peHUB Wire: Tuesday, April 27, 2010

Greetings from the home office. A handful of notes to kick off your Tuesday…

*** First up is an internal housekeeping note, and a sad one at that: Erin Griffith, peHUB’s lead private equity blogger and this space’s regular fill-in columnist, is moving on. I’ve tried to persuade her, cajole her and guilt her into staying, but my efforts have failed. In a few weeks from now, she’ll be backpacking and bus-riding through South America with a friend, after which she’ll return to New York and figure out her next move. Budget tourism’s gain, our loss.

We’ve still got Erin until next Friday, and plan to work her to the bone. In the meantime, our search is on for her successor. So, this is my official call for an East Coast-based reporter/blogger who can cover private equity for us. Experience preferred, but not required (i.e., perhaps you’re an industry insider wh! o’s been itching for a smaller paycheck). It is a fulltime position.

If you’re interested in the job, please let me know via email ( and I can provide more details…

*** One of today’s eleven VC deal announcements is a $13 million Series B round for ShoeDazzle, an online shoe shopping assistant for women. Lightspeed Venture Partners led the round, and was joined by return backer Polaris Venture Partners.

One thing that stood out to me in the press release was that the Polaris quote came from Jason Trevisan, who typically focuses on “growth equity and buyout transactions.” Seemed a bit odd, given that ShoeDazzle was launched just last March. So I had a quick chat this morning with Jason, who told me three things:

1. “ShoeDazzle has grown so fast that it has a lot of the numbers and characteristics of a much later-stage deal.”

2. The company was co-founded by Brian Lee, who also was a co-founder of LegalZoom – a Polaris portfolio company of which Trevisan is a board member. The other co-founder is reality TV siren Kim Kardashian, which I only mention because it’s probably my only chance to include Kim Kardashian in this column.

3. ShoeDazzle has plans for a broader fashion portfolio, but Trevisan declined to respond to my question about whether it would be hamstrung by its footwear-specific name.

*** One of yesterday’s top news items was that GTCR had agreed to acquire electronic alarm company Protection One (Nasdaq: PONE) for $828 million. The company’s majority shareholder is Quadrangle Group, which I’ve learned will book around a 38% IRR on the deal. You can read more financial details here.

As an aside: When doing a bit of Google research on Protection One, I saw a handful of press releases by law firms “investigating potential claims on behalf of shareholders of Protection One.” In other words, law firms hoping to get shareholders to sue the company for selling at too low a price (a.k.a. breach of fiduciary duty).

These law firms should really be ashamed of themselves. I’m all for getting the best price, and for going after public boards that hold quasi-proprietary processes. But the Protection One case is fairly cut and dried. The company publicly! announced in January that it had hired J.P. Morgan to seek out strategic alternatives. It then ran a competitive auction, netting a premium of more than 100% from the pre-January announcement price (and 13% higher than last Friday’s closing price). Moreover, this is a tender offer. Someone should “investigate” these law firms for wasting everyone’s time.

*** I spent part of last night at a book launch party for Jeff Bussgang, a partner with Flybridge Capital Partners who regularly blogs over at peHUB. Great group of local investors, entrepreneurs and local pols (namely Governor Patrick). I’m ashamed to admit that I haven’t finished the tome yet, but the first few chapters are great. If you like what Jeff writes over at the website, I recommend you pick it up.

Top Three

Cellular Dynamics International, a Madison, Wis.-based manufacturer of human heart cells, has raised $40.6 million in Series B funding. Return backer Tactics II Stem Cell Ventures led the round, and was joined by Sam Zell’s Equity Group Investments and Sixth Floor Investors. Cellular Dynamics previously raised $18 million.

Vision Capital has acquired a majority stake in Nordax Finans AB from Palamon Capital Partners. The deal valued Nordax Finans at approximately €105 million. The Stockholm-based company provides unsecured loans to individuals with “good credit standi! ng” across the Nordic region.

Zong, a Palo Alto, Calif.-based mobile payment service used by online gaming and social networking websites, has raised $15 million in VC funding led by Matrix Partners. The company is a recent spinout from Swiss mobile media company Echovox, which has raised over $12 million in VC funding from Advent Venture Partners and Newbury Ventures.

VC Deals

Joule Biotechnologies, a Cambridge, Mass.-based developer of technology to convert carbon dioxide into ethanol, has raised $30 million in Series B funding led by Flagship Ventures, according to VentureWire.

FreeWheel, a San Mateo, Calif.-based developer of online video monetization technology, has raised $16.8 million in fourth-round funding. Steamboat Ventures led the round, and was joined by return backers Turner Broadcasting System, Battery Ventures and Foundation Capital. The company previously raised more than $12 million.

