PE Week Wire: Tuesday, June 3, 2008

Most of this morning’s Lehman Brothers talk has been about how the firm may be looking to raise between $3 billion and $4 billion in new capital, which is believed to mean the firm is about to post its first quarterly loss since going public. But here’s a little scoop you may not yet have heard:

Lehman has also lost something else: Tony Trousset, its global co-head of software investment banking. No word yet on what preceded the departure, or if he’s got a new gig.

Trousset joined Lehman in 2005, after having been VP of business strategy with SAS Institute. He worked out of its Menlo Park office. Lehman declined comment.

*** Yesterday, the FT reported that Cerberus had sold more than half of its equity stakes in Chrysler and GMAC. Today, Cerberus is (sort of) denying it, claiming to have not sold any equity since the deal closed. Pay careful attention to the timing clause there, because it seems that Cerberus’ original purchase actually included undisclosed co-investors. In other words, Cerberus didn’t actually own the “sold” equity in the first place.

*** KSL Capital Partners, a Denver-based private equity firm focused on the leisure and recreation sectors, is raising up to $500 million for a “supplemental” fund to KSL Capital Partners II, the $1 billion vehicle it closed in mid-2006.

Kind of surprising from the outside looking in for two reasons: (1) KSL II was just 15% called down through last September 30, according to The Washington State Investment Board; and (2) KSL has only made three investments since that point: ClubCorp, Western Athletic Clubs and Orion Expedition Cruises.

But regulatory filings indicate that it has at least $200 million committed, from LPs like Washington and the Oregon State Treasury. Probitas Partners is serving as placement agent.

So why does KSL need to get a dry powder dump? The answer may be found in The Sunday Times of London, which recently reported that the firm is one of six bidders for UK fitness club chain Esporta. That entire deal is valued at around £450 million, which sadly translates into nearly $885 million. This includes an enterprise value of around £200 million and another £250 million worth of related real estate.

KSL would surely leverage the deal, but nonetheless might need to deepen its pockets in order to curry favor with seller Simon Halabi, who bought Esporta in 2006 for 500 million from Duke Street Capital (which also is a reported suitor, along with David Lloyd Leisure Group and LA Fitness). KSL did not return requests for comment.

*** The NVCA and Deloitte have released a survey of venture capitalists from around the globe, on asked which countries are considered the most technologically innovative. Connie has details, including a downloadable version of the results.

*** If you’re one of the more than 1,500 folks who checked out Jason Mendelson’s post yesterday on startup lawyers, you might want to check back in. Lots of insightful reader comments – including some very long ones, which isn’t surprising given that most of the respondents are attorneys.

*** peHUB First Read, including Jeff Bezos and John Doerr telling a dirty story.

Top Three

VeraLight Inc., an Albuquerque-based developer of a non-invasive diabetes screening system, has raised $20 million in Series C funding. CMEA Ventures and the Psilos Group co-led the round, and were joined by vSpring Capital, EPIC Ventures, The Dow Chemical Company and the Southern Ute Growth Fund.

MedAssets Inc. (Nasdaq: MDAS) has completed its acquisition of Accuro Healthcare Solutions Inc., a Dallas-based provider of financial and operational solutions for healthcare providers, from Welsh, Carson, Anderson & Stowe. The deal was valued at approximately $350 million in cash and stock (including assumed debt). In related news, Accuro withdrew its registration for a $143.75 million IPO.

Adveq of Switzerland has raised $457.5 million for Adveq Opportunity II, a fund-of-funds that will “pursue special and unique investment strategies outside the traditional private equity sectors of venture ! capital and buyouts in the U.S.” The firm also promoted Philippe Bucher, Nils Rode and Lee Gardella to managing director, and Kang Pan to executive director.

VC Deals

IP Commerce Inc., a Denver-based provider of on-demand access to commerce services, has raised $17 million in Series C funding. Venrock led the round, and was joined by Total Technology Ventures and return backers Meritage Funds, Appian Ventures and Iron Gate Capital. The company has now raised more than $34 million since early 2006.

Corindus Inc., a maker of robotic systems that support the treatment of coronary artery and peripheral vascular disease, has raised $12 million in Series B funding from 20/20 HealthCare Partners. Corindus has offices in Auburndale, Mass. and Israel.

Ekahau Inc., a Helsinki-based provider of mobile positioning technologies, has raised over $10 million in Series C funding. Nexit Ventures led the round, and was joined by return backers like Finnish Industry Investment Ltd. and Sampo Group. It has now raised over $18 million in total funding.

OnRequest Images Inc., a Seattle-based provider of custom imagery services, has raised $8 million in Series C funding. European Founders Fund led the round, and was joined by return backers Frazier Technology Ventures, Maveron and Menlo Ventures. The company has now raised $30 million since 2004.

Tigo Energy, a Los Gatos, Calif.-based developer of technology to increase efficiency of commercial and residential solar installations, has raised $6 million in first-round funding. Matrix Partners and OVP Venture Partners co-led the round.

