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THURSDAY, MAY 5
The sun is shining, Labour is weakened and Vonage has raised the year’s largest venture capital deal (unless you were to count LiquidNet as VC). In other words, it’s time for Friday Feedback.
Just a few items of note this week, including the issue of whether or not Warburg Pincus and Texas Pacific Group overpaid for Neiman Marcus. Charles writes: “I think your cynicism on the Neiman Marcus purchase price is unwarranted. Yes, [$100 per share] was higher than the stock has been trading and, yes, the run-up in price may have been caused by the news of a coming buyout. But none of that means that Warburg and TPG can’t expand the brand enough to not only justify the price, but also to generate a low-multiple (but high cash) returns.” Julie sounds a similar theme: “Weren’t you the one who said the SunGard deal would act as a sort of return buffer for buyout funds, with it guaranteeing low, but positive, returns for a good chunk of the fund? Isn’t Neimen Marcus the same thing?” Maybe Julie, but the SunGard buyers aren’t paying nearly as high a premium as are the Neiman Marcus folks.
Scott jumps over to my preferred side of pessimism: “I think Neiman Marcus can certainly afford to grow quicker than it has, since I don’t think ‘customers’ perception of exclusivity’ is the issue. Instead, it’s that luxury sales are at a high point in their cycle, which is the very time that buyout firms are supposed to stay away. Don’t Warburg and TPG know that?”
Robin asks a question about Pacific Corporate Group: “Is the PCG saga going to become the PE Week Wire’s next Testa Hurwitz? I’m not sure I can handle it.” Well, I certainly hope not, but since you brought it up… Not only is PCG losing people at an extraordinary rate, but it’s also occasionally adding folks. Just this morning, for example, it hired four people for its Asset Management Group, led by onetime State Street Bank pro Michelle Davidson. The overall situation, however, is still one of contant flux, and it will be very interesting to see how certain pension systems — particularly Washington and New York City — handle current/upcoming RFPs. Whether or not all this turnover affects those contracts could test the theory that firms need some semblance of stability in order to survive.
Finally, the vast majority of emails this week concerned the beloved Celtics. I won’t bore you with all the details, except to say that readers are split on Doc Rivers, and that some of them harbor deep resentment for Antoine Walker. This latter group is eating a giant slice of humble pie this morning, since ‘Toine saved the Celts’ season in Game 6. You have no idea how difficult it will be for me to be at a wedding in Long Island on Saturday night, while friends use my tickets back in Boston.
Vonage Holdings Corp., and Edison, N.J.-based broadband phone company, has raised $200 million in Series E funding. Bain Capital Ventures led the deal, and was joined by return backers New Enterprise Associates, 3i group, Meritech Capital and Institutional Venture Partners. It is the largest pure VC transaction to date in 2005, and follows a $105 million Series D round last summer. All together, Vonage has raised over $490 million in venture capital since its 2001 inception. www.vonage.com
Charlesbank Capital Partners is looking to raise upwards of $900 million for its sixth private equity fund, according to a regulatory filing. To date, the filing reports that it has secured $675.74 million. www.charlesbank.com
Rajiv Ghatalia has agreed to join Warburg Pincus as a managing director in the firm’s Hong Kong office. He previously served as a partner and co-head of Asian Pacific I-banking for Goldman Sachs. www.warburgpincus.com
Turbine Inc., a Westwood, Mass.-based multiplayer online game publisher, has raised $30 million in Series B funding. Tudor Ventures and Columbia Capital co-led the deal, and were joined by return backers Highland Capital Partners and Polaris Venture Partners. Turbine has raised nearly $50 million in total VC funding since its 1994 inception, including a $15 million Series AA recap in 2003. The Series B round closed in February, with The Boston Globe reporting that it will be formally announced next week. www.turbine.com
AcuFocus Inc., a California-based provider of ophthalmic devices for presbyopia, has raised $27.5 million in Series C funding. Pequot Ventures led the deal, and was joined by return backers Versant Ventures, SV Life Sciences, Carlyle Ventures and Accuitive Medical Ventures. www.acufocus.com
Tazz Networks Inc., a Providence, R.I.-based provider of policy control solutions for the broadband market, has raised $6 million in Series C funding, according to a regulatory filing. Return backers included Lazard Technology Partners, BlueStream Ventures and Pilot House Ventures. www.tazznetworks.com
Software Innovation Inc., a Toronto-based provider of project collaboration solutions to large capital projects, has raised Cdn$6.4 million in second-round funding. Participants included Covington Capital, BDC Venture Capital, Verdexus and Software Innovation ASA. www.softinn.com
Ikano Communications Inc., a Salt Lake City-based provider of private-label Internet services, has received a $16.5 million credit facility from Hercules Technology Growth Capital, and has immediately drawn down $5 million on the line. Ikano is backed by Insight Venture Partners. www.ikano.com
Warburg Pincus has acquired UK-based heating company Caradon Plumbing Solutions from an ownership consortium led by Montagu Private Equity. The purchase price was approximately Gbp227 million. Montagu had acquired Caradon back in 2000 for Gbp496 million, although it has since divested certain assets.
