PE Week Wire: Mon., Oct. 22, 2007

It seems that we have a timing detente between MoneyTree and VentureOne, the two organizations that provide us with quarterly venture capital investment data. VentureOne typically comes out with its info on a Monday, while MoneyTree comes out the following Tuesday. Or, when the groups are feeling frisky, MoneyTree comes out on the Monday, with VentureOne still preempting it by coming out the prior Friday. None of this probably matters to you, but it makes my life difficult, as I have a corporate allegiance to MoneyTree (Daddy Thomson compiles its data, which is sponsored by PricewaterhouseCoopers and the National Venture Capital Association).

Anyway, both groups this quarter came out on Saturday. And while they may agree on timing, they do not agree on data. MoneyTree reported that 887 companies raised $7.1 billion in Q3, which was a slight decrease from the $7.2 billion it reported in Q2 (but higher than $6.8b in Q3 2006). VentureOne, on the other hand, reported $8.07 billion raised by 635 companies.

I posted the top-line spreadsheets at peHUB, and later today will do some more in-depth breakdowns and analysis of the discrepancies…

*** One final data item. One of the past quarter’s largest deals has not been otherwise announced: Bill Me Later Inc. raised $71.65 million in “Series 4” funding. The Timonium, Md.-based company previously was known as I4 Commerce, and allows consumers to make online purchases without having to share credit card information. I tried getting the company to discuss the funding last Friday, but didn’t get anywhere…

*** The fax machines were humming Friday at Bain Capital, as investors submitted commitments for the firm’s tenth buyout fund. Bain began raising the fund earlier this year with a $10 billion target, and was expected to have in excess of $7 billion once everything was counted over the weekend. A final close will occur early next year, as certain LPs have already burned through their 2007 allocations.

Bain also is raising a $5 billion co-investment fund, with a first close on that vehicle expected to occur in a few weeks.

So what does this tell us? How about this: Most limited partners are all talk when it comes to souring on mega-buyouts. They complain a good game during pre-marketing, but sign up when actually offered the opportunity. Not only was Bain was able to keep its hefty 30% carried interest intact, but also its industry-standard broken deal fees (which have become a point of concern, in the wake of Sallie Mae).

Bain began marketing this fund before the credit crunch, but never was forced to cut back on its aspirations. It is even said to be playing tough with some smaller limited partners, who would prefer to commit less than what Bain set as a minimum.

Maybe certain LPs are just hoping that this giant stash will prevent Bain from returning to market next year. The Boston-based firm closed its $10 billion ninth fund($8b general/$2b co-invest) just 18 months ago, and its $5 billion eighth fund ($3.5b/$1.5b) less than two years before that.

“Every time Bain fundraises, it says that it expects the capital to last three to four years,” says one LP. “But then it’s gone in 24 months. I like the regular accountability, but wouldn’t mind being left alone a bit longer next time.”

LBO Wire first reported news of Bain’s first close for Fund X. The Boston-based firm is likely to use Fund IX capital for its Clear Channel acquisition, while tapping Fund X for 3Com.

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*** Steve Schwarzman saw the peHUB analysis of PR pro donations to presidential candidates, and doesn’t understand why Obama and Clinton got so much love. Ok, it’s the Fake Steve Schwarzman, but still…

*** PE Council and KKR hire a Senate insider, to lobby against tax changes.

*** Former Labor Secretary Robert Reich chimes in on tax changes, and why the Democrats are afraid to make them.

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Top Three

Hellman & Friedman has agreed to acquire Goodman Global Inc. (NYSE: GGL) for approximately $2.65 billion. Goodman Global stockholders would receive $25.60 per share in cash, which is a 14.5% premium to Friday’s closing price. Senior credit facilities have been committed by Barclays Capital, Calyon New York Branch, GE Commercial Finance and GSO Capital Partners. GSO also has committed $500 million in senior subordinated financing. Goodman Global is a Houston, Texas-based manufacturer of residential and light commercial heating, ventilation and air-conditioning equipment. It was advised on the deal by Goldman Sachs and J.P. Morgan Securities. Get more info.

HelioVolt Corp., an Austin, Texas-based developer of thin-film photovoltaics, has raised $24 million in additional Series B funding. The round total now stands at $101 million, including a $77 million first close announced in August. New investors include Sequel Venture Partners, Noventi Ventures and Passport Capital. The initial tranche included participation from Paladin Capital Group, Masdar Clean Tech Fund, New Enterprise Associates, Solucar Energias, Morgan Stanley Principal Investments, Sunton United Energy and Yellowstone Capital. Get more info.

