PE Week Wire: Tues., Dec. 4, 2007

You might not know the name Carissa Phelps, but she is easily the most impressive – and inspiring – private equity pro I’ve ever covered. Not because of the deals she’s done or the fortunes she’s made, but because she was willing to walk away for the sake of a far greater cause.

On the surface, Carissa looks like a lot of other young go-getters. She spent last summer interning at Weatherly Capital Group, and this past June graduated from UCLA with both a law degree and an MBA. She immediately took a job in the alternative assets division of LACERA, because “that was what I thought I was supposed to do.” Her plan was to spend several years putting in her dues and building her bank account, before moving onto something more fulfilling. It would be a typical story, except that Carissa realized after just two months at LACERA that her future needed to be brought into the present. So she resigned. Not because she’s a flighty free spirit, but because people’s very lives were at stake. And Carissa should know, because she was once one of those people.

From Motels To Dorms

At the age of 12, Carissa was abandoned by her mother at a juvenile detention facility in Fresno, California. It was nearly 60 miles from where Carissa had called home, and where she had been acting out due to parental abuse and neglect. The facility wouldn’t take her in, because she had not committed any crime. So she slept in the lobby for three lonely nights, before finally wandering off into a strange new world. She was immediately offered aid and comfort by men who wanted something perverse in exchange, and she had few options but to accept. “I was a target to be sexually exploited,” Carissa says. Before long, she was one of the many child prostitutes living and working in a section of Fresno known as Motel Drive.

This was Carissa Phelps’ life for the next several years. A parade of indecency that local officials either pretended didn’t exist, or were okay with so long as it didn’t spread into more respectable neighborhoods. The police would come every now and then, but only to round up the girls and then release them back to their pimps the next morning.

Not surprisingly, Carissa eventually had enough of a track record that she was accepted by the very same juvenile system that had previously rejected her. She soon met a counselor who told her she “had potential” – a commonplace compliment for so many of us by our elders, but a revolution for Carissa. She began working harder on her studies, and eventually beat every odd by getting accepted into college. From there it was UCLA.

“I knew that at some point I wanted to help do something about Motel Drive… In law school I studied community economic development, and in business school I studied entrepreneurship,” she says. “What I really learned was a new language and how to develop a network.

But Phelps told few people about her background. She says that “no one would have cared” at law school, and her group of B-school friends only heard small snippets leak out over time. One of those friends, however, was classmate and budding filmmaker David Sauvage. He convinced Carissa to let him film a documentary about her life, which would include interviews with everyone from her mother to juvenile hall counselors to prostitutes.

A Need to Act Now

Part of the filming took place while Carissa was just beginning at LACERA, and it was traumatic. “Just driving back there was so hard” she says. “My defenses were still so high, because it’s the same open-air sex market that it used to be. At one point I had to leave my car and ride with the cameraman.”

Before long, Carissa realized that she needed to make a drastic change. She quit her job, and embarked on a community revitalization plan for Motel Drive. “This documentary might become my 15 minutes of fame, and there’s nowhere else on earth where I could make more of an impact.”

Carissa’s first phase is essentially due diligence. She’s talking with people who are homeless in the area – both veterans and newcomers – and trying to reconnect with the community at large. She also plans to speak later this week with city and county officials on issues youth face when they’re homeless, including situations in which kids are turned away from shelters.

“I’m approaching it as a child exploitation issue first, rather than barging in and saying I want to redevelop the neighborhood,” she explains. “But, obviously, the neighborhood needs to be changed… There is no way that a family would ever go shopping there or even drive through there, the way it is now.”

So the second phase is redevelopment, and Carissa plans to raise $20 million for a for-profit community development corporation (CDC). She has forged some big-name friendships so far, but still needs help — which is part of the reason I’m bringing this story to the attention of you, dear reader. Not only does her project require investment (which it does), but Carissa also is requesting any advice from people who have experience with community development, real estate private equity and/or other relevant areas. For example, she is still trying to determine the best financial structure for her fund.

You can contact Carissa at, or through me. You also can read more about her and see some of the documentary clips at

She has already accomplished so much with so little. Imagine what she could do with something…

Top Three

Mainsail Partners of San Francisco has acquired Togo’s Eateries, a fast-casual sandwich chain, from Dunkin’ Brands, the parent company of Dunkin’ Donuts and Baskin-Robbins. No financial terms were disclosed. Dunkin’ Brands was acquired in March 2006 for $2.43 billion by Bain Capital, The Carlyle Group and Thomas H. Lee Partners.

