PE Week Wire: Wed., April 11, 2007

Lots of blog chatter this morning about Aggregate Knowledge, a behavioral search company that just scored $20 million in Series B funding from DAG Ventures and Kleiner Perkins. After all, it’s not too often that a widget company raises double-digit venture dollars. Moreover, it’s not too often that a company seeds the journalistic clouds by sending out an embargoed press release with the actual round amount X’d out (brilliant strategy, worked like a charm).

What hasn’t yet been reported, however, is that one of AK’s primary competitors also raised new VC funding… And it raised more.

That competitor would be ChoiceStream, which said in a regulatory filing that it has raised $25.79 million. ChoiceStream declined to discuss the deal, which is really too bad because the filing itself seems to indicate that the company is now valued in excess of $250 million.

How so? Because Regulation D filings require identification of any shareholder with a greater than a 10% voting interest in the company. So let’s assume that ChoiceStream followed that rule of thumb – even though such an assumption might make an ass of… well at least me.

The ChoiceStream filing lists only three institutional shareholders: General Catalyst, Sutter Hill Ventures and a family trust affiliated with ChoiceStream CEO Stephen Johnson. Each had participated on a prior Series B round, and apparently holds more than a 10% interest. None of them, however, are the source of the new $25.79 million – because the filing reports that the entire amount came from a single investor based in Texas (none of the aforementioned are based in Texas). So if a single investor contributed over $25 million and received less than a 10% equity stake, the company must be valued in excess of $250 million. For context, Matt Marshall is reporting that AK received a post-money valuation of more than $70 million.

In case you’re wondering who the Texas investor is, join the club. My original guess was Austin Ventures, but they denied it. Ditto for Sevin Rosen. I’ve got one more thought – more a hedge fund than VC fund – but will hold off until asking them directly.

For more on AK, check out this 5 Questions I did with company CEO Paul Martino. Seems the big round number is primarily for biz dev, including a new product feature that allows “discovery” accross websites, instead of just within a single one (current product is like Amazon’s “Customers also purchased…”)

*** Terra Firma is in the news this month due to its rival bid for UK drugstore chain Alliance Boots. Expect it also to be in the news at the end of May, when it closes on its latest fund with at least €5 billion (that’s the cap, but it might go over). It’s also in the bidding for a sponsor-to-sponsor aerospace deal, which I hope to report on later today at peHUB.

*** Speaking of fundraising, early-stage VC firm GrandBanks Capital is in market with its second fund. $150 million target with a $200 million cap. Managing general partner Charley Lax declined to comment on the fund (rules, rules, rules), but we did have a lovely chat about Red Sox opening day.

*** Oh, I just remembered: Reports are floating out there that the Boston Celtics are preparing to offer Doc Rivers a contract extension (and also have no interest in firing Danny Ainge). If this happens – and I pray nightly that it doesn’t – I think Bain Capital and Highland Capital Partners have to think long and hard about ending their association with Steve Pagliuca and Wyc Grousbeck, respectively. How could LPs ever again trust their judgment? Ok, I’m kidding, but can’t anyone at either firm talk some sense into them?

*** Finally, just a reminder that I’ll be moderating a panel next Tuesday at Buyouts Symposium East. The topic is the recent trend of take-private buyouts, and my panelists include Bud Watts of Carlyle Group, Seth Lawry of Thomas H. Lee Partners, Michael MacDougall of TPG and John Coyle, head of financial sponsors with JPMorgan. To register, go here.

Top Three

Apollo Management has agreed to acquire the aluminum interests of Xstrata PLC for $1.15 billion. Xstrata Aluminum was created from the former Falconbridge Group’s aluminum assets, known as Noranda Aluminum, following Xstrata’s acquisition of Falconbridge last August. The Apollo acquisition is expected to close later this quarter.

Draper Fisher Jurvetson has reached the $600 million target for its ninth early-stage VC fund. More information here.

Epocal Corp., an Ottawa-based developer of enterprise point-of-care blood diagnostic products, has raised US$31 million in Series C funding. Highland Capital Management led the deal, and was joined by return backer Genesys Capital Partners. Aquilo Partners served as placement agent.

VC Deals

SpineWave Inc., a Shelton, Conn.-based medical device company focused on spinal surgery solutions, has raised $45 million in Series D funding. The round was led by Compass Global Fund, an investment group of the Cotrel family that is managed by Compass Financial Advisors. Return backers included New Enterprise Associates, Sprout Capital, Canaan Partners, Thoma Cressey Equity Partners, CHL Medical Partners, Morgenthaler Venture Partners, Foundation Medical Partners and California Technology Partners.

