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Hours Spent = Dollars (or Euros) Earned
The Organization for Economic Cooperation and Development (www.oecd.org), a Paris-based research group, issued a report earlier this week showing a divergence among industrialized nations in terms of hours worked per capita. This is one of the few reports to quantify what we already suspected anecdotally: American workers are spending more and more hours at the office, while European workers (with the exception of Icelanders) are working fewer. What is most interesting about the OECD report, however, is that it directly links these higher numbers of per capita hours worked to higher per capita income in the U.S. Now this obviously makes sense it terms of per-hour workers, but OECD is trying to make a larger point that time spent at the office trumps worker productivity as an economic driver. In other words, the average U.S. worker and British worker each generate similar outputs, but the U.S. worker produces more because he works more.
Now I’m not bringing this up to slam The Wire’s sizable European readership (in fact, I’d like to formally extend my envy). Instead, I’m curious to know how private equity investors into European companies feel about the OECD findings. Are they accurate? If so, does that mean that a VC or control investment in a European company is effectively worth less than a similar investment into a U.S. company? Does the company’s target market (Europe-only or global) maker a difference? Enquiring minds want to know.
Unrelated: And a question for U.S. venture capitalists who recently closed new funds, or are preparing to close new funds. What is the strangest or most outrageous gift (or offer of a gift) you’ve received from a prospective limited partner. With VC fund downsizing (think Sevin Rosen Funds), there must be some interesting tales to tell on an anonymous basis. Other than that, have a good weekend…
The Cypress Group has agreed to acquire the automotive aftermarket business of Dana Corp. (NYSE: DCN) for $1.1 billion in cash. The deal is expected to close this quarter, and will include 52 facilities employing 13,000 people. Credit Suisse First Boston and Goldman Sachs are serving as financial advisors to Dana Corp. www.dana.com
Alimera Sciences Inc., an Atlanta-based drug company focused on the ophthalmic industry, has raised $26.75 million in Series A funding. Intersouth Partners led the deal, and was joined by BA Venture Partners, Domain Associates and Polaris Venture Partners. Each VC firm made an equal investment, and will hold one seat on the Alimera board of directors. www.alimerasciences.com
Bob Evans Farms Inc. (Nasdaq: BOBE) has completed its acquisition of Mimi’s Café Inc. (a.k.a. SWH Corp.) for approximately $103 million in cash plus the assumption of $79 million in outstanding indebtedness. In conjunction with the deal close, Mimi’s Café withdrew its registration papers for an $85 million IPO. Mimi’s Café is a Tustin, Calif.-based restaurant operator that had listed buyout firm Saunders Karp & Megrue as its majority shareholder. www.mimiscafe.com
ELance Inc., a Sunnyvale, Calif.-based provider of software solutions for services procurement and management, has raised $10 million in Series E funding. Return backers include New Enterprise Associates, Pequot Private Equity and Kleiner, Perkins, Caufield & Byers. www.elance.com
U-Nav Microelectronics Corp., an Irvine, Caif.-based fables semiconductor company, has raised $5 million in Series D funding. Investors included Nordic Venture Partners, iSherpa Capital, Shelter Capital, UNI-LLC and Trimble Navigation Ltd. www.unav-micro.com
The Carlyle Group has completed its sale of container shipping company Horizon Lines LLC to Castle Harlan for $650 million. Carlyle originally had acquired Charlotte, N.C.-based Horizon Lines (f.k.a. CSX Lines) from CSX Corp. in a February 2003 recap valued at $300 million ()$240 million in cash, $60 million in debt). Goldman, Sachs & Co. and Latham & Watkins LLP advised Carlyle on the sale to Castle Harlan. www.horizon-lines.com
