PE Week Wire: Wed., Feb. 28, 2007

Another morning of technical troubles here at Wire central, as our in-house email servers have gone the way of the stock markets (i.e., down). So please forgive my tardiness in responding to recent and near-future messages. In the meantime…

*** Last month, I reported that middle-market buyout firm Trimaran Capital Partners had canceled fundraising and suffered the departures of four professionals to Columbus Nova. Two days later, this ran in a Friday Feedback column:

Justin on Trimaran: “One of your competitors reported that Trimaran will be back in the fundraising market later this year. Who’s right? Them or you?” Great question Justin. I know exactly why that was written – because I know exactly who said it (I got the same call). Let me just say this for now: If there does happen to be a third Trimaran-branded fund, it will not feature the same partnership as the prior funds… And I’m not just referring to the folks who left last week.

Ok, time to spill the proverbial beans. Trimaran managing partner Andrew Heyer has launched a new firm called Mistral Partners, which also will include folks like Trimaran managing director Bill Phoenix. It will focus on consumer/retail plays, with an inaugural fund target of between $400 million and $500 million. Yes, there are a number of funds out there like this, but Mistral will have some competitive advantage because it’s formed a partnership with the Schottenstein family – serial acquirers of such consumer companies as American Eagle, Filene’s Basement and DSW Show Warehouse. Jay Schottenstein will be a part-timer with Mistral, while the family and Heyer will combine to commit around $50 million to the initial fund. Mistral also includes an operating board of current CEOs like Donnie Deutsche and Steven Heyer (Andrew’s brother, and current head of Starwood Hotels).

Just for context, Trimaran currently has eight significant portfolio companies, by which I mean there are eight companies in which it has a controlling interest or otherwise significant investment. It also has a few other small stakes via various co-investments. Half of these were deals led by either Heyer or Phoenix (plus another that Phoenix and a remaining Trimaran partner did together), and the pair will continue to represent Trimaran on those boards. Heyer’s current board seats include Niagara Corp., Hain Celestial Group, Brite Media Group, Charlie Brown’s, Village Voice Media and El Pollo Loco. Phoneix’s include Urban Brands, Millennium Digital Media Holdings, Eureka Broadband Corporation, Charlie Brown’s, Brite Media Group and Reddy Ice Holdings.

*** Charles River Ventures recently held a $186 million first close on its 13th fund, with a final close on just over $275 million scheduled for early March. And it’s a good thing too, because it would have run out of money otherwise.

CRV raised $250 million for its 12th fund in December 2003, but didn’t actually crack it until the following July. The bi-coastal firm then began making disbursements at a fairly steady pace, and eventually targeted Q1 2007 (i.e., now) as the start-date for its next fund-raising drive. But deal-pace slowed in early 2006, which prompted CRV to push back its target to Q3 2007.

Then, just as quickly, deal-pace sped back up. In fact, the capital spigot flowed so fast that CRV began worrying that it could soon run out of new investment dollars. The situation became acute by last October, when it became clear that the accounts would be dry by mid-January. The firm explained the situation to LPs during its annual meeting last November, and sent out PPMs with a $275 million cover price by the second week of December. In its pitch, it asked as many LPs as possible to make commitments by year-end, with the understanding that some LPs would need to wait until 2007 because of calendar allocation issues.

Not only was the process accelerated, but the restrictions were fairly tough. CRV put a $12.5 million cap on all LP commitments, in order to accommodate as many LPs as possible. This was the same ceiling it had used with its $250 million Fund XII, with the extra $25 million in wiggle room used to help certain LPs increase their stakes closer to $12.5 million. For example, certain LPs with $3 million commitments to Fund XII got to put $5 million into Fund XIII.

CRV continued its band on public pensions, but only in part due to FOIA issues. The bigger issue, sources say, is that CRV simply has too much LP interest than it can handle. Now I know some of you are probably thinking: “Wow, who at CRV fed you that?” – but the reality is that CRV raised $1.2 billion for a fund in early 2001, and had to make severe LP cuts in order to raise subsequent vehicles at sub-$300 million. Public pensions were among those who got cut, but not the only ones…

The primary partners on CRV XIII are Izhar Armony and Bruce Sachs in Waltham, and Bill Tai and George Zachary in Menlo Park. Chris Baldwin will not be participating on Fund XIII, but will continue to honor his Fund XII commitments (including board seats).

*** An Illinois judge has voided a Sudan divestment law, which would have prevented public state pension funds from investing in private equity funds that refused to sign a sworn affidavit certifying that their portfolio companies do not do business in Sudan. More on this later today at

*** Speaking of peHUB, Alex looks at how recent VC-backed IPO subjects are faring after yesterday’s stock slide. The answer is decidedly mixed.

