PE Week Wire: Mon., March 31, 2008

Just a few quick notes, as I keep hitting redial for Celtics playoff tickets…

Why wait until tomorrow to examine Q1 deal data, when we can be premature and look today? Daddy Thomson sent over a nifty M&A and private equity spreadsheet, which you can download over at peHUB.

For those allergic to clicking, the short story is that it was a short story. The global M&A market only generated $715 billion worth of deals, which was its lowest tally in over two years. Things were particularly grim in the U.S. market, where aggregate deal value was off 51.6% from Q1 2007. Things were a better overseas, where Asia dipped 18.4% and Europe fell by less than a single percentage point.

Those figures include private equity-sponsored deals, which really proved to be a drag. The first quarter saw just over $62 billion in disclosed value for 796 deals, which was off 70.6% from Q1 2007. U.S. figures were down more than 85%, and represented their lowest mark since Q4 2003. Asian PE deal volume was actually up 24.8% from the prior year, while European PE was down 64.2 percent.

Expect all of the Q1 figures to be revised upward a bit, based on whatever happens today. For example, Pernod Ricard agreed to buy the parent company of Absolut vodka for nearly $9 billion, and Gores Group is part of a consortium that agreed to take Gilat Satellite private. But neither will change the overall trend, which is sharply downward.

*** I also did a quick preliminary run of venture capital activity, which showed a very slow first quarter as well… But those numbers are likely to be revised upwards as new MoneyTree surveys are submitted. Expect final numbers in a few weeks.

*** Last Friday I suggested that Clear Channel is being used by the banks as a guinea pig for BCE. My explanation here.

*** peHUB First Read, including an exit of sorts for Tom Perkins.

*** Gametime: There are just four teams left in the NCAA Tourney, and we’ve got a three-way tie atop our March Madness Extravaganza. Our co-leaders are: Christian Pujara of H.I.G. Capital, who has UCLA beating Kansas in the final; Maneesh Goyal of Miramar Venture Partners, who has UCLA beating UNC; and the mysterious “Adam V” who has Kansas beating Memphis (who are you Adam?)… Continued good luck to all.

Top Three

TriVascular2, a recently-formed developer of endovascular repair devices for treating abdominal aortic aneurysms, has raised $65 million in Series A funding. MPM Capital and New Enterprise Associates co-led the round, with Delphi Ventures and Kearny Venture Partners also participating. Some of the Series A proceeds will be paid to Boston Scientific, which is divesting TriVascular as a “non-strategic asset.” It had originally acquired the company in April 2005, from VC shareholders like Delphi and Kearny.

Gilat Satellite Networks Ltd. (Nasdaq: GILT) has agreed to be acquired by a consortium that includes The Gores Group, Mivtach Shamir Holdings and DGB Investments. The total deal is valued at $475 million, with Gilat stockholders to receive $11.40 per share. There are no financing conditions on the deal. UBS served as exclusive advisor to Gilat, which is traded on both the Nasdaq and the Tel Aviv Stock Exchange.

Kohlberg Kravis Roberts & Co. has closed its latest buyout fund with $17.6 billion in capital commitments.

VC Deals

Realtime Worlds, a Dundee, Scotland-based video game developer, has raised $50 million in Series C funding, according to TechCrunch. Maverick Capital led the round, and was joined by return backers CIM Fund and New Enterprise Associates. Montgomery & Co. served as placement agent. Realtime Worlds was founded by CEO and creative director David Jones, who previously created the Grand Theft Auto and Lemmings games franchises. It had previously raised $33 million.

6N Silicon Inc., an Ontario-based supplier of solar-grade silicon to the photovoltaic industry, has raised $20 million in second-round funding. Good Energies led the round, and was joined by return backers Ventures West Management and Yaletown Venture Partners.

