PE Week Wire: Wed., April 2, 2008

I spent yesterday watching J successfully defend her PhD dissertation (which was equally nerve-wracking and fantastic), so today’s column is generously written by Larry Aragon, editor of Venture Capital Journal:

Secondary firms are kind of like the Betty Ford Centers of the venture business. Ask a VC what he thinks about them, and he’ll typically say they provide a much needed service, but he has never actually needed to use such a service himself. Right, just like Amy Winehouse has never gone to rehab.

The stigma associated with secondaries is bizarre. Sure, I get the part about failure. But both VCs and buyout pros long ago embraced failure as a normal part of their business. I guess a VC feels comfortable saying he won’t back an entrepreneur who has never failed before, but failure of a VC fund is another matter. Why? VC is among the riskiest businesses in the world. It stands to reason that many VC firms will fail, just like most startups will fail.

If I were an LP, I’d want to see a VC do everything in his power to make his first fund a success—even if it meant my return would shrink. I’d rather have 10% of something than 20% of nothing.

Am I missing something here? Email me at

For those who’d like to read more about this topic, click here for this month’s cover story in Venture Capital Journal. (The story is free to non-VCJ subscribers for today only, so read quickly.)

And for those of you who’d like to meet Connie Loizos, the author of the cover story, or one of the secondary experts she quoted, please come visit us next Wednesday, April 9, at the Quadrus Conference Center in Menlo Park, Calif. The cost is just $60, with a $25 discount for VCJ subscribers. For tickets, call Angelica Vicioso at (646) 822-3570 or shoot her an email.

Hope to see you there…

Top Three

Nanosolar Inc., a Palo Alto, Calif.-based provider of lower-cost solar energy panels, has raised $50 million from EDF Energies Nouvelles SA. The equity is part of a strategic agreement whereby Nanosolar next year will begin supplying EDF with panels. No word on if a rumored $2 billion valuation was attached. Nanosolar had previously received a $20 million grant from the U.S. Department of Energy, and raised around $100 million in VC funding from Mohr, Davidow Ventures, Benchmark Capital, Mitsui & Co., Onpoint, SAC Capital, GLG Partners, Swiss Re and Grazia Equity.

Gen. Peter Pace, former chairman of the U.S. Joint Chiefs of Staff, has joined Behrman Capital as an operating partner. He also has been named chairman of Behrman portfolio company Pelican Products, which makes advanced lighting systems and cases for protecting valuable equipment.

The Blackstone Group has closed its ninth real estate fund – Blackstone Real Estate Partners VI — with $10.9 billion in capital commitments. It is the largest real estate private equity fund ever raised.

VC Deals

Range Fuels Inc., a Broomfield, Colo.-based developer of cellulosic ethanol production technology, said that it has raised more than $100 million in Series B funding. VentureWire puts the total at $130 million. Hedge fund Passport Capital led the round, and was joined by BlueMountain, Khosla Ventures, Leaf Clean Energy Co. and Pacific Corporate Group. Advanced Equity and Morgan Stanley served as placement agents.

ProGenTech, a developer of a cassette-based automated nucleic acid purification system, has raised $21 million in its first institutional round of funding, co-led by Bay City Capital (San Francisco) and DT Capital (Shangahi). The company has offices in both Shanghai and Emeryville, California.

Sweet Leaf Tea, a maker of ready-to-drink iced teas, has raised $18 million in Series C funding from Catterton Partners.

Attributor, a Redwood City, Calif.-based provider of online content licensing technology, has raised $12 million in Series C funding. Jafco Ventures and Turner Broadcasting were joined by return backers Amicus Capital, Draper Richards, First Round Capital and Selby Venture Partners. It had previously raised $10 million.

Uplogix, an Austin, Texas–based provider of secure remote management solutions, has raised $10 million in Series C funding. Citi was joined by return backers Adams Capital Management and Fayez Sarofim & Co. It had previously raised around $16.5 million.

Novinium Inc., a Seattle-based provider of cable life extension technology for the utility market, has raised $6 million in Series C funding led by Nomura’s New Energy & Clean Technology Ventures. Evolution Capital Advisors served as financial advisor to Novinium.

Futuretec, a UK-based developer of technology for enhancing oil and gas well casing and liner activities and cementing, has raised £4 million in VC funding from Scottish Equity Partners and Energy Ventures.

CoreXchange, a Dallas-based network access exchange provider, has raised an undisclosed amount of convertible note financing led by Red Barn Investments. The company also secured a credit facility from Silicon Valley Bank.

Buyout Deals

Audax Group has acquired In the Swim, a Chicago, Ill.-based direct marketer of swimming pool supplies, from AEA Investors. No financial terms were disclosed. Harris Williams & Co. advised ITS, while Madison Capital provided leveraged financing.

FL Capital Partners of Ireland has acquired Cavan-based power tool manufacturer Tomsburg Group for around €25 million, according to The Independent. It is the firm’s third deal since launching in late 2006.

