Ohio could certainly use some good news, after the locals got tossed again by Florida in a national championship game. So here it is:The Ohio Bureau of Workers’ Compensation is just weeks away from leaving the private equity market.
Ok, I know what some of you are thinking: “Isn’t this a bad thing, given how private equity typically outperforms public equity and bond indices?”Well,that would betrue in most cases — but OBWC isexceptionally inept. It favors short-term political expediency over long-term investment strategy (take a bow Coingate). It also seems unable to properly file away partnership subscription agreements. And then there was its willingness – no, make that its eagerness – to sell GPs down the river by disclosing portfolio company valuations. In short, OBWC is like that annoying guy at the poker table. He’s got enough money to keep anteing, but is unable to differentiate between a low pair and a straight flush. At least OBWC knows when to fold them…
Which brings us to the present. Both buy-side and sell-side sources tell me that final bids for the OBWC private equity portfolio were due last Thursday. An email goof by placement agent UBS revealed that at least 29 firms had expressed serious interest, although it’s unclear how many actual offers were made. What I do know is that UBS put the entire portfolio’s net asset valuation at $685 million, including around $271 million in unfunded commitments. In case you’re now scouring your FedEx pile for the offering book, look for something codenamed “Project Ottawa.”
The final sale will come at a premium, but it’s highly unlikely that any one secondary firm will walk away with the whole enchilada. In fact, such a bid probably does not exist. Instead, prospective buyers view the portfolio as three pieces: (1) The good stuff, which includes funds from firms like The Carlyle Group, Castle Harlan and Charter Life Sciences; (2) The bad stuff, which is a portfolio of Ohio-based firms that has an average net annualized IRR of -17.3% through the end of Q1 2005; and (3) The funds-of-funds, which include HarbourVest Partners, Lexington Partners and Fort Washington Capital Partners.
Top-end secondary firms will be interested in 1, but probably will be contractually precluded from owning stakes in 3. They won’t want 2, but might bid anyway just to ease the process. There will be some secondary salvage shops (read: masochists) that only will bid on 2, and then some secondary firms without fund-of-funds arms that will bid on part 3.
Winners and losers will be selected within the next two to three weeks, with UBS already having scheduled presentations to current OBWC staff (who are far more competent than their former bureaucratic overlords).
OBWC general partners include: ABRY Partners, ABS Capital Partners, Athenian Venture Partners, Carlyle Group, Castle Harlan, Charter Life Sciences, Draper Triangle Ventures, EDF Ventures, Edgewater Funds, Edison Venture Fund, Fort Washington Capital Partners, Fremont Partners, Halpern Denny, HarbourVest Partners, Lexington Partners, Invesco Private Capital, MCM Capital Partners, MK Capital Management, Pharos Capital, Primus Venture Partners, Quad C Advisors, Reservoir Capital Ventures, TCW/Crescent Mezzanine, Thayer Capital Partners, Triathlon Medical Ventures and Wind Point Partners.
*** CNBC broke news late yesterday afternoon that Apollo Management is working with Goldman Sachs on a possible IPO. Then Reuters chimed in with a similar report adding that JPMorgan also is involved – while I mentioned at peHUB that such rumors first came to me on Monday morning (too thinly-sourced to post at the time).
This morning’s WSJ suggests that the deal will be for just a small management company position valued at $1.5 billion, and adds that both Goldman and JPMorgan have been formally retained. Dealbook, on the other hand, calls such suggestions hogwash, and instead believes that the banks are leaking in order to force Apollo’s hand. I say the smart money is on a filing, with Carlyle, Oaktree and others to follow suit. Remember, S-1 filings don’t always lead to actual pricings – as evidenced by the BDC craze a few years back.
*** Speaking of BDCs, Fifth Street Capital soon plans to become one. Buyouts Magazine reports that the New York-based mezz firm is currently raising a $400 million fund via traditional means, but is telling prospective LPs that its interests will eventually be converted into BDC shares at an unspecified later date.
*** Tons of top-level personnel moves in the LP arena this week. The most notable is that Mel Williams of UNC and Edwin Poston of the Rockefeller Foundation have teamed up to form a new shop called TrueBridge Capital. The Chapel Hill-based shop already has begun marketing a VC fund-of-funds with a target of around $250 million, with other types of funds expected to follow. I’m working on a print piece about TrueBridge, which will use part of its GP carry to help build up the Kauffman Fellows Program’s endowment. Not only does Kauffman want to expand overseas, it also has considered accepting Fellows for positions with limited partners.
Other big moves include Tim Recker leaving the Michigan State Retirement System for the University of California Regents (he starts next week), and Trey Thompson leaving UTIMCO to work with old boss Bob Boldt at Perella Weinberg Partners (as first reported by Private Equity Insider).
