PE Week Wire: Monday, June 30, 2008

Last Friday, I wrote: “The Blackstone Group today plans to hold a first close for its new private equity fund. It wants $8 billion in commitments.”

Well, that was the plan, but it didn’t happen. Sources say that Blackstone is still tweaking its limited partnership agreement (LPA), as it tries to seal the deal with several large investors. One area of discussion, for example, is on transaction fee splits, which are currently at 50/50. That’s a bit more weighted toward the GP than the industry standard, so expect it to break slightly in favor of the LPs. There also are various LP calendar and allocation issues that still need to be dealt with.

This is the second time Blackstone has postponed the fund’s first close, as it was originally slated to occur April 11. It still has a few billion dollars in dry powder, which makes this more an embarrassment than an actual problem. No new date has been set, although expectations are that things will wrap up within the next several weeks.

Blackstone is targeting $20 billion for this fund, which would be its sixth. Blackstone’s prior fund-raising effort launched in 2004 with a $10 billion target, and ended up closing last summer of $22 billion. A firm spokesman declined to comment.

*** Speaking of The Blackstone Group, seems the firm is taking Graham Packaging public via a reverse IPO with a SPAC formed by Tom Hicks. Details of the $3.2 billion transaction are just filtering in — press release here — and Erin is listening in on the conference call. Will have more info at the site soon.

*** The end of Q2 is just hours away, which means that we’re in for a data deluge. Well, not from the VC-backed IPO market – can you be deluged with nothingness? – but from everywhere else. Full data from Thomson Reuters will be available this afternoon at peHUB, but here’s a quick preview of first half 2008 compared to first half 2007:

• Global M&A is down 26%

• Global private equity-sponsored M&A is down 75%

• U.S. M&A is down 41%

• U.S. private equity-sponsored M&A is down 84%

• U.S.-based buyout firms raised $65.6 billion in fund capital in Q2, compared to $76.7 billion in Q1 (source: Buyouts Magazine).

Top Three

News Corp. and Permira have offered to take UK set-top box maker NDS Group PLC (Nasdaq: NNDS) private, in a transaction valued at approximately $3.6 billion. News Corp. is currently the majority shareholder in NDS. The proposal would value NDS shares at $49.70 each, which is nearly a 21% premium to Friday’s closing price., a Chinese video sharing site, has raised $30 million in new VC funding. Maverick Capital led the round, and was joined by return backers Brookside Capital, Sutter Hill Ventures, Farallon Capital and Chengwei Ventures. The company also secured a $10 million equipment loan from Western Technology Investment.

Openwave Systems (Nasdaq: OPWV) has sold its mobile phone software business to Purple Labs, a Chambery, France-based provider of embedded Linux solutions for the wireless market. No financial terms were disclosed. Purple Labs last year raised $14.5 million in Series A funding from Sofinnova Partners, Earlybird Venture Capital and Partners Group.

VC Deals

Reily Genomics Inc. has raised $15 million in Series B funding, according to a regulatory filing. Kleiner Perkins Caufield & Byers was joined by return backer Mohr Davidow Ventures. Brook Byers of Kleiner is joining MDV’s Michael Goldberg on the board of directors. The Palo Alto, Calif.-based startup integrates diagnostics with therapeutics to identify the right patients for the right medication at the right dose at the right time.

NeoPad Technologies Corp., a Hillsboro, Ore.-based maker of CMP pads, has raised just over $14 million in Series C funding, according to a regulatory filing. InterWest Partners led the round, and was joined by return backers BlueRun Ventures, Intel Capital and SmartForest Ventures. It had previously raised $16 million.

Lithium Technologies, an Emeryville, Calif.-based provider of on-demand solutions for enterprise communities, has raised $12 million in Series B funding. Benchmark Capital led the round, and was joined by return backers Emergence Capital and Shasta Ventures. Lithium had previously raised $9 million in April 2007.

NanoMR Inc., an Albuquerque-based blood diagnostics device startup, has raised $5.5 million in first-round funding, as first according to VentureWire. vSpring Capital led the round, and was joined by Dow Venture Capital and Sun Mountain Capital. The company does not have a website.

