PE Week Wire: Tues., Aug. 14, 2007

The Blackstone Group yesterday held its inaugural earnings call yesterday. Most interesting nuggets:

• Blackstone is just months away from beginning to raise its next private equity fund. It’s been less than two weeks since Blackstone sewed up its $21.7 billion fifth fund, but that record-breaking vehicle is already 70% committed – and Blackstone begins fundraising once its dry powder runs down to around 25 percent. No word on the target.

• Blackstone already has closed on $10 billion for its new real estate private equity fund, which is being capped at $10.2 billion. It’s already 40% committed.

• Blackstone COO Tony James got asked if there were any deals Blackstone would not have done, were covenant-light loan terms unavailable. He first said that there were “a couple of deals we probably wouldn’t have done, at the prices we did,” but then seemed to back off in a later answer.

• He thinks future tax changes have already been baked into the Blackstone share price. He also tried to link private equity taxes with VC taxes – a tactic employed by the buyout lobbyists and fought against by VC lobbyists.

• Steve Schwarzman is spending the week in China, and Blackstone already has a couple of Chinese investment transactions in the works.

• There were over 500 people on the call. Wonder if anyone keeps rank of such things… Gut says it was the most crowded non-Google/non-GM call in a while.

*** KKR yesterday filed an amended S-1 document, even though it would be absolutely nuts to proceed with its IPO. One item getting some press play is that KKR had received a request for documents and information from the antitrust division of the U.S. Department of Justice. To be clear, this is the same request we discussed more than a year ago. Sources tell me that neither KKR nor any other large LBO firms have received follow-up requests for additional documents.

*** Time for a mea culpa. Yesterday at peHUB, I reported that a company called KickApps had raised $20 million in Series B funding. This was incorrect – the company had raised $11 million (still a strong showing within the white-label social networking world).

Since this has caused untold headaches for KickApps, and confusion among more than a few readers, a brief explanation: I heard about the KickApps funding yesterday morning during a conversation about something else, with someone not directly involved with the company. They had few details. An email conversation with someone else turned up the lead – Softbank – and the valuation range. All okay so far.

The problem came when I found an SEC filing, dated July 27 and signed by KickApps CEO Alex Blum. It lists $20 million in Series B preferred equity (only $6.5m called down). I felt that my sourcing ducks were in a row. I later learned that a press release was slated for today, and I called KickApps for comment. They told me that a different media outlet had been given the exclusive, and that any information they gave me would have to be embargoed until the other pub ran it. I am an unabashedly aggressive reporter, so told KickApps that I’d be publishing at around 4pm. I didn’t hear from them again.

Turns out that the $20 million figure in the filing referred to an original $6m Series A, some additional Series A raised later, the $11 million Series B and some venture debt. I don’t know why the filing didn’t mention any of this (they typically do), but the end story here is that I was wrong and caused a company hardship. Again, my apologies. I’ll try to do better next time…

Top Three

Chrysalis Capital Partners has agreed to sell Central Lewmar LLC to International Paper (NYSE: IP) for approximately $185 million. Central Lewmar is a Newark, N.J.–based paper and packaging distributor with annual sales of approximately $900 million. It will operate as part of International Paper’s Xpedx unit.

Doppelganger Inc., a San Francisco-based provider of avatar-based IM environments for music fans in conjunction with entertainment and media companies, has raised $11 million in fourth-round funding. ComVentures led the deal, and was joined by return backers DFJ, Draper Richards, Trident Capital, KPG Ventures and Greycroft Partners.

Maxum Petroleum Holdings Inc., an Old Greenwich, Conn.-based energy logistics company, has filed for a $400 million IPO. It plans to trade on the NYSE under ticker symbol MXP, with Credit Suisse, Bear Stearns and UBS serving as co-lead underwriters. The company was formed in October 2003 as an acquisition platform called SPI, by sponsors Northwest Capital Appreciation, Waud Capital Partners and RBC Capital Partners (through Cadent Energy Partners). It has since acquired such companies as Simons Petroleum, Trevco, Hartney Fuel Oil Co., Pecos and Canyon State Oil Company.

VC Deals

LucidEra Inc., a San Mateo, Calif.-based provider of on-demand reporting and analytics software, has raised $15.6 million in Series B funding. Crosslink Capital led the deal, and was joined by return backers Benchmark Capital and Matrix Partners.

Extend Health Inc., a provider of defined contribution health care solutions to Fortune 500 corporations, has raised $15 million in Series B funding. Psilos Group Managers led the deal, and were joined by return backer Revolution Health Group.

Enigmatec Corporation Ltd., a London-based developer of run book automation solutions, has raised $12.5 million in Series C funding. Herald Ventures and former Misys chairman Kevin Lomax were joined by return backers Amadeus Capital Partners and Pentech Ventures.

SyncVoice Communications Inc., a Costa Mesa, Calif.-based provider of voice network management software, has raised $11.6 million in Series B funding and changed its name to Communicado. SoftBank Capital was joined by return backers Clearstone Venture Partners and Hummer Winblad Venture Partners.

KickApps Inc., a New York-based provider of white label social networking tools, has raised $11 million in Series B funding. SoftBank Capital was joined by return backers Prism VentureWorks and Spark Capital.

Kontera Technologies Inc., a San Francisco-based provider of in-text advertising solutions for online publishers and advertisers, has raised $10.3 million in second-round funding. Carmel Ventures led the deal, and was joined by return backers Sequoia Capital and Lehman Brothers. Kontera had raised a $7 million Series A round in April 2006.