Mando Corp., a South Korea-based car parts company, is being put up for sale by owners JPMorgan Partners and Affinity Capital, according to The Financial Times. The asking price is reported to be between $1.5 billion and $2 billion. www.mando.com
Tammac Holdings Corp., a Wilkes-Barre, Pa.-based specialty finance company focused on the manufactured housing market, has received an undisclosed amount of private equity funding commitments from existing shareholders LLR Partners and Greenhill Capital Partners. It also reached a similar agreement with lenders RBS Greenwich Capital and Textron Financial. www.tammaccredit.com
Apax Partners is the last bidder standing for UK-based children’s television producer HIT Entertainment PLC, after Lions Gate Entertainment said that it has dropped out of the running. www.apax.com
Zumiez Inc., an Everett, Wash.-based retailer of sports apparel, equipment, footwear and accessories, priced over 3.12 million common shares at $18 per share (above its $15-$17 range), for an IPO take of approximately $56.25 million. It plans to trade on the Nasdaq under ticker symbol ZUMZ, and had its IPO co-lead managed by Wachovia Securities and Piper Jaffray. In 2002, Brentwood Private Equity acquired an indirect minority interest in Zumiez (37.6% pre-IPO position). www.zumiez.com
EpiCept Corp., an Englewood Cliffs, N.J.-based drug company focused on pain management, has reduced its proposed IPO price range from $11-$13 per share, to $6-$7 per share. It still plans to sell 5.5 million common shares, with Wachovia Securities serving as lead underwriter. EpiCept has raised over $32 million in VC funding since its 1993 inception, with significant shareholders including TVM Techno Venture Management, Merlin Biosciences and GZ Paul Partners. www.epicept.com
Hemosense Inc., a San Jose, Calif.-based maker of blood coagulation monitoring systems for the management of warfarin medication, has set its proposed IPO terms to 2.6 million common shares being offered at between $9 and $13 per share. The offering will bne done via W.R. Hambrecht & Co.’s OpenIPO process. Hemosense has raised around $40 million in VC funding since its 1997 inception, and lists significant shareholders like MPM Capital, Vanguard Ventures, W Capital Partners and GC Technology Fund. www.hemosense.com
MindTree Consulting, an India-based provider of IT solutions via global software development, has acquired Linc Software Services Private Ltd., an India-based provider of application development and maintenance, ERP product support and Web development. No financial terms were disclosed. MindTree has raised nearly $25 million in VC funding from such firms as Walden International, Global Technology Ventures and Templeton Asset Management. Linc Software has raised less than $2 million from ICF Ventures and Infinity Technology Inv*stments. www.mindtree.com
3i Group is planning to open an office in Shanghai in June, according to The Deal. It would be the UK-based private equity giant’s first office in Mainland China. www.3i.com
Apollo Management is looking to raise upwards of $6 billion for its sixth buyout fund, according to PrivateEquityOnline. It raised $3.8 billion for its fifth fund in 2001.
Beth Seidenberg has joined Kleiner Perkins Caufield & Byers as an executive-in-residence. She most recently served as senior VP of global development and chief medical officer of Amgen Inc., and previously held senior executive positions at Bristol-Myers Squibb Co. and Merck & Co. www.kpcb.com
Organized Living Inc., a Westerville, Ohio-based storage and organization goods retailer, filed for Chapter 11 bankruptcy protection on Wednesday. The company had raised around $40 million in VC funding, from backers like Kansas City Equity Partners, Kansas Venture Capital, Inv*stAmerica Venture Group, White Pines Management and Saunders Karp & Megrue. www.organized-living.com
THURSDAY, MAY 5
Fillat To GrandBanks? Not So Fast…
GrandBanks Capital is in the market for a new partner. still.
The Newton, Mass.-based venture capital firm in run by Charley Lax, a gifted venture capitalist whose previous credits include co-founding Softbank Venture Capital (now known as Mobius Venture Capital) and Flatiron Partners (which since has been subsumed by JPMorgan Partners). He’s also led a slew of successful deals, such as E*Trade, Art Technology Group, GeoCities, Mainspring, Personalogic, TheStreet.com, 1800Flowers.com and Connected Corp.
Lax launched GrandBanks in 2000 with the support of Softbank, and can boast that it is one of the few bubble-era, early-stage venture firms without any real dogs in its portfolio. In fact, it would seem to be a prime landing spot for an enterprising VC looking to break free of the brand-name Rt. 128 crowd. With that selling pitch in mind, Lax began searching for a second partner in mid-to-late 2001, and has held informal conversations with at last a dozen folks, including serious negotiations with at least three big names (whose identities I can’t share, since they were told to me in confidence). The sticking point most often seems to be partnership structure, which probably is code for compensation and other goodies. As they say, some partnerships are more equal than others.
The latest in this long line of candidates is Andy Fillat, the former head of North American venture capital for Advent International. Fillat began phasing himself out of Advent in late 2003, after the firm decided to mostly abandon its early-stage investing practice. He formally left last December, and began sharing a bit of deal-flow with Lax. By February, Fillat and GrandBanks were in full-on courtship mode, with many Boston-area folks believing that the marriage had been consummated. In fact, Fillat is even listed as a GrandBanks employee here, and sent out a March 9 Plaxo email listing himself as a general partner with the firm.
It isn’t entirely clear what happened between March 9 and now (Fillat says any mention of GrandBanks on the Plaxo note was “a mistake”), but it is official that Fillat and GrandBanks are not to be. Lax says that the firm is continuing to look for its second partner (plus another associate), while Fillat said that he and Lax simply had different mindsets about how the relationship would work. Fillat also stressed that he and Charley remain friends, and that he remains in the market for a new gig.
*** In unrelated personnel news, Pacific Corporate Group has lost yet another professional. This time it’s Peter Martenson, a director with the firm for the past five years. That makes at least four resignations in calendar 2005, plus the whole Scott Vollmer situation. As one source points out, last week’s PCG reorganization was designed to better serve clients, but didn’t address the firm’s Achilles Heel: an ability to retain employees.
