PE Week Wire, Jan. 2, 2007

I had planned to write the 2nd Annual PE Week Wire Awards column on the plane-ride back from Costa Rica, but the smooth sailing and a John Irving novel lulled me to sleep instead. Don’t blame Irving though – instead blame the Costa Rican neighbors who didn’t run out of homemade explosives fireworks until about 3am the night before. Anyway, some reading for you while I hoist myself back into the saddle, for another year of private equity news and views…

*** Thomson Financial and the National Venture Capital Association have released VC-backed M&A and IPO tallies for 2006. The M&A short story is that deal volume was down slightly, but that disclosed value rose (even though the number of disclosed values dropped). There was a slight increase in VC-backed IPOs, and a more significant rise in amount raised. You can read the release and see the charts here:

*** Speaking of M&A, James Cramer believes that 2007 will be even bigger than 2006. Check out his piece in New York Magazine:

*** CVC Capital Partners has received limited partner consent to attempt hostile takeovers, according to The Telegraph. I was actually unaware that many LP agreements specifically forbade this type of behavior, but instead assumed it had fallen out of fashion: (A) Because there are so many public companies with willing management; (B) Because a firm known for hostile takeovers is likely to be viewed with suspicion by “possibly-willing” management and (C) Because private equity firms today seem more interested in keeping existing management in place, which is best done by fomenting a positive relationship. It will be interesting to see CVC’s first target.

*** Brad Feld and Jason Mendelson have launched a website called AsktheVC, in which readers can submit various questions about anything from term sheets to the best industry publications (thanks for the plug guys). Check it out at:

*** Well, the Deal apparently got more sleep than I did, as it already has termed Accel Partners a 2006 Winner and Sevin Rosen Funds a 2006 Loser. Sounds right on first glance, but more on it tomorrow…

Top Three

Investcorp has agreed to acquire Moody International Ltd. from Close Brothers Private Equity for Gbp158 million. Moody is a UK-based provider of energy and construction inspection services.

Industry Ventures, a San Francisco-based venture secondaries firm, has closed its fourth fund with $105 million in capital commitments. It also secured $15 million for a pair of co-investment vehicles.

Michael Feinstein has left Venrock Associates, where he had been a Cambridge, Mass.-based general partner since 2004. No word yet on his future plans.

VC Deals

Lucid Information Technology Ltd., a Netanya, Israel-based developer of 3D graphics processing solutions, has raised $12 million in second-round funding, according to Globes Online. Intel Capital led the deal, and was joined by return backers Genesis Partners and Giza Venture Capital.

Digg, a San Francisco-based news website that lets users rank stories, has raised $8.5 million in new VC funding from return backers Greylock Partners and Omidyar Network. The news was first reported last week by VentureWire.

CorasWorks Inc., a Reston, Va.-based provider of workplace application software on the Microsoft SharePoint platform, has raised $4 million in second-round funding from Edison

Venture Fund. The company had previously raised $3 million from Novak Biddle Venture Partners, Bonsal Capital and Isis Capital.

Minekey Inc., a Sunnyvale, Calif.-based developer of Internet-based personalization and recommendation services, has secured $600,000 of a $3 million Series A round led by New Enterprise Associates, according to a regulatory filing.

Buyout Deals

Crestview Partners has sponsored a management buyout of Munder Capital Management, a Birmingham, Mich.-based money management firm, from Comerica Inc. Grail Partners advised Munder on the deal, and also participated in the equity. Comerica retained full ownership of World Asset Management, the former quantitative and index-oriented investment management division of Munder Capital.

Lincolnshire Management has acquired Dawn Trucking Co., a Farmington, N.M.-based provider of trucking services for the oil and gas industry in the San Juan Basin. No financial terms were disclosed for the deal, which was first reported by The Daily Times of Farmington. Lincolnshire is expected to merge Dawn with existing portfolio company Dalbo.

Kayne Anderson Energy Development Co. and Tortoise Capital Resource Corp. have acquired Millennium Midstream Energy LLC and its affiliates, which consist of gathering, processing and pipeline assets in Texas and Louisiana. The deal was done via the creation of a new limited partnership, through which the former owners of MME will own 100% of the general partnership and of the subordinated units. Kayne Anderson made a $47.5 million equity investment, in exchange for a 39% LP interest. In addition, Tortoise and a Wells Fargo company have acquired common LP units, representing a combined 18% stake.

HSBC Private Equity Middle East has acquired a “significant equity stake” in Flip Media Investments, an interactive marketing agency with offices in both the Middle East and Asia. No financial terms were disclosed.

Inflexion Private Equity has sponsored a Gbp12 million management buyout of Tekton Group, a UK-based provider of construction and homebuilding software.

PE-Backed IPOs

Omneon Video Networks Inc., a Sunnyvale, Calif.-based provider of digital content storage and processing systems for media companies, has filed for a $115 million IPO. It plans to trade on the Nasdaq under ticker symbol OMNE, with JPMorgan serving as sole bookrunner. Shareholders include Norwest Venture Partners, Accel Partners, Advanced Technology Ventures, Invesco Private Capital, Meritech Capital Partners and Lucent Ventures.

PE-Backed M&A

Nycomed AS, a Danish drug company, has completed its acquisition of Altana AG’s pharmaceuticals business for approximately €4.5 billion. Nordic Capital holds a 51% stake in Nycomed, with other shareholders including DLJ Merchant Banking Partners, Blackstone Group and AlpInvest.

Graceway Pharmaceuticals, a Bristol, Tenn.-based drug company owned by GTCR, has completed its $875 million acquisition of 3M’s pharmaceuticals operations in the U.S., Canada and Latin America. Graceway also has subsumed fellow GTCR portfolio company Chester Valley Pharmaceuticals.

Healthy Foods Holdings, a portfolio company of Catterton Partners, has completed its acquisition of Van’s International Foods Inc., a Vernon, Calif.-based maker and marketer of Van’s Waffles. No financial terms were disclosed.

PE Exits

Television Station Group Holdings LLC, a portfolio company of Boston Ventures and Alta Communications, has sold WTAG-TV for $56 million to Nexstar Broadcasting Group Inc. (Nasdaq: NXST). WTAG serves the Johnstown/Altoona, Pa. market.

Firms & Funds

Goldman Sachs has closed its first GS Infrastructure Fund with more than $6.5 billion in capital commitments (including $750 million from Goldman Sachs). The fund will target opportunities in traditional infrastructure sectors, including transport infrastructure (i.e., toll roads, airports and ports) and regulated gas, water and electrical utilities.

HLM Venture Partners has closed its second fund with $216 million in capital commitments, according to VentureWire. The Boston-based venture capital firm focuses on opportunities in the healthcare space.

Human Resources

David Metzger has been named CFO of Sciona Inc., a Boulder, Colo.-based supplier of consumer DNA testing for lifestyle and nutritional guidance. He previously served as CFO of Sterling Partners.

Jonathan English has agreed to join Portfolio Advisors, after having spent more than five years with Abbott Capital Management.