PE Week Wire: Fri., April 13, 2007

Greetings from Chapel Hill, where in a few hours I’ll be helping to judge aspiring venture capitalists at the 10th Annual VCIC. Then, said aspirants will spend the night sweating out fictional term sheets, while I and the other judges are treated to fine food and adult beverage at the esteemed Carolina Inn. It’s a tough job, but someone’s gotta do it…

*** For the uninitiated, VCIC is not a business plan competition, but rather a venture capital competition in which teams of B-school students are judged on such skills as due diligence, term sheet acumen and investment decisions (plus the ability to orally defend all of the above). But there is a b-plan component, in that five real startups make elevator pitches, provide documentation and answer due diligence questions.

I’m precluded from discussing any of the b-plan specifics, but nonetheless want to share the following note from a healthcare informatics startup: “If aviation suffered from the same error rate as that of medicine, there would be as many as two unsafe landings at O’Hare airport each day.” That’s reassuring…

*** Speaking of depressing b-plan claims, a wind power company said last week at the ICE competition said that the annual increase in New England energy usage is greater than the annual amount of energy that would be provided by the proposed Cape Wind project (were it ever able to move forward).

*** It seems that the New York City Comptroller’s Office has finally added a new Director of Private Markets. The hire is Leon Dunklin, who previously served as a assistant vice president/investment officer for the Community Development Group at JPMorgan Chase. Dunklin declined to comment.

*** Greenbriar Equity Partners, a Rye, N.Y.-based private equity firm focused on the transportation industry, is almost halfway to the $1 billion cap it set for its second fund. Limited partners include Citigroup Pension Plan, University of Chicago, Allianz and the Bill & Melinda Gates Foundation.

Greenbriar declined comment (no surprise), but I hear that the only significant change this time around is a change in Greenbriar’s relationship with Boston-based Berkshire Partners. When Greenbriar raised its $700 million inaugural vehicle in 2000, Berkshire negotiated the right to co-invest in any of the fund’s deals. Likewise, Greenbriar was permitted to co-invest in any transportation-related deals led by Berkshire. The two firms will maintain a close relationship with expectations of continued co-investment – but there will be no formal agreement.

*** In case you haven’t already heard, Dow Chemical yesterday fired two executives for allegedly holding “unauthorized discussions with third parties about the potential acquisition of the company.” That third party was apparently JPMorgan, while one of the two men — Romeo Kreinberg — already has denied the allegation.

I have absolutely no idea what to make of this, because it seems to utterly outlandish. If true, what exactly did these two men think they would accomplish? Get a really great offer from KKR, and then present it to the Dow Chemical board? And hope the board would be so overwhelmed by the offer that it would forget to fire its rogue employees? Oh, and one more question: Did JPMorgan get paid and, if so, by whom?

In unrelated news, I’m currently soliciting offers for Thomson Financial, a subsidiary of publicly-traded Thomson Corp. No legitimate offer will be ignored. All I ask for in return is a small transactional fee, and perhaps that you not mention my involvement…

*** Finally, some very sad news out of Malibu, where J. Carter Beese Jr., a venture partner with Boulder Ventures, committed suicide Sunday at the age of 50. Funeral services are scheduled for 11am this morning, at the St. Thomas Episcopal Church in Owings Mills, Maryland.

Beese joined Boulder in 2001 with an impressive financial resume. He previously had served as president of Riggs Capital Partners, and before that was an OPIC director, SEC commissioner and chairman of Alex. Brown International.

“Carter was a very up person with a wonderful personality,” Boulder general partner Larry Nacks told Dow Jones. “He brought really good council to our partnership and our partners.”

Beese is survived by his wife Natalie, daughter Courtney and sons John III, Wilson and Alex.


New at

• Alex on Feeding the supposed India Skills Famine.

• David Toll on The Unspoken Risk in Private Equity

• David Silver of Baird’s Euorpean M&A Team, on Improving Private Equity’s Image in Europe.