Tenaxis Medical Inc., a Mountain View, Calif.-based developer of surgical sealants to reduce procedure times, has raised $4.47 million in Series B funding from individual angels, according to a regulatory filing.

weComm, a London-based provider of interactive mobile data solutions, has raised £3 million in second-round funding from return backers Elderstreet Investments and Frontiers Capital. The company focuses on enabling the Sky Box to receive recording instructions from a mobile phone., a New York-based social network for dieters, has raised $2 million in Series A funding led by MentorTech Ventures., a Santa Monica, Calif.-based online comparison search company focused on the education market, has raised an undisclosed amount of Series A funding. Rincon Venture Partners led the deal, and was joined by O’Connor Ventures and the founders and founding investors of

Buyout Deals

Exponent Private Equity and former Travelex CEO Clive Kahn have acquired Cardsave, a UK-based provider of credit card services to independent retailers, from RJD Partners. The deal is valued at approximately £70 million, with Exponent holding around 73% of the equity. RJD acquired Cardsave three years ago for £45 million.

GP Investimentos has agreed to acquire a control stake in Magnesita SA, the largest producer of refractory material in Latin America. The total deal is valued at around $642 million, with GP to receive 70.7% of Magnesita’s voting capital and 38.6% of its total capital.

Station Casinos Inc. (NYSE: STN) shareholders have approved a $90 per share buyout offer from Colony Capital and Station Casinos CEO Frank Fertitta. The total deal is worth approximately $5.4 billion, including $3.4 billion of assumed debt.

Sensis Corp. has raised an undisclosed amount of minority equity funding from Needham Capital Partners and Dolphin Direct Equity Partners. Sensis is an East Syracuse, N.Y.-based provider of systems for air defense, air traffic control, airline and airport operations management and data integration and distribution.

Nautic Partners has acquired Prince Sports Inc., a Bordentown, N.J.-based maker of racquet sporting goods, from Lincolnshire Management. No financial terms were disclosed for the deal, which included the participation of company management. GE Antares Capital provided senior debt financing.

Quadrangle Group today is expected to complete its $245 million buyout of Dennis Publishing’s U.S. operations, according to The New York Post. Its first order of business will be to fold Stuff magazine.

Triton Pacific Capital Partners has acquired a majority interest in Vayan Marketing Group LLC, a Boca Raton, Fla.-based provider of online lead generation, email marketing, offline marketing, list management and affiliate marketing services located. No financial terms were disclosed. KPMG Corporate Finance advised Vayan on the deal.

PE-Backed IPOs

Nanosphere Inc., a Northbrook, Ill.-based molecular diagnostics company with a nanotech-based platform to enable earlier disease detection and treatment, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol NSPH, with Lehman Brothers serving as lead underwriter. Nanosphere has raised around $80 million in VC funding since 2000, from firms like Brookside Capital Partners, Lurie Investments Bain Capital Ventures and Allen & Company.

Biolex Inc., a Pittsboro, N.C.-based drug company whose lead candidate focuses on hepatitis C, has filed for an $80 million IPO. It plans to trade on the Nasdaq under ticker symbol BLEX, with Lehman Brothers and Deutsche Bank Securities serving as co-lead underwriters. Biolex has raised nearly $100 million in total VC funding since its 1997 inception, including a venture recap. Shareholders include Intersouth Partners (20.3% pre-IPO stake), Johnson & Johnson Development Corp. (16.2%), Quaker BioVentures (14.9%), Polaris Venture Partners (11.4%), Investor Growth Capital (9.9%), Mitsui & Co. Venture Partners (5.4%), JP Morgan Securities, Easton Capital and Dow Venture Capital.

PE Exits

The Carlyle Group has sold Cameca SAS, a French maker of ion and electron probes, to Ametek Inc. (NYSE: AME) for approximately $112 million. Carlyle Europe Venture Partners bought Cameca in April 2005, after which Cameca acquired German ion probe manufacturer Atomika.

Novell (Nasdaq: NOVL) has acquired Senforce Technologies Inc., a Draper, Utah–based provider of endpoint security management solutions. No financial terms were disclosed. Senforce has raised over $19 million in VC funding since 2004, from firms like Thomas Weisel Partners, Rocket Ventures, American River Ventures, vSpring Capital and EsNet Group.

PE-Backed M&A

Irving Tanning Co. and Prime Tanning Co. have agreed to merge into a single tanning operation with combined annual revenue of over $225 million. Irving is based in Hartland, Maine, and was acquired in 2005 by Meriturn Partners and company management.

Firms & Funds

Darby Overseas Investments Ltd. has closed its “Converging Europe Mezzanine Fund” with €248 million ($340m) in capital commitments. Following the expected refinancing of a €65 million bridge loan, the fund size is expected to exceed €300 million. It will focus on mezzanine opportunities in Central and Eastern Europe, and already has made five investments.

Guggenheim Capital Markets has been granted a license to open an office in Dubai.

Human Resources

Patricia Luscombe has joined mid-market I-bank Lincoln International as a managing director. She previously was a managing director with Duff & Phelps, where she worked in the firm’s valuations and fairness opinions practice.

Regina Glocker has joined executive search firm Sextant Search Partners as a New York-based partner, focused on engagements in the global banking, hedge fund and private equity markets. She previously was a partner with Westwood Partners.