PE Week Wire, Nov. 13, 2006

The sky is gray, the Patriots are (temporarily) infuriating and the inaugural Deal of the Week award is available at In other words, it’s time for some Monday Mouth-Off.

First up are some responses to Friday’s column about a new private equity fund focused exclusively on Libya. Brian writes: “Dan, you noted that Carlyle Group is unlikely to win the auction for Tamoil, but I wonder if its recent addition of Walid Musallam [as head of MENA operations] isn’t an attempt to salvage the deal. If anyone can do it, it would be him… and a Carlyle win in the region might really open up the floodgates of U.S. LBO interest in Libya and other neighboring countries.”

Alex and Matt have a back-and-forth at peHUB. Alex: “There’s a guy running around (can’t put my hand on his details at the moment) with a venture fund based in Kabul. Since, last time I checked, Libya isn’t suffering from an active insurgency, I’m going to say that Afghanistan is even further out on the risk curve.” Matt: “Alex, I believe the guy you’re referring to is Pierre van Hoeylandt, whose firm, Acap Partners, manages the Afghanistan Renewal Fund. Key difference is most of their money is development finance, whereas it looks like Taureg is targeting commercial capital. $100 million seems like quite a large fund for a country which hasn’t seen significant levels of FDI in the past five years. Also, U.S. investors beware– I believe Libya is still on the restricted list for U.S. ! investment.”

As a quick clarification, the U.S. lifted its investment embargo when Libya gave up its nuclear ambitions. That said, Taureg only plans to target MENA LPs for the inaugural fund. It might open things up for its second vehicle, which is expected to focus on Algeria.

*** Arnold on the middle-market efforts of Silver Lake and Texas Pacific Group: “This is exactly the type of move that these firms should be making. Their peers are moving bigger and bigger, so TPG and Silver Lake are making the contrarian play. Not surprising, given that TPG first made money in commercial airlines while Silver Lake was one of the first LBO firms to focus on tech… Many people believe the middle markets are too crowded, but firms like these should be able to gain separation by just their names alone.”

*** Finally, lots of emails about, which now is exactly one week old (not to mention the Wire redesign). The vast majority are positive, save for some minor sniping about the cartoons. Also, to answer the two most common questions: (1) Yes, both the news and blog sections are updated throughout the day. (2) No, there won’t be free trials for the Premium subscriptions — it’s only $124. Please keep your comments coming, so that we can continue refining the site to best suit your needs…

Top Three

HomeAway Inc., an Austin, Texas-based operator of an online vacation rentals website, has raised $100 million in second-round equity funding. It also secured $60 million in debt financing. Existing shareholders Austin Ventures and Redpoint Ventures were joined by new backers American Capital Strategies, Institutional Venture Partners and Trident Capital. HomeAway used some of the proceeds to acquire rival

Sun Capital Partners and Golden Gate Capital have agreed to acquire retailer Eddie Bauer Holdings Inc. (Nasdaq: EBHI) for $9.25 per share (12% premium to 4-week closing average). The total deal is valued at approximately $614 million, including around $328 million of debt to be repaid. It is expected to close in Q1 2007. Goldman Sachs served as financial advisor to Eddie Bauer.

Benchmark Capital Europe has closed its third fund with $500 million in capital commitments. Limited partners include Horsley Bridge.

VC Deals

Cerenis Therapeutics SA, a France-based drug company focused on cardiovascular and metabolic diseases, has raised Euro 42.1 million in Series B funding. TVM Capital led the deal, and was joined by OrbiMed Advisors and return backers Sofinnova Partners, HealthCap, Alta Partners, EDF Ventures and NIF SMBC Ventures.

Mascoma Corp., a Cambridge, Mass.-based company focused on cellulosic biomass-to-ethanol development and production, has raised $30 million in second-round funding. General Catalyst Partners led the deal, and was joined by Kleiner Perkins Caufield & Byers, VantagePoint Venture Partners, Atlas Venture, Pinnacle Ventures and return backers Khosla Ventures and Flagship Ventures.