*** Finally, we have opened up some of this year’s Buyouts Deals of the Year awards to popular vote. Check it out here.

Top Three

Vantage Media, a Venice, Calif.-based provider of performance-based search engine marketing and online lead generation, has raised $70 million in Series A funding. Montgomery & Co. led the deal, and was joined by Scale Venture Partners, Tudor Ventures and Integral Capital Partners.

EQT Partners has agreed to acquire cancer diagnostics company Dako Denmark AS for approximately $1.28 billion. Sellers include company founder Niels Harboe and Novo Nordisk.

China Pacific is planning a $1 billion IPO in Hong Kong, after reaching an agreement with shareholders The Carlyle Group and Prudential, according to The Financial Times. Carlyle and Prudential acquired a 25% stake in the government-owned company’s life insurance division in 2005, for around $410 million. Under terms of the new agreement, they would trade their stake for a 19.9% position in the overall company.

VC Deals

Advanced BioHealing Inc., a La Jolla, Calif.-based regenerative medicine company, has raised $25.5 million in Series C funding. Safeguard Scientific led the deal, and was joined by Channel Medical Partners, Red Abbey Venture Partners and return backers Canaan Partners and Wheatley Partners.

Trius Therapeutics Inc., a San Diego-based developer of antibacterial drugs for the treatment of serious infections, has raised $20 million in Series A funding. Sofinnova Ventures led the deal, and was joined by InterWest Partners, Prism VentureWorks and Versant Ventures. The company previously was known as Rx3 Pharmaceuticals.

Kineto Wireless Inc., a Milpitas, Calif.-based provider of mobile over wireless LAN solutions, has raised $10 million in additional Series C funding. InterDigital Communications Corp. led the deal with a $5 million infusion, and was joined by return backers Sutter Hill Ventures, Venrock Associates, 3i Group, Oak Investment Partners, SeaPoint Ventures and Storm Ventures. Kineto has raised around $88 million in total VC funding since its 2001 inception.

Purkinje, a St. Louis-based provider of healthcare IT services for physicians, has raised $10 million in Series D funding. The deal was led by existing board members John Doerr (partner with Kleiner Perkins) and Michael Long (former Healtheon CEO). Doerr’s brother Thomas is Purkinje’s chief medical officer.

iSkoot Inc., a Cambridge, Mass.–based provider of mobile Internet communications solutions, has raised $7 million in Series B funding. Charles River Ventures led the deal, and was joined by return backers Khosla Ventures, ZG Ventures and Jesselson Capital Corp.

Impulse Monitoring Inc., a Columbia, Md.-based provider of intra-operative neurophysiologic monitoring, has raised around $4.5 million in Series A funding led by Tullis-Dickerson, according to a regulatory filing.

Chiliad Publishing Inc., an Amherst, Mass.-based developer of software for corporate information management, has secured $4 million of a $6.25 million Series C round, according to a regulatory filing. Shareholders include Hewlett-Packard, Charlot Capital and Allied Commercial Exporters.

itzBig Inc., an Austin, Texas-based provider of job recruitment software, has raised $4 million in Series A funding, according to a regulatory filing. Backers include Rho Ventures and Sevin Rosen Funds.

The Guild Inc., a Madison, Wis.-based online art retailer, has secured around $3 million of a $3.5 million Series B round, according to a regulatory filing. Shareholders include San Francisco Equity Partners and Dolphin Equity Partners.

Terascala Inc., an Avon, Mass.-based developer of next-generation Linux cluster architecture, has raised $3 million in first-round funding from Ascent Venture Partners.

Ingent Inc., a Germany-based provider of information retrieval infrastructure technologies for computer applications, has raised $1.72 million in Series A funding, according to a regulatory filing. Backers include Wellington Partners VC, Holtzbrink Ventures

Informative Inc. has secured $1.5 million of a $5 million Series CC recap round, according to a regulatory filing. Listed shareholders include Levensohn Venture Partners, Crystal Ventures, New Enterprise Associates, Nokia Venture Partners, Global Catalyst Partners and Walden International. The company has raised around $71 million in total VC funding since its 1999 inception, including a $26.6 million Series C infusion in 2000 at a post-money valuation of approximately $100 million.

Virtual Expert Clinics, a New Brunswick, Canada-based developer of Internet-based software for the treatment of learning disabilities and developmental disorders like autism, has raised Cdn$1.45 million in private funding from Business Development Bank of Canada and GrowthWorks.

