PE Week Wire, Nov. 10, 2006

Think you’re adventurous because you invest in China or India? Have some courage. Invest in Libya.

That’s right, I said Libya – the country best known to Americans as the homeland of Muammar Qaddafi and those VW van drivers who tried to kill Doc Brown. Seems times have changed (except for the part about Qaddafi being in charge).

Libya formally gave up its nuclear ambitions two years ago, and ever since has been on a slow but steady path toward global reintegration. Now, it’s poised to get its first dedicated private equity fund.

The general partner is Taureg Capital, an 8-month-old firm with staffers in Bahrain, London and Tripoli. It currently is pre-marketing the fund with a $100 million target, with initial commitments coming from founding shareholders ASA Consultants and United Gulf Industries Corp. Expect most LPs to come from the MENA (Middle East/Africa) region.

“I’d say it’s probably still too early to call it an emerging market – maybe a pioneering market – but there is an enormous amount of opportunity.” says Abdulla Boulsien, a Taureg principal who previously spent six years with Merrill Lynch’s UK-based leveraged finance team. “If you understand the country like we do, you’ll see enough deals here for ten private equity funds.”

Boulsien says that the Taureg fund will be sector-agnostic, and already has been scouting out opportunities in areas like oil and gas, real estate, catering, healthcare centers and education.

My initial thought was that these guys are serious outliers, but it’s worth noting that there actually have been some major private equity developments in Libya over the past several weeks.

First, VC Bank (Bahrain) and Global Emerging Markets (New York) recent paid between $40 million and $50 million to acquire a stake in Libyan oil drilling contractor Challenger Ltd. Second, The Carlyle Group remains in the hunt for $3 billion Libyan oil company Tamoil, although it appears that the winning bidder will instead be Kazakhstan state-owned oil company Kazmunaigaz. Also note that Carlyle just hired a new MENA group head.

“I was really hoping that Carlyle would buy Tamoil, just because of everything that could help open up,” Boulsien says. “But there is plenty of deal-flow, no matter how that turns out.”

*** Paul Vabakos – a former venture capitalist with Trinity Ventures and ComVentures – has reemerged with a $500 million-targeted hedge fund. It’s called Apollo Capital Partners, but has no relation to the New York-based buyout giant. Instead, Vabakos says that his Greek/christened name is a derivative of Apollo.

*** Fitch Ratings predicts a major slowdown of public-to-private tech buyouts. But its analysis seems to miss one key point: An explosion in the number of tech-focused buyout funds currently being raised. At this week’s Buyouts Symposium West, one panelist suggested that 20 such vehicles currently are out in market. Sometimes the only relevant financial stat is amount of available capital…

*** David Bonderman takes on a recent FSA report that warns of a pending LBO market crash.

*** Finally, a few new Vox Populi postings at Bart Schachter has a follow-up from his controversial Wednesday post (and the comments that followed), and Bob Nolan of Halyard Capital asks if IRRs have taken on too much importance. Also, apologies that some of the links weren’t working yesterday morning. Catch up on what you missed.

Thanks to everyone who visited the site this week, and I promise to make it even better in the weeks to come. Have a great weekend…

Top Three

Wellspring Capital Management has agreed to reacquire JW Aluminum Holding Co. from Superior Plus Income Fund. The deal is valued at $310 million, and is expected to close next month. JW Aluminum is a manufacturer of flat-rolled aluminum products, and had been first acquired by Wellspring from Walter Industries in December 2003 for $125 million. Wellspring then sold the company last year for approximately $350 million.

Theranos Inc., a Menlo Park, Calif.-based provider of bio-monitoring systems, has secured around $22 million of a $30 million Series C round, according to a regulatory filing. Return backers include ATA Ventures and Draper Fisher Jurvetson.

Capella Education Co., a Minneapolis-based provider of online post-secondary education services via the Internet, priced four million common shares at $20 per share, for an IPO take of approximately $80 million ($17.50-$19.50 forecast). It will trade on the Nasdaq under ticker symbol CPLA, while Credit Suisse served as lead underwriter. Shareholders include Forstmann Little, Technology Crossover Ventures, Maveron, Insight Venture Partners and Cherry Tree Ventures.

VC Deals

Talyst, a Bellevue, Wash.-based provider of automation solutions for central pharmacies, has raised $20 million in Series B funding co-led by Ignition Partners and OVP Venture Partner. The company had closed a $9 million Series A deal in 2005 from AIG Horizon Partners.