*** Finally, Robert Walsh has left the general partnership of Summit Partners, which is currently raising a pair of new funds. No idea where he’s headed…
Experian, a Costa Mesa, Calif.-based subsidiary of UK-based GUS PLC, has acquired LowerMyBills.com, a Santa Monica, Calif.-based online mortgage lead generator. The deal was valued at $330 million, plus up to an additional $50 million in performance-related earn-outs over the next two years. LowerMyBills has raised around $12 million in VC funding since its 1999 inception, from firms like Split Rock Partners (f.k.a. St. Paul Venture Capital) and eCompanies. www.experian.com www.lowermybills.com
Split Rock Partners has raised its first fund with $275 million in limited partner commitments. The Minneapolis-based venture firm was formed last year as part of the breakup of St. Paul Venture Capital. The other half of the split – Vesbridge Partners, — currently is marketing its own inaugural fund. www.splitrockpartners.com
Microsoft Corp. has launched a new program to license out hundreds of internally-developed technologies to entrepreneurs and small businesses. Microsoft IP Ventures, the program was developed, in part, with the help of venture capitalists. www.microsoft.com
Avidia Inc., a Mountain View, Calif.-based developer of biotherapeutic proteins, has raised $28.5 million in Series B funding. Morgenthaler Ventures led the deal, and was joined by TPG Ventures, MedImmune Ventures, Amgen Ventures and return backers Alloy Ventures and Maxygen Inc. www.avidia.com
Cytochroma Inc., a Markham, Canada-based specialty drug developer, has received the first tranche of a Cdn$15 million venture funding round. VenGrowth Private Equity Partners is leading the deal, with additional participation from fellow return backers CDP Capital, Business Development Bank of Canada, GeneChem Financial Corp. and Canadian Medical Discoveries. www.cytochroma.com
Akorri Networks Inc., a Littleton, Mass.-based technology startup, has raised $8.43 million in Series A funding. Backers include Matrix Partners, North Bridge Venture Partners and BlueStream Ventures. www.akorri.com
3F Therapeutics Inc., a Lake Forrest, Calif.-based maker of cardiac and circulatory devices, is raising up to $20 million in Series E funding, according to a regulatory filing. The company has $6 million so far, from return backers like Domain Associates, Boston Scientific and new buyer FjordInv*st. Overall, 3F has raised $34 million in VC funding since its 1998 inception. www.3ftherapeutics.com
Xoft Microtube Inc., a Fremont, Calif.-based maker of micro x-ray catheter for radiation therapy, has raised $30 million in Series C funding, according to VentureWire. Maverick Capital led the deal, and was joined by return backers MPM Capital, Sutter Hill Ventures, Mosaix Ventures, Frantz Medical Ventures and Frazier Healthcare Ventures. www.xoftmicrotube.com
Placemark Inv*stments Inc., a Dallas-based overlay manager to financial services companies offering unified managed accounts (UMAs), has raised an undisclosed amount of venture capital funding. Participants included RBC Technology Ventures, Ascent Venture Partners and North Hill Ventures. www.placemark.com
GHN-Online Inc., a Dallas-based provider of revenue cycle management solutions for the healthcare industry, has raised $2 million in VC funding from Ballast Point Ventures, an affiliate of Raymond James Financial. www.ghnonline.com
Doppler SA, a Greek elevator maker, has sold a minority ownership position to Attica Ventures, according to Greek press reports. www.doppler.gr
GTCR Golder-Rauner has committed $200 million of equity capital to support the formation of Capella Healthcare Inc., a Brentwood, Tenn.-based acquisition and holding platform focused on acute care hospitals within the United States. Daniel Slipkovich, former president and COO of Province Healthcare Inc., will serve as CEO of Capella, while Thomas Anderson, former senior vice president of M&A and development for Province Healthcare, will serve as president. www.gtcr.com
Pets At Home, a UK-based pet supplies retailer acquired in July 2004 by Bridgepoint for Gbp230 million, has completed a refinancing of the original buyout transaction. Under terms of the revised arrangement, BNP Paribas and Royal Bank of Scotland have jointly underwritten Gbp189 million of new facilities (including Gbp167 million in senior notes and Gbp22 million of working capital). Combined with cash generated since the buyout, an original Gbp20 million mezzanine loan has been repaid, while shareholders have received Gbp70 million. www.petsathome.com
Hicks, Muse, Tate & Furst has agreed to acquire Sturm Foods Inc. from a Mason Wells-sponsored ownership group. Sturm is a Manawa, Wis.-based provider of nutritionally-focused drink mixes, hot cereals and other dry-mix products in the retail and foodservice markets. No financial terms were disclosed. www.sturmfoods.com
Rackable Systems Inc., a Milpitas, Calif.-based provider of high-density computer servers and high-capacity storage systems, has set its proposed IPO terms to 6.25 million common shares being offered at between $11 and $13 per share. It plans to trade on the Nasdaq under proposed ticker symbol RACK, with Thomas Weisel Partners serving as lead underwriter. Parthenon Capital holds a 61.2% pre-IPO stake in the company. www.rackable.com
Watchdata Technologies Ltd., a Beijing, China-based provider of operating systems software with data security and encryption features, has reduced its IPO terms for the second time in a week. The company originally planned to offer four million American depository shares (ADS) at between $18 and $20 per ADS, but recently cut the price down to $14 to $15 per ADS. Now, it also is reducing the total number of offered shares to three million. Overall, the original $100 million target has been reduced to around $45 million. Transpac Capital holds a 34% ownership stake in Watchdata, while Deutsche Bank Securities and Jefferies Broadview are serving as lead book managers. www.watchdata.com.cn
Xerium Technologies Inc., a Westborough, Mass.-based supplier of two categories of consumable products used in the production of paper, has reduced its proposed IPO terms to 13.9 million common shares being offered at between $14 and $16 per share. It originally filed to raise $700 million via an IPO of income deposit securities (IDS), but later changed the offering to 16.4 million common shares at between $18 and $20 per share. The company is an indirect, wholly-owned subsidiary of Xerium SA, which is majority-owned by Apax Partners. www.xerium.com
Galapagos Genomics NV, a Belgium-based developer of genomics platforms for drug target discovery, has set its IPO price to 7 euros per share. It is expected to begin trading tomorrow on the Euronext Amsterdam and Euronext Brussels exchanges. Dutch biotech company Crucell NV holds a 20% stake in Galapagos, while other shareholders include Abingworth Management and Burrill & Co. www.galapagos.be
Spark Networks PLC, a Beverley Hills, Calif.-based provider of online personals services, has withdrawn its proposed $75 million IPO filing. The company lists Tiger Technology Management as a significant shareholder. www.spark.net
Selectica Inc. (Nasdaq: SLTC) has paid $1 million to acquire the software product assets of Determine Software Inc., a San Francisco-based provider of enterprise contract management solutions. Determine had raised over $35 million in VC funding, including a $12.25 million Series C round in early 2003 at a post-money valuation of approximately $22.25 million. Backers included New Enterprise Associates, Mohr, Davidow Ventures and JPMorgan Partners. www.selectica.com www.determine.com
WellPoint Inc. (NYSE: WLP) has agreed to acquire Lumenos Inc., an Alexandria, Va.-based provider of consumer-driven healthcare programs. The deal is valued at approximately $185 million in cash, and is expected to close later this quarter. Lumenos had raised over $110 million in VC funding since its 1999 inception, from firms like KBL Healthcare Ventures, Johnson & Johnson Development Corp., Draper Fisher Jurvetson, Liberty Partners, Novartis Corp., Allianz Private Equity Partners and AIG Horizon Partners. www.wellpoint.com www.lumenos.com
Small Bone Innovations LLC of New York has acquired Fixano SA, a France-based developer and manufacturer of orthopedic devices. No financial terms were disclosed. SBI was formed in May 2004 by the principals of Viscogliosi Brothers LLC, to developer and acquire technologies in the small bone and joined sector. Prior to Fixano, the company already had acquired Avanta Orthopedics Inc., Envision Manufacturing Inc. and worldwide licensing rights to market certain tissue technologies of Biorthex Inc. www.totalsmallbone.com www.fixano.com
Western Inventory Service, a Toronto-based portfolio company on ONCAP LP, has acquired Washington Inventory Service, a San Diego-based portfolio company of SterlingInv*stment Partners. The combined inventory and asset management company will be renamed WIS International, and be owned by ONCAP and company management.
