PE Week Wire: Tues., June 19, 2007

PE Week Wire – Tuesday, June 19

A Voice in the Crowd

I was at Fenway Park on Friday night, to boo Barry Bonds watch the Red Sox pummel the Giants. One of my companions was a recent Harvard Biz School grad, who takes a certain level of academic interest in what I do. He asked how the work week had been, and I replied that it had been fairly slow, until the whole Blackstone Bill brouhaha had erupted late Thursday afternoon.

I explained that the bill’s authors want to tax publicly-traded limited partnershipsas if they werecorporations – but that Ibelieve their endgame to befar more expansive than just petty swiping at Blackstone. I think it’s a testcase for changing tax treatmentof privately-held limited partnerships. In other words, the whole matter of taxing carried interest as ordinary income instead of as capital gains.

At that point, a middle-aged man in front of us muttered something to no one in particular, but clearly intended for me: “It’s ordinary income.” My companion heard it too, and tapped him on the shoulder to make sure he was speaking to us. The man then turned around fully – or as fully as possible in Fenway’s right-field grandstands – and repeated: “It’s ordinary income,” adding “How could anyone not think so?”

He was obviously just one guy at a ballgame, but his conviction made me also think he was something else: A precursor to how the average American voter is going to feel about this issue — particularly if it somehow becomes a high-profile political campaign issue…

*** Not too much scoop this morning, as I got in just a few hours ago from a raucous wedding weekend in Vermont. But here’s something, since I hate to leave you empty-minded: Ned Jannotta is stepping down as managing principal of Chicago-based buyout firm GTCR.

He began his career as a GTCR associate in 1985, and left three years later to join William Blair Capital Partners. He rejoined GTCR in 1998, and was named managing principal in 2002. He will stick with the firm on a more limited basis, while his responsibilities will be spread out amongst other senior managers.

Top Three

Home Depot has agreed to sell its Home Depot Supply unit for more than $10 billion, according to The New York Times. The winning bidder was a buyout group comprised of Bain Capital, The Carlyle Group and Clayton Dubilier & Rice. A rival bidding group had included CCMP Capital and Thomas H. Lee Partners.

Advent Solar Inc., an Albuquerque, N.M.-based maker of solar cells and modules, has raised $70 million in Series D funding, according to VentureWire. ZBI Ventures led the deal, and was joined by Sun Mountain Capital, Globespan Capital Partners and return back! ers @Ventures, Battery Ventures, EnerTech Capital, Firelake Capital and New Mexico Co-Investment Partners.

Harvest Partners of New York has closed its fourth fund with $815 million in capital commitments. It will continue to focus on middle-market opportunities in the North American industrial, business services and consumer/retail spaces. In related Harvest news, the firm also has promoted Michael DeFlorio to senior managing director from managing director. He joined the firm in June 2003, and led the recent acquisition of Aquilex Corp.

VC Deals

MyStrands, a Corvallis, Ore.-based developer of social recommendation technologies, has raised $25 in Series B funding. Grupo Zeto CEO Antonio Asensio led the deal, and was joined by return backers Debaeque and Sequel R&D.

BroadLogic Network Technologies, a San Jose, Calif.-based provider of silicon solutions for broadband networks, has raised $17 million in fifth-round funding. Comcast Interactive Capital led the deal, and was joined by Advance/Newhouse and return backers Time Warner Investments, Rho Ventures, Cisco, Levensohn Venture Partners, Walden International, Presidio and Intel. BroadLogic has raised over $94 million in total VC funding since its 1998 inception.

K2 Network Inc., an Irvine, Calif.-based online game publisher, has raised $16 million in Series B funding. Intel Capital led the deal, and was joined by Greycroft Partners, Khosla Ventures, Novel TMT Ventures and return backers BV Capital and mvp Capital.

SpaceClaim Corp., a Concord, Mass.-based 3D mechanical designer for the manufacturing industry, has raised $13.5 million in second-round funding. Return backers North Bridge Venture Partners and Kodiak Venture Partners co-led the deal, and were joined by Borealis Ventures and Needham Capital Partners.

Silicon Valley Solar, a Santa Clara, Calif.-based manufacturer of flat plate internal concentrator solar modules, has raised $10.2 million in Series A funding led by Bessemer Venture Partners. Some of the proceeds were used to acquire NuEdison, an angel-funded manufacturer of photovoltaic modules for use in solar electric systems.

Visage Mobile, a San Francisco-based provider of wireless software for carriers and private label wireless operators, has raised $10 million in Series A funding. UMC Capital led the deal, and was joined by return backers Nomura, Worldview Technology Partners, Mobius Venture Capital, Advanced Technology Partners, Vesbridge Partners, Emergence Capital Partners, Palisades Ventures and Selby Ventures Partners. Visage has raised around $93 million in total VC funding since its 2001 formation.

