PE Week Wire: Wed., Feb. 13, 2008

Last month, I reported that Quad-C Management had lost its three-man investment team in New York. At the time, Quad-C said they were leaving “to pursue their own separate opportunities.” That sentiment was echoed by departing Quad-C partner Gary Binning, when asked if the trio would reunite to form an independent firm.

Yeah, right.

The three yesterday sent out an email announcing the formation of Dominus Capital, a new firm whose investment strategy sounds almost identical to Quad-C. Here is how Dominus described itself in the email:

“Dominus Capital will seek to invest in leading middle market companies in partner¬ship with management in a variety of industries with a particular focus on the busi¬ness services, general industrial and consumer products sectors. Drawing on the ex¬perience, knowledge and network of its founders and a team of in-house operating executives, Dominus will look to create value at its portfolio companies by primarily focusing on operational improvements.”

In addition to Binning, the Dominus partnership includes former Quad-C principals Bob Haswell and Ashish Rughwani. The partners are currently camping out in the offices of law firm White & Case, and have launched a website. I put in a call to Binning, but have not yet heard back.

*** Some big changes over at Norwest Mezzanine Partners, as general partner Mike Hall and partner Bill Dietz have left to hang their own shingle. The move came as a surprise to other NMP pros, but is described as orderly and amiable. A spokeswoman says that it is unrelated to an announcement that Carter Balfour and Shani Graber have been promoted to partner and principal, respectively – although Balfour will become the group’s de facto head.

NMP receives all of its capital from sole limited partner Wells Fargo, as do affiliates Norwest Equity Partners and Norwest Venture Partners. It is currently investing out of a $400 million fund “raised” in 2004, and recently received approval from Wells Fargo for a $500 million third fund. I should have more on Hall and Dietz’s new effort later today over at peHUB (had a quick cell phone talk with Dietz, but he was walking into a meeting).

*** Wellspring Capital Management has put Dave & Buster’s on the block, with a $600 million asking price. Sure that’s 60% more than Wellspring paid for the company just two years ago, but the upside is a limitless supply of skeeball tokens.

*** The economy is going to be just fine, because Sports Illustrated put an American on the cover of its swimsuit issue.

*** Is the era of friendly buyouts winding to an end?

*** To me, Wes Clark would be Obama’s best pick for running mate (I know, getting ahead of myself). But how about McCain? Fingers crossed for Romney, but it just seems so unlikely…

*** Two good pieces on SPACs: One from Andrew Ross Sorkin, and one from David Hamilton.

*** A final reminder that I’ll be moderating a buyouts-focused panel this afternoon in Boston. My discussants include Josh Beckenstein of Bain Capital, Kevin Callaghan of Berkshire Partners, Jill Greenthal of Blackstone Group and Marty Mannion of Summit Partners. Get more info here.

*** And for those who care (hi mom), my upcoming travel schedule includes: VC in the Rockies, Buyouts East in New York, Buyouts Madness in New York, VCIC Finals in Chapel Hill and ACG Intergrowth in Orlando.

Top Three

MoneyGram International Inc. (NYSE:MGI), a money transfer company, has agreed to a recapitalization plan with Thomas H. Lee Partners and Goldman Sachs. The deal includes a $710 million equity investment that could be increased to $775 million, depending on the price at which MoneyGram can sell certain investment portfolio assets. It also includes up to $500 million in debt financing from Goldman Sachs, and another $200 million in debt financing from third-parties.

Dell has agreed to acquire MessageOne Inc., an Austin, Texas–based provider of SaaS-enabled email services. The deal is valued at approximately $155 million in cash. MessageOne had raised over $30 million in VC funding since 2000, from firms like Impact Venture Partners, RRE Ventures, StarVest Partners and Venrock.

FirstGain LLC, a San Diego-based online consumer lender, has raised $30 million in private equity funding from Arsenal Capital Partners.

VC Deals

Atrato Inc., a Westminster, Colo.-based maker of high-volume digital data storage platforms, has raised $18 million in VC funding. Backers include Jesse Aweida (StorageTek founder), Tom Porter (former CTO of Seagate), Gary Gentry (SVP Maxtor for Seagate) and Dick Blaschke (former IBM and EMC executive)., a new spinout from Eons, has raised $4.3 million in funding from Dow Jones, Eons and other strategic backers. VentureWire reports a post-money valuation of $8.9 million. is an online content company focused on obituaries and related information, which means it will compete with sites like Eons is a social network for the baby boomer set, and has raised $32 million in VC funding to date.