Envest Holdings LLC, a Virginia Beach, Va. Venture capital firm, has closed its second fund with $48.33 million in limited partner commitments. www.envestventures.com
Beth Seidenberg has joined Kleiner Perkins Caufield & Byers as an executive-in-residence. She most recently served as senior VP of global development and chief medical officer of Amgen Inc., and previously held senior executive positions at Bristol-Myers Squibb Co. and Merck & Co. www.kpcb.com
Correction: Friend Skoler & Co. was misspelled in yesterday’s edition. www.freindskoler.
WEDNESDAY, MAY 4
Suffering a bit of misery-induced hangover from last night’s debacle at the Shawmut Center/Fleet Center/TD BankNorth Garden, so just a couple quick notes:
Lots of fund news today, including word that Benchmark Capital has closed its second venture capital fund focused on Israel-based technology companies. The final capitalization was $250 million, which is up slightly from the $240 million raised for Benchmark’s inaugural Israel vehicle in March 2001. That original fund currently features 20 portfolio companies, and a handful of exits via M&A (including Intel’s pending buy of fabless semiconductor company Oplus Technologies Ltd. for $100 million).
The reason I’m mentioning this fund-raising in blue is to credit Benchmark for sticking in out in Israel, when every geo-political fiber must have been telling them to bail. Four years ago – when the renewed intifada was boiling over — I assigned a PE Week reporter to write about whether or not U.S.-based VC firms would continue to invest in Israel. My assumption was that the answer would be “no,” given the added dangers of travel, possible supply line disruptions and LP distaste for instability. What the reporter found, however, was a complete lack of trepidation. As Alex Balkanski, a general partner with Benchmark, said at the time: “When two Israelis run into each other in the elevator or at the water cooler and one says to the other Did you hear about the trouble?’ the trouble is [a down] Nasdaq market.
*** VC-backed M&A data for Q1 2005 is now available at www.nvca.com, courtesy of Thomson Venture Economics and the NVCA. No surprise that the total dollar numbers are up, although M&A is always tricky since it involves disclosed deal valuations (ditto for LBO volume data). A bit intriguing that the total number of deals was down slightly from Q4 2004 (77 vs. 85), but the Q2 data could rebound thanks to a bunch of deals agreed-upon in Q1, which are expected to close in Q2.
*** Two Celtics gripes, since I’m so preoccupied and this column is read by certain minority owners: (1) It would not be unreasonable to fire Doc Rivers today. Not tomorrow. Not at season’s end, but today. After all, you demoted GM Chris Wallace in the middle of a playoff series two years ago (in favor of Danny Ainge). The man is simply lost with his substitutions, can’t design a late-game play that doesn’t involve Pierce vs. World and complains to officials so much that he has become a taller version of Chicken Little. (2) Giving a $75 restaurant gift certificate to season ticket holders – particularly those in the first few rows — always gets laughs from those of us in the cheap seats.
Bayhill Therapeutics Inc., a Palo Alto, Calif.-based drug developer focused on autoimmune diseases, has raised $35.4 million in Series B funding. De Novo Ventures and Lilly Ventures co-led the deal, and were joined by fellow new backers A.M. Pappas & Associates, Boston Life Science Venture Corp., Grand Cathay Venture Capital Co., Montreux Equity Partners, PAC-LINK Bio Management Corp, Prudence Venture Investment Corp. and Quintiles’ PharmaBio Development. Returning shareholders included CMEA Ventures, Latterell Venture Partners, Morgenthaler Ventures, U.S. Venture Partners and The Vertical Group. The company raised $11.55 million in Series A funding in 2002, at a post-money valuation of approximately $19.5 million. www.bayhilltherapeutics.com
Amos Barzilay has resigned from his managing director position with Walden International, in order to form a new early-stage venture firm with unnamed senior partners from other VC firms. He will continue to represent Walden on the boards of Business Signatures Corp., InQuira Inc. and Velosel Corp. Barzilay focuses on software and Internet services deals, while Walden recently disclosed its intentions to focus exclusively on the semiconductor space. www.waldenintl.com
CVC Capital Partners has closed its second Asia Pacific Fund with over $1.97 billion in limited partner commitments. The effort is a joint venture with Citigroup, and will be used to fund companies in the most developed Asia Pacific economies, including Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan. The group’s original Asia Pacific Fund closed in 2000 with $750 million, of which over $526 million has been disbursed to 17 companies. www.cvceurope.com
Sorrent Inc., a San Mateo, Calif.-based developer and publisher of mobile entertainment, has raised $20 million in Series D funding. Granite Global Ventures led the deal, and was joined by return backers BA Venture Partners, Globespan Capital Partners and Sienna Ventures. The company has raised over $48 million in total VC funding since its 2001 inception, including a $20 million Series C infusion last year. www.sorrent.com
Worksoft Inc., a Dallas-based provider of automated software quality solutions, has raised $12 million in Series D funding. Crescendo Ventures led the deal, and was joined by return backer Austin Ventures. www.worksoft.com
Prenova Inc., a Marietta, Ga.-based provider of energy process management solutions, has raised $2 million in new venture capital funding. Return backers include Frontenac Co., River Cities Capital Funds and Austin Ventures. The company has raised over $17.5 million in total VC funding since a 2003 recap. www.prenova.com
Infolink Systems Inc., the parent company of RFID supply chain solutions provider Savi Technology, has received a $2 million investment from private equity firm GlobeSecNine. www.globesecnine.com www.savi.com
Capri Engineering LLC, a Sunrise, Fla.-based engineering company, has received private equity funding from Palm Beach Capital Partners. No financial terms were disclosed. www.capriengineering.com
Tacit Networks Inc., a South Plainfield, N.J.–based provider of enterprise-wide remote office IT solutions, has received a $7.5 million minority equity infusion from Brocade Communications Systems Inc. (Nasdaq: BRCD), as part of a licensing and development agreement. www.tacitnetworks.com
Optimer Pharmaceuticals Inc., a San Diego-based biotech company, has agreed to sell a 16% ownership interest to Par Pharmaceutical Cos. Inc. (NYSE: PRX) for an undisclosed amount. The two companies also have entered into a joint development and collaboration agreement for a narrow-spectrum antibiotic focused on C. difficile. www.optimerpharma.com
Francisco Partners has closed its acquisition of the WebTrends web analytics business of NetIQ Corp. (Nasdaq: NETIQ) for approximately $94 million in cash. www.franciscopartners.com www.webtrends.com
Goldman Sachs Capital Partners and EQTAB have received European Commission approval for their proposed $3.81 billion buyout of ISS AB, a publicly-traded, Danish cleaning and support services company. Once the deal closes, ISS will de-list from the Copenhagen Stock Exchange.