*** I reported on Monday that Moneytree does not count Connecticut as part of New England. That was only partially correct. Companies based in Fairfield County are lumped in with New York Metro, while companies elswhere in the Nutmeg State do indeed fall under the New England umbrella. Apologies…
*** Alex reports that Nick Sturiale has one foot out the door at Sevin Rosen Funds, and I hear that he might not be the only one… http://pehub.com/wordpress/?p=800
*** Latest peHUB Document Dump.
*** Gametime Reminder: Today is the last day to sign up for our Fantasy Baseball League over at RotoHog.com. Go here for info
Top Three
Sangart Inc., a San Diego-based developer of an artificial blood substitute, has raised $50 million in Series F funding led by return backer Leucadia National Corp. The deal also includes warrants which, if exercised, could provide another $50 million in funding. Sangart previously had raised more than $70 million in VC funding since its 1998 formation. http://www.sangart.com/
Fidelity Ventures has acquired a majority interest in Asset Control, a provider of centralized data management solutions to the financial services industry. No financial terms were disclosed. Phil Lynch, former CEO of Reuters America and a venture partner with Fidelity Ventures, will succeed Asset Control founder Ger Resenkamp as company president and CEO. Rosenkamp will continue to serve as company chairman, while Fidelity Ventures’ Anne Mitchell will join the board of directors. Asset Control has offices in New York and Amsterdam. In a concurrent transaction, Asset Control has acquired TAP Solutions Inc., a Vancouver-based provider of data accessibility software for financial services firms. www.asset-control.com
Acorn International, a Shanghai, China-based marketer of consumer products through a TV home shopping network, has filed for a $128.25 million IPO. It plans to trade on the NYSE under ticker symbol ATV, with Merrill Lynch and Deutsche Bank serving as co-lead underwriters. SAIF Partners holds a 26.6% pre-IPO position. www.chinadrtv.com
VC Deals
Affimed Therapeutics AG, a Heidelberg, Germany-based developer of antibody therapeutics, has raised €25 million in Series B funding. Participants included BioMedInvest, OrbiMed Advisors, Life Sciences Partners and return backer FirstVentury. The company’s two lead clinical programs focus on the treatment of Hodgkin’s disease and Non-Hodgkin’s Lymphoma, respectively. www.affimed.com
Mavenir Systems Inc., a Richardson, Texas-based provider of network convergence solutions, has raised $20.5 million in Series B funding, according to a regulatory filing. Return backers include Austin Ventures and North Bridge Venture Partners. http://www.mavenir.com/
Nfocus Neuromedical Inc., a Menlo Park, Calif.-based biotech company focused on hemorrhagic stroke treatments, has raised $20.3 million in Series B funding. Nfocus was formed via CardioVasc Inc.’s recent acquisition of Acta Vascular Systems Inc. Oxford Bioscience Partners and Technology Partners co-led the deal, and were joined by existing CardioVasc backer ePlanet Ventures. www.cvasc.com
ForeSee Results, an Ann Arbor, Mich.-based provider of online customer satisfaction management solutions, has raised $20 million in new VC funding. Updata Partners and Investor Growth Capital co-led the deal, and were joined by return backer CFI Group. http://www.foreseeresults.com/
Surface Logix Inc., a Brighton, Mass.-based developer of drug optimization programs, today announced that it has raised $20 million in additional Series D funding. The news was first reported by PE Week Wire last week, based on a regulatory filing. Return backers include Venrock Associates, Arch Venture Partners, Unilever Ventures, HBM BioVentures and CW Ventures. http://www.surfacelogix.com/
GenVault Corp., a Carlsbad, Calif.-based provider of room-temperature biosample management, has raised $18 million. QuestMark Partners was joined by return backer Domain Associates. The company previously had raised over $24 million in VC funding since 2002. http://www.genvault.com/
Cogentus Pharmaceuticals Inc., a Menlo Park, Calif.-based combination medicines startup, has raised $15 million in SeriesB funding led by Prospect Venture Partners, according to a regulatory filing. www.cogentus.net
Protemix Corporation Ltd., a drug startup with offices in both San Diego and New Zealand, has raised $14.5 million in a first close of its Series A funding round. Novartis Venture Fund led the deal, and was joined by NovaQuest and seed backer Birnie Capital. http://www.protemix.com/
Innovasic Inc., an Albuquerque, N.M.-based provider of replacement integrated circuit (IC) and microcontroller solutions, has secured $6.22 million of a $7.72 million Series C round, according to a regulatoryfiling.Backers include the Sensor Technology Development Fund, Valley Ventures, Grayhawk Venture Partners, Red River Ventures and Valley Ventures. The company declined comment. www.innovasic.com
