PE Week Wire, Jan. 5, 2007

The sky is gray, the President feels entitled to open mail without a warrant and I’ve got a Jets fan coming over on Sunday to watch his team’s one and only playoff game. In other words, it’s time for some Friday Feedback.

*** I obviously prefer when most of your emails are about something I’ve written, but this week the majority was some variation on: “Why haven’t I gotten the Wire?” Yes, we’ve been having some major deliverability problems this week, particularly with Hotmail, MSN and Yahoo accounts. It is something we’re working on but, in case you don’t receive the Wire on any given morning, just paste the following URL into your browser:

My suggestion is that you bookmark it, and click it if you haven’t received the Wire by at least 10:45am ET on a given morning. Again, apologies for some of the delivery problems…

*** OK, on to actual business. First up are some responses to my predictions of increased LBO deal-making and fundraising in 2007. Lawrence writes: “You may be correct about increased LBO deal volume, but I’m beginning to think that the total disclosed value you described will actually be lower. The disclosed value figures are skewed upward by mega-deals – as you point out – and I’m actually expecting a decrease in such deals. My reasons are twofold: First, I think we’ve already seen a shakeout of most of the public companies that have an active interest in being taken private. Second, and it’s really a corollary, the boards of the remaining public targets are indicating more and more reticence to sell at traditional 15%-20% premiums. It’s almost like they feel they’re getting scammed. The only LBO option is to raise the premiums, and there comes a point where the anticipated return margins get too thin to justify the risk. So either the disclosed value figure goes down, or ! I’m worried that returns will.”

But Mike disagrees: “You’re spot-on Dan. Deal size continues to be driven by fund size, and fund sizes keep growing in multiples of two or three. By this time next year, we’ll be wondering if a $100 billion buyout is coming in 2008, since we’ll already have seen one of at least $70 or $80 billion.”

*** Beau writes in on CVC’s decision to permit hostile takeovers in its latest fund: “Another reason PE firms investment guidelines historically preclude hostile takeovers: Pension funds (which, as you know, are a significant source of LP money) might not be that excited about being associated with a ‘corporate raid’ – sort of a political issue. That’s at least been my impression (though I don’t know if that’s still an articulated belief these days in fund formation negotiations).”

*** Marina on MBAs preferring to enter the LBO world instead of the VC world: “Part of it is obviously money, but a bigger factor is basic job availability. VC firms have been keeping their personnel levels static for several years (if not actually getting smaller), while buyout firms keep adding staff to handle the incredible amount of deal-flow and related due diligence.

***Finally, William writes: “I’ve been reading your column/email for over a year now and find it quite useful. I was wondering if you could recommend a job posting site for us to post an ad for our private equity [firm]?” Of course I can William, the Careers Board. We’ve got 19 jobs on there right now, with a number more coming later today. You can post a job for just $99, and it will run for two weeks. Just click on the Careers at the top of today’s Wire, or go here for the automated job posting form:

New at

• Five Questions for Bob Fitzsimmons, who just left his managing partner post with The Riverside Company to form a new firm called High Road Capital.

• Mike Guthrie has left Garnett & Helfrich Capital to join Symphony Technology Group.

• Alex Haislip on new funding for EnrNOC

• Bombay’s Butterfly Effect

• And, as always, news and analysis updated throughout the day…

Top Three

The New York Times Co. has agreed to sell its Broadcast Media Group to Oak Hill Capital Partners for $575 million. The group consists of nine network-affiliated television stations.

TaizinaiGroup, a China-basedlactobacillus drink manufacturer, has raised $40 million in private equity funding from Actis. The infusion is part of a larger $73 million financing, which also includes Goldman Sachs and Morgan Stanley.

Harold Bradley has agreed to join The Ewing Marion Kauffman Foundation as chief investment officer, effective February 1. He currently serves as American Century Investment’s CIO for U.S. growth equity mid-market/small-cap.

VC Deals

Synosis Therapeutics Inc., a South San Francisco, Calif.-based CNS drug company spun out of EuroVentures early last year, has raised $32.5 million in VC funding from Versant Ventures, Abingworth Management, 5AM Ventures and Novo AS. It also has signed a partnership with Roche, which includes Synosis acquiring five Roche drug candidates, including four Phase I molecules.

