PE Week Wire: Thurs., Sept 13, 2007

When the Home Depot Supply buyout was reworked earlier this month, numerous press reports discussed how the resolution would serve as a model for other hung transactions. Then I read the same thing earlier this week, when KKR made some minor concessions on the leverage terms for its pending buyout of First Data. Now we hear that KKR and its bankers actually haven’t agreed upon debt terms – but that hasn’t stopped the modeling talk. For example, today’s DealBook says: “Wall Street is closely watching the intense negotiations over the First Data debt as a bellwether for how other, similar deals will fare.”

HD Supply is done. And let’s assume that First Data gets done. Neither is a model, or even the looser term “bellwether.”

It’s not because either deal’s resolution is faulty, but because there is no “one size fits all” for leveraged buyouts. Moreover, one deal getting done means virtually nothing for the next deal. Each transaction is unique – in terms of structure, seller, buyer, banker, industry sector, etc.

The buyout market is very tough right now, and there is now way to color by number. People working on these deals recognize that. It’s folks on my side of the market who seem not to.

*** I may very well been guilty of the above infraction (sounds like something I might have said, particularly on TV). If so, consider this payment of my rhetorical fine.

*** Willis Stein has sold Lincoln Snacks to ConAgra Foods. for an undisclosed amount. I’m glad ConAgra is public, because learning the sale price could be particularly interesting. For those who don’t remember, Lincoln Snacks — which makes Fiddle Faddle, among other treats – was at the heart of nasty litigation between Willis Stein and Brynwood Partners (some background here). That case seems to have been resolved behind closed doors, but we’ll only know who truly won when we see how much cash Willis Stein got for its troubles.

*** Two Wharton professors have determined that the average private equity firm makes more money on fees than on carried interest. Specifically, an average firm will collect $10.35 in fees for every $100 managed, compared to just $5.41 in carried interest. Tennille Tracy has the story.

*** QuizTime: Can you name the Asian private equity firm that is about to end investment activities in one of its target countries? Hint: The managing director will leave, while his number two will stick around for portfolio monitoring purposes.

*** Among the companies announcing VC funding today are Veoh and WiChorus. We reported on both of those deals over a month ago. And a rival pub today learned that The Active Network raised $65 million. Where or where could they possibly have learned that? Sorry, just feeling petty this morning…

*** Scott Kirsner has a great behind-the-scenes piece on Why Facebook Went West. Battery Ventures apparently passed on the company when it was still based in Cambridge, because of (A) Its existing Friendster investment and (B) Turf issues between Battery’s Boston and Silicon Valley offices. Battery partner Scott Tobin says passing on Facebook” may turn out to have been a mistake.” Not quite sure where Tobin sees the wiggle room… By the way, I hear that reports of that pending Facebook venture round are on the money.

Top Three

AMC Entertainment Inc., a Kansas City-based movie theater chain, has filed for a $500 million IPO. The company had filed for a $790 million IPO last December, but suspended the offering this past May due to “adverse market conditions.” It used Goldman Sachs as its lead underwriter last time, but did not list any banks on its new S-1. AMC shareholders include JPMorgan Partners (20.78% pre-IPO position on prior S-1), Apollo Management (20.78%), Bain Capital (15.09%), The Carlyle Group (15.09%) and Spectrum Equity Investors (9.76%).

LDR, an Austin, Texas-based developer of spinal implants for both non-fusion and fusion applications, has raised $25 million in Series C funding. Telegraph Hill Partners led the round, and was joined by return backers Austin Ventures, Rothschild Private Equity and PTV Sciences.

The Blackstone Group is investing $178 million, as part of a privatization of Latvian telecom company Lattelecom. The total deal is valued at $575 million, and also includes Blackstone syndicate partners Unicredit, Nordea Bank, Parex Bank and DnB Nor. Sellers include the Latvian government (51%) and TeliaSonera (49%).

VC Deals

GridPoint Inc., a Washington, D.C.-based provider of energy management products, has raised $32 million in Series D funding, according to a regulatory filing. Listed shareholders include Goldman Sachs, Altira Group and Standard Renewable Energy Group.

Alereon Inc., an Austin, Texas-based fabless semiconductor company developing ultrawideband wireless chipsets, has called down around $18.5 million in additional Series B funding, according to a regulatory filing. The company had previously raised $21.53 million in Series B funding at a post-money valuation of approximately $80 million. Backers include Pharos Capital Partners, Austin Ventures, Centennial Capital Ventures, Duchossois Technology Ventures, PTV Sciences, eCentury Capital Partners and Genesis Campus.

Canesta Inc., a Sunnyvale, Calif.-based developer of chips that help computers measure 3D spaces, has secured $10 million of a $24.4 million Series D-1 round, according to a regulatory filing. Return backers include Apax Partners, Carlyle Venture Partners, Korea Global IT Fund and Venrock. The company previously had raised over $40 million in total VC funding.

