PE Week Wire: Thurs, Jan. 10, 2008

It’s been about 24 hours since we learned that Silver Lake Partners has sold a piece of itself to CalPERS. So who’s next? Here’s my stab at playing oddsmaker, among U.S.-based firm that have raised (or are raising) funds of $7 billion or more.


2-1. “The most likely firm to sell an ownership stake is always going to be the firm closest to going public,” says someone who helps arrange such deals. So that would be KKR, even though we can all agree that the IPO is a disaster-in-waiting (never buy stock when the prospectus’ use of proceeds section says: “To prove mine is bigger”).


3-1. Biggest, baddest brand left on the board. It also has a leader smart enough to hold his ostentatious parties in Vegas, where every party is ostentatious. No other firm on this list has had more buzz about a possible ownership stake sale, or had more pre-credit-crunch IPO predictions. Oh, and it’s finally the right time to have a venture capital arm.

Bain Capital

6-1. This one has most of the right ingredients, but it just doesn’t feel like a go. Maybe if the Celtics had drafted Yi Jianlian and Romney still had a chance of being elected president. Plus, why sell a piece when you’re getting 30% carry?

Warburg Pincus

10-1. The most idiosyncratic of private equity firms, with a single fund to do billion dollar buyouts and few million dollar startups. It works for them, but kind of hard for an outsider to get his head around. Walks to the beat of its own drummer, and these odds are all about following the crowd. Of course, there once were these three drummers: The Brown Brothers and Old Man Harriman.

First Reserve Corp.

16-1. Last week, I would have told you that the energy-only focus was a detriment. But then tech-only Silver Lake sells a piece, and industry diversification doesn’t seem as important. Plus, First Reserve’s performance is strong enough to make grown LPs cry.

Madison Dearborn Capital Partners

16-1. Chicago-based firm known for investing in basic industries? Just lacks the sex appeal that seems to drive decision-makers in Dubai and Sacramento. Plus, carried interest at MDCP is broadly distributed, with no one individual receiving double-digit points (out of 100). Does that sound like a particularly greedy bunch to you?

Thomas H. Lee Partners

20-1. A lot of these deals are done to help senior managers recognize brand equity, but that isn’t really in play at THL. The firm bought out namesake Tom Lee back in 1999, and its current top dogs are still relative pups.

Apollo Management

75-1. Leon Black now needs to turn his attentions to something new, with Chris Dodd falling out of the presidential race. And this is a firm that still very much wants to go public. The sale last year to Abu Dhabi may just be an appetizer.

The Carlyle Group

80-1. They’ve done this twice already — first with CalPERS, and then with Abu Dhabi. Never trust an addict.

The Blackstone Group

100-1. Never say never with Blackstone, which probably walked down the road a bit with other suitors before settling on China. But today’s share buyback indicates that it’s moving in the opposite direction.

Silver Lake Partners

150-1. That was it. Silver Lake isn’t yet big enough to justify another sale, nor are its senior partners old enough. Good to get the institutional seal-of-approval, though.

Goldman Sachs Capital Partners

Off the board, since it never really owned itself to begin with. Its parent bank, however, can be found on a board around the corner.

Top Three

The Blackstone Group has agreed to acquire GSO Capital Partners, for approximately $930 million. The cash and stock deal will be partially financed via Blackstone’s buy back of $500 million in shares.

Tethys Bioscience, an Emeryville, Calif.-based developer of multi-biomarker technology, has raised an undisclosed amount of Series C funding. Intel Capital led the round, and was joined by return backers Kleiner Perkins Caufield & Byers and MDV. The company has now raised a total of $54 million, including a $5.3 million Series A round in 2005 from MDV.

Tony Blair has joined JPMorgan Chase as a senior advisor. The former British Prime Minister will advice JPMorgan’s CEO and senior management team on a part-time basis, and also will join the firm International Council.

VC Deals

Zogenix Inc., a San Diego-based drug company focused on pain management and CNS disorders, has raised $18 million in second-round funding. Abingworth Management led the round, and was joined by return backers Clarus Ventures, Domain Associates and Scale Venture Partners. The company previously raised a $60 million Series A round.

Canopy Financial, a San Francisco-based provider of technologies for connecting healthcare and financial services, has raised $15 million in VC funding. Granite Global Ventures led the round, with Financial Technology Partners serving as placement agent.

Jingle Networks Inc., a Menlo Park, Calif.–based operator of a national consumer telephone directory assistance service, has raised nearly $13 million in Series C-1 funding, according to a regulatory filing. Listed shareholders include Goldman Sachs, IDG Ventures Boston, Liberty Associated Partners and First Round Capital. The company had closed on a $30 million Series C round last October, with the aforementioned investors, plus Comcast Interactive Capital, Hearst Corp. and Lead Dog Ventures.

