PE Week Wire: Mon., Aug. 20, 2007

Big day here at the home office, as PE Week Wire has reached the 40,000 subscriber mark. That’s slightly more people than can cram into Fenway Park, and far more than I ever thought would be interested in daily news about the venture capital and buyout markets.

This is a publication that has grown virally, without a dollar ever spent on marketing. So that means I have you – dear readers – to thank for its surprising growth. Thank you for recommending PE Week Wire to your colleagues, and for continuing to send me your insights and scoops. I do read all of your emails, even if I sometimes become too overwhelmed to respond (if at first I don’t respond, try try again). Ditto for your anonymous tips. Without you, I’d have very little to write about…

*** This was going to be a feedback column before I noticed the subscriber figures. Most of your emails last week actually related to recent quiz questions, so here is a brief answer key:

Question: Can you name the Wall Street titan that is raising $1 billion for a fund that will buy up debt from hung bridges? Hint: This isn’t the first time that this firm has tried making lemonade out of a larger economic lemon.

Answer: Goldman Sachs, which is raising its third “Liquidity Partners” fund with a $1 billion target. Get the details here.

Question: Can you name the new social networking startup backed by Accel Partners? Hint: The brother of one of its non-Accel board members used to have a reality show (or maybe still does – it’s hard to keep track).

Answer: Global Grind, a New York-based company founded by the former management team of 360hiphop. Get the details here.

Top Three

Apollo Management has agreed to make a $1 billion equity investment in the parent company of Norwegian Cruise Line, in exchange for a 50% ownership stake. The proposed investment, announced Friday, will be in the form of common stock alongside NCL Corporation Ltd.’s sole shareholder, Star Cruises. Under the deal, Apollo will name a majority of the NCL board with certain consent rights retained by Star Cruises, which will keep 50 percent ownership and all of its existing stock in NCL. Apollo already made a foray into the cruise industry earlier this year, investing in premium cruise line Oceania Cruises.

Lone Star Funds is in talks to sell its 51% stake in Korea Exchange Bank to HSBC Holdings. Read more here

Hummer Winblad Venture Partners is nearing a $200 million final close on its sixth fund. It already has closed on $183.5 million in commitments, and has made three investments.

VC Deals

NeurAxon Inc., a drug company focused on pain management, has raised $32 million in Series B funding. Delphi Ventures and Orbimed Advisors co-led the deal, and were joined by return backers BDC Venture Capital, Genesys Capital Partners, H.I.G. Ventures, NeuroVentures Fund and Ventures West Capital. The company has offices in both Waltham, Mass. and Toronto.

Jive Software Inc., a Portland, Ore.-based maker of Clearspace collaboration software, has raised $15 million in first-round funding led by Sequoia Capital.

eBureau Inc., a St. Cloud, Minn.-based provider of credit risk management and fraud detection software for retailers and financial firms, has raised $12 million in Series B funding. Redpoint Ventures led the deal, and was joined by return backer Split Rock Partners.

3i Systems, a Guangdong, China-based provider of automated optical inspection (AOI) solutions for the Asian TFT-LCD market, has raised $6.5 million in Series B funding. The round was co-led by BlueRun Ventures and Anxon International.

Venture Vehicles Inc., a Los Angeles-based maker of “green-friendly” automobiles, has raised $6 million in Series A funding, according to a regulatory filing. Backers include NGEN Partners and DVC Technologies NV. The company’s website says that it is developing:”A revolutionary, two-passenger, three-wheeled, tilting (articulating) vehicle, powered by a highly fuel efficient hybrid propulsion system that will deliver over 100 mpg, at over 100 mph, and blistering 0 to 60 acceleration.”

Avila Therapeutics Inc., a Waltham, Mass.-based drug company focused on cancer and viral diseases, has raised an undisclosed amount of Series A funding, according to VentureWire. Abingworth Management led the deal, and was joined by Advent Venture Partners, Atlas Venture and Polaris Venture Partners.

Consistel Pte Ltd. of Singapore has raised an undisclosed amount of VC funding co-led by Jafco Asia and Intel Capital. The company is a wireless network solutions provider and system integrator specializing in in-building coverage solutions, network planning and optimization and revenue assurance.

Navigenics, a Redwood City, Calif.-based personal genomics startup, has raised an undisclosed amount of VC funding from Kleiner Perkins Caufield & Byers and Sequoia Capital. The company is run by Mari Baker, the former BabyCenter CEO who most recently served as an entrepreneur-in-residence with Kleiner Perkins. Board members include KP’s John Doerr and Dana Mead, while Sequoia’s Mark Kvamme is an observer. News of the funding was first reported by VentureBeat.

VytronUS Inc., a Los Altos, Calif.-based medical device startup, has raised $6.55 million in Series A funding, according to a regulatory filing. Backers include Delphi Ventures and New Enterprise Associates.

Corcept Therapeutics Inc. (Nasdaq: CORT) has raised $10.1 million in PIPE funding. Paperboy Ventures led the deal, and was joined by fellow existing Corcept shareholders Sutter Hill Ventures and Alta Partners. Corcept is a Menlo Park, Calif.-based drug company focused on psychiatric and neurological diseases.

Buyout Deals

Apax Partners and TPG Capital are in talks to buy part of the founder’s stake in India’s Patni Computers Systems, according to the Business Standard. An agreement between one of the firms and two Patni brothers — Ashok and Gajendra — who hold 29% in the IT services company, is expected to be signed next month, the report said. Chairman Narendra Patni, who holds a 14.69% stake in the company, told the paper he was open to buying a part of his brothers’ stake, provided the price is correct. General Atlantic Partners, which holds a 16.38% stake, has decided not to exit, the chairman said. Other institutions holding a stake in the company are Merrill Lynch and UBS.

