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Random Ramblings

Huge amount of news this morning, so just time for a few quick notes:

*** Buyouts Magazine today released 2005 deal-making and fund-raising figures. Not surprisingly, both tallies shattered previous records. In 2005, there were 845 leveraged buyouts of U.S. targets or which included at least one U.S. sponsor, worth a disclosed $197.8 billion (including debt). This represents a 44% increase over the 2004 disclosed deal value and more than twice 2003’s total. Q4 2005 included 195 deals worth an all-time quarterly high of $59 billion.

U.S.-based buyout and mezzanine firms also were busy in the fund-raising market, with a remarkable $173.5 billion raised. This compares with just $42 billion in 2004 and $24 billion in 2003. Around 354 buyout/mezz firms were in the fund-raising market last year, and big numbers also are expected this year with offerings from firms like KKR and Thomas H. Lee Partners. There also should be final closings for funds from mega-players like Apollo Management and The Blackstone Group.

*** The Ohio Bureau of Workers’ Compensation matter has become comical (unless you actually live in Ohio, at which point it’s closer to tragic). First it was the 10-day’s notice letter. Next it was the decision to not advocate for its general partners’ portfolio confidentiality rights in court. Then there was the apparent loss of partnership subscription documents.

Today, I’m disappointed to inform you that there are several mathematical errors in the Ennis Knupp report released last Friday. The most striking involves Carlyle Partners III, which is listed in Exhibit 9 with a net annualized IRR of -1.9 percent. Why an error? Because the very same chart shows that the fund disbursements and remaining holding value total around $21.37 million, compared to just $14.3 million called down. Basic IRR math is as follows:

Disbursements + Remaining portfolio value > Call-Downs = Positive IRR
Disbursements + Remaining portfolio value < Call-Downs = Negative IRR

I asked OBWC about this mistake, and was referred to Ennis Knupp. Ennis Knupp, of course, declined to comment “on work done for our clients.” I also called Carlyle, which told me that figures publicly disclosed by CalPERS were much better indicators of its funds’ performance. CalPERs, of course, correctly has the IRR in positive territory.

Thank goodness OBWC seems to be following my advice to sell its portfolio on the secondary market… Expect Wilshire to be running the auction.

*** An interesting SEC filing just popped up: San Francisco-based character animation company Evil Twin Studios. This is one of the former VSP Capital companies that went up for (very) limited auction after the venture firm’s collapse last year, and was won by former VSP pro – and current legal adversary — Vince Vannelli. The filing reports that Evil Twin has called down $7.9 million of an $8.5 million Series B round. Trident Capital came into the deal, and was joined by return backers Draper Richards, Draper Fisher Jurvetson and Vannelli (listed as KPG Investments).

*** European VC & PE Journal is hosting a cocktail reception to honor recipients for its annual awards and offer a chance for networking. The reception will take place at the Trafalgar Hotel in central London on Tuesday, Jan. 31. For further information about the event please visit www.evcjawards.com.

*** Finally, I’ll be in the Research Triangle Park area this Friday morning with a bit of free time (traversing between Duke and UNC). If someone is interested in grabbing a cup of coffee, let me know…

Bain Capital has agreed to acquire the Sensors & Controls business of Texas Instruments Inc. (NYSE: TXN) for $3 billion in cash. Sensors & Controls is based in Attleboro, Mass., and supplies engineered sensors and controls to the appliance, climate control, industrial, automotive, lighting, and aircraft markets.The deal is expected to close in the first half of 2006, with financing to be provided by Morgan Stanley, Bank of America and Goldman Sachs. TI was advised by on the deal by Morgan Stanley. www.baincapital.com www.ti.com

Xytis Inc., an Irvine, Calif.-based drug company focused on the central nervous system, has raised $24.5 million in a tranched-out Series B funding round. Sanderling Ventures led the deal, and was joined by Atlas Venture, Ventech and CDC Enterprises Innovation. www.xytis.com

Richard Bressler has joined Thomas H. Lee Partners as a managing director and head of its strategic resource group, which provides services to portfolio companies. He most recently served as senior executive vice president and CFO of Viacom Inc. Before that, he served as chairman and CEO of Time Warner Digital Media, and as executive vice president and CFO of Time Warner.

    VC Deals

Windsor Health Group Inc., a Brentwood, Tenn.–based managed care company for seniors operating government sponsored health plans, has raised $9 million in Series A funding. Pharos Capital Group led the deal, and was joined by Delta Capital Management and Vanderbilt Health Services. www.windsorhealthgroup.com

SageQuest, a Beachwood, Ohio-based provider of vehicle tracking and information management services, has raised $4 million in VC funding Hopewell Ventures led the deal with $2.5 million, while Ohio-based angels provided the remaining $1.5 million. www.sage-quest.com

Onconova Therapeutics Inc., a Lawrenceville, N.J.-based drug company focused on cancer, has raised nearly $14 million of a $16 million Series E round, according to a regulatory filing. Backers include The Blackstone Group, ICICI Ventures and I-Ven Biotech of India. www.onconova.com

