PE Week Wire: Fri., April 27, 2007

Just a few quick notes on what is a surprisingly hectic Friday at the home office.

*** First up is the Internship Drive, which officially launched late yesterday afternoon with more than 90 listings in the MBA Forum section of I’ve got another 20 or so to pump into the system when I’m done writing this (adding to the hecticity), which means that there are far more opportunities than ever before. VC, LBO, I-bank, operating companies, U.S., Asia, Europe, South America, etc… You want it, we probably have it.

Each listing is seeking first-year MBAs looking for summer employment. If your firm is interested in hiring for fulltime positions (either junior or senior), you can do that in our Careers Section. Job ads cost just $99, and run for two weeks.

*** “Hecticity” should be a word.

*** Emails continue to pour in on the SEIU issue, including two that used the term “efficient.” As in: “Dan, you’re missing the point. The current trend of lowered risk/higher reward is making the private equity markets more efficient.” Ummm… Correct me if I’m wrong, but isn’t it inefficiency that helps the private markets outperform the public markets. If the private markets are just going to become the public markets, than what’s the point?

*** Speaking of public/private issues, one subject I forgot to mention from Wednesday’s Ropes & Gray event: The hedge fund/private equity convergence has played out far differently than most people expected. Rather than taking deal-flow away from private equity, hedge funds are driving deal flow (there are obviously exceptions, but I’m talking rule here). Just look at the current Applebee’s situation, or others where activist shareholders make so much noise that corporate boards start seeking cover from their friendly neighborhood LBO firm.

*** Former Apple CFO Fred Anderson gets some support from current Elevation Partners colleague Roger MacNamee, in this NY Times piece on Anderson’s comments on Steve Jobs and Apple options.

*** Alex keeps an eye on high-end adult toy company Jimmy Jane, which has now employed Terry Hatcher to help it raise money. Read the handwritten letter.

*** Joanna on China vs. India, from Wednesday’s China VC Forum in Palo Alto.

*** Quiz Time #1: Who did Venrock just quietly hire to help build out its digital media practice? Hint: His first name is David, but his last name is not Siminoff.

*** Quiz Time #2: Oak Hill Capital Partners today announced that it has ordered six new Boeing freighter planes at a cost of $1.4 billion. Can you name a similarly-named private equity firm that is trying to unload its own aviation leasing business?

*** Since it worked so well last weekend: Go Sox

Top Three

ChinaCache Network Technology, a Beijing-based provider of content distribution networks in China, has raised $31.5 million in Series B funding. Qiming Venture Partners led the deal, and was joined by Ignition Partners, CV Starr International and Susquehanna International Group China. Return backers Jafco Asia, Intel Capital and Investor AB also participated.

The Blackstone Group and Apax Partners have agreed to sell German waste-handling company Sulo Group to Veolia Environnement SA. The deal is valued at approximately €1.45 billion, including the assumption of €950 million in debt.

Pharmasset Ltd., a Tucker, Ga.-based drug company focused on viral diseases, priced five million common shares at $9 per share, for an IPO take of approximately $45 million. It had originally filed to sell six million shares at between $12 and $14 per share. Pharmasset will trade on the Nasdaq under ticker symbol VRUS, while Banc of America securities and UBS served as co-lead underwriters. The company had raised $55.3 million in VC funding since its 1998 inception, from firms like MPM Capital (25.6% pre-IPO stake), TVM Capital (11.7%), Burrill & Co. (11.1%) and MDS Capital (8.1%).

VC Deals

Tracon Pharmaceuticals Inc., a San Diego-based oncology drug company, has raised $9.5 million in senior convertible note financing, according to a regulatory filing. The deal was placed by Tracon backer Paramount Biosciences.

Incept BioSystems Inc., an Ann Arbor, Mich.-based medical device company focused on clinical cell biology applications, has raised $3.25 million in Series A funding. Venture Investors led the deal, and was joined by such groups as Angel Healthcare Investors and Plymouth Venture Partners.

iSuppli Corp., an El Segundo, Calif.-based provider of technology value-chain market intelligence, has raised an undisclosed amount of strategic funding from Goldman Sachs. The minority investment is part of a marketing agreement between iSuppli and Goldman’s Hudson Street Services, which offers market research products.