Littlejohn & Co. has completed its sale of Jerr-Dan Corp. to Oshkosh Truck Corp. (NYSE: OSK) for $80 million. Jer-Dan is a Greencastle, Pa.-based manufacturer of towing and recovery equipment, and was acquired by Littlejohn as part of a 1999 public-to-private acquisition of Jer-Dan parent company Durakon Industries. www.jerr-dan.com
Charlesbank Capital Partners has led a recapitalization of Papa Murphy’s International Inc., a Vancouver, Wash.-based take-and-bake pizza chain. Wells Fargo provided a revolving credit facility for the deal, although no financial terms were disclosed. Company management participated in the recap, as did John Barr, new vice chairman of Papa Murphy’s, and former president and CEO of Automotive Performance Industries, Quaker State Corp. and The Valvoline Co. www.pamurphys.com
Fortis Private Equity has led a management buyout of the Velleman Group, a Belgium-based distributor of electronic components and consumer electronics. No deal terms were disclosed. www.velleman.be
Sterling Investment Partners has led a buyout of The CBORD Group Inc., an Ithica, N.Y.-based provider of software solutions for stored value card systems and food service management. Oak Investment Partners also participated in the equity portion of the deal, while Antares Capital Corp. provided senior debt financing. No financial terms were disclosed. www.cbord.com
Volterra Semiconductor Corp., a Fremont, Calif.-based provider of power management semiconductors, has set its IPO offering price range to $10-$12 per common share, and its number of offered shares to 4.5 million. The company has raised over $60 million in VC funding from significant shareholders like Kleiner, Perkins, Caufield & Byers, INVESCO Private Capital, Morgenthaler Ventures and Integral Capital Partners. www.volterra.com
Cisco Systems Inc. (Nasdaq: CSCO) has agreed to acquire Parc Technologies Ltd., a UK-based provider of traffic engineering solutions and software for routing optimization. Cisco will pay $9 million for all outstanding shares it does not already own. Parc has raised over $24 million in VC funding since its 1997 inception, with investors including Cisco, 3i Group, Advent International, CSFB Private Equity and Soros Private Equity. www.parctechnologies.com
CapitalSource Inc. (NYSE: CSE) has acquired CIG International LLC, a Washington, D.C.-based specialty lender of subordinated debt financing to the for-sale residential real estate development market. The deal was valued at $97.5 million, with CIG to operate as paert of CapitalSource’s structured finance group. www.capitalsource.com
Mitsubishi Corp. and Daido Life Insurance Co. have teamed up to create a $200 million corporate turnaround fund-of-funds focused on the U.S. and Europe, according to The Nihon Keizai Shimbun. Mitsubishi and Daido Life each will commit $50 million to the new effort, and solicit the remainder from other institutional investors. The companies have selected Pacific Corporate Group to serve as its fund selection advisor.
Poteza, a Slovenia-based financial group, has raised €66.5 million for the Poteza Adriatic Fund, which will make private equity investments in Southeast Europe. Poteza is sponsoring the fund, and has received LP commitments from investors like the International Finance Corp. www.poteza.si/poteza_uk
Thursday, July 8
Holding Back The LP Flood
Sevin Rosen Funds yesterday wrapped up paperwork on its ninth venture capital fund, which tipped the scales at $300 million. Most news reports of the closing have focused on how the new effort is so much smaller than the $875 million that Sevin Rosen raised for SRF VIII in 2000, or even than the $600 million that SRF VIII became after being downsized in late 2002. The more important story, however, is how large SRF IX would have been, had limited partners had gotten their way.
John Jaggers, a general partner with Sevin Rosen, says that his firm received over $600 million in requested commitments from existing limited partners alone. He adds that the amount of interest from new LPs (new to Sevin Rosen, that is) was far more intense than anything he has experienced since joining the firm 16 years ago. A big part of this new action came from overseas, but a heady percentage also came from new domestic players like the burgeoning fund-of-funds market.
