PE Week Wire: Tues., April 3, 2007

The sky is gray, Schilling’s arm was less useful yesterday than Gredenko’s and David Tom is the big winner of our March Madness Extravaganza. In other words, it’s time for some Tuesday Talkback.

Today’s edition is entirely devoted to The Blackstone Group IPO, since I haven’t done one of these since they filed. Tons of email on the topic, and here’s a brief sampling:

* Casey: “This deal is being done to cash out the senior partners. Like the buyout firms that sold minority management company stakes in the late 1990s, I bet the next generation of managers is not too thrilled about this potential deal. I wonder if Mr. Schwarzman will be able to pull this off without losing some of the firm’s talent?”

* Adam: “There is no doubt that a Blackstone IPO means that LPs’ negotiation power will weaken even more, as the GP will have a superior fiduciary responsibility toward its public shareholders that to its LPs. Why should LPs get more information on their investments, when such info might end up being used as ‘insider information?’ Everybody is going to have to get used to the Goldman model of blackbox investing… Funny how the world has turned since 2001.”

* Sam: “This move should take the sting out of the negative publicity PE firms have been receiving lately (something Schwarzy is seriously worried about given his recent comments). To me, the underlying reason behind this IPO is that it confuses those arguing for tighter regulations for PE firms.”

* Randall feels differently: “To me, this is Blackstone shooting the entire private equity industry in the back. Nothing is going to invite regulatory scrutiny more than having the market’s biggest player as a publicly-traded entity.”

* Jared: “It’s interesting to see the news on Blackstone after watching Fortress’ success. Lots of folks are saying Fortress was the first to list, but don’t forget about the smaller but also very successful IPO last March of Zug, Switzerland’s Partners Group. IPO was a similar story…priced at CHF 63, shot up to CHF 84 on the first day and then has continued… Now at just shy of CHF 140. One of the highest performing European IPOs of 2006 and a market cap now of CHF 3.7bn+, but probably under the radar of many US institutionals.”

* David: “This is just following the recent monetization trend that has been growing in Europe for a long time. It’s a smart move if you ask me, because they will have much easier access to capital.”

* Ish: “They are going public because they saw executives at Fortress make a fortune (including some paper billionaires on the Forbes List). Can’t blame them really, can we?”

* Jim: “I wonder if LBO firms going public might cut down on club deals in the future. If both Blackstone and KKR are public, for example, maybe each will feel that they can best raise their stock price by acting alone.”

Gametime: As I wrote above, David Tom of VCFA Group is the big winner of our March Madness contest. Not only did he have Florida beating Ohio State, but he also guessed the correct final score (which I really find quite amazing). You’ll be hearing from David later this month, when he takes over the PE Week Wire column for a day…

Top Three

Comcast (Nasdaq: CMCSA) has agreed to acquire Patriot Media & Communications, a Greenwich, Conn.-based owner and operator of cable systems in central New Jersey. The deal is valued at approximately $483 million in cash, and is expected to close in the third quarter. Patriot Media is owned by Spectrum Equity Investors, Spire Capital and veteran cable executive Steve Simmons.

Syndax Inc., a Waltham, Mass.-based drug company focused on cancer therapies in mechanistically-driven combination regimens, has raised $40 million in Series A funding. Domain Associates and MPM Capital co-led the deal, and were joined by Avalon Ventures, Forward Ventures and Pappas Ventures. The company was co-founded by Eckard Weber of Domain and Ronald Evans of the Salk Institute for Biological Studies and the Howard Hughes Medical Institute.

TA Associates has acquired Alere Medical Inc., a Reno, Nev.-based provider of disease management services to group health plans. The deal is valued at $175 million, and was done in partnership with company management. Alere had raised around $96 million in VC funding since 1996, from firms like Flagship Ventures, Institutional Venture Partners, S.R. One Ltd., Cutlass Capital, Firemark Advisors, Nevada Ventures, Redpoint Ventures and Western Technology Investment.

