PE Week Wire, Nov. 29, 2006

Both Yale and MIT are holding their annual PE/VC conferences later this week – Yale on Friday, MIT on Saturday – and it’s certain that both will be crawling with MBA candidates in search of future work. To those planning to graduate this spring, I wish you the best of luck. For you first-year folks, however, I’m pleased to introduce our 4th Annual Internship Drive.

The way this works is that private equity firms should contact me via email if you’re looking for a summer intern from the current crop of first-year MBA candidates. All types of firms need apply, and ditto for geography. In your emails, please include your firm name, job location and type of business (i.e., VC/LBO/etc.).

I will keep your firm name confidential (unless you ask me not to), with the listing looking like: Early-stage VC firm with healthcare focus, New York City.

One change this year is that the listings will be posted in the MBA Forum of, instead of in this space. There are over 600 MBAs already signed up, and will be more once I respond to a backlog of access requests (don’t worry, I haven’t forgotten about you…). Each respondent will be directed to an anonymous Yahoo email account that I’ll set up for each firm.

So please get me your information as soon as possible. We have placed well over 100 summer interns via this program, and some have gone on to fulltime employment at their internship site following graduation. So, again, please get those emails of interest to me so that we can post the internship listings ASAP.

New at

• More on the HCA filing, including comments on yesterday’s column and what seems to be the target exit price.

• I play Five Questions with Neal Aronson of Roark Capital Partners, whose firm recently acquired sandwich shop Schlotzsky’s. We talk about the overall environment for restaurant buyouts, if the flagging real estate market will cause future troubles and, of course, his favorite Schlotzsky’s sandwich.

• Peter Hebert, co-founder and managing partner of Lux Capital, puts up his inaugural Vox Populi post. It’s titled “Three Pounds of Pulp or Three of Thought.”

Top Three

The Riverdeep Group of Ireland reportedly has agreed to acquire Boston-based publisher Houghton Mifflin Co. for approximately $3.4 billion. Alchemy Partners and MSD Capital backed a 2003 management buyout of Riverdeep, while Bain Capital, Thomas H. Lee Partners and The Blackstone Group bought Houghton Mifflin from Vivendi for around $1.68 billion in 2002.

Kalypsys Inc., a San Diego-based drug development company, has raised $100 million in Series C funding. Tavistock Life Sciences led the deal with an $89 million contribution, and was joined by fellow return backers Sprout Group, CMEA Ventures and KT Venture Group. The company now has raised around $172 million in VC funding since February 2002.

Mike Angelakis is stepping down as a managing director of Providence Equity Partners, in order to become Co-CFO of Comcast Corp. (Nasdaq: CMCSA). He will replace the retiring Lawrence Smith, and will take over as sole CEO in 2008, once fellow Co-CFO John Alchin retires. Providence recently began raising its sixth fund with a $10 billion target capitalization. Angelakis currently is a director with Providence portfolio companies Bresnan Communications, MGM and Northland Cable Networks.

VC Deals

Magellan Biosciences, a Chelmsford, Mass.-based provider of point-of-care analyzers and automated systems for hospital-based labs and near-patient testing, has raised $50 million in new private equity and debt funding. Abingworth Management led the deal, and was joined by Hambrecht & Quist Capital Management, KBL Healthcare Ventures and return backers Ampersand Ventures, New England Partners Capital, Nexus Medical Partners and Boston Community Venture Fund.

Elixir Pharmaceuticals Inc., a Cambridge, Mass.-based drug company focused on diabetes and age-related metabolic diseases, has raised $31 million in Series C funding. MPM Capital led the deal, and was joined by fellow return backers Arch Venture Partners and Oxford BioScience Partners. New shareholders include CDIB, Jafco Ventures and YFY Bioscience. In related news, Hercules Technology Growth Capital provided $15 million in venture debt.

Cara Therapeutics Inc., a Tarrytown, N.Y.-based drug company focused on pain and inflammation associated with diverse medical conditions, has raised $19 million in Series C funding. MVM Life Science Partners and Alta Biopharm Partners were joined by return backer Ascent Biomedical Ventures.

Tangoe Inc., an Orange, Conn.-based provider of enterprise telecommunications expense management software and services, has raised $8 million in $8 million Series E funding. North Atlantic Capital led the deal with a $6 million investment, and was joined by return backers like Edison Venture Funds and Axiom Venture Partners.

iSkoot Inc., a Cambridge, Mass.-based provider of mobile Internet communications solutions, has raised around $6.2 million in Series A funding led by Khosla Ventures.

Aesthetic Sciences Corp., a Palo Alto, Calif.-based developer of injectable filler products for soft tissue augmentation, has closed its Series A round with a total of $6 million. Backers include Domain Associates and New Leaf Venture Partners.

Apex Learning Inc., a Seattle-based provider of a digital curriculum for secondary education, has raised $6 million in seventh-round funding. MK Capital of Chicago led the deal, which follows a Series AA recap led by Warburg Pincus last year. Apex Learning has raised over $60 million in funding since 1999.

Impedance Cardiology Systems Inc., a Menlo Park, Calif.-based biotech startup, has raised $5 million in Series B funding, according to a regulatory filing. Backers include Versant Ventures and Starfish Ventures (Australia).

Cardioxyl Pharmaceuticals Inc., a Towson, Md.-based drug startup focused on cardiovascular disease, has secured $3.2 million of a $14.5 million Series A round, according to a regulatory filing. Backers include Aurora Ventures and New Enterprise Associates.

Sequans Communications, a France-based provider of fixed and mobile WiMAX semiconductor solutions, has raised an undisclosed amount of strategic funding from Motorola Ventures. Sequans previously raised around $40 million in total VC funding from firms like CapDecisif, i-Source Gestion, Kennet Venture Partners, SGAM Private Equity, Add Partners and Vision Capital.

