PE Week Wire: Mon., Feb. 4, 2008

I’m not really in the mood to work today, but felt it was unprofessional to call in sad. So just a few notes:

*** Private equity pros continued to take care of their own in Q4, contributing $85,150 to Mitt Romney’s presidential campaign. That gives him a 2007 total of $479,650, which is more than the second and third-place candidates combined.

Barrack Obama placed second in the overall tally with $253,788, but slipped to fifth in Q4 giving. In fact, the quarter’s second-place slot went to Chris Dodd, who didn’t manage to survive past January’s Iowa caucus. He was followed by fellow loser Rudy Giuliani, who only earned him a single delegate before dropping out last week. Actual contenders Hillary Clinton and John McCain finished fourth and sixth in Q4, and fifth and sixth for the year.

A big question going into Q4 was whether or not private equity pros would punish Democrats who came out in favor of a change to carried interest tax treatment, which would increase taxes on PE profits. It seems that they might have. Both Obama and Clinton raised less in Q4 than in Q3, while Republicans and Dodd (who remained non-committal) flourished. John Edwards did manage to raise nearly 10x in Q4 what he did in Q3, but that’s only because he was starting from so little.

I’ve compiled all the relevant data here for your downloading pleasure, including a spreadsheet of individual Q4 contributors. I hope to get VC data up on the site later today.

*** It’s also worth noting that Romney has spent around $35 million of his personal fortune, which was mostly derived from private equity investments.

*** I spent Saturday morning at Harvard Business School, moderating a panel on digital media investing. Good timing, given the prior day’s Microsoft-Yahoo news (really don’t know what we would have talked about one week earlier). A couple quick hits:

• Howard Morgan of First Round Capital noted that his firm had been in talks with both Microsoft and Yahoo about possible portfolio company sales, but that the talks had “frozen” due to the takeover attempt. Most panelists agreed that the two companies are going to cut way back on acquisitions in the short-term.

• All the panelists agreed to that merger – if it happens – would shrink the buyer pool for their companies, but Dennis Miller of Spark Capital stressed that Microsoft, Yahoo and Google aren’t the only players in the digital media pond.

• We talked a lot about online advertising, in the context of a recessionary environment causing macro ad spend cutbacks. Most panelists played the counter, arguing that online ad accountability and price may actually increase online strategy adoption.

• I wondered if Rupert Murdoch’s decision to keep some WSJ content behind the walled garden could be a watershed for other online content companies – kind of like how the legal destruction of P2P sharing companies like Napster (mostly) ended the notion of free music content (not that it’s helping the record cos. much). Most folks didn’t think so, but Alan Spoon of Polaris made an interesting addendum: He thinks Murdoch is charging too little for the WSJ premium content (at least if it stays status quo). If someone believes content is valuable enough to pay for – particularly businesspeople – then they’re probably willing to pay a lot.

• Speaking of Murdoch, there was some talk about MySpace being unprofitable today, and perhaps unprofitable forever.

*** Finally, congratulations to all you Giants fans, including those who have already written me this morning to gloat. The beloved Pats were outplayed and (particularly) outcoached. I also think David Tyree deserved the MVP over Eli, but that’s the least of my disappointments…

Top Three

Teneros, a Mountain View, Calif.-based maker of an application continuity appliance, has raised $40 million in Series D funding. Advanced Equities led the round, which peHUB first reported on last September. Return backers include Goldman Sachs, New Enterprise Associates, Sevin Rosen Funds and STAR Ventures. Teneros has now raised over $77 million since 2004.

Steelpoint Capital Partners has agreed to acquire prAna from Liz Claiborne Inc. (NYSE: LIZ). The deal includes a $36.5 million cash payment at closing, and up to $4 million in financial milestone-based earnouts. It is expected to close later this quarter. PrAna is a vista, Calif.-based maker of yoga and active lifestyle apparel and accessories.