Shelfari, a Seattle-based online social network for book aficionados, has raised $1 million in VC funding led by, according to The Seattle Post-Intelligencer.

Sterling Planet of Atlanta has raised an undisclosed amount of Series B funding from Low Carbon Accelerator Ltd. of London. VentureWire puts the round amount at $7 million. Sterling Planet is a retail provider of solar, wind and other clean, renewable energy through direct sales and electric utility partnerships.

Buyout Deals

EGL Inc. (NYSE: EAGL) has received a $36 per share buyout offer from a group that includes EGL chairman and CEO Jim Crane, Centerbridge Partners and The Woodbridge Co. The deal would be valued at approximately $1.46 billion, with nearly $1.18 billion of leverage to be provided by Merrill Lynch, Pierce, Fenner & Smith and The Woodbridge Co. EGL is a Houston-based provider of transportation, supply chain management and information services.

The Blackstone Group reportedly is in talks to acquire Jupiter Asset Management, a fund manager currently owned by Commerzbank. The deal could be worth around Gbp$1 billion, but Commerzbank also is considering an IPO for Jupiter.

Swander Pace Capital has acquired Raj Manufacturing Inc., a Tustin, Calif.–based maker of designer swimwear for women and girls. No financial terms were disclosed for the deal, except that Monroe Capital arranged a $40.625 senior credit facility.

Harrah’s Entertainment (NYSE: HET) has set April 5 for a shareholder vote on a proposed $17.1 billion buyout by Apollo Management and Texas Pacific Group.

W.P. Carey International has acquired a portfolio of 61 French logistics properties through a sale and leaseback transaction with the Fraikin Group, a portfolio company of CVC Capital Partners, for $68 million. The properties total more than one million square feet, and include locations in Paris, Lille and Marseille.

PE-Backed IPOs

BigBand Networks Inc., a Redwood City, Calif.-based provider of broadband multimedia service routers, began its IPO road-show this week, and is expected to price the week of March 12. The offering is designed to raise upwards of $128 million, with Morgan Stanley and Merrill Lynch serving as co-lead underwriters. BigBand has raised $100 million in VC funding since its 1999 inception, from firms like Charles River Ventures, Cedar Fund, Lauder Partners, Meritech Capital Partners, Redpoint Ventures and Time Warner Ventures.

PE-Backed M&A

Charlie Brown’s Steakhouse, a portfolio company of Trimaran Capital Partners, has agreed to acquire Atlanta-based restaurant chain Bugaboo Creek Steakhouse for $28 million. The deal is expected to close by Q3 2007.

Bear Growth Capital Partners has acquired swimwear retailer Just Add Water, and said that it will be combined with existing portfolio company Everything But Water. No financial terms were disclosed.

PE Exits

JDS Uniphase Corp. (Nasdaq: JDSU) has agreed to acquire Picolight Inc., a Boulder, Colo.-based maker of optical transceivers and components. The deal includes an initial $115 million payment in JDS stock, plus up to $10 million in cash earn-outs. Picolight has raised around $124 million in total VC funding since its 1996 inception, with current shareholders including Investor Growth Capital, BA Venture Partners, Vesbridge Partners and Coral Capital Management.

Firms & Funds

Liquid Realty Partners is raising up to $600 million for its fourth real estate private equity fund, according to a regulatory filing. It already has secured around $160 million in commitments.

Human Resources

Mark Ashida has joined OVP Venture Partners as a partner, with a focus on the security, networking and infrastructure spaces. He previously was with Microsoft as general manager of Windows enterprise networking. Before that, he was COO of InterTrust, a public digital rights management company sold to Philips in 2002.

David Lang has stepped down as a managing director of TA Associates, where he focused on the healthcare and healthcare IT market. He will remain with the firm as a senior advisor.

Liang Meng has agreed to join D.E. Shaw & Co. as CEO of the firm’s China business, according to The Wall Street Journal. Meng currently serves as co-head of China I-banking with J.P. Morgan Chase & Co.

Arques Industries AG, a German venture capital firm, said that CFO Martin Vorderwuelbecke will take over as CEO, effective May 1. Current CEO Peter Lowe is leaving due to “personal reasons.”

Scott Ryles has joined Cowen Group Inc. (Nasdaq: COWN) as vice chairman. He previously was CEO of Procinea Management.

Broadcasting Media Partners said that OMD Worldwide CEO Joe Uvawill become CEO of Spanish-language broadcaster Univison Communications Inc. (NYSE: UVN), following the completion of their $12.3 billion public-to-private buyout.BMP includes Haim Saban, Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group and Thomas H. Lee Partners.