ReliOn, a Spokane, Wash.-based fuel cell maker, has raised $16.9 million in Series C funding. Pacific Corporate Group was joined by return backers Chrysalix Ventures, Enterprise Partners, Wall Street Technology Partners and Oak Investment Partners. It had previously raised around $45 million

Chumby Industries, a San Diego-based developer of a small personal device that provides information via wireless Internet, has raised $12.5 million in Series B funding. JK&B Capital led the round, and was joined by return backers Avalon Ventures, Masthead Venture Partners and O’Reilly AlphaTech Ventures.

Codon Devices Inc., a Cambridge, Mass.-based synthetic biology company, has raised $11 million in additional Series B funding. It had held a $20 million first close late last year. Participants include Highland Capital Partners, Alloy Ventures, Flagship Ventures, Khosla Ventures, Tactics II Ventures and Kleiner Perkins Caufield & Byers.

MediaXstream Inc., a San Jose, Calif.–based provider of transport and managed network services for the production and broadcast industries, has raised $10 million in Series A funding. Constellation Ventures led the round, and was joined by Columbia Venture Corp.

Vindicia, a San Mateo, Calif.-based provider of on-demand payment management software, has raised $5.6 million in Series C funding. Leader Ventures and return backer DCM co-led the round.

Project Agape (f.k.a. Philotic), a Berkeley, Calif.-based developer of a website for furthering political or social causes, has raised $5 million in Series B funding, according to a regulatory filing. The only listed institutional shareholder is Founders Fund, which had provided the company with $2.35 million in Series A funding. One of Project Agape’s founders is Sean Parker, who also is a Founders Fund partner.

WePlay Inc., a New York-based online community for youth sports, has raised $4.4 million in Series A funding.peHUB had previously reported a smaller figure, based on a regulatory filing. Pequot Ventures provided $3.5 million, while the remainder came from Derek Jeter, LeBron James, Peyton Manning, WePlay senior management and angel investor Ron Conway. The company had been incubated by Creative Artists Agency and Major League Baseball.

Blue Kai Inc., a Bellevue, Wash.-based developer of an online market data exchange, has raised $3.18 million in Series A funding, according to a regulatory filing. Redpoint Ventures led the round, with partners Chris Moore and Fouad ElNaggar taking board seats.

Publish2 Inc., a Reston, Va.-based developer of an online news aggregation platform, has raised $2.75 million in Series A funding from Velocity Interactive Group. The company was co-founded by Scott Karp, former director of digital strategy for Atlantic Media, and veteran entrepreneur and blogger Robert Young.

Razz Inc., a San Francisco–based content service provider of audio entertainment for mobile content and social network users, has called down $1.87 million of a $2.5 million Series B round. Shareholders include Mayfield, Cardinal Venture Capital, Garage Technology Ventures and Greenpark Capital. The company was founded in 2002, and had previously raised around $10 million.

Undertone Networks, a New York–based online advertising network, has raised an undisclosed amount of VC funding from JMI Equity. It also raised leveraged financing led by Orix Venture Finance.

Buyout Deals

3i Group has agreed to acquire Civica, a UK-based provider of software, consulting and managed services to the public sector and regulated services markets. The deal values the entire company at £190 million, with Civica stockholders to receive 270 pence per share. That’s a 33.7% premium to where the stock closed on Friday, and a 39.8% premium to its six-month trading average.

Candover reportedly has ceased talks to acquire a quarter of UK insurance broker Towergate, from Towergate founder Peter Cullum, due to uncertainties in the credit markets. Talk had begun spreading in late February that the two were in negotiations for a deal that would value Towergate at £3 billion, in preparation for an IPO.

Candover has received European Commission approval for its buyout of Bourne Leisure Holdings Ltd. The firm had previously owned a 28% stake in Bourne alongside Legal & General Ventures, but divested in 2004. It currently owns UK holiday parks Butlins and Haven.

Endless LLP reportedly is nearing a deal to acquire The Works, a UK-based bargain bookseller, for just £15 million. The Works went into administration in January, with Kroll managing a process that has seen the closure of 85 of the company’s 210 stores. Hermes Private Equity had funded a £50 million management buyout of The Works in 2005.

