Every time the PE Week Wire adds another thousand subscribers, I like to remind you that these morning missives are just a speck in our vast editorial universe. We’ve got more detailed news and views at peHUB.com, plus in our three print magazines: Buyouts, Venture Capital Journal, PE Week and European Venture Capital Journal. So just whip out that corporate credit card and get better informed than the competition (unless they also are subscribers, which would just put you on an even keel). peHUB subscriptions can be purchased online for just $124 per year, while you can contact Rob Mills about obtaining print mag subs.
Finally, if your firm is interested in advertising to the PE Week Wire or peHUB masses, just reply to this email with your contact info, and I’ll shoot over a media kit and ad sales contact info. 2008 spots are beginning to fill up…
*** When people like me appear on cable news shows, we generally know the questions ahead of time. It’s mostly done to prevent dead air, and also helps prevent invited “experts” from saying things without ample time for reflection. But sometimes you get caught off-guard, as I did back in an August taping for CNBC’s Fast Money. The host asked for a date when the buyout market would return, and I blurted out September 24. That would be today.
Mea culpa, although we are definitely beginning to see some signs of life. For example, there were plenty of buyers last week for the $5 billion First Data bond sale, and the deal is now expected to close today. It’s true that $5 billion is just part of the First Data debt commitment, but we’re talking progress – not the finish line. Moreover, we’ve been a steady flow of smaller deals that have managed to secure leverage commitments post July 4. Examples include Atkins Nutritionals. I clearly was premature, but maybe not by too much.
*** On the other hand, my prognosticating skills were on point with Adnexus Therapeutics. Last month, I wrote that the company’s IPO filing was a cry for acquisition, rather than an honest desire to go public. This morning it announced that it will be bought by Bristol Myers Squibb for $430 million. One for two ain’t bad… I’ve reposted my original argument here.
*** Should venture capitalists invest in ideas or people? Business plans or management?
It may sound like the VC version of chicken versus egg, but some empirical research says to place your bet with the horse (company) rather than with the jockeys (management). That would mean Don Valentine is right and Arthur Rock is wrong, although few of us would mind being wrong like Arthur Rock. But I digress…
I’ve posted the study here. It was written by Steve Kaplan at the University of Chicago, Berk Sensoy at USC and Per Stromberg at SIFR.
They found that over 90% of successful VC-backed companies have the same business model at the time of IPO as they had at the time of initial VC funding. Conversely, only 72% have the same CEO – and that number drops to 44% by the third annual report. And here’s a kicker: The researchers also examined a sample that included both VC-backed and non-VC backed IPOs for 2004, and found no demonstrable difference in the human variable’s importance. So much for VC value-add…
*** Buyout billionaires bloom on the Forbes list of 400 richest Americans.
*** Jeff Bussgang on The Rebirth of Enterprise IT.
Top Three
KKR and GS Capital Partners said Friday that they want to abandon their $8 billion buyout of Harman International Industries Inc. (NYSE: HAR), because they believe that a material adverse change in Harman’s business has occurred. Harman said in a statement that it was informed of KKR and Goldman’s position today, and that it disagrees with their assessment. www.harman.com
Bristol-Myers Squibb Co. (NYSE: BMY) has agreed to acquire Adnexus Therapeutics Inc., a Waltham, Mass.-based developer of therapeutic proteins. The deal is valued at $430 million, or $415 million net of Adnexus’ cash on hand. The deal also includes up to $75 million in earnouts. Adnexus is currently in registration for an IPO, and has raised $70 million in VC funding from Atlas Venture, Flagship Ventures, HBM BioVentures, Polaris Venture Partners and Venrock. www.adnexustx.com
Affinion Group Holdings Inc., a Norwalk, Conn.-based provider of integrated marketing and loyalty solutions, has set its IPO terms to 32.5 million common shares being offered at between $15 and $17 per share. It would have an initial market cap of approximately $1.58 billion, if it prices at the high end of its range. Affinion plans to trade on the NYSE under ticker symbol AFI, with Morgan Stanley and Deutsche Bank Securities co-leading a roster of 10 underwriters. Apollo Management acquired the company in October 2005 from Cendant Corp. for approximately $1.83 billion. www.affiniongroup.com
VC Deals
