PE Week Wire: Thursday, June 19, 2008

Bobby Kingsbury is a lot like you right now. He’s sitting at his desk, reading the PE Week Wire as a brief diversion before returning to the daily grind of private equity. But there was a very big difference between you and Bobby five months ago: You were still sitting behind your desk, while he was a professional baseball player.

Kingsbury was drafted by the Pittsburgh Pirates in 2002, when he was a junior at Fordham University (where he won a pair of Atlantic 10 Player of the Year awards). He used the leverage of possibly staying in school to get a six-figure signing bonus, and headed into the Pirates’ system. There he climbed through minor leagues as a centerfielder, and played in the 2004 Olympics for the Greek national team (most of the team was made up of Americans with Greek ancestry). The following year he injured his ankle, and returned to Fordham to rehab – with the Pirates picking up his remaining tuition tab.

Then came what looked like his break, when the Pirates invited him to major league camp in the spring of 2006. He didn’t necessarily think he’d necessarily stick, but he knew he was close. Then disaster struck. Quickly.

In the very first inning of his very first game, Kingsbury tore both his rotator cuff and labrum while diving for a ball. He finished the game on adrenalin, even though he couldn’t really throw. The team physician broke the news later that week about the extent of his injuries, and told him that even with surgery he had just a 10% chance of ever returning.

That chance was good enough for Kingsbury, who hopped on the operating table soon after. Unfortunately, he still couldn’t throw well upon his return. The Pirates sent him down to “A” ball, because that’s the only level where he could serve as a designated hitter. His salary was a whopping $1,350 per month. He batted well, and kept rehabbing his shoulder in the off-season at The Cleveland Clinic. He still couldn’t throw, and some of his old Fordham friends began encouraging him to return to New York to capitalize on his finance major.

In order to make ends meet while in Cleveland, Bobby gave hitting lessons to local high-school players. Most of the boys came with over-involved fathers, who would occasionally lash out at their sons, instructor or both. But one just sat there intensely watching, and rarely saying a word. After one session, he came up to Kingsbury and asked how his rehab was going. Upon hearing the dispiriting response, the father told Kingsbury to check out a website for MCM Capital, a Cleveland-based private equity firm focused on the middle-markets. It was looking for a business development pro. The message was clear: Perhaps it was time to begin considering a future without baseball.

Kingsbury could barely define private equity, but was nonetheless intrigued. The father – MCM managing director Mark Mansour – set up interviews with other MCM pros.

“One of them said: ‘So, you’ve never worked before in your life,’” Kingsbury says. “I told him that he should try playing 146 games in 150 days while riding a bus all over the place. Then tell me it’s not work… I think they all thought [Mansour] was crazy when he told them that he thinks he found the right guy and he is giving his son baseball lessons.”

But Kingsbury won them over, and in early February took the seat he’s currently sitting in. He signed his baseball retirement papers right there, and one week later was down in Orlando for ACG Intergrowth (where I first met him).

“The hours are certainly different, because I was used to going to bed at 4 and waking up at noon,” he says. “And there’s obviously still competitive pressure to perform, but it’s different because you don’t have fans there or other players on your team all out for themselves. I’m not sure I should say this, but I think it’s probably easier than baseball.”

No problem saying it Bobby. Most PE pros would give up their job in a heartbeat, if they thought they even had a chance at A ball. But they don’t.

Top Three

Hexion Specialty Chemicals’ proposed $6.5 billion buyout of Huntsman Corp. (NYSE: HUN) is on the verge of falling apart. Hexion is a portfolio company of Apollo Management, and yesterday filed suit to limit its liability if the deal falls apart. It claims that Huntsman’s financial situation has deteriorated since the original agreement, thus putting bank financing in jeopardy. Huntsman has responded by saying it will fight any attempt to scuttle the deal. Read more…

The Blackstone Group has agreed to acquire home healthcare services company Apria Healthcare Group Inc. (NYSE: AHG), for approximately $1.6 billion. Apria stockholders would receive $21 per share, which is a 33% premium to yesterday’s closing price.

ApaTech, a UK-based developer of orthopedic implants, has raised $45 million in a VC funding round co-led by HealthCor Partners and return backer 3i Group. The company had previously raised around $24 million, and says that it applies “the science of silicon to bone graft technology.”

VC Deals

NTRglobal, a Barcelona, Spain-based provider of on-demand communications and collaboration solutions for the enterprise, has raised €22 million in new VC funding. Kennet Partners led the round, and was joined by Atlas Venture and return backers Debaeque and Elaia Partners.

ParaScale Inc., a Cupertino, Calif.-based provider of cloud storage software, has raised $11.37 million in Series A funding, according to a regulatory filing. Backers include Charles River Ventures and Menlo Ventures.

Mochi Media Inc., a San Francisco-based provider of advertising solutions within Flash games, has raised $10 million in Series B funding. Shasta Ventures led the round, and was joined by return backer Accel Partners. The company had raised a $4 million Series A round last year.

TxVia Inc., a New York-based provider of prepaid card processing technology, has raised $8.5 million in Series B funding. Espírito Santo Ventures led the round, and was joined by fellow insiders Village Ventures and High Peaks Venture Partners. The company also formally changed its name from TxCore.

DynaPump Inc., a Northridge, Calif.-based manufacturer of surface mounted artificial lift systems for the oil and gas industry, has secured $6 million of an $8 million Series C extension, according to a regulatory filing. The company had previously held a $12 million close on the round, from DFJ Element, NGP Energy Technology Partners and Chevron Technology Ventures.