Outspark Inc., a San Francisco-based provider of a “virtual playground” for online gamers , has raised $11 million in Series B funding. Tencent Holdings Ltd. of China led the round, and was joined by return backers Altos Ventures and DCM.

Cardiovascular Systems Inc., a St. Paul, Minn.-based developer of a device for debulking atherosclerotic plaque in coronary and peripheral vessels, has secured $11.22 million of a $22 million Series B round, according to a regulatory filing. Return backers include Easton Hunt Capital Partners and Maverick Capital.

RadioFrame Networks Inc., a Redmond, Wash.-based provider of a platform for converging mobile voice and data, has secured $8.37 million of a $30 million Series F round, according to a regulatory filing. Return backers include Ignition Partners, Nextel Ventures, Ericsson Venture Partners and VantagePoint Venture Partners. The company had previously raised around $78 million since 2001.

Nexxo Financial Corp., a San Bruno, Calif.-based provider of financial services for international monetary remittance, has raised around $7.5 million in Series C funding, according to a regulatory filing. Return backers include Menlo Ventures and Sutter Hill Ventures. The company had previously raised around $23 million.

Escoublac Inc. has secured $6.65 million of a $10.9 million Series A round, according to a regulatory filing. The Columbia University spinout is being incubated by Biogen Idec, and focuses on treatments for Type II diabetes.

DevonWay Inc., a San Francisco-based provider of on-demand web services for improving work processes, has raised $6.5 million in Series A funding led by Crosslink Capital, according to a regulatory filing.

Carbon Design Systems Inc., a Waltham, Mass.-based maker of EDA tools for virtual hardware models, has raised $6 million in Series E funding. Return backers include Commonwealth Capital, Flagship Ventures and Matrix Partners. The company has now raised nearly $40 million in total VC funding since its 2002 inception. Get more info.

Channel M Inc., a Los Angeles-based developer of video content for retailers, has raised $6 million in Series C funding. Backers include Ascend Venture Group and Vintage Capital Partners.

LiveMocha Inc., a Bellevue, Wash.-based provider of online language education, has raised nearly $6 million in Series A funding led by Maveron Equity Partners, according to a regulatory filing.

Sanako, a Finland–based provider of education software, has raised over €5 million in funding from Nordic Capital.

ArcMail Technology, a Shreveport, La.-based provider of email archiving and management solutions, has raised $3 million in VC funding. Participants included Advantage Capital Partners and the Louisiana Technology Fund.

Achilles Group, a Houston, Texas-based provider of outsourced HR services for small businesses, has raised $2.5 million in Series A funding. Participants include Ephor Group and First Analysis.

FyreBall Inc., a Bellevue, Wash.-based company that is developing a gaming-influenced alternative to email, has raised around $1.1 million in Series A funding led by Labrador Ventures. It is run by former members of the Halo development team.

Kajeet, a Bethesda, Md.-based mobile virtual network for kids and tweens, has raised $10 million in venture debt from BlueCrest Capital Finance. The company last fall closed a $36.8 million Series B round from DFJ Growth Fund, Bessemer Venture Partners, Fidelity Ventures, Gabriel Venture Partners and InterWest Partners.

Buyout Deals

Audax Group has acquired Bridgepoint Tank Trucks Inc., a Bridgeport, Texas-based provider of fluid transport and disposal services and equipment rentals for oilfield production and drilling applications in the Barnett Shale. No financial terms were disclosed. Wells Fargo Foothill and Regiment Capital Advisors provided leveraged financing.

CHB Capital Partners of Denver has acquired Newline Products Inc., a Plano, Texas-based maker of classroom products like chalkboards and marker-boards, according to LBO Wire. No financial terms were disclosed. The report also said CHB soon plans to launch its fourth fund with a target of between $125 million and $150 million.

London Bay Capital has acquired Selling Source LLC, a La Vegas–based Internet marketing company focused on the specialty finance sector. The deal was valued at more than $130 million, with Plainfield Asset Management providing both leveraged financing and an equity co-investment. Thomas Weisel Partners advised London Bay.

Huntsman Corp. (NYSE: HUN) shares fell to $23.57 yesterday, on speculation that Apollo Management may back out of a $27.25 per share buyout offer. Shares of the chemicals company were down again in early trading Thursday.

Pennington Allen Capital Partners has acquired a majority stake in Knox Laboratories LLC, a Tulsa, Okla.-based drug testing company. No financial terms were disclosed.