Ensequence Inc., a Portland, Ore.-based provider of interactive video software and services, has raised $40 million in Series C funding. No investor information was disclosed. Past backers have includes Westbury Partners and Fortuna Investments.

Applied Spine Technologies Inc., a New Haven, Conn.-based developer of a stabilization device for supporting an injured or degenerated spine without eliminating motion, has raised $28 million in Series C funding. Investor Growth Capital led the deal, and was joined by MB Venture Partners.

Cybera Inc., a Nashville, Tenn.-based provider of broadband wide area network solutions to multi-location businesses, has expanded its Series C round to $18 million. A $12.8 million first close occurred in 2005. Adams Street Partners led the deal, and was joined by Chrysalis Ventures, Claritas Capital and several prior Cybera investors.

Altierre Corp., a San Jose, Calif.-based provider of wireless infrastructure solutions for retailers, has raised $17 million in Series B funding. D.E. Shaw Group led the deal, and was joined by DuPont Capital Management and return backers ATA Ventures, Kinetic Ventures and Labrador Ventures. Altierre had raised a $13 million Series A round in January 2005.

AirTight Networks Inc., a Mountain View, Calif.-based provider of wireless intrusion prevention solutions, has raised $14.5 million in Series C funding. CMEA Ventures led the deal, and was joined by return backers like Blueprint Ventures, Granite Ventures, Siemens Venture Capital, Trident Capital and Walden International. AirTight has raised $36.75 million in total VC funding since its 2002 inception.

Click4Care Inc., a Powell, Ohio-based provider of medical management software for payers, providers and patients, has raised $10 million in first-round funding from the Psilos Group.

Rinera Networks Inc., a San Mateo, Calif.-based online video distribution startup, has raised $9 million in Series A funding from New Enterprise Associates and Foundation Capital.

IntelliPath Corp., a Lumberton, N.J.-based provider of automated connectivity solutions, has raised $6.5 million in Series A funding from L Capital Partners and Blueprint Ventures. The company also has acquired a family of enterprise-class physical layer network connectivity switches from Brocade Communications Systems.

Telovations Inc., a Tampa, Fla.-based provider of IP communications services to SMEs, has raised $6.5 million in Series A funding. Lovett Miller & Co. led the deal, and was joined by returning seed backers Lane Five Ventures, Dominion Financial Group and Connemara Capital.

Built-e Inc., a Seattle-based provider of green building materials, has raised over $5 million in first-round funding led by Catamount Ventures, according to VentureWire. The company operates under the name Environmental Home Center.

SenSage Inc., a San Francisco-based provider of security management solutions, has raised $5 million in Series D funding. Return backers include Mitsui & Co. Venture Partners, Canaan Partners, Sierra Ventures and Battery Ventures. The company has raised $31 million in total VC funding since its 2000 inception.

FonJax Inc., a Walnut Creek, Calif.-based mobile applications software developer, has raised around $2.2 million in Series A funding, according to a regulatory filing. Backers include Co-Investor AG.

Outspark, a San Francisco-based publisher of casual, multiplayer online games for the U.S. and Asian markets, has raised an undisclosed amount of Series A funding. Altos Ventures and DCM co-led the deal.

World Golf Tour, a San Francisco-based developer of an online multiplayer golf game, has raised an undisclosed amount of first-round funding led by Battery Ventures.

HowStuffWorks, an Atlanta-based online content company, has raised $75 million in private funding (mostly equity). It also plans to launch an instructional video offering, in partnership with ViTrue Inc. Participants in the round include Capital Research & Management, Chilton Investment Co., Carl Icahn and Chartwell Investments. Allen & Co. served as placement agent.

Buyout Deals

Apollo Management has completed its $30 per share take-private buyout of real estate franchisor Realogy Corp. (NYSE: H). The entire deal was valued at approximately $9 billion, including around $1.6 billion in assumed debt and approximately $750 million of other liabilities. Apollo committed around $2 billion of equity, and with leveraged financing provided by JPMorgan, Credit Suisse and Bear Stearns. Evercore Partners served as financial advisor to Realogy.

ArcLight Capital Partners has acquired a 50% equity interest in National Energy & Trade Holdings LLC, a Houston, Texas.-based provider of natural gas marketing and a transportation services. No financial terms were disclosed. NETH was advised on the deal by GulfStar Group.