Reply Inc., a San Ramon, Calif.-based provider of online consumer services in the automotive and real estate verticals, has raised $6 million in Series B funding. Outlook Ventures was joined by return backer Scale Venture Partners and board member Debi Coleman (former Apple Computer CFO). http://www.reply.com/
RF Code Inc., a Mesa, Ariz.-based provider of hybrid RFID data management software, has secured $4.34 million of a $13.48 million Series C funding round, according to a regulatory filing. The only listed investor is return backer QuestMark Partners. www.rfcode.com
Firm58, a Chicago-based provider of post-trade management software for the financial services sector, has raised $3.7 million in Series A funding led by New World Ventures. http://www.firm58.com/
SustainableCircles Inc. (a.k.a. SustainLane), a San Francisco-based Internet media startup focused on green technologies, has raised around $3.5 million in Series B funding, according to a regulatory filing. No investor info was disclosed. http://www.sustainlane.com/
Modumetal Inc., a Seattle-based developer of composite alloys, has raised Series A funding from Second Avenue Partners, according to a regulatory filing. The total deal is valued at around $1.68 million. http://www.modumetal.com/
Buyout Deals
DaimlerChrysler confirmed that it has held talks with potential buyers for its slumping Chrysler unit. No further specifics were given, but The Detroit News reports that the asking price is around $8 billion, with three offers already on the table. www.daimlerchrysler.com
Carlyle/Riverstone has agreed to sell its 63% limited partnership interest in Buckeye GP Holdings LP (NYSE: BGH) to ArcLight Capital Partners, Kelso & Co. and Lehman Brothers. http://www.buckeye.com/
The Blackstone Group is in talks to acquire a stake in Guofeng Group, China’s largest manufacturer of plastic products. http://www.blackstone.com/
Chinese banking regulators are expected to reject The Carlyle Group’s $42 million offer to acquire a 7.99% stake in Chongqing City Commercial Bank, according to Bloomberg. http://www.carlyle.com/
Enterprise Investors has acquired Polish carpet, rug and hardwood floor retailer Komfort for €64 million. Approximately half of the deal was financed by Bank Zachodni. www.ei.com.pl
Marlin Equity Partners has acquired CMS Software Inc., an Ontario-based provider of enterprise resource planning (ERP) and supply chain management (SCM) software to small and medium-sized manufacturers, distributors and wholesalers in North America and Asia.https://webmail.tfn.com/exchweb/bin/redir.asp?url=http://www.marlinequity.com/ http://www.cmssoftware.com/
Riverlake Partners has completed its acquisition of vacuum concentrator manufacturer Genevac from Thermo Fisher Scientific Inc. (NYSE: TMO). Specific financial terms were not disclosed, although Fisher Scientific referred to Genevac as a “$17 million business” in a press release. http://www.thermofisher.com/ http://www.riverlakepartners.com/
Brazos Private Equity Partners has agreed to acquire Ennis Paint Inc., according to LBO Wire. Ennis is an Ennis, Texas–based maker of paint for traffic and pavement markings. No financial terms were reported. http://www.ennispaint.com/
Goldner Hawn has acquired Remmele Engineering Inc., a New Brighton, Minn.-based maker of components and complex automated assembly systems, from the family of the company’s founder. No financial terms were disclosed. Rich Pogue will remain Remmele’s president and CEO, and no management turnover or layoffs are planned as a result of the deal. Greene, Holcomb & Fisher advised Remmele on the transaction. http://www.goldnerhawn.com/ www.remmele.com
PE-Backed IPOs
MetroPCS Communications Inc., a Dallas-based wireless communications services provider, has set its IPO terms to 50 million shares being offered at between $19 and $21 per share. It plans to trade on the NYSE under ticker symbol PCS, with Bear Stearns serving as lead underwriter. The company has raised around $415 million in venture capital funding since its 1994 inception. It also secured an additional $688 million in late 2005 from TA Associates and Madison Dearborn Partners, but that capital was used to fund a tender offer for shares from existing stockholders (TA and Madison also provided $50m in new capital, which is included in the $688m figure). Shareholders include TA (13.24% pre-IPO stake), Madison Dearborn (13.20%), Accel Partners (11.26%) and M/C Venture Partners (8.45%). MetroPCS had priced an IPO at $17 per share back in 2003 but, before the company could begin trading on the Nasdaq exchange, certain accounting inconsistencies were discovered and the I! PO was withdrawn. www.mteropcs.com
PE-Backed M&A
Senior Home Care Inc., a Clearwater, Fla.-based provider of home healthcare services, has acquired Synergy Inc. from Synergy Healthcare Systems Inc. No financial terms were disclosed for the deal, which included equity from SHC backers MTS Health Investors and Oaktree Capital Management. Synergy is a Baton Rouge, La.-based provider of home nursing services targeting the Medicare population in Louisiana, with 17 branch offices. www.seniorhomecare.net
