Oaktree Capital Management has decided to help loosen some of the “hung bridges” that are currently strangling Wall Street. Sources tell me that the Los Angeles-based firm is raising between $3 billion and $5 billion for a new fund that will buy up LBO-related debt that banks have been unable to place. It is being marketed with a small management fee and no carry — which stands in stark contrast to the 20% carry Goldman Sachs is employing for its $1 billion-targeted fund bridge fund (as first reported here last week).
Oaktree plans to spend most of the fund capital on current hung bridges, which means that it could be effectively committed within months of a final close (expect fundraising to go very quickly). That said it’s also holding a pool of approximately 20% for opportunistic deals that fall outside of the bank debt bailiwick. The fund has a one-year recycle and up to a seven-year liquidation. One important note is that it is unlikely to do any European deals, as Oaktree already has a separate vehicle for such transactions (which does have a carry).
In addition to Oaktree and Goldman, there is a report today from The Deal that Lehman Brothers is also raising more than $2 billion for its own hung bridge fund. You’ve also got a variety of hedge funds raising similar pools – plus numerous private equity firms using existing fund capital in select situations.
*** Microsoft yesterday announced that it is acquiring Parlano Inc., a Chicago-based maker of the MindAlign enterprise group chat application. Seems like a typical deal, but Parlano has an unusual funding history.
The company was originally formed back in 2003, when Golden Gate Capital and Oak Investment Partners acquired the collaboration assets of Divine Inc. Yes, take a moment to realize that something good came of Divine. Ok, are we back? Good.
What’s unusual is that Golden Gate is no longer listed as a Parlano shareholder. Instead, the company’s website identifies Oak and Longworth Venture Partners. Paul Margolis of Longworth explains that Longworth actually bought out Golden Gate back in October 2004, and later participated in a follow-on round for Parlano in 2006. When else have you heard of a relatively small VC firms acquiring a portfolio company position from a large buyout firm? Not often…
*** Corporate venture capital is on the rise, according to new data released this morning by PwC, NVCA and Thomson Financial. Get more info here, including some exclusive raw data.
Top Three
Zayo Bandwidth, a Louisville, Colo.–based regional provider of fiber-based network services, has secured access to $225 million in private equity funding. Backers include Columbia Capital, M/C Venture Partners, Oak Investment Partners, Battery Ventures and Centennial Ventures. Zayo is run by former ICG Communications and Level 3 Communications executives Dan Caruso and John Scarano, and recently acquired two companies: PPL Telcom, a 4,600 fiber-route-mile network serving areas throughout the Northeast, and Memphis Networx, a 200 fiber-route-mile network serving the greater Memphis area. It also today announced agreements to acquire both Indiana Fiber Works of Ind! ianapolis and Onvoy Inc. of Minneapolis. Combined, the four companies represent $125 million of annual revenue and 8,400 route miles of fiber. www.zayo.com
Goldman Sachs Capital Partners and Madrone Capital Partners have agreed to make a $1 billion equity investment in privately-held hotelier Global Hyatt Corp. The infusion is in exchange for an undisclosed minority stake, with one representative of both Goldman and Madrone to take a Hyatt board seat. Hyatt is controlled by the Pritzker family, while Madrone is affiliated with the Walton family of Wal-Mart fame. Read more
Presidio Pharmaceuticals Inc., a San Francisco-based drug company focused on small-molecule compounds to treat HIV-1, HCV and other chronic viral infections, has raised $26 million in Series B funding. Panorama Capital led the deal, and was joined by Baker Brothers Investments, Bay City Capital, Ventures West Capital and Nexus Medical Partners. Returning Series A backers included Sagamore Bioventures, George Rathmann Fund and Peninsula Overview Partners. www.presidiopharma.com
VC Deals
EndoGastric Solutions Inc., a Redmond, Wash.-based medical device company focused on endoluminal reconstructive gastric procedures, has raised $30 million in Series D funding. DeNovo Ventures led the deal, and was joined by return backers Advanced Technology Ventures, Chicago Growth Partners, Foundation Medical Partners, MPM Capital and Oakwood Medical Investors. The company raised a $32 million Series C round in early 2006. www.endogastricsolutions.com
Aquantia Corp., a Milpitas, Calif.-based developer of physical-layer transceiver ICs, has secured $19.17 million of a $25 million Series B round, according to a regulatory filing. Pinnacle Ventures was joined by return backers Lightspeed Venture Partners and Greylock Partners. The company closed its first round in 2005 with over $12 million. www.aquantia.com
