PE Week Wire: Thurs., March 29, 2007

The first quarter still has two days remaining, but it’s effectively over so far as PE-backed IPOs go. The final pricing came last night, when medical device maker SenoRx raised an underwhelming $44 million. Overall, Q1 was a very strong quarter for VC-backed offerings, with 15 companies raising approximately $1.96 billion. This represents a slight monetary increase from last quarter ($1.63 billion for 20 companies), and a major one from Q1 2006 ($540.82 million for 10 companies). If I had to write an abstract, it would be that Clearwire skewed the Q1 data upwards. I’m in the process of compiling relevant charts for you to download, and I just posted my initial efforts here.

Buyouts-backed offerings, on the other hand, were virtually non-existent. Only five such companies priced on U.S. exchanges last quarter, for a paltry take of around $1.42 billion. You need to go back to Q4 2005 to find a quarter in which less money was raised, and back to Q1 2003 to find fewer offerings. Combine this with yesterday’s note about decreased buyout disbursements, and it’s another chink in the PE hype armor. I’ll have in-depth buyout-backed IPO data up on peHUB by noon ET.

*** Organized labor was all over the private equity headlines yesterday, which is probably a statement that makes many Wire readers squirm in their upholstered leather swivel seats.

First, the United Auto Workers rejected a new wage offer from Delphi Corp., General Motors and the private equity firms seeking to take Delphi out of bankruptcy. A UAW executive called the latest proposal “insulting,” and vowsto strike if Delphi makes good on threats to void existing labor contracts. In other words, no champagne corks popping at Cerberus Capital, Appaloosa Management and Harbinger Capital – the three firms whose $3.4 billion buyout offer is contingent on a labor agreement.

Perhaps more interesting was word that the Service Employees International Union has launched a blog dedicated to The Blackstone Group’s proposed IPO.

It is the SEIU’s first-ever blog dedicated to anything besides organizing campaigns (although it once had a website called, and promises to keep tabs on an offering that SEIU spokeswoman Renee Asher says “could have a huge impact on the economy and workers.”

Asher says that SEIU has no positive or negative opinion on the IPO, but a quick blog skim indicates a giant dose of worry. For example, SEIU expresses accusatory concern about how Blackstone does not plan to offer quarterly financial guidance.

I’m not quite sure when SEIU became a shareholder advocacy group, although it claims to have always taken an interest in what it refers to as “capital stewardship.” Leaving that aside, this particular provision is perhaps the best thing possible for the average union worker. Maybe not for the average SEIU worker – who won’t be impacted one bit by Blackstone going public or staying private – but certainly for teachers, state employees and others whose pension funds invest in private equity funds like Blackstone. Why? Because it means that Blackstone still plans to put LP interests ahead of Wall Street etiquette.

But let’s return to my claim that SEIU workers will not be affected by the Blackstone IPO. SEIU must disagree, or else it wouldn’t have launched the blog, sent out a press release, etc.

Stephen Lerner, assistant to the president at SEIU, agrees that the Blackstone IPO is not designed to impact SEIU members, but argues that it should have an impact. More specifically, a positive impact.

Lerner says that Blackstone has made much of its fortune on the backs on company employees, and that its IPO should not just be used to continue consolidating wealth for the privileged few. Instead, it should partially be a mechanism for kicking some cash down the employment food chain.

After all, Lerner points out that Blackstone execs are going to make a fortune on fees and carried interest from the Equity Office deal. But what about the janitors who literally clean those assets? Do they get a cut? Even a tiny one?

How to sugar-coat this? Ummm… the answer is “no” (but with a charitable foundation on top). I wish it were different – and that one or two points of carry would be allocated to company employees. But I’m also a realist, and reiterate that this IPO will be a curiosity for workers in Blackstone-owned companies, but not one of consequence. Unless the consequence you’re talking about is that certain workers will continue to be poorer by comparison…

*** Our anonymous tip button has not been working properly over the past two weeks — which means that many submitted messages have disappeared into the cyber-ether. But now it has been fixed. So if you have dropped an interesting dime during that time period, please resend if possible. If you haven’t used it, today would be a wonderful day to begin…

*** Finally, many of you have asked for a PE Week Wire roto baseball league. Ok. Details coming tomorrow…

Top Three

KKR has held talks with Bell Canada owner BCE about a possible takeover, according to The Globe & Mail. BCE is valued at approximately Cnd$24.3 billion (US$20 billion).