Sevin Rosen dealt with the oversubscription by holding firm on its $300 million target (it originally had considered taking up to $350 million) and cutting out all public LPs and funds-of-funds. The concern, however, is that other VC firms won’t exhibit such discipline. Even worse is the prospect of a new class of inexperienced emerging managers forming funds for the sole purpose of exploiting bloated limited partners. As Jaggers says: “There is so much money out there right now that it’s getting scary… It almost makes me fear that we could be heading into another cycle like we saw a few years ago.” Me too John, me too. – Dan Primack
Leon Shahinian has been promoted to senior investment officer for the alternative investment management program at the California Public Employees’ Retirement System (CalPERS). He replaces Rick Hayes, who left last month to launch a fund-of-funds practice for Oak Hill Capital Management. CalPERS is believed to be the world’s largest institutional investor into private equity, with approximately $20 billion in committed capital. Shahinian originally joined CalPERS in August 1998, before which he co-managed a $1.5 billion fixed-income portfolio for Sacramento-based Foundation Health Systems. www.calpers.com
Sevin Rosen Funds has held a final close on its ninth fund, with $300 million in limited partner commitments. The early-stage VC firm had raised $875 million for its previous fund in 2000, but later reduced its size by $275 million. www.srfunds.com
Thomas H. Lee Partners has agreed to acquire Progressive Moulded Products Ltd. from an ownership group led by Oak Hill Capital Partners. No financial terms were disclosed, except that financing will be provided by JP Morgan Chase, Canadian Imperial Bank of Commerce, Credit Suisse First Boston and Goldman Sachs. Progressive is a Canada-based supplier of plastic automotive interior subsystems.
Kasenna Inc., a Mountain View, Calif.-based provider of broadband video solutions, has raised $15 million in new VC funding. Key Ventures led the deal, and was joined by fellow new investor AsiaTech Management. Return backers included U.S. Venture Partners, Alloy Ventures, OM Technology Investments Partnership, Artiman Ventures, CIR Ventures and the Entrepreneurs’ Fund. www.kasenna.com
OneAccess Networks SA, a France-based provider of broadband access routers for telecom carriers and corporate networks, has raised €7.5 million in new VC funding. CDIC Ixis Innovation led the deal, and was joined by VPSA (f.k.a. Viventures Partners), AGF Private Equity and CIC Capital Privé. www.oneaccess-net.com
Lightningcast Inc., an Alexandria, Va.-based provider of broadband advertising software, has raised $5 million in Series D funding. New investors Global Internet Ventures and New Markets Growth Fund were joined on the deal by return backers Nokia Venture Partners and Redleaf Group. www.lightningcast.com
Arcwave Inc., a Cambell, Calif.-based provider of wireless solutions for the cable industry, has raised $8 million in new VC funding. Vulcan Capital led the deal, and was joined by past backers and fellow new investor Comcast Interactive Capital. Arcwave now has raised $28 million in total VC funding since its 2000 inception. www.arcwaveinc.com
Lysac Technologies Inc., a Boucherville, Québec -based provider of fine chemicals research and development, has raised Cdn$5 million in new VC funding. Investors included the Solidarity Fund QFL, Desjardins Venture Capital, the Société générale de financement du Québec (SGF) and the National Research Council of Canada (NRC). www.lysac.com
HgCapital has led a £102 million management buyout of Iris Software, a UK-based provider of financial, practiced management and tax software to accounting firms. Hg Capital will receive a 62% stake in Iris, while Lloyds Development Capital (the MBO’s selling party) has re-invested £8 million for a 12% stake. www.irissoftware.com
ABN AMRO has sold De Dietrich Thermique to REMEHA, a heating equipment company based in The Netherlands. De Dietrich Thermique is the heating division of France-based industrial holding company De Dietrich, which ABN AMRO acquired in a public-to-private deal nearly four years ago. This is the bank’s second spinout from De Dietrich, as it sold the company’s railways division in September 2002. No deal terms of the most recent sale were disclosed. www.abnamro.com
Capital C Energy LLC, an investment platform formed in 2002 by Carlyle/Riverstone Global Energy & Power Fund, has completed its acquisition of Belden & Blake Corp., a North Canton, Ohio-based oil and gas exploration company. No financial terms of the all-cash deal have been disclosed. www.beldenblake.com
The European Union Commission has approved KKR‘s €2.25 billion buyout of Dynamit Nobel AG. It also approved Texas Pacific Group and CSFB Private Equity‘s proposed buyout of Germany-based Grohe AG.
