PE Week Wire: Tues., April 15, 2008

Yesterday’s plumbing problems had been limited to the kitchen, but have now spread like wildfire to the rest of my home’s faucets and drains. But I’ve now got professionals dealing with it, so onto actual business:

*** There are thousands of names available to new private equity firms, which is why it’s so vexing that they often pick ones that are perilously close to the names of existing firms. I’m not just taking about the tired habit of naming your firm after a tree or a rock, but real phonetic similarities that can prompt incumbents to claim trademark infringement. We saw this last year when Union Square Ventures sued Union Square Partners (since settled out of court), and now have a new example: H.I.G. Capital suing H&G Capital Partners.

H.I.G. is the established player here, as a Miami-based firm with over $4 billion in assets under management (buyout, VC, distressed and public equities). H&G is the startup, a Salt Lake City-based middle-market buyout firm formed by Jon Huntsman Sr., former Bain Capital investor Bob Gay (thus the “H” and “G”) and some ex-Sorenson Capital pros like Steve Young (yeah, that Steve Young).

In its complaint, H.I.G. asserts that the name similarities will lead to market confusion, and said that H&G did not change its name after being requested to do so. H.I.G. is asking for punitive damages in a Florida court, although recently lost its motion for an injunction against H&G. Neither firm has responsed to requests for comment.

You can read the actual complaint here.

*** Speaking of lawsuits, it looks like a pair of VC-backed electric car makers are taking their dispute to court.

*** FM Publishing, an advertising network for online publishers, this morning announced that it has raised $50 million in Series C funding led by Oak Investment Partners.

peHUB had reported the deal on Sunday, saying that FM had raised between $40 million and $50 million at a whopping $200 million pre-money valuation. No valuation information was provided by FM in today’s press release, except that Oak’s investment resulted ina minority ownership position. FM is run by former Industry Standard honcho John Battelle, and last year was envisioned as part of Ross Levinsohn and Jon Miller’s rollup plan with General Atlantic. In an interesting coincidence, another one of that rollup’s proposed pieces – Sphere – today was acquired by AOL.

*** Yesterday’s email request for new Desperate Intern listings was a success, as we now have over 50 firms participating. I’ll have all of the posts up in MBA Forum by tomorrow morning (tonight’s plan is to first file taxes, and then do intern postings).

*** Jeremy Harrell on CapitalSource’s new funding spigot: You and me.

*** peHUB First Read, including a reason why LBO firms might want to think twice about buying up their own portfolio company’s loans.

*** Happy birthday M. You remain my favorite PE pro to have never provided me with a single piece of useful information…

Top Three

Move Networks Inc., an American Fork, Utah-based provider of video-over-IP solutions, has raised $46 million in Series C funding. Benchmark Capital led the round, and was joined by Cisco, Comcast Interactive Media, Televisa and return backers Hummer Winblad Venture Partners and Steamboat Ventures.

J.C. Flowers & Co. said that it will not increase its £3.5 billion bid for UK insurer Friends Provident PLC, and warned that it plans to walk away if talks do not begin by Friday. Shares in Friends, which rejected the 150 pence per share approach from Flowers last month, dropped almost 10% after the U.S. firm’s statement.

HRJ Capital has raised $195 million for its first distressed opportunities fund-of-funds. The fund is already fully committed.

VC Deals

Cuill, a Menlo Park, Calif.-based search startup, has raised $25 million in second-round funding. Madrone Capital Partners led the round, and follows an $8 million Series A round from Tugboat Ventures and Greylock Partners.

Pathway Medical Technologies Inc., a Kirkland, Wash.-based developer of endovascular treatments for peripheral arterial disease, has raised $24.5 million in Series C-1 funding. Return backers include HLM Venture Partners, Latterell Venture Partners, Oxford Bioscience Partners, Forbion Capital Partners and Giza Venture Capital.

FrontStream Payments Inc., a Brentwood, Tenn.-based provider of payment solutions to SMEs, has raised $16 million in first-round funding. Participants include SSM Partners, Noro-Moseley Partners, Wakefield Group, Southpoint Capital and company management.

Aileron Therapeutics, a Cambridge, Mass.–based developer of cell-permeable peptide technology to help treat cancer, announced that it has raised $10 million in Series C funding. The round closed late last year, and was co-led by Apple Tree Partners and the Novartis Venture.

Heritage Pharma Ltd., a UK-based generic drug developer, has raised $10 million in Series A funding from McClendon Venture Co. and TLW Venture Co.

QD Vision Inc., a Watertown, Mass.-based nanotech product company focused on the display and lighting markets, has called down $9 million of a $16 million Series C round, according to a regulatory filing. Return backers include Highland Capital Partners and North Bridge Venture Partners, while the company’s website also lists In-Q-Tel and OSI Ventures as investors.

Redfern Integrated Optics Inc., a Santa Clara, Calif.-based maker of optical transmitters for the fiber optic sensing and communication markets, has raised $7.5 million in new VC funding. Southern Cross Venture Partners was joined by return backers Tallwood Venture Capital and Jolimont Capital. The company had previously raised around $32 million.

BuddyTV Corp., a Seattle-based operator of a social network for television fans, has raised $6 million in Series B funding from Madrona Venture Group.

Nirvanix, a San Diego-based developer of cloud storage platforms, has raised an undisclosed amount of VC funding from European Founders Fund. The company had previously raised around $29 million from firms like Intel Capital, Valhalla Partners, Windward Ventures and Mission Ventures.

