PE Week Wire: Wed., May 14, 2008

The Clear Channel saga headed into its final chapter at 11:11 last night, when the company announced that the financing dispute over its buyout had been resolved. Bain Capital and THL Capital will now pay $36 per share to acquire Clear Channel, as opposed to the standing $39.20 per share. In exchange, they will pay a higher interest rate on the debt. The deal will still take several more months to close, due to the need for a new stub equity election and shareholder vote. While we wait, a spot rundown of the winners and losers:

Winner: Bain Capital and THL Capital

We don’t yet have all the revised agreement details, but the share price slash and interest rate hike seem designed to offset each other. This means that the projected IRR should remain relatively constant. This is good news for the two firms, which both believe Clear Channel will end up being a big winner – a belief that was reinforced by the company’s strong Q1 financials. Moreover, Bain and THL don’t have to spend the next few months in court, locked in a battle with Wall Street firms they’ll ultimately have to reengage for future business.

Loser: Clear Channel shareholders

Yes they’re getting more than the stock would trade at sans buyout. But they voted in favor of a deal that has now been reneged on by both the sponsors and the lenders. This morning they should have the same complaint that Bain and THL were expressing over the past few months. What use is having a deal if one party doesn’t keep to it? I wouldn’t be surprised to see a class action attempt, although it would likely be fruitless.

Winner: Bain and THL limited partners

It’s the LPs, not the GPs, who would have born most of the legal and termination fee burdens. Some may still wish this deal didn’t exist, but is a better outcome if they trust their GPs’ judgment. If they don’t, then the real mistake was investing in the first place.

Loser: Me

I was told there would be a trial, and now all I’ve got is a press release and background briefings. It’s an empty feeling, and entirely inconsequential outside of the home office.

Incomplete: Lenders

I was tempted to call them losers, since this deal still looks better for the buyout firms than for the banks. Pretty sure that Citi, et. all still would have preferred to pay the breakup fee and move on. But no determination until we see what effect, if any, this settlement has on the pending buyout of BCE. If Clear Channel was the guinea pig, then BCE is the gorilla.


peHUB Across America

Yesterday more than 350 of you signed up for peHUB Across America, which is taking place the week of June 9. Not bad, considering how I butchered the URLs for two of the events in yesterday’s Wire.

So let me try again. You can access all five of the events by going here. To get information and register for specific events, please use the below URLs. Really hoping to see lots of you there, for what should be a great evening of drinking and networking:

Los Angeles:


Washington DC:

New York City:


Special thanks to national sponsor Dechert LLP, and local sponsors Grant Thornton, Atlas Venture, New York Private Placement Exchange and Polachi & Co.


New at peHUB

* Private Placement Poaching: Greenhill takes Lehman’s fund placement team.

* Cascadia Capital’s Michael Butler on The Death and Rebirth of Venture Capital.

* The OECD says that the rise in African private equity funds is the continent’s “investment story to watch.”

* peHUB First Read, including Blackstone’s annual report and Fortress’ self-delusion.

Top Three

Bain Capital and THL Capital have reached an agreement that will allow them to complete their buyout of Clear Channel Communications. The deal lowers the share sale price from $39.20 to $36, but increases the debt’s interest rate. A trial had been scheduled to begin Monday.

BrightSource Energy Inc., an Oakland-based developer of utility-scale solar energy projects, has raised $115 million in Series C funding. New investors include, BP Alternative Energy, StatoilHydro Venture and Black River. Return backers include VantagePoint Venture Partners, Morgan Stanley, DBL Investors, Draper Fisher Jurvetson, and Chevron Technology Ventures. The company has now raised over $160 million.

Royal Bank of Scotland has excluded private equity firms from the auction process for its insurance unit. RBS allowed eight bidders into the auction’s second round, but banned PE firms due to current difficulties in securing enough leverage to finance the £7 billion purchase. Interested PE firms had included Apax Partners, Blackstone Group and KKR. The FT reports that the second round will instead include AIG, Allianz, Zurich Financial, Assicurazioni Generali, Berkshire Hathaway, Allstate, Travelers and Ping An. Bids are due by May 28.

VC Deals

Ubidyne, a provider of digital radio technology for the wireless industry, has raised $34 million in Series B funding. Doughty Hanson Technology Ventures led the round, and was joined by BayTech Venture Capital and return backers Accel Partners and TVM Capital. Ubidyne has offices in Germany and Tempe, Arizona.

CoreOptics, a German maker of optical networking subsystems, has raised $25 million in new VC funding. No investor information was disclosed. The company has now raised more than $90 million, from firms like T-Com Venture Fund, GIMV, Crescendo Ventures, TVM Capital, High Tech Private Equity, Atila Ventures and Quest for Growth.

Sai Advantium Pharma, a Hyderabad, India-based pharmaceutical services company, has raised $20 million from MPM Capital. The deal represents MPM’s first investment in India.

Social Gaming Network, a Palo Alto, Calif.-based developer of games for social networks like Facebook, has raised $15 million in Series A funding. Backers include Greylock Partners, Founders Fund, Columbia Capital and Novak Biddle Venture Partners.