Transportation Resource Partners has led a buyout of QEK Global Solutions, a Bloomfield Hills, Mich.–based provider of outsourced vehicle and asset management solutions. Other participants include UnitedAuto Group Inc. (NYSE: UAG) and Penske Truck Leasing. Global M&A, a global partnership of which Brown Gibbons Lang & Co. is the U.S. member, represented the seller, LeasePlan Corp. No financial terms were disclosed. www.qekgs.com
Avalon Pharmaceuticals Inc., a Germantown, Md.-based developer of small-molecule therapeutics for cancer, has filed to raise $57.5 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol AVRX, with Legg Mason Wood Walker serving as lead underwriter. Avalon has raised over $82 million in VC funding since its 1999 inception, with significant shareholders including AIG Global Inv*stment Group, EuclidSR Partners, Forward Ventures, GIMV, OBP Management, CDP Capital, MDS Capital, H&Q Healthcare and Array Capital. www.avalonrx.com
Quintana Maritime Ltd., a Houston, Texas-based provider of dry-bulk marine transportation services, has filed to raise $300 million via an IPO of common stock. 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.
James River Group Inc., a Chapel Hill, N.C.-based insurance holding company, has filed to raise $80 million via an IPO of common stock. The company plans to trade on the Nasdaq under ticker symbol JRVR, with Keefe, Bruyette & Woods serving as lead underwriter. Trident Capital holds a 28.9% pre-IPO ownership position. www.jamesriverins.com
EZGov Inc., an Atlanta-based provider of government process automation software and services, has sold its Americas and Caribbean operations to ChoicePoint Inc. (NYSE: CPS) for an undisclosed amount. EZGov will retain its European operations, and is backed by Warburg Pincus, Imlay Inv*stments, EDS Ventures and Northwood Ventures. www.choicepoint.com www.ezgov.com
Benchmark Capital has raised its second fund focused on the Israeli high-tech market, with $250 million in limited partner commitments. The Menlo Park, Calif.-based firm’s original Israeli fund closed in March 2001 with $240 million. Benchmark maintains an office in Herzliya Pituach, Israel, plus one in London for its European efforts. www.benchmark.com
Littlejohn & Co., a Greenwich, Conn.-based private equity firm focused on the middle-markets, has closed its third fund with $650 million in limited partner commitments. www.littlejohnllc.com
Allied Capital Corp. has sold its portfolio of commercial mortgage-backed securities and collateralized d*bt obligation bonds and preferred shares to Caisse de depot et placement du Quebec for $976 million in cash. www.alliedcapital.com www.cdpcapital.com
ESP Equity Partners announced its formation, as a new private equity firm focused on biotech and pharmaceutical opportunities in North America, Europe and Asia. Fund-raising is expected to be finished later this year. The firm’s general partners are Howard Weisman, S. Douglas Sheldon and Jeffrey Li, co-founders of ESP Pharma Inc., which was acquired earlier this year. www.espequity.com
Chris Temple has joined Saddle Brook, N.J.-based private equity firm Friend Skolar & Co. as a director. He previously served as a managing director with Thayer Capital Partners. www.friendskolar.com
Greg Jones has joined Newton, Mass.-based VC firm GrandBanks Capital as chief administrative officer. He previously was an attorney with Testa, Hurwitz & Thibeault LLP, representing venture capital firms. www.grandbankscapital.com
Steve Heinen has joined Minneapolis-based Marquette Capital Partners as a managing director charged with opening a new Chicago office. He previously was with CapitalSource. www.marquettecapitalpartners.com
Michael Glouchevitch has joined private equity firm Riordan, Lewis & Haden as a general partner. He previously was a managing director with Westar Capital. www.rlhinvestors.com
Dennis Barsema has joined Benchmark Capital as a venture partner. He currently serves as chairman of Blue Lane Technologies Inc., and previously was CEO and chairman of Onetta Inc., which recently was acquired by Bookham Technologies. He also is the former president and CEO of Redback Networks Inc. www.benchmark.com
Correction: Jefferies & Co. was misspelled in yesterday’s Wire, and the correct website is www.jefco.com
TUESDAY, MAY 3
The Real Neiman Marcus Winners
The $5.1 billion buyout of luxury retailer Neiman Marcus Group won’t be consummated until at least November, but certain market analysts already are asking how Texas Pacific Group and Warburg Pincus plan to generate positive returns with an offer price of $100 per share. Not only has NMG stock never traded at $100, but its recent sprint past $90 per share seems to have been largely driven by constant reports that deep-pocketed private equity firms were circling their wagons. Moreover, the 10.2x or 10.3x purchase price multiple (depending on who’s doing the math) is higher than that of the average mega-buyout (according to 2004 S&P data), and also is higher than the average retail market acquisition.
Since no major managerial changes are expected, the ROI equation seems to involve some serious expansion, including more brick-and-mortar stores in the U.S. and abroad, plus the continued build-out of its online catalog business. All well and good from a theoretical perspective, since NMG isn’t on every urban street corner, like a Gap or Crate & Barrel. On the other hand, at least one analyst report yesterday (from Morningstar) suggested that NMG’s very success is rooted in its customers’ perception of exclusivity, which could be dampened by anything approaching omnipresence. Maybe TPG and Warburg are simply betting that NMG’s target market of 45-60 year-olds making more than $200K per year will continue to grow, and that our current macro-economic problems (including that pesky GDP) will just be a momentary blip.
