PE Week Wire, Nov. 1, 2006

Today’s column fell apart at the last minute, so just a few links to help start your day (or to end it, if you’re in Europe)…

*** CalPERS has updated its private equity fund performance data, which now goes through June 30, 2006. The best net IRR (non-California Ventures VC portfolio) comes from a 2001 Texas Pacific Group fund, while the worst comes from the new Blackstone Group fund (although that means very little, since it’s not even completely closed yet). The best cash-on-cash return comes from a 1995 Information Technology Ventures fund, while a 1992 Kidd Kamm Equity Partners fund returned basically nothing. As always, please remember that these numbers are in constant flux, are affected by J-curves, etc…

*** Speaking of LPs, Oregon and Massachusetts have each posted RFPs for private equity consultants. Oregon currently is advised by Pacific Corporate Group, while Massachusetts uses Pathway. Read Oregon. Read Massachusetts.

*** Charles River Ventures has launched a new seed funding program called CRV QuickStart. Matt Marshall talks with the principals, and I’m scheduled to chat with them later today. My first question: What lessons did the firm learn from its defunct CRVelocity endeavor, and how is this different?

*** Lots of you writing in about the embryonic stem cell issue, including many who point out that the federal limitations are on “funding” – not on the actual practice of ES cell research. You are correct, but I feel it’s largely a distinction without much practical difference. Keep the emails coming – particularly those regarding potential VC investment in the space.

*** The International Herald Tribune discusses LBOs in France.

*** Katie Fehrenbacher on VC funding trends in the mobile content space. Her headline? Easy Money.

*** Finally, DealBreaker with a short note on the supposed “death of newspapers.” Its main point is dead-on: PE firms might be able to salvage the industry by helping to introduce new electronic strategies. Many current newspaper editors and execs simply do not understand the non-ink medium — whereas a growing number of PE pros do.

Top Three

Bain Capital and The Blackstone Group have completed their $44 per share acquisition of crafts retailer Michaels Stores Inc. (NYSE: MIK). The total deal is valued at more than $6 billion.

Pathway Medical Technologies Inc., a Redmond, Wash.-based developer of endovascular treatments for peripheral arterial disease, has raised $25 million in Series B funding. HLM Venture Partners led the deal, and was joined by Latterell Venture Partners and return backers ABN Amro Capital, Giza Ventures and Oxford Bioscience Partners.

Raymond Bingham has joined General Atlantic as a managing director and head of the firm’s Palo Alto, Calif. office. He is the former chairman and CEO of Cadence Design Systems, and has served on the board of GA portfolio company A-Max since 2005.

VC Deals

KnowNow Inc., a Sunnyvale, Calif.–based provider of enterprise-class Web 2.0 solutions, has raised $13 million. RSS Investors led the deal, and was joined by Presidio Ventures and return backers Kleiner Perkins Caufield & Byers, Levensohn Venture Partners and Palomar Ventures. KnowNow has raised over $50 million in total VC funding since its 2000 inception. In other company news, KnowNow is expected to make a major partnership announcement next week.

Avantis Medical Systems Inc., a Sunnyvale, Calif.-based developer of catheter-based endoscopic devices for detecting colon cancers and polyps, has raised $12 million in Series B funding led by Montreux Equity Partners., an India-based social media and local commerce website, has raised $10 million in Series A funding from Norwest Venture Partners.

AbTech Industries Inc., a Scottsdale, Ariz.-based provider of storm-water filtration technologies, has raised $6.8 million in Series A funding led by Bernard L. Madoff Inv*stment Securities, according to VentureWire.

Scivantage, a New York-based provider of Web-based front and back-office products for the brokerage industry, has raised $6.7 million in VC funding from Edison Venture Fund.

Biofisica Inc., an Atlanta-based developer of high-tech wound care products, has raised $5 million in Series A funding. Unilever Technology Ventures led the deal, and was joined by return backers Novartis Venture Fund and the Advanced Technology Development Center (ATDC) Seed Capital Fund.

iPolicy Networks Inc., a Fremont, Calif.-based netowrk security company, has secured $3 million of a $5.02 million Series B-1 round, according to a regulatory filing. Return backers include Clearstone Venture Partners, Dali, Hook Partners, Ignite Group and WK Technology Fund. The company has raised nearly $70 million in total VC funding since its 1997 inception.

Buyout Deals

The Carlyle Group and Unison Capital Group (Japan) are co-sponsoring a management buyout of Toshiba Ceramics from Toshiba Corp. Toshiba Ceramics makes silicon wafers and other materials for microchips. Toshiba Corp. will sell its 40.4% stake, with the deal valuing Toshiba Ceramics at approximately $775 million.

Excel Staffing Services, a Scottsdale, Ariz.-based provider of payroll and staffing solutions, has completed a $7 million recapitalization sponsored by Windstone Capital Partners. The deal included both a commercial credit line and mezzanine capital.