51jobs Inc., a Shanghai, China-based provider of human resource services in China, has filed to raise $90 million via an IPO of American Depository Shares (each ADS represents two common shares) on the Nasdaq under proposed ticker symbol JOBS. The company lists Doll Capital Management as a significant shareholder. www.51jobs.cn.st
NeuroMetrix Inc., a Waltham, Mass.-based maker of non-invasive diagnostic equipment for neuromuscular disorders, has set its IPO offering price range to $10-$12 per share, and its number of offered shares to three million. The company has raised around $44 million in VC funding from significant shareholders like J.H. Whitney & Co., Delphi Ventures, BancBoston Ventures, Harris & Harris Group and Commonwealth Venture Partners. www.neurometrix.com
Dollar Financial Group Inc., a Berwyn, Pa.-based provider of financial services to lower-income customers, has set its IPO offering price range to $15-$17 per share, and its total number of offered shares to over 6.87 million. The company was acquired in 1998 by a holding company controlled by Leonard Green & Partners, which still serves as a significant shareholder, along with Goldman Sachs Mezzanine Partners. www.dfg.com
William Holm has joined Hartford Investment Management Co. as a vice president with the firm’s mezzanine and equity finance team. He previously worked with Capital Resource Partners in Boston. www.thehartford.com
Baring Vostok Capital Partners, a Russia-based private equity group affiliated with Baring Private Equity International, has added Sergey Abramov and Philippe Der Megreditchian as partners. Abramov will be responsible for government relations and business development, and has spent the past four years working for the Administration of the President of the Russian Federation. He previously served as first deputy chairman of the Moscow government’s Committee for Telecommunications and Mass Media. Der Megreditchian will be responsible for project management and business development, and is the former chief executive of Eagle Venture Capital, a Moscow-based private equity group that oversees four regional investment funds of the European Bank for Reconstruction and Development. www.bvcp.ru
Thomas Amick, a former senior executive with Johnson & Johnson Corp., has joined the advisory board of Quaker BioVentures. www.quakerbio.com
Janet Cowell, marketing manager with SJF Ventures, is running for the District 16 state senate seat in North Carolina. www.janetcowell.com
Wednesday, July 7
I’ve got deadlines on top of deadlines, so time for just two quick notes: (1) Not a single IPO filing or pricing yesterday. Chances are that this unusual absence was caused by July 4th jetlag, but it also is possible that the past week’s market swoon is causing some folks to rethink their S-1 strategies. It will be interesting to see what happens today (mixed market open so far). (2) Gametime: Less than a week until the At-Bats Contest ends, and it looks like Todd Thompson of Piper Jaffray will win unless Michael Young suffers some sort of injury. Details on the next PE Week Wire contest will be coming next Thursday… – Dan Primack
Apollo Management has agreed to acquire Borden Chemical Inc. from Kohlberg Kravis Roberts & Co. (KKR) for approximately $1.2 billion, including the assumption of outstanding debt. Borden is a Columbus, Ohio-based maker of resins, adhesives and binders for the global forest products and industrial markets. In May, it filed a registration statement with the SEC for a $200 million IPO, but that offering now has been suspended. Apollo’s acquisition is expected to close sometime this quarter. www.bordenchemical.com
Advent International has sponsored a $120 million leveraged recapitalization of Shoes For Crews Inc., a West Palm Beach, Fla.-based designer and marketer of non-slip footwear for the restaurant and foodservice industry. Advent invested over $30 million for a 40% ownership interest in SFC, with co-founders Stanley and Matthew Smith retaining a 60% stake. RBC Capital Partners led a $52 million senior debt facility to complete the deal, and were joined by Antares Capital Corp. and The Bank of New York. www.shoesforcrews.com
Radianse Inc., a Lawrence, Mass.-based provider of indoor positioning solutions for healthcare applications, has raised $9 million in Series A funding. HLM Venture Partners and Partech International co-led the deal with a pair of $3.25 million investments, and were joined by Ascension Health Ventures. www.radianse.com