Laureate Education Inc. has completed its $3.82 billion take-private acquisition by a consortium that included Laureate chairman and CEO Douglas Becker, Kohlberg Kravis Roberts & Co., Citi Private Equity; S.A.C. Capital Management, SPG Partners, Bregal Investments, Caisse de dépôt et placement du Québec, Sterling Capital, Makena Capital, Torreal SA, Brenthurst Funds and Vulcan Capital. Laureate stockholders received $62 per share. Laureate is a Baltimore-based provider of on-campus and online higher education.

Leonard Green & Partners has completed its acquisition of a majority stake in The Container Store Inc. No financial terms were disclosed for the deal, which offered equity opportunities to approximately 170 employees, including each of the Dallas-based retailer’s individual store general managers. JP Morgan served as financial advisor to The Container Store.

Nasdaq is considering strategic alternatives for its 31% stake in the London Stock Exchange, including a possible sale. Nasdaq has retained both JPMorgan and UBS to help manage the process.

Woodside Capital has led an acquisition of the assets of Hamilton Specialty Bar Corp., a Hamilton, Ontario-based specialty bar-quality steel mini-mill. Other deal participants included Pinnacle Steel and Sankaty Advisors. No financial terms were disclosed. Hamilton Specialty Bar was shut down in May by former owner Delaware Street Capital.

PE-Backed IPOs

CardioNet Inc., a San Diego-based provider of wireless mobile cardiac outpatient monitoring solutions, has filed for a $150 million IPO. It plans to trade on the Nasdaq under ticker symbol BEAT, with Citi serving as lead underwriter. CardioNet has raised around $163 million in total VC funding, including a $110 million infusion earlier this year. Shareholders include H&Q Healthcare Investors, Sanderling Ventures, Guidant Corp., Foundation Medical Partners and IngleWood Ventures.

Orion Energy Systems Inc., a Plymouth, Wis.-based maker of energy-efficient lighting systems to large commercial and industrial customers, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol OESX, with Thomas Weisel Partners serving as lead underwriter. Orion Energy has raised VC funding from Expansion Capital Partners, Capvest Venture Fund and Custer Capital.

PE Exits

GSI Commerce Inc. (Nasdaq: GSIC) has agreed to acquire Accretive Commerce Inc. (f.k.a. NewRoads), a Huntersville, N.C.-based provider of outsourced ecommerce solutions. Accretive Commerce raised a $76 million venture capital round in 2000 from Accretive Technology Partners and DB Capital.

Castle Harlan has sold its interest in UK pipe systems maker Polypipe Group to The Bank of Scotland and company management, for an enterprise value of $880 million. Castle Harlan said that it realized a 4.5X total return on its original equity contribution.

PE-Backed M&A

Questex Media Group Inc., a Newton, Mass.-based B2B media company owned by Audax Group, has acquired Oxford Publishing Inc., an Oxford, Miss.-based producer of food and beverage event “The Show.” Oxford also publishes Nightclub & Bar Magazine. No financial terms were disclosed.

Firms & Funds

W.L. Ross & Co. is targeting $2.5 billion for its fourth fund, according to LBO Wire. The New York-based firm focuses on distressed and turnaround opportunities, and raised $1.15 billion for its current fund back in 2005. The new fundraising effort has a $4 billion cap, with a first close scheduled by the end of next month.

KKR Financial Holdings (NYSE: KFN) has agreed to sell 16 million shares at $14.40 per share, to Morgan Stanley, Farallon Capital Management, Fir Tree Partners, JGE Capital Management, Marisco Capital Management, Oak Hill Advisors and Sageview Capital. The fund also is offering its own shareholders 18.8 million shares for $270 million. The fund last week said it sold $5.1 billion of its mortgage debt and other investments at a $40 million loss.

Human Resources

Matt Shaw is leaving his managing director position with Crossbow Ventures, in order to “pursue other interests.” The move comes as Crossbow begins preparing to raise a new fund. In other Crossbow personnel news, the West Palm Beach, Fla.-based firm has promoted Mark Patten and Brian Bilnoski from senior associates to principals.

Jeff Giles has joined Bertram Capital as director of business development, with a focus on sourcing and evaluating investment opportunities and managing Bertram Capital’s intermediary relationships throughout North America. Giles previously was director of business development at St. Louis-based private equity firm Mindseye Group.

Alona Ponomareva has taken on a field assignment with the International Finance Corp., based in Kiev, Ukraine. She will make direct local investments and fund investments locally and regionally on behalf of IFC. She previously spent six years making private equity and real estate fund commitments for the World Bank Pension Plan.

Bobby Jones Jr. has joined private equity firm Bluff Point Associates as a partner, with a focus on business development for the firm and strategic planning for its portfolio companies. Jones previously was a founder and executive vice president of The BISYS Group.

Scott Parkes has joined Energy Investors Funds as a senior associate in the firm’s Mill Valley, Calif. office. He previously spent three years working in various positions at ExxonMobile, including corporate finance and investor relations.

The Carlyle Group has hired Rahul Gupta, Ryoko Kondo and Agnes Kong as vice presidents for its Asia leveraged finance group. Gupta previously was a director with UBS’ Asian fixed income research group. Kondo and Kong were with JPMorgan’s Asia syndicated and leveraged finance team.

Chrysalis Ventures said that Richard Vance has transitioned into an operating partner role, after having joined the firm in February as an executive-in-residence. He is the former president and CEO of CorSolutions Medical Inc.

Brian Sisko has joined Safeguard Scientifics as senior vice president and general counsel. He previously served in similar positions with