BridgeCo Inc., a Los Angeles–based provider of digital home networking solutions, has raised $17 million in new private equity and debt funding. ETV Capital provided $9 million in debt, while equity came from return backers Advent Venture Partners, Balderton Capital, Cipio Partners, Earlybird Venture Capital, Fidelity Ventures, Intel Capital and Wellington Partners. BridgeCo previously had raised around $44 million. It focuses on processor IC and software platforms that connect consumer electronics to computers and the Internet. www.bridgeco.com
Helixis Inc., a Carlsbad, Calif.-based developer of molecular diagnostics products, has raised $10 million in Series A funding co-led by Domain Associates and Okapi Venture Capital. Jim Blair or Domain and Sharon Stevenson of Okapi will take Helixis board seats. Helixis is led by Alex Dickinson, co-founder and former CEO of Luxtera Inc. www.helixis.com
Grocery Shopping Network Inc., a Minneapolis–based provider of consumer-facing software for grocery retailer websites, has raised $7 million in Series A funding. VantagePoint Venture Partners led the round, with managing director David Carlick taking a board seat. Houlihan Smith & Company advised Grocery Shopping Network on the deal. www.groceryshopping.net
Innovectra Corp., a Vienna, Va.-based developer of an online yellow-and-white pages directory platform, has secured around $1.79 million of a $2.3 million Series C round, according to a regulatory filing. Return backers include Longworth Venture Partners and Edison Venture Fund. www.innovectra.com
Mogad Inc., a San Francisco-based Web 2.0 startup, has raised $500,000 in Series A funding led by Felicis Ventures, according to a regulatory filing. The company allows online users share information on what is consuming their attention. www.mogad.com www.felicisvc.com
GlassHouse Technologies Inc., a Framingham, Mass.-based provider of storage consulting and services, has raised $16 million in convertible note financing. Hedge fund LRG Capital Group led the deal (via BayStar Capital III), and was joined by Velocity Capital Group and Leader Ventures. GlassHouse previously raised over $64 million in VC funding from firms like GrandBanks Capital, Jafco, Kodiak Venture Partners, Montagu Newhall Associates, Paladin Capital Management, Shiprock Capital and Sigma Partners. www.glasshousetech.com
Buyout Deals
Alltel Corp. (NYSE: AT) shareholders have approved a $71.50 per share buyout by TPG and GS Capital Partners. The total deal is valued at $27.5 billion, with leveraged financing being provided by Goldman Sachs, Citigroup, Barclays and RBS. Alltel is being advised by Merrill Lynch, Stephens Inc. and JP Morgan Securities. Its CEO Scott Ford will remain in place post-buyout. www.alltel.com
Bain Capital has received FTC approval for its pending acquisition of the Bath and Kitchens products business of American Standard Companies Inc. (NYSE: ASD). The total deal is valued at just under $1.76 billion, with Bank of America and Credit Suisse providing leveraged financing. Lazard is advising ASD on the sale, while Bain is being advised by Lehman Brothers.
Blue Point Capital Partners has sponsored a recapitalization of WDC Exploration & Wells, a Woodland, Calif.–based provider of contract drilling services. Blue Point and company management provided equity, while debt financing was provided by Emporia Capital, Madison Capital, Merrill Lynch Capital and NewStar Financial. No additional terms were disclosed. WDC was advised by Citi Capital Strategies. www.wdcexploration.com
Bunker Hill Capital has completed its $11 per share buyout of steakhouse chain Smith & Wollensky. The $94.6 million deal was done in partnership with Nick Valenti and Joachim Splichal, who will run Smith & Wollensky. www.smithandwollensky.com
General Atlantic has acquired a 33% stake in Torex Retail Holdings Ltd., a global provider of IT solutions for the retail, hospitality, convenience and petroleum industries. No financial terms were disclosed. Torex also counts Cerberus Capital Management among its shareholders. Much of the Torex management team previously worked with GA and Cerberus while with SSA Global. www.torexretail.com
Imagin Natural Resources LLC has received $200 million in private financing commitments from Natural Gas Partners’ Midstream & Resources Fund and Barclays Capital’s commodities principal investment team. Imagin is a Richmond, Va.-based investment firm focused on mining companies, mining operations, reserve positions and other mining related interests like docks, terminals and transportation. It has a particular focus on coal in North America and Europe, but will diversify in terms of both mineral and geography.