Transcend Medical Inc., a Menlo Park, Calif.-based developer of medical devices to treat glaucoma, has raised $7 million in Series A funding. Backers include Morgenthaler Ventures and Split Rock Partners.

Ontela Inc., a Seattle-based provider of mobile imaging technologies, has raised $4.5 million in first-round funding from Hunt Ventures, Oak Investment Partners and Voyager Capital.

Stingray Geophysical Ltd., a UK-based provider of technologies for permanent reservoir monitoring, has raised around $1.3 million in Series A funding, according to a regulatory filing. Backers include Energy Ventures, CTTV Investments and Hydro Technology Ventures.

Buyout Deals

Fox Paine & Co. has agreed to acquire Wire Rope Corporation of America from KPS Special Situations Fund. No financial terms were disclosed for the deal, which is expected to close within 90 days. WRCA is a St. Joseph Mo.-based producer and marketer of specialty wire ropes.

The Riverside Company has agreed to acquire ONI SGPS SA, the wire-line telecom unit of Portuguese utility Energias de Portugal. The deal is valued at Euro 160 million, and is expected to close early next year.

Blue Point Capital Partners and Endeavour Capital have acquired Dri-Eaz Products Inc., a Burlington, Wash.–based provider of restorative and drying products. No financial terms were disclosed.

Warburg Pincus has taken a stake in 7 Days Inn Group, an economy hotel chain in China, according to SinoCast.

River Associates Investments of Chattanooga, Tenn. has agreed to acquire Wheaton Science Products from Alcan Inc. (NYSE: AL). Wheaton is a Millville, N.J.-based maker of equipment for scientific laboratories. No financial terms were disclosed for the sale, which is expected to close later this month.

Perry Capital and Oxford Lodging Advisory & Investment Group have acquired the Allerton Crowne Plaza Chicago from FelCor Lodging. No financial terms were disclosed for the deal, except that the new owners plan a $10 million renovation. CB Richard Ellis Hotels arranged the sale.

PE-Backed IPOs

Metabolix Inc., a Cambridge, Mass.-based developer of bioplastics and biopolymers, priced 6.8 million common shares at $14 per share ($12-$14 range), for an IPO take of approximately $95.2 million. It will trade on the Nasdaq under ticker symbol MBLX, while Piper Jaffray served as lead underwriter. The company had raised VC funding from both The Vertical Group and Westfield Capital.

Thermage Inc., a Hayward, Calif.-based maker of medical devices for the non-invasive treatment of wrinkles, priced six million common shares at $7 per share, for an IPO take of approximately $42 million. It originally planned to price the shares at between $11 and $13, but later lowered its forecast to between $8 and $9. It will trade on the Nasdaq under ticker symbol THRM, while Merrill Lynch served as lead underwriter. Thermage had raised around $48 million in VC funding since its 2001 inception, from firms like Draper Fisher Jurvetson, Essex Woodlands Health Ventures, Institutional Venture Partners, Morgenthaler Venture Partners and Technology Partners.

Optimer Pharmaceuticals Inc., a San Diego-based developer of anti-infective products, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol OPTR, with Piper Jaffray and Jefferies & Co. serving as co-lead underwriters. It has raised over $67 million in VC funding from firms like ProQuest Investments, Formose Healthcare Investments and BB Biotech.

PE Exits

Permira plans to sell its remaining 6.92 million shares in German pay-TV broadcaster Premiere, via a secondary placement managed by UBS.

Nordic Capital has agreed to sell Sweden-based fitness club chain SATS to Tryg I Danmark Smba for an undisclosed AMOUNT. Nordic Capital originally acquired the company in 2002, with 2005 revenue coming in at around Euro 120 million.

Firm & Fund News

Capricorn Venture Partners of Belgium is raising its first clean-tech fund with a target capitalization of between Euro 75 million and Euro 100 million. It already has held a Euro 26 million first close from LPs like PMV, Electrabel and MRBB.

Human Resources

Anthony Natale has joined Prism VentureWorks as a venture partner in the firm’s Santa Monica, Calif. office. He will focus on opportunities in the medical technology and device space, and previously was a venture partner with MDS Capital.

Mark Sutton has decided to step down as chairman and CEO of UBS Americas, effective at year-end. He will be replaced by Robert Wolf, who previously served as chairman of UBS I-Bank Americas, and global CEOO of UBS I-Bank.