PE Week Wire: Monday, July 21, 2008

Hey there. Long time no speak, so let’s answer two quick questions: Yes, vacation was spectacular and purposefully uneventful. No, I didn’t pay much attention to the PE markets, although I did keep an ear out for any news of TPG bailing out Indymac (or the broader U.S. financial system, for that matter – which would result in a bronzed Bonderman being added atop the Bowling Green Bull). Ok, onto business:

*** SBA Communications this morning announced that it has agreed to buy wireless tower company Optasite, which had raised over $125 million in private equity funding since 2000 (plus lots more debt). I’ve written about Optasite occasionally because it’s based just a few miles from the home office, and also because CEO Jim Eisenstein agreed to do our first-ever 5 Questions at peHUB. So a few notes about the deal:

• Optasite shareholders will receive 7.25 million shares of SBA common stock, which currently is valued at around $255 million (shares are up this morning). Normally I’m not a huge fan of all-equity deals from the seller’s perspective, but this is unrestricted stock in a very liquid company.

• The multiple return isn’t a grand-slam, based on a $130 million post-money valuation in late 2006 (no word on a subsequent valuation from earlier this year), but is still strong in terms of cash-on-cash. The investors are mostly VC firms, but this really was a private equity deal complete with leverage (SBA will assume Optasite’s fully-drawn $150 million senior credit facility and some unfunded liabilities).

• The exit provides a track record boost to Jon Auerbach, who left Highland Capital Partners late last year in the aftermath of the Amp’d Mobile debacle. He is currently with Charles River Ventures. Ditto for Matt Newton, who led both Optasite and Amp’d for Columbia Capital. He’s still in place with Columbia, and has led a series of other tower-related deals.

• Don’t be surprised to see Optasite management regroup at some point to form another tower company (possibly with similar investors). Senior Optasite management isn’t staying with SBA post-close, although they do seem to have non-competes in place (which are enforced here in Mass.). No word yet on how many Optasite employees will be kept on at SBA, if any.

*** Q2 venture capital investment data was released over the weekend and, as expected, it was sluggish. VCs disbursed $7.44 billion to 986 U.S.-based companies, which is a hare lower than the $7.5 billion disbursed in Q1. It’s the lowest quarter since Q2 of last year, when $7.37 billion went to 1,031 companies. I’m about to post all the related charts and data to peHUB, so you can download them beginning at 11am ET.

*** I’ve been out of the loop, so be sure to resume your anonymous tip-dropping. Yeah, I’m shamelessly searching for scoops. Just use the “Top Secret” button over on the right-hand side, or go here.

*** A huge thanks to Erin Griffith for taking care of PE Week Wire in my absence. Putting this thing together – particularly the news – can be a beast, and she did a terrific job. Also, additional gratitude to guest bloggers Connie Loizos (peHUB), Paul Kedrosky (Infectious Greed), Roger Longman (In Vivo Blog) Charley Lax (Grandbanks Capital), Chris Douvos (TIFF) and John Carney (DealBreaker).

Top Three

Providence Equity Partners and General Atlantic are the latest names attached to the bidding for a stake in the mobile device unit of China’s Huawei Technologies. Providence is teaming up with Silver Lake Partners, while General Atlantic has paired with AEA Investors. Other bidders include Bain Capital, KKR and GS Capital Partners. The deal is expected to top $2 billion.

SBA Communications Corp. (Nasdaq: SBAC) has agreed to buy wireless tower company Optasite for approximately $255 million in unrestricted common stock. Optasite had raised over $125 million in private equity funding since its 2000 inception, from firms like Columbia Capital, Centennial Ventures, Citi, Highland Capital Partners, Kestral Management, Key Venture Partners, Berkshires Capital Investors, Long River Capital Partners and Village Ventures. It also secured leveraged financing from GE and Morgan Stanley.

Accretive Exit Capital Partners has closed its first fund with $125 million in capital commitments. The Boston and West Palm Beach, Fla.-based firm acquires portfolio company stakes from mid-market buyout funds.

VC Deals

Spring Wireless Inc., a Sao Paulo, Brazil-based provider of mobile telecom services in Latin America, has raised around $56 million in Series C funding, according to a regulatory filing. Backers include Goldman Sachs, New Enterprise Associates, Darby Technology Ventures, Ideiasnet SA and E-nicial Ventures.

ContextWeb Inc., a New York-based developer of contextually-based online advertising solutions, has secured over $26 million of a $30 million Series D round, according to a regulatory filing. Investor Growth Capital was joined by return backers like Draper Fisher Jurvetson, DFJ Gotham Ventures and Updata Ventures. Savvian Advisors served as placement agent. ContextWeb has now raised over $53 million since 2004.

Rohati Systems Inc., a Sunnyvale, Calif.-based provider of network-based entitlement control solutions, has raised $12 million in Series B funding. Return backers include Matrix Partners and Foundation Capital.

HaloSource Inc., a Bothell, Wash.-based antimicrobial technology company focusing on safe water and infection control, has raised $11.5 million in new VC funding. Origo Sino-India and Origo Resource Partners co-led the round, and was joined by return backer Unilever Venture Partners. The company did not say if existing shareholders Alexander Hutton Venture Partners, Britannia Holdings or WRF Capital also participated.

Qumu Inc., an Emeryville, Calif.–based provider of enterprise video communications solutions, has raised $10.7 million in Series C funding. Advanced Technology Ventures led the round, and was joined by return backers SAP Ventures, Storm Ventures, Garage Technology Ventures, Halo Opportunities Fund and the Angels Forum. Qumu has now raised just over $20 million in total VC funding since mid-2003.