Continental Energy Corp. (OTC BB: CPPXF) has received a $3.25 million PIPE infusion from Macquarie Bank. The deal includes five million common shares at $0.65 per share. It also includes 10 million attached warrants that, when exercised, would be worth an additional $9 million. CEC is an oil and gas exploration company focused exclusively on Indonesia. www.continentalenergy.com
PE Exits
Agribusiness Partners International has sold Russian poultry producer Chicken Kingdom to Cherkizovo Group (LSE:CHE). The deal is valued at approximately $143 million, plus the assumption of long-term debt. Chicken Kingdom reported 2006 sales revenue of $109 million, and EBITDA of $23 million. www.amc-api.com
RoundTable Healthcare Partners has agreed to sell MedAssist Holding Inc. to an affiliate of Firstsource Solutions Ltd., a listed business process outsourcing company based in Mumbai, India. The deal is valued at $330 million in cash. MedAssist is a Louisville, Ky.-based provider of outsourced revenue cycle management services to the healthcare industry, including eligibility services, receivable management services, and collections services. RoundTable acquired a majority stake in MedAssist in 2004, and supported subsequent acquisitions of Argent Healthcare Financial Services, Twin Medical Transaction Services and Capstone Solutions LLC. www.roundtablehp.com www.medassistgroup.com
PE-Backed M&A
The Federal Trade Commission has asked Intel Corp. for more information on its proposed deal with Switzerland’s STMicroelectronics NV. The companies, along with private equity firm Francisco Partners, plan to form a new company that will buy up Intel’s and STMicroelectronics’ NOR flash businesses. Intel said it would respond to the request promptly. www.intel.com
TheFind Inc., a Mountain View, Calif.-based shopping search engine, has acquired Glipse.com, a fashion shopping website operator that was formed less than a year ago. No financial terms were disclosed. TheFind has raised around $26 million in VC funding from firms like Bain Capital Ventures, Redpoint Ventures and Lightspeed Venture Partners. Glipse.com had raised an undisclosed amount of funding from Greylock Partners and Redpoint Ventures. www.thefind.com www.glipse.com
Norvestor has acquired Nordic travel companies Seat24 Travel AB and SRG Online AB, and merged them into a single entity called European Travel Interactive AB. No financial terms were disclosed. www.norvestor.com
Firms & Funds
Silver Lake Partners has secured over $726 million for its debut middle-market fund, according to a regulatory filing. The fund is named Silver Lake Sumeru, and is being marketed with a $750 million target and $1 billion cap. www.silverlake.com
Human Resources
Nirav Tolia and Sarah Leary have joined Benchmark Capital as entrepreneurs-in-residence. Tolia is the former COO of Shopping.com and, before that, was co-founder and CEO of Epinions. Leary also held executive positions at Epinions and Shopping.com, serving as vice president of several product and marketing groups. www.benchmark.com
U.S. Venture Partners has promoted Rick Lewis to principal. He joined the firm in 2004 to focus on IT opportunities, and led the firm’s investment in myYearbook.com. He also works closely with USVP portfolio companies Intermolecular and Instantis. www.usvp.com
Alain Carrier reportedly is leaving Goldman Sachs, where he had been a London-based managing director in the telecom, media and technology space. The Telegraph says that he will take a job in the Canadian government. Carrier has advised on such deals at NTL’s merger with Telewest and its takeover of Virgin Mobile. www.goldmansachs.com
Janice O’Brien has been named vice president of finance with Wildlands Inc., a Rocklin, Calif.-based private mitigation and conservation banking firm. She previously was chief financial officer of American River Ventures.
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