PE Week Wire: Fri., July 20, 2007

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*** One other administrative note: Some of you occasionally ask how you can get PE Week Wire news items before the email is sent out each morning circa 10:15am ET. The answer is that a lot of it appears earlier in the news section of peHUB, including most of the VC deals sourced from regulatory filings. Either check out the news section directly, or sign up for either our general news RSS feed or vertical news feeds (VC Deals, etc.). All RSS feeds are available here.

*** Last night I attended a cleantech networking hour in Cambridge (although I bought my own pint before realizing that sponsor Flagship Ventures had spring for pitchers). Good mix of VCs, entrepreneurs, headhunters, students and folks looking for work.

One general topic of conversation was about bubbles. Not surprising, of course, particularly given that VC firms keep adding money and personnel to the sector without a corresponding growth of quality dealflow. But one VC was more worried about mini-bubbles within the sector, with his latest example being the electric car phenomenon. Just yesterday, another such company raised a massive $60 million infusion. It may well end up working, but I’m not so sure that VCs are the folks who should be doing what basically amount to project finance deals. Or, even worse, what could oxymoronically be considered pre-revenue mezzanine deals.

Maybe the bet is that these types of deals – plus biofuel production deals – are actually less risky than typical cleantech, which closely mirrors life sciences in both its hit rate and run time. But it’s a pricey bet that should make LPs a bit nervous…

*** Private equity investors – both VC and LBO pros – keep warning that they will pass on additional tax costs to their limited partners, via increases in management fees and carried interest percentages. My take is here.

*** Could the buyouts bull market get even stronger? Yup. Here’s the recipe.

*** A quick reminder that I’ll be in Redwood City for most of next week. I’m thinking of organizing some informal cocktails for Thursday night. Anyone interested? Either way, have a great weekend…

Top Three

Ubiquisys Ltd., a UK-based provider of 3G femtocell access points for the residential market, has raised $25 million in Series B funding. Google Inc. was joined by return backers Accel Partners, Atlas Venture and Advent Venture Partners. The femtocell offers mobile coverage in the home for those using 3G cell phones. The device plugs into an existing home broadband gateway, or is built into a gateway product that includes WiFi, DSL, Ethernet, phone ports and USB. Uniquisys previously raised $17 million.

Buongiorno SpA of Italy has agreed to acquire iTouch PLC, a UK-based distributor of mobile entertainment products and services. The deal includes a €129 million cash payment to iTouch shareholders Oak Investment Partners and Goldman Sachs, with both firms also to become shareholders in Buongiorno. The deal also includes €12 million in assumed debt.

Orbitz Worldwide Inc., a Chicago-based operator of a travel reservations website, raised $510 million through its IPO. The company priced 34 million common shares at $15 per share (below $16-$18 range), which gives it an initial market cap of approximately $1.24 billion. Orbitz is a subsidiary of Travelport Ltd., which The Blackstone Group and Technology Crossover Ventures bought last year from Cendant for $4.3 billion. It later added on PE-backed Worldspan for $1.4 billion. Orbitz will trade on the NYSE under ticker symbol OWW, while underwriters included Morgan Stanley, Goldman Sachs, Lehman Brothers and JPMorgan.

VC Deals

Spectrum Equity Investors has invested $40 million for a minority position in Interbank FX, a Salt Lake City-based provider of online foreign exchange trading.

PerQuest Inc., an Oakland, Calif..-based provider of online payroll service to smaller employers, has raised around $17.3 million in Series B funding. Backers include StarVest Partners, Spring Mountain Capital, Vermillion Capital and Baroda.

Eka Systems Inc., a Germantown, Md.-based provider of wireless sensor and mesh networking solutions, has raised $12.5 million in Series C funding co-led by Angeleno Group and Rockport Capital Partners.

Loopt Inc., a Palo Alto, Calif.-based mobile presence company that uses GPS to help locate friends, has called down $8.25 million of a $12 million Series B round, according to a regulatory filing. Return backers include New Enterprise Associates and Sequoia Capital. It previously raised an $8 million Series A round

CoWare Inc., a San Jose, Calif.-based provider of EDA software and services, has secured $7 million of a $14 million Series F round, according to a regulatory filing. Backers include Greylock Partners, GIMV, Cadence Design Systems and IT Partners (Belgium).

