PE Week Wire, Sept. 27, 2006

Apologies for the light opining so far this week, but I’ve been consumed by news overload and meetings related to a new project I’m working on (details to come shortly). In the meantime, some quick content to fill your appetites…

*** Clint Chao of Formative Ventures on his investment litmus test: Does he want to be your VP of sales?

*** Andy Sack of Judy’s Book with some simple ideas on removing the boredom from the boardroom.

*** NY Times Dealbook learns that Wall Street acumen does not necessarily translate to thegolf course.

*** QuizTime: While Morgan Stanley re-enters the private equity market, other I-banks continue to leave. Can you name the most recent big-name bank whose private equity team has gone independent? Or perhaps the latest insurance company fund-of-funds group that’s doing the same?

*** No major bombshells during yesterday’s AA Capital hearing in Chicago – mostly just procedural matters. But I do have some info on the union pension systems that allegedly were defrauded. They are: Carpenters Pension Trust – Detroit & Vicinity, Operating Engineers Local 324, Michigan Teamsters Joint Council #43, Millwright Local 1102 Supplemental Pension Fund, Michigan Regional Council of Carpenters Annuity Fund and Arkansas/Oklahoma Regional Council of Carpenters.

*** Finally, one last reminder: Please participate in our Reader Survey. It will only take a few minutes. Thanks to all who did so yesterday. It is much appreciated.

Top Three

Acquicor Technology Inc. (AMEX: AQ) has agreed to acquire Jazz Semiconductor Inc., via a $260 million reverse merger. Acquicor is a blank check acquisition company formed earlier this year by former Apple Computer executives Gilbert Amelio, Ellen Hancock and Steve Wozniac. Jazz is a Newport Beach, Calif.-based wafer foundry that was formed in 2002 by The Carlyle Group, Conexant Systems Inc. and RF Micro Devices Inc. Jazz had been in registration for a $105 million IPO. The reverse merger is expected to close in Q1 2007.

Visto Corp., a Redwood City, Calif.-based mobile access company, has raised $51 million in new venture capital funding. Return backer Oak Investment Partners led the deal, and was joined by DFJ Growth Fund and other existing shareholders like Meritech Capital Partners, DFJ ePlanet Ventures, Rustic Canyon Ventures and Blueprint Ventures. Visto has raised over $250 million in total VC funding since its 1996 inception, including a recap in 2001.

Centerbridge Partners has closed its inaugural fund with $3 billion in capital commitments. The New York-based firm was launched by Mark Gallogly and Jeffrey Aronson — formerly of Blackstone Group and Angelo Gordon, respectively – and will focus on private equity and distressed securities opportunities.

VC Deals

Neusoft Group Ltd., a Shanghai-based software and solutions provider, has raised $40 million in strategic funding from Intel Capital. Under terms of the agreement, Neusoft will establish a “solution performance optimization competency center” based on Intel architecture and platforms. The deal is subject to regulatory approvals.

NeoGuide Systems Inc., a Los Gatos, Calif.-based developer of technology to prevent and treat colorectal cancer, has raised $25 million in Series C funding. Advent Venture Partners led the deal, and was joined by Rockport Capital Partners and return backers Versant Ventures, Utah Ventures, 3i, Kaiser Permanente Ventures, Arboretum Ventures, SBV and The Angels Forum/Halo Fund.

GridPoint Inc., a Washington, D.C.-based provider of energy management products, has raised $21 million in strategic third-round funding led by Goldman Sachs. GridPoint raised a $16 million Series B deal earlier this year from Altira Group, Contango Capital and Advantage Capital Partners.

DeepStream Technologies Ltd., a UK-based provider of 3D packaged embedded sensor technology for electromechanical products, has raised $15.4 million in Series B funding. 3i Group led the deal, and was joined by return backer Doughty Hanson Technology Ventures.

Conduit Capital Partners has made two new investments in Mexico, via its recently-closed $393 million Latin Power III fund. They are: $9 million for Benito Juarez, a hydroelectric power plant project in Oaxaca; and $8.8 million for SOGAP V, which consists of nine peak-shaving and cogeneration projects for sites in six different Mexican states. The SOGAP plants will provide energy services to Controladora Mabe SA de CV, which is a 48%-owned subsidiary of General Electric.