VC Deals

Radius, a Cambridge, Mass.-based drug company focused on osteoporosis and women’s health, has raised $57.5 million in second-round funding. The Wellcome Trust and existing investor MPM Capital co-led the deal. Other new backers included BB Biotech Ventures and Scottish Widows Investment Partnership, while other returnees included HealthCare Ventures and Oxford Bioscience Partners. The company previously had raised $24 million.

MicroCHIPS Inc., a Bedford, Mass.-based developer of drug delivery and biosensing devices, has raised $13.4 million in Series F funding. Novartis Venture Fund led the deal, and was joined by return backers Polaris Venture Partners, IDG Ventures Boston, Medtronic, Boston Scientific, Intersouth Partners and Boston University Community Technology

Baynote Inc., a Cupertino, Calif.-based provider of on-demand content guidance software, today announced that it has raised $10.75 million in Series B funding. Steamboat Ventures led the deal, and was joined by return backers Hummer Winblad Venture Partners, JK&B Capital and Chess Ventures. The news was first reported by PE Week Wire in February, based on a regulatory filing.

PandoraTV, operator of a South Korean video sharing website, has raised $10 million in Series B funding. DCM-Doll Capital Management led the deal, and was joined by return backers Altos Ventures, STIC International and Saehan Ventures.

Inertia Beverage Group, a Napa, Calif.-based provider of a sales and marketing platform for wineries conducting direct-to consumer-and direct-to-trade wine sales, has raised $8 million in Series B funding. Allegis Capital and Sid R. Bass Associates co-led the deal.

Samplify, a Menlo Park, Calif.-based provider of real-time compression IP, has raised $6.5 million in Series A funding from Charles River Ventures and Formative Ventures.

ForSight Labs LLC, a Menlo Park, Calif.-based ophthalmic technology incubator, has raised $5 million in Series A funding for its latest company. Backers include Morgenthaler Ventures, Split Rock Partners and Versant Ventures. No specifics of the new startup were disclosed. ForSight’s initial company was glaucoma device maker Transcend Medical, which has raised over $9 million.

YouMail Inc., an Irvine, Calif.-based provider of advanced voicemail solutions, has raised $1.87 million in first-round funding from the Tech Coast Angels (TCA) and other angels.

Silicon Navigator Corp., a Cupertino, Calif.-based developer of electronic design automation (EDA) software, said that it has raised an undisclosed amount of strategic funding from Intel Capital. The company had previously disclosed the deal in an October 2006 regulatory filing, which showed a $4.125 million Series A extension from Intel and return backers ITU Ventures and Gefinor Ventures.

Waterfront Media, a Brooklyn, New York-based online health media company, has raised $8 million in venture debt from Hercules Technology Growth Capital. The company previously had raised $10 million in VC funding from firms like BEV Partners, Neocarta Ventures, Rho Ventures, Time Warner Ventures and Village Ventures.

Buyout Deals

Pacific Equity Partners and Westfarmers Ltd. have co-led an Au$19 billion buyout offer for Australian retailer Coles Group Ltd. The price is 8% higher than an earlier bid led by KKR, which was rejected. Others in the buyout consortium include Permira and Macquarie Bank. If closed, it would be the largest-ever buyout of an Australian company.

Lightyear Capital has agreed to acquire construction rental company Neff Corp. from Odyssey Investment Partners. No financial terms were disclosed, athough LBOWire puts the pricetag at around $835 million (including $485 million of assumed debt). Lightyear will be joined on the equity tranche by GE Pension Trust and Norwest Equity Partners, while debt financing will be arranged by Bank of America, CIBC World Markets, GE Capital Markets and UBS.

AIG Financial Products Corp. has acquired a 50% partnership interest in Tenaska Energy’s natural gas marketing companies: Tenaska Marketing Ventures, Tenaska Marketing Canada and Tenaska Gas Storage (collectively known as TMV). No financial terms were disclosed for the deal, which closed on March 31.

Genstar Capital has completed its previously-announced acquisition of International Aluminum Corp. (NYSE: IAL), a Monterey Park, Calif.-based manufacturer of residential and commercial aluminum building materials. IAL shareholders received $53 per share, for a total transactional value of $228 million.

