PE Week Wire: Wed., Sept. 26, 2007

Mike Richter was a master between the pipes, raising both a Stanley Cup and Olympic silver medal during his 14-year ice hockey career. Now he wants to repeat his success in the private equity arena.

Richter is part of Environmental Capital Partners, a new firm that will focus on middle-market opportunities in the “green” space. ECP recently received a $100 million cornerstone commitment from New York Private Bank & Trust, and is planning to raise an additional $100 million from other limited partners. Its typical transaction will require an equity investment of between $10 and $25 million, for companies focused on such things as green consumer products, eco-friendly building materials, alternative energy and industrial environmental services.

“Someone will make an absolute fortune with more speculative, or early-stage, opportunities, but we didn’t want to be VC-oriented,” Richter says. “We wanted to go further down the chain for more day-to-day things that overlay our lives… like say a furniture-making process that uses less energy than normal.”

Richter joins a growing list of ex-pro athletes who have entered some segment of the private equity market, including John Hummer, Harris Barton and Ronnie Lott (Joe Montana and Steve Young both tried their hands, but later left). It would be easy to dismiss this as a vanity or ego play, but Richter appears sincere in both words and action.

He says that he spent much of his hockey downtime reading nonfiction environmental books, including by Bill McKibbon and Paul Hawken. Upon retirement after the 2003 season, he began lecturing on environmental issues, and enrolled in Yale University. There, he met Dr. Stephen Kellert, a noted professor of social ecology in Yale’s School of Forestry and Environmental Studies.

It was through Kellert that Richter eventually hooked up with William Staudt, a veteran private equity pro who had recently led a majority investment in something called Environmental Quality Management Inc. Staudt said he was forming a new “green” private equity firm focused on the middle-markets, and eventually signed up both Richter and Kellert.

“I’m not quick to jump on things, and am pretty selfish with where I put my time and enregies,” Richter explains. “But I felt this was an opportunity to continue focusing on environmentalism and to learn the business aspect of it.”

He adds that his personal reputation should be a net positive in terms of getting ECP’s foot into certain doors, but cautions that the celebrity factor will only take them so far – particularly in terms of deals outside of the Tri-State area.

In addition to Staudt (managing partner), Kellert and Richter, the ECP team also includes managing partner Robert Egan (former senior advisor to JPMorgan Partners and founding partner of Chase Capital) and principal Chris Staudt (former senior associate with the Argentum Group).

Top Three

Biomet Inc. has been taken private by a private equity consortium that includes The Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG. The deal’s total equity value is $11.4 billion, with Biomet stockholders receiving $46 per share. Biomet manufactures products used by musculoskeletal medical specialists in both surgical and non-surgical therapy.

Demand Media, a Santa Monica, Calif.-based domain name aggregator and registrar, has raised $100 million in Series D funding. Goldman Sachs was joined by return backers 3i Group, Generation Partners, Oak Investment Partners and Spectrum Equity Investors. The company has now raised $320 million in total VC funding since its March 2006 founding. Get the full story.

XOJET, an Atlanta-based private aviation company, has raised $143 million in private equity and debt financing from TPG and Lehman Brothers GPS. It also has secured an additional $220 million in aircraft lease financing from Lehman Brothers GPS. It was advised by Morgan Stanley on the deal, and has added three new board members: David Bonderman, chairman and CEO of TPG; David Siegel, chairman and CEO of Gate Gourmet; and William McGlashan Jr., partner and managing director of TPG Growth.

VC Deals

Miasole Inc., a San Jose, Calif.-based manufacturer of thin-film solar cells, has raised $50 million in Series D funding, according to VentureWire. The deal included six new investors, but the report did not include any names. Miasole previously had raised $56 million from firms like Kleiner Perkins Caufield & Byers, VantagePoint Venture Partners, Firelake Strategic Technology Fund, Garage Technology Ventures and Nippon Kouatsu Electric Company. Company CEO David Pearce had told Cnet last September that the company expected to go public within 12 to 18 months.

GlobeImmune Inc., a Louisville, Colo.-based developer of immunotherapy products for the treatment of cancer and chronic infectious diseases, has raised $41.2 million in Series C funding. Wexford Capital led the deal, and was joined by Celgene Inc., Mellon Family Investment Co., Richard King Mellon Foundation, Eminent Venture Capital, Boston Life Science Venture and WRF Capital. Return backers included HealthCare Ventures, Morgenthaler Ventures, Sequel Venture Partners, Lilly Ventures, Medica Venture Partners, Adams Street Partners, Biogen Idec, Inc., Pac-Link Bioventures, China Investment and Development (CIDC), Yasuda Enterprise Development, Partners Healthcare and GC&H Investments. GlobeImmune has now raised $88 million in total VC funding.

