PE Week Wire: Wed., May 23, 2007

Yesterday’s big venture news was that Google invested $3.9 million into bioinformatics startup 23andMe, which also received funding from Genetech, New Enterprise Associates and Mohr, Davidow Ventures. Why so much hubbub? Because 23andMe is co-founded by Anne Wojcicki, who earlier this month married Google co-founder Sergey Brin. This connection led to all sorts of blogosphere snickering about how the deal was a pretty generous wedding present.

All of that is obviously to be expected, as Google itself seemed to acknowledge in an 8-K filing that stressed how the deal had been cleared by company compliance officers. But here’s the thing: If you strip away the Anne-Sergey thing, this is a really interesting deal on its own merits. In fact, I had drafted my original blog post on the matter before even realizing the connection, although it is prominent in the published post.

23andMe is a hybrid of personalized medicine and online informatics, with the goal of helping people identify and/or exclude health risks based on genetic information.

The company’s initial rollout will be more focused on education than prediction, in order to help users better understand the more detailed information that will come in later versions. Nonetheless, you will be able to enter certain family medical histories to get a birds-eye understanding of your own risks. The next step would involve actual entry of personal DNA information, which can be most easily obtained with a swab. I initially assumed that initial analysis would have to occur in a lab, but genotyping technology may soon be robust and affordable enough to do basic runs at home. I could also envision a software-as-a-service model at medical facilities.

If you’re wondering why Google would invest in such a company, think for a minute about how the Google search algorithm works. In the most simplistic sense, it tracks how popular certain search results are among users, and then re-ranks the most-clicked items as the top search results. Expect a similar sort of backend strategy for 23andMe, with genetic characteristics linked to most prevalent diagnoses.Sure there is some nepotism here, but Google makes every bit as much sense as a 23andMe investor as Genetech does.

*** Today’s lead paragraph was supposed to say something about how the Burger King mascot won’t be at Bain Capital’s annual meeting next week, but that perhaps Greg Oden would show up on the arm of Bain honcho and Boston Celtics owner Steve Pagliuca. It sounded so good approximately 14 hours ago, before I began yelling at my television set (exacerbated by a cameo appearance by the disastrous duo of Doc and Danny). But I digress… Back to Bain.

Most Bain limited partners are expecting some sort of fund-raising plans to be announced during the meeting, but I hear that they’ll probably be left hanging. The issue isn’t a lack of GP ambition or LP interest, but rather the fact that Bain can’t really define fundraising plans until it knows the outcome of both the Clear Channel and OSI Restaurants deals. It’s now expected that both transactions will receive shareholder approval – thanks to upwardly-revised offers – which would mean that Bain’s tenth fund (including $2 billion co-invest vehicle) would be well over 60% committed. In other words, time to at least begin pre-marketing for the next fund.

But Bain probably would not need to begin fundraising yet if either of the deals fail (particularly Clear Channel, which also would result in a breakup fee of between $300m-$500m for Bain & TH Lee). Instead, it could postpone until late this year or perhaps even early 2008. LPs expect the target to be somewhere in the range of $15 billion to $20 billion.

*** Rich Levandov has agreed to join Avalon Ventures of La Jolla, Calif., as a Boston-based managing director. His most recent gig was as a general partner with Masthead Venture Partners, and before that was a partner wth Softbank Technology Ventures and VP of biz dev with AOL. More info at peHUB.

Top Three

Navini Networks Inc., a Richardson, Texas-based provider of portable wireless broadband network solutions, has raised $50 million in Series F funding. Arcapita Ventures and return backer Austin Ventures co-led the deal, and were joined by existing shareholders Granite Ventures, Investor Growth Capital, Lehman Brothers, Sternhill Partners, Intel Capital and Motorola Ventures. Navini has raised around $203 million in total VC funding since its 2000 inception. Past backer Sequoia Capital did not participate in the Series F round, but the Sequoia website still lists Navini as a portfolio company.

Fletcher Building Ltd. of New Zealand has agreed to acquire Formica Corp. from Cerberus Capital Management and Oaktree Capital Management. The deal is valued at $700 million, plus up to $50 million in deferred payments. The sellers will retain Formica’s South American operations and certain real estate in California.