Quadrangle Capital Partners has agreed to acquire Hargray Communications Group, a Hilton Head, S.C.-based telecom provider serving southeastern South Carolina and northeastern Georgia. No financial terms were disclosed for the deal, which also includes Hagray directories publishing unit Data Publishing Company Inc. Following the close of the transaction, Quadrangle will name current Morningstar Management CEO G. Thomas Reed as Hargray’s new CEO.

Caxton-Iseman Capital has agreed to acquire KCP Income Fund (TSX: KCP.UN), a Canadian manufacturer of consumer products in the laundry, household cleaners, personal care, OTC medicated and pharmaceutical categories. KCP unit-holders will receive Cnd$10 per unit, for a total transaction value of around Cnd$804 million.

ArcLight Capital Partners has agreed to acquire National Energy & Trade Holdings LLC, a Houston, Texas.-based provider of natural gas marketing and a transportation services. No financial terms were disclosed. NETH was advised on the deal by GulfStar Group.

Trivest Partners has acquired Allegiance Security Group, a Fort Myers, Fla.-based provider of security guard services firms in the Southeastern United States. The seller was ASG founder and CEO Stephen Levine, who will continue to run the company’s day-to-day operations. No financial terms were disclosed.

Ford Motor Co. has completed its sale of APCO to Stone Point Capital and APCO management. No financial terms were disclosed. APCO is a marketer and administrator of extended vehicle service contracts and warranties sold by automotive OEMs.

The Stephens Group has agreed to acquire a majority stake in Multi-Shot LLC, a Conroe, Tenn.-based provider of directional drilling services. The transaction completes a partial company recap, with Stephens both making a majority equity investment and providing subordinated debt financing. No financial terms were disclosed. Prior to the recap, Multi-Shot was owned by management and private equity firm Catalyst/Hall.

GIMV and IRIS Capital have acquired Dutch data management software company Human Inference from Prime Technology Ventures. No financial terms were disclosed.

PE-Backed M&A

Warburg Pincus and Marshall & Ilsley Corp. are planning to transact a sponsored spinout of M&I’s payment processing unit Metavante, according to The Wall Street Journal. The deal could be worth $4 billion, with Metavante being spun out to shareholders in a tax-free transaction, with Warburg Pincus paying cash for a significant minority ownership position.

NBGI Private Equity has sold Brambles Foods to Adeliue Food Holdings, which is backed by Duke Street Capital. The deal is valued at £22 million. Brambles is a UK-based maker of sandwiches, rolls and other related products. It was acquired by NBGI in July 2003.

ReSun Corp., a modular building provider controlled by Calera Capital, has completed its acquisition of GE North American modular space business from GE Capital Corp. Other ReSun shareholders include ABS Capital and company management, while leveraged financing for the acquisition was arranged by Bank of America and JP Morgan. No financial terms were disclosed for the deal, which results in ReSun being renamed ModSpace.

Wausau Financial Systems Inc., a Mosinee, Wis.–based provider of distributed payment and document processing services, has acquired the assets of Omaha, Neb.-based DMP Payment Systems from First National of Nebraska Inc. No financial terms were disclosed. Wausau is a portfolio company of Frontenac Co.

Accuro Healthcare Solutions Inc., a Dallas-based provider of financial and operational solutions for healthcare providers, has acquired The Woodmoor Group Inc., a Raleigh, N.C.-based provider of Web-based accounts receivables management, denials management and revenue analytics tools. No financial terms were disclosed. Accuro is controlled by Welsh, Carson, Anderson & Stowe.

Hettinger Welding LLC, a Gillette, Wyo.-based portfolio company of Clearview Capital, has acquired Eagle Excavation Inc. of Moorcroft, Wyo., according to LBOWire. No financial terms were disclosed.

PE Exits

Concentra Health Services Inc., an Addison, Texas-based provider of occupational healthcare services, has sold its workers’ compensation managed care services business units to Coventry Health Care Inc. (NYSE: CVH) for $387.5 million. Concentra is a portfolio company of Welsh Carson Anderson & Stowe.