Waterfront Media, a New York-based online health media company, has raised $25 million in fourth-round funding. Scale Venture Partners led the deal, and was joined by Foundation Capital and return backers Rho Ventures, Time Warner Ventures, BEV Capital, and Neocarta Ventures. It previously had raised $10 million in VC funding, plus $8 million in venture debt from Hercules Technology Growth Capital., a Santa Monica, Calif.-based provider of an online auto marketplace, has raised $13.5 million in new VC funding led by Capricorn Investment Group. It has raised a total of $46 million in equity funding and another $21 million in debt since its April 2005 launch. Existing shareholders include Global Research Partners and Anthem Ventures.

LeisureLink Inc., a Pasadena, Calif.-based distribution platform for vacation lodging properties, has raised $8 million in Series B-1 funding. Group RCI was joined by return backers Clearstone Venture Partners and Mission Ventures.

Cardiosolutions Inc. has raised $7 million in Series A funding led by BioVentures Investors. The Stoughton, Mass.-based company is developing a minimally-invasive system for repair of a regurgitant mitral valve interfering with normal heart function.

Myxer, a Deerfield Beach, Fla.-based provider of mobile content delivery solutions, has raised $6.5 million in new VC funding. Harris Preston & Partners led the deal, and was joined by Morgenthau Venture Partners and return backer New World Angels.

HuffingtonPost has raised $5 million in second-round funding, according to PaidContent. The deal includes past backers Softbank Capital, Greycroft Partners, CEO and co-founder Kene Lerer and Bob Pittman’s Pilot Group.

Reflex Photonics Inc., a Montreal-based maker of high-speed opto-electronic connectivity solutions, has raised US$2 million in venture loan funding from MMV Financial.

Buyout Deals

Clear Channel Communications Inc. (NYSE: CCU) stockholders overwhelmingly approved a $39.20 per share buyout offer from Bain Capital and Thomas H. Lee Partners. The total deal is valued at approximately $27.45 billion. Full story here.

The Riverside Company has acquired UltraVolt Inc. and Galluppi Associates Inc. UltraVolt manufactures and distributes high-voltage power supplies for complex products such as medical equipment. Galluppi Associates provides systems integration and engineering services around UltraVolt’s products, adding customization. Both companies are located in Ronkonkoma, New York. No financial terms were disclosed.

Solera Capital has acquired a majority interest in Calypso Christiane Celle, a multi-brand retailer and designer of women’s and children’s lifestyle apparel, accessories and luxury home goods. No financial terms were disclosed. Company co-founders Christiane Celle and Antoine Verglas will retain “significant ownership stakes,” with Celle staying aboard as CEO and head of design. Elizabeth Rose-Poleway will join as chief operating officer. She previously was a senior executive with LVMH, Liz Claiborne and Coach.

Quadrangle Capital Partners has agreed to acquire all common shares of Ntelos Holdings Corp. (Nasdaq: NTLS) owned by CVC Equity Partners, a private equity fund managed by an affiliate of Court Square Capital Partners. The deal increases Quadrangle’s stake in Ntelos to 27 percent. Bear Stearns and Lehman Brothers advised Court Square Capital on the sale.

Audax Group has completed its acquisition of Help/Systems Inc. from Summit Partners. No financial terms were disclosed. Help/Systems is an Eden Prairie, Minn.-based provider of automated operations and business intelligence software.

Great Hill Partners has agreed to acquire InteleNet Communications Inc., according to LBO Wire. InteleNet is an Irvine, Calif.–based provider of data center and Web hosting services.

Kinderhook Industries has agreed to sponsor a buyout of Blitz USA, a Miami, Okla.-based manufacturer of plastic gas cans. No financial terms were disclosed for the deal, which also includes participation from current Blitz president Rocky Flick. Blitz owner Cy Elmburg will retire following the sale’s completion.

TXU Corp. today began selling $2.3 billion in outstanding unsecured debt securities issued by itself and a subsidiary, which is related to its pending $32 billion buyout by KKR and TPG. The tender offer consists of $1 billion in 7% senior notes due 2013 and $250 million in 6.125% notes due 2008 and $1 billion in 4.8% senior notes due 2009.