ADiMaB, an antibody startup launched by GlycoFi founder Tillman Gerngross, has raised $6 million in Series A funding, according to VentureWire. Backers include Polaris Venture Partners and SV Life Sciences, which both backed GlycoFi, which was sold last year to Merck. Gerngross also served as a venture partner with SV Life Sciences.

Diamics Inc., a Novato, Calif.-based cancer screening and diagnostics company, has raised $6 million in private equity funding from Inverness Medical Innovations Inc. (AMEX: INI). The deal gives Inverness a 51% ownership position, while Diamics seed backers like the Keiretsu Forum remain shareholders.

Verified Person Inc., a New York-based provider of background screening and identity verification services, has raised around $5.5 million in Series D funding. Return backers include Rho Ventures and Sevin Rosen Funds.

Buyout Deals

Appaloosa Management has sent a letter to the board of bankrupt auto supplier Dana Corp., in opposition to a proposed $750 million investment into Dana by Centerbridge Capital Partners. Apoloosa is Dana’s largest shareholder, and said the deal “will yield far less than the maximum recoveries available to stakeholders.”

Battery Ventures has completed its take-private buyout of Quovadx Inc. for $136.7 million. The deal included: Quovadx’s ISD division, which provides enterprise solutions for hospitals, government entities and health plans; and its Rogue Software group, which provides reusable software components and services to professional developers application development. It did not include Quovadx’s CareScience division, which was sold in a separate transaction to Premier Inc. for $34.9 million.

Candover has agreed to sell European electronic publishing company Bureau van Dijk to BC Partners. No financial terms were disclosed, although Reuters reported that the price could be upwards of €700 million.

Crestview Partners has agreed to acquire a “significant equity stake” in ValueOptions Inc., a Norfolk, Va.–based behavioral health care company. No financial terms were disclosed for the deal, which is expected to close by year-end.

GFI Energy Ventures has acquired Turbine Generator Maintenance Inc., a Cape Coral, Fla.–based provider of field and shop services to the U.S. turbine generator market. No financial terms were disclosed.

HgCapital has agreed to acquire a majority stake in German lighting company SLV. The deal comes with an enterprise value of 320 million, and is expected to close within the next month. Company founder Franko Neumetzler, who up to now has held the majority of SLV, will retain a significant minority stake, with other members of senior management also continuing to hold shares.

Littlejohn & Co. has completed its acquisition of gourmet coffee company Van Houtte Inc. (TSX: VH) for Cdn$25 per share. The total enterprise value was approximately Cdn$600 million, including the assumption of indebtedness. CIBC World Markets advised Van Houtte on the transaction.

Oak Investment Partners has left the private equity consortium bidding on Vertrue Inc. (Nasdaq: VTRU), a provider of Internet direct marketing services. Oak had been teamed with One Equity Partners and Rho Ventures on a $48.50 per share offer, but dropped after the bid was raised to $50 per share. Oak’s equity check might be covered by existing Vertrue shareholder Bencourt Advisors. Jefferies Broadview is advising Vertrue on the deal, while the equity consortium will receive debt financing from Lehman Brothers and JPMorgan.

Terra Firma has extended to July 29 the deadline for acceptance of its £2.4bn offer for UK music group EMI. So far, Terra Firma has received acceptance from investors holding 26.19% of EMI’s shares. This is the third time Terra Firma has extended the deadline. EMI shareholders appear to have been holding out for a counter-bid, likely from rival US group Warner. But both Warner and former EMI chief executive Jim Fifield, also said to be interested, confirmed that they would not make an offer for EMI this week.

Texas Pacific Group is thought to be interested in bidding for UK cable and pay-TV operator Virgin Media. Press reports suggest that TPG has contacted Virgin Media’s adviser, Goldman Sachs, about its involvement in an expected $23 billion auction. Several other private equity houses are said to be interested in the target, and many are hoping for an extension to the mid-August deadline for bids as they put together funding packages. Carlyle has already made a bid approach of some $23 billion. Meanwhile, Providence Equity Partners is thought to have teamed up with fellow houses Blackstone and Cinven. KKR is believed to have hired advisers to help with a possible offer, while trade buyers are also expected to show interest.