Convio Inc., an Austin, Texas-based provider of software that helps nonprofit organizations use the Internet for fundraising and other forms of support, has raised $15 million in fourth-round funding. Adams Street Partners led the deal, and was joined by return backers Granite Ventures, Austin Venture and Silverton Partners. The company now has raised over $37 million in total VC funding since its 1999 inception. www.convio.com
Libelis SA, a Paris, France-based provider of Java-based enterprise software, has raised €4 million in second-round funding. Iris Capital led the deal, and was joined by return backers Innovacom, iSource and Cap Decisif. www.libelis.com
BroadLight Inc., a Mountain View, Calif.-based supplier of semiconductors, software and transceivers for fiber-to-the-premises deployment, has raised $4.4 million in new Series C funding. BroadLight held a $13.5 million first close on the deal this past March, which brings its Series C total to $17.9 million. New investor Azure Capital Partners participated on the second tranche, alongside several existing investors. www.broadlight.com
GridApp Systems Inc., a New York-based provider of database virtualization and consolidation solutions, has received an undisclosed amount of venture capital funding from Advantage Capital Partners. www.gridapp.com
XOsoft Inc., a Burlington, Mass.-based provider of continuous application availability solutions to the enterprise, has raised $9 million in fourth-round funding from JK&B Capital and other returning backers. The company now has raised nearly $30 million in total VC funding since its 1999 inception. www.xosoft.com
IE-Engine Inc., a Waltham, Mass.-based provider of human resource cost management software, has raised $3.5 million in new Series A funding. Investors included Kodiak Venture Partners, Adams, Harkness Ventures and RBC Capital Partners. IE-Engine has now raised over $21 million in total VC funding since its 1999 inception, including an original $6.4 million Series A deal in 2001 at a post-money valuation of approximately $9.5 million. www.insurance-engine.com
Inimex Pharmaceuticals Inc., a Vancouver-based drug company, has held a US$4.5 million first close on its Series A round of VC funding. Investors included BDC Venture Capital, the Canadian Medical Discoveries Fund (advised by MDS Capital) and the Working Opportunities Fund (managed by GrowthWorks). The company hopes to raise another $2 million to $3 million. www.inimexpharma.com
Castle Harlan Inc. has completed its $380 million acquisition of Ames True Temper Inc., a Camp Hill, Pa.-based manufacturer of lawn and garden tools and accessories. The seller was Windpoint Partners, which acquired Ames True Temper in early 2002. www.ames.com
Attachment Technologies Inc., a portfolio company of Norwest Equity Partners, has acquired both CAM and Genesis Equipment and Manufacturing Inc. CAM is a Cokato, Minn.-based manufacturer of auger-based material handling equipment, while Genesis is a Superior, Wis.-based maker of mobile shears and attachments for the recycling market. Terms of the deals were not disclosed. www.attachment.com
ENeighborhoods Inc., a portfolio company of Summit Partners, has acquired ReChannel Communications Inc. No deal terms were disclosed. www.rechannel.com
Goldman Sachs has lost two professionals from its private equity fund-of-funds group, according to PrivateEquityCentral.net. Geoff Clark, group co-head, is leaving for “personal reasons,” while Elizabeth Varley Camp, managing director, will join Ewing Management Group as a general partner. www.goldmansachs.com
The Greater Philadelphia Venture Group has appointed four new members to its board of directors: Sherrill Neff, managing partner with Quaker BioVentures, has been elected chairman; Michael DiPiano, managing partner with NewSpring Ventures, will serve as president; Barbara Dalton, managing partner with EuclidSR Venture Partners, will serve as vice president; William Molloie, a partner in PricewaterhouseCoopers‘ Technology InfoComm and Entertainment Practice, has been elected to a second term as treasurer. www.gpvg.com
Auda Advisor Associates LLC, a New York-based private equity firm, has closed its Auda Secondary Fund with $410 million in limited partner commitments. The vehicle will focus on secondary acquisitions of buyout, venture capital and mezzanine private equity interests. www.auda.net
ARC Financial Corp., a Calgary-based investment management firm focused on the energy sector, has closed its fourth private equity fund with Cdn$403 million (approx. US$305 million) in limited partner commitments.