Netronome Systems Inc., a Pittsburgh-based provider of deep packet inspection, content flow and virtual machine technologies, has raised $20 million in Series C funding. 3i Group led the deal, and was joined by Tudor Investment Corp. and return backers Top Technology Ventures and Spinner Global Technology Fund. Returning angels include FORE Systems founders Robert Sansom and Eric Cooper.

ClairMail Inc., a Novato, Calif.-based provider of mobile phone-based customer interaction solutions, has raised $12 million in Series B funding. Jafco Ventures led the deal, and was joined by return backers Norwest Venture Partners and Outlook Ventures.

Firefly Energy Inc., a Peoria, Ill.-based developer of lead acid battery technology, has raised $10 million in Series B funding. Stark Capital led the deal, and was joined by return backers KB Partners, Caterpillar, the Illinois Finance Authority and Tri-County Venture Capital Fund.

Pluck Inc., an Austin, Texas-based provider of social media solutions for online publishers, has raised $7 million in Series B-1 funding. Reuters was joined on the deal by return backers Austin Ventures and Mayfield. It nowhas raised around $17 million in total VC funding since its 2003

International Consumption Products Joint Stock Co. (ICP), a Vietnamese consumer products company, has raised over $6 million in venture capital from Mekong Capital.

Etology Inc., a Foster City, Calif.-based operator of an online advertising marketplace, has raised $4 million in Series A funding, according to a regulatory filing. Backers include Mustang Ventures, DG Incubation and CGM Marketing.

Yaupon Therapeutics, a Radnor, Pa.-based drug company focused on lymphoma, addiction and neuropathic pain, has raised $4 million in Series B funding. Osage Ventures led the deal, and was joined by Ben Franklin Technology Partners, TDH Capital and return backer BioAdvance Greenhouse Fund.

Endocyte Inc., a West Lafayette, Ind.-based developer of receptor-targeted smart drugs for the treatment of cancer and autoimmune diseases, is looking to raise $30 million in Series D funding, according to VentureWire. The company already has raised over $45 million from firms like Blue Chip Venture Co., Burrill & Co., CID Equity Partners, Sanderling Ventures, Triathlon Medical Ventures and Twilight Venture Partners.

Locus Pharmaceuticals Inc., a Blue Bell, Pa.-based small-molecule drug company, is looking to raise $25 million in Series E funding, according to VentureWire. It already has raised over $92 million in total VC funding since its 1999 inception, including a $40 million Series D round at a post-money valuation of approximately $196 million.

Infinite Power Solutions Inc., a Golden, Colo.-based provider of thin-film energy storage devices for micro-electronic applications, has raised an undisclosed amount of strategic funding from In-Q-Tel. This is in addition to a $34.7 million round IPS announced in September.

Buyout Deals

Graham Partners has completed a $215 million recapitalization of portfolio company Infiltrator Systems, a manufacturer of plastic chambers for onsite wastewater management systems in the septic leach-field and storm-water markets. First-lien providers include Merrill Lynch Capital, GE Antares and National City Bank, while second-lien providers include American Capital Strategies and Deerfield Capital.

First Reserve Corp. and Texas Pacific Group are considering a joint offer for Amec PLC (London: AMEC).

Golden Gate Capital has completed a recapitalization of Venus Swimwear Inc., and subsidiaries WinterSkills LLC and Venus Manufacturing. No financial terms were disclosed for the recap, which was done in partnership with company management. Venus is a Jacksonville, Fla.-based women’s swimwear company. It will now reside beneath the umbrella of Golden Gate acquisition platform Catalog Holdings Inc.

Lion Chemical Capital has agreed to acquire the EPDM and Rubber Chemicals businesses of Chemtura Corp. (NYSE: CEM). No financial terms were disclosed for the deal, although Chemtura did say that the units have annual revenues of approximately $300 million.

