PE Week Wire: Thurs., March 13, 2008

AOL announced earlier this morning that it will pay $850 million to acquire Bebo, a UK-based social networking company that trails only Facebook and MySpace in terms of total users. It’s already held a press call, in which the most interesting tidbits were:

• Bebo’s husband-wife founding team of Michael and Xochi Birch won’t be sticking around AOL for very long (if at all).

• Bebo plans to soon expand into several non-English-speaking European markets

• Bebo had been in the market for new funding to support acquisitions, particularly in the contextual and behavioral search markets. But that ended once acquisition offers began coming in. No comment on earlier reports that Yahoo was an interested suitor (which is now 0-for-2 on such efforts).

The sale will represent more than a 9x cash return for Balderton Capital, which provided Bebo with $15 million in Series A funding less than two years ago. That round gave Balderton a 15.7% ownership position (approx. $95m post-money valuation), which would work out to around a $133 million paycheck from AOL. But Balderton actually gets approximately $140 million, due to some additional provisions and entitlements contained in the investment agreement.

*** Gail Long, CEO of ACG Boston, joins the Vox Populi at peHUB. Her first post is on reflections from last week’s Great Debates panel at Buyouts East.

*** Last week I mentioned that Carl Icahn had essentially put the Motricity monkey on his son’s back. Some of you asked me for the video, so here it is.

*** Killing the KKR IPO may not be as easy as it sounds.

*** I was at last night’s Celtics game, which also happened to be Kevin Garnett bobble-head doll night. Less than two minutes after receiving my toy, some guy offered to buy it from me and held out some greenbacks. Just a very odd moment that I felt was worth mentioning. (Note to bosses: Team owned by buyout pros and VCs — so it is somehow relevant)

*** A bunch of you have been asking my opinion on the proposed California legislation that would preclude state pension funds from investing in private equity firms that are partially owned by sovereign wealth funds of nations with poor human rights records. That will be the gist of tomorrow’s column (or so the current plans are), but my gut-check feeling is this: I don’t have a philosophical problem with it, just as I didn’t with that Sudan bill in Illinois last year. But I’ve got a bunch of practical problems with it, including the inconsistency of preventing investment in firms that have sold management company stakes to Dubai (for example), but not those firms that count Dubai among their largest limited partners. This is a distinction without much difference,! and really opens bill sponsor SEIU up to more charges that this is more about unionizing Manor Care than it is about human rights.

*** Speaking of SEIU: Carlyle has a big internal meeting scheduled in DC within the next couple of months, which could include more than 600 of its employees. I want them to protest at SEIU headquarters, which also happens to be in DC. Show up in suits, shout a bit and then return to work. If it helps, I’ll offer any logistical support needed. Not because I do or don’t believe in the “cause,” but just because I really want to watch.

Top Three

Carlyle Capital Corp. said that it expects creditors to size all of its remaining fund assets, after failing to reach a deal that would have prevented liquidation. The Amsterdam-listed fund is an affiliate of The Carlyle Group, and last week missed margin calls on its $21.7 billion portfolio of residential mortgage-backed securities.

AOL has agreed to buy Bebo, the world’s third-largest social networking site, for $850 million. Bebo had raised $15 million in Series A funding less than two years ago from Balderton Capital (then Benchmark Capital Europe), and was advised on the AOL sale by Allen & Company.

BHG Acquisition Corp. has filed for a $350 million IPO, with Credit Suisse and Deutsche Bank Securities serving as co-lead underwriters. The Greenwich, Conn.-based blank check acquisition company is led by Cliff Robbins, a former partner with both General Atlantic and KKR, who currently runs an investment manager firm called Blue Harbour Group. The only other listed manager is Avenue Capital Group chief executive Marc Lasry, who will serve as a director.

VC Deals

eASIC Corp., a Santa Clara, Calif.-based fabless maker of zero mask-charge ASIC chips, has raised $48 million in Series F funding. Advanced Equities led the round, and was joined by return backers Khosla Ventures, Kleiner Perkins Caufield and Byers, Crescendo Ventures and Evergreen Venture Partners. It had previously raised around $32.5 million since 2004.

Hydra Biosciences Inc., a Cambridge, Mass.-based developer of drugs that target ion channels, has raised $34 million in Series C funding, according to a regulatory filing. Advanced Technology Ventures led the round, and was joined by return backers Abingworth Management, BioVentures Investors, Lilly Ventures, New Enterprise Associates and Polaris Venture Partners.

Next New Networks, a New York-based operator of micro television networks over the Internet, has raised $15 million in Series B funding. Goldman Sachs and Velocity Interactive Group co-led the round, and were joined by return backers Spark Capital, Saban Media Group and Bob Pittman. Next New had previously raised an $8 million Series A round, and is run by co-founder Herb Scannell, former vice chairman of MTV Networks and president of Nickelodeon. It reports having 33 million video views in February.

ShareThis, a San Francisco-based provider of online content sharing solutions, has raised $15 million in Series B funding led by Draper Fisher Jurvetson. The company had raised a $6 million Series A round last year from firms like Blue Chip Venture Co., Illinois Ventures, DFJ Mercury, Queen City Angels and RPM Ventures. ShareThis CEO Tim Schigel previously was a venture capitalist with Blue Chip.

Aperio Technologies Inc., a Vista, Calif.-based provider of digital pathology services for the healthcare and life sciences industry, has raised $20 million in Series C funding. HLM Venture Partners led the round, and was joined by Acadia Woods Partners, BlackRock Alternative Advisors and return backers Galen Partners and Advanced Technology Ventures. It had previously raised around $27 million.