While we wait to find out how TPG and Warburg Pincus do, there is at least one private equity firm doing back-flips: Castanea Partners, a Newton, Mass.-based firm focused on the lower, middle-markets. It’s unlikely that Castanea ever would ever be able to/want to participate in a $1 billion deal, let alone a $5.1 billion deal, as its current fund is just $207 million. Nonetheless, two of its three principals – Rob Smith and Brian Knez — serve as vice chairmen of NMG (they are former co-CEOs), and will reap millions off the buyout. Moreover, the pair should profit even further from their familial relationship with NMG chairman Richard Smith, whose position now is valued at nearly $650 million (Richard is Rob’s father, and Brian’s father-in-law).
I had lunch last year with both men at a dingy – but amazing — West Newton eatery known as Comella’s, and both seemed down-to-earth and interested in building a name for themselves within the private equity market. They still have a ways to go before being a household name, but they already might have made more money on Neiman Marcus than the principals at either TPG or Warburg Pincus ever will.
Visto Corp., a Redwood City, Calif.-based provider of mobile access solutions, is looking to raise between $60 million and $100 million for its eighth round of venture capital funding, according to PE Week. The company already has netted over $160 million in funding from more than 25 firms, including New Enterprise Associates, Draper Fisher Jurvetson, Trinity Ventures, Oak Investment Partners and Meritech Capital Partners. www.visto.com
Forstmann Little & Co. has agreed to acquire 24 Hour Fitness Worldwide Inc., a San Ramon, Calif.-based health club chain controlled by McCown De Leeuw & Co. The total transaction is valued at $1.6 billion, including $900 million from Forstmann Little’s equity and subordinated d*bt funds. The balance will be funded through a senior loan facility. 24 Hour Fitness chairman and CEO Mark Mastrov will continue to lead the company, and will retain an ownership position. www.24hourfitness.com
Thomson Financial, an operating unit of The Thomson Corp. (NYSE: TOC), has acquired Macdonald & Associates Ltd., a Toronto-based research group focused on the Canadian private equity market. No financial terms were disclosed. (Note: Thomson Financial publishes the PE Week Wire) www.thomsonfinancial.com www.canadavc.com
Orchestria Corp., a New York-based provider of active policy management software, has raised $21 million in Series D funding. New backers include Paladin Capital Group, Goldman Sachs, RRE Ventures and the New York City Inv*stment Fund, while existing shareholders Benchmark Capital, Constellation Ventures and Doughty Hanson Technology Ventures also participated. www.orchestria.com
DATAllegro Inc., an Aliso Viejo, Calif.-based supplier of a price/performance data warehouse appliance, has raised $15 million in Series B funding. Adams Capital Management led the deal, and was joined on a pro–rata basis by return backers Palomar Ventures and Venrock Associates. www.datallegro.com
GTESS Corp., a Richardson, Texas-based provider of business process outsourcing services to the healthcare industry, has raised $12 million in Series B funding. HLM Venture Partners led the deal, and was joined by Adams Harkness Ventures and return backers General Catalyst Partners and Kodiak Venture Partners. www.gtess.com
Celator Pharmaceuticals Inc., a drug development company with offices in Vancouver, Canada and Princeton, N.J., recently raised US$40 million in VC funding, according to the company’s website. This brings Celator’s total venture capitalization to over $50 million, with backers including Domain Associates, Quaker BioVentures, TL Ventures, Ventures West Management, GrowthWorks, Business Development Bank of Canada and Hearthstone Inv*stments Inc. www.celator.ca
Conforma Therapeutics Corp., a San Diego-based developer of small-molecule oncology drugs, has raised $11 million in additional Series C funding, closing out the round at $41.5 million. All participants had made previous commitments to the round, including Domain Associates, Forward Ventures, Inglewood Ventures, Lilly BioVentures, Novo AS, ProQuest Investments, RBC Capital Partners, RiverVest Venture Partners and S.R. One Ltd. www.conformacorp.com
InPhase Technologies Inc., a Longmont, Colo.-based developer of holographic storage media technologies, has entered into a joint development agreement with Bayer MaterialScience AG, to help develop and supply raw materials for the production of optical storage media. As part of the deal, Bayer is providing $5 million in private equity funding to InPhase. www.inphase-technologies.com
Apollo Health Street Ltd., a subsidiary of India-based Apollo Hospitals, has raised $7.5 million in private equity funding from One Equity Partners and a subsidiary of Apollo Hospitals shareholder Temasek Holdings. www.apollohospitals.com
Ford Motor Credit Co. has sold non-prime auto finance lending subsidiary Triad Financial Corp. to a consortium comprised of GTCR-Golder Rauner, Goldman Sachs and Gerald J. Ford, president of Hunter’s Glen/Ford Ltd. No financial terms were disclosed, although press reports suggest a total price of $2.4 billion. www.triadfinancial.com
Bear Growth Capital Partners is in talks to acquire a minority stake in Bronx, N.Y.-based restaurant food supplier Dairyland Inc., according to The Deal. The transaction is expected to be structured as a recap, with a total value of up to $60 million.
