PE Week Wire: Mon., March 26, 2007

Every time the PE Week Wire adds another thousand subscribers, I like to remind you that these morning missives are just a scrumptious sampling of our editorial smorgasbord. Paid subscribers to Buyouts Magazine, PE Week and/or Venture Capital Journal receive an all-you-can-eat buffet of news, analysis, opinion and data – from the industry’s most experienced editorial team.

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*** I actually had a pretty interesting column set for today, but am awaiting one final piece of confirmation. Suffice to say: Lots of rumors floating around that a pair of distantly-related VC firms are going under. But only one is actually on its way out of business… I’ll have it for you tomorrow.

*** Jens Bisgaard-Frantzen has resigned as managing partner of ATP Private Equity Partners, one of Europe’s largest investors in private equity funds with more than €3 billion in capital under management. A formal statement is expected later this morning.

Bisgaard-Frantzen describes the split as amicable, and says that the primary issue was a disagreement over whether or not the firm should raise capital from limited partners other than Dutch pension fund ATP. He adds that he plans to form his own fund-of-funds in the near future, with details forthcoming in a few months.

ATP will not replace Bisgaard-Frantzen with a single individual, but rather with a trio of current partners: Torben Vangstrup, Susanne Forsingdal and Klaus Ruhne.

*** Over 3,300 people have downloaded the Blackstone S-1 filing from peHUB. That makes it the single most downloaded file since the site launched last November.

*** March Madness is down to the Final Four, so here are the top four in our 580-person field: (1) David McCoy, a principal with National City Equity Partners, with 111 points. David has Ohio State beating Florida in the finale. (2) Emily Lammers, a recent Princeton grad working at Standard & Poor’s, with 110 points. Emily has Florida taking care of Georgetown (even though her team! name indicates some Hoya affinity). (3) Andrew Garman, managing partner of New Venture Partners, with 109 points. Andrew has Georgetown topping Florida. (4) We’ve got three players tied with 108 points…

New at

• Does the Blackstone IPO represent an AOL-Time Warner moment for private equity?

• Dennis Shelly of Arcadis with the Top 10 Trouble Signals During Environmental Due Diligence. It’s long, but definately worth printing out and saving for future reference.

• Arthur Klausner of Pappas Ventures with a follow-up to his piece on the similarities between March Madness and Venture Capital.

• More data and info on job creation at PE-backed companies in Europe.

And, as always, news and analysis updated throughout the day.

Top Three

Charterhouse Capital Partners has agreed to acquire Germany-based utility metering company Ista International from CVC Capital Partners, for €2.4 billion. The deal is expected to close in May.

CardioNet Inc., a San Diego-based provider of wireless mobile cardiac outpatient monitoring solutions, has raised $110 million in fifth-round funding. No investor information was disclosed for the deal, which featured Citigroup Global Markets as lead placement agent and Sun Trust Robinson Humphrey as co-placement agent. CardioNet previously had raised around $53 million in equity funding, including a $10 million Series D round in 2004 at a post-money valuation of approximately $230 million. Backers included H&Q, Sanderling Ventures, Guidant Corp., Foundation Medical Partners and IngleWood Ventures.

The Carlyle Group has agreed to acquire the Engineered Products division of Goodyear Tire & Rubber Co. (NYSE: GT) for $1.475 billion. The deal is subject to customary closing conditions, including receipt of regulatory approvals and the completion of a labor agreement with the United Steelworkers union. Goodyear Engineered Products operates 32 facilities in 12 countries, has approximately 6,500 employees and manufactures engineered rubber products for industrial, military, consumer and transportation original equipment end-users. It had 2006 sales of approximately $1.5 billion.

VC Deals

Surface Logix Inc., a Brighton, Mass.-based developer of drug optimization programs, has raised $19.9 million in Series D funding, according to a regulatory filing. Return backers include Venrock Associates, Arch Venture Partners, Unilever Ventures, HBM BioVentures and CW Ventures. It has now raised around $75 million in total VC funding since its 2000 inception.