The Audax Group is raising up to $1 billion for its third private equity fund, according to a regulatory filing. The Boston-based firm closed its second private equity fund in 2004 with $700 million, and also raised a $700 million mezzanine fund last year.

VC Deals

Intechra Holding Corp., a Carrolton, Texas-based IT asset disposition company, has raised $30 million in fourth-round funding. Participants include Richland Ventures, Oxford Bioscience Partners, First Avenue Partners, Chrysalis Ventures, Sewanee Partners and SJF Ventures.

Mojix Inc., a Los Angeles-based developer of digital signal processing products for sensory networks, has raised around $16 million in Series B funding, according to a regulatory filing. Return backers include InnoCal Ventures, Oak Investment Partners and Red rock Ventures. Mojix previously raised $5.5 million over a tranched-out Series A round, with a final post-money valuation of $8.5 million.

Vibrynt Inc., a Mountain View, Calif.-based medical device startup, has raised around $16 million in Series A funding, according to a regulatory filing. New Enterprise Associates led the deal, and was joined by Delphi Ventures.

Petra Solar, a Green Brook, N.J.-based developer of power electronics for solar energy systems, has raised $14 million in Series A funding. DFJ Element and BlueRun Ventures co-led the deal, and were joined by National Technology Enterprises Company.

MuleSource, a San Francisco–based provider of open source infrastructure and integration software, has raised $12.5 million in second-round funding. Lightspeed Venture Partners led the deal, and was joined by Hummer Winblad Venture Partners and Morgenthaler Ventures. The company raised $4 million in first-round funding last October.

Tempo Pharmaceuticals Inc., a Cambridge, Mass.-based developer of nanoparticle technology to improve drug efficacy, has raised $12.1 million in Series A funding. Venrock and seed backer Polaris Venture Partners co-led the deal, and were joined by Lux Capital.

BioSeek Inc. of Burlingame, Calif. has raised $10 million in strategic Series C funding from Amylin Pharmaceuticals (Nasdaq: AMLN). The capital is connected to a new collaboration agreement whereby BioSeek will screen existing Amylin’s drug compounds to discover useful treatments for inflammatory diseases. BioSeek had signed an earlier partnership with Amylin last year, and previously raised around $18 million in VC funding from firms like Bay City Capital, Fremont Ventures and Vanguard Ventures.

Greystripe, a San Francisco-based distributor of ad-supported mobile games and applications, has raised $8.9 million in Series B funding led by Steamboat Ventures. The company previously raised $1.1 million in Series A funding from Monitor Ventures and Incubic Venture Capital.

Zmanda, a Sunnyvale, Calif.-based provider of open source backup and recovery software, has raised $8 million in Series B funding. Helion Venture Partners led the deal, and was joined by return backers BlueRun Ventures and Canaan Partners.

3-V Biosciences Inc., a Menlo Park, Calif.-based developer of antiviral drugs to fight influenza virus, respiratory syncitial virus and rhinovirus, has raised $7.61 million in Series A funding, according to a regulatory filing. Backers include Kleiner Perkins Caufield & Byers, The Column Group and Wilson Sonsini.

IXICO Ltd., a UK-based provider of image analysis solutions for the pharma market, has raised £2.44 million in first-round funding. Imperial Innovations Group PLC and The Capital Fund co-led the deal.

Rooftop Media Inc., a San Francisco-based provider of on-demand audio/video programming like, has raised $2.5 million in Series A funding led by Azure Capital Partners, according to VentureWire.

Transonic Combustion Inc., a Cupertino, Calif.-based developer of fuel injection systems that enable conventional internal combustion engines to operate at higher efficiency, has raised an undisclosed amount of second-round funding. Venrock led the deal, and was joined by return backers Rustic Canyon and Khosla Ventures.

Buyout Deals

PAI Partners has agreed to acquire U.S. homebuilder KB Home’s 49% stake in French subsidiary Kaufman & Broad, for approximately $736.3 million. The deal is expected to close in KB Home’s third fiscal quarter of 2007. Read more.