• Alexis on Imus

• Kaye Scholar has put together an invaluable study of Industry Standard Terms for private equity transactions.

• A bunch of new career opportunities. Feel encouraged to post openings at your firm.

And, as always, news and analysis updated throughout the day…

Top Three

Sallie Mae (NYSE: SLM), the nation’s largest provider of college loans, is in talks to be acquired for more than $20 billion, according to The New York Times. The report says that possible buyers include The Blackstone Group and an unnamed financial services firm.

Comverge Inc., an East Hanover, N.J.-based provider of hardware and software to utilities, priced 5.3 million common shares at $18 per share, for an IPO take of approximately $95.4 million. It originally filed to price around 4.89 million common shares at between $15 and $17 per share. Cavium will trade on the Nasdaq under ticker symbol COMV, while Citigroup serving as lead underwriter. The company had raised nearly $40 million in VC funding from firms like Nth Power, EnerTech Capital Partners, Rockport Capital Partners, Norsk Hydro Ventures, Ridgewood Capital, Easton Hunt, Data Systems & Software Inc., Air Products & Chemicals Inc. and Partners for Growth.

Sun Microsystems Inc. (Nasdaq: SUNW) has agreed to acquire the IP assets of SavaJe Technologies Inc., a Chelmsford, Mass.-based provider of mobile telephony software. No financial terms were disclosed. SavaJe has raised over $120 million in total VC funding since 1999, including a $13 million Series AA recap round last summer. Participants on the recap included RRE Ventures, Ridgewood Capital and Vodafone.

VC Deals

TransMedics Inc., an Andover, Mass.-based developer of portable life support systems for organ transplants, has raised $25.5 million in Series D funding. Tudor Investment Corp. led the deal, and was joined by return backers 3i, Alta Partners, CB Health Ventures, Flagship Ventures, Posco BioVentures, Sagamore Bioventures, Sherbrooke Capital and VantagePoint Venture Partners. The company has raised around $90 million in total VC funding since 2000.

Mavenir Systems Inc., a Richardson, Texas-based provider of network convergence solutions, has raised $20.5 million in Series B funding. The news was first reported by PE Week Wire last week. Alloy Ventures led the round, and was joined by return backers include Austin Ventures and North Bridge Venture Partners.

Fishbowl Marketing, an Alexandria, Va.-based provider of permission-based email marketing solutions for the restaurant industry, has raised $7 million from Edison Venture Fund.

Buyout Deals

Bain Capital is facing some shareholder opposition to its proposed $3.5 billion buyout of South African retailer Edgars Consolidated Stores Ltd. (Edcon). PIC, which holds a 10.1% stake, says that it is voting against the deal, as are Templton Asset Management (3%), Aberdeen Asset Mangement (2%) and Columbia Wagner Asset Management (2%). If completed, the deal would be the largest-ever leveraged buyout of a South African company.

Ten private equity firms plan to submit offers for restructuring energy giant Calpine Corp., according to Calpine entered Chapter 11 bankruptcy protection more than a year ago, and plans to pick a winner within the next two weeks. Its suitors include Carlyle, KKR, TPG, Blackstone, Hellman & Friedman and Equity Capital Partners.

Countrywide PLC shareholders have approved a £1.05 billion buyout offer from Apollo Management. The UK-based property and financial services company’s shareholders previously rejected an offer from 3i Group.

Apax Partners reportedly is considering an offer for Spanish air carrier Iberia, which already has received a €3.41 billion approach from TPG.

CVC Capital Partners reportedly may bid for listed Spanish cigarette maker Altadis SA, which earlier this week rejected a €16.2 billion bid from UK-based Imperial Tobacco Group PLC. Other participants in the consortium could include PAI Partners and Cinven.

Valeo, a listed French car parts maker, has received buyout approaches from both Cerberus and PAI Partners, according to Les Echos. The PAI offer would value the company at approximately €3.4 billion.