HgCapital has acquired a 75% stake in a Swedish wind farm called the Havsnäs. The total deal is valued at €185 million, including a €127 million construction and term project finance loan from CommerzBank, ING Bank and NordLB. The remaining 25% equity stake will be retained by wind farm developer Renewable Energy Systems (RES).

International Investment Bank of Bahrain has acquired an undisclosed equity stake in ARTES, a Tunisian distributor for Renault, Nissan and Dacia automobiles. No financial terms were disclosed.

Lake Pacific Partners and Wingate Partners have acquired Cal Pacific Specialty Foods, a strawberry products processor. No financial terms were disclosed. J.H. Chapman Group advised Cal Pacific on the deal.

Iceni Capital has sponsored a management buyout of Apollo Lifts, a UK-based independent lift contractor. No financial terms were disclosed.

Macrovision Corp. (Nasdaq: MVSN) has completed the sale of its software business unit to Thoma Bravo for approximately $200 million. The newly-independent company will be known as Acresso Software, with former Macrovision software unit chief Mark Bishof serving as CEO.

Ontario Teachers Pension Plan disclosed yesterday in its annual report that it would be responsible for up to C$587 million of the C$1 billion breakup fee associated with a failure of the C$52 billion BCE buyout. OTPP has repeatedly said, however, that it expects the deal to close.

3i Group has invested £50 million for a 20% stake in UK-based Hyperion Insurance Group.

Skylight Capital has acquired Bonney Plumbing Inc., a provider of plumbing services to residential and commercial customers in the greater Sacramento area. No financial terms were disclosed. GW Equity advised Bonney Plumbing on the deal.

PE Exits

Permira has completed its $1.2 billion sale of Aearo Technologies Inc., an Indianapolis-based manufacturer of personal protective equipment and energy-absorbing products, to 3M. Aearo last year had agreed to a leveraged recap that included a senior secured first-lien facility and a senior secured second-lien facility worth a combined $735 million. Lenders included Bank of America, Bear, Stearns & Co. and Deutsche Bank.

Wind Point Partners has sold snack companyNonni’s Food Company Inc. to Greek food group Vivartia, for $320 million.

PE-Backed M&A

Dufa Deutek, a Romanian decorative paints producer, has acquired Bengloss, a Romanian mortar and core adhesives maker. The €19 million deal was sponsored by Dufa owner Advent International.

Jordan Health Services, a Mount Vernon, Texas-based provider of in-home Medicaid and Medicare services, has acquired CareLink, a provider of in-home Medicare services in Dallas. No financial terms were disclosed for the deal, which was financed via an additional equity investment from JHS owner Trinity Hunt Partners.

MindShift Technologies Inc., a Fairfax, Va.-based managed service provider, has acquired Collaboration Online Ltd., a Burlington, Mass.-based provider of SaaS solutions to small and mid-sized businesses. No financial terms were disclosed. MindShift has raised over $157 million in VC funding since 1999, including a $14 million Series DD round last year from TD Fund, Columbia Capital and Fidelity Ventures.

Tinglobal Ltd., a UK-based provider of refurbished, midrange IT infrastructure and services, has acquired Powercore, a provider of services for midrange hardware products. No financial terms were disclosed for the deal, which was sponsored by Tinglobal shareholder Shackleton Ventures Ltd.

Firms & Funds

Chicago Growth Partners has closed its second fund with $500 million in capital commitments.

DLJ South American Partners has closed its debut fund with $300 million in capital commitments. The firm is a joint venture between Credit Suisse’s Alternative Investments group and an investment team co-led by Carlos Garcia (former head of South American investments for DLJ Merchant Banking Partners) and Marcelo Medeiros (former manager of the Brazil Private Equity Fund). It has already made three investments: The creation of Arcos Dorados BV, to acquire the master franchise of McDonald’s restaurants in Latin America and the Caribbean; The acquisition of Fispal, a promoter of food and beverage trade shows in Brazil; and the acquisition of a large stake in Brazilian education company EBEC.

Arapima Partners is raising its debut fund with a $150 million target, according to Private Equity International. It will focus on middle-market opportunities in Indonesia.

Human Resources

Sonali De Rycker has joined venture capital firm Accel Partners as a London-based partner. She previously was an investment banker with Goldman Sachs.

Marc Landsberg has joined Lake Capital as a director. He previously served as director of corporate strategy and development at marketing agency Leo Burnett Worldwide.

Ziv Sarig has joined Resilience Capital Partners as chief operating officer. He previously was CFO of TOA Technologies, a provider of customer appointment and mobile workforce management solutions.

Thomas Creaser has joined The Jordan, Edmiston Group as executive vice president of the firm’s professional services group, where he will oversee the internal operations of JEGI’s client engagements and project management efforts. It is a new position. He previously ran Walt Disney Co.’s consumer magazine business. JEGI is an investment bank focused on the media and information sectors.

Valerie Auffray has joined Apposite Capital, a healthcare-focused investment firm based in London, as investor relations manager. She previously was associate director at PR firm Citigate Dewe Rogerson.