on today.

*** Rising gas prices have led to lots of talk about alternative energy production, new drilling, etc. One thing that rarely gets mentioned, however, is increasing the amount of gasoline that can be produced from a barrel of crude.

That’s the goal of Rive Technology, which has quietly raised $14 million in Series B funding. Nth Power led the round, and was joined by return backers Advanced Technology Ventures and Charles River Ventures.

Rive’s investors didn’t want to talk yesterday — can’t blame them, since the deal hasn’t been announced – but I did speak to another cleantech investor about the “catalyst” space. He says that the technical process is obviously difficult, but that the larger challenge is operational. Specifically, how do you convince production companies to alter their well-established processes? If a catalyst startup can successfully navigate that minefield, then they could be a blockbuster.

Other startups in the space include Catalin, Oxford Catalysts, Zeolite Solutions and Green Catalysts. To date, Rive has raised the most VC funding.

*** Yesterday’s top news item was about GT Solar, which raised $500 million in its IPO. Then it went out and traded down around 12 percent.

One snap judgment is that GT Solar was simply the victim of a particularly bad day on Wall Street (so blame the underwriters for lousy forecasting). Or you could argue that the public markets still don’t really believe in solar companies yet.

That latter argument is one broached earlier this week on peHUB by Alex Haislip, and now is being put to the test by venture capitalist Rob Day of @Ventures. Day has worked with Intrade to form an online marketplace for you to buy and sell IPO futures of four major solar companies. Here’s the details.

*** Have a great weekend. Go Sox.

Top Three

Clear Channel Communications (NYSE: CCU) shareholders yesterday approved a $17.9 billion buyout offer from Bain Capital and Thomas H. Lee Partners. Approximately 97% of shares were cast in favor of the transaction, which is slated to close next Wednesday.

Huntsman Corp. (NYSE: HUN) said that it has been approached by investors offering to help finance Huntsman’s $6.5 billion takeover by Hexion Specialty Chemicals, a portfolio company of Apollo Management. Hexion has been trying to back out of the deal, saying it is no longer feasible due to Huntsman’s increased debt load.

Microsoft Corp. has agreed to acquire DATAllegro Inc., an Aliso Viejo, Calif.-based maker of a data warehousing appliance. No financial terms were disclosed. DATAllegro has raised around $65 million in VC funding since 2004, from firms like Adams Capital Management, Focus Ventures, Intel Capital, JAFCO Ventures, Palomar Ventures and Venrock.

VC Deals

Cara Therapeutics Inc., a Tarrytown, N.Y.-based biotech company focused on pain and inflammation, has raised $12.3 million in additional Series C funding. It had previously raised $24 million. Devon Park Bioventures led the new tranche, and was joined by Connecticut Innovations and return backers Ascent Biomedical Ventures, Mitsubishi and Wistar Morris. Other company shareholders include Scottish Windows, MVM Life Science Partners and Alta Partners.

Intel Capital announced that it has invested a total of $17 million into three Indian companies:, an events-focused social networking portal;, an online travel portal; and Emnet Samsara Media Pvt. Ltd., an out-of-home advertising company focused on the Indian public transportation market.

Genomic Vision, a French developer of nanotechnology for DNA analysis in the areas of cancer and acute diseases, has raised €4 million in Series B funding. Vesalius BioCapital was joined by return backer SGAM AI.

I-nexus, a UK-based provider of Web-based software for enterprise performance improvement, has raised $4 million in new funding. Antrak Capital and individual angels were joined by return backers Herald Ventures and the Advantage Growth Fund.

Slate Pharmaceuticals, a Durham, N.C.-based developer of hormone replacement therapies, has raised $5 million in Series A funding led by T+T Holdings. News of the round was first reported by the Raleigh News & Observer.

DigitalBridge, an Orem, Utah-based provider of information sharing technologies for digital ecosystems, has raised an undisclosed amount of private equity funding from Sorenson Capital Partners.

Goode Partners has invested in Rosa Mexicano Co., operator of an upscale Mexican restaurant chain and marketer of Mexican food products. No financial terms were disclosed.

