Just a few quick fundraising notes before heading off for a much-needed Thanksgiving holiday…
*** Private equity fundraising has broken volume records each of the past three years (including 2006), and a reporter yesterday asked if I thought the trend would continue in 2007. My answer was affirmative.
From a buy-side perspective, I expect the limited partner community to increase its already-ravenous private equity appetite. Three reasons: (1) A continued influx of new institutional money from Asia and MENA; (2) Rising public blue-chips raise the hard dollar amounts of alternative allocations and; (3) Returns have been outstanding of late, and they will only improve as the IPO window keeps inching up. Oh, and private equity is the economic equivalent of that popular kid who everyone wanted to befriend.
The sell-side perspective is a bit dicier. The record-breaking needle has been largely moved by mega-funds, and heavyweights like Blackstone, KKR, Permira and TPG are not expected to raise new funds in 2007. But there should still be enough action on that end of the spectrum, with expected closes from Apax Europe, Carlyle, CCMP Capital, Hellman & Friedman, Providence Equity Partners and Silver Lake Partners. In addition, there likely will be a handful of new superstar spinouts (i.e., next version of Centerbridge) and continued inevitable formation of new upper-middle-market funds.
*** One firm that probably will hold a final close this year is Thomas H. Lee Partners. While perusing the Yale SOM Private Equity conference agenda (because I like seeing my name in someone else’s print), I noticed the following note in the bio of TH Lee co-president Scott Schoen: “THL Partners… is currently investing Thomas H. Lee Equity Partners VI, with closed and committed capital of approximately $8 billion.” That’s the revised fund target (original was $7.5 billion), with a max cap believed to be around $9 billion.
*** 3i Group yesterday announced that it had raised Euro 5 billion for a new middle-market fund focused on Europe. I’m still trying to get my head around the “middle-market” part of a fund that large…
*** Quiz Time: Can you name the buyout firm that raised a fund within the past 12 months, but which already is talking to LPs about needing some additional dough?
Publishing note: The next PE Week Wire will be published on Monday, November 27. To keep up on news in the meantime – particularly for those of you outside the U.S. – just go to www.peHUB.com, which will continue to be updated. Talk to you online and/or on Monday…
Orexigen Therapeutics Inc., a San Diego-based neuroscience company focused on the treatment of obesity, has raised $30 million in Series C funding. MPM BioEquities and Wasatch Advisors co-led the deal, and were joined by undisclosed return backers. The company previously had raised over $46 million, including a $35 million Series B deal in April 2005 at a $75 million post-money valuation. Participants in that round included BA Venture Partners, Domain Associates, Duke University, Kleiner Perkins Caufield & Byers, Montreaux Equity Partners, Morgenthaler Ventures and Sofinnova Ventures. www.orexigen.com
Qantas Airways Ltd. of Australia has received a buyout approach from Macquarie Bank and Texas Pacific Group. News of the offer sent Qantas shares up 15%, valuing it at approximately Au$10 billion. www.qantas.com.au
Spirit Aerosystems Holdings Inc., a Wichita, Kan.–based non-OEM designer and manufacturer of aerostructures, priced around 55.08 million common shares at $26 per share ($23-$25 range), for an IPO take of approximately $1.35 billion. It will trade on the NYSE under ticker symbol SPR, while Credit Suisse, Goldman Sachs and Morgan Stanley served as co-lead underwriters. Onex Partners remains the company’s controlling shareholder. www.spiritaero.com
VC Deals
Galil Medical Ltd., an Israel-based maker of cryotherapy systems for use in kidney and prostate cancer treatments, has raised $40 million in VC funding co-led by Thomas, McNerney & Partners and The Vertical Group. In addition, approximately $4 million of existing shareholder loans will be converted into Galil shares, while the new investors will purchase approximately $8 million of shares from existing Galil backers like Elron Electronic Industries Ltd. www.galilmedical.com
Natural Convergence Inc., a Ottawa, Canada-based supplier of VoIP application software for service providers, has raised US$10M in Series C funding. Wesley Clover and BDC Venture Capital co-led the deal, and were joined by VIMAC, Desjardins Venture Capital Group and return backers Jefferson Partners, Primaxis Technology Ventures and Purple Angel. www.naturalconvergence.com
Rannoch Corp., a Boulder, Colo.-based provider of aerospace systems research and development, is raising $7 million in Series B funding, according to a regulatory filing. It raised $3 million Series A round in 2004 from Boulder Ventures. www.rannoch.com
Agrivida Inc., a Cambridge, Mass.-based agricultural biotech company focused on renewable, biomass-based alternative fuels and raw materials, has raised over $600,000 in seed funding, according to a regulatory filing. Shareholders include incTank Ventures and Shin Nippon Biomedical Laboratories. www.agrivida.com
MidOcean Partners has agreed to acquire a 50% ownership position in Prism Business Media, upon Prism’s completion of its previously-announced acquisition of Penton Media. The stake will be sold by Prism owners Wasserstein & Co., Highfields Capital Management and Lexington Partners. No financial terms are being disclosed. www.prismb2b.com
Reliance Communications of India is in talks to raise up to $1 billion, which would be used to form a subsidiary for its telecom towers business, according to The Financial Times. The Blackstone Group and The Carlyle Group are reported to be co-leading the deal, with other participants including Temasek and American Tower.
