PE Week Wire: Thursday, September 4, 2008

What a difference a year makes. Well, at least according to Vanity Fair.

The monthly glossy has released its 2008 New Establishment list, which is basically a ranking of the world’s most powerful movers and shakers. Noticeably absent are The Blackstone Group’s dynamic duo of Steve Schwarzman and Pete Peterson, who came in at number four last year (up from #34 in 2006). Not demoted, mind you, but totally gone.

Henry Kravis remained on the list, but fell from #51 to #77. Ditto for venture capitalists Mike Moritz (#56 to #88) and Vinod Khosla (#62 to #92). Even part-time private equity pro Bono is less important than he used to be, dropping eight slots from #28 to #36.

Vanity Fair did at least throw one bone to the private equity markets, bumping Quadrangle Group’s Steve Rattner up ten spots to #89. Why? Because Michael Bloomberg placed his vast fortune into Quadrangle’s care. Maybe Blackstone should have made a run for the Mayor’s money…

*** Last month I wrote a column comparing today’s VC-backed cleantech market with yesteryear’s VC-backed nanotech market. Here’s a salient comment from Jens that somehow didn’t make it out of the feedback mailbag: “When you look at the technology companies (not the project companies) in the cleantech space, then you will notice that the vast majority of them are novel materials companies. The vast majority of these novel material technologies are nanotech-based. In other words: Cleantech is the market for which Nanotech has been waiting.”

*** Speaking of cleantech VC, thin-film solar film company Miasole reportedly is raising $200 million in new funding. This doesn’t include the $106 million it had previously disclosed, although certain strategic investors – like Arcelor Mittal – have already said that they participated in the new round.

*** WSJ reported today that Sun Capital Partners is facing two lawsuits related to busted deals: Mervyn’s and Powermate. Sun told WSJ that the cases have no merit (I know, a novel reply), but it will nonetheless be interesting to see how these play out. PE firms are often compelled to settle such suits because most PE partners aren’t covered by D&O insurance in the case of gross negligence (although the fund itself is). Trustee litigators know this, which means that merit is not always their top priority. We’ll post the actual complaints at peHUB later this morning.

Top Three

Microfabrica Inc., a Venice, Calif.-based developer of micro-devices for medical, electronic and defense applications, has raised $22.5 million in Series B funding. Versant Ventures and Interwest Partners co-led the round, and was joined by return backers Draper Fisher Jurvetson, DynaFund Ventures, Chevron Technology Ventures and Partech International. The company has now raised around $62 million in total VC funding since its 2000 founding as MemGen.

Coca-Cola Co. has agreed to buy Chinese juice-maker China Huiyuan Juice Group Ltd. (HK: 1886) for approximately $2.5 billion in cash. Warburg Pincus invested $62.5 million for nearly a 7% stake two years ago. That position would be worth around $175 million under terms of the Coke offer.

Alberto Cribiore has agreed to join Citi as vice chairman of its institutional clients group, effective next week. He previously was managing partner of Brera Capital Partners and an independent director with Merrill Lynch. Prior to founding Brera, Cribiore was co-president of Clayton Dubilier & Rice.

VC Deals

Sagent Pharmaceuticals Inc., a Schaumberg, Ill.-based developer of injectable drugs, has raised $30 million in new Series A funding. It had held a $53 million first close on the round last fall. Vivo Ventures continues to be the only listed investor.

Chamate, a Chinese fast-food restaurant chain, has raised $23 million in third-round funding. Participants included Oak Investment Partners and IDG VC. The company previously raised a $10 million round in late 2006 from IDG VC and GGV Capital, and counts Taiwanese food company Ting Hsin International Group among its major shareholders.

Natrix Separations Inc., a Canadian maker of membrane-based disposable chromatography products, has raised C$19 million in Series B funding. D.E. Shaw Venture Capital led the round, and was joined by the Canadian Medical Discoveries Fund (managed by JovInvestment Management) and BDC Venture Capital.

Lumativa AG, a Swiss developer of anti-infectives for women’s health, has raised CHF 18 million ($16.24m) in Series A funding. Backers include Atlas Venture, BB Biotech Ventures and BioMedInvest.

Stylesight, a New York-based online provider of fashion information, has raised $16 million in Series A funding from Fidelity Ventures.

Vibes Media LLC, a Chicago-based mobile marketing company founded ten years ago, has raised $15 million in Series A funding from Fidelity Ventures.

Fonality Inc., a Los Angeles-based provider of open-source IP telephone for the SMB market, has raised $12 million in Series D funding. Draper Fisher Jurvetson Growth Fund led the round, and was joined by return backer Intel Capital. Fonality had previously raised over $12 million from Intel and Azure Capital.

Raprt, a social gaming startup launched by XFire co-founder Dennis Fong, has raised $12 million in Series A funding, according to PaidContent. Backers include Accel Partners and the Founders Fund.

Histogenics Corp., a Waltham, Mass.-based tissue repair company, has raised $13.1 million in second-round funding. Return backer Boston Millennia Partners led the round, and was joined by Foundation Medical Partners and Stryker Corp.