PregLem, a Geneva, Switzerland-based developer of therapeutic compounds for female reproductive medicine, has raised CHF 36 million ($32m) in Series B funding. Sofinnova Ventures led the round, and was joined by return backers Sofinnova Partners, MVM Life Science Partners and NeoMed Management. The funds will be used to developer a molecule licensed-in from HRA Pharma (France), for the pre-operative treatment of uterine myoma. PregLem has now raised a total of CHF 68 million.

NextPoint Networks Inc. has been formed via the merger of NexTone Communications and Reef Point Systems, to deliver global fixed-mobile convergence border platforms and secure interconnectivity solutions. The merger is being sponsored by $20 million in new VC funding. One Equity Partners led the round, and was joined by Core Capital Partners, American Capital Strategies, Jerusalem Venture Partners, Safeguard Scientifics and Summerhill Venture Partners. NexTone had previously raised $65 million, while Reef Point had raised over $160 million.

VC Deals

Alloptic Inc., a Livermore, Calif.-based developer of optical networking equipment for the delivery of converged services, has raised $24 million in Series B funding. Return backers include Arcapita Ventures and Ritchie Capital Management.

JetBird, a low-cost executive jet taxi operator in Europe, has raised €21 million in new private equity funding. No investor details were disclosed for the deal, which values the company at approximately €101 million. Claret Capital served as placement agent.

AgraQuest Inc., a Davis, Calif.-based maker of environmentally-friendly pesticides, has raised $20 million in new VC funding. Loudwater Trust Ltd. was joined on the round by return backer TPG Ventures.

ParAccel, a San Diego-based provider of a massively parallel processing platform for analytic queries, has raised $20 million in Series B funding, according to a regulatory filing. Backers include Bay Partners, Mohr Davidow Ventures and Walden International.

Topaz Pharmaceuticals Inc., a Philadelphia-based pediatric drug company, has raised $20 million in Series A funding from Aisling Capital and Fidelity Biosciences. Seaview Securities LLC served as financial advisor.

Motionbox, a New York-based video sharing and storage website for families, has raised $7 million in Series B funding. Constellation Ventures led the round, and was joined by return backers Canaan Partners and SAS Investors.

1800Diapers Inc., a Montclair, N.J.-based ecommerce company focused on baby products, has raised $7 million in Series B funding, according to a regulatory filing. Backers include Bessemer Venture Partners and Brand Equity Ventures.

Quickfilter Technologies Inc., an Allen, Texas-based developer of mixed-signal ICs based on a programmable FIR engine for digital signal processing, has raised $4.8 million in Series C funding. No investor names were disclosed, but the company had previously raised funding from Argonaut Partners.

Serus Corp., a Mountain View, Calif.-based provider of technology and managed services for companies with distributed or outsourced manufacturing operations, has raised $2 million in funding from Samsung Ventures.

WiTricity Inc., a Belmont, Calif.-based developer of wireless energy transmission, has raised $2 million in Series A funding led by Stata Venture Partners, according to a regulatory filing. The company doesn’t seem to have a website yet, but here’s a piece on the concept from Wired.

Pyxis Mobile Inc., a Waltham, Mass.-based maker of wireless applications for the financial services market, has raised $1.95 million in Series B funding, according to a regulatory filing. Backers include Ascent Venture Partners and Egan-Managed Capital., an Indian personal finance website based by Sequoia Capital, is in talks to raise another $15 million, according to The Economic Times. Sequoia is expected back, with Crys Capital and Intel Capital also participating.

Buyout Deals

Morgan Stanley Private Equity has completed its purchase of the Tops Markets grocery chain from Ahold for $310 million. The 71 stores will continue to operate as Tops Markets and Martin’s Super Food Stores, with the same staff. Tops was founded as a neighborhood grocery chain in Buffalo in the 1960s. It was acquired by Ahold in 1991. In recent years, Ahold sold off some of its Tops stores in eastern New York, the Adirondacks and Ohio.

Linsalata Capital Partners has acquired a majority interest in Lund International Inc. from Resilience Capital Partners. No financial terms were disclosed. Lund is a Suwanee, Ga.-based maker of branded accessories for trucks, SUVs, crossover utility vehicles and passenger cars.

Pennington Allen Capital Partners has acquired the assets of Bliss Industries Inc., a Ponca City, Okla.-based maker of hammermills, pelletmills, coolers and related products serving the ethanol, wood pellet, food processing and animal feed markets. No financial terms were disclosed. Company founder Bill Bliss will stay on as chairman and retain a “substantial” ownership position.
Purepay has acquired CybrCollect, a LaCrosse, Wis.-based electronic check recovery provider. No financial terms were disclosed. Purepay is a $100 million buyout fund ocused on payments, banking and the financial supply chain.

Sentinel Capital Partners has acquired Trinity Consultants Inc., a Dallas, Texas–based provider of air quality consulting and compliance services. No financial terms were disclosed.

