PE Week Wire: Tues., April 22, 2008

The following column was written by Adam Vaughan, winner of this year’s March Madness Extravaganza. As you may recall, one of the prizes is to take over this space for a day…

How I Won This Year’s Bracket Breakdown

I would love to tell you that I stole a giant blackboard from the neighborhood elementary school, took a week off of work, kicked my fiancé out of the house, unplugged my telephone, bought a keg, preordered pizza to be delivered at noon every day to be left on the front porch so as not to be disturbed and analyzed this bracket with all the seriousness that college level sports deserve. In all honesty I only did a few of those things, or none. I don’t remember.

The truth be told, I got lucky. That’s all there is to it. It isn’t really much of a story to tell at all. I am an honest guy, so I will break down my 2008 NCAA March Madness stats for you just to show you how lucky I actually am. Out of the six bracket style pools I entered, this was the only one where the winner I picked made it to the final four. Not just that though, it is the only one where my pick even made it to the elite eight. And in three of the six, I didn’t even get to the sweet sixteen.

So when Dan informed me my prize was to write a column — something I had never done before — I thought to myself: “What the hell am I supposed to write about finance that these guys don’t already know?” I live in North Bay, which is three and a half hours North of Toronto, which is probably the only city in Canada you would recognize, so I am fairly detached from the day-to-day deals, and I cannot stand the talking heads on CNBC, so I rely on this wonderful newsletter to keep me informed.

So I decided then not to write about finance. You read this stuff everyday, all day, why bore you with my textbook analytical skills, or write about how you can make millions piggy- backing all of Warren Buffet’s picks. When the truth is Wall Street and the NCAA March Madness tournament have quite a lot in common. Luck. You need to get really lucky despite all your hard work. You can run wind sprints up and down the court and drain free throws for an hour or you can read through financial statements and listen to conference calls. All it does is prepare you. You still need to get a few fortuitous bounces and some friendly calls from the referee (Fed) to go the distance.

Now, more than ever luck is key. Assets that were once uncorrelated now seem to be correlated, stocks are going up when all logic says they should be going down, bad press is good press, and GE missed earnings…

So thank you Dan for letting me participate in this year’s pool, I hope you enjoyed my column, and I can’t wait for you to read next year’s.


New at peHUB

* peHUB First Read, including Chrysler loan slashing and some lawsuit musings from Fake Schwarzman.

* Barack Obama cleaned up in Q1 campaign contributions from private equity pros. It obviously didn’t hurt that Romney dropped out, but it’s remarkable that Obama received cash from more PE individuals than did Clinton and McCain combined (although the actual dollar gap wasn’t nearly so large). The post includes downloadable charts of contributions-to-date and who gave what to which candidate.

* Bernard Moon says we’re heading toward an Nontrepreneur Nation.

* Sign up for our News Feeds, which now include intra-day updates from our Thomson Reuters colleagues. Why wait until 10am to get the news?

Top Three

Think Global AS, a Norwegian electric car maker, has agreed to launch a North American subsidiary. It is being done as a joint venture with Kleiner Perkins Caufield & Byers and RockPort Capital. Think Global will hold a 50% stake, while the VC firms will split the remainder.

Golden Gate Capital has sold PlantCML to European aerospace EADS for approximately $350 million. PlantCML is a Temecula, Calif.–based provider of mission-critical communications systems for emergency contact centers.

Warburg Pincus has closed its tenth fund with $15 billion in capital commitments. The New York-based firm makes venture capital, growth equity and leveraged buyout investments out of the same general fund, which invests globally.

VC Deals

Nurien Software, a Seoul, South Korea-based provider of social networking and online gaming services, has raised $15 million in Series A funding. Backers include Northern Light Venture Capital, Globespan Capital Partners, New Enterprise Associates and QiMing Venture Partners.

HealthEdge, a Burlington, Mass.-based provider of claims and benefit administration for healthcare payers, has raised $13 million from Psilos Group.

Red Bend Software Inc., a Waltham, Mass.-based provider of software for remotely updating mobile phone applications, has raised $10 million in fifth-round funding. Coral Capital Management was joined by return backers Carmel Ventures, Greylock Partners, Infinity Venture Capital, Pitango Venture Capital and Poalim Ventures. The company has now raised $32.5 million in total venture capital since early 2001.