Senior Whole Health, a Cambridge, Mass.-based healthcare plan for senior citizens, has raised $16 million in Series B funding. Flexpoint Partners led the deal, and was joined by Council Ventures, New Capital Partners, Noro- Moseley and SSM Partners.

Polymer Vision Ltd., a Dutch developer of rollable electronic displays, has spun out of the Royal Phillips Electronics NV Technology Incubator and raised Euro 21 million in first-round funding. Technology Capital led the deal in exchange for a majority ownership position, while Royal Phillips will retain a 20% stake.

Juvaris BioTherapeutics Inc., a Pleasanton, Calif.-based developer of vaccines for cancer and infectious diseases, has raised $7.53 million in Series A funding led by Kleiner Perkins Caufield & Byers, according to a regulatory filing. Tom Monath of KPCB will serve on the Juvaris board of directors. Juvaris had said on its website that it was seeking “$10 million to commence full-scale operations.” Company CEO Martin Cleary declined to comment.

Kolorific Inc., a Milpitas, Calif.-based fabless semiconductor supplier of video processors and software solutions for the flat-panel HDTV market, has secured around $7 million of a $25.24 million Series C round, according to a regulatory filing.

Retrevo Inc., a Sunnyvale, Calif.-based consumer electronics search engine, has raised $3.2 million in Series A funding. Norwest Venture Partners led the deal, and was joined by return backer Alloy Ventures.

Optasia Medical Ltd., a Manchester, England–based manufacturer of computer-assisted detection software for medical imaging, has raised Gbp2.6 million in VC funding from Noble Fund Managers and Saffron Hill Ventures.

Ngo Han Joint Stock Co., a Vietnamese magnet-wire company, has raised $1.91 million from Mekong Capital. The deal is expected to be expanded to $6.25 million, once the law on 30% limit on foreign ownership in unlisted companies has been amended., a New York-based online community for mothers, has raised $1.5 million in first-round funding from company management and angels like Pat Croce.

Icarcos Inc., a developer of hardware and software that creates a geographical database, has sold a minority ownership stake of Athlone Global Security, a private equity firm focused on Israeli homeland security companies. Icaros is based in Maryland, but has R&D facilities in Israel. No financial terms were disclosed.

Navarro Discount Pharmacies, a Miami, Fla.-based drugstore chain, has received an undisclosed amount of private funding from MBF Healthcare Partners.

Xunlei Network Technology Co., a Chinese provider of online video and game downloads, reportedly has acquired an undisclosed amount of private equity funding from Google Inc. and Ceyuan Ventures. The move comes one day after Google announced that it had teamed with China Mobile to provide online search serves for mobile phones.

VMIX Media Inc., a San Diego-based online media platform, has raised an undisclosed amount of Series B funding from return backers Mission Ventures and Enterprise Partners. It had raised $5 million in Series A funding in early 2005.

Buyout Deals

Goldman Sachs and CanWest Global Communication plan to offer up to Cdn$2.5 billion for Canadian media company Alliance Atlantic Communications Inc., according to The Globe and Mail.

Lakeview Equity Partners has acquired Automatan, a Plover, Wis.-based manufacturer of lithographic labeling equipment for the global corrugated packaging industry. No financial terms were disclosed.

Pepper Dining Inc., an affiliate of Olympus Partners, has agreed to acquire 89 Chili’s Grill & Bar restaurants from Brinker International Inc. (NYSE: EAT). No financial terms were disclosed for the deal, which also includes plans to Pepper Dining to develop and additional 20 to 44 new franchised Chili’s locations.

Jimmy John’s, a Champaign, Ill.-based sandwich shop chain, has received an undisclosed amount of private equity funding from Weston Presidio.

PE Exits

North Dakota Television Holdings LLC has closed the sale of its television stations to Hoak Media LLC for an undisclosed amount. The deal represents an exit for North Dakota Television shareholders The Wicks Group of Companies, JPMorgan Partners and Halyard Capital.

Biogen Idec (Nasdaq: BIIB) has agreed to acquire Syntonix Pharmaceuticals Inc., a Waltham, Mass.-based drug company focused on chronic diseases like hemophilia. The deal includes an additional $40 million cash payment, plus up to $80 million in milestone earn-outs. It is expected to close later this quarter. Syntonix has raised over $64 million, including a 2002 infusion at a $61 million post-money valuation. Backers include Alta Partners, Bay City Capital, HBM Partners, Pappas Ventures, The AFB Fund and Venrock Associates.