Vaccsys Inc., a Seattle-based vaccine developer, has called down $9 million of an $18 million Series A round, according to a regulatory filing. Backers include Alta Partners, The Column Group and Versant Ventures. The company’s technologies “regulate immune responses by targeting dendritic cell biology with combinations of proprietary vectors and adjuvants.”

Buyout Deals

Cerberus Capital Management is being sued by an investment fund called Amida Capital Management, over its failed buyout of United Rentals. Amida alleges that Cerberus made “deceptive” misrepresentations that cost Amida millions of dollars.

Brantley Partners has made an investment in Jet Lithocolor Inc., a Downers Grove, Ill.-based commercial plastic printer that provides of prepaid, loyalty and gift cards. No financial terms were disclosed.

Diamond Castle Holdings has agreed to buy York Label from Wind Point Partners, for an undisclosed amount. York Label is an Omaha, Neb.-based provider of labeling and packaging solutions to the food, beverage, consumer products and pharmaceutical markets.

DLJ Merchant Banking Partners has offered to acquire Guala Closures, an Italy-based maker of wine and spirit bottle tops. The offer is valued at approximately €290.8 million, with Guala Closures stockholders to receive €4.30 per share. Guala CEO Marco Giovannini, who owns around 12% of the company’s shares, is participating with DLJ.

H.I.G. Capital has acquired Stant Corp. from Tompkins PLC for an undisclosed amount. Stant Corp. is a Connersville, Ind.-based maker of fuel system and vapor emission control products for automotive and industrial applications. It recorded $179 million in 2007 sales, and is being sold as part of Tompkins’ plan to divest itself of non-core businesses.

LBO France reportedly has acquired a one-third equity stake in French energy business Converteam from Barclays Private Equity. The deal values Converteam at approximately €2 billion, with Barclays retaining a two-thirds ownership position.

Morgan Stanley Private Equity has acquired nearly a 35% stake in Breitenfeld, an Austrian specialty steel producer. No financial terms were disclosed. BAST Investment Group also participated in the deal, and acquired an additional 3.5% position.

Trow Global, an Ontario-based multidisciplinary engineering and consulting firm, has received an investment from General Atlantic. No financial terms were disclosed.

Vista Equity Partners has sponsored a recapitalization of P2ES Holdings Inc., a provider of data, software and enterprise services for the energy industry. No financial terms were disclosed. Friedman Billings Ramsey & Co. advised P2ES on the deal.

Warburg Pincus has formed Ganic Pharmaceuticals as an acquisition platform for revenue-generating drug companies, products and/or pipeline development assets. No financial terms of Warburg Pincus’ commitment were disclosed. Ganic will be run by former senior executives of MedPointe Pharmaceuticals.

PE Exits

Apax Partners said that it has not set a specific time to sell its 44% stake in listed German telecom company Versatel AG.

Johnson & Johnson has acquired Amic, a Swedish developer of in vitro diagnostic technologies for use in point-of-care and near-patient settings. No financial terms were disclosed. Amic had raised around $8.5 million in VC funding since 2002, from firms like InnovationsKapital and Investor Growth Capital.

Microsoft has acquired Navic Networks, a Waltham, Mass.–based provider of television advertising solutions. No financial terms were disclosed. Navic raised around $52 million in 2000 and 2001, from firms like Highland Capital Partners, Himalaya Capital, Pequot Capital and Pilot House Ventures.

PE-Backed M&A

Cortina Systems Inc., a Sunnyvale, Calif.-based provider of analog and digital ICs, has acquired Storm Semiconductor Inc., a company specializing in embedded network processing, triple play services and storage solutions for both SMB and home networks. No financial terms were disclosed.

Cortina has raised over $216 million in total VC funding, including a $132 million round in 2006 to finance the company’s acquisition of Intel Corp.’s optical network components business. Backers include Institutional Venture Partners, Canaan Partners, Morgenthaler Ventures, Alloy Ventures, Bridgescale Partners, Doll Capital Management and Sofinnova Ventures. Other returnees included Kodiak Venture Partners, El Dorado Ventures, Invesco Private Capital, Jafco Ventures and Redpoint Ventures.

Firms & Funds

Kohlberg Kravis Roberts & Co. has made a number of internal changes, including the creation of a chief administrative officer position. It will be filled by existing KKR pro Todd Fisher. The firm also has absorbed its entire KFL credit business, shifting from a 65% owned entity to a wholly owned entity.

DFJ InCube Ventures is targeting $125 million for its debut fund, according to a regulatory filing. The Menlo Park, Calif.-based firm focuses on early-stage medical technology opportunities, and is led by managing director Mir Imran. It already has received a $10 million LP commitment from Medtronic.

Great Hill Equity Partners is raising up to $1.25 billion for its fourth fund, according to a regulatory filing. The Boston-based firm already has secured around $830 million in commitments. Its third fund closed in 2006 with $750 million. www.greathillpartners.

New Enterprise Associates is pre-marketing its thirteenth fund, according to VentureWire. The Baltimore-based venture firm is expected to begin official fundraising in the second half of this year, with a target of between $2.5 billion and $3 billion. It raised $2.5 billion for its twelfth fund in 2006.

Human Resources

Mark Rodrigues has joined Aquiline Capital Partners. He previously was with Oliver Wyman, as a managing director and global head of strategic IT and operations.

JPMorgan Chase & Co. staffers were informed that there may be additional job cuts coming, according to Reuters.

Paul Anderson has joined Natixis Global Asset Management as vice president of institutional sales. He previously was with Bank of America, where he served as a vice president of institutional sales for the firm’s Columbia Management unit.