DLJ Merchant Banking Partners has acquired Peach Holdings Inc. (AIM: PSF), the parent company of specialty finance company Peachtree Settlement Funding. The deal is valued at Gpb3.85 per share, for a total of approximately Gbp402 million. Other equity participants include Credit Suisse, LLR Partners, Greenhill Capital Partners and Peachtree senior management. www.peachtreesettlementfunding.com
Castle Harlan has completed its $110 million purchase of AmeriCast Technologies Inc. from KPS Special Situations Fund. AmeriCast is an Atchison, Kansas-based maker of complex steel castings.
North Castle Partners has agreed to sell Naked Juice Co. to PepsiCo (NYSE: PEP). No financial terms were disclosed. Naked Juice is an Azusa, Calif.-based premium juice company with annual sales in excess of $150 million.
BlackEagle Partners, a middle-market affiliate of Apollo Management, has acquired an equity stake in Federal Broach & Machine Co., a Harrison, Mich.-based manufacturer of specialized broach machines and broach tools. No financial terms were disclosed. www.blackeaglepartners.com www.federalbroach.com
Teachers’ Private Capital has agreed to acquire specialty resin adhesive and paper overlays producer Dynea North America from Dynea Chemicals Oy of Finland. No financial terms were disclosed. www.otpp.com www.dynea.com
PE-Backed IPOs
Aercap Holdings NV, a Dutch provider of aircraft, engines and parts, priced a $600.3 million IPO. It will trade on the NYSE under ticker symbol AER, while Morgan Stanley served as lead underwriter. Cerberus is the company’s controlling shareholder. www.aercap.com
Sterling Commerce, a subsidiary of AT&T (NYSE:T), has agreed to acquire Comergent Technologies Inc., a Redwood City, Calif.-based developer of sell-side ecommerce software. The deal is valued at approximately $155 million in cash. Sterling Commerce plans to incorporate Comergent products to provide customers with a unified end-to-end order fulfillment solution across the extended supply chain. This unified solution will enable customers to increase revenue, shorten sales and order fulfillment cycle times, and reduce overall supply chain costs. Comergent had raised around $77 million over three rounds of VC funding, including a $54 million second-round deal in 2000 at a post-money valuation of approximately $245 million. Backers include Amerindo, Cisco Systems, Crosspoint Venture Partners, Mobius Venture Capital, Morgan Stanley Venture Partners, Pivotal Asset Management and Van Wagoner Capital Management and Invesco Private Capital. www.sterlingcommerce.com www.comergent.com
PE-Backed M&A
SunGard has acquired Integrated Business Systems Inc., a Melville, N.Y.-based provider of software solutions and related services to hedge funds. No financial terms were disclosed. SunGard was acquired last year in a public-to-private buyout by Silver Lake Partners, AlpInvest, Bain Capital, Blackstone Group, Goldman Sachs, HarbourVest Partners, KKR, Providence Equity Partners and Texas Pacific Group. www.sungard.com
Other Deals
Shayne International Holdings Ltd., a Hangzhou, China-based manufacturer of high-end upholstered furniture and leather apparel, has raised $20 million in notes and warrants from Darby Asia Mezzanine Fund II.
Firm & Fund News
Hellman & Friedman has secured $2.7 billion in commitments for its sixth fund, which is being marketed with an $8 billion target capitalization. www.hf.com
Orlando Management of Germany has closed its second special situations fund with Euro255 million. It will focus on the acquisition of troubled industrial companies in Germany and German-speaking countries. MVision served as exclusive placement agent. www.orlandofund.com
Access Venture Partners of Westminster, Colo. is raising its second fund with a $30 million target, according to a regulatory filing. It already has secured around $10.95 million in commitments. www.accessventurepartners.com
Columbus Acquisition Corp., a New York-based blank check acquisition company, has filed for a $100 million IPO. It plans to trade on the AMEX, with Ladenburg Thalmann & Co. serving as lead underwriter. Firm management includes CEO Andrew Intrater, also CEO of Columbus Nova, and executive director Michael Ernestus, managing partner of Artus Advisors. www.columbusnova.com
John Bond, former chairman of HSBC, has joined Kohlberg Kravis Roberts & Co. as a senior advisor. www.kkr.com
James Li has joined Kleiner Perkins Caufield & Byers as a partner. He has spent the past 15 years with Merck Co., including a recent stint as regional marketing director for hypertension in Asia. www.kpcb.com
Bill Stensrud, a general partner with San Diego-based Enterprise Partners, announced that he plans to leave the firm at year-end. He will remain as acting CEO of Enterprise portfolio company Muze. www.epvc.com
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