PE-Backed IPOs

Medecision Inc., a Wayne, Pa.-based provider of medical management solutions to healthcare payers and regional health information organizations, has set its proposed IPO terms to 5.5 million common shares being offered at between $14 and $16 per share. It plans to trade on the Nasdaq under ticker symbol MEDE, with Cowen & Co. and Wachovia Securities serving as co-lead underwriters. Medecision has raised $38.4 million in VC funding from firms like Grotech Capital Group, Stockwell Fund, Liberty Ventures, DWS Investment and Britannia Business Expansion Fund.

Next week’s IPO calendar includes expected pricings from Adcare Health Systems Inc., OneBeacon Insurance Group, Canadian Solar Inc., KBW Inc. and Thermage Inc.

PE-Backed M&A

IronPort Systems Inc., a San Bruno, Calif.–based Internet gateway security provider, has acquired PostX Corp., a Cupertino, Calif.-based provider of enterprise email encryption technology. No pricing terms of the all-stock transaction were disclosed. IronPort has raised around $95 million in VC funding from firms like Allegis Capital, ChevronTexaco Technology Ventures, General Motors, Menlo Ventures, New Enterprise Associates and Rembrandt Venture Partners. PostX has raised around $58 million from firms like Draper Richards, Mayfield, Alloy Ventures, Palo Alto Venture Partners, Charles Schwab and Sunrise Ventures.

SideStep Inc., a Santa Clara, Calif.-based online comparison shopping site for travel, has acquired, a San Mateo, Calif.–based website for site for hotel reviews and ratings. No financial terms were disclosed. SideStep has raised more than $17 million in VC funding from Trident Capital, PAR Capital and individuals. has raised some seed funding from Amicus and Arba Seed Inv*stment Group.

Virgin Active, the UK-based health and fitness group owned by Virgin Group, has completed its acquisition of Holmes Place’s UK business from Permira and Bridgepoint. The deal included £142.5 million leverage package underwritten by UBS, with both Permira and Bridgepoint re-investing in the equity for a combined 12% Virgin Active stake. No additional financial terms were disclosed.

ImpreMedia LLC, a New York-based publisher of Spanish-language newspapers, has acquire Vista Magazine, a dual-language general interest publications with a circulation of one million. No financial terms were disclosed. ImpreMedia is a portfolio company of Halyard Capital and Clarity Partners.

PE Exits

Western Financial Group has agreed to acquire a 25% stake in Canadian insurance brokerage Hayhurst Elias Dudek Inc. The deal will represent an exit for VenGrowth Private Equity Partners, which invested a total of $7.5 million into HED in December 2003, in exchange for a 10% stake.

Anixter International Inc. (NYSE: AXE) has acquired Italy-based fastener distributor MFU Holding SpA from company management, Kairos Partners and MPS Venture.

Firms & Funds

Cdb Web Tech of Italy has completed its sale of limited partner stakes in 90 venture capital funds to Pantheon Ventures for over $310 million. The deal also includes the sale of eight direct deals in the tech sector.

Upstream Ventures of Singapore has launched an $80 million fund focused on technology companies in Singapore and India.

Xilinx Inc. (Nasdaq: XLNX), a supplier of programmable logic solutions, has formed a $75 million corporate venture capital fund focused on the Asia-Pacific technology market.

Cambridge Consultants, a UK-based technology design and development company, has teamed with Espirit Capital Partners to form a £10 million VC fund that will back spinouts of Cambridge Consultants’ own technology ventures.

Human Resources

Jeff Leiden, former president and COO of Abbott Labs’ pharmaceuticals business, has joined Clarus Ventures as a partner.

Advent International has added six professionals to its Boston-based North American deals team: Jeff Case and John Maldonado join as principals, while David Chen, Bryan Doherty, Kevin McQuarrie and Thomas Weisman join as Associates. Case rejoins Advent after having completed his MBA at Harvard; Maldonado previously was with Parthenon Capital; Chen previously worked in Merrill Lynch’s financial institutions group; Doherty joins from William Blair’s financial sponsors group; Kevin McQuarrie was with Lazard Frère & Co.’s life sciences group; and Weisman comes over from UBS’ financial sponsors leveraged finance group.

Peter Buckley has joined Watch Hill Partners as a partner and head of private placements (new position). He previously was a managing director and head of equity private placements with J.P. Morgan Securities.

South Korean prosecutors are seeking an arrest warrant for Paul Yoo, head of Lone Star Advisors Korea. The move is part of a larger investigation into alleged manipulation of Korea Exchange Bank’s stock price, so that Lone Star could get a better acquisition price. One South Korean news service also reports that prosecutors have requested an arrest warrant for Lone Star vice chairman Ellis Short.