PE Week Wire: Thurs., March 6, 2008

Dow Jones is reporting that Thomas H. Lee Partners recently notified limited partners of an imminent capital call, related to its proposed of Clear Channel. In other words, the “will it or won’t it” parlor game may be nearing its conclusion – and just a scant 16 months after the original agreement was signed.

The article adds that it does not know if similar notifications have been sent to limited partners of Bain Capital, which is partnering with THL on the deal. Well, I’ve spoken to a pair of Bain LPs this morning, and they claim to be hearing little more than crickets. So what gives?

I have no definitive answers, so instead let me throw out a pair of educated theories:

1. It’s not too surprising that THL would be the first to ring the bell on CCU. I’ve spoken to sources inside both THL and Bain about this deal repeatedly since the credit crunch hit, and the THL folks have always expressed more optimism than have the Bain folks. Not more desire, mind you, but more optimism.

2. Dow Jones notes the following: “Capital calls… are standard operating procedure within 30 days of an anticipated closing.” Well, only sort of. That’s a standard amount of time if you’re an individual investor in a buyout fund (i.e., a high-net-worth individual), but institutional investors (i.e., endowments, pension funds, etc.) typically get ten days or less. So that makes me think that the Dow Jones leaker was an individual. That doesn’t disqualify the story’s veracity — but helps explain the disconnect.

Finally, let me stress: Don’t read too much into any of this, one way or the other. The CCU buyout is not closing this week or next, and there is still the outstanding issue of litigation with CCU, Providence Equity Partners and Wachovia — which is officially all separate from the bigger buyout, but we’ve seen MACs triggered for less.

As someone in the know told me today: “I wouldn’t trust this deal to be done until a press release is sent out… Just because people are preparing for the end doesn’t mean it’s coming, and doesn’t mean that it’s not. I’m not trying to be ambiguous, but that’s the reality of the situation.”

*** I’m way past deadline (and nearing hotel checkout time), so we’ll discuss Carl Icahn and The Great Debates tomorrow. One quick note, however: I did ask Icahn why he did a pure venture capital deal last year for Motricity, which is now laying off 250 workers and moving its headquarters out of North Carolina. He answered that his son came to him with the deal one night, and he basically said “Why not?” He now admits it probably wasn’t a good decision, but still expressed faith in the company’s technology.

*** Speaking of Icahn, I found a video of him “performing” at Caroline’s comedy club. Basically telling the tale of how he and Leon Black once wanted to buy US Steel.

*** Does it matter where you go to school, if you want to be a private equity pro? An unscientific study says yes.

*** Last night was our 2nd Annual Buyouts Awards Dinner. I’ve posted a list of the winners here.

Top Three

Ziff Davis Media Inc., a publisher of technology and video game magazines and websites, has filed for Chapter 11 bankruptcy protection, saying that it could no longer service its debt. Private equity firm Willis Stein & Partners in early 2000 for $780 million, but has seen its revenue drop from around $300 million in 2001 to just $76 million last year.

American Education Group, a private education acquisition platform, has acquired Little Sprouts, a provider of pre-K educational services in the Boston area. No financial terms were disclosed AEG was formed last year via a $40 million funding commitment from private equity firms Chicago Growth Partners and Winona Capital Management. Its initial acquisition was a private middle and high school in New Jersey.

Oracle Healthcare Acquisition Corp. (OTC BB: OHAQ) has canceled its agreed-upon acquisition of Precision Therapeutics Inc., a Pittsburgh-based oncology services company. The move comes because Oracle’s lifecycle has ended, and it never brought the reverse merger up for a vote. It is unclear what happens next for PTI, which had been in registration for an IPO at the time that it agreed to the Oracle deal. PTI has raised around $84 million in VC funding since 1996, from firms like Adams Capital Management (39.1% stake), Quaker BioVentures (21.5%), TVM Capital (9.1%), Birchmere Ventures (8.8%), Stephens Group (6.5%) and Draper Triangle Ventures.

VC Deals

Tippit Inc., a San Francisco-based provider of online B2B marketing solutions, has raised $12.17 million in Series C funding, according to a regulatory filing. Granite Global Ventures led the round, and was joined by return backers Lightspeed Venture Partners and Trinity Ventures. Tippit had previously raised around $11 million.

TxCell, a French cell therapy company focused on such indications as Crohn’s disease, has raised €10.5 million in second-round funding, according to VentureWire. Return backers include Auriga Partners, AXA Private Equity, Bioam Gestion, CDC Innovation and Seventure.

Zinwave, a UK-based provider of active wideband in-building coverage solutions, has raised $10 million in Series B funding. SEB Venture Capital led the round, and was joined by return backers Atlas Venture and Scottish Equity Partners.

Livebookings, a European online network for restaurant reservations and marketing, has raised £6.5 million in VC funding led by Balderton Capital. EOC Partners advised Livebookings on the deal.