PE-Backed IPOs

ACA Capital Holdings Inc., a New York-based specialty finance company focused on asset management services and credit protection products, priced 12.2 million common shares at $13 per share ($15-$17 forecast), for an IPO take of approximately $158.6 million. It will trade on the NYSE under ticker symbol ACA, while Credit Suisse, JPMorgan and Bear Stearns served as co-lead underwriters. Shareholders include Bear Stearns Merchant Banking, Stephens Group and Aegon USA.

Diamondback Energy Services Inc., an Oklahoma City-based acquisition company focused on service-oriented companies in the oil and natural gas industry, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol FANG, with Jefferies & Co. serving as lead underwriter. Diamondback is controlled by Wexford Capital.

PE-Backed M&A

Verizon (NYSE: VZ) has agreed to sell the former MCI’s division serving corrections facilities to Global Tel*Link Corp., a portfolio company of The Gores Group. No financial terms were disclosed.

NeoPhotonics Inc., a San Jose, Calif.–based provider of optical networking components, has acquired Paxera Corp., a Santa Clara, Calif.-based provider of ultra-widely tunable lasers. No financial terms were disclosed. NeoPhotonics has raised around $200 million in VC funding since 1998, from firms like ATA Ventures, Bay Partners, DFJ, DuPont Ventures, Harris & Harris Group, Institutional Venture Partners, International Finance Corp., Mitsubishi, Nth Power, Oak Investment Partners, Rockport Capital Partners, Venrock Associates and SVB Capital. Paxera has raised over $6 million from Crescendo Ventures and Harbinger Venture Management.

PE Exits

Motorola Inc. (NYSE: MOT) has agreed to acquire Good Technology Inc., a Santa Clara, Calif.-based provider of enterprise mobile computing software and services. No financial terms were disclosed. Good Technology has raised around $245 million in VC funding from firms like Kleiner Perkins Caufield & Byers, Benchmark Capital, Advanced Equities Capital, Avalon Ventures, BA Venture Partners, Broadview Capital Partners, CrossBridge Venture Partners, Crosslink Capital, Rembrandt Venture Partners and Visa.

Firm & Fund News

Valhalla Partners, a Vienna, Va.-based venture capital firm focused on the technology market, has closed its second fund with $260 million in capital commitments.

Jade Alternative Investment Advisors of Dubai reportedly is raising a $150 million fund-of-funds focused on VC and private equity vehicles in China.

CalPERS has committed $500 million to Sacramento Equity Partners, a new fund-of-funds focused on venture capital and small/middle-market private equity funds. SEP will be managed by Oak Hill Investment Management.

Magnum Industrial Partners of Spain reportedly is targeting Euro 850 million for its inaugural fund.

CapitalSource has formed a Canadian subsidiary to provide financing for Canada-based middle-market companies.

Human Resources

Thurston Morton has decided to retire as Chief Investment Officer for Duke Management Company (DUMAC), effective at year-end. He will be succeeded by Neal Triplett, who has spent the past six years heading DUMAC’s hedged strategies group.

Tony Veith has joined Clearview Capital as a principal. He has spent the past 10 years as a senior vice president in the New York office of LaSalle Business Credit.

Jesse Rogers, a managing director with Golden Gate Capital, has resigned from the board of Herbalife Ltd. (NYSE: HLF). The move was made due to possible conflicts of interest arising from Golden Gate’s acquisition of Neways Inc.

Monte Haymon has joined the Watermill Group, a Lexington, Mass.-based private equity firm, as an operating partner. He previously served as president and CEO of Sappi Fine Paper North America.

Edward Erickson, a serial healthcare entrepreneur, has been named a venture partner with SC Capital Partners, the venture capital fund of the Philadelphia-based Science Center.

Robert McCooey Jr. has been named senior vice president in charge of a new capital markets group at Nasdaq. He previously was president and CEO of NYSE floor broker Grisworld Co.