Alltel Corp. stockholder Lon Engel has sued the wireless provider, claiming the company’s proposed $24.7 billion buyout is “grossly unfair and far below the maximum value.” The lawsuit, which requests class-action status, was filed Monday in Chancery Court in Wilmington, Del., and names the company, CEO Scott T. Ford and other past directors of Alltel as defendants. Read more.

Kohlberg & Co., Lubert-Adler Partners and Chrysalis Capital Partners have completed their take-private buyout of Central Parking Corp., a Nashville, Tenn.-based provider of parking and transportation-related services. Central Parking shareholders received $22.53 per share, for a total transactional value of approximately $726 million. Goldman Sachs and RBS Greenwich Capital provided the debt financing for the transaction, while UBS advised the buyers. Central Parking was advised by The Blackstone Group.

First Data Corp. (NYSE: FDC) said in a regulatory filing that it did not receive any additional buyout offers during its 50-day go-shop period. The company in March agreed to be acquired for approximately $29 billion by Kohlberg Kravis Roberts & Co.

Aeroflex Inc. (Nasdaq: ARXX) said that it has received a revised $14.50 per share buyout offer from Veritas Capital, which it deems superior to a previous agreement to be acquired for $13.50 per share by General Atlantic and Francisco Partners. GA and Francisco have three days to increase their offer. Aeroflex is a Plainview, N.Y.-based provider of high technology solutions to the aerospace, defense, cellular and broadband communications markets.

Norwest Equity Partners has agreed to sell Des Moines, Iowa-based logistics company Jacobson Cos. to Oak Hill Capital Partners, according to LBO Wire. No financial terms were disclosed. Norwest acquired Jacobson in 2004, and since has made several add-on acquisitions.

Corvus Capital PLC, the Geneva-based company run by businessman Andrew Regan, has ruled itself out a rival bid for EMI Group PLC, market sources told Thomson Financial News. A report in the New York Post suggested that Corvus and former EMI chief executive Jim Fifield were in the final stages of preparing a rival bid of 278 pence per share for the entire company, which would have topped the agreed 265 pence a share offer from Terra Firma earlier this week. The bid from Terra Firma values EMI at around £2.4 billion. Read more

The European Commission has cleared Apollo Management’s proposed acquisition of Claire’s Stores Inc. Claire’s Stores is a retailer of costume jewellery, fashion accessories and cosmetics for young women.

The European Commission said the deadline for its inquiry into German private equity firm Allianz Capital Partners’ proposed £772.5 million acquisition of UK contract catering giant Compass Group PLC’s Selecta vending machine business is set for June 25.

PE-Backed IPOs

RSC Holdings Inc., a Scottsdale, Ariz.-based construction equipment rental company, priced around 20.83 million common shares at $22 per share ($23-$25 range), for an IPO take of approximately $458 million. It will trade on the NYSE under ticker symbol RRR, while Morgan Stanley, Deutsche Bank and Lehman Brothers serving as co-lead underwriters. The company is owned by Oak Hill Capital Partners and Ripplewood Holdings, with each firm expected to hold a 34% position post-IPO.

Sirtris Pharmaceuticals Inc., a Cambridge, Mass.-based developer of therapeutics that modulate an enzyme family called sirtuins, priced 6 million common shares at $10 per share, for an IPO take of approximately $60 million. It had originally filed to sell 5 million shares at between $9 and $11 per share. It will trade on the Nasdaq under ticker symbol SIRT, while JPMorgan served as lead underwriter. Sirtris had raised $67 million in VC funding since its 2002 inception (plus $15m in venture debt), from firms like Polaris Venture Partners (14.91% pre-IPO stake), TVM (11.83%), Cardinal Health Partners (9.52%), Skyline Ventures (7.68%) Wellcome Trust (5.13%), Three Arch Partners, Novartis, Cargill Ventures, Cyad Group, Hunt Ventures, Red Abbey, Bessemer Venture Partners, Genzyme Ventures, QVT Fund and Alexandria Real Estate Equity.