Laszlo Systems, a San Mateo, Calif.-based developer of an open-source platform for building and deploying Ajax applications, has raised $6.6 million in additional Series C funding. The round total is now $14.6 million, including an $8 million first close in late 2006. All of the second tranche’s participants were existing shareholders: WI Harper Group, General Catalyst Partners, Sofinnova Ventures and Mitsui & Co. Venture Partners.

Sidsense, a Canadian developer of IP for the non-volatile memory market, has raised US$6 million in first-round funding. Vertex Venture Capital led the deal, and was joined by Tech Capital Partners, NTT Finance Corp. and Trellis Capital.
Khosla Ventures is sponsoring the spinout of Pax Streamline, a maker of high-efficiency HVAC systems, turbines and marine propulsion systems, from Pax Scientific. No financial terms were disclosed, although CNet reports that the initial investment size is $6 million, with an investor option for another $6 million down the road.

Rapid Mobile Media Ltd., a Scotland-based provider of mobile advertising and mobile application positioning software, has raised £2 million in second-round funding. New Enterprise Associates led the deal, and was joined by Alliance Trust Equity Partners and return backers Pentech Ventures and Scottish Enterprises’ Scottish Venture Fund.

Climos, a San Francisco-based company developer of large-scale climate change mitigation technologies, has raised $3.5 million in Series A funding. Braemar Energy Ventures led the round, and was joined by Elon Musk.

Buyout Deals

CI Capital Partners has formed CoVant Technologies LLC, an acquisition platform focused on companies that provide technology solutions to the defense, homeland security and intelligence markets. It is being formed in partnership with an executive team led by Joseph Kampf, former president and CEDO of Anteon International. CI and the executives have each committed $200 million, and the CoVant platform has made its first deal by acquiring A-T Solutions Inc., a Fredericksburg, Va.-based provider of analytical and training solutions for the detection, identification and defeat of IEDs and weapons of mass destruction.

Industrial Equity Investments Ltd., anIreland-based investment firm owned by Permira, has completed its $2.4 billion acquisition of Tokyo-based agrochemical company Arysta LifeScience Corp. from Olympus Capital Holdings Asia. Permira provided all of the acquisition’s equity, while leverage partners included JPMorgan, Lehman Brothers, Bayerische Hypo- Und Vereinsbank (HVB) and Aozora Bank.

PE-Backed IPOs

ViewSonic Inc., a Walnut, Calif.-based maker of computer monitors and projectors, has withdrawn registration for a $143.8 million IPO. It cited poor market conditions in its withdrawal, and added that the capital raised via IPO would have been “discretionary.” ViewSonic originally filed last July, and was using JPMorgan and Bvank of America Securities as its co-lead underwriters. Shareholders include Intel Capital and Partech International.

PE Exits

AAR Corp. (NYSE: AIR) has completed its acquisition of Avborne Heavy Maintenance Inc. from Trivest Partners. Other sellers include Allied Capital and PNC Equity. No financial terms were disclosed. Avborne is a Miami, Fla.–based provider of aviation maintenance, repair and overhaul services.

PE-Backed M&A

BSG Alliance Corp., an Austin, Texas-based provider of on-demand enterprise software, has acquired Iconixx Corp., a Houston-based provider of on-demand solutions for global talent management in mid-sized and large enterprises. No financial terms were disclosed. BSG last year raised $20 million in VC funding from Foundation Capital, Hummer Winblad Venture Partners and Powershift Ventures. Iconixx had raised capital in 1999 and 2001 from Thayer Capital Partners.

USI Holdings Corp., a Briarcliff Manor, N.Y.–based distributor of insurance and financial services to businesses, has acquired Corporate Planning Systems, a Bellevue, Wash.-based employee benefit insurance brokerage. No financial terms were disclosed, except that the deal is expected to provide USI with approximately $4.5 million in additional annual revenue. USI is owned by Goldman Sachs Capital Partners.

Firms & Funds

ABRY Partners, a Boston-based private equity firm focused on the media sector, this week closed its sixth fund with $1.35 billion in capital commitments, according to LBO Wire. The total fund value will be closer to $1.7 billion, once general partner commitments are included.Limited partners include Harvard University, TIFF, PSERS, IBM, Portfolio Advisors and the San Francisco Employees’ Retirement System. The entire fundraising process took just over two months.

Human Resources

Murad Beg has joined Cleveland-based private equity firm Linsalata Capital Partners as a vice president. He previously was a partner with law firm Calfee, Halter & Griswold LLP, where he served as co-head of the M&A practice.

Allen Alley, a onetime general partner with Battery Ventures, announced that he’s running for the GOP nomination for State Treasurer in Oregon. His most recent job was as deputy chief of staff for Oregon Governor Ted Kulongoski.