OnRequest Images, a Seattle-based provider of custom imagery, has raised $8 million in additional Series C funding from European Founders Fund, according to a regulatory filing.The company had previously raised a $9 million Series C round led by Menlo Ventures, with return backers Maveron and Frazier Technology Ventures also participating.

Infinia Corp., a Kennewick, Wash.-based developer of solar thermal engine technology, has raised $7 million in additional Series B funding. The company had previously held a $50 million first close. Foxconn Technology Group and an undisclosed backer led the expansion, while earlier round participants included GLG Partners, Wexford Capital, Vulcan Capital, Khosla Ventures, EQUUS Total Return Inc., Idealab and Power Play Energy LLC.

Health Plan One, a Shelton, Conn.-based online marketplace for health insurance, has raised $6.5 million in Series A funding. Pequot Ventures led the round, and was joined by Greycroft Partners. Individual investors included Kevin Hill, former CEO for United Healthcare Northeast; Chan Wheeler, former CEO of Uniprise; and Bill Sullivan, former president of Oxford Health Plans.

Aureos China Fund has invested $5 million in company Qingdao Land of State Power Environment Engineering Co., a Chinese wind energy and environmental protection company.

Micrima, a Bristol, England-based developer of radio wave technology to breast cancer diagnostics, has raised £2 million in new funding. YFM Group and Swarraton Partners co-led the round, and were joined by return backer Nesta.

The Guild Inc., a Madison, Wis.-based online art retailer, has raised $2.5 million in Series C funding, according to a regulatory filing. Shareholders include Dolphin Equity Partners.

TeachStreet, a Seattle-based online community for helping match students with local teachers, has raised $2.25 million in Series A funding. Madrona Venture Group led the round, and was joined by Bezos Expeditions and several local angels.

Modigene Inc., an Israel-based developer of proprietary versions of already-approved therapeutic proteins, has raised $2 million in additional Series A funding. Shareholders include Spencer Trask Ventures.

Vysr Inc., a Palo Alto, Calif.-based developer of an online voice and text communication tool, has raised around $2 million in Series A funding. Backers include Sand Hill Group and VenturEast of India.

ArGentis Pharmaceuticals LLC, a Memphis-based company that seeks to in-license therapies for chronic diseases, has raised an undisclosed amount of funding from Innova Memphis Inc.

VirtualLogix Inc., a Sunnyvale, Calif.-based provider of real-time virtualization software, has received an undisclosed amount of equity funding from Motorola Ventures. The company recently closed a similar deal with Texas Instruments, and before that raised $16 million in Series B funding from Esprit Capital Partners, Intel Capital, Atlas Venture and Index Ventures.

Buyout Deals

The Carlyle Group and J.H. Whitney & Co. have led an acquisition of Authentix Inc., an Addison, Texas–based provider of authentication and brand protection solutions. No financial terms were disclosed. MHT Securities advised Authentix on the deal.

Cerberus Capital Management reportedly has ended its pursuit of the healthcare business of Belgian imaging technology group Agfa-Gevaert, due to worsening economic conditions.

Crystal Ridge Partners has sponsored a recapitalization of Bronco Manufacturing Inc., a Tulsa–based manufacturer of replacement parts for drilling, workover, and well servicing rigs. No financial terms were disclosed. Corporate Finance Associates advised Bronco on the deal.

EDB Business Partner of Norway today denied a Finnish newspaper report that it has made a formal offer to acquire Nordic IT services company TietoEnator. “The company will keep the situation under continual review and has not made any decisions on further actions in this matter,” EDB said. TietoEnator yesterday advised shareholders to reject a €1.1 billion buyout offer from Nordic Capital.

Emerging Capital Partners has acquired a controlling interest in BACIM Bank, the seventh-largest banking group in Mauritania. The deal is valued at $15.9 million.

Francisco Partners and Elliott Associates have purchased $80 million in zero coupon convertible notes issued by Blue Coat Systems Inc. (Nasdaq: BCSI), a provider of WAN application delivery and web gateways. Blue Coat will use part of the proceeds to acquire Packeteer Inc.