Friends Provident has essentially rejected a buyout offer from J.C. Flowers & Co. that would value the UK-listed life insurer at around £3.5 billion. In a statement, Friends Provident said that the proposal “significantly undervalues Friends Provident and its prospects and does not represent a basis for discussion.”

HitecVision has acquired a 60% stake in Hitec Products Drilling, a Norway-based provider of customized drilling solutions and well intervention systems for the offshore oil and gas industry. No financial terms were disclosed. HitecVision and HPD are not related, despite the name.

LDC has invested £9.1 million to sponsor the management buyout of Ego, a UK-based Mediterranean-style restaurant group. Ego currently operates six restaurants, and plans to roll out another 36 outlets.

LexisNexis has sold its local legal, tax and regulatory publishing operations in Argentina, Chile and Mexico to Palmfund Management. No financial terms were disclosed for the deal, on which Palmfund partnered with an industry management team that will run the newly-independent company.

Mapeley, a listed property investment and management outsourcing company, said that it has ended discussions about being taken private. The company had announced an approach in late February, which was reported to be a £19 per share offer from Fortress Investments.

The Riverside Company has acquired Summit Medical, a UK-based supplier of single-use medical devices, from Graphite Capital for £36 million. Graphite had sponsored a £17 million management buyout of Summit Medical in September 2001, and has since made two add-on acquisitions.

Sharda Worldwide Exports Pvt. Ltd., a Mumbai, India-based agrochemical company, has raised $21.5 million in private equity funding from Henderson Equity Partners. Sharda was advised by Ernst & Young India.

Whippoorwill Associates Inc. disclosed in an SEC filing that it has acquired a 9.8% stake in Silicon Graphics (Nasdaq: SGIC). It also said that it wants the company to discuss options for unlocking the company’s value, including the possibility of a go-private transaction. The company’s current market cap is approximately $143 million.

PE Exits

NBGI Private Equity has sold Hamworthy Heating, a UK-based commercial heating equipment business, to French engineering conglomerate Altantic. No financial terms were disclosed, although NBGI disclosed that it had generated a 6x IRR on its original investment of £11.2 million in January 2002.

PE-Backed M&A

Buzznet Inc., a Los Angeles-based social media community focused on music and pop culture, has acquired Washington, DC-based social music company Qloud, according to Mashable. No financial terms were reported. Buzznet last year raised a $6 million Series B round, and PaidContent reports that it’s added another $25 million from investors like Interscope Records. Backers include Redpoint Ventures and Anthem Venture Partners. Qloud had raised capital from Steve Case’s Revolution.

PMG Partners, a provider of medical billing and collection services, has acquired Medibis, an Oklahoma City-based provider of Web-based reporting, analysis and benchmarking software for ambulatory surgery centers. No financial terms were disclosed. PMG is a portfolio company of Bertram Capital.

Bad News

Aloha Airlines said that it will end all passenger service after today, marking the end of 60 years of service to the Hawaiian market. The company had been helped out of bankruptcy in 2006 by Yucapia Cos.

Firms & Funds

Banco Santander SA of Spain is planning to raise €1.5 billion for infrastructure investments in Europe and Latin America, according to LBO Wire.

Clayton Dubilier & Rice has secured nearly $2 billion in capital commitments for its eighth fund, according to a regulatory filing. Its listed target is $7.5 billion, although that likely represents an upper limit. CD&R closed its previous fund with $4 billion in 2006, and later added a $550 million co-investment vehicle.

Human Resources

Andrew Tisdale has joined Providence Equity Partners as a London-based managing director. He has spent the past 18 years with Morgan Stanley, most recently as co-global head of the firm’s media and communications group, and as a management committee member for investment banking.

Kathleen Powers Dunlap has joined Epoch Investment Partners as a managing director of client relations. She previously was with AllianceBernstein as director of Western region defined contribution institutional investments.

Kim Kaplan-Gross has joined Cooley Godward Kronish LLP as a Boston-based partner in the firm’s venture capital group, with a focus on fund formation. She previously was a partner with DLA Piper.