ReVolt Technology AS, a Trondheim, Norway-based developer of rechargeable Zinc-air batteries, has raised €10 million in second-round funding. Return backers include Northzone Ventures, Sinvent, Sofinnova Partners, TVM Capital, Verdane Capital and Viking Ventures.

Nimbuzz, a Rotterdam-based mobile Internet startup, has raised $10 million in first-round funding. Participants included Mangrove Capital Partners, MIH Group and Holtzbrinck Ventures.

Cequent Pharmaceuticals, a Cambridge, Mass.-based developer of RNAi-based treatments, has raised $9 million in Series A funding. Participants included Ampersand Ventures, Nexus Medical Partners, Pappas Ventures and Novartis Option Fund.

LiveVox, a San Francisco-based provider of an on-demand voice portal, has raised $7.1 million in Series E funding. R&D Bauer Ventures led the deal, and was joined by Bluefish Ventures, Lunsford Capital and individual angels.

Shioplogix, an Oakville, Ontario-based provider of real-time performance management solutions, has raised Cdn$7 million in venture capital funding from JLA Ventures and EdgeStone Capital Partners.

RatePoint Inc., a Westwood, Mass.-based provider of a quality-assurance certification and customer feedback platform, has raised $6.5 million in Series A funding. Prism VentureWorks and .406 Ventures co-led the deal., a Chicago-based operator of a user-generated ratings and reviews website, has raised $5 million in Series A funding. Illinois Innovation Accelerator Fund was joined by local angels Joe Mansueto, founder & CEO of Morningstar Inc., Michael Alter, president of The Alter Group, Matt McCall, co-founder and managing director of DFJ and Portage Venture Partners, Lon Chow, general partner with Apex Venture Partners and J.B. Pritzker, founder and partner of New World Ventures and CEO of The Pritzker Group.

Quintura Inc., an Alexandria, Va.-based developer of a “see and find” visual search engine, has raised around $5 million in new VC funding led by return backer Mangrove Capital Partners, according to VentureWire.

DailyStrength, a Santa Cruz, Calif.-based social network that connects users through their medical conditions, has raised between $5 million and $7 million in first-round funding led by Redpoint Ventures, according to VentureBeat.

3D Media (China) Ltd., a Shanghai, China-based developer of a 3D entertainment and media network has received an undisclosed amount of strategic VC funding from Softbank China Venture Capital.

Buyout Deals

3i Group has agreed to acquire Inspecta from majority shareholder MB Funds. No financial terms were disclosed. Inspecta provides inspection, testing and certification services in the Nordic and Baltic regions.

Kachi Partners has acquired Photo Stencil, a Colorado Springs, Colo.-based manufacturer of stencils and other tooling used in the printed circuit board assembly process. No financial terms were disclosed.

Terra Firma Capital Partners has received bids for German motorway service operator Tank & Rast, from Macquarie and a number of infrastructure funds. The offers are believed to be in the range of €2.5 billion, with Citigroup running the process. Terra Firms is expected to announce a winner or refinancing by week’s end. It originally acquired Tank & Rask in late 2004 for just over £1 billion from Apax Partners, Allianz Capital Partners and Lufthansa.

RedZone Capital and Six Flags Inc. have acquired television producer Dick Clark Productions Inc. for $175 million. Red Zone will take a 60% stake, while Six Flags will take the remaining 40 percent.

TGF Management Corp. has sponsored a recapitalization of M&M Manufacturing Co., a Fort Worth, Texas-based fabricator of custom sheet metal products, primarily serving the air distribution and ventilation market. No financial terms were disclosed for the deal, which was done in partnership with company management. TGF is an Austin, Texas-based private equity firm.

DLJ Merchant Banking Partners has completed its $440 million acquisition of RathGibson from Castle Harlan. RathGibson is a Janesville, Wis.-based manufacturer of highly engineered premium stainless steel and alloy welded tubing products. It was previously acquired by Castle Harlan in February 2006 for approximately $260 million, and last August acquired tubing manufacturer Greenville Tube Co. for $37 million.

Blue Equity has acquired Team Championship International, a Littleton, Colo.-based sports league and tournament organizer. No financial terms were disclosed.

Summit Partners has acquired a minority stake in LiveOffice, a Torrance, Calif.–based provider of managed messaging security, archiving, and compliance solutions. No financial terms were disclosed.

Cadbury Schweppes confirmed that it is more likely to sell its drinks division than demerge it as a separate listed unit. The confectionary group said it was continuing to “pursue a twin track process of either a sale or demerger,” but added that a sale was now seen as “the more likely outcome.” Last month, it was reported that interested suitors include two private equity consortia. One includes Blackstone, KKR and Lion Capital, while the other includes Bain Capital, TPG and Thomas H. Lee Partners.