SOA Software Inc., a Los Angeles-based provider enterprise SOA management, security and governance solutions, has raised $2.5 million in Series D preferred stock and another $500,000 in convertible notes, according to a regulatory filing. Backers include Mellon Ventures, Redpoint Ventures, Palisades Ventures and Padadin Capital Group. www.soa.com

Starent Networks Corp., a Tewksbury, Mass.–based provider of mobile multimedia infrastructure solutions, has received an undisclosed amount of strategic funding from the T-Mobile Venture Fund. www.starentnetworks.com

Hawaii Biotech Inc., a Honolulu-based drug company, has raised $7.8 million in Series C funding. Hawaii Biotech Board chairman Nick Mitsakos led the deal. www.hibiotech.com

    Buyout Deals

 

The Carlyle Group and Zodiac SA have agreed to acquire Water-Pik Technologies Inc. (NYSE: PIK) for $27.75 per share. The deal’s total equity tranche works out to about $380 million, with Carlyle providing 80% and Paris-based Zodiac providing the remainder. Water-Pik is a Newport Beach, Calif.-based provider of personal health care products and pool products sold under the Water Pik® and Jandy® brands. JPMorgan served as Water Pik’s financial advisor on the deal, while Carlyle and Zodiac were advised by Lazard. www.carlyle.com www.waterpik.com

ABS Capital Partners and Norwest Equity Partners have co-led a management buyout for Fairfield Language Technologies, a Harrisonburg, Va.-based provider of the Rosetta Stone® language learning software. No financial terms were disclosed. Madison Capital Funding provided debt financing, while BNY Capital Markets acted as exclusive financial advisor to FLT. www.rosettastone.com

Investcorp has agreed to acquire Autodistribution, a France-based independent distributor of auto, truck and industrial spare partners. No deal terms were disclosed. This would be Investcorp’s second portfolio company in this space, having previously acquired U.S.-based American Tire Distributors. It also once was majority holder of auto aftermarket company CSK Auto (NYSE: CAO). www.investcorp.com

Riverside Partners has sponsored a recapitalization of National Display Systems Inc., a Morgan Hill, Calif.–based provider of flat-panel display systems for use in healthcare applications. No financial terms were disclosed. Chela Technology Partners advised NDS on the deal. www.nationaldisplay.com

Fidelity Capital has agreed to acquire Lanoga Corp. from Laird Norton Company LLC for an undisclosed amount. Lanoga Corp. is a Redmond, Wash.–based professional building materials dealer. www.fidelitycapital.com www.lanoga.com

Apax Partners has completed its acquisition of a majority interest in Spectrum Laboratory Network, a Greensboro, N.C.–based regional provider of clinical lab and disease screening services. No financial terms were disclosed. www.apax.com www.spectrumlab.org

Monomoy Capital Partners has acquired Barjan Products LLC, a Rock Island, Ill.–based distributor of consumer products to truck stops and convenience stores. The deal was valued at approximately $20 million in cash and assumed liabilities. The seller was a 13-bank syndicate led by General Electric Commercial Financial Services Inc. www.mcpfunds.com www.barjan.com

Littlejohn & Co. reportedly has sponsored a management buyout of Kenan Advantage Group, a Canton, Ohio-based provider of fuel transportation services. No financial terms were disclosed. www.littlejohnllc.com www.thekag.com

LS Power Equity Partners has agreed to acquire Duke Energy’s (NYSE: DUK) entire fleet of North American power generation assets outside of the Midwest. The deal could be valued at up to $1.54 billion, and no less than $1.48 billion. www.dukeenergy.com

LBO France has agreed to acquire French electrical engineering company Cegelec Holdings SA for around 1.1 billion euros (including debt), according to Agence France Presse. Sellers include Charterhouse Capital and CDC Enterprises Capital. www.cegelec.fr

JPMorgan Partners has agreed to acquire substantially all of CareMore Medical Enterprises from CareMore Medical Group and other shareholders. CareMore is a Downey, Calif.-based managed healthcare provider serving approximately 20,000 Medicare beneficiaries in Los Angeles and Orange counties. No financial terms were disclosed. Crystal Cove Partners is working with JPMP on the deal, and will join company management post-close. www.caremoremedical.com

On-Site E-Discovery Inc., an Alexandria, Va.–based provider of litigation support services, has received an undisclosed amount of private equity funding from Summit Partners. The new capital will be used to buyout certain minority shareholders like High Street Capital. www.onss.com

    PE-Backed IPOs

 

Koppers Holdings Inc., a Pittsburgh-based provider of carbon compounds and commercial wood treatment products, has set its proposed IPO terms to 8.7 million common shares being offered at between $14 and $16 per share. Its plans to trade on the Nasdaq under ticker symbol KOP, with CSFB and UBS serving as lead underwriters. Koppers is controlled by Saratoga Partners. www.koppers.com

    PE-Related M&A

 