Titan Petrochemicals Group, an oil logistics company listed in Hong Kong, has raised $175 million in PIPE funding from Warburg Pincus. The two-part deal includes an immediate $75 million investment in exchange for a 9.9% ownership position and one board seat. The stake could rise to 22% if it converts its preferred shares and exercises around $20 million worth of allotted warrants. The second part is a $100 million deal for Titan’s onshore storage terminals unit (China Storage Co.), in exchange for a 49.9% ownership stake the unit.

Leonhard Fischer has agreed to become co-CEO of RHJ International (Euronext: RHJI), the listed holding company controlled by private equity firm Ripplewood. He previously was CEO of Credit Suisse for Europe, the Middle East and Africa. In other RHJI news, the firm announced that Jean-Marc Roelandt has been named CFO. Interim CFO Anthony Barone will become executive vice president.

VC Deals

CoreValve, an Irvine, Calif.-based maker of medical devices for percutaneous heart valve replacement, has raised $33 million in third-round funding. Maverick Capital led the deal, and was joined by return backers Apax Partners, HealthCap and Sofinnova Partners. The company has now raised around $63 million in total VC funding since 2003.

Nitec Pharma AG, a Swiss drug company focused on the treatment of chronic inflammatory diseases, has raised approximately $26 million in Series B funding. NGN Capital led the deal, and was joined by return backers Atlas Venture and Global Life Science Ventures.

Xponent Photonics Inc., a Monrovia, Calif.-based maker of surface mount photonic products, has raised $23 million in Series 3 funding. American River Ventures led the deal, and was joined by return backers Arcturus Capital, Eastward Capital, El Dorado Ventures, HOYA Holdings, Samsung, US Venture Partners and Walden International. Xponent has raised over $90 million in total VC funding since 2000, including a May 2006 infusion at a post-money valuation of approximately $47.7 million.

Coapt Systems Inc., a Palo Alto, Calif.-based developer of bioabsorbable implants for use in aesthetic surgery, has raised $22.6 million in Series E funding. Global Life Science Ventures and Easton Capital co-led the deal, and were joined by return backers Alta Partners, Asset Management Company, Canaan Partners, Boston Millennia Partners and Foundation Medical Partners. Coapt has raised around $56 million in total VC funding since its 2000 formation.

AutoGenomics Inc., a Carlsbad, Calif.-based developer of automated molecular diagnostic testing solutions, has raised $12 million in Series C funding. The company said that the offering, like its Series A and B rounds, was mostly comprised on individual investors.

Streamcore, a Paris, France-based provider of application performance and network optimization technologies, has raised $7 million in Series B funding. Auriga Partners led the deal, and was joined by return backers Convergent Capital and OTC Asset Management, a subsidiary of Tocqueville Finance.

Webjam, a London-based online content sharing startup, has raised £1 million in first-round funding from I-Source Gestion.

NeoSaej Corp., a Concord, Mass.-based provider of e-commerce infrastructure software, has secured $505,000 of a $1 million Series A round led by Stata Venture Partners, according to a regulatory filing.

LitePoint Corp., a Sunnyvale, Calif.-based provider of wireless test solutions, has raised an undisclosed amount of venture capital funding from Sequoia Capital.

Buyout Deals

Veronis Suhler Stevenson has agreed to acquire New York-based media company Advanstar Communications Inc. from DLJ Merchant Banking Partners for $1.142 billion. VSS is being joined by co-sponsors Citigroup Private Equity and New York Life Capital Partners. DLJ acquired Advanstar in 2000 from Hellman & Friedman for approximately $900 million.

Safeguard Scientifics Inc. (NYSE: SFE) has sold Pacific Title & Art Studio Inc. to Celerity Partners and Ticonderoga Capital. The deal is valued at $23 million. Pacific Title is a provider of digital and photo-chemical services for post-production and archival applications in Hollywood’s motion picture and television industry.

Aurora Capital Group is nearing an agreement to acquire Mitchell International Inc. from Hellman & Friedman for more than $500 million. GE Pension Trust would participate alongside Aurora, while Goldman Sachs is arranging around $320 million in debt. Mitchell is a San Diego-based provider of insurance claims processing software, and was acquired by H&F in 2000.

Investcorp Technology Partners has acquired UK-based online payment provider Moneybookers Ltd. The deal was valued at €105 million, with existing Moneybookers shareholders retaining a minority ownership position. LongAcre Partners advised Moneybookers on the deal.