Earth Class Mail Corp. (f.k.a. Document Command), a Seattle-based virtual post office company, has secured $7.4 million of a $19.69 million Series A round led by Ignition Venture Partners, according to a regulatory filing. The company previously raised $3.25 million in seed funding from Alliance of Angels, Keiretsu Forum and other angel groups.

MindShift Technologies Inc., a Fairfax, Va.-based managed service provider, has raised $14 million in Series DD funding, according to a regulatory filing. Return backers included TD Fund, Columbia Capital and Fidelity Ventures. The company has now raised nearly $160 million in total VC funding since 1999.

Aldagen Inc., a Durham, N.C.-based developer of clinical-stage regenerative therapies, has raised $9 million in additional Series C funding. It brings the round total to $23 million, including a first tranche closed last December. Tullis-Dickerson and CNF Investments were joined by return backers Harbert Venture Partners and Intersouth Partners.

European Telemedicine Clinic of Barcelona has raised €7 million in a VC funding round led by Kennet Partners. ETC provides sub-specialized teleradiology services to public and private healthcare providers in Europe.

Nascentric Inc., an Austin, Texas-based maker of electronic design automation tools, has secured $5.6 million of a $7.65 million Series C round, according to a regulatory filing. Intel Capital was joined by return backers like Austin Ventures and Silverton Partners.

Grid Net Inc., a San Francisco-based provider of policy-based networking software for the utility industry, has raised nearly $6.75 million in Series A funding, according to a regulatory filing. Backers include Catamount Ventures and Intel Capital.

PacketTrap Networks Inc., a San Francisco-based network management startup, has raised $5 million in Series A funding led by August Capital, according to a regulatory filing.

Digital Entertainment Corporation of America, a Santa Monica, Calif.-based digital entertainment studio, has called down $2.5 million of a $5 million Series A round, according to a regulatory filing. Backers include Atomico, Mayfield and General Catalyst.

National Payment Network Inc., an El Segundo, Calif.-based provider of loan acceleration programs for the automotive industry, has raised around $4.93 million in Series A funding led by Foundation Capital, according to a regulatory filing.

VT Silicon, an Atlanta-based RF circuit developer, has raised $3.3 million in first-round funding from Menlo Ventures. The company will use the capital to further developer its “intelligent power amplifier” chips for next-generation WiMax mobile devices.

Accenx, an Irvine, Calif.-based provider of interoperability solutions for electronic healthcare records, has raised $3 million in Series A funding led by National Healthcare Services of Long Beach, California.

PureVideo Inc., an El Segundo, Calif.-based provider of user-generated and professional video content for the web and wireless devices, has called down $2.85 million of a $5.85 million Series B round, according to a regulatory filing. The only listed investor is existing shareholder SoftBank Capital.

Climpact, a France-based provider of climate risk management services, has raised €1 million in Series A funding from Elaia Partners.

Buyout Deals

Bear Stearns Merchant Banking has completed its $14.25 per share buyout of MC Shipping Inc. The total deal was valued at $284 million. MC Shipping is an international shipping company focused on maritime transportation of liquefied petroleum gas, with headquarters in Monaco and an office in London. It partially owns and operates a fleet of 19 vessels, and has contracted to purchase 4 others.

Ceridian Corp. (NYSE: CEN) stockholders approved a $36 per share billion buyout offer from Thomas H. Lee Partners and Fidelity National Financial. The total deal is valued at $5.3 billion. Deutsche Bank Securities and Credit Suisse will provide leveraged financing. Ceridian is being advised by Greenhill & Company.

European Capital has sponsored a partial management buyout of Soflog-Telis, a provider of logistics services to major industrial customers in France. European Capital and Soflog-Telis’ management company will hold 55%, while existing shareholder 3i Group will retain a 45% position. European Capital invested €29 million, in the form of equity and mezzanine debt.

Palm Inc. (Nasdaq: PALM) shareholders approved a $325 million private equity infusion from Elevation Partners, in exchange for a 25% ownership stake. As part of the deal, Palm will pay a special distribution of $9 per share, or about $940 million in cash, to shareholders for their reduction in ownership.

TA Associates has acquired a minority position in Gandinnovations, a Mississauga, Ontario-based manufacturer of state-of-the-art wide format graphics printers and ink. No financial terms were disclosed. Harry Taylor, a senior vice president with TA, will join the Gandinnovations board of directors. Gandinnovations has a worldwide installed base of over 1,000 printers, operating in more than 50 countries.

Topspin LBO has acquired Utrecht Manufacturing Corp. from Brynwood Partners. No financial terms were disclosed. Utrecht is a Cranbury, N.J.–based multi-channel retailer of art supplies, with 35 stores nationwide. This represents Topspin’s first deal out of its recently-closed $115 million fund.