Xytrans Inc., an Orlando, Fla.-based provider of millimeter wave sensors used in people-screening and facility security applications, has raised an undisclosed amount of fifth-round funding. UPS Strategic Enterprise Fund was joined by return backers Alliance Technology Ventures and Crossbow Ventures.

Buyout Deals

Harrah’s Entertainment (NYSE: HET) might receive a second buyout bid, according to CNBC. The network said that Penn National Gaming and hedge fund D.E. Shaw are part of a group that might rival an existing $83.50 per share offer from Apollo Management and Texas Pacific Group.

Monomoy Capital Partners has agreed to acquire and recapitalize Western Recreational Vehicles Inc., a Yakima, Wash.-based manufacturer of high-end recreation vehicles. No financial terms were disclosed for the deal, which is expected to close in the second week of December.

KRG Capital Partners has recapitalized portfolio company Varel International, a Carrollton, Texas-based supplier of drill bits for the oil, gas and mining industries. Apollo Investment Corp. led the recap’s $115 million in senior unirate loan and junior subordinated notes, with American Capital Strategies also participating. Varel also structured a $10 million asset-based revolver with Fifth Third Bank, while KRG maintains its majority ownership.

Palm Beach Capital has acquired Atlas Paper Mills, a Hialeah, Fla.-based manufacturer of tissue paper made from 100% recycled waste paper. No financial terms were disclosed.

The Carlyle Group reportedly has paid approximately $121 million to acquire 110 villa units in the Minhang District of Shanghai, China.

Advantage Partners, a Japanese private equity firm, has agreed to acquire the financial businesses of Livedoor Co. for approximately $151 million.

Dollar General (NYSE: DG) stock rose more than 5% in afternoon trading yesterday, after Josh Kosman of Mergermarket said on CNBC that Bain Capital and Cerberus were “aggressively pursuing” the retail chain.

Novartis AG may be considering a sale of baby food maker Gerber Products Inc., according to The Wall Street Journal. The report suggests Nestle as a likely suitor, but also says that Dutch baby food company Numico and various private equity firms also could have interest.

PE-Backed IPOs

Obagi Medical Products Inc., a Long Beach, Calif.-based pharma company focused on the aesthetic and therapeutic skin health markets, has set its proposed IPO terms to 5.35 million common shares being offered at between $13 and $15 per share. It plans to trade on the Nasdaq under ticker symbol OMPI, with JPMorgan serving as lead underwriter. Stonginton Partners is the company’s majority shareholder.

Next week’s IPO calendar includes expected pricings from Transforma Acquisition Group, Agean Marine Petroleum and Heelys.

PE Exits

IBM (NYSE: IBM) has agreed to acquire Vallent Corp., a Bellevue, Wash.-based supplier of network performance monitoring and service management software for wireless service providers. No financial terms were disclosed for the deal, which is expected to close next quarter. Vallent has raised over $83 million in VC funding since 1999, from firms like Ericsson Venture Partners, Investor AB, New Venture Partners, Origin Partners, Pequot Capital and Telesystem-Argo Global Capital.

Symantec (Nasdaq: SYMC) has agreed to acquire the IP and other certain assets of Revivio Inc., a Lexington, Mass.-based provider of continuous data protection solutions. No financial terms were disclosed, although various press reports estimate a $20 million price-tag. Revivio had raised around $52.5 million over three rounds of VC funding, from firms like Charles River Ventures, Flagship Ventures, Bessemer Venture Partners, Globespan Capital Partners, Lighthouse Capital Partners, Eastward Capital and Nomura International.

Saratoga Partners is planning to sell 1.75 million shares of Koppers Holdings Inc. (NYSE: KOP) in a secondary public offering. Saratoga still will own approximately 20% of Koppers’ outstanding shares.

PE-Backed M&A

Eureka Growth Capital has sold Specialty Pharma Inc. to Critical Homecare Solutions, a portfolio company of Kohlberg & Co. No financial terms were disclosed Specialty Pharma is a Cromwell, Conn.-based provider of home infusion and respiratory therapy services, and was advised on the sale by Ewing Bemiss & Co.

Kiadis BV, a Dutch oncology pharma company, has agreed to merge with Celmed BioSciences Inc. of Canada. The resulting company will be called Kiadis Pharma. No financial terms were disclosed. Kiadis has raised VC funding from such firms as Alafi Capital, Life Sciences Partners and Prelude Ventures, while Celmed backers have included Aladi, BioVeda Capital, Cheng Xin Technology Development Corp., Fat Capital Management, GeneChem Financial, HMCH Ventures, IronWood Ventures, Shea Ventures, Life Sciences Partners and Timkin Trust.

Firm & Fund News

3i Group has formed a new group to buy significant stakes in underperforming public companies in Europe. Bruce Carnegie-Brown, former UK head of insurance company Marsh, will serve as managing partner. Other founding partners include: Stephen Hill, former CEO of online gambling company Betfair; Richard Segal, former CEO of PartyGaming; and existing 3i partner Alan MacKay.

Westham Capital Partners, a Richmond, Va.-based private equity firm, has formed a strategic partnership with Stamford, Conn.-based Atlantic Street Capital Management. Under the terms of the agreement, Westham will serve as an outsourced business development partner and co-investor, providing coverage of deal sources located throughout most of the United States.

Human Resources

Peter Keen has joined Espirit Capital Partners as a partner. He previously was CFO of Arakis Ltd., and before that co-founded venture capital firm Merlin Biosciences.

Ted Ridgway has joined banking boutique Seven Hills Partners as a partner in its technology, media and telecom practice. He previously was a vice president and general manager atRadiSys Corp., (Nasdaq: RSYS).