Appian, a Vienna, Va.-based provider of business process management technology, has raised $10 million from Novak Biddle Venture Partners. It is the 9 year-old company’s first round of institutional funding.

DepotPoint, a Bellevue, Wash.-based provider of an application suite for the real estate foreclosures market, has raised $7 million in Series C funding. OVP Venture Partners led the round, and was joined by return backer Trident Capital.

Appirio, a San Mateo, Calif.-based provider of products and services that help businesses accelerate adoption of on-demand solutions, has raised $5.6 million in Series B funding. Sequoia Capital led the round, which follows a $1.1 million Series A infusion from and individual angels.

XORPsource Inc., a Santa Clara, Calif.-based developer of open-source, open-platform routing software, has raised $5.05 million in Series A funding, according to a regulatory filing. Backers include Highland Capital Partners and Onset Venture Partners. The company does not yet have a website.

Celleration Inc., an Eden Prairie, Minn.-based maker of a non-contact ultrasound device for medical applications like wound-care, has expanded its Series D round from $25 million to $30 million, according to a regulatory filing. Shareholders include Venture Investors LLC, Upper Lake Growth Capital, Baird Venture Partners, Aavin Equity Advisors, Triathlon Medical Ventures and New Science Ventures. It has now raised over $60 million since 2002. JMP Securities served as placement agent on the Series D round.

Appcelerator Inc., an Atlanta-based developer of products and services for RIA development on an SOA, has raised $4.14 million in Series A funding, according to a regulatory filing. Storm Ventures led the round. The company was founded by two former members of Vocalocity management.

Biosocia, a New York-based developer of online communities that are structured like games, has raised $1.5 million in Series A-1 funding, according to a regulatory filing. Backers include Spark Capital, Baseline Ventures, Betaworks Studio and Ron Conway. The company was founded in 2006, and its first product is called I’m in Like with You. Bijan Sabet of Spark Capital has joined the Biosocia board of directors.

GumGum Inc., a Santa Monica, Calif.-based licensing and distribution platform for content online, has secured $500,000 of a $1 million Series A round, according to a regulatory filing. First Round Capital led the deal, with partner Howard Morgan taking a GumGum board seat.

Buyout Deals

Avista Capital Partners has committed $100 million to Hansa Hydrocarbons LP, a London-based energy exploration company. The capital will be used to acquire and develop oil and natural gas properties in the North Sea and Northern Europe.

Capvis has agreed to acquire the KVT unit of German steel and metals distributor Kloeckner & Co., for 325 million. KVT is a Switzerland-based maker of fastening systems and sealing plugs.

The Jordan Co. has agreed to acquire marine transport company Harvey Gulf International Marine Inc., for approximately $500 million. Jordan would hold a 76% stake, while company management would hold the remainder.

Kenner & Co. has acquired the Aluminum Products unit of industrial manufacturer Leggett & Platt (NYSE: LEG). The deal includes $300 million in cash, a $25 million subordinated note and up to $25 million worth of preferred stock.

Permira is considering a bid for European frozen foods company Findus, according to The Sunday Telegraph. Permira already owns Iglo Birds Eye, while Findus is part of a food company owned by CapVest.

Phoenix Equity Partners and Sirius Equity have acquired LK Bennett, a UK retailer of upscale women’s clothes and accessories. The deal is believed to be valued at between £80 million and £100 million.

PE-Backed IPOs

Wind Information, a Chinese provider of financial data and information, is planning to raise around 1 billion yuan ($147m) via a public offering in Shanghai or Shenzhen. The company raised around 80 million yuan last year from Sino-Century Assets Management, in exchange for less than a 10% ownership stake.

PE-Backed M&A

Hargray Communications Group, a portfolio company of Quadrangle Group, has agreed to acquire the Central Florida operations of Smart City. No financial terms were disclosed for the deal, which excludes Smart City’s operations for the Orange County Convention Center. DH Capital advised Smart City on the deal.

Firms and Funds

Clayton Dubilier & Rice has secured over $3.28 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.

Credit Suisse is raising $250 million for a new private equity fund-of-funds, according to a regulatory filing. It’s being called Credit Suisse Private Equity Opportunities II.

The Maine Public Employees Retirement System last month approved a 5% target allocation for private equity, which is hopes to reach within the next five years. The $11 billion system has not yet decided whether to hire an internal staff or outside consultant, according to Buyouts.

Riverlake Partners plans to hold a $100 million second close for its second fund by summer’s end, according to Buyouts. The Portland, Ore.-based firm is targeting $150 million, which will be used for small-market buyouts. It is using ELK Capital Advisors as a placement agent.

Human Resources

Michael Klein is ending his 23-year career with Citi, where he most recently served as chairman of the firm’s institutional clients group. Before that, he was chairman and co-CEO of Citi Markets & Banking. No word yet on his future plans.

Ken Wilson, Goldman Sachs’ most senior financial institutions banker, is taking a temporary leave to advise U.S. Treasury Secretary Hank Paulson, according to The Wall Street Journal.

Trace McCreary has joined Barclays Capital as a managing director and head of U.S. infrastructure finance. He previously was with Bear Stearns as a senior managing director in the firm’s global industries group.

David Riley has joined Sadis & Goldberg LLP as a San Francisco-based partner in the firm’s corporate and financial services group. He will focus on private equity and hedge fund formation and ongoing services.