Oncodesign SA, a Dijon, France-based provider of preclinical oncology services, has raised $4.7 million in new VC funding. Vizille Capital Innovation led the round, and was joined by return backer Avenir Enterprises.

American Biomass Corp., a Manchester, N.H.-based distributor and online retailer of wood pellets and biomass fuels for residential heating, has raised $4 million in Series A funding led by .406 Ventures.

EnzySurge Ltd., an Israel-based provider of chronic wound management solutions, has raised $4 million in fourth-round funding. The round was led by company chairman Eli Gilboa, of Gilboa & Licht.

PhysioSonics Inc., a Seattle-based developer of noninvasive neurologic products, has held a $4 million first close on its Series A round, from Johnson & Johnson Development Corp.

Lumos Labs, a San Francisco-based provider of brain training games, has raised $3 million in its first round of institutional funding. Pequot Ventures and Norwest Venture Partners were joined by seed backers like Michael Dearing.

MarketAxess Holdings Inc. (Nasdaq: MKTX), an operator of an electronic trading platform for fixed-income securities, has raised $35 million from Technology Crossover Ventures. The deal involves the sale of preferred stock and warrants at a conversion price of $10 per share (34% premium to yesterday’s closing price).

Buyout Deals

Golden Gate Capital has agreed to acquire Pinnacle Security, an Orem, Utah–based provider of residential and commercial security systems. No financial terms were disclosed for the deal, which was done in partnership with company management.

Marlin Equity Partners has acquired the coupon redemption operations of International Outsourcing Services, and formed a new company called ProLogic Redemption Solutions. No financial terms for the acquisition were broken out, but Marlin did say that it would spent up to a total of $60 million to build the new business.

Summit Partners has acquired a minority position in Snap Fitness, a franchisor of compact 24/7 express fitness clubs in North America. No financial terms were disclosed.

3i Infrastructure and Infinis (a Terra Firma portfolio company) both said that they have no immediate plans to bid on UK renewable energy company Novera Energy. The news sent Novera shares down nearly 15% this morning.

PE-Backed IPOs Inc., an Austin, Texas-based online destination for consumers to search, compare, and apply for credit cards, has withdrawn its IPO registration. The company had planned to sell around 10.73 million common shares at between $13 and $15 per share. It would have had an initial market cap of approximately $421 million, were it to price at the high end of its range. Credit Suisse and Citi were serving as co-lead underwriters. Austin Ventures sponsored a recap of in late 2006, and holds a 65.6% position. Also participating on the recap were American Capital Strategies (9.6%) and company founder Dan Smith (16.1%).

PE Exits

Bestport Ventures and Close Brothers have sold their stakes in UK-based occupational health services provider Grosvenor Health Ltd. to the Serco Group for £19.6 million. The two firms acquired Grosvenor via a March 2004 management buyout, and later provided additional capital to help the company acquire Associated Health Specialists and Health Sure UK.

The Gores Group has completed its sale of Denver-based videoconferencing company Wire One Holdings Inc. to British Telecom(NYSE: BT). No financial terms were disclosed, except that the gross audited assets of Wire One were $90.5 million as of year-end 2007.

NetSuite Inc. (NYSE: N) has agreed to acquire OpenAir Inc., a Boston-based provider of on-demand professional services automation software. The deal is valued at $26 million, plus the assumption of $5 million of restricted stock units. OpenAir has raised VC funding from firms like 3i group, Fidelity Ventures, i-Hatch Ventures and Rex Capital.

PE-Backed M&A

Collective Media, a New York–based online advertising network, has acquired Personifi, a provider of audience targeting solutions to Web publishers, ad networks and mobile providers. No financial terms were disclosed. Collective Media raised around $2.5 million in Series A funding last fall from Greycroft Partners and iNovia Capital.

Direct Group, a UK-based provider of corporate and affinity services to the insurance sector, has acquired Millennium Insurance for an undisclosed amount. Direct Group was acquired last summer in a £40 million management buyout sponsored by LDC, the private equity arm of Lloyds TSB.

Total Safety U.S. Inc., a Houston, Texas-based portfolio company of DLJ Merchant Banking Partners, has acquired Callaway Safety Equipment Co., a provider if safety services to the oil and gas industry. No financial terms were disclosed.

Firms & Funds

Barclays Capital has raised $1 billion for its first junior capital fund. It also may seek an additional $500 million in commitments. The vehicle will mostly provide mezzanine, uni-tranche and second-lien financing, but also may participate in private equity co-investments.

Lehman Brothers may raise between $3 billion and $4 billion in fresh capital, according to The Wall Street Journal.

Human Resources

David Haddad has joined Olympus Partners as a vice president, according to LBO Wire. He previously was with Cornerstone Equity Investors, where he focused on the healthcare and consumer sectors.

Gregory Patti Jr. has joined Cadwalader Wickersham & Taft LLP as a New York-based partner in the firm’s corporate department, with a focus on private equity. He previously was a partner with O’Melveny & Myers.