Revolvymer Ltd., a UK-based polymer technology company, has raised Gbp10 million in third-round funding. New investors include Lehman Brothers International (Europe), Naxos Capital Managers Sarl and Sloane Robinson Private Equity. Return backers include IP Group and Swarraton Partners.

Passenger, a Los Angeles-based provider of on-demand customer collaboration solutions, has raised $8 million in Series C funding. StarVest Partners led the round, and was joined bv fellow return backers Steamboat Ventures and Shelter Capital Partner. The company has now raised $20.5 million in total VC funding.

Sprout, a San Francisco-based platform for creating, publishing and managing rich media content, has raised $5 million in Series B funding. Polaris Venture Partners led the round, and was joined by return backers Global Venture Capital and Mitch Kapor.

Greentech Media Inc., a Cambridge, Mass.–based online media company covering the greentech market, has raised $2.75 million in Series B funding. EGORA Holding and The Massachusetts Green Energy Fund co-led the round, and were joined by King Hill Capital and return backers Lightspeed Venture Partners and Northport Private Equity.

BuySafe Inc., an Arlington, Va.-based provider of security solutions for online shoppers, has secured $2.7 million of a $5.12 million Series D round, according to a regulatory filing. Return backers include Core Capital and Grotech Capital.

WideSail Technologies, a Montreal-based developer of semiconductor products and IP for very high performance error correction. has raised an undisclosed amount of VC funding from MSBi Valorisation.

Buyout Deals

Informa, a listed UK publishing group, has begun receiving takeover interest from private equity firms.

Eurazeo and Colony Capital are not seeking control of French hotels and services firm Accor, according to Eurazeo CEO Patrick Sayer. The two firms announced earlier this month that they plan to increase their combined stake in Accor from 17.5% to 30 percent.

Lindsay Goldberg has agreed to buy Atlantic Industrial Inc. from Sterling Partners for more than $250 million, according to LBO Wire. Atlantic Industrial is a Beaumont, Texas-based provider of industrial services like scaffolding to refineries, mills and other facilities.

Singapore Airlines is looking to sell its 49% stake in Virgin Atlantic, which it acquired nine years ago for around £800 million. Richard Branson has said that he may have interest in reacquiring the position.

PE-Backed IPOs

Metastorm Inc., a Columbia, Md.-based provider of business process management software, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol MSTM, with Jefferies & Co. and Oppenheimer & Co. serving as co-lead underwriters. Metastorm has raised around $115 million in total VC funding, including a 2004 recap round. Backers include Internet Capital Group (32.2% pre-IPO stake), ABS Capital Partners (16.8%), 3i Group (12.8%) and Wall Street Technology Partners (9.1%).

Grand Canyon Education Inc., a Phoenix-based provider of online postsecondary education services, has filed for a $230 million IPO. It plans to trade on the Nasdaq under ticker symbol LOPE, with Credit Suisse and Merrill Lynch serving as co-lead underwriters. Shareholders include Endeavour Capital (32.6% pre-IPO stake).

PE-Backed M&A

NXP has held preliminary merger talks with the chairman of German chipmaker Infineon, according to Financial Times Deutschland. Such a deal is opposed by Infineon’s CEO. NXP is the former semiconductor unit of Philips, which was acquired in 2006 by KKR, Bain Capital, Apax Partners, AlpInvest and Silver Lake Partners.

Allegro Media Group, a producer of audio and video content, has raised $37 million in new funding. The round includes equity from existing shareholder Canterbury Park Capital, and a subordinated note and revolving line of credit from U.S. Bank. Allegro also announced that it has acquired Softland Corp., the exclusive distributor of audio and video entertainment products to the Marine Exchange Service.

Firms & Funds

The Carlyle Group today will announce an agreement with China’s Shangdong Province to enhance trade co-operation and stimulate investment in the province. The deal involves Carlyle committing to put resources and capital into the province, in exchange for government recommendations for investment opportunities.

CB Richard Ellis has raised $2.1 billion for its fifth real estate private equity fund. The vehicle is expected to have $6.4 billion in purchasing power, including leverage.

Human Resources

JPMorgan Chase & Co. reportedly may cut up to 4,000 of its own employees, as it prepares to absorb Bear Stearns.

Jeffrey Stiefler has joined Emergence Capital Partners as a venture partner. He previously was chairman and CEO of Digital Insight, which last year was sold to Intuit for $1.4 billion. Past roles include president of American Express and CEO of IDS Financial Services.

Prism VentureWorks has promoted Brendan O’Leary to general partner. He joined the firm in 2003, and co-leads the firm’s life sciences practice. His board seats include Locus Pharmaceuticals, Proteon Therapeutics, ROX Medical, Serica Technologies and Trius Therapeutics.

Jean-Eudes Renier has joined Merrill Lynch as a managing director in the firm’s European multi-industries origination team. He previously was a managing director in Morgan Stanley’s basic materials group.

Kevin Reynolds is transitioning out of his role as UK country head at mid-market buyout firm Bridgepoint, according to Dow Jones. Reynolds plans to take a three-month sabbatical once Bridgepoint finishes raising €4.5 billion fourth fund later this month. He will then return as a transaction partner, while Guy Weldon will take over as UK country head.

Matthew Hawkins has joined Treadstone Partners as a senior director. He previously was with EFO Holdings