Amedica Corp., a Salt Lake City-based maker of orthopedic implants, has filed for a $74.75 million IPO. It plans to trade on the Nasdaq under ticker symbol AMCA, with Morgan Stanley serving as lead underwriter. Amedica has raised over $44 million in total funding since November 2003, including a $13.2 million Series D round earlier this month. Shareholders include Vestal Venture Capital and Creation Capital.

Helicos Biosciences Corp., a Cambridge, Mass.-based DNA sequencing company, has reduced its IPO offering range from $13-$15 per share to $10-$11 per share. It still plans to offer 5.4 million common shares, and to trade on the Nasdaq under ticker symbol HLCS. UBS is serving as lead underwriter. The company has raised around $67 million in VC funding from firms like Flagship Ventures (20.6% pre-IPO stake), Atlas Venture (17.6%), Highland Capital Partners (17.6%), MPM Capital (12.9%) and Versant Ventures (9.9%).

PE-Backed M&A

BSG Alliance Corp., an Austin, Texas-based provider of on-demand enterprise software, has acquired The Contours Group, a Houston, Texas-based corporate/IT strategy and executive education. No financial terms were disclosed. BSG announced earlier this month that it had raised $20 million in VC funding from Foundation Capital, Hummer Winblad Venture Partners and Powershift Ventures.

PE Exits

Siemens has completed its acquisition of UGS Corp. for approximately $3.5 billion (including assumed debt), from Bain Capital, Silver Lake Partners and Warburg Pincus. UGS is a Plano, Texas-based maker of product lifecycle management software for industrial manufacturers.

Business Objects (Nasdaq: BOBJ) has agreed to acquire Inxight Software Inc., a Sunnyvale, Calif.-based provider of enterprise software solutions for unstructured information discovery. No financial terms were disclosed for the deal, which is expected to close in July. Inxight has raised over $50 million in VC funding from Deutsche Bank-affiliated funds, Dresdner Kleinwort Wasserstein, VantagePoint Venture Partners and Atila Ventures.

Firms & Funds

Southern Cross Venture Partners, an Australia-based early-stage venture firm, has closed its debut fund with Au$170 million in capital commitments. Limited partners include Macquarie Bank (Au$60 million), Industry Funds Management and SunSuper.

Blue Chip Venture Co. is hoping to raise up to $200 million for its fifth fund later this year, according to VentureWire. The Cincinnati-based firm raised $190 million for its fourth fund in 2001, and recently scored a bid exit when AOL agreed to acquire Third Screen Media for approximately 110 million.

Translink Capital is raising up to $75 million for its debut venture capital fund, according to a regulatory filing. The Palo Alto, Calif.-based firm already has secured around $21 million from limited partners like UMC Capital and Nikko Antfactory.

Qualcomm Inc. said today it will invest 100 million euros in European companies that support 3G wireless innovation. Read more.

Human Resources

Michael Murray has joined the advisory board of Calera Capital, a middle-market private equity firm formerly known as Fremont Partners. Murray most recently was head of corporate and I-banking with Bank of America.

Jeffrey Gainer has joined Norwest Equity Partners as an operating partner, focused on standalone and add-on opportunities within the technology and business services markets. He was a founding partner of Wessels, Arnold & Henderson, which was acquired by Dain Rauscher in 1998. RBC Capital Markets acquired Dain Rauscher Wessels in 2001.

David Castagna has agreed to join Piper Jaffray as a managing director and co-head of tech I-banking, effective in August. He currently is a managing director and head of tech, media and telecom I-banking with Cowen & Company.

Calyon Credit Agricole CIB of France has beefed up its UK financial sponsors team with several new hires from the Bank of Ireland. They include managing director Grant Gardiner, executive directors Allan Clawson and Nathan Hawkes, director Nick Bellis, assistant director Charles Bowden and associate Lucy Morley.

Thomas Fitzpatrick has resigned as vice chairman and CEO of SLM Corp. (a.k.a. Sallie Mae), which recently agreed to be acquired in a $25 billion buyout led by J.C. Flowers & Co. The company said that Fitzpatrick is leaving to pursue other interests, and that he will be succeeded by CFO C.E. Andrews. Fitzpatrick will serve in an advisory role over the next few weeks, in order to help facilitate the transition. Read more.