Conversus Capital has agreed to acquire a portfolio of private equity fund interests from CalPERS. The portfolio has a net asset value of approximately $189 million and around $25 million in unfunded commitments, as of June 30, 2007. Conversus was joined by four syndicate partners, including Oak Hill Investment Management.

VC Deals

Liquid Machines Inc., a Waltham, Mass.-based provider of enterprise rights management solutions, has raised $10 million in Series D funding. RRE Ventures led the round, and was joined by return backers Goldman, Sachs & Co., Atlas Venture, Masthead Ventures and Draper Fisher Jurvetson. The company has now raised around $37 million in total VC funding since 2002.

Clickability Inc., a San Francisco-based provider of on-demand web content management solutions, has raised $8 million in Series B funding. Shasta Ventures led the round, and was joined by return backer Convergence Partners. The company has now raised $15.6 million in total VC funding.

Ringleader Digital (fka: MoPhap), a New York-based mobile advertising network, has raised $6 million in Series A funding led by WP Group.

RemitData, a Memphis, Tenn.–based provider of Web-based software for physicians and other healthcare professionals, has raised $5 million in Series A funding. Backers include Noro-Moseley Partners and SSM Partners.

Caringo, an Austin, Texas–based provider of content storage software, has raised an undisclosed amount of VC funding from Vodafone Ventures. The company previously raised capital from Austin Ventures.

eScreen, an Overland Park, Kansas-based provider of drug screening and electronic hiring program management solutions, has raised an undisclosed amount of funding from Carlyle Venture Partners.

Tyfone Inc., a provider of infrastructure for bank-branded mobile banking, mobile contactless payments and mobile retail merchant relationship services, has raised an undisclosed amount of VC funding from Ojas Venture Partners. The company has a U.S. headquarters in Portland, Ore., and an Asian headquarters in Bangalore, India.

Buyout Deals

Belvedere Capital has completed its acquisition of Spectrum Bank, an Irvine, Calif.-based community bank, for $37 million.

Resilience Capital Partners has completed its acquisition of the Satellite Communications business of Andrew Corp. (Nasdaq: ANDW). The company has been renamed ASC Signal Corporation. Andrew will retain a 17.9% ownership interest in ACS, and received $8.5 million in cash. It also received a $2.5 million note and could receive another $2.5 million note and another $25 million in cash based on certain milestones.

The Riverside Company has acquired Shinsouki, the largest parking lot operator in Niigata City, Japan. No financial terms were disclosed for the deal, which Riverside will use as an acquisition platform.

Spring Air, a Boston–based mattress manufacturer, has raised $22 million in financing from existing shareholders H.I.G. Capital and American Capital Strategies.

PE-Backed IPOs

Biolex Inc., a Pittsboro, N.C.-based drug company whose lead candidate focuses on hepatitis C, has withdrawn registration for an $80 million IPO, citing “unfavorable market conditions.” It had planned to trade on the Nasdaq, with Lehman Brothers and Deutsche Bank Securities serving as co-lead underwriters. Biolex has raised nearly $100 million in total VC funding since its 1997 inception, including a venture recap. Shareholders include Intersouth Partners (20.3% pre-IPO stake), Johnson & Johnson Development Corp. (16.2%), Quaker BioVentures (14.9%), Polaris Venture Partners (11.4%), Investor Growth Capital (9.9%), Mitsui & Co. Venture Partners (5.4%), JP Morgan Securities, Easton Capital and Dow Venture Capital.

PE Exits

Pegasus Capital Advisors has sold Cannondale Bicycle Corp. to Dorel Industries Ltd. (TSX: DII.A, DII.B), for between $190 million and $200 million in cash. Pegasus had acquired the bicycle maker in 2003.

LGV Capital has sold Verna Group, a UK-based manufacturer of infection control products, to Verna management and Bank of Scotland Integrated Finance. No financial terms were disclosed, but AFX puts the pricetag in excess of Gbp50 million. LGV bought Verna in April 2005 for around Gbp60 million.

