Early delivery this morning, as I’ll be live-blogging a 9:30am ET earnings call with The Blackstone Group (whose stock rose another 15.7% yesterday). You can follow along by going here, and I encourage you to participate via the feedback function (you also can suggest questions for me to ask Tony James). Moving on…
*** Not too long ago, A123 Systems looked poised to become one of the costliest VC-backed busts of the new millennium. The Watertown, Mass.-based company had raised over $200 million to make lithium-ion batteries for electric vehicles, but couldn’t find any takers. In fact, A123’s only significant contract at this time last year was with Black & Decker, which used the startup’s batteries in some of its cordless power tools, and the company was operating at a loss.
A123’s most painful failed woo was General ! Motors, which had been looking for batteries for its upcoming Chevy Volt. Not only did GM pick a Detroit-based subsidiary of South Korea’s LG Chem, but President Obama poured salt on the wound by publicly lamenting that America wasn’t making batteries for the next generation of hybrids. As one Boston-area VC put it to me last December: “I’m not sure they have many bullets left, except for the one they’ll need to use on themselves.”
Since then, A123 has been experiencing a V-shaped recovery. First came news in April that Chrysler had picked A123 to supply batteries for its first-ever line of electric vehicles (due in showrooms next year). That deal included a plan to open a manufacturing facility in Michigan, and was soon followed by another $69 million in VC funding (including a re-up from GE, wh! ich should help A123 push into the smart grid apps market).
Yes terday, A123 got yet more good news. The company was awarded $249 million, as part of a $2.4 billion federal grant program to further battery technology development for electric and hybrid cars. In fact, it was just one of two VC-backed companies to get a grant (something that some coastal competitors reportedly believe has to do with its Michigan blueprints).
The net result of A123’s recent good fortune should be a successful IPO, which sources believe will occur before year-end. The company originally filed last August 8, and has been reported to be seeking a market cap in excess of $1 billion. Not only would such a deal begin opening the liquidity spigot for A123’s venture backers, but it also could become the VC market’s first cleantech homerun (thus providing much-needed validation, even if much of it is at the government trough). In short, A123 has a lot riding on its batteries…
*** Need to refinance portfolio company debt? Well, it might help if your firm was founded by the former CEO and CFO of a bank that’s still in business.
Yesterday, Falfurrias Capital Partners announced that it has secured a $70 million refinancing for quick-serve restaurant chain Bojangles. It was co-led by Bank of America and Wells Fargo, with BB&T and Regions Bank also participating. Not coincidentally, Falfurrias was launched in 2006 by ex BoA bigs High McColl and Marc Oken.
Oken told me yesterday that the relationship obviously helped facilitate the deal, but that it ultimately came down to the company’s growth. Not only did it have 7% sales growth over the first six months of 2009 (compared to first six of 2008), but also had 17% EBITDA growth over the same period.
He also said that the refinancing made sense to do now for two main reasons: (1) Rates are lower now than when the original buyout closed two years ago; (2) “We left a lot of the existing debt in ! place to get the deal done quickly… There were some prepayment penalti es that kind of went away, or lessened, with the passage of time.”
Top Three
Avago Technologies Ltd., a Singapore-based chipmaker, raised $648 million in an IPO on the Nasdaq (AVGO). The company priced 43.2 million common shares at $15 per share, compared to its original plan to offer 36 million shares at between $13 and $15 a piece. Its initial market cap is approximately $3.54 billion. Avago is the former semiconductor unit of Agilent Technologies, which was acquired by KKR and Silver Lake Partners in 2005 for approximately $2.66 billion.
Arcion Therapeutics, a Baltimore-based biotech company focused on alleviating pain associated with diabetic neuropathy, has agreed to go public via a reverse merger with Anesiva Inc. (Nasdaq: ANSV). Simultaneously, the combined company plans to raise $20 million in new equity. Following the transaction, Arcion shareholders will hold a 6! 4% stake. Arcion has raisedover $17 million inVC funding from firms like CMEACapital and InterWest Partners.
Rahul Bhasin and Subbu Subramaniam, co-founding partners of Baring Private Equity Partners India, reportedly have decided to part ways. Bhasin is expected to buy out the stake held by Subramaniam, who will launch a new firm.
VC Deals
3-V Biosciences, a Palo Alto, Calif.-based pharma startup whose lead candidates focus on respiratory viral infections, has raised $30 million in Series B funding. New Enterprise Associates led the round, and was joined by return backers The Column Group and Kleiner Perkins Caufield & Byers.
Questar Assessment Inc., an Apple Valley, Minn.-based provider of educational assessments for states, has raised $4.6 million in VC funding from Camden Partners and New Markets Venture Partners.
Buyouts Deals
AXA Private Equity has acquired Babcock & Brown’s wind assets in France for an undisclosed amount. The deal was transacted via Axa’s infrastructure fund, and includes 15 wind farms located within 300 kilometers of Paris. www.axaprivateequity.com
Gordon Brothers has been named the “stalking horse” for the assets of jewelry retailer Finlay Enterprises, which yesterday filed for Chapter 11 bankruptcy protection. Finlay listed assets of between $500 million and $1 billion.
Ironshore Inc., a Bermuda-based insurance company founded in 2007, has revealed more information about a recent $300 million capital infusion. As previously reported new investor GTCR will contribute $200 million. We now also know that Wellington Management will invest $50 million, while return backer Calera Capital will invest the remaining $50 million. Ironshore was launched in late 2006 with a $1 billion capitalization, including $200 million in equity from Calera,Irving Place Capital, Corporate Partners, TowerBrook Capital Partners and Greenhill Capital Partners.
PE-Backed M&A
Broadview Networks Inc., a Rye Brook, N.Y.-based provider of integrated communications and managed security services, has agreed to acquire select assets of Natural Convergence Inc., an Ottawa-based provider of hosted VoIP software applications. No financial terms were disclosed. Broadview has raised nearly $300 million in total VC funding since 1997, with current shareholders including Baker Capital, MCG Capital, New Enterprise Associates, ComVentures and Lightspeed Venture Partners. Natural Convergence has raised VC funding from firms like VIMAC Ventures, Jefferson Partners, BDC Venture Capital, Dejardins, Primaxis, WesleyClover and PurpleAngel.
Emdeon Inc., a Nashville, Tenn.-based provider of revenue cycle management services for healthcare providers, has acquired The Sentinel Group, a Lake Forrest, Ill.-based provider of healthcare fraud and abuse management services. No financial terms were disclosed for the deal, which closed on June 5. Emdeon is in registration for an IPO, and is backed by General Atlantic and Hellman & Friedman.
PE Exits
Apax Partners has sold its remaining 14.2% stake in Germany’s Dialog Semiconductor PLC (TWB: DLG), via a placement of approximately 6.54 million shares with institutional investors. Apax had originally acquired the company in 1998. Jefferies International Ltd. served as placement agent.
WestView Capital Partners has sold Radiac Abrasives to Austria’s Tyrolit Schleifmittelwerke Swarovski KG, for an undisclosed amount. Radiac is a Salem, Ill.-based maker of bonded abrasives and super-abrasive grinding wheels.
Firms & Funds
Longworth Venture Partners has secured $122 million for its third fund, according to a regulatory filing. The Waltham, Mass.-based firm is targeting $180 million total, and began fundraising about a year ago. Longworth raised $120 million for its second fund in 2003, and $20.5 million for its 1999 debut fund. www.longworth.com
Human Resources
Aaron Headley has joined Versa Capital Management as an associate. He recently received his MBA from Wharton and, before that, worked at Schultze Asset Management, TouchStone Partners and Wachovia. www.versa.com
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