Focus Media Holding Ltd. (Nasdaq: FMCN) has agreed to acquire fellow Chinese outdoor advertising company Target Media Holdings Ltd. from shareholders including The Carlyle Group. The deal is valued at $325 million, including $94 million in cash and $231 million in Focus ordinary shares. www.targetmedia.com.cn

Technical Concepts LLC, a Mundelein, Ill.–based provider of washroom hygiene solutions, has acquired Bentfield International BV, a Dutch manufacturer of washroom dispensing systems. No financial terms were disclosed. Technical Concepts is a portfolio company of Liberty Partners and American Capital Strategies. www.technicalconcepts.com

Storecast Holdings Inc., a Malvern, Pa.–based provider of merchandising services to major food and drug retailers and manufacturers, has acquired the Archway Merchandising Services business from AHL Services Inc. No financial terms were disclosed. Archway provides merchandising services to major consumer product manufacturers in the mass merchant, dollar store and other retail channels. Storecast is controlled by Lake Capital Partners. www.storecast.com

ECI Partners has sold The Hotel and Catering Training Co. to VT Group PLC for Gbp10 million. HCTC is a UK-based private sector provider of government-funded vocational training in the hospitality and catering industries. ECI acquired the company via a management buyout in mid-1998. www.ecipartners.com www.hctc.co.uk

    Firm & Fund News

Quad-C Management of Charlottesville, Va. has closed its seventh private equity fund with $850 million in capital commitments, according to a regulatory filing. Its previous fund was capped at $650 million. www.quadcmanagement.com

Lightspeed Venture Partners has closed its seventh fund with $475 million in capital commitments. Limited partners include Bessemer Trust, Alfred L. DuPont Trust, Horsley Bridge Partners, Pantheon Ventures, Partners Group, the Regents of the University of California and GIC Special Investments. www.lightspeedvp.com

Montagu Newhall Associates has closed its third venture capital fund-of-funds with $250 million in limited partner commitments. Champlain Advisors served as a placement agent. Up to 25% of the capital will be used for co-investments, while portfolio partnerships from MNA’s predecessor vehicles include Accel Partners, Delphi Ventures, Domain Associates, HealthCare Ventures, InterWest Partners, Lightspeed Venture Partners, New Enterprise Associates, North Bridge Venture Partners, Oak Partners, Polaris Venture Partners, Summit Partners, TA Associates and Venrock Associates.www.montagunewhall.com

Care Capital has closed its third fund with $300 million in capital commitments. Lazard served as placement agent. Care is a Princeton, N.J.–based firm focused on later-stage pharmaceutical and biotech opportunities. www.carecapital.com

Abbott Capital Management has closed its fifth private equity fund-of-funds with over $850 million in capital commitments. Like its predecessors, the new fund-of-funds will invest in venture capital, buyout and special situation partnerships within the U.S. and other developed markets. In other Abbott news, the firm has promoted both Matthew Smith and Meredith Rerisi to managing director. www.abbottcapital.com

Saratoga Ventures is raising upwards of $25 million for its fifth fund, according to a regulatory filing. www.saratogaventureslp.com

    Human Resources

Hurst Lin, co-founder and former chief operating officer of SINA Corp. (Nasdaq: SINA), has agreed to join DCM-Doll Capital Management as a general partner. The move is effective in April, at which point Lin will co-lead DCM’s China practice out of its Beijing office. Lin resigned from SINA Corp. last week. www.dcmvc.com

Rob Martin has decided to leave KRG Capital Partners, where he had been a partner. He joined the firm in 2000, and his key responsibilities now will be assumed by principal Howard Lipshutz and marketing coordinator Tracie Kelly. www.krgcapital.com

Charlie Troup has joined Duke Street Capital as a partner. He had spent the past decade at Permira, where he was made partner in 2001. www.dukestreetcapital.com

Jim Hornthal has joined CMEA Ventures as a venture partner focused on opportunities in the digital media and Internet space. He founded Preview Travel, which went public in 1997 before merging with a division of Sabre Holdings to form Travelocity.com. He served as Travelocity vice chairman until the entire company was acquired by Sabre in 2002. www.cmeaventures.com

Quadrangle Group has made the following promotions: Josiah Rotenberg to managing principal, after having joined Quadrangle Debt Recovery Funds as a vice president in July 2002; T.J. Vigliotta to principal, after having joined Quadrangle as an associate in July 2002 to focus on distressed debt; and Patrick Bartels to vice president, after joining as an associate in May 2002. www.quadranglegroup.com

Tim Danford has been named a technology partner with Storm Ventures. He previously had been a principal and technologist-in-residence with the firm, and was co-founder of Airespace (sold to Cisco in 2005). Storm Ventures also has promoted Kevin Melia from associate to senior associate. www.stormventures.com

Thomas Casky, founding director of Cogene Ventures, has been named director and CEO-elect of the Brown Foundation Institute of Molecular Medicine for the Prevention of Human Diseases, part of The University of Texas Health Science Center at Houston. www.uthouston.edu