Cellerix SL, a Tres Cantos, Spain-based developer of adult stem cell therapies, has raised €27.2 million in new VC funding. Life Sciences Partners and Ventech co-led the round, and were joined by Roche Venture Fund, Novartis Venture Fund and Ysios Capital Partners. Return backers included former parent company Genetrix SL, Grupo A&G and Cellerix management. www.cellerix.com
RingCentral Inc., a Redwood City, Calif.-based, provider of communications unification and management solutions for small businesses, has raised $12 million in VC funding from Khosla Ventures and Sequoia Capital. www.ringcentral.com
Visible Technologies, a Seattle-based provider of Internet brand and reputation management services, has raised $12 million in Series B funding. Backers include Ignition Partners and WPP Group. www.visibletechnologies.com
Xangati, a Cupertino, Calif.-based provider of rapid problem identification (RPI) applications for enterprise networks, has raised $10.7 million in Series B funding. Walden International led the deal, with partner Mary Coleman joining the board of directors. Return backer Alloy Ventures also participated. www.xangati.com
SnapVine Inc., a Seattle-based provider of mobile voice solutions for social networking sites, has raised $10 million in Series B funding. Bridgescale Partners led the deal, and was joined by return backers Draper Fisher Jurvetson and First Round Capital, according to The Seattle Post-Intelligencer. www.snapvine.com
CashView Inc., a Palo Alto, Calif.-based provider of electronic cash management services, has raised $6.5 million in Series B funding. Emergence Capital led the deal, and was joined by return backer DCM. www.cashview.com
JapanBridge Inc., a Tokyo-based drug company, has raised $6.5 million in Series A-2 funding. Return backers MPM Capital and Itochu were joined by new strategic partner Kyowa Hakko Kogyo Co. Ltd., which will collaborate with JapanBridge on the commercialization of oncology and oncology supportive care assets in Japan. www.japanbridge.co.jp
iRex Technologies, a Dutch provider of electronic paper solutions, has held a €6 million first close on a new VC funding round. Main Capital Partners led the deal, and was joined by return backer ABN Amro Capital and company management. www.irextechnologies.com
Peermeta Inc., an Acton, Mass.-based developer of a mobile software platform, has raised $6 million in Series A funding from Sigma Partners and Kepha Partners. www.peermeta.com
TimeTrade Systems Inc., a Bedford, Mass.-based provider of appointment scheduling software, has raised $5 million in Series C funding. It is the company’s first institutional round, with VentureWire reporting a post-money valuation of $21 million. Ascent Venture Partners led the deal, and was joined by return backer CommonAngels. www.timetrade.com
SUSO Drinks Ltd., a UK-based carbonated beverage startup, has raised £4 million in VC funding from Smedvig Capital.
GenomeQuest Inc., a Westborough, Mass.-based provider of enterprise genomic search solutions, has raised $4 million in Series B funding. Mosaix Ventures led the deal, and was joined by return backers Cross Atlantic Partners, Milestone Venture Partners and Sociate Generale Asset Management. www.genomequest.com
Kelti Daily Product Co. Ltd., a Chinese beauty-salon chain operator, reportedly has raised $20 million in private equity funding from Prax Capital.
Nanosolar Inc., a Palo Alto, Calif.-based provider of lower-cost solar energy panels, has received a $20 million grant from the U.S. Department of Energy. The company has previously raised VC funding from such firms as Mohr, Davidow Ventures, Benchmark Capital, Mitsui & Co., Onpoint, SAC Capital, GLG Partners, Swiss Re and Grazia Equity. www.nanosolar.com
Buyout Deals
Kohlberg & Co. has agreed to acquire Converting Inc., a Clintonville, Wisc.-based manufacturer of tabletop disposables and party goods. No financial terms were disclosed. The deal is expected to close within the next 45 days, pending certain closing conditions like consummation of Kohlberg’s parallel acquisition of Hoffmaster from Solo Cup Co. www.convertinginc.com
Borders Group Inc. (NYSE: BGP) has agreed to sell its UK and Ireland stores to Risk Capital Partners for up to $40 million. The deal includes a $20 million up-front payment and $20 million in possible earn-outs. It includes 71 total stores. www.borders.com
Gores Group has completed its acquisition of CompuDyne Corp. (Nasdaq: CDCY), an Annapolis, Md.-based maker of security products like blast-resistant windows and doors for federal buildings. The deal was valued at approximately $81 million, including a $59 million equity value, $42 million of assumed debt and the subtraction of $20 million in CompuDyne cash on hand. CompuyDyne shareholders received $7 per share, while Clearlake Capital Group provided both equity and debt to help finance the deal. www.compudyne.com
Bausch & Lomb (NYSE: BOL) shareholders have approved a $3.67 billion buyout by Warburg Pincus, in which they would receive $65 per share.