Vector Capital has completed its acquisition of information security company SafeNet Inc. (Nasdaq: SFNT) for $28.75 per share. The total deal was valued at approximately $634 million. Merrill Lynch acted as financial advisor to SafeNet on the transaction.

Court Square Capital Partners and Weston Presidio have completed their acquisition of Denver-based specialty chemical manufacturer MacDermid Inc. (NYSE: MRD) for $35 per share. The transaction was valued at over $1.3 billion, including assumption or repayment of approximately $301 million of debt. Company chairman and CEO Daniel Leever participated alongside the equity sponsors.

Avista Capital Partners has completed its $210 million acquisition of BioReliance Corp. from Invitrogen Corp. (Nasdaq: IVGN). Financing was arranged by UBS Securities and The Royal Bank of Scotland. BioReliance is a Rockville, Md.-based contract service organization providing biological safety testing, toxicology, viral manufacturing and lab animal diagnostic services to the global pharma industry. www.bioreliance.comTerracycle Inc., a Trenton, N.J.-based maker of organic fertilizers using worm waste, has raised an undisclosed amount of private equity funding from JH Partners. The news was first reported by LBOWire.

PE-Backed IPOs

Cavium Networks, a Santa Clara, Calif.-based provider of security, network services and content processing semiconductor solutions, has set its proposed IPO terms to 6.25 million common shares being offered at between $10 and $12 per share. It plans to trade on the Nasdaq under ticker symbol CAVM, with Morgan Stanley and Lehman Brothers serving as co-lead underwriters. Cavium has raised over $60 million in total venture funding since its 2000 inception, from firms like Menlo Ventures (29.98% pre-IPO stake), Diamondhead Ventures (9.19%), Alliance Ventures (13.89%), NeoCarta Ventures (5.46%). Menlo Ventures.

PE-Backed M&A

GateHouse Media Inc. (NYSE: GHS) has agreed to acquire four daily newspapers from Gannett (NYSE: GCI) for $410 million in cash. The papers are: Norwich Bulletin in Connecticut, Rockford Register Star in Illinois, Observer-Dispatch in Utica, N.Y., and The Herald, Dispatch in Huntington, West Virginia. GateHouse was acquired by Fortress Investment Partners in 2005 from Leonard Green, and then went public last year. Fortress still holds a majority ownership position.

Senior Care Centers of America Inc., a Trevose, Pa.-based provider of daytime healthcare services for adults, has acquired Brookhaven, Pa.-based Generations Adult Day Center. No financial terms were disclosed. Clearview Capital acquired a majority stake in SCCA late last year.

Technorati Inc., a San Francisco–based search engine for the blogosphere, has acquired The Personal Bee Inc., a Berkeley, Calif.-based provider of personalized news aggregation. No financial terms were disclosed. Technorati has raised around $18 million in total VC funding from firms like August Capital, DFJ, Mobius Venture Capital. Personal Bee had raised around $500,000 from Mohr, Davidow Ventures.

PE Exits

Akamai Technologies Inc. (Nasdaq: AKAM) has acquired Red Swoosh Inc., a San Mateo, Calif.-based distributed networking infrastructure company. The deal is valued at approximately $15 million in Akamai stock, net of cash acquired. Red Swoosh was originally seeded by Mark Cuban, and later raised around $1.73 million in Series A funding from August Capital and Radical Investments.

ISIS Equity Partners has sold Martin Audio Ltd. to LOUD Technologies (Nasdaq: LTEC) for £17.25 million. Martin Audio is a UK-based manufacturer of loudspeaker systems for the professional audio markets. It was acquired by ISIS in 2003, via a buyout from former parent company TC Group AS.

Firms & Funds

River Cities Capital Funds, a Cincinnati-based VC firm, has held an $80 million first close for its fourth fund, according to The News & Observer. It is targeting $150 million. The firm’s prior fund was capped at $137 million in 2001.

Human Resources

James Crumpton has joined Hercules Technology Growth Capital as chief credit officer. He previously was a senior vice president and credit administration officer at Comerica Bank.