Ario Data Networks, a San Jose, Calif.-based provider of mid-sized enterprise storage solutions, has raised $8 million. Clearstone Venture Partners and Partech International co-led the deal, and were joined by fellow return backers Mellon Ventures, Evercore Partners, Anthem Venture Partners and Sunsino Ventures.

oDesk Inc., a Palo Alto, Calif.-based online marketplace for hiring global technical talent and provider of Web-based tools for managing remote staffers, has raised $8 million in Series B funding. Benchmark Capital led the deal, and was joined by return backers Globespan Capital Partners and Sigma Partners.

Anodyne Health Partners, a Falmouth, Maine–based provider of revenue cycle management solutions for healthcare providers, has raised $5.6 million in new venture capital funding. Backers include Brook Venture Partners, Frontier Capital, Brooke Private Equity Advisors and the Small Enterprise Growth Fund.

Auctionpay Inc., a Portland, Ore.-based provider of fundraising software and service solutions for the nonprofit community, has raised $5.5 million in Series B funding from Appian Ventures and return backer Maveron.

GuardID Systems Inc., a San Mateo, Calif.-based company focused on the prevention of online identity theft and fraud, has raised $5 million in first-round funding from Trinity Ventures.

OpenLogic Inc., a Broomfield, Colo.-based provider of open-source enterprise software stacks and support services, has raised $4.3 million in second-round funding. Backers include UV Partners, Appian Ventures, Village Ventures, Highway 12 Ventures and Red Rock Ventures.

ETelemetry Inc., an Annapolis, Md.-based developer of network appliances that track such things as bandwidth usage and desktop computing assets, has raised $4 million in first-round funding led by Centripetal Capital Partners. The company was founded in 1999.

Crux Biomedical Inc., a Portola Valley, Calif.-based medical device startup from former NeoPath and Bacchus Vascular executive Mel Schatz, has raised around $3.85 million in Series A funding, according to a regulatory filing. Backers include Alloy Ventures and Dr. Thomas Fogerty.

CardioSpectra Inc., a San Antonio, Texas-based developer of a fiber optic-based cardiac catheter to produce real-time, high-resolution images of vulnerable plaque, has secured $1.5 million of a $2.5 million Series B round, according to a regulatory filing. Shareholders include ATP Partners, Scientific Health Development Ltd. and the University of Texas.

NitroSecurity Inc., a Portsmouth, N.H.-based provider of enterprise network security solutions, has secured $2 million of a $5 million Series C round, according to a regulatory filing. Brookline Venture Partners was joined by return backer First Analysis Corp.

Genesis Networks Inc., a New York–based provider of global video transmission services over fiber and satellite, has raised an undisclosed amount of second-round funding from Longworth Venture Partners and Masthead Venture Partners.

NextNine Inc., an Israel-based provider of support automation solutions, has raised an undisclosed amount of new VC funding led by Motorola Ventures. Return backers include Ascend Technology Ventures, Infinity Venture Capital Fund, Ofer Hi-Tech, Yozma Venture Capital Group, Morgan Stanley Dean Witter Private Equity and Redwood Venture Partners. The company previously had raised $34 million in total VC funding since its 1999 inception.

Buyout Deals

Duke Street Capital has agreed to acquire UK-based IT services company 2e2 from Gresham Private Equity for £130 million.

Sandler Capital Management has acquired substantially all of the assets of the Crafts Group from Primedia Inc. (NYSE: PRM) for approximately $132 million in cash. The group will be renamed Enthusiast Media LLC, and publishes nine consumer publications like Creating Keepsakes and McCall’s Quilting.

H.I.G. Capital has agreed to acquire Severn Trent Laboratories Inc., an environmental testing firm with 31 laboratories throughout the United States. H.I.G. plans to merge Severn Trent with existing H.I.G. portfolio company TestAmerica.

Audax Group has acquired a majority of Flexstar Technology Inc., a Fremont, Calif.-based provider of data storage testing solutions. No financial terms were disclosed. Rigel Associates and company management also participated in the deal’s equity tranche, while Comerica provided senior leverage financing.