KKR and Goldman Sachs have agreed to invest $400 million into audio equipment maker Harman International Industries Inc. (NYSE: HAR). The investment would be in lieu of a breakup fee that the two firms would have been required to pay, as part of their decision to bail on an $8 billion take-private buyout of Harman. Get the full story.

VC Deals

Voltage Security Inc., a Palo Alto, Calif.-based provider of information encryption solutions, has raised $12 million in Series D funding. Trident Capital led the round, and was joined by return backers Hummer Winblad Venture Partners, Morgenthaler Ventures, Menlo Ventures, Cipio Partners and Jafco Ventures.

BioFuelBox Inc., a Hollister, Calif.-based biofuel refining startup, has raised $9.46 million in Series A funding. Backers include Draper Fisher Jurvetson and DFJ Element, according to a regulatory filing. The company’s website says its solution is a “bio-refinery in a box — a modular, containerized innovation that produces biofuel cost-effectively and easily.”

VisEn Medical Inc., a Woburn, Mass.-based developer of fluorescence molecular imaging technology platforms, has raised around $7.5 million in Series B funding, according to a regulatory filing. Merck Capital Ventures was joined by return backers Flagship Ventures, Siemens AG Medical Solutions and Spinnaker Capital.

Altela Inc., an Albuquerque-based provider of desalination technology and services, has raised $7.1 million in Series A funding. CCS Income Trust, a Canadian environmental and energy services company, led the deal. Get more info

Amulaire, a San Diego-based thermal management company, has raised $5 million in Series C funding. Backers include Tallwood Venture Capital, Narra Ventures Capital and AsiaVest Partners.

BrightRoll Inc., a San Francisco-based online video advertising network, has raised around $5 million in Series B funding. Backers include True Ventures and Adams Street Partners.

RoyaltyShare, a San Diego-based provider of digital royalty and content management solutions to the entertainment industry, has raised $4 million in additional Series B funding. Bertelsman Digital Media Investments was joined by return backer Trident Capital. The round now totals $9 million, including a $5 million first tranche that was announced back in May.

Doostang, an invite-only social network for professionals, has raised $3.8 million in Series A funding. Backers include Shasta Ventures and Tugboat Ventures. The company previously had raised angel funding.

Schooner Information Technology Inc. has secured $3.33 million of a $15 million Series A round led by CMEA Ventures. The Oakland-based company is in stealth mode, but says that its goal is to help financial sector and Internet consumer-facing companies achieve high performance and scalability at a fraction of their current costs.” The company is led by Richard Busch, who previously was with Sun Microsystems as research director of computer system architecture and analysis.

Genomas Inc., a Hartford, Conn.-based biomedical company focused on DNA-guided medicine and personalized health, has raised $2.5 million in Series C funding. Shareholders include Hartford Hospital, LES Investments and the Puerto Rican Entrepreneurs Fund.

Tumblr Inc., a New York-based Web 2.0 startup, has raised $750,000 in Series A funding from Spark Capital and Union Square Ventures, according to a regulatory filing. Bijan Sabet of Spark has joined the company’s board of directors. Tumblr describes its technology as enabling online scrapbooks, as opposed to online journals (i.e., blogs). It says: “Blogs are great, but they can be a lot of work. And they’re really built to handle longer-form text posts. Tumblelogs, on the other hand, let you easily and quickly post and share anything you find or create.”

GameLayers Inc., a San Francisco-based gaming startup focused on passively-multiplayer online games, has raised $500,000 in preferred stock funding led by O’Reilly AlphaTech Ventures. Other shareholders include Joi Ito and Richard Wolpert.

Collective Media, a New York–based online advertising network, has raised an undisclosed amount of Series A funding. Greycroft Partners led the round, and was joined by iNovia Capital. Get more info.

Buyout Deals

Arlington Capital Partners has agreed to acquire horse-racing content provider Daily Racing Form LLC from The Wicks Group of Cos. No financial terms were disclosed, although LBO Wire puts the price tag at between $170 million and $190 million. Liberty Mutual participated as a minority equity co-investor, while GE Capital led the leveraged finance facility. Other lenders included CIT Corporate Lending, Merrill Lynch Capital, Goldman Sachs and Wells Fargo. Credit Suisse managed the sale. Get more info.

First Reserve Corp. has committed $300 million to an acquisition platform that will focus on energy-related shipping assets. The effort is called Diamond S Shipping LLC, and is being done in partnership with shipping industry veteran Craig Stevenson. Get more info.