ARC International (LSE: ARK) has acquired the primary assets of Teja Technologies Inc., a San Jose, Calif.-based developer of heterogeneous multiprocessor software. The deal includes a $3.4 million upfront cash payment, plus up to $1.6 million in earn-outs that could be paid in stages over the next two years. Teja reported a $3.3 million loss for calendar year 2006, and listed its gross assets at just $900,000, at the end of March. Teja had raised $32 million in VC funding since 2000, from firms like Blueprint Ventures, Intel Capital, Mayfield, Tallwood venture Capital, PacRim Venture Partners, RRE Ventures and SmartForest Ventures.

W.L. Ross & Co. has completed its sale of BST Safety Textiles to International Textile Group Inc. (OTC: ITXN). No financial terms were disclosed. BST is a Maulburg, Germany-based manufacturer of fabrics for automotive air bags, seat belts and military and technical uses.

Roche has acquired Therapeutic Human Polyclonals Inc., a Mountain View, Calif.-based developer of antibody therapeutics. No financial terms were disclosed. VentureWire reports that THP had raised $12 million in VC funding from Research Corp. Technologies and SangStat Medical Corp. (later acquired by Genzyme).

Firms & Funds

Cipio Partners has acquired a portfolio of venture capital investments from Siemens, including virtually all the assets of the Siemens Venture Capital Communications Fund. No financial terms were disclosed. According to its website, the SVC Communications fund has 59 current portfolio companies.

Vintage Venture Partners, an Israel-based secondary firm, has closed its third fund with $125 million in capital commitments. The fund will acquire limited partner interests of Israel-related venture capital funds and private equity funds, and direct portfolios of Israel-related technology investments.

Investcorp Technology Partners is planning to raise between $400 million and $500 million for its third fund, according to LBO Wire.

GSC Group has closed its CDO VIII fund with $350 million. It is the New York-based firm’s thirteenth corporate collateralized debt obligation fund the firm has raised since April 2000, including three in Europe. The transaction priced with Citigroup and is 80% ramped to date.

CIT Group Inc. has agreed to acquire the U.S. Business Technology Finance unit of Citigroup Inc. No financial terms were disclosed, except that the unit’s total assets are approximately $2 billion.

Human Resources

Michelle Guthrie has joined Providence Equity Partners as a Hong Kong-based managing director focused on Asia-Pacific opportunities, effective June 1. She most recently served as CEO of STAR, a media and entertainment company in Asia owned by News Corp.

Patrick Siewert and Herman Chang have joined The Carlyle Group as senior directors focused on Asia. Siewert previously was Coca Cola’s most senior executive in Asia, and will focus on consumer-related opportunities out of Hong Kong. Chang previously was a top manager with Delphi in Asia, and will focus on industrial opportunities out of Shanghai.

Larry Coleman and David Swenson have been named venture partners with SSM Partners, a Memphis, Tenn.-based venture capital firm. Both men are co-founders of Coleman Swenson Booth, one of the country’s first dedicated healthcare venture capital firms.

George Roberts has joined OpenView Venture Partners as a venture partner. He is a former executive with Oracle, who has spent the past few years as a local angel investor and board member with such VC-backed software companies as ScriptLogic, Fieldglass and Informance International.

Scott Reilly has joined Golub Capital as a vice president in the firm’s first lien middle-market group. He previously was with GE Capital’s global sponsor finance group.

Jon Seeber has joined Updata Partners as an associate. He previously was with IBM Global Services Business Development.

Tim Fitzpatrick, CEO of Sallie Mae, is joining the advisory board of Leeds Equity Partners. In other LEP news, the firm said that Rudy Giuliani will remain on its advisory board, despite his current presidential campaign.

John Pierce and Peter Mostow have joined law firm Wilson Sonsini Goodrich & Rosati as partners focused on the renewable energy and biofuels markets. Both previously were with Stoel Rives.