PE Week Wire: Tuesday, June 17, 2008

Every time the PE Week Wire adds another thousand subscribers, I like to remind you that these morning missives are but grains of sand on our vast editorial hourglass. We’ve got more detailed news and views at peHUB, plus in our print mags: Buyouts, Venture Capital Journal, PE Week and European Venture Capital Journal. peHUB archive subscriptions can be purchased online for just $124, while you can email Rob Mills about obtaining print subs. Just use your corporate credit card (that’s why they gave you one).

Also, if you are interested in advertising on PE Week Wire or peHUB, just reply to this email and let me know. You also could simply send in a check as if you were an advertiser, but without actually advertise anything. This is a new program we’ve launched, but for some reason has gotten very little traction…

*** Canada’s Supreme Court today will hear BCE’s appeal of a lower court ruling that threatens to derail the company’s C$34.8 billion buyout. A three-judge panel will listen to oral arguments, and then can either issue a ruling or push for a fuller process. Conventional wisdom is that they’ll rule in BCE’s favor, at which point the sponsor vs. lender showdown would resume. Here’s a primer.

*** When we last saw Tagg Romney, he was traipsing around Iowa and New Hampshire on behalf of his father’s presidential campaign. That didn’t work out too well, so Tagg has moved on to something Romneys are notably better at: Private equity. He and three partners have launched a new firm targeting $200 million. We’ve got the details over at peHUB.

*** Austin Ventures is leading a buyout for Entrepreneur Media, as reported yesterday by paidcontent. There also is an undisclosed Boston-based VC firm participating (I’ve got a pretty good idea who, but not good enough to share yet).

The reason this merits column mention isn’t the target so much as the type of transaction (i.e., a buyout). Austin Ventures is in the midst of raising a new fund, and every prospective investor I’ve talked to says that its later-stage portfolio – including a limited number of buyouts – is much stronger than its early-stage stuff. That means AV is playing to its relative strength with Entrepreneur Media, which should help convert a few more fund commitments from verbal to paper.

*** Quiz Time: Can you name the principals of a new cleantech fund that is expected to target $3 billion. No official PPM yet, just talk.

*** peHUB First Read, including a popular explanation for why Yahoo exec Jeff Weiner has agreed to join two VC firms as an executive-in-residence.

Top Three

Platinum Equity has agreed to sell PNA Group Holding Corp., an Atlanta-based steel processor and distributor, to Reliance Steel & Aluminum Co. (NYSE:RS). The deal is valued at approximately $1.1 billion, and is expected to close within the next 60 days. PNA had been in registration for a $200 million IPO, and had been acquired by Platinum from Germany’s TUI AG in 2006.

Medicis (NYSE: MRX) has agreed to acquire LipoSonix, a Seattle-based maker of an ultrasound technology for cosmetic body contouring. The deal includes a $150 million upfront cash payment and up to $150 million in future milestone payments. LipoSonix had raised nearly $40 million in VC funding since 2001, including a $27 million Series C round in 2004 at a post-money valuation of approximately $67 million. Backers include Versant Ventures, Accuitive Medical Ventures, Carlyle Venture Partners, Delphi Ventures, SV Life Sciences, Three Arch Partners and Essex Woodlands Health Ventures.

SpectraWatt Inc., a maker of PV cells for solar manufacturers, has been formed as an independent spinout from Intel Corp. It also has received $50 million in funding commitments led by Intel Capital. Other participants include Cogentrix Energy (subsidiary of Goldman Sachs), PCG Clean Energy and Technology Fund and Solon AG.

VC Deals

Cameron Health Inc., a San Clemente, Calif.-based maker of implantable devices for treatment of cardiac disorders, has raised around $51.5 million in Series E funding, according to a regulatory filing. PTV Sciences was joined by return backers Boston Scientific, Delphi Ventures, Sorrento Ventures, Three Arch Partners and Versant Ventures. Piper Jaffray served as placement agent. The company has now raised over $130 million since early 2001.

Solarflare Communications Inc., an Irvine, Calif.-based provider of standards-compliant 10GbE solicon, has raised $26 million in new VC funding. Return backers include Oak Investment Partners, Foundation Capital, Accel Partners and Amadeus Capital Partners. Solarflare has now raised over $125 million in total VC funding since early 2001.

PSS Systems Inc., a Mountain View, Calif.-based provider of legal holds and retention management solutions, has raised $18 million in Series D funding. FTVentures led the round, and was joined by return backers Lightspeed Venture Partners, Azure Capital Partners, Granite Ventures and Cipio Partners.

Funambol Inc., a Redwood City, Calif.-based developer of open-source mobile application servers, has raised $12.5 million in Series B funding. Nexit Ventures led the round, and was joined by Castile Ventures and return backers Walden International and HIG Ventures.