Inside Contactless, a French maker of “contactless” payment chips and NFC technologies for mobile devices, expanded its Series C round to a total of nearly $42 million. Samsung Ventures America participated in the latest tranche, which followed a $38 million first close. Other round backers include Nokia Growth Partners, Sofinnova Partners, Vertex Management, Vertex Ventures, Siparex, GIMV, EuroUS Venture, Granite Global Ventures and Visa Ventures.

Kaltura Inc., a Brooklyn, N.Y.-based provider of an open-source video platform, has raised an undisclosed amount of Series B funding. 406 Ventures led the round, withmanaging directorMaria Cirino taking a board seat and principal Greg Dracon serving as a boardobserver. Also participating pro rata was Alavon Ventures, which led Kaltura’s $2.1 million Series A round.

Buyout Deals

GIMV has acquired a majority stake in Dutch women’s clothing brands Bandolera Holding NV and NTS. No financial terms were disclosed for the deal, which is expected to close within 30 days. Company management will retain a minority position.

Hunton Collins has put UK dental chain James Hull Associates on the block of around £200 million. Likely bidders include Candover and GI Partners.

Palm Beach Capital has acquired SUNZ Group LLC, a St. Petersburg, Fla.-based provider of workers’ compensation solutions. No financial terms were disclosed.

Segulah has acquired European bakery Almondy from Smedvig Capital. No financial terms were disclosed.

Sun Capital Partners is in talks to acquire troubled UK furniture chain SCS Upholstery. The company is currently valued at just £2.2 million, compared to a £190 million valuation just two years ago.

Talon Merchant Capital has acquired certain assets of Haggerty Enterprises Inc., including all the operating and intellectual property assets of motion lamp maker Lava World International. No financial terms were disclosed.

Veronis Suhler Stevenson has acquired a majority stake in Brand Connections LLC, a New York-based provider of out-of-home media and marketing solutions, from The Cypress Group. No financial terms were disclosed. Petsky Prunier advised Brand Connections on the deal.

PE-Backed IPOs

Bayhill Therapeutics Inc., a Palo Alto, Calif.-based drug company focused on autoimmune diseases like multiple sclerosis, has withdrawn registration for an $86.25 million IPO, citing unfavorable market conditions. It had planned to trade on the Nasdaq, with Pacific Growth Equities and Lazard Capital Markets serving as co-lead underwriters.

Bayhill has raised $62.75 million in VC funding, from firms like U.S. Venture Partners (21.38% pre-IPO stake), Morgenthaler Ventures (11.38%), De Novo Ventures (11%), CMEA Ventures (10.46%), Lilly Ventures (9.17%), Latterell Venture Partners (7.32%), Montreux Equity Partners (5.5%), A.M. Pappas Life Science Ventures, Boston Life Science Venture Corp., Grand Cathay Venture Capital Co., PAC-LINK Bio Management Corp., Prudence Venture Investment and Vertical Group.

Infor, an Alpharetta, Ga.-based enterprise software company owned by Golden Gate Capital, does not plan to go public before next year, according to a German newspaper interview with CEO Jim Schaper. The company has more than $2 billion in annual sales.

Firms & Funds

Bear Stearns Merchant Banking is closing its San Francisco office, following the departure of sole staffer Bodil Arlander, according to LBO Wire. Arlander is a founding partner of BSMB. No future plans were reported.

Horsley Bridge Partners has closed its ninth general fund-of-funds with just under $1.76 billion. Limited partners include the Indiana Public Employees’ Retirement Fund and Railways Pension Trustee Co. Its prior general fund closed on around $1 billion in 2005. The firm does not have a website.

Human Resources

Lazard Middle Market has added three new managing directors: Robert Frost, previously with Piper Jaffray; Andrew Samett, previously with Bear Stearns; and Scott J.R. Smith, previously with Wachovia.

Thomas Stoddard has joined the corporate advisory unit of The Blackstone Group as a senior managing director. He focuses on the financial services sector, and previously was a founding partner of Barrett Ellman Stoddard Capital Partners.

BNY Mellon Wealth Management has named Ted Berenblum as head of alternative investments, a new position. he previously was with Citigroup as a managing director and head of ultra-high net worth investments.