Realtime Worlds, a Dundee, Scotland-based video game developer, announced that it has raised $50 million in Series B funding. We had previously noted the news, based on a TechCrunch report. Maverick Capital led the round, and was joined by return backers WPP and New Enterprise Associates.Realtime Worlds was founded by CEO and creative director David Jones, who previously created the Grand Theft Auto and Lemmings games franchises.

RecycleBank, a Philadelphia-based company that partners with cities and businesses to reward households that recycle, confirmed that it has raised $30 million in Series B funding. The news had previously been reported by VentureWire. Kleiner Perkins Caufield & Byers led the round, and was joined by return backers RRE Ventures, Sigma Partners and The Westly Group.

Buyout Deals

August Equity has sold its investment in Healthcare Homes, a residential care provider for the elderly, in a £75 million secondary buyout to Bowmark Capital. Bowmark invested £35 million of equity, with Royal Bank of Scotland providing a £40 million senior debt facility and further funding for bolt-on acquisitions and development.

Gresham Private Equity has acquired Johnson Clothing, a UK-based maker of job-related clothing, from Johnson Service Group in an £82.5 million management buyout. Debt was provided by Lloyds TSB, Barclays, HSBC and Royal Bank of Scotland.

The Riverside Company has acquired Central Power Products Inc., a Grandview, Mo.-based manufacturer of railcar movers. No financial terms were disclosed, except that the debt was financed via a co-managed venture of GE Commercial Finance and Allied Capital. Riverside will fold CPP into an acquisition platform called Nordco.

Prism Health Networks, a West Seneca, N.Y.-based provider of muscular-skeletal health services, has raised an undisclosed amount of equity funding from Summer Street Capital Partners.

PE-Backed IPOs

DigitalGlobe Inc., a Longmont, Colo.-based provider of commercial high-res earth imagery solutions, has filed for a $250 million IPO. It plans to trade on the NYSE under ticker symbol DGI, with Morgan Stanley and Lehman Brothers serving as co-lead underwriters. Investors include Ball Aerospace & Technologies Corp., Hitachi Ltd., Morgan Stanley and Telespazio SpA/Euimage Investment.

PE Exits

AOL has acquired Sphere, a San Francisco-based provider of contextual search tools that offers content to online publishers. No financial terms were disclosed. Sphere was founded in 2005, and has raised just over $4 million in VC funding from True Ventures, Trident Capital and Hearst Corp. Angels backers included Doug Mackenzie, David Mahoney, Kevin Compton, Mike Winton, Phil Black, Vince Vannelli and Will Hearst.

Tenaska Power Fund has agreed to sell Holland Energy, a 665-megawatt generating station in Illinois, to Indiana electric cooperatives Wabash Valley Power and Hoosier Energy. No financial terms were disclosed for the deal, which are expected to close by January 2009.

PE-Backed M&A

Buzznet Inc., a Los Angeles-based social media community focused on music and pop culture, has acquired music blog Idolator from Gawker Media. No financial terms were disclosed. Buzzznet also recently acquired music blog Stereogum and social media company Qloud. It also reportedly raised $25 million in new VC funding from Interscope Records, Redpoint Ventures and Anthem Venture Partners.

Chrysalis, the UK music group which sold its radio interests last year, has terminated discussions about the sale of the rest of the business. In early February, reports suggested that EMI, backed by private equity investor Terra Firma, as well as Warner and Sony were in a second round of bidding. Bids had been expected to be worth around £170 million.

iCrossing Inc., a Scottsdale, Ariz.-based digital marketing company, has acquired German competitor 3GNet. No financial terms were disclosed. iCrossing has raised around $141 million in total VC funding, from firms like Goldman Sachs, Oak Investment Partners, RRE Ventures and StarVest Partners.

MediaXstream Inc., a San Jose, Calif.–based provider of transport and managed network services for the production and broadcast industries, has acquired Secure Media Solutions Inc., a Los Angeles-based provider of production applications, consulting, and managed workflow solutions to film and television clients. No financial terms were disclosed. MediaXstream recently raised $10 million in Series A funding from Constellation Ventures and Columbia Venture Corp.

North America Sports Media, a portfolio company of Pfingsten Partners, has acquired Dodds Athletic Tours, a provider of university sports tour development and marketing. No financial terms were disclosed.

The Suzo-Happ Group, a portfolio company of Pfingsten Partners, has acquired Suzo Polska, a distributor of gaming equipment in Poland. No financial terms were disclosed.

Firms & Funds

CapitalSource has agreed to acquire the retail banking operations of Fremont General, which includes 22 California locations and $5.6 billion in deposits.

Goldman Sachs is targeting $7.5 billion for its second infrastructure fund, according to LBO Wire. It closed its debut infrastructure fund in 2006 with $6.5 billion. Goldman itself has committed to invest the lesser of $750 million or 12.5% of total capital commitments.

Human Resources

Edwards Angell Palmer & Dodge announced that Walter Reed has been elected to serve as the law firm’s new managing partner. He succeeds Terrence Finn and Charles DeWitt Jr., who have served as co-managing partners since the 2005 merger of Edwards & Angell and Palmer & Dodge. Reed joined the firm in 1981, and has focused on corporate transactions.

Justin Mirro has agreed to join Moelis & Co. as a managing director leaving coverage of the automotive sector. He previously was with Jefferies & Company.