Atlas Genetics, a Bath-based developer of point-of-care molecular diagnostics for such indications as MRSA and meningitis, has raised £2.1 million in VC funding. Backers include South West Ventures Fund and Finance South Wales Growth Fund.

UpSpring, an Austin, Texas-based maker of parenting products like motion sensors for sleeping infants, has raised $2 million in Series B funding. Individual angels included Walter Foss and Sherman Wyman.

Buyout Deals

First Reserve has agreed to acquire an 80% stake in the Borco oil terminal on Grand Bahamas, from Petroleos de Venezuela SA. The other 20% will be acquired by Dutch oil and gas storage company Royal Vopak NV, which will manage the terminal. No financial terms were disclosed.

Halyard Capital has acquired HCPro Inc. from The Riverside Company. No financial terms were disclosed. HCPro is a Marblehead, Mass.-based provider of education and information in the areas of healthcare compliance, regulation and management. GE Capital, Newstar Financial and CapitalSource provided financing for the transaction, while Riverside was advised by Berkery Noyes.

Bain Capital has received FTC antitrust clearance for its proposed buyout of Bright Horizons Family Solutions Inc. (Nasdaq: BFAM), a provider of employer-sponsored child care, early education and work/life solutions. The total deal is valued at $1.3 billion, with Bright Horizons stockholders to receive $48.25 per share in cash. Goldman Sachs has committed debt financing, while Goldman and Evercore Group advised Bright horizons on the deal.

Beringea and Matrix Capital have sold Gyro International, a B2B brand communications agency, to Pegasus Capital Advisors for $97 million.

Republic Private Equity has acquired Camalloy Inc., a Washington, Penn.-based metal service center specializing in stainless-steel sheet plate. No financial terms were disclosed.

RiverRock Holdings has acquired Dynamic Energy Systems Inc. (a.k.a. MedAct), a McKinney, Texas-based provider of medical billing software for the durable and home medical equipment industry. No financial terms were disclosed.

PE-Backed M&A

The Riverside Company has acquired Integrated Power Services, a Greenville, S.C.-based company that provides repair and other services of large electric motors. No financial terms were disclosed. IPS will be added to existing Riverside portfolio company Electro-Mec, which is based in Indiana, Pennsylvania.

TeraCloud Corp., a Bellevue, Wash.-based storage analytics company, has acquired Estorian Inc., a Bellevue, Wash.-based developer of an email archiving, discovery and retrieval product. No financial terms were disclosed for the deal, although a regulatory filing indicvates that TeraCloud raised $8.9 million to finance the deal. TeraCloud – which is rebranding as Estorian — has raised around $20 million in VC funding since 2002, from firms like Northwest Venture Associates, Boulder Ventures and Cascadia Capital.

PE Exits

Wellspring Capital Management retained Jeffries & Co. to run an auction for Dave & Buster’s, according to The Deal. The target price is $600 million. Wellspring took the Dallas-based restaurant chain private in 2006 for $375 million.

Firms & Funds

Catalyst Microfinance Investors has received $125 million in capital commitments, which will be used for microfinance investments in Asia and Africa. Backers include TIAA-CREF and Dutch pension fund ABP.

Human Resources

Michele Serrao and Evan Darr have joined the private equity fund-of-funds team at Invesco, as a partner and senior associate, respectively. Both were previously with Atlantic Trust, Invesco’s private wealth management business.

Ralph Whitworth, principal of Relational Investors LLC, has been named to the Sprint Nextel Corp. board of directors. Some reports indicate that he could push for a sale of the Nextel network, or of the entire company.

Jai Pathak has joined the Los Angeles office of Gibson, Dunn & Crutcher LLP, as a partner focused on cross-border transactions in Asia and elsewhere. He previously was a partner with Jones Day.

UBS has named Jerker Johansson as chairman and CEO of investment banking, effective March 17. He previously was vice chairman of Europe for Morgan Stanley.