CCA Industries Inc. (AMEX: CAW) announced that it has terminated negotiations relating to the proposed acquisition of the company by Dubilier & Co. The move comes after Dubilier was “unable to secure financing of the transaction.” CCA manufactures and markets health and beauty products.

Cardinal Health (NYSE: CAH) has completed the sale of its pharmaceutical technologies and services (PTS) business to The Blackstone Group for approximately $3.3 billion. PTS develops, manufactures and packages medication and other products for pharma and biotech firms, and employs approximately 10,000 people at more than 30 global facilities. It generates approximately $1.8 billion in annual revenue.

Marwit Capital has acquired Best Vinyl LLC, an American Fork, Utah-based installer of plastic fences. No financial terms were disclosed for the deal, which was first reported by LBO Wire.

World-Check, a London-based provider of structured intelligence on heightened risk individuals and entities, has received a “significant equity investment” from Spectrum Equity Investors and HarbourVest Partners. No financial terms were disclosed. Portico Capital Securities advised World-Check on the transaction.

Medwave Inc. (Nasdaq: MDWV), a St. Paul, Minn.-based maker of blood pressure monitoring devices, said that it will begin a process to explore strategic alternatives, which could include a sale of the company.

Ready Pac Foods Inc., an Irwindale, Calif.-based provider of fresh-cut produce and fresh prepared foods, has raised an undisclosed amount of strategic funding from Bayside Capital, an affiliate of H.I.G. Capital.

PE-Backed IPOs

New World Restaurant Group Inc., a Golden, Colo.-based franchisor and operator of Einstein Bros. and Noah’s bagel shops, has filed for a $125 million IPO. It plans to trade on the Nasdaq under ticker symbol BAGL, with Morgan Stanley and Cown & Co. serving as co-lead underwriters. The company already is quoted on the Pink Sheets, and plans to rename itself Einstein Noah Restaurant Group Inc. prior to the offering. Greenlight Capital holds a 94.1% pre-IPO position.

Vanguard Car Rental Group Inc., a Tulsa, Okla.-based vehicle rental company operating under the National Car Rental and Alamo Rent-A-Car brands, has withdrawn its $300 million IPO filing. The move is related to Vanguard’s pending acquisition by Enterprise Rent-A-Car Co. Cerberus Capital Management is Vanguard’s majority shareholder.

PE-Backed M&A

AmeriCast Technologies Inc., an Atchison, Kansas-based maker of complex steel castings, has acquired Atlas Castings and Technology, a Tacoma, Wash.–based manufacturer of specialty steel castings for the energy and defense industries. No financial terms were disclosed, except that the combined company will have annual revenue in excess of $300 million. Castle Harlan acquired AmeriCast late last year from KPS Capital Partners for $110 million.

PE Exits

Lone Star Funds has retained Merrill Lynch to find a buyer for portfolio company Bi-Lo LLC, a Mauldin, S.C.-based operator of supermarkets in the Southeastern U.S.

Firms & Funds

Park Avenue Equity Partners is raising up to $300 million for its second fund, according to a regulatory filing. It already has secured around $100 million, while its inaugural fund was capped at $110 million in 1999.

Catamount Ventures of San Francisco has closed its third fund with $82.58 million in capital commitments, according to a regulatory filing. Limited partners include Legacy Ventures, Lehman Brothers Fund-of-Funds XVIII, Horsley Bridge and BP Master Trust for Employee Pension Plan.

GE Commercial Finance Global Media & Communications has renamed itself Media, Communications & Entertainment, to reflect a growing focus on – and portfolio of – entertainment industry customers.

Human Resources

Michael Janse has joined Harris & Harris Group as a managing director and executive vice president. He previously was a principal with Arch Venture Partners and, before that, worked in the semiconductor products group of Motorola.

Philippe Donnet has joined Wendel Investissement as managing director for a new Asia-Pacific team based in Singapore. He previously was a member of AXA’s executive committee, and will continue to serve as non-executive chairman of AXA Japan.

Dennis McCrary is leaving fund-of-funds manager Adams Street Partners, where he was head of the U.S. partnership team. No future plans were disclosed. The news was first reported by LBO Wire.

Mark Joachim and Robert Carey have joined Bracewell & Giuliani LLP as New York-based partners in the firm’s leveraged finance and high yield practice. They previously were partners with Bingham McCutchen.

David Buzen has joined Churchill Financial Holdings as chief financial officer. He previously was a managing director with Dublin, Ireland-based DEPFA Bank PLC.