Tradual Inc., a Boston-based social media company focused on the foreign currency exchange marketplace, has secured $2.4 million of a $4 million Series A round, according to a regulatory filing. North Bridge Venture Partners is leading the financing, with partner Jeff Beir taking a board seat. Company executives includes Dave Lemont, former CEO of ApppIQ, and Asaf Yidgal, former director of professional services with Akorri. Tradual does not yet have a working website.

Buyout Deals

Pernod Ricard, the world’s second-largest spirits group, is planning to sell around €1bn worth of assets over the next 12 to 18 months. Private equity firms are expected to be among the bidders for the assets, which mostly comprise neglected non-core brands.

Astorg Partners has acquired Photonis, a France-based developer of photo sensor technology, from AXA Private Equity. No financial terms were disclosed.

The Carlyle Group, JMI Equity and Pala Investments have completed their C$190 million take-private acquisition of Gemcom Software International Inc., a Canadian supplier of mining productivity solutions.

Kelso & Co. and MatlinPatterson Global Advisors are conducting due diligence on BankUnited Financial Corp. (Nasdaq: BKUNA), according to The Wall Street Journal. The mortgage lender reportedly rejected private equity overtures earlier this year, instead opting for a failed public issuance of new shares.

The Riverstone/Carlyle Global Energy and Power Funds has agreed to acquire Hudson Products Corp. from The Sterling Group. No financial terms were disclosed. Hudson Products is a Sugar Land, Texas-based provider of air-cooled heat exchangers and axial flow fans to the energy markets.

PE-Backed IPOs

Rackspace Inc., a San Antonio-based hosting company, has set its IPO terms to 15 million common shares being offered at between $12 and $16 per share. It would have an initial market cap of approximately $1.6 billion, were it to price in the middle of its range. Rackspace plans to trade on the NYSE under ticker symbol RAX, with Goldman Sachs, Merrill Lynch and Credit Suisse serving as co-lead underwriters. It has raised over $48 million in VC funding since 1999, from firms like Norwest Venture Partners (16.2% pre-IPO stake) and Sequoia Capital (11.6%). It had first filed for an IPO in early 2000, but pulled it later that year due to unfavorable market conditions.

Roadrunner Transportation Services Inc., a Cudahy, Wis.-based provider of non-asset based transportation and logistics services, has filed for a $150 million IPO. It plans to trade on the Nasdaq under ticker symbol RRTS, with Robert W. Baird & Co. and BB&T Capital Markets serving as co-lead underwriters. Shareholders include Thayer |Hidden Creek Entities, Eos Partners and American Capital Strategies.

PE Exits

Bridgepoint has pulled UK debt collection business 1st Credit off the auction block, after failing to receive high enough bidders. Suitors are reported to have included BC Partners, Warburg Pincus and Bain Capital.

EnergySolutions Inc., a nuclear materials company backed by Lindsay Goldberg and Peterson Partners, raised $665 million in a secondary offering of common shares, according to Dow Jones. The Salt Lake City-based company sold 35 million shares at $19 each. It had originally gone public last November.

Select Medical Corp. (NYSE: SLC), a Mechanicsburg, Pa.-based operator of specialty hospitals, has filed to raise $100 million in secondary offering of common stock. Shareholders include WelshCarson Anderson & Stowe and Thoma Cressey Bravo.

Firms and Funds

Goldman Sachs has raised $10 billion for a fund that will invest in leveraged loans, according to The Financial Times. It will be managed by GS Capital Partners.

Element Partners has held a $130 million second close for its second fund, according to VentureWire. This brings the total raised to $400 million, with a $500 million hard cap expected to be reached soon. The Radnor, Penn.-based VC firm focuses on both early and later-stage cleantech and energy opportunities.

Lincoln International, a middle-market I-bank, has opened an office in Tokyo. It will be led by managing director Tetsuya Fujii, who previously was a Tokyo-based senior vice president of M&A for Lehman Brothers.

Human Resources

Mitch Cohen has retired as a managing director with Hellman & Friedman, according to LBO Wire. He had been with the firm since 1989, and most recently served as head of media relations. The move comes as Hellman & Friedman gets ready to begin marketing a new $10 billion fund.