PE Week Wire, Nov. 7, 2006

Maurice Gunderson is looking to become a roots investor. This is different from a seed investor or early-stage investor, since both of those refer to the age of prospective portfolio companies. What Gunderson wants to do is examine the root causes of an energy industry dilemma, so that the larger market can flourish in the future.

Gunderson is a veteran venture capitalist, having co-founded Nth Power back in 1993. He retired from the firm in March – just as it began raising its fourth fund – and last month quietly reemerged as a venture partner with CMEA Ventures (as we all know, VC “retirement” is usually code for “changing jobs”).

He says that he is looking for companies at the convergence of advanced materials, biotech and energy. What does that mean? He wants to improve the efficacy of crops that are being grown for the purpose of energy production.

“The current feedstocks for ethanol and biodiesel – things like corn and soy – are optimized for food, not energy,” Gunderson explains. “We need to learn what types of efficiencies and economies we can get by optimizing agriculture for fuel… These new crops might not taste very good, but they won’t be used for cooking.”

This could be a very lucrative market, considering how much money VC and LBO shops are pouring into new ethanol and biodiesel production facilities (which really is project finance more than traditional private equity). There are obviously a number of hurdles – molecular development, convincing farmers to change crops, etc. – but it’s always a smart bet to improve the efficiency of an input product when so many people are focused on its output.

*** A bunch of news broken on the first day of Allan Karp resigned as co-CEO of Apax Partners U.S., while the firm’s consumer/retail group head Chris Reilly has also quit. We’ve got more personnel movement at Pacific Corporate Group, and my colleague Larry Aragon reports on new funds coming from both Silver Lake Partners (a middle-market one) and Garnett & Helfich.

*** Today, we’ve got a trio of new Vox Populi postings:

• Arthur Klausner, a partner with Pappas Ventures, writes about VCs and the Public Markets.

• Erick Hirsch, CIO of Hamilton Lane, argues that LPs need to recognize that the private equity market is changing.

• Mike X, an endowment manager who I’ve granted blogging anonymity, asks if Hertz is the Best Flip Ever?

*** I’m aware that we’re having some issues with the RSS feeds — they should be fixed shortly.

*** Finally, it’s election day here in the States. Just two Wire-endorsed candidates left. Go Lamont and Mahoney (reminder: Wire endorsements are based completely on resume, not on party affiliation or stands on particular issue). Tomorrow I’ll have a full roundup of how the VenturePAC-supported candidates performed…

Top Three

Aozora Bank, a Japanese lender majority-owned by Cerberus, raised approximately $3.2 billion via an IPO on the Tokyo Stock Exchange. The offering priced at 570 Yen-per-share, which was the low end of its 550-610 Yen-per share offering range.

NewHope Bariatrics, a Charlotte, N.C.-based operator of ambulatory surgery centers for the treatment of obesity, has raised $18.5 million in private equity and debt funding from Austin Ventures, Versant Ventures and Square 1 Bank.

Allan Karp has resigned as co-CEO of Apax Partners U.S. Also resigning is Chris Reilly, head of the firm’s retail and consumer group.

VC Deals

Access 360 Media (f.k.a. Access Retail Entertainment), a Culver City, Calif.–based in-store entertainment network targeting young adult consumers, has raised $4.25 million in Series A funding from Bessemer Venture Partners. The deal closed back in April.

SodaHead Inc., a Santa Clarita, Calif.-based social networking startup, has raised $4.25 million in Series A funding led by Mohr Davidow Ventures, according to a regulatory filing.

FanLib Inc., a Hollywood, Calif.-based provider of online user-generated entertainment content, has raised around $3 million in Series A funding led by H.I.G. Ventures, according to a regulatory filing.

Gecko Audio Inc., a Palo Alto, Calif.-based developer of network audio products, has raised $3 million in Series A funding led by Technology Venture Partners (Australia), according to a regulatory filing.

Verient Inc., a Cupertino, Calif.-based stealth-mode tech startup, has secured $2.13 million of an $8.45 million Series A round led by Global Catalyst Partners, according to a regulatory filing.