The Gores Group has agreed to buy the Power Systems business of Tyco Electronics Ltd. for $100 million in cash. The deal is expected to close either late this year, or in early 2008. The unit manufactures power solutions, including board-level conversion components and complete power conversion and backup power systems for telecom applications. Get more info.

Wynnchurch Capital has agreed to acquire GDX International Holdings Ltd., a Farmington Hills, Mich.-based supplier and manufacturer of sealing systems and glass encapsulation products for the automotive sector. The seller is Cerberus Capital Management. Wynnchurch reportedly will close the GDX facility in Wabash, which would result in up to 800 layoffs. Get more info.

Platinum Equity has completed its acquisition of Chicago-based metals processor Ryerson Inc. (NYSE: RYI). The total deal is valued at approximately $2 billion, with Ryerson stockholders receiving $34.50 per share. UBS advised Ryerson on the deal.

United Rentals Inc. (NYSE: URI) shareholders have approved a $6.6 billion buyout by Cerberus Capital Management. The deal will pay out $34.50 per share.

PE-Backed IPOs

This month’s IPO calendar includes expected pricings from BioHeart, Merrion Pharmaceuticals, SoundBite Communications, CVR Energy, Fuqi International, Ulta Salon, Cosmetics & Fragrance, Power Medical Interventions and Atlas Industries Holdings.

Redline Communications, a Markham, Ontario-based provider of broadband wireless equipment, has filed for a Cdn$40 million IPO in Canada. The company has raised US$57 million in total VC funding since its 1999 inception, from firms like Matrix Partners, U.S. Venture Partners and GF Private Equity Group.

Adnexus Therapeutics Inc., a Waltham, Mass.-based developer of therapeutic proteins, has withdrawn registration for an $86.25 million IPO. The move comes after Adnexus agreed to be acquired by Bristol-Myers Squibb Co. (NYSE: BMY), in a deal that could be valued at just over $500 million. Adnexus has raised $70 million in VC funding from Atlas Venture, Flagship Ventures, HBM BioVentures, Polaris Venture Partners and Venrock.

PE Exits

ADC (Nasdaq: ADCT) has agreed to acquire LGC Wireless Inc., a San Jose, Calif.-based provider of in-building wireless networking solutions. The deal is valued at approximately $169 million, including an equity purchase price of $148.5 million in cash. LGC has raised around $91 million in VC funding, from firms like Rembrandt Venture Partners, Associated Venture Capital, Crimson, Mayfield Fund, Allegis Capital, OMERS, Telesystem-Argo Global Capital and Dali Hook Partners. Get more info.

Comverge Inc. (Nasdaq: COMV), an East Hanover, N.J.-based provider of hardware and software to utilities, has filed for a $200 million secondary public offering. It has not yet identified selling shareholders, but many of the company’s VC backers still have significant holdings. They include Nth Power, EnerTech Capital Partners and Rockport Capital Partners.

Metalmark Capital has completed its sale of Denver-based Cantera Natural Gas LLC to Copano Energy LLC (Nasdaq: CPNO) for approximately $675 million. The deal included $562.5 million in cash, and around 3.25 million newly-issues Class D shares.

PE-Backed M&A

Industrial Equity Investments Ltd., an international investment firm based in Ireland, has agreed to acquire Tokyo-based agrochemical company Arysta LifeScience Corp. from Olympus Capital Holdings Asia. No financial terms were disclosed for the deal, which is expected to close in early 2008. IEIL is owned by Permira, which provided all of the acquisition’s equity. Get morre info.

Platial Inc., a Portland, Ore.-based online aggregator of stories, reviews and multimedia for local geographies, has acquired social mapping company Frappr. No financial terms were disclosed. Platial earlier this year raised $2.4 million from KeyNote Ventures, Kleiner Perkins, Caufield & Byers, Omidyar Network, Ram Shriram and Ron Conway.

Firms & Funds

Alpha Associates, a Zurich-based private equity fund-of-funds manager, has closed its second Central and Eastern Europe vehicle with €309 million. Limited partners include the European Bank for Reconstruction and Development, Kredietbank Luxembourg, Mutuelles du Mans Assurances and Minnesota Life.

Bear Stearns Cos. and Chinese bank Citic Securities Co. have formed a strategic partnership that includes $1 billion in cross-investments and the creation of a new Asian joint venture. Citic will invest in Bear Stearns through 40-year convertible trust preferred securities that will convert to about 6% of Bear Stearns’ outstanding shares. Citic could potentially increase the stake to 9.9 percent. Get the full story.