PE Week Wire: Monday, June 23, 2008

*** Former CalPERS chief investment officer Russell Read is making good on his promise to launch a cleantech-focused private equity fund. Details are scarce, but it looks like he’ll be targeting capital-intensive projects rather than small-money enabling technologies.

One of his partners will be John Preston, a senior lecturer at MIT who previously was the university’s director of the university’s tech transfer office. He currently serves as president and CEO of Atomic Ordered Technologies, a Fall River, Mass.-based company “researching new methods to shift the properties of materials” – including “methods to create long range ordering of atoms in bulk metals.” Preston declined to comment on the private equity venture, due to those pesky SEC marketing regulations.

*** From the Patience Pays Off Department: Ellora Energy, a Boulder, Colo.-based domestic oil and gas company, on Friday amended its proposed IPO price range, from $12-$14 per share to $17-$19 per share. If it prices as the high end of its range, it would raise around $216 million with an initial market cap of approximately $1.01 billion.

Ellora originally filed for an $86.25 million IPO back in November 2006. By last August it had raised the IPO target to $147.2 million, and increased its number of offered shares from five million to eight million. Then came another revised offer this past January, when the shares jumped to 11.37 million.

In other words, Ellora’s IPO is basically keeping pace with rising energy costs. Kind of makes me wonder when they’ll decide to actually pull the trigger, since no one can see that mountain’s peak…

*** The Canadian Supreme Court on Friday overturned a lower court decision that would have derailed the C$52 billion leveraged buyout of Bell Canada. No explanation was given, although the Court’s website said “reasons to follow.”

This ruling did not come as much of a surprise, as it basically affirmed that bondholders don’t have the same standing as shareholders when it comes to a major corporate decision like accepting an LBO. If they want such rights, then they had better explicitly negotiate them in the first place. Otherwise, directors have only one master to serve.

Now comes the part where I sound like a broken record: This ruling is not the end of anything. In fact, it’s mostly been an unexpected diversion.

The real battle over BCE will be between the buyers and lenders over financing terms. It’s no coincidence that a bank document surfaced during the Clear Channel litigation that joked about just putting a BCE logo on the CCU materials for the next go-around. And then there could be issues with BCE shareholders — yeah, the ones with actual voting rights — since the buyer/lender negotiations are bound to produce a lower sale price. We’re one step closer to closure, but it’s still a long way off.


In Memoriam: Jeanine Newmann

Jeanine Newmann, head of investor relations and communications for Berkshire Partners, passed away last week after a recurrence of cancer. She was just 47 years-old, and had been with Berkshire since 1986.

Most of you probably didn’t know Jeanine, but all of us industry reporters did (particularly those of us in Boston). We couldn’t have covered Berkshire nearly so effectively without her. Jeanine didn’t give it all away, but also didn’t hold everything back. Never rude, always patient – even when she would have been justified in being neither.

In a statement, Berkshire said: “We are forever grateful for Jeanine’s personal and professional contributions that have touched each of us over the past twenty-two years. Throughout her battle with cancer, Jeanine remained focused on her efforts at the firm and at home with her family. She was a tremendous friend and an inspiration to everyone who knew her.”

Jeanine’s family asks that donations in her memory be made to The Greater Boston Foodbank, 99 Atkinson Street, Boston, MA 02118.

You also can share memories here, or send condolences to Jeanine’s family via Garth Greimann c/o Berkshire Partners LLC, One Boston Place, Suite 3300, Boston, MA 02108.

Top Three

The Supreme Court of Canada on Friday overturned a lower court decision that would have derailed the C$52 billion leveraged buyout of BCE.

Halliburton has ended talks to buy UK oilfield services company Expro (LSE: L), after Expro’s board recommended a £1.8 billion offer from Candover, Goldman Sachs and AlpInvest. Halliburton said that it had been willing to offer more per share than did Candover, but only if Expro would delay related hearings. Expro would not.

Austin Ventures has committed $50 million to create ATCOR Holdings Inc., an acquisition platform focused on the online advertising, marketing and digital media sector. It will be run by Sherman Atkinson, former COO of Intermix Media.

VC Deals

Seesmic Inc., San Francisco-based provider of online video chat solutions, has raised $6 million in Series B funding. Omidyar Network and Wellington Partners co-led the round, which comes less than five months after a $6 million Series A infusion. Participants in that deal included Atomico, Mike Arrington, Dave Winer, Martin Varsavsky, Ron Conway, Steve Garfield, Mark Pincus, Jeff Clavier, Jeff Pulver and Steve Case.

AdMeld Inc. has secured $5 million of a $6 million Series A-1 round, according to a regulatory filing. Backers include Foundry Group and Spark Capital. The New York-based company says it provides solutions that “blend advertising operations and agile software development to drive advertising revenue for online publishers.” The company’s founding team was previously with JumpTV., a Santa Clara, Calif.-based online marketplace for college students, has raised around $5 million in Series B funding, according to a regulatory filing. Return backers Gabriel Venture Partners and Mike Maples.

Simparel, a New York-based developer of ERP solutions, has raised $4 million in Series A funding from L Capital Partners.

SeeSaw Networks, a San Francisco-based out-of-home digital media company, has raised $3.5 million in Series B funding, according to a regulatory filing. Series A investor Sutter Hill Ventures participated.