AthenaHealth Inc. (Nasdaq: ATHN), a Watertown, Mass.-based provider of online business services for physician practices, has withdrawn registration for a secondary public offering of around 3.11 million common shares, due to “market conditions.” Selling shareholders were to include Oak Investment Partners (1.1m) and Cardinal Partners (473k). Both firms would have retained ownership stakes following the sale. Fellow venture backers Venrock and DFJwere not planning to sell shares via the offering.

PE-Backed M&A

Accruent Inc., a Santa Monica, Calif.–based provider of real estate performance management solutions, has acquired FAMIS Software Inc., an Irvine, Calif.-based maker of integrated workplace management systems. No pricing terms for the all-cash deal were disclosed. Accruent has raised nearly $55 million in VC funding since 2000, from firms like Granite Global Ventures, InnoCal Venture Capital, Red Rock Ventures, Pequot Capital, Sierra Ventures, Stanford University, Mustang Capital and Peninsula Equity Partners. has agreed to sell its European DVD rental business in the UK and Germany to LoveFilm International, a London-based online DVD rental services. LoveFilm has raised VC funding from Arts Alliance Media, Balderton Capital, Esprit Capital Partners and Index Ventures.

Bausch & Lomb has completed its acquisition of Eyeonics Inc., an Aliso Viejo, Calif.-based maker of ophthalmic medical devices like intraocular lens implants. No financial terms were disclosed. Bausch & Lomb was recently acquired by Warburg Pincus. Eyeonics had raised $43.5 million in VC funding since 1998, including a Series E round in late 2005 at a post-money valuation of approximately $84.2 million. Backers include ABS Ventures, Brentwood Venture Capital, Pequot Capital and Versant Ventures.

Global Brass and Copper Inc., a portfolio company of KPS Capital Partners, has acquired certain operating assets of Bolton Metal Products Company. No financial terms were disclosed. This is GBC’s first acquisition since being formed by KPS last November, concurrent wit the firm’s acquisition of Olin Corp.’s (NYSE: OLN) worldwide metals business.
Kurz-Kasch Inc., a Dayton, Ohio–based maker of electromagnetic and engineered composite components, has acquired Macon Electric Coil Inc., a St. Louis–based maker of custom electric coils and solenoids for the irrigation and consumer appliance industries. No financial terms were disclosed. Monomoy Capital Partners acquired Kurz-Kasch from the Dover Corp. in February 2006.

LGV Capital has sold Classic Hospitals to Spire Healthcare, a company formed last year by Cinven’s purchase of BUPA Hospitals. The deal is valued at Gbp145 million, with leveraged financing is being provided by Lloyds TSB Corporate Markets, Calyon and GE Leveraged Loans Limited. Classic Hospitals is the UK’s sixth largest hospital group.

USI Holdings Corp., a Briarcliff Manor, N.Y.–based distributor of insurance and financial services to businesses, has acquired Webster Insurance Inc. from Webster Financial Corp. (NYSE: WBS). No financial terms were disclosed. Webster Insurance is a Meriden, Conn.-baased middle-market insurance brokerage firms focused on the New England market. USI is owned by Goldman Sachs Capital Partners.

Human Resources

Morgan Stanley is in talks to hire Jim Howland as an operating partner in its recently-reformed private equity unit, according to LBO Wire. Howland is the former president of Dun & Bradstreet.

Aberdare Ventures has promoted Y. Vincent Kim and Naheed Ismaili Misfeldt from principals to partners. Kim joined in 2002, and focuses on therapeutic medical device companies. Misfeldt joined in 2003, and focuses on biopharmaceutical product companies.

Updata Partners has promoted Rich Erickson to general partner and Carter Griffin to partner. The moves were made effective with the recent closing of Updata’s fourth fund with $223 million in capital commitments. Updata has offices in Reston, Va. And Edison, N.J., and focused on growth-stage technology investments.