Gourmet Boutique LLC, a Jamaica, N.Y.-based manufacturer of prepared foods, has raised $8 million from Key Principal Partners.

PE-Backed IPOs

Omeros Corp., a Seattle-based drug company focused on receptor and enzyme therapeutics, has filed for a $115 million IPO. It plans to trade on the Nasdaq under ticker symbol OMER, with Deutsche Bank Securities serving as lead underwriter. The company has raised approximately $110 million in total VC funding, from firms like ARCH Venture Partners, Aravis Ventures, American Financial Group, Grosvenor Funds, Novartis Venture Fund, Southern Cross Capital, Stanley Medical Research Institute, Trevi Health Ventures and WRF Capital.

PE Exits

Aruba Networks Inc. (Nasdaq: ARUN) has agreed to acquire Airwave Wireless Inc., a San Mateo, Calif.-based provider of WLAN management software for configurable networks. The deal is valued at $37 million in cash and stock. Airwave had raised VC funding from Ignition Partners, Idealab and Westbury Equity Partners.

Metavante Technologies Inc. (NYSE: MV) has acquired Nomad Payments Ltd., a London–based provider of prepaid and debit card processing and licensed software. The deal was valued at approximately $58 million. Nomad had raised VC funding from firms like Quester Capital Management, Advent Venture Partners and Foresight Group.

Rocket Software, a Boston-based maker of enterprise infrastructure products, has acquired the assets of Arkivio Inc., a Mountain View, Calif.-based provider of storage software. No financial terms were disclosed. Arkivio had raised $15 million since 2001 from firms like Globespan Capital Partners, Voyager Capital and Valence Capital Management.

PE-Backed M&A

SunGard has acquired the assets of Financial Technology Integrators LLC, a provider of Web-based portfolio management, pre-trade compliance, regulatory compliance, performance reporting and modeling systems. No financial terms were disclosed. SunGard was acquired in 2005 by seven private equity firms.

Firms & Funds

Synergy Life Science Partners has closed its debut fund with $143 million in capital commitments. The Portola Valley, Calif.-based firm will focus on early-stage medical device companies, and was founded in 2006 by John Onopchenko (J&J Development Corp.), Richard Stack (Synecor co-founder) and Bill Starling (Synecor co-founder). Tracy Pappas recently joined as CFO, after having served in the same role with Scale Venture Partners.

Horsley Bridge Partners of San Francisco is raising $1.75 billion for its ninth private equity fund-of-funds, according to a regulatory filing. It already has secured around $973 million in commitments, including $375 million from foreign investors.

Pfingsten Partners is raising up to $400 million for its fourth private equity fund, according to a regulatory filing. The Deerfield, Ill.-based firm raised $285 million for its third fund back in 2003.

Fort Washington Capital Partners of Cincinnati is raising $400 million for its sixth fund-of-funds, according to a regulatory filing.

Cadent Energy Partners, a Rye Brook, N.Y.-based private equity firm focused on energy opportunities, has raised $231 million for its second fund, according to a regulatory filing. Limited partners include CommonFund, University of Chicago and the Andrew W. Mellon Foundation.

Human Resources

Chris Casciato has joined Lightyear Capital as a managing director. He has spent the past 20 years with Goldman Sachs, where he was a partner in the financial institutions group.

Andrew Woeber has joined Greenhill & Co. as a managing director in San Francisco He previously was a managing director with Morgan Stanley and, before that, worked in M&A at Merrill Lynch.

Bill Bryant has joined Draper Fisher Jurvetson as a venture partner, focused on opportunities in the Pacific Northwest. Bryant is a former venture partner with Atlas Venture, who has co-founded such companies as Netbot and Qpass.

Sarah Reed has joined Lowenstein Sandler as a partner, marking the opening of the venture/tech law firm’s Boston office. She previously was general counsel at Charles River Ventures.

TA Associates has made the following promotions: Jennifer Mulloy from principal to director; Harry Taylor from senior VP to principal; Christopher Parkin from VP to principal; Roy Burns from VP to senior VP; Mark Carter from VP to senior VP; and Hythem El-Nazer from associate to vice president.

Matthew Kavan and Adam Suberi have joined Advantage Capital Partners as associates. Kavan previously worked in the Capital Markets unit of U.S. Bank, while Suberi previously was an I-banking associate with A.G. Edwards & Sons.

John Burton, co-founder and managing general partner of Updata Partners, has been elected president of the Mid-Atlantic Venture Capital Association. He succeeds Kevin Burns, a co-founder and managing principal of Lazard Technology Partners, who will assume the position of chairman.