Buyout Deals

First Reserve Corp. has committed $720 million in equity funding from form Torus Insurance Holdings Ltd., a Bermuda-based insurance company with a particular focus on the energy industry. Torus will be led by David Hope, who previously was CEO of the London operations of The Navigators Group Inc.

Getty Images Inc. (NYSE:GYI) shareholders have approved a $34 per share buyout offer from Hellman & Friedman. The total deal is valued at $2.4 billion, and is expected to close next week. Barclays Capital, GE Commercial Finance and RBS Greenwich Capital are providing debt financing.

Kohlberg Kravis Roberts is considering an investment in Australian advisory and infrastructure investment firm Babcock & Brown, according to The Independent. It is unclear if KKR is interested in the entire company, or just certain assets. Babcock & Brown is believed to have a market cap of between £1 billion and £1.5 billion.

Norske Skog (Olso: NSG), a Norway-based maker of newsprint and magazine paper, has agreed to sell its South Korean operations to Morgan Stanley Private Equity Asia and Shinhan Private Equity. The deal is valued at approximately $830 million, and includes two newsprint mills.

PE-Backed IPOs

AGA Medical Holdings Inc., a Plymouth, Minn.-based maker of medical devices the treatment of structural heart defects and vascular diseases, has filed for a $200 million IPO. It plans to trade on the Nasdaq under ticker symbol AGAM, with Citi, Deutsche Bank Securities and Lehman Brothers serving as co-lead underwriters. Welsh Carson Anderson & Stowe acquired a majority stake AGA Medical via a 2005 equity recap.

Broncus Technologies Inc., a Mountain View, Calif.-based developer of medical devices for emphysema and other lung diseases, has withdrawn registration for an $86.25 million IPO, due to “currrent public market conditions.” Lehman Brothers and Bear Stearns had been serving as co-lead underwriters. Broncus has raised around $73 million in total VC funding since 1997, from firms like HBM Partners (26.2% pre-IPO stake), Abingworth Management (15.3%), Menlo Ventures (12.7%), Boston Scientific Corp. (7.9%) and SightLine Partners (7.6%), Bio*One, Charter Ventures, JAIC America, Oakwood Medical Investors, Pac-Link Management, Pequot Ventures and Saratoga Ventures.

Ellora Energy Inc., a Boulder, Colo.-based oil and gas company, has increased its IPO price range from $12-$14 per share to $17-$19 per share. It still plans to offer 11.37 million common shares. Its initial market cap would be approximately $1.01 billion, were it to price at the high end of its range. Ellora plans to trade on the Nasdaq under ticker symbol LORA, with AG Edwards and Friedman Billings Ramsey serving as co-lead underwriters. Ellora is a portfolio company of Yorktown Energy Partners.

PE Exits

Checkpoint Systems Inc. (NYSE: CKP) has agreed to acquire OATSystems Inc., a Waltham, Mass.-based maker of RFID application software and middleware. No pricing terms for the all-cash deal were disclosed. OATSystems has raised $24 million in VC funding from such firms as Greylock Partners, Matrix Partners and Hercules Technology Growth Capital.

Nokia has agreed to acquire Plazes AG, a mobile social navigation startup with offices in Zurich and Berlin. No financial terms were disclosed. Plazes has raised VC funding from Doughty Hanson Technology Ventures, Esther Dyson, Marc Andreessen and Martin Varsavsky.

PE-Backed M&A

Orval Kent Food Co., a portfolio company of Questor Management Co., has acquired Fresh Creative Foods LLC, a San Diego-based processor and distributor of a diverse array of ready-to-eat refrigerated gourmet meals and side dishes. No financial terms were disclosed. RSM EquiCo Capital Markets advised Fresh Creative on the deal.

Firms & Funds

Barclays has run into difficulties trying to raise £4 billion in fresh capital from sovereign wealth funds. The British bank on Friday received a letter from a member of Qatar’s royal family, who complained about Barclays allegedly owing him €42m related to a fraud five years ago.

Centerview Partners has raised $430 million for its debut private equity fund, according to LBO Wire. The New York-based firm expects to hold a final close at its $850 million target by year-end. UBS is serving as placement agent.

Spur Ventures has held a $75 million first close for its third VC fund-of-funds, according to a regulatory filing. Limited partners include The Boston Foundation, Chapman Private Equity and the M.J. Murdock Charitable Trust.

Human Resources

Morgan Stanley has named Yoshihiko Shigenari as head of its private equity operations in Japan, effective next week. He joined the firm in 1989, and currently serves as co-head of the firm’s Japanese investment banking division.

Rajesh Subramaniam has joined Walden International as a managing director and head of Indian operations, according to VC Circle. He previously was CFO of Firstsource Solutions. The firm has not had a managing director in India since 2004, when Dinesh Vaswani left to join Bessemer Venture Partners (he’s now with Temasek).

Joseph Romic and Bradley Nii have joined American Capital Strategies to lead the firm’s Chicago and West Coast sponsor finance practices, respectively. Romnic previously was a director with Goldman Sachs’ specialty lender group, while Nii was a senior VP of investment banking with Lehman Brothers.

Michael McFadden has joined the private equity group of insurance broker Lockton Cos., as an executive vice president. He previously was a managing director in Marsh’s private equity and mergers practice.