Texas Pacific Group and its hedge fund affiliate TPG-Axon Capital have agreed to acquire shareholders of 18.2% and 9.1%, respectively, in German mobile phone operator Mobilecom AG from France Telecom. No financial terms were disclosed. www.mobilcom.de
Permira and Apax Partners reportedly are considering a Gbp 7 billion offer for UK-based “do-it-yourself” retailer B&Q, which is owned by Kingfisher. Other potential bidders include KKR and The Home Depot. www.diy.com
Matalan, a UK-based clothing retailer, has agreed to sell its Lee Cooper jeans business to Emerisque Capital for at least Gbp 20 million, according to The Times of London. www.matalan.co.uk
Morningstar Inc., a Chicago-based financial information provider, priced 7.5 million common shares at $18.50 per share (upper end of $16-$19 range), for a total IPO take of approximately $140.6 million. The offering was made via the OpenIPO process managed by WR Hambrecht & Co., with Softbank Finance Corp. owning a 19.8% pre-IPO ownership position. Morningstar will trade on the Nasdaq under ticker symbol MORN. www.morningstar.com
Progress Software Corp. (Nasdaq: PRGS) has agreed to acquire EasyAsk Inc., a Marlborough, Mass.-based provider of natural language question/answer solutions for retrieving critical business information. The all-cash deal is valued at $9.2 million, net of cash acquired, and is expected to close within the next two weeks. EasyAsk has raised approximately $18 million in total VC funding since its 1994 inception, from firms like Flagship Ventures, Gilde Inv*stment Management, Sigma Partners and The Venture Capital Fund of New England. www.progress.com www.easyask.com
Agribuys Inc., a Torrance, Calif.-based provider of supply chain management software to the global perishable food industry, has agreed to merge with Foodconnex Worldwide, a Roseville, Calif.-based provider of technology to companies in the perishables and food retail markets. The combined company will be called FoodLink Online, and will receive $2 million in venture capital funding from certain existing backers, according to VentureWire. Agribuys has raised over $38 million in VC funding from groups like Rustic Canyon Ventures and Internet Capital Group, while Foodconnex has raised over $8 million from firms like WI Harper Group. www.agribuys.com www.foodconnexwordwide.com
Clarity Visual Systems Inc., a Wilsonville, Ore.-based, has acquired Synelec Telecom Multimedia SA, a France-based digital imaging company with 2004 reported revenue of around $30 million. No financial terms were disclosed. Clarity Visual is backed by Needham Asset Management. www.clarityvisual.com www.synelec.com
Whitehill Technologies Inc., a Canadian provider of document composition and data transformation software, has acquired the technology assets of Metaserver Inc., a North Haven, Conn.-based provider of business process integration software and solutions to the insurance industry. No financial terms were disclosed. Whitehill has raised VC funding from GrowthWorks and Latitude Partners, including a Cdn$4.1 million Series B round last November. Metaserver has raised over $36 million since its 1996 inception, from firms like Madison Dearborn Partners, Connecticut Innovations, Century Capital Management and Signal Lake Management. www.whitehilltech.com www.metaserver.com
Carmel Ventures, an Israel-based VC firm focused on the software and communications markets, has closed its second fund with $200 million. Limited partners include The Partners Group, DPartners, Pomona Capital, Citigroup, Siemens Venture Capital, Horsley Bridge International, JP Morgan Fleming, LGT Capital Partners, NY State/HarbourVest Partners, The Kauffman Foundation, Swiss Re, Wilshire Associates, Goldman Sachs and Grove Street Advisors clients CalPERS and the Oregon Public Employees’ Retirement Fund. www.carmelventures.com
Canaan Partners has closed its seventh venture capital fund with $450 million in limited partner commitments. It also promoted Brent Ahrens and Maha Ibrahim to the position of general partner. Canaan has offices in both Rowayton, Conn. and Menlo Park, Calif., and focuses on early-stage deals in both the IT and life sciences spaces. www.canaanpartners.com
Philip Berkowitz has joined Jeffries Broadview as a managing director focused on the communications equipment industry. He had spent the past five years in the tech I-banking group of CSFB. In other Jeffries Broadview news, the group has promoted Robert Jackman to the position of managing director. www.jeffries.com
Kenneth Freeman has joined Kohlberg Kravis Roberts & Co. as a managing director. He most recently served as chairman and CEO of Quest Diagnostics Inc. (NYSE: DGX). www.kkr.com
Correction: TAK Imaging Inc. has raised $26.25 million in total Series C funding, not $16.25 million.
MONDAY, MAY 2
Just Linking Around…
Lots of time spent on the news section this morning, so I’ll just play blogger and direct you to a bunch of other places (apologies for the laziness):
*** PE Week subscribers can read all about Sierra Ventures co-founder Jeffrey Drazen’s new fund, changes at Clearstone Venture Partners, more on the AIG Capital Partners mess and new funds focused on Africa and India. Just go to Weekly Headlines at www.pewnews.com. Oh, and here’s a piece from last week on how South Korean tax authorities recently “invaded” The Carlyle Group’s offices in Seoul.
*** Not so sure that In-Q-Tel has been as mysterious or scandalous as this NY Post report suggests, but there are a couple troubling accusations. The rest is mostly sensationalistic, since In-Q-Tel’s management structure — as the article briefly acknowledges – is designed to mirror other institutionally-sponsored VC efforts that provide what amounts to carried interest. Now there certainly is an argument to be made that the federal government shouldn’t be involved in such things at all, but that is a whole different box of bees.
*** Could Sun Microsystems be going private with the help of Silver Lake Partners? BusinessWeek says maybe, SiliconBeat.com says no, or at least that any such deal won’t involve Silver Lake.
*** I just saw this (i.e., haven’t had time to look into it), but Ross Mayfield of Socialtext says his company got Series B funding, and invites you to play journalist on the details.
*** Good new VC blog devoted to the clean-tech space. Made even better by the fact that the PE Week Wire is listed as a link.