Sleep Innovations Inc., a West Long Branch, N.J.-based maker of memory foam products, has acquired the Prime Foam division of Leggett & Platt Inc. (NYSE: LEG). No financial terms were disclosed, except that the Prime Foam division generated approximately $200 million in 2006 revenue. Sleep Innovations is a portfolio company of Catterton Partners. Leggett & Platt was represented on the sale by Goldsmith Agio Helms. www.sleepinnovations.com
American Achievement Corp., class ring and yearbook provider owned by Fenway Partners, has acquired Powers Embroidery Inc., a Waco, Texas-based producer of letter jackets, chenille patches and other school spirit embroidery merchandise. No financial terms were disclosed. http://www.cbi-rings.com/
CCC Information Services Inc., a Chicago-based provider of auto claims information systems and claims management software, has acquired Integrated Collision Management, a –based provider of shop management software to the collision industry. No financial terms were disclosed. Investcorp acquired CCC in February 2006. http://www.cccis.com/
Market Force Information Inc., a Boulder, Colo.-based provider of customer experience information, has acquired Speedmark Information Services, a marketing services company based in The Woodlands, Texas. Market Force has raised around $43 million in VC funding since its 2005 inception, from firms like Boulder Ventures, Centennial Ventures, Vista Ventures, Hercules Technology Growth Capital and Monitor Clipper Partners. www.marketforceinfo.com http://www.speedmarkweb.com/
PE Exits
Eli Lilly & Co. has completed its $315 million acquisition of Hypnion, a Lexington, Mass.–based drug company focused on sleep disorders. Hypnion had raised around $88 million in VC funding since its 2000 inception, from firms like Advanced Technology Ventures, Coastview Capital, Flagship Ventures, Forward Ventures, GIMV, Jafco Ventures, Mintz Levin, MPM Capital and Oxford Bioscience Partners. www.hypnion.com
Alcatel-Lucent (NYSE: ALU) has agreed to acquire substantially all the assets of Tropic Networks Inc., an Ottawa-based metro-WDM networking supplier. No financial terms were disclosed. Tropic Networks had raised around $156 million in total VC funding since its 2000 inception, from firms like Celtic House Venture Partners, Crescendo Ventures, Goldman Sachs, Kodiak Venture Partners, Ontario Teachers’ Pension Plan and Panorama Capital. www.tropicnetworks.com
Ev3 Inc. (Nasdaq: EVVV), a Plymouth, Minn.-based developer of catheter devices for the endovascular treatment of vascular diseases and disorders, has filed for a $175 million secondary offering of common stock. Shareholders Warburg Pincus and The Vertical Group are offering up $125 million in the deal, which would reduce their combined ownership stake from around 70% to 60 percent. www.ev3.com
PIPEs
ChemGenex Pharmaceuticals (Nasdaq: CXSP, ASX: CXS) has raised Au$10.5 million via a new rights issue of 16.89 million shares and options, plus a $10.5 million private placement. Participation in the rights offering has increased Alta Partners’ position in the company to 19.9%, and the position of GBS Venture Partners to 8.9 percent. www.chemgenex.com
Firms & Funds
Western Technology Investment of San Jose, Calif. has closed its twelfth venture debt fund with over $1 billion in capital commitments. http://www.westerntech.com/
Human Resources
Michael Nowak has joined Yorkville Advisors as a managing director in the firm’s technology investment group. He previously was a general partner with venture firm TVM Capital.
Warren Holtsberg, founder of Motorola Ventures, has been named co-head of portfolio management with The Tokarz Group, the investment advisor to MVC Capital Inc. (NYSE: MVC). Holtsberg will lead Tokarz’s new Chicago office, and also will joined the board of MVC. www.mvccapital.com
CMEA Ventures said that Maurice Gunderson is now a senior partner with the firm. The former Nth Power co-founder joined CMEA last fall as a venture partner. http://www.cmeaventures.com/
Christiian Marriott has agreed to join Barclays Private Equity as head of investor relations, according to PrivateEquityOnline. He previously had been with Mezz Management.
Ken Ouriel has joined Foundation Medical Partners as a clinical partner. He is the current chairman of surgery with the Cleveland Clinic. http://www.foundmed.com/
Adam Frieman has joined Probitas Partners as a principal in the firm’s New York office, where he will focus on relationship and liquidity management. He previously was deputy head of U.S. equity capital markets with UBS. http://www.probitaspartners.com/
Blue Sage Capital has promoted Jack Cardwell to partner. Cardwell is the first in-house pro at Blue Sage to be promoted to partner, and previously had worked at both Parthenon Capital and Greenhill & Co. http://www.bluesage.com/
Steven Turner has joined Ventures West as a Vancouver-based associate focused on cleantech opportunities. He previously was an equity research associate with Raymond James Ltd., covering industrial special situations companies. http://www.ventureswest.com/
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