Boston Scientific Corp. (NYSE: BSX) has acquired EndoTex Interventional Systems Inc., a Cupertino, Calif.-based carotid artery stent maker. No financial terms were disclosed. Endotex had raised over $25 million in total VC funding, plus a late strategic infusion from Boston Scientific. Other shareholders included Delphi Ventures, Guidant Corp., New Enterprise Associates, New Venture Partners, Onset Ventures, US Surgical and Saratoga Ventures.

Smith & Wesson Holding Corp. (Nasdaq: SWHC) has completed its acquisition of Rochester, N.H.-based hunting arms maker Thompson/Center Arms Inc. from TGV Partners. No financial terms were disclosed.

Huron Capital has sold its position in Prostech Products Inc., a San Antonio, Texas-based manufacturer of exothermic temporary heat sources and catheters, for an undisclosed amount. Buyers were company management and existing individual shareholders, plus some commercial lenders. In 2003, Huron partnered with Pristech management to capitalize the Company and fund the spinoff of a non-core division of a former Huron portfolio company.

Firms & Funds

Sun Capital Partners is targeting $4 billion for its fifth buyout fund, according to LBO Wire. Its previous fund closed in early 2005 with $1.5 billion.

Cardinal Partners is raising up to $175 million for its third healthcare-focused venture capital fund, according to a regulatory filing. The Princeton, N.J.-based firm already has secured more than $68 million in commitments from LPs like the State Teachers Retirement System of Ohio.

Dewey Ballantine LLP and Orrick Herrington & Sutcliffe LLP have called off their proposed merger. In a joint statement, the firms said: “While both firms tried their best to work through these challenges, we were unable to bring the merger to completion. No one issue led us to this point, and each firm leaves this process with great respect for the leaders and partners of the other.”

Apollo Investment Corp. (Nasdaq: AINV) is planning a secondary public offering of 16 million common shares.

Human Resources

John Madigan has left Madison Dearborn Partners, where he had been serving as a special partner. The move was made to remove possible conflicts of interest related to Madison Dearborn’s interest in Tribune Co., of which Madigan previously served as chairman and CEO. He also is on the board of a foundation that is Tribune’s second-largest shareholder with a 13% stake. News of Madigan’s departure from Madison Dearborn was first reported by Crain’s Chicago Business.

Krisztina Zsebo has been named a venture partner with Enterprise Partners. She joined the firm as a principal in 2004, and later assumed additional responsibilities as an entrepreneur-in-residence. For the past two years, Zsebo has been the president and CEO of Celladon, an Enterprise-backed developer of treatments for congestive heart failure.

Randy Guggenheimer III has joined Burrill & Co. as a managing director of merchant banking. He has spent the past 15 years with Lehman Brothers, including time as co-head of healthcare M&A.

Orna Berry, a venture partner with Gemini Israel Funds, was unanimously elected as the next chairperson of the Israel Venture Association, replacing Yoram Oron, founder and managing partner of Vertex Venture Capital.

The Carlyle Group has promoted 34 professionals to senior positions, 16 to Managing Director and 18 to Principal/Director. They are: Colin Atkins, David Daniel, Marc Demumieux, Yi Luo, Masato Marumo, Eliot Merrill, Charlie Moore, Stephen Owens, Thomas Ray, Lori Sabet, Catherine Simoni, Michael Stewart, Takaomi Tomioka, Alex Wagenberg, Michael Wand and Brent Whisenant. The new Principal/Directors promoted from Vice President/Associate Director are: Dan Bellissimo, Brian Bernasek, Sameer Bhargava, Han Chen, Jacques Galante, Ryan Harris, Markus Hoffman, Mark Johnson, Horoshi Kawahara, Marilyn Lucas, Andrew Marino, Heather Mitchell, Thaddeus Paul, David Pearson, Nicholas Shao, Koichiro Taniyama, David Willich and Feng Xiao. (Principals and Directors are the same level in Carlyle parlance; Principal is the title used in the U.S. and Director is the title used in Europe and Asia.)