Roark Capital Group has acquired a majority interest in CyberCore Technologies, a Baltimore, Md.-based provider of IT services to federal government like the Department of Homeland Security and the Defense Logistics Agency. No financial terms were disclosed.

Cerberus Capital Management has agreed to acquire the assets of Tower Automotive (OTC BB: TWRAQ) out of bankruptcy for approximately $1 billion. Tower Automotive is a Novi, Mich.–based designer and producer of vehicle structural components and assemblies used by every major automotive OEM.

The Carlyle Group has agreed to acquire a 49% stake in China’s Yangzhou Chengde Steel Tube Share Co. from Jiangsu Chengde Steel Tube Share Co., according to Dow Jones. No financial terms were reported.

The Blackstone Group is a likely bidder for Australian television broadcaster TEN Network Holdings Ltd., according to the Sydney Morning Herald.

Circuit City Stores Inc. (NYSE: CC) said that has retained Goldman Sachs to explore strategic options for Canadian unit InterTAN Inc., which comprises around 800 stores. The company also said that it plans to lay off 3,400 employees throughout its chain, and will replace them with lower-paid workers.

Commerzbank AG reportedly is considering the sale of French asset management firm Caisse Centrale de Reescompte. The news comes one week after Commerzbank agreed to sell UK-based Jupiter Asset Management to TA Associates and Jupiter management just over €1 billion.

UPC Wind, a Newton, Mass.–based wind power productions company, has secured $44 million in equity funding from affiliates of JPMorgan Chase and Wells Fargo. The capital will be used to reduce project debt associated with the Mars Hill Wind Farm in Maine, which achieved full commercial operations earlier this week.

PE-Backed IPOs

SenoRx Inc., an Aliso Viejo, Calif.-based provider of minimally-invasive medical devices for the diagnosis and treatment of breast cancer, priced 5.5 million common shares at $8 per share ($11-$13 range), for an IPO take of approximately $44 million. It will trade on the Nasdaq under ticker symbol SENO, while Banc of America Securities and Citigroup served as co-lead underwriters. The company had raised $54.57 million in total VC funding since its 1998 inception, from firms like MPM Capital, Domain Associates, Mayfield, Medicus Venture Partners, De Novo Ventures, Entrepreneurs’ Fund and Tyco Capital (shares now held by Protostar Equity Partners).

PE-Backed M&A

Berean Christian Stores, a Cincinnati-based Christian bookstore chain controlled by JMH Capital, has acquired independent Macon, Ga.-based book retailer Macon Christian Bookstore. No financial terms were disclosed.

PE Exits

Cisco Systems Inc. (Nasdaq: CSCO) has agreed to acquire SpansLogic Inc., a Mountain View, Calif.-based fabless semiconductor company backed by Crescendo Ventures and ATA Ventures. No financial terms were disclosed.

Firms & Funds

Baring Vostok Capital Partners of Russia has closed its fourth fund with $1 billion in capital commitments. The capital will be used to acquire companies based in former Soviet Union countries.

CCMP Capital has secured $1.47 billion for its first independent fund since spinning out of JPMorgan, according to a regulatory filing. The former late-stage and buyout team of JPMorgan Partners is targeting upwards of $4 billion, and is using Credit Suisse as its placement agent.

BankCap Partners, a Dallas-based private equity firm targeting the commercial banking sector, is raising up to $200 million for its inaugural fund, according to a regulatory filing. It already has secured $109.5 million in capital commitments.

Nautic Partners of Providence, R.I. is targeting $1.2 billion for its sixth fund, as first reported by PE Week Wire last September (and re-reported today by LBO Wire). Credit Suisse is serving as placement agent.

Human Resources

Sue Siegel has joined Mohr, Davidow Ventures as a partner focused on life sciences opportunities. She previously was president of Affymetrix Inc. (Nasdaq: AFFX), and also is a director of MDV portfolio company Pacific Biosciences.

Asiff Hirji has resigned as president of TD Ameritrade’s client group, in order to join TPG as a senior executive focused on firm and portfolio management. The news was first reported by Private Equity Insider, and later confirmed by PE Week Wire. His first day at TPG will be in May.

Circle Peak Capital has promoted James Clippard to vice president. Clippard joined the firm as an associate in June 2005, and has worked on such transactions as Shari’s Restaurants, Luxury Optical Holdings and WealthTrust Inc.