BCE Inc. shareholders have approved a $48.5 billion buyout by the Ontario Teachers’ Pension Plan, Providence Equity Partners and Madison Dearborn Partners. The deal is expected to close in Q1 2008, pending regulatory approvals. www.bce.ca
PE-Backed IPOs
Elixir Pharmaceuticals Inc., a Cambridge, Mass.-based drug company focused on metabolic diseases like diabetes and obesity, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol ELXR, with Credit Suisse serving as lead underwriter. The company has raised over $78 million in VC funding since 2000, from firms like MPM Capital (29.4% pre-IPO stake), Arch Venture Partners (16.4%), Oxford Bioscience Partners (10.4%), CDIB, Jafco Ventures and YFY Bioscience. www.elixirpharm.com
Emphasys Medical Inc., a Redwood City, Calif.-based medical device company focused on emphysema, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol EMPH, with Morgan Stanley serving as lead underwriter. The company has raised around $80 million in VC funding since 2000, from firms like Advanced Technology Ventures (17.8%), Morgenthaler Ventures (13.8%), St. Paul Venture Capital (11.5%) OrbiMed Advisors (13.7%), ABS Ventures (10%), Morgan Stanley Venture Partners (7.4%), Cargill Ventures (6.1%) and Neww Enterprise Associates. www.emphasysmedical.com
China Digital TV Holding Co., a Beijing-based provider of conditional access systems to China’s digital television market, has set its IPO terms to 12 million American depository shares being offered at between $11 and $13 per share. It would have an initial market cap of approximately $721 million, if it prices at the high end of its range. China Digital plans to trade on the NYSE under ticker symbol STV, with Morgan Stanley and Credit Suisse serving as co-lead underwriters. Shareholders include SAIF, with a 21.8% pre-IPO stake.
Compellent Technologies Inc., an Eden Prairie, Minn.-based provider of data storage and data management solutions, has set its IPO terms to six million common shares being offered at between $10 and $12 per share. It would have an initial market cap of approximately $356 million, if it prices at the high end of its range. Compellent plans to trade on the NYSE Arca under ticker symbol CML, with Morgan Stanley serving as lead underwriter. The company has raised around $53 million in total VC funding since 2002, from firms like El Dorado Ventures (21.4% pre-IPO stake), Crescendo Ventures (21.4%), Cargill Ventures (10.9%), Centennial Ventures (10.3%), Affinity Capital (6.6%) and Nomura International (5.5%). www.compellent.com
PE-Backed M&A
Universal American Financial Corp. (Nasdaq: UHCO) has completed its acquisition of pharmacy benefits manager MemberHealth Inc., for approximately $630 million (55% cash, 45% UAF stock). The deal is being backed by a $350 million PIPE investment in UAF by Lee Equity Partners, Perry Capital, Union Square Partners Management (f.k.a. Capital Z) and Welsh, Carson, Anderson & Stowe. The PIPE was valued at $20 per share. www.uafc.com
Firms & Funds
Mohr, Davidow Ventures has raised $580 million for its ninth fund, according to a regulatory filing. It is unclear whether or not this represents a final close, as Private Equity Insider previously had reported that the firm was seeking between $500 million and $600 million. Its previous fund closed on $400 million in 2005. www.mdv.com
Stone Point Capital has entered into a strategic relationship with Mitsui & Co., in order to pursue investments in the Japanese insurance and financial services markets. www.stonepointcapital.com
Ysios Capital Partners of Barcelona, Spain is raising €65 million for its debut fund, which will focus on venture capital opportunities in the biotech space. The firm will support early-stage companies, later-stage companies and pharmaceutical spinouts. Its team includes: managing partner Joel Jean Mairet, co-founder and CEO of Glycart Biotechnology AG; partner Christina Garmendia, co-founder and president of the Genetrix Group; and partner Julia Salaverria, former director of funds for Talde. www.ysioscapital.com
Human Resources
Austin Ventures has promoted Phil Siegel to the position of general partner. He joined the firm as a venture partner in October 1999, and has led such deals as All Star Directories, CreditCards.com, HomeAway, Newgistics, and Re:Trans. Siegel also has led the firm’s CEO-in-residence program for the past three years. www.austinventures.com
InterWest Partners has promoted Linda Grais to the position of partner. She joined the firm in 2005 as an executive-in-residence, and focuses on opportunities in the biopharmaceutical and medical device space. Her current board seats include Gynesonics and Arca Discovery. www.interwest.com
Henry Wang has joined Citigroup Global Markets as a vice president in the firm’s Financial Entrepreneurs group. He previously was a vice president with Financial Technology Partners. www.citigroup.com
Rahul Jain has joined Core Capital Partners as an associate. He previously served in various marketing, product management and business development roles with 3Com. www.core-capital.com
Vestar Capital Partners has named Kevin Mundt as president of Vestar Resources, the firm’s in-house strategic counsel resource for portfolio company management teams. Mundt joined Vestar Resources in 2004 as a managing director.
Benjamin Nummy has joined real estate investment firm Equibase Capital Group as a managing principal. He previously was an executive director in the real estate group of Morgan Stanley. www.equibasecapital.com
Houlihan Lokey has named Sandy Purcell and Jean-Florent Rerolle as co-heads of the firm’s European Financial Advisory Services (FAS) practice. Purcell is a managing director in the firm’s London office, and previously headed its Mideast FAS practice. Rerolle is a managing director based in France. www.hlhz.com
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