RoundBox Inc., a Florham Park, N.J.-based provider of mobile broadcast software, has called down $12 million of a $20 million Series C round, according to a regulatory filing. Montagu Newhall Associates was joined by return backers Core Capital Partners, Polaris Venture Partners and RRE Ventures. The company previously raised $23 million over two rounds.

ImageSpan Inc., a Sausalito, Calif.-based provider of enabling infrastructure for digital content licensing, has raised $11 million in Series B funding. Bertelsmann Digital Media Investments led the round, and was joined by the New York City Investment Fund, City Lights Capital Management and Ackerley Partners. Return backers include Greycroft Partners and Village Ventures.

TeleSphere, a Phoenix-based provider of managed telecom and Internet services, has raised $10 million in new VC funding. Greenspun Corp. was joined by return backers Rally Capital and Hawkeye Capital.

JazzD Markets Inc., a Brookline, Mass.-based online directory startup, has raised $8 million in Series A funding, according to a regulatory filing. Backers include Commonwealth Capital Ventures and Pilot House Ventures. The company is run by former Aberdeen Group CEO James Bedard.

Verticals onDemand, a Pleasanton, Calif.-based provider of SaaS CRM solutions for the pharma and biotech markets, has raised $4 million in VC funding from Emergence Capital Partners.

i2we Inc., a Berkley, Calif.-based developer of social applications, has raised $750,000 in Series A funding led by IDG Ventures San Francisco, according to a regulatory filing. The company was founded by Karel Baloun, the first senior engineer at Facebook.

Mpex Pharmaceuticals, a San Diego-based developer of antibacterial drugs for multi-drug resistant bacterial pathogens, has entered into a strategic partnership with GlaxoSmithKline. The deal includes an $8.5 million upfront payment, a $6.5 million equity investment and milestones worth between $200 million and $250 million for each product candidate. Mpex previously raised nearly $35 million in VC funding from Western States Investment Group, Aberdare Ventures, HBM BioVentures, Adams Street Partners and SV Life Sciences.

Answers Corp. (Nasdaq: ANSW) has raised $13 million in a private placement of convertible preferred stock and warrants to Redpoint Ventures.

Buyout Deals

Quadrangle Group has agreed to buy Web-based marketing analytics company Greenfield Online Inc. (Nasdaq: SRVY), for approximately $426 million. The deal would pay Greenfield stockholders $15.50 per share, which represents around a 17% premium over last Friday’s closing price.

Arbor Investments has agreed to acquire Gold Standard Baking Inc., a Chicago-based maker of fresh and frozen baked goods, according to LBO Wire. No financial terms were disclosed.

Roark Capital Group has acquired Primrose Schools, an Acworth, Ga.-based provider of education-based early-child-care services. No financial terms were disclosed.

PE Exits

Monotype Imaging Holdings Inc. (Nasdaq: TYPE), a Woburn, Mass.-based provider of text imaging software, has filed for a secondary offering of five million shares. Selling shareholders include TA Associates, whose ownership position would drop from 49.9% to 37.6 percent. Monotype filed for the sale last Friday. Its closing price the prior day was $11.99 per share.

PE-Backed M&A

Glam Media, a female-focused online advertising network, has acquired Monetise Ltd., an online media sales company in the UK entertainment market. No financial terms were disclosed. Glam has raised over $87 million in VC funding from firms like Draper Fisher Jurvetson, Accel Partners, DAG Ventures and Walden Venture Capital.

Firms & Funds

The Edgewater Funds of Chicago is raising up to $750 million for its third growth equity fund, according to a regulatory filing.

Human Resources

Goldman Sachs last week laid off hundreds of junior investment bankers, including an estimated 25% of “vice presidents.”

Jeff Weiner has agreed to join both Accel Partners and Greylock Partners as an executive-in-residence. He has been with Yahoo for the past seven years, most recently as executive vice president of its Network division.

Lightspeed Venture Partners has made three hires: David Gussarsky as managing director of Israel, after previously serving as a partner with BRM Capital; James Mi as a managing director of China, after having been director of Greater China corporate development for Google; and Andrew Moley as CFO, former CFO and interim CEO of eGreetings Network.

Peter Gissel and Mark Nunny have joined Hermes Private Equity as a partner and investment manager, respectively. Gissel previously was a principal with Nikko Principal Investments, while Nunny spent the part four years with KPMG Transaction Services.

Frank Yeary is leaving his position as head of M&A at Citigroup, in order to assume a new vice chancellor post at UC Berkley. No permanent successor has been named, although I-banking co-head Raymond McGuire will take over Yeary’s duties on an interim basis.

Rudy Mazzocchi has been named CEO of NovaVision, a Boca Raton, Fla.-based developer of medical devices for people with neurological visual impairments. He previously was a managing director with Accuitive Medical Ventures.

Lee Goldberg has been named a Boston-based managing director with Getzler Henrich & Associates, a middle-market corporate turnaround and restructuring firm. He previously was a founding partner of The Recovery Group, and a partner with Coopers & Lybrand.