Affinium Pharmaceuticals Inc., a Toronto-based developer of oral antibacterial therapeutics, has raised US$18 million in Series A funding. Forward Ventures led the deal, and was joined by Oxford Bioscience Partners, SV Life Sciences and seed backer Genesys Capital Partners.

Discera Inc., a San Jose, Calif.-based fabless analog semiconductor company that makes miniature silicon resonators for the frequency and timing control markets, has raised $17.5 million in Series C funding. Scale Venture Partners led the deal, and was joined by Horizon Ventures and return backers 3i Group, Partech International and Ardesta LLC. Discera has raised around $48.5 million in total VC funding since its 2001 inception.

Advanced Electron Beams Inc., a Wilmington, Mass.-based developer of electron beam technology for advanced manufacturing processes and environmental control, has raised $17.47 million in Series B funding, according to a regulatory filing. Rockport Capital Partners was joined by return backers Atlas Venture and General Catalyst Partners. The company had raised a $10 million Series A round in late 2005.

AdMob, a San Mateo, Calif.-based mobile advertising marketplace, has raised $15 million in Series B funding. Accel Partners led the deal, and was joined by return backer Sequoia Capital.

Endocyte Inc., a West Lafayette, Ind.-based developer of receptor-targeted therapeutics for the treatment of cancer and autoimmune diseases, has raised $15 million in Series C-3 funding. Return backers include Sanderling Venture Partners, Burrill & Co., Triathlon Venture Partners, Blue Chip Venture Co., American Bailey Ventures and CID Capital. The post-money valuation was $77 million, according to VentureWire. Endocyte has raised around $61 million in total VC funding since 2001.

Tobii Technology, a Stockholm, Sweden-based provider of hardware and software solutions for eye tracking and eye control, has raised $14 million from Investor Growth Capital.

Marathon Technologies Corp., a Littleton, Mass.-based provider of virtualization software, has raised $12 million in Series B funding. Sierra Ventures led the deal, and was joined by return backers Atlas Venture and Longworth Venture Partners.

Streetcar, a UK-based pay-as-you-go car club, has raised £6.4 million from Smedvig Capital.

Xobni Corp., a San Francisco-based provider of email analytics software, has secured $1.5 million of a $4.26 million Series A round led by Khosla Ventures, according to a regulatory filing. The company was originally seeded by Paul Graham and Y Combinator.

Payoneer Inc., a New York-based provider of Web-based debit-card payment solutions, has raised $4 million in Series A funding. Greylock Partners led the deal, and was joined by seed backer Crossbar Capital and several individual angels.

C Squared Holdings Ltd., a UK-based publisher and event organizer for the advertising industry, has raised £250,000 from The Capital Fund.

CapMan has agreed to invest in, and acquire 3i Group’s stake in, Finland-based market intelligence company Novintel. No financial terms were disclosed.

Buyout Deals

Telecom New Zealand Ltd. has agreed to sell its Yellow Pages unit for NZ$2.24 billion (approx. US$1.6 billion) to CCMP Asia and Teachers’ Private Capital. An alternate offer reportedly had been made by KKR and Seven Network Ltd. of Australia.

TPG has agreed to acquire the Surgery Division of HealthSouth Corp. (NYSE: HLS), a network of 139 outpatient surgery centers and three surgical hospitals in 35 states that provide surgical services to physicians and their patients. The deal is valued at approximately $945 million, including a $920 million purchase price and an equity interest whereby HealthSouth has the opportunity to participate in newly-formed company.

Bridgepoint Capital has agreed to acquire the educational division of Amsterdam-based publisher Wolters Kluwer NV, for an enterprise value of €774 million. Wendel Investissement reportedly had been the other short-listed bidder.