Warburg Pincus has agreed to buy Czech web portal NetCentrum SRO. No financial terms were disclosed, although Czech media reports put the price-tag at around $162 million. NetCentrum co-founders Ondrej Tomek and Oldrich Baje will retain minority stakes, while sellers included Intel Capital, ING and a fund formed by the European Bank for Reconstruction and Development (and managed by Baring Private Equity Partners).

PE-Backed IPOs

Memsic Inc., an Andover, Mass.-based developer of semiconductor sensor and system solutions based on MEMS technology and mixed-signal circuit design, has set its IPO terms to six million common shares being offered at between $11 and $13 per share. It would have an initial market cap of approximately $294 million, if it were to price at the high end of its range. Memsic plans to trade on the Nasdaq under ticker symbol MEMS, with Citi serving as lead underwriter. It has raised over $33 million in VC funding since 1999, from f! irms like Celtic House Venture Partners (16.1% pre-IPO stake), The Still River Fund (15.7% pre-IPO stake), InveStar Capital (13.7%), CID Group (5%) and Ironside Ventures.

Milestone AV Technologies Inc. (f.k.a. CSAV Holding Corp.), a Savage, Minn.-based maker of audio-visual mounting equipment and display solutions, has cut its IPO price range from $14-$16 per share to $12-$14 per share. It still plans to offer 12 million common shares, and trade on the NYSE under ticker symbol MLS. Wachovia Securities and Piper Jaffray are serving as co-lead underwriters. Friedman Fleischer& Lowe led a 2003 buyout of Milestone, and currently stands as majority owner. Other shareholders include Fulham Investors and Performance Equity Management.

PE Exits

Accel-KKR has sold Systems & Software Inc. to Harris Computer Systems, a subsidiary of Constellation Software Inc. No financial terms were disclosed. S&S is a Colchester, Vermont-based provider of customer information systems for municipal and investor-owned utilities. It was acquired by Accel-KKR in 2005.

Irdeto, a content security subsidiary of Naspers (JSE: NPN) has acquired Cloakware Corp., a Vienna, Va.-based developer of tamper-resistant/secure software, for $72.5 million. Cloakware had raised around $14.2 million in VC funding from Fairhaven Capital, Globespan Capital Partners and Intel Capital.

News Corp. has not engaged in reported $1 billion buyout talks with biz-focused social network LinkedIn, according to Reuters.

PE-Backed M&A

Local Insight Media LP, a publishing portfolio company of Welsh Carson Anderson & Stowe, has completed its acquisition of Hawaii Telecom’s directories business. No financial terms were disclosed.

Performance Fibers Holdings Inc., a portfolio company of Sun Capital Partners, has agreed to acquire the North America tire cord and polyester industrialfilament businesses of INVISTASarl and its affiliates. No financial terms were disclosed for the deal, which includes manufacturing facilities in Salisbury, N.C., Shelby, N.C. and Winnsboro, S.C. It also includes fabric-producing assets currently operating inside INVISTA’s Querataro, Mexico site.

Refrigerated Holdings Inc. has acquired a majority stake in East Coast Warehouse & Distribution Corp., an Elizabeth, N.J.-based third-party provider of temperature-controlled warehousing and logistics services. No financial terms were disclosed. Refrigerated Holdings is an acquisition platform sponsored by Fenway Partners, which a focus on investments in the temperature-controlled logistics sector.

Wyle Laboratories Inc., an El Segundo, Calif.-based defense engineering testing and research company, has acquired RS Information Systems, a McLean, Va.-based federal systems integrator. No financial terms were disclosed. Wyle is a portfolio company of Littlejohn & Co.

Firms & Funds

The Cartesian Group has closed its debut fund with $1.05 billion in capital commitments. The New York-based firm focuses on opportunities in emerging markets – often buyouts of family-run businesses – and was formed by former AIG Capital Partners pros like Peter Yu and Bill Jarosz.

Draper Fisher Jurvetson and Hollywood talent firm Creative Arts Agency are teaming to launch a $150-$200 million VC fund focused on the digital/entertainment sector, according to PaidContent.

Pegasus Capital Advisors has closed its fourth private equity fund with $75 million in capital commitments. Park Hill Group served as placement agent. Pegasus is a middle-market private equity firm with offices in New York City and Cos Cob, Connecticut.

Rho Ventures has secured $440 million in capital commitments for its sixth fund, according to a regulatory filing. The filing indicated a $700 million cap.

Human Resources

Seth Katz has joined Pomona Capital as a director of the firm’s $2.1 billion fund-of-funds business. He will be based in New York, and previously managed private equity investments for Rockefeller University.