Texas Pacific Group and Warburg Pincus have agreed to acquire retailer The Neiman Marcus Group Inc. (NYSE: NMG.A, NMG.B) for approximately $5.1 billion, or $100 per share. Shareholder approval is expected to be voted on by November 1. Rival bidders are reported to have included Blackstone Group, Thomas H. Lee Partners and Bain Capital. www.neimenmarcusgroup.com
TheFacebook.com, a social networking company focused on college and university students, has raised $12 million in first-round funding. Accel Partners led the deal, with Accel’s Jim Breyer joining TheFacebook.com’s board of directors. www.thefacebook.com
Charles Mixon has resigned from AIG Capital Partners, where he was a vice president focused on deal opportunities in Russia. The move came just days after AIG CP chief Peter Yu and AIG CP managing director Bill Jarosz were fired. www.aig.com
NetZentry Inc., a Palo Alto, Calif.-based provider of network-level defense security technologies, has raised $6.05 million in Series A funding. U.S. Venture Partners and Alloy Ventures participated on the deal, with Stuart Phillips of USVP and John Shoch of Alloy Partners joining the NetZentry board of directors. www.netzentry.com
Mindjet Corp., a Larkspur, Calif.-based provider of software for visualizing and managing information, has raised $15 million in second-round funding. Inv*stor Growth Capital led the deal, and was joined by return backer 3i Group. Mindjet has raised $20.2 million in total VC funding since its inception, including a $5.2 million first-round in 2001 at a post-money valuation of approximately $26 million. www.mindjet.com
Luminetx Corp. (f.k.a. Conehill Biomedics), a Memphis, Tenn.-based maker of a digital imaging systems that lets medical professionals “map” veins for use in medical procedures, has raised $4 million in first-round funding from Morgan Keegan. www.luminetx.com
CebaTech Inc., a Red Bank, N.J.-based provider of solutions for accelerating the development of complex communication protocols in silicon, has raised $4.5 million in Series B funding. NJTC Venture Fund and 2M Technology Ventures co-led the deal, and were joined by return backer SAS Inv*stors. www.cebatech.com
The IVC Research Center reports that 102 Israel-based technology companies raised $350 million in VC funding during Q1 2005, which is down approximately 4% from the $366 million raised by 113 such companies in Q4 2004. Overall, the report suggests that Israel-based tech companies will raise $1.5 billion in total VC funding this year. www.ivc-online.com
Solaris Nanosciences Corp., a Providence, R.I.-based developer of “nano-particles” for use in making solar energy panels and video displays, has raised $150,000 in convertible note funding from the Slater Technology Fund. www.solarisnano.com
Advent International has acquired Fat Face, UK-based retailer of active-wear and outdoor clothing. No financial terms were disclosed. Sellers include ISIS Equity Partners, while Fat Face founders Tim Slade and Jules Leaver will retain a substantial ownership position. www.adventinternational.com www.fatface.com
EQT Partners has agreed to sell German dental equipment manufacturer Sirona Group to Madison Dearborn Partners. No financial terms were disclosed. The selling group also includes company management, which teamed with EQT to buy the company in 2003. www.eqtpartners.com www.sirona.de
Lenovo Group Ltd. (HKSE: 992), a Chinese personal computer company, has completed its acquisition of IBM Corp.’s PC unit. The $1.75 billion deal (including $500 million in assumed d*bt) was made possible, in part, by a $350 million strategic infusion from private equity firms Texas Pacific Group ($200 million), General Atlantic ($100 million) and Newbridge Capital ($50 million). Approximately $150 million of the private equity transaction was used to help finance the IBM PC acquisition, while the remaining $200 million will be used by Lenovo for general working capital and corporate purposes. www.lenovo.com
PAI Partners has agreed to acquire the food ingredient operations of Denmark-based Chr. Hansen Holding for a reported $1.4 billion. www.paipartners.com
Behrman Capital has acquired Selig Sealing Products Inc., a Forrest, Ill.-based manufacturer of container sealing products, from The Riverside Co. The deal, which also includes Selig’s senior management team, has an aggregate value of approximately $100 million. www.seligsealing.com
Scotsman Holdings Inc., a Baltimore-based provider of mobile and modular home building solutions, has filed to raise $250 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol WLSC, with Citigroup, Lehman Brothers and CIBC World Markets serving as lead underwriters. The company was recapitalized in 1997, by The Cypress Group, Odyssey Inv*stment Partners and fellow modular home builder Keystone Inc. www.willscot.com
Morningstar Inc., a Chicago-based financial information provider, is expected to price its IPO later today. It plans to sell over 7.61 common shares at between $16 and $19 per share, via the OpenIPO process managed by WR Hambrecht & Co. Softbank Finance Corp. owns a 19.8% pre-IPO ownership position in Morningstar. www.morningstar.com
Egenera Inc., a Marlborough, Mass.-based provider of utility computing solutions, has withdrawn its proposed $125 million IPO, citing “market conditions.” Last week, the company announced that it had secured $45 million in new funding commitments, including $15 million from Horizon Technology Finance and a $20 million expansion of its existing credit line from Silicon Valley Bank (from $10 million to $30 million). Egenera had previously raised $124 million in total VC funding since its 2000 inception, including a $30 million Series D infusion in late 2003 at a post-money valuation of approximately $382 million. Significant shareholders include Austin Ventures, CSFB Private Equity, Crosslink Venture Capital, Goldman Sachs, Kodiak Venture Partners, Spectrum Equity Investors and Technology Crossover Ventures. www.egenera.com
Verifone Holdings Inc., a San Jose, Calif.-based provider of electronic payment transaction services at the point-of-sale, priced 15.4 million common shares at $10 per share (after reducing range from $12-$14), for a total IPO take of approximately $154 million. It closed its first day of trading up at $10.75 per share. Verifone originally went public in 1990, but was acquired and taken private by Hewlett-Packard Co. in 1997. Four years later, Hewlett-Packard sold the company to Gores Technology Group. In 2002, GTCR Golder-Rauner led a recapitalization, and became Verifone’s majority shareholder. www.verifone.com
Boise Cascade Holdings LLC, a Boise, Idaho-based provider of paper and forest products, has set its proposed IPO terms to 16 million common shares being offered at between $24 and $26 per share. The company has been controlled by Madison Dearborn Partners since last October. www.bc.com
Darby Overseas Inv*stments Ltd. and Banco Bilbao Vizcaya Argentaria SA (NYSE: BBV) have closed their Darby-BBVA Latin America Private Equity Fund with $175 million in limited partner commitments. www.darbyoverseas.com
Casey Tansey has joined U.S. Venture Partners as a general partner focused on early-stage opportunities in the medical device and biopharmaceutical spaces. He most recently served as president and CEO of Epicor Medical, a medical device company acquired last year by St. Jude Medical Inc. Before that, he was president and CEO of Heartport Inc., a public company acquired by Johnson & Johnson in 2001. www.usvp.com
Wael Aburida has agreed to join Sacramento-based merchant bank Douglas, Curtis & Allyn LLC (DCA) has a managing director and head of I-banking. He previously was director of M&A for Santa Clara, Calif.-based Intel Corp. www.douglascurtis.com
Martin Gagen, former president and CEO of 3i US, has joined the advisory board of WHI Capital Partners, a Chicago-based private equity firm focused on the lower middle-markets. www.whicapital.com
MQ Associates Inc. (a.k.a. MedQuest), an Alpharetta, Ga.-based medical imaging company controlled by JPMorgan Partners, said in an SEC filing last week that three of its top executives have resigned. The three are CEO Gene Venesky, president Kenneth Luke and CFO Thomas Gentry, and the moves come one month after MedQuest’s audit committee began a review of certain financial statements. It also comes shortly after the three men filed suit against MedQuest and JPMorgan Partners for wrongful termination. That suit was dropped as part of the separation agreement. www.medquest.com
Get last week’s complete PE Week Wire here.