American Industrial Partners and Steel Partners have agreed to acquire Collins Industries Inc. (OTC BB: CNSI) for $12.50 per share. The entire transaction is valued at approximately $110 million, including assumed debt and expenses. Collins Industries is a Hutchinson, Kansas–based ambulance manufacturer, and is being advised on the sale by George K. Baum Advisors.

WHI Capital Partners has acquired Container Recycling Alliance, the glass recycling division of Waste Management Inc. (NYSE: WMI). No financial terms were disclosed.

Blake Offshore LLC, a New Orleans-based owner and operator of seven offshore drilling rigs, has raised $51 million from Avista Capital Partners. The deal is in the form of subordinated notes and Class B units that will be used to retire senior notes and finance remaining costs associated with the upgrades of two rigs.

PE-Backed IPOs

Mindray International Medical Ltd., a China-based medical device maker, priced 20 million American depository shares at $13.50 per share, for an IPO take of approximately $270 million. It is trading on the NYSE under ticker symbol MR, with Goldman Sachs (Asia) and UBS having served as lead underwriters. GS Capital Partners held a 9.64% pre-IPO position.

EV Energy Partners LP of Houston, Texas has priced 3.9 million LP interests at $20 per share, for an IPO of approximately $78 million. It will trade on the Nasdaq under ticker symbol EVEP, while Raymond James and A.G. Edwards served as co-lead underwriters. The company was formed earlier this year by EnerVest to acquire, produce and develop oil and gas properties. EnCap Investments also is a shareholder.

CVR Energy Inc., a Sugar Land, Texas-based producer of ammonia and urea-ammonia nitrate, has filed to raise $300 million via an IPO of common stock. Shareholders include Goldman Sachs and Kelso & Co.

PE-Backed M&A

Rutland Holdings, the parent company of UK-based Rutland Plastic Technologies Inc., has agreed to acquire Union Ink Co., a provider of services and technologies to the textile screen printing market. No financial terms were disclosed. Union Ink Co. has offices in both Ridgefield, N.J. and Paddock Wood, England. Rutland is controlled by HSBC Capital.

PE Exits

PepsiCo has acquired IZZE Beverage Co., a Boulder, Colo.-based maker of all-natural sparkling fruit juices. No financial terms were disclosed. Sellers include Sherbrooke Capital Partners, Greenmont Capital Partners and Tango Partners.

3i Group and property company Lar are planning to sell their respective 20% stakes in Spanish residential homes operator Ballesol, according to Expansion. The company is believed to be valued at approximately €80 million.

Other Deals

Block Interest Discovery Service (BIDS) has launched as an alternative trading system for the block trading market. It is being backed by six brokerage firms, although no financial terms were disclosed. The firms are: Citigroup, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS. A CEO announcement will come within the next few weeks, with trading expected to commence in early 2007.

Firms & Funds

Morgan Stanley is reentering the private equity business; with a new group headed by former Goldman Sachs pro Stephen Trevor and current Morgan Stanley corporate finance chief Alan Jones. Morgan Stanley spun off its private equity business in 2004, with the resulting independent firm being called Metalmark Capital.

NGEN Partners has closed its second venture capital fund with $180 million in capital commitments. The Santa Barbara, Calif.-based firm focuses on cleantech companies that are primarily enabled by advances in materials science.

Actis has raised $70 million in new LP commitments for a mid-market private equity fund focused on opportunities in Southeast Asia. This capital is being added to an initial $60 million that was committed when the fund was slated to focus exclusively on Malaysia, for a fund total of $130 million.

Baker Brothers Investments of New York has raised $251 million for a life sciences and biotech fund, according to a regulatory filing. Limited partners include the University of Chicago and Howard Hughes Medical Institute.

Westshore Capital Partners has launched to focus on small-market buyouts and recapitalizations in the U.S. and Canada. The firm’s three principals are: David Malizia, (formerly with Florida Capital Partners), Earl Powell (Trivest Partners) and Andy Krusen (Dominion Financial Group).

Preston Gates & Ellis of Seattle reportedly is in talks to merge with fellow corporate law firm Kirkpatrick & Lockhart Nicholson Graham of Pittsburgh.

Human Resources

Elizabeth Varley Camp has joined Healthpoint Capital as a managing director. She previously headed the business engagement team at Ewing Management Group. Before that, she was a managing director in the private equity group of Goldman Sachs.

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