PE-Backed IPOs

Airvana Inc., a Chelmsford, Mass.-based provider of network infrastructure products used by wireless carriers to provide mobile broadband services, raised $58.1 million through its IPO. The company priced 8.3 million common shares at $7 per share ($8-$10 range), which gives it an initial market cap of $443.59 million. It will trade on the Nasdaq under ticker symbol AIRV, while Morgan Stanley and Lehman Brothers served as co-lead underwriters. Airvana raised around $81 million in total VC funding since 2000, from firms like Matrix Partners and Qualcomm.

Hhgregg Inc., an Indianapolis-based retailer of audio/video products, branded appliances and accessories, raised $121.88 million from its IPO. The company priced 9.375 million common shares at $13 per share ($15-$17 range), which gives it an initial market cap of around $411 million. It will to trade on the NYSE under ticker symbol HGG, while Credit Suisse and Lehman Brothers served as co-lead underwriters. Freeman Spogli & Co. was the company’s largest shareholder with a 64% pre-IPO stake, followed by CalSTRS (10.5%).

ImaRx Therapeutics Inc., a Tucson, Ariz.-based drug company using nanotech therapies for stroke and cancer, has lowered its proposed IPO terms. The company originally filed to sell 3 million shares at between $6.50 and $7.50 per share, but has now dropped the price-tag down to $5 per share. It still plans to trade on the Nasdaq under ticker symbol IMRX, with Maxim Group serving as lead underwriter. Edison Moore Healthcare Ventures holds a 4.8% pre-IPO ownership position. ImaRx had filed for a $75 million IPO last year, but later withdrew it due to “unfavorable market conditions.”

Masimo Corp., an Irvine, Calif.-based provider of non-invasive patient monitoring products, has set its IPO terms to around 11.92 million common shares being offered at between $16 and $18 per share. It would have an initial market cap of around $950 million, if it were to price at the high end of its range. The company plans to trade on the Nasdaq under ticker symbol MASI, with Piper Jaffray and Deutsche Bank Securities serving as co-lead underwriters. Masimo has raised around $88 million in total VC funding since 1992, including a 2005 infusion at a $190 million post-money valuation. Backers include Invesco Private Capital (8.6% pre-IPO stake), Steelpoint Capital Partners (5.6%), DSV Partners (5.4%) and Franklin Templeton Group (5.3%).

PE-Backed M&A

Codexis Inc., a Redwood City, Calif.-based provider of solutions for pharma chemical process development and manufacturing, has acquired BioCatalytics Inc., a Pasadena, Calif.-based maker of off-the-shelf enzymes used in chemical process manufacturing by pharma and fine chemical companies. Codexis has raised $75 million in VC funding since 2002, from firms like CCTV Investments, CMEA Ventures, Pequot Capital, Bio*One Capital and Pfizer.

Facebook Inc., a Palo Alto, Calif.-based social networking company, has acquired Parakey Inc., a startup from Mozilla Firefox co-founders Blake Ross and Joe Hewitt. No financial terms were disclosed. Parakey has developed a platform that allows users to bypass the desktop when synching files across the web. Facebook has raised $38 million in VC funding from Accel Partners, Greylock Partners and Meritech Capital Partners.

Firms & Funds

Blum Capital Partners is raising between $2 billion and $2.5 billion for its fourth fund, according to LBO Wire. The San Francisco-based firm’s previous fund closed in 2005 with $1.2 billion.

RCP Advisors of Chicago is raising up to $325 million for its fifth fund-of-funds, which will back middle-market buyout funds. It already has secured over $85 million in commitments, with RBC Dain Rauscher serving as placement agent. RCP’s fourth fund-of-funds closed last year on $265 million.

Human Resources

Christopher Falk has joined I-banking boutique Livingston as a partner. He will be based in Chicago, and will head up the firm’s business services and tech sector practices. Falk previously was a managing director with Wells Fargo Securities, where he helped form its mid-market I-banking practice.

Michael Krupka, a managing director with Bain Capital Ventures, has been elected to the board of Vonage Holdings Corp. (NYSE: VG). He replaces Harry Weller, a partner with New Enterprise Associates.

Vaidehi Shah has agreed to join hedge fund Eton Park, with a focus on “illiquid” opportunities. Today is her last day as a senior associate with The Carlyle Group, where she has focused on buyout opportunities in the U.S. telecom and media sectors.