Buyout Deals

Genesis HealthCare Corp. (Nasdaq: GHCI) said that its board has authorized buyout talks with Fillmore Capital Partners, which has offered to acquire the company for $64.75 per share in cash. Genesis already has agreed to be acquired by Formation Capital and JER Partners for $64.25 per share. Formation/JER originally had agreed upon a $50 million breakup fee, but later reduced it to $15 million. Genesis is a Kennett Square, Pa.-based long-term care provider with over 200 skilled nursing centers and assisted living residences in 13 eastern states.

AIG Highstar Capital has agreed to acquire AmPorts Inc. from Lincolnshire Management for an undisclosed amount. AmPorts is a Jacksonville, Fla.-based operator of ports and portside vehicle processing facilities.

Levco Group has acquired Coverall Industries LLC, a provider of residential homebuilding services. No financial terms were disclosed. Coverall was advised on the sale by Citigroup Capital Strategies.

DST Systems Inc. (NYSE: DST) has agreed to sell a “significant” stake in wireless services company Asurion Corp. to undisclosed private equity firms. DST said it will receive $600 million in after-tax proceeds from the deal, and that it will retain a 6% ownership position in Asurion.

Actividades de Construccion y Servicios SA has agreed to sell its Continental Auto unit to National Express Group PLC for Gbp449.7 million. Losing bidders include 3i Group, Arriva PLC and a joint bid from Doughty Hanson and Mercapital.

PE-Backed IPOs

Pentadyne Power Corp., a Chatsworth, Calif.-based maker of flywheel power systems, said that it plans to float on London’s AIM exchange late next month. The offering is designed to raise up to $30 million, which would give Pentadyne a market cap of approximately $100 million. It has raised around $29 million in VC funding since 2001, from firms like Accera Venture Partners, Nth Power, DTE Energy, Rustic Canyon Partners and Sempra Ventures.

GT Solar International Inc., a Merrimack, N.H.-based provider of manufacturing equipment and solutions to the photovoltaic industry, has filed for a $200 million IPO. It plans to trade on the Nasdaq under ticker symbol SOLR, with Credit Suisse and UBS serving as co-lead underwriters. Shareholders include GFI Energy Ventures, Oaktree Capital Management and the RBC Global Energy Fund.

RSC Holdings Inc., a Scottsdale, Ariz.-based construction equipment rental company, has nearly doubled its IPO target – from an initial $300 million to $575 million. It has not yet disclosed the number of shares being offered, or a proposed price range. RSC plans to trade on the NYSE under ticker symbol RRR, with Morgan Stanley, Deutsche Bank and Lehman Brothers serving as co-lead underwriters. The company is owned by Oak Hill Capital Partners and Ripplewood Holdings.

Biodel Inc., a Danbury, Conn.-based drug improvement company focused on endocrine disorders like diabetes and osteoporosis, set its proposed IPO terms to five million common shares being offered at between $14 and $16 per share. It also added Morgan Stanley as a co-lead underwriter, alongside Banc of America Securities. The company raised $21 million in Series B funding last summer, and lists shareholders like Great Point Partners (17.4% pre-IPO stake), OrbiMed Advisors (17.4%) and Vivo Ventures (15%).

Pinnacle Gas Resources Inc., a Sheridan, Wyo.-based onshore natural gas exploration and development company, has set its proposed IPO terms to 3.57 million common shares being offered at between $10 and $12 per share. It plans to trade on the Nasdaq under ticker symbol PINN, with Friedman Billings Ramsey serving as lead underwriter. Shareholders include DLJ Merchant Banking.

