PE Week Wire: Tuesday, December 2, 2008

Last week I reported that Bain Capital has already written down its Clear Channel investment by around 15 percent, according to financial statements sent last week to limited partners. Also worth noting that the firm has completely written off both Bavaria Yacht (bought for €1.3 billion in June 2007) and Cumulus Media Partners (part of a $1.2 billion buyout in late 2005). Notable write-downs include HD Supply and Outback Steakhouse.

Overall, Bain was pretty aggressive in its conservatism – particularly when one realizes that some of its co-investors are carrying shared portfolio companies at significantly higher values…

*** Former RealNetworks executive Jeff Schrock has joined Intel Capital, as a Seattle-basedinvestment directorfocused on the digital home sector. He had spent the past ten months as a venture partner with early-stage firm Monster Venture Partners, and will retain his board seat with Monster-backed Evo Landing.

Schrock is the former VP of corporate development with RealNetworks, where he helped oversee such transactions as the $350 million acquisition of WiderThan and the $600 million joint venture between MTV Networks and Rhapsody. Before that, he worked in corp dev for Yahoo, and co-founded and rana VC-backed company called Activate (bought by CMGI in 1999 for $100m). Read more here, including comments from Schrock.

*** Joel Holsinger yesterday began work as an Atlanta-based managing director with Fortress Investment Group, where his initial focus is on portfolio acquisitions and distressed opportunities. He previously had been a managing director with Atalaya Capital Management, and is considered one of the foremost authorities on capital markets transactions in the restaurant sector. Read more here.

*** A few weeks back, I reported that John Abraham (ex-Kodiak Venture Partners), Marcia Hooper (ex-Castile Ventures) and Rashid Ashraf (VC Fund of New England) were hanging their own shingle. Not much new news to report yet, except that the new firm will be named ArrowPoint Ventures.

*** Quiz Time: Can you name the private equity fund within a fund (not a “fund-of-funds”) that was just terminated, with its portfolio to be managed by a separate private equity firm? Hint: This one has old Wall Street all over it…

*** Where in the World? Doing a bunch of speaking over the next two weeks:

• This Saturday I’m moderating the opening keynote panel at the MIT Venture Capital Conference.

• Next Monday I’ll be participating in a panel called Pulse of the Middle Markets in Boston, which is being put together by law firm Edwards Angell Palmer & Dodge.

• Next Thursday I’ll be moderating the LP and energy deal-making panels at Buyouts Texas in Dallas.

*** Self-Promotion Alert: This evening I’ll be on NewsNight with Jim Braude, which airs on New England Cable News at 8pm. Subject is economic doom and gloom.

Top Three

Hawaiian Telcom Communications Inc. has filed for Chapter 11 bankruptcy protection, and says that it will continue operations while restructuring. The company currently has around $75 million of cash on hand. The Carlyle Group formed HTC in 2005, following its $1.65 billion acquisition of Verizon Hawaii from Verizon Communications. The deal included Verizon’s Hawaii-based local telephone operations, plus its print directory, long distance and Internet service provider assets.

Liquidnet Holdings Inc., a New York-based operator of an institutional trading platform, will delay its plans to go public until 2010, according to a Reuters interview with company CEO Seth Merrin. The company had originally planned to price its $500 million offering this quarter. Shareholders include TH Lee Putnam Ventures (12.29%), Summit Partners (7.42%) and Technology Crossover Ventures (7.42%).

Jamie Sprayregen has agreed to rejoin law firm Kirkland & Ellis LLP as a partner in its restructuring practice, effective December 12. He had spent the past three years with Goldman Sachs.

VC Deals

Paratek Microwave Inc., a Columbia, Md.-based provider of adaptive RF front-end component solutions for mobile wireless applications, has raised $20 million in Series E funding, according to a regulatory filing. Listed shareholders include Polaris Venture Partners, Novak Biddle Venture Partners, Morgenthaler, Investor AB, STMicroelectronics and ABS Ventures. The company previously raised over $118 million since 1999.

Globant, a Buenos Aires-based provider of software product development and IT maintenance outsourcing, has raised $13 million in VC funding from Riverwood Capital and FTVentures.

ExtendMedia Corp., a Newton, Mass.-based provider of online video distribution software and services, has raised $10 million in Series C funding, according to a regulatory filing. Return backers include Atlas Venture, Venrock Associates and TVM. The company had previously raised $23 million.

Viridity Inc., an Amesbury, Mass.-based startup focused on the optimization of data center application and equipment deployment, has raised $7 million in Series A funding, according to a regulatory filing. Backers include Battery Ventures and North Bridge Venture Partners.

uTest, a Southborough, Mass.-based provider of crowdsourcing for software testing, has raised $5 million in Series B funding. Longworth Venture Partners and Egan-Managed Capital co-led the round, and were joined by return backers Mesco Ltd. and the Massachusetts Technology Development Corp.

Energetiq Technology Inc., a Woburn, Mass.-based developer of advanced light sources for nanoscale fabrication and analysis, has secured around $3.8 million of a $5 million Series C round, according to a regulatory filing. Listed shareholders include Shea Ventures, Intel Capital and Ushio Inc. of Japan.

JackNyfe Inc., a Hillsborough, Calif.-based developer of Web 2.0 applications that allow social networks to be distributed among web content, has raised around $3.8 million in Series B funding led by Altos Ventures, according to a regulatory filing.

Adhezion Biomedical LLC, a Myomissing, Penn.-based maker of adhesive and anti-microbial sealant products for medical applications, has raised $2.1 million in additional Series A funding from Liberty Venture Partners. The round total is now $5.25 million.