ASOCS, an Israel-based ,provider of wireless processors for handheld devices has raised $8 million in second-round funding. FinTech Global Capital led the round, and was joined by return backers Vertex Venture Capital and Harel Hertz Investment House.

Inscape Software (f.k.a. HR Alloy), a Montreal-based provider of on-demand employee assessment solutions, has raised C$7 million in Series B funding. Solidarity Fund QFL led the round, and was joined by return backers Rho Canada Ventures, Rho Investment Partners Canada and Garage Technology Ventures Canada.

Eco-Products, a Boulder, Colo.-based provider of food service items made from renewable resources, has raised $2 million in Series A funding from Greenmont Capital Partners.

Highwinds Network Group, a Winter Park, Fla.-based provider of multi-platform IP services and content distribution solutions, has raised an undisclosed amount of second-round from European Founders Fund. This follows a recent $55 million infusion co-led by General Catalyst Partners and Alta Communications.

Buyout Deals

CVC Asia Pacific has withdrawn its offer to acquire around a 30% stake in watchmaker Peace Mark (HK: 0304), although the company says it has received another offer.

Gryphon Investors has sponsored simultaneous recapitalizations of Carlsbad, Calif.-based Synteract Inc. and Overland Park, Kan.-based Vince & Associates Clinical Research, providers of outsourced pharma services to biotech and drug companies. No financial terms were disclosed. Celerity Partners, an existing backer of both companies, will remain a shareholder.

PE Exits

Barmoral Advisors has sold Interstate Southwest Ltd., a Navasota, Texas-based provider of closed die steel forgings, to Ellwood Group Inc. for an undisclosed amount. Balmoral originally acquired the company 20 months ago, and used National City Capital Markets to manage the sale.

Pall Corp. (NYSE: PLL) has acquired GeneSystems, a French developer of a molecular diagnostics platform. No financial terms were disclosed. GeneSystems had raised around $5 million in VC funding since 2003, from CVC Enterprises, Endeavour Vision SA and XAnge Private Equity.

Secure Computing Corp. (Nasdaq: SCUR) has agreed to acquire Securify Inc., a Cupertino, Calif.-based enterprise gateway security company. The deal is valued at approximately $15 million, plus an earn-out of up to another $5 million. Securify had raised over $76 million in VC funding since 1998, from firms like Benchmark Capital, JPMorgan Partners (managed by Panorama Capital), Spectrum Equity and Pequot Capital (managed by FirstMark). Other past backers – including Mohr Davidow Ventures, US Venture Partners and AltoTech Ventures – are no longer Securify shareholders.

PE-Backed M&A

ConsumerPowerline Inc., a New York-based provider of energy demand response solutions, has acquired DemandDirect LLC, a provider of demand resources to electricity end-users in New England. No financial terms were disclosed. ConsumerPowerline raised a $17 million Series A round last fall from Expansion Capital Partners, Bessemer Venture Partners, Schneider Electric Ventures, the New York City Investment Fund and Vantania Holdings.

Expand Networks Inc., a Roseland, N.J.-based provider of WAN compression and acceleration appliances, has agreed to acquire NetPriva Pty Ltd., an Australian developer of software-only WAN optimization solutions. No financial terms were disclosed for the deal, which is expected to close within the next few days. Expand Networks has raised nearly $70 million in VC funding, from firms like America Online, Comcast Interactive Capital, DIC, Federated Kaufman Fund, Intel Capital, Omninet Capital, RBC Capital Markets, Tamir Fishman Ventures and Robeco Investment Management.

The HealthCentral Network, an Arlington, Va.-based provider of online health and wellness information, has acquired and for an undisclosed amount. The first is an HIV/AIDS patient resource, while the second is an HIV/AIDS professional resource. HealthCentral has raised over $80 million in VC funding from firms like IAC, Sequoia Capital, Carlyle Venture Partners and Polaris Venture Partners.

Veyance Technologies Inc., the former Engineered Products division of Goodyear Tire & Rubber, has acquired RCT Servicos de Vulcanizacao, a Brazilian conveyor belt supplier and service provider. No financial terms were disclosed. Veyance was acquired last year by The Carlyle Group for $1.475 billion.

Firms & Funds

The New York State Common Retirement Fund has disclosed three new fund commitments: $250 million to Lindsay Goldberg III; $50 million to VantagePoint CleanTech Partners II and $10 million to Smith Whiley Pelham Fund III.

Human Resources

Richard Grand-Jean has joined Hall Capital Partners as a principal and director of business development for the Eastern United States. He previously was president of Abel’s Hill Capital Corp. and Global Film Equity Corp.

David Wardrop and Tristan Craddock have joined Rutland Partners, a UK-based mid-market private equity firm, as an investment manager and investment executive, respectively. Wardrop previously was with Close Brothers Corporate Finance, while Craddock was with Ernst & Young.

LNK Partners, a New York-based private equity firm focused on the consumer/retail sector, has promoted Jeff Pearlman to partner. He has worked on LNK deals Au Bon Pain and Ariat, and previously was a principal with Apax Partners and an associate with GE Equity.

Stonehenge Growth Capital has promoted Travis Milks to senior associate to vice president.