SolarBridge Technologies, an Atlanta-based provider of microinverter and monitoring solutions for the solar energy market, has raised $15 million in Series B funding. Rho Ventures led the round, and was joined by return! backer Battery Ventures. The company previously raised $12 million.

Healthline Networks, a San Francisco-based provider of online health information services, has raised $14 million in third-round funding. Investor Growth Capital led the round, and was joined by return backers Peacock Equity Fund and Reed Elsevier Ventures., an online shoe shopping assistant, has raised $13 million in second-round funding. Lightspeed Venture Partners led the round, and was joined by return backer Polaris Venture Partners. The company previously raised $7 million, and was founded byLegalZoom co-founderBrian Lee and reality TV star Kim Kardashian.

Cantaloupe Systems, a S an Francisco-based provider of wireless technology solutions for the vending industry, has raised $12.4 million in third-round funding from Foundation Capital and Global Environment Fund. It previously raised $6 million.

Marketo, a San Mateo, Caif.-based provider of lead management software, has raised $10 million in Series C funding. Mayfield Fund led the round, and was joined by return backers InterWest Partners and Storm Ventures. The company previously raised $22 million., an online news site focused on the entertainment and media markets, has raised $2 million in Series B funding led by return backer Maveron Capital. The company was founded Sharon Waxman! , former Hollywood correspondent for The New York Times.

Wildfire Interactive Inc., a Palo Alto, Calif.-based provider of social media marketing software, has raised an undisclosed amount of minority equity funding. Summit Partners led the round, and was joined by individual angels Jeff Clavier, Aydin Senkut and Gary Vaynerchuk.

Buyouts Deals

CVC Capital Partners has agreed to acquire a 19% stake in listed Hong Kong brokerage Sun Hung Kai & Co., for approximately $272 million. Once closed, the deal would make CVC the company’s largest minority shareholder.

Gresham Private Equity has sponsored a £32.8 million management buyout of UK-based telecom services company Team Telecom Group from Spice PLC.

Iron Mining International has secured a $250 million investment from China Life (HK: 2628), ahead of a planned $1 billion Hong Kong IPO. Existing IMI shareholders include Hopu and Temasek.

Warburg Pincus has agreed to invest around €79.2 million into AmRest, a listed restaurant operator in Eastern and Central Europe. The PIPE transaction would g! ive Warburg Pincus nearly a 25% ownership stake, with an option to increase its position to 33 percent.

PE-Backed M&A

Playdom, a Mountain View, Calif.-basedsocial gaming company, has acquired Merscom LLC, a Chapel Hill, N.C.-based developer of online and social games for third parties.No financial terms were disclosed.Playdomlastfallraised a $43 million Series A round at around a $300 million post-money valuation, from New Enterprise Associates, Lightspeed Venture Partners and Norwest Venture Partners. It has since made several acquisitions.

PE Exits

Advantage Partners has sold its 11.7% voting rights stake in troubled Japanese retailer Daiei Inc. (T:8263) to a unit of Deutsche Bank. The shares were valued at approximately $106.4 million.

ExonHit Therapeutics SA, a listed French therapeutics company, has agreed to acquire RedPath Integrated Pathology Inc., a Pittsburgh-based cancer diagnostics company. The deal is valued at upwards of $32 million, including up-front payments of $12.5 million in cash and $10 million in stock. RedPath had raised over $10 million in VC funding from Seneca Health Partners, Inflexion Partners, HMA Capital Partners New Spring Capital and CID Capital.

TransPerfect has acquired Astoria Software, a San Francisco-based provider of enterprise solutions for SaaS/on-demand XML component content management. No financial terms were disclosed. Atoria had raised around $29 million in VC funding from Goldman Sachs, Prism VentureWorks, Blueprint Ventures and Ticonderoga Capital.

Firms & Funds

Housatonic Partners today announced that it has closed its fifth fund with $325 million in capital commitments. peHUB had reported on the fund close earlier this month.

Human Resources

Allen Han has joined CVC Capital Partners as a senior managing director of operations in Asia. He previously ran Honeywell’s global sensing division.

Skip Paul has joined Centerview Partners as a Los Angeles-based senior advisor in the firm’s advisory practice, with a focus on the media and entertainment markets. He most recently was interim CEO of Nation! al Golf Properties (sold to Goldman Sachs) and the founder investor in Flektor (sold to News Corp).

Alan Warrick has joined Lovell Minnick Partners, a private equity firm focused on the financial services sector,as a senior advisor. He previously was managing director of strategic business development for AEGON USA Financial Services Group and previously was CEO of Transamerica Worksite Marketing (a member of the AEGON Group).