PE-Backed M&A

CMIA Capital Partners has merged portfolio companies FerroChina Ltd. and Everbright, into a single company with a pro forma market capitalization of around $860 million. FerroChina manufactures heavy-gauge, galvanized steel coils used mainly in the building and construction industry. Everbright is involved in the manufacture and sale of thin-gauge galvanized steel coils used mainly in the consumer electronics, home appliances, computer, automobile and building material industries.

The Active Network Inc., a San Diego-based provider of an online community for active lifestyles, has agreed to acquire InfoSpherix, the information subsidiary of Spherix Inc. (Nasdaq: SPEX). No financial terms were disclosed for the deal, which is expected to close by the end of summer. The Active Network has raised over $70 million in VC funding since its 1998 inception, from firms like ABS Ventures, Austin Ventures, Canaan Partners, Charles River Ventures, Dominion Ventures, Kettle Partners, Enterprise Partners VC, North Bridge Venture Partners and Ticketmaster.

PE Exits

The Carlyle Group has sold French piping equipment company Groupe Genoyer to CDC Capital Investissement for an undisclosed amount. The company anticipates more than €300 million in 2007 revenue.

H.I.G. Capital has sold its 50% interest in All Metal Services Ltd. to AMS founder David Potts and his partner Terry Stocker. The two men now own 100% of the company, and serve as its executive management. No financial terms were disclosed. AMS is a London-based distributor of alloys to the aerospace market.

Celesio AG has agreed to buy a 90% stake in Dutch online pharmacy operator DocMorris. Selling shareholders include 3i Group, HgCapital and Neuhaus Partners. Company management will retain a 10% stake. No financial terms were disclosed, although VentureWire valued the deal at approximately €200 million.

SignStorey Inc., a Fairfield, Conn.-based provider of in-store media networks for the grocery industry, has acquired Captive Audience LLC, a Newton, N.J.-based provider of digital media services in the deli departments of ShopRite and Big Y stores in the New York Tri-State region. No financial terms were disclosed. SignStorey shareholders include Golden Gate Capital, CIC Partners and Phoenix Investment Partners.

Firms & Funds

The Riverside Company has formed an investor relations and fundraising team that will be led by Christine Croissant, who has spent the past six years with Riverside as director of marketing and communications. Joining her will be: Avi Turetsky, assistant director of fundraising and IR, formerly a sell-side M&A advisor with Goldsmith Agio Helms; and Pam Koberg, IR coordinator, former client services manager with Elevation Group. In related news, Leslie Hardin has resigned as the firm’s chief administrative officer. Riverside also has promoted Graham Hearns to director of marketing and communications, and Anita Begovic to marketing coordinator.

Daiwa Securities Group Inc. has acquired just over a 20% equity interest in Sagent Advisors Inc., a New York-based boutique investment bank. The deal was valued at $52 million, with Daiwa to transfer its New York-based M&A team to Sagent. In addition, Daiwa Securities SMBC Co. Ltd. — a joint venture between Daiwa Securities Group and Sumitomo Mitsui Financial Group Inc. — has formed a business alliance with Sagent, which will add a focus on Japanese-related transactions.

Simpson Thacher & Bartlett LLP has opened an office in Beijing, which will focus on M&A, private equity and capital market transactions. The office will be led by new hire Douglas Markel, who previously was an M&A partner with Freshfields Bruckhaus Deringer.

Human Resources

Perry Odak, former CEO of Wild Oats Markets, has joined Genstar Capital as an operating partner. He will advise the firm on opportunities in the consumer products and industrial technology spaces.

Robert Eversole has joined Stonehenge Partners as a principal. He has spent the past 22 years with Fifth Third Bank, most recently as president and CEO of central Ohio and regional president for Fifth Third’s banks in Western Ohio and the Ohio Valley. Stonehenge is a Columbus, Ohio-based private equity firm.


Bally Total Fitness only plans to sell six of its Toronto-based health clubs to Extreme Fitness Inc., a portfolio company of Falconhead Capital. The rest are being sold to Good Life.

Dolan Media has filed to trade on the NYSE, not the Nasdaq.