Roc2Loc Inc., a San Francisco-based maker of mobile security and monitoring devices, has secured $2 million of a $5 million Series A round led by Claremont Creek Ventures, according to a regulatory filing.

UnboundID Corp., an Austin, Texas-based developer of identity management software for large enterprises and service providers, has secured $2 million of a $3 million Series A round led by Silverton Partners, according to a regulatory filing.

KZO Innovations Inc., a Herndon, Va.-based provider of live onsite video webcasting services, has secured $1.68 million of a $2.08 million Series A round led by Valhalla Partners, according to a regulatory filing.

Flexicath Ltd., an Israeli maker of sterile catheter IV systems, has raised $600,000 in Series B funding led by The Zitelman Group.

BEZ Systems Inc., a Boston-based provider of performance management software and analytics, has raised an undisclosed amount of additional Series D funding. Ascent Venture Partners led the extension, and was joined by fellow return backers Massachusetts Technology Development Corporation and Velocity Equity Partners. The company previously had raised around $16.5 million.

Buyout Deals

EQT Partners and ATP Private Equity Partners have agreed to acquire KMD A/S, a Danish provider of IT solutions to local municipalities, for approximately DKK2.2 billion ($375 million). EQT will hold an 85% stake, while ATP will hold the remainder. The transaction is to be funded with 50% leverage, provided by Danske Bank, Nordea, Nykredit, FIH and ATP.

One Equity Partners has acquired the professional wound care business of Ethicon Inc., a Johnson & Johnson company. No financial terms were disclosed, except that the unit generated 2007 net sales of approximately $270 million.

Sorin Group (Milan: SRN) has sold its vascular therapy business to Italian private equity firm IP Investimenti e Partecipazioni SpA. No financial terms were disclosed.

Emerging Capital Partners has invested $30 million into Finagestion, a holding company that operates several major water and power production and distribution contracts in Cote d’Ivoire and Senegal.

PE Exits

Montagu Private Equity has retained Sal. Oppenheim to advise on the possible sale of German sausage casings maker Kalle Nalo. Montagu bought the company in 2004 from CVC Capital Partners for an undisclosed amount.

Rapid Communications LLC has sold its cable assets and customers in Virginia and West Virginia to Shenandoah Telecommunications Co. (Nasdaq: SHEN), for approximately $10 million. Rapid Communications is a portfolio company of Alta Communications, Columbia Capital and Housatanic Partners.

PE-Backed M&A

DeMet’s Candy Co., a portfolio company of Brynwood Partners, has acquired the TREASURES and STIXX confectionery brands from Nestlé USA. No pricing terms were disclosed, although DeMet’s CEO David Clarke says that the transaction was financed via a combination of company cash and Brynwood capital.

The FeedRoom, a New York-based provider of online video solutions for media companies, has acquired ClearStory Systems, a provider of digital asset management software. No financial terms were disclosed. The FeedRoom has raised over $65 million in venture capital and debt financing, with current shareholders including BEV Capital, NewSpring Capital and Velocity Equity Partners. ClearStory had raised an undisclosed amount of capital from SCP Partners.

The Orthotic Group, an acquisition platform sponsored by PNC Equity Partners, has acquired the Deerfield, N.Y.-based custom orthotics business of Langer Inc. Bank of Montreal provided senior debt, although no additional financial terms were disclosed.

Quintiles Transnational Corp., a provider of professional services to the healthcare market, has acquired Targeted Molecular Diagnostics, a Westmont, Ill.-based developer of biomarker technologies for oncology research. No financial terms were disclosed. Quintiles shareholders include 3i Group, Bain Capital, Temasek Holdings and TPG Capital.

Six Apart Ltd., a San Francisco-based provider of blogging software and services, has acquired micro-blogging startup Pownce. The actual Pownce platform will soon be shutdown, with the company’s technology and team incorporated into Six Apart. No financial terms were disclosed. Six Apart has raised around $22 million in VC funding from August Capital, Focus Ventures and Intel Capital.

Treasure Valley Business Group, a portfolio company of Creo Capital Partners, has acquired TKM2 Sales Solutions LLC, a provider of sales, marketing and distribution of food and food-related products throughout the United States. No financial terms were disclosed.

Vestcom International Inc., a Little Rock, Ark.-based provider of shelf-edge marketing solutions to retailers and brand manufacturers, has acquired ELT Inc., a provider of in-store communications solutions. No financial terms were disclosed. Vestcom is a portfolio company of Lake Capital and Stephens Group.

Firms & Funds

Sentica Partners, a Finnish buyout firm focused on the lower middle-markets, has closed its third fund with €50 million in capital commitments. Limited partners include Finnish Industry Investment Ltd., Ilmarinen Pension Insurance Co. and Etera Mutual Pension Insurance Co.

Human Resources

Fernando Marques Oliveira has joined General Atlantic as head of its Latin American program and head of its office in São Paulo, Brazil. He previously was a director with family investment office Grupo Icatu.

Bert Koth has joined the London office of Denham Capital Management, where he will focus on opportunities within the global mining sector. He previously worked on M&A and business development with mining company BHP Billiton.

Paul Capital has added Sabina Sammartino as a principal on the firm’s secondaries team. It also has promoted both Elizabeth Coleon and Guillaume Partiot to principal.

Andy Rose has joined Worthington Industries (NYSE: WOR) as chief financial officer. He previously was an Atlanta-based senior investment professional with MCG Capital Corp. and, before that, was a co-founding partner of Peachtree Equity Partners.

Laurent Camilli and Gwénael de Sagazan have been named co-heads of Close Brothers’ French business, following the planned departure of founding partner Olivier Dousset.

Barclays Capital announced the leadership team for its global M&A business, following the acquisition of Lehman Brothers’ North American investment banking unit.