PE-Backed IPOs

Telecity Group (f.k.a. TelecityRedbus), a pan-European data center operator, plans to raise £130 million via an IPO of London’s AIM. Telecity shareholders include 3i Group, Oak Hill Capital Partners, Sputnik Group, UK2 Group, Pogan Invest Corp. and Butterfield Trust.

Targanta Therapeutics Inc., a Cambridge, Mass.-based developer of antibacterial agents, has set its IPO terms to 5.75 million common shares being offered at between $12 and $14 per share. It would have an initial market cap of approximately $293.5 million, were it to price at the high end of its range. Shareholders include Brookside Capital Partners (15.2% pre-IPO position), InterMune Inc. (15.2%), Skyline Ventures (13.2%), VenGrowth (11.8%), OrbiMed Advisors (11.1%), T2C2 (7.3%), Canadian Medical Discoveries Fund (7.1%), Seaflower Ventures (7%) and Radius Ventures (6.1%).

PE Exits

Lyceum Capital has agreed to sell National Britannia Group Ltd., a UK provider of health and safety compliance services, to Connaught PLC. The deal is valued at £91 million, and is subject to Connaught shareholder approval. Lyceum sponsored a management buyout of National Britannia in March 2005, with the firm saying that the company’s sales have risen 81% and its EBITDA has nearly tripled.

PE-Backed M&A

ISH Inc., a Fairfield, Conn.-based provider of professional services for healthcare, has acquired Paradigm Business Solutions, a provider of strategic consulting services and of Lawson Software application and technical solutions. No financial terms were disclosed. ISH is a portfolio company of Summit Partners.

Syrgis Performance Products, a halogen chemistry company backed by Edgewater Capital Partners, has acquired the organic peroxides business of Norac Inc. No financial terms were disclosed, except that the transaction is expected to add more than $50 million in annual revenue to Syrgis.

Firms & Funds

Castle Harlan has begun marketing its fifth buyout fund with a $1.5 billion target, according to LBO Wire. The firm’s current fund closed with $1.2 billion in 2003.

Draper Fisher Jurvetson has partnered with Russian commercial bank VTB, in order to form a $150 million VC fund focused on Russia and CIS companies. The fund will be named DFJ-VTB Aurora, and will be managed by four partners in Russia and one in Silicon Valley.

General Catalyst Partners is nearing a $600 million final close for its fifth fund, according to VentureWire. The fund includes a $200 million carve-out pool for larger, more mature companies.

Human Resources

Masao Hirano has agreed to join The Carlyle Group as co-head of its Japan buyout team, effective November 1. He is currently a director with McKinsey & Co., and will be partnered with existing Japan co-head Tamotsu Adachi. In related news, Carlyle said that Takeshi Isayama will become chairman of Carlyle Japan, effective October 1. He has served as vice chairman of Nissan Motors since retiring from the Ministry of Economy, Trade and Industry.

Erol Uzumeri has been promoted to head of Teachers Private Capital, the private equity arm of Ontario Teachers’ Pension Plan. He previously had been a vice president responsible for international investments, and succeeds Jim Leach, who is taking over as the pension plan’s CEO.

Dr. Mickey Kim has joined Canaan Partners as a principal in the firm’s Westport, Conn. office. He will focus on healthcare opportunities, and previously co-founded Pacific Point Ventures, a VC fund dedicated to healthcare services companies in Asia.

David Tamburri has joined Susquehanna Growth Equity as an entrepreneur-in-residence, with a particular focus on financial and healthcare technology and services companies. He previously was president and chief operating officer of Onward Healthcare Inc., a Welsh Carson Anderson & Stowe portfolio company that offers human capital services to healthcare providers.

John Dominguez and Vincent Williams have joined SVB Capital Partners, the fund management unit of SVB Financial Group (Nasdaq: SIVB). Dominguez will serve as a partner, and previously managed the private equity group of Hall Capital Management. Williams previously was senior vice president and managing director of institutional sales for Northern Trust Global Investments.

George Haymaker Jr. has joined the advisory board of Genstar Capital. He is the former chairman and CEO of Kaiser Aluminum Corp.

The Riverside Company said that Andrew Strauss has relinquished his role as co-fund manager of RCAF, which is the firm’s North American flagship fund. He will remain with Riverside as its most senior transacting partner in the New York office. He will be replaced by Suzy Kriscunas, with existing co-fund manager David Gordon remaining in place.