Halyard Capital yesterday acquired a package of cable assets from Newnan Utilities, a municipally-owned utility based in Newnan, Georgia. The deal was valued at $70 million, with financing provided by CIT Lending Services, Newstar Financial and Wells Fargo Foothill. The assets will be managed by a newly-formed company called NuLink.

Hanover Partners has acquired Pyramid Technologies Inc., a Mesa, Ariz.-based maker of bank note validators and currency validation equipment used in slot machines, vending machines and amusement devices. No financial terms were disclosed.

Pine Creek Partners has sponsored a recapitalization of Hilden America Inc., a South Boston, Va.-based provider of luxury linens to high-end hotels and restaurants. No financial terms were disclosed for the deal, which also included participation by SunTrust Bank.

Sun Capital Partners yesterday got a boost from proxy firm RiskMetrics Group-ISS, which urged Furniture Brands International (FBN) stockholders to approve three board nominees put forth by Sun, rather than the furniture company’s candidates.

Aquiline Capital Partners has acquired a 5.1% stake in in Dutch equities trader BinckBank NV.

PE Exits

H.I.G. Capital has sold Motive Eyewear to StyleMark Inc. for an undisclosed amount. Motive is a Fullerton, Calif.-based designer and supplier of affordable sunglasses, reading glasses and optical frames.

Sonus Networks (Nasdaq: SONS) has acquired Atreus Systems Corp., an Ottawa-based provider of IP voice and IP service provisioning software. No financial terms were disclosed. Atreus had raised around US$40 million in VC funding since 1999, from firms like Blueprint Ventures, Skypoint Capital Corp., Mobius Venture Capital, TELUS Ventures, Meritage Private Equity Funds and Business Development Bank of Canada.

PE-Backed M&A

BuzzLogic, a San Francisco-based provider of software that helps marketers monitor blogosphere conversation, has acquired Activeweave, creator of the brower companion application BlogRovR. No financial terms were disclosed. BuzzLogic last year raised $9.6 million in Series A funding from Adams Capital Management, Ackerley Partners and Transcosmos Investments & Business Development.

iTradeNetwork Inc., a Pleasanton, Calif.–based provider of on-demand e-business solutions for the food industry, has agreed to acquire Instill Corp., a San Mateo, Calif.-based provider of spend intelligence solutions for the foodservice industry. No financial terms were disclosed. The deal is partially being financed by Accel-KKR, which recently acquired a majority equity stake in iTradeNetwork. Instill Corp. has raised over $90 million in VC funding between 1995 and 2001, with current shareholders including Octane Capital, Panorama Capital and Mayfield Fund.

UniTek USA LLC, a portfolio company of HM Capital Partners, has agreed to acquire the cable services operating unit of 180 Connect Inc., which is being acquired by DirecTV in a separate transaction. Unitek also will acquire certain DirecTV installation services markets in exchange for cash and UniTek’s satellite installation services in New York City, Burbank, Calif., and Bloomington, California.

Firms & Funds

Credit Agricole Private Equity has raised €600 million for a fund that will invest in the public-private partnership infrastructure sector. It already has invested a total of €80 million in a Vienna road project, Ireland’s Limerick tunnel and certain UK healthcare programs.

Human Resources

Kathie Painter has joined Alinda Capital Partners as a London-based partner. She previously was a managing director with Citigroup’s infrastructure investment banking group. The news of her move was first reported by The Infrastructure Journal.

Private Advisors LLC has added three managing directors in its London office: Matthew Baker, Jennifer Buckley and Rickard Fischerstrom. Baker has spent the past eight years with GE Equity in London, where he was head of the EMEA private equity group. Baker was with ATP Private Equity Partners, where he oversaw legal and tax affairs. Fischerstrom will be responsible for European business development and investor relations at Private Advisors, and previously had a similar role with Lazard Asset Management.

Kevin Kuby has joined Alvarez & Marsal as a senior director in the firm’s Chicago office. He previously was with the restructuring practices of FTI Consulting and PwC.

John Paulson brought home $3.7 billion in 2007, making him the hedge fund industry’s highest earner, according to Alpha Magazine.