JLL Partners has agreed to acquire UK-based aerospace components and servicing company Mckechnie Aerospace Holdings Ltd. from Melrose PLC for £434.92 million (including £2.85 million in assumed debt). Mckechnie

Apax Partners has agreed to acquire a 49.9% stake in UK car listings publisher Trader Media from Guardian Media Group for an enterprise value of £1.35 billion. Other bidders reportedly included The Blackstone Group and Cinven.

Royal Ahold is expected to receive at least three bids for its U.S. Foodservice unit, according to The Deal. Bids are due next month with an estimated price-tag of around $5.5 billion. Groups include Clayton Dubilier with KKR; Bain Capital, Blackstone Group and Wellspring Capital Management; and Madison Dearborn with GTCR Golder Rauner.

Bridgepoint has agreed to acquire Fat Face from Advent International for £360 million. BNP Paribas will provide leveraged financing. Fat Face is a UK-based retailer of self-branded active lifestyle clothing and accessories.

Spire Capital has acquired SalvageSale Inc., a Houston, Texas-based online marketplace and services provider for commercial insurance salvage and corporate end-of-life assets.The deal was done in partnership with company management, while sellers included Securitas Ventures, American Re and Merrill Lynch Ventures. Stifel Nicolaus served as financial advisor to SalvageSale.

Sun Capital Partners has agreed to acquire Morristown, Tenn.-based furniture maker Berkline/BenchCraft Holdings Inc. from Code Hennessy & Simmons. The company announced last week that it had agreed to a $40 million recap and $40 million in new financing, with LBO Wire this morning disclosing the buyer.

Paul Capital Healthcare Partners has restructured its two investments in SkyePharma PLC (Nasdaq: SKYE). As part of the amended agreements, Paul Capital has converted its royalty participation in 14 of SkyePharma’s marketed and pipeline products into a $92.5 million secured note, with additional contingent payments linked to the future sales performance of DepoDur, a pain management product of SkyePharma’s injectables business which has been divested today.

PE-Backed IPOs

Comverge Inc., an East Hanover, N.J.-based provider of hardware and software to utilities, has set its IPO terms to around 4.89 million common shares being offered at between $15 and $17 per share. It plans to trade on the Nasdaq under ticker symbol COMV, with Citigroup serving as lead underwriter. The company has raised nearly $40 million in VC funding from firms like Nth Power, EnerTech Capital Partners, Rockport Capital Partners, Norsk Hydro Ventures, Ridgewood Capital, Easton Hunt, Data Systems & Software Inc., Air Products & Chemicals Inc. and Partners for Growth.

Shanghai Anxin Flooring Co., a Chinese hardwood flooring company, is prepping a $150 million IPO in New York for Q3, according to The South China Morning Post. The company raised $27.5 million in VC funding commitments from The Carlyle Group last May.

The final VC-backed IPOs of Q1 are expected to price today: Aruba Networks Inc. and PhotoWatt Technologies Inc.

PE-Backed M&A

TricorBraun, a St. Louis–based rigid packaging company controlled by Code Hennessy & Simmons, has acquired Boston-based Independent Packaging Inc. (I-PAK). No financial terms were disclosed.

Firms & Funds

Updata Partners is raising up to $200 million for its fourth fund, according to a regulatory filing. It already has secured around $153 million, with Sparing Capital Partners serving as placement agent.

Unitus Inc. of Redmond, Wash. has closed its inaugural private equity fund with $23.4 million in capital commitments. The vehicle will invest in microfinance institutions in Asia and Latin America.

Human Resources

Steve Wiggins, founder and former CEO of Oxford Health Plans, has joined Essex Woodlands Health Ventures as an operating partner.

Daniel Johnson has joined executive search firm Fiderion as a New York-based managing director. He previously was with Jamesbeck Global Partners.

Richard Hunt, CFO of HealthExtras (Nasdaq: HLEX), is leaving to take a “financial position in a venture capital oriented company.” He will be succeeded by former HealthExtras CFO Michael Donovan.