PE-Backed IPOs

SeaCastle Inc., a Wilmington, Del.-based lessor of intermodal equipment used in global containerized cargo trade, has filed for a $345 million IPO. It plans to trade on the NYSE under ticker symbol SC, with underwriters to include Citi, Bear Stearns, Deutsche Bank and Merrill Lynch. Fortress Investment Group holds a 98.5% ownership position, pre-IPO.

Constant Contact Inc., a Waltham, Mass.-based provider of direct marketing email software, has set its IPO terms to 6.7 million common shares being offered at between $12 and $14 per share. It plans to trade on the Nasdaq under ticker symbol CTCT, with CIBC World Markets and Thomas Weisel Partners serving as co-lead underwriters. The company has raised $38.8 million in VC funding from Morgan Stanley Dean Witter Venture Partners (21.87% pre-IPO stake), Commonwealth Capital Ventures (15.35%), Hudson Venture Partners (14.16%), Greylock Partners (14.16%), Longworth Venture Partners (9.79%), Saturn Capital and VeriSign.

PE Exits

GTCR has agreed to sell its large minority stake in netASPx, a Herndon, Va.-based provider of applications management services, to NaviSite Inc. (Nasdaq: NAVI). The deal is valued at $40.5 million, including $15.5 million in cash and $25 million in convertible preferred stock. GTCR had invested around $100 million.

Moneygram International Inc. (NYSE: MGI) has agreed to acquire PropertyBridge Inc., an Oakland-based provider of electronic payment processing services for the real estate management industry. No financial terms were disclosed. PropertyBridge had raised around $2 million in a 2006 venture round led by Claremont Creek Ventures.

PE-Backed M&A

Avail Media Inc., a Reston, Va.-based provider of IPTV and other media services to broadband operators, has acquired ViewNow, a supplier of video-on-demand programming. No financial terms were disclosed. Avail raised a $17 million Series B round earlier this year from Novak Biddle Venture Partners, Columbia Capital, Pioneer Investors and the Benaroya Companies. The selling party was Kasenna Inc., which has raised over $80 million, from firms like Alloy Ventures, U.S. Venture Partners, Intel Capital, AsiaTech Ventures, Artiman Ventures, Key Venture Partners, Cypress Ventures, Silicon Graphics and Sun Microsystems.

Bridgepoint Education, a San Diego-based portfolio company of Warburg Pincus, has acquired the Colorado School of Professional Psychology. No financial terms were disclosed. CSPP is a Colorado Springs, Colo.-based school that offers psychology degrees at the master’s and doctorate levels. It has been renamed The University of the Rockies.

ChannelAdvisor Corp., a Morrisville, N.C.-based provider of channel management solutions, has acquired rival Marketworks Inc. of Atlanta. No financial terms were disclosed. ChannelAdvisor has raised over $64 million in total VC funding, from backers like Advanced Technology Ventures, Kodiak Venture Partners, New Enterprise Associates, TriState Investment Group, eBay Inc., Atlantis Group, Montagu Newhall Associates and Southern Capitol Ventures. Marketworks had raised around $17.5 million in VC funding from Crosslink Capital, First Data Corp., Imlay Investments, Council Ventures and Atlanta Technology Angels.

La-Z-Boy Inc. (NYSE: LZB) has agreed to sell its Clayton Marcus subsidiary to Rowe Fine Furniture Inc., a portfolio company of Sun Capital Partners. No financial terms were disclosed. Clayton Marcus is a Hickory, N.C.-based maker of mid-to-high priced upholstered furniture.

Firms & Funds

Apollo Investment Corp. (Nasdaq: AINV) raised $260 million via a secondary public offering of 13 million common shares at $20 per share.

CDC Group has committed $70 million to Navis Asia Fund V, and $10 million to Aureos Malaysia Fund.

The Private Equity Council spent $660,000 to lobby the federal government in the first half of 2007, according to a recent disclosure form. Its lobbyists focused on carried interest tax legislation, and lobbied Congress, the Treasury Department and the White House.

White & Black Legal LLP has launched as an Oxford, UK-based firm focused on corporate finance, venture capital and technology law. Its managing partner is Phil Riman, who previously was lead council at 3i Group.

Human Resources

Craig Jarchow has joined Pine Brook Road Partners as a managing director. He previously was a director with First Reserve Corp. and, before that, was with Apache Corp. (NYSE: APA).

Bernd Schaessburger has joined European Capital as an investment director in the firm’s Frankfurt office. He previously was with DAM Capital in London and, before that, at Dresdner Kleinwort in Frankfurt.

Carty Chock has joined Arsenal Capital Partners as a principal. Chock was previously with JPMorgan Partners, where he focused on the financial services sector.

Scale Venture Partners has promoted Nancy Lynch, M.D.,to principal.She joined the firmin July 2006 after completing her MBA, with a concentration in health sector management, at Duke’s Fuqua School of Business.

Sextant Search Partners has promoted Holly Davidson Little to partner. She joined the firm’s San Francisco office in January 2005, and focuses on the private equity, global banking and asset management sectors.