EyeGate Pharma, a Paris-based developer of iontophoresis technology to non-invasively deliver therapeutics for ocular indications, has raised $15 million in Series C funding. Medicis Capital was joined by return backers The Nexus Group, Innoven Partenaires and Ventech.

Zuora Inc., a Mountain View, Calif.-based provider of SaaS for subscription management and billing, announced that it has raised $6.5 million in Series A funding led by Benchmark Capital. peHUB first reported on the news back in January.

Buyout Deals

CHAMP Private Equity, the Australian affiliate of Castle Harlan, has acquired Golding Contractors Pty Ltd., an Australian mining and public infrastructure project company. No financial terms were disclosed. Golding had 2007 revenue in excess of A$350 million, and A$50 million in EBITDA.

Castle Harlan has agreed to buy Anchor Drilling Fluids USA Inc. from American Capital Strategies for approximately $250 million. Anchor Drilling is a Tulsa, Ok.-based provider of drilling fluids and fluid-handling services for onshore oil and gas drilling.

KRG Capital Partners has acquired Tronair Inc., a Holland, Ohio-based maker of ground support equipment for business, regional and commercial aircraft. No financial terms were disclosed. Dresner Partners advised Tronair on the deal.

Triton Pacific Capital Partners has acquired a majority interest in AssetPoint, a Greenville, S.C.–based provider of enterprise asset management software. No financial terms were disclosed.

The Blackstone Group has acquired a minority stake in Indian railway freight wagon manufacturer Titagarh Wagons Ltd., according to The Economic Times. The pre-IPO placement was 0.23 million shares at 672 rupees per share. Other Titagarth shareholders include GE Capital Infrastructure, JPMorgan, 2i Capital and ChrysCapital.

PE-Backed IPOs

CyDex Pharmaceuticals Inc., a Lenexa, Kansas-based developer of drugs that “address limitations of current therapies in selected established,” has filed for a $50 million IPO. It plans to trade on the Nasdaq under ticker symbol CYDX, with Pacific Growth Equities serving as lead underwriter.CyDexhas raised over $29 million in VC funding since 2000, from firms like TVM Capital, RiverVest Venture Partners, Life Sciences Opportunities Funds, S.R. One Ltd. and Eastman Chemical Company Investments.

Salient Surgical Technologies Inc. (f.k.a. TissueLink), a Dover, N.H.-based developer of technology for sealing blood vessels and other collagen-based structures, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol SLNT, with Bear Stearns and Piper Jaffray serving as co-lead underwriters. The company had raised over $85 million in VC funding since 1999, with current shareholders including Americh Massena & Associates (40.5% pre-IPO stake), QuestMark Advisors (16.1%), Medtronic (8.8%), RiverVest Venture Partners (7.6%), Vanguard Ventures (5.9%) and Crescendo Ventures (5.2%).

Heritage-Crystal Clean Inc., an Elgin, Ill.-based provider of parts cleaning services and containerized waste services, raised around $22 million in its IPO. It priced 1.91 million common shares at $11.50 per share, and closed up at $14.19 on its first day of trading. William Blair & Co. and Piper Jaffray served as co-lead underwriters. Bruckmann Rosser Sherrill & Co. held a 13% pre-IPO stake.

PE-Backed M&A

IBM has acquired Encentuate Inc., a Redwood City, Calif.-based provider of identity and access management software. No financial terms were disclosed. Encentuate had raised $18.2 million in VC funding since 2003, from firms like Gabriel Venture Partners, VSP Capital and August Capital Management.

Microsoft has agreed to buy Kidaro, an Israeli provider of virtual desktop computing for the enterprise. No financial terms were disclosed. Kidaro has raised $14 million in VC funding since 2004, from Genesis Partners, Storm Ventures and Opus Capital.

PE-Backed M&A

Specific Media, an Irvine, Calif.-based online advertising network, has acquired UK ad network operator Adviva Media Ltd. No financial terms were disclosed. Specific Media last year raised $100 million from Francisco Partners, while Adviva had raised EUR 6.6 million in VC funding from Kennet Partners.

Firms & Funds

SFW Capital Partners, a Rye, N.Y.-based middle-market private equity firm, has closed its debut fund with $300 million in capital commitments. The firm was founded by former AEA Investors pros Thomas Salice, Roger Freeman and Norm Wells, plus Casey Lynch (Parthenon Capital) and David Webb (Merrill Lynch’s financial sponsors group).

DJF Gotham is looking to raise around $125 million for its third fund, according to Silicon Alley Insider.

The London Pensions Fund Authority has selected JPMorgan Private Equity Fund Services to provide portfolio administration and performance reporting for its alternative investment portfolio.

The Pennsylvania State Employees’ Retirement System has approved the following fund commitments: $40 million to ABS Capital Partners VI, $50 million to Lime Rock Partners V, $50 million to Madison Dearborn Capital Partners VI and $15 million to Versa Capital Partners II.

Human Resources

Tim Parker has joined CVC Capital Partners as a partner. He previously was CEO of The Automobile Association Ltd., a CVC portfolio company merged last year with Saga. He also used to work with CVC portfolio company Kwik-Fit.

Julie Premont has agreed to join Canadian financial group Desjardins as a senior manager in the mid-market financing sector, effective next week. She currently is a manager of private equity with Caisse de dépôt et placement du Québec.

Kevin Tom has joined Wedbush Capital Partners as a senior associate. He previously was with KRG Capital Partners. The firm also promoted Ben Wu to vice president and Karan Kapoor to associate.

Headwaters MB has promoted Mark Guilford and Aaron Osmundson to the position of principal. Headwaters is a Denver-based middle-market investment bank.

Ella van Gool has joined DLA Piper as a Palo Alto-based regional manager of the firm’s Venture Pipeline Group. She previously was the chief representative of the Netherlands Business Support Office.