PE-Backed IPOs

MAP Pharmaceuticals Inc., a Mountain View, Calif.-based developer of inhaled drug products for respiratory and CNS diseases, filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol MAPP, with Merrill Lynch and Morgan Stanley serving as co-lead underwriters. The company has raised around $107 million in total VC funding since its 2003 formation, including a $50 million Series D round earlier this year. Shareholders include Perseus-Soros Biopharmaceutical Fund, Pequot Ventures, Brookside Capital, Skyline Ventures and D.W. Shaw Group.

Dice Holdings Inc., an Urbandale, Iowa–based provider of specialized career sites and career fairs, has set its proposed IPO terms to 16.7 million common shares being offered at between $11 and $13 per share. Dice would be valued at approximately $805 million, if it were to price at the high end of its range. It plans to trade on the NYSE, with Credit Suisse and Morgan Stanley serving as co-lead underwriters. Dice has been owned by General Atlantic and Quadrangle Group since August 2005.

Lululemon Corp., a Vancouver-based athletic apparel designer and retailer, has set its proposed IPO terms to around 18.18 million common shares being offered at between $10 and $12 per share. It would be valued at around $903 million, were it to price at the high end of its range. Lululemon plans to trade on both the Nasdaq and TSX, with Goldman Sachs and Merrill Lynch serving as co-lead underwriters. Shareholders include Advent International, Highland Capital Partners and Brooke Private Equity Advisors.

PE Exits

Hewlett-Packard (NYSE: HPQ) has agreed to acquire SPI Dynamics Inc., an Atlanta-based provider of web application security assessment software and services. No financial terms were disclosed for the deal, which is expected to close next quarter. SPI Dynamics has raised around $5.5 million in VC funding since 2001, from firms like Gray Ventures, C&B Capital, Southeastern Technology Fund and Visa International.

Synopsys Inc. (Nasdaq: SNPS) has acquired ArchPro Design Automation Inc., a Milpitas, Calif.-based provider of EDA solutions for power management design challenges in multi- voltage designs. No financial terms were disclosed. ArchPro had raised over $5 million in VC funding from firms like Intel Capital, Entrepia Ventures and Sage Technology Ventures.

PE-Backed M&A

PatchLink Corp., a Scottsdale, Ariz.-based provider of security patch and vulnerability management software, has agreed to acquire SecureWave SA, a Luxembourg-based provider of endpoint security software. No financial terms were disclosed. PatchLink has raised over $45 million in VC funding from firms like Bay Partners, GIC Special Investments, Granite Global Ventures and Scale Venture Partners. SecureWave has raised around $10 million from firms like Index Ventures and Mangrove Ventures. As part of the sale agreement, Mangrove will be given a seat on the PatchLink board.

Firms & Funds

Parthenon Capital of Boston has closed its third fund with approximately $700 million in capital commitments. MVision Private Equity Advisors served as placement agent. Parthenon had originally targeted around $1 billion.

CIT Group Inc. (NYSE: CIT) has agreed to acquire Edgeview Partners, a Charlotte, N.C.-based M&A advisory focused on serving financial sponsors and middle-market companies. No financial terms were disclosed for the deal, which is expected to close next quarter.

The Cypress Group has abandoned plans to raise a new fund, according to LBO Wire. The New York-based buyout firm raised $2.5 million for its second fund in 1999, but has since experienced significant personnel turnover. That fund is long out of dry powder, but Cypress has made new deals thanks to a partnership with Goldman Sachs Capital Partners.

Human Resources

First Reserve Corp. has promoted Tim Day, Joe Bob Edwards and Hardy Murchison to managing director. Day joined the firm in 2000, and focuses on the downstream segment of the energy industry. Edwards joined in 1998, and focuses on the oilfield service and infrastructure sectors. Muchison has been with First Reserve since 2001, and focuses on the oil and gas reserve sectors.

Allan Kwan has joined Oak Investment Partners as a venture partner focused on the telecom space. He previously spent six years with Yahoo, including his most recent stint as president of Yahoo International, following its $1 billion investment into

New Enterprise Associates has promoted the following four principals to partner: Patrick Chung, Robert Garland, Paul Hsiao and Peter Sonsini. It also has promoted Amita Shukla and Ben Matthias to principal.

Kobi Rozengarten has joined Jerusalem Venture Partners as a venture partner. He previously was president of Saifun Semiconductors.

David Lyon has joined D.E. Shaw Group, as a member of its special situations/distressed private equity team. He previously was a managing director of The Cypress Group.

Alvaro de Molina, the former Bank of America CFO, has agreed to join Cerberus Capital Management, according to The Wall Street Journal. He will focus on the financial services sector, including the 51% GMAC stake Cerberus acquired from General Motors.

Pat Noonan and Todd Higgerson have joined Commonwealth Capital Ventures as associates. Noonan previously was with consulting firm Capgemini, while Higgerson was an analyst with Chrysalis Ventures.