Wavesat, a Canadian supplier of WiMax chipsets and software, has raised an undisclosed amount of strategic funding led by SK Telecom. VentureWire puts the total round at US$6 million ($3.8m from SK Telecom), with return backers including BDC Venture Capital and Monet Capital.

Wireless Technology Partners, a Luxembourg-based wireless VoIP startup, has raised an undisclosed amount of seed funding from Add Partners.

Buyout Deals

Macquarie Infrastructure Partners has agreed to acquire Halterm Ltd., operator of a shipping terminal at the Port of Halifax, Canada. The deal is valued at approximately Cnd$172.75 million.

3M is considering a sale of its pharmaceuticals division (mostly generics), according to The Economic Times. The paper reports that the deal could be worth up to $1 billion, with likely suitors including Warburg Pincus and Indian drug companies Ranbaxy and Wockhardt.

Private equity firms reportedly are abandoning their efforts to acquire France-based sports marketing agency Sportfive SA, due to opposition from France’s Football Authority. Interested firms had included Hellman & Friedman (teamed with WPP), Apollo, Cinven and Permira. Only strategic bidders remain. The deal is expected to be worth between 800 million and 1 billion euros.

PE-Backed IPOs

This week’s IPO calendar includes expected pricings from AdCare Health Systems Inc., OneBeacon Insurance Group Ltd., Canadian Solar Inc., KBW Inc., Thermage Inc., Metabolix Inc., Physicians Formula Holdings Inc. and ACA Capital Holdings.

PE-Backed M&A

United BioSource Corp., a Bethesda, Md.-based provider of evidence-based services and information to the pharma and life sciences markets, has acquired BioCor LLC, a Yardley, Pa.-based provider of clinical data services to the pharmaceutical and biotechnology industries. No financial terms were disclosed. United BioSource is backed by Grotech Capital Group, J.W. Whitney and Oak Investment Partners.

PE Exits

CVC Capital Partners and PAI Partners have retained Goldman Sachs to help sell their positions in French animal feed company Provimi, according to Financial News Online.

Firm & Fund News

TXU Corp. (NYSE: TXU) has formed a $200 million venture capital fund focused on next-generation energy technologies.

Kodiak Venture Partners has begun to form a board of advisors. Its first two members are: Atiq Raza, founder and CEO of Raza Microelectronics; and Mike Volpi, senior vice president for Cisco’s service provider group and routing technology group.

Human Resources

Pauline Brown has joined The Carlyle Group as a managing director in the firm’s Consumer & Retail group. She previously was with Avon Products Inc., as senior vice president for corporate strategy and global business development.

Charles Burke, former CEO of plumbing and heating products company Wolseley PLC (NYSE: WOS) has joined Clayton, Dubilier & Rice as a New York-based partner.

Matthew Barger has decided to retire as vice chairman of Hellman & Friedman, according to Bloomberg. He will remain as a senior advisor to the firm.

Jim Kilts, former CEO of Gillette Co. and co-founding partner of Centerview Partners, has agreed to join VNU NV’s supervisory board.

Dennis Barsky has joined Jones Day as a partner. He previously was with Weil, Gotshal & Manges, where he focused on M&A and private equity transactions.

Enrique Martin has joined Greenberg Traurig LLP as a Miami-based shareholder within the global practice group, where he will focus on domestic and cross-border acquisitions, domestic and foreign issuer securities offering and venture capital transactions. He previously was a partner with Hunton & Williams.

Global Life Science Ventures of Germany has promoted both Holger Reithinger and Stephen McCormack to partner, according to VentureWire.

Keith “Kim” Schappert has joined Credit Suisse as managing director and CEO of the Americas for Asset Management. He most recently was president and CEO of Federated Investment Advisory Cos.

David Sweig has joined Piper Jaffray as a Chicago-based partner in the firm’s financial restructuring group. He most recently worked at Giuliani Capital Advisors in Chicago, where he was a managing director focused on financial restructurings.