Iris Capital, a Paris-based venture capital firm, has held a €144 million second close on its latest fund, according to PrivateEquityCentral.net. The total fund target is €200 million, and a final close is expected later this year. www.iriscapital.com
New York City has reinitiated its search for a new consultant to oversee the expansion of its pension system’s private equity program. The city began its search for a new consultant May 17, then withdrew its original RFP and issued a new one in late June. The new consultant will advise the fund on strategy, sub-asset allocation and industry best practices, as well as identify and evaluate new investment opportunities and analyze market conditions. Pacific Corporate Group has held the contract for the last six years. It is expected to compete alongside other investment consultants and advisors for the new contract.
Tuesday, July 6
Tuesday TalkBack: On Forstmann and Fahrenheit
Vacation is over, I’m neither rested nor ready and the unreliable Pontiac would not start this morning. In other words, it’s time for some Tuesday TalkBack. A few emails from late last week discussed the Forstmann Little verdict, and were almost uniformly in opposition to Teddy’s statement that liability without damages was a “complete victory.” Zach typified this sentiment, when he wrote: “While it is not pleasant to consider the ramifications of LPs believing they can sue over bad investment performance, we should not lose sight of the big picture. Forstmann did breach his duty… The idea that he understood the telecom market better than experienced public investors was pure hubris, and he should have created a new vehicle to pursue this dream.” Ryan agreed with my critique of the New York Times sidebar: “Connecticut didn’t get any money, but they still won the case. Any private equity firm that turns down [Connecticut’s] money because Connecticut sued Forstmann is either vindictive or plans to engage in practices that could prompt a future lawsuit.”
Most emails, however, were far more concerned with “Fahrenheit 911” than with Connecticut courtrooms. Specifically, folks on both sides of the aisle took me to task for last Monday’s column, which basically argued that the second-half of the film was fascinating, but that the first half was filled with juxtapositions that unfairly linked the Bush family with Saudi-born terrorism (particularly in regards to The Carlyle Group). What follows is a sampling of reader comments:
Ethan writes: “There is a material difference between CalPERS investing in Carlyle at the same time as the Bin Laden family, and national security decision makers (e.g. the Bush family) investing in Carlyle at the same time as the bin Laden family. The inappropriateness of this relationship is further compounded by the defense industry orientation of many Carlyle investments… This isn’t conspiracy theory, it’s just the subversive power of monetary influence that loosens one’s grip on the ability to make solid decisions like that third martini at dinner. In my opinion, this is a big deal.”
David writes: “I totally disagree with your comment equating Moore’s juxtaposition of Bush and Bin Laden to Bush/Cheney references to 9/11 and [Saddam] Hussein. First of all, you will never find a comment from either Bush or Cheney that Iraq had a role in 9/11 (if you do – I’d love to see it). The message from Bush on 9/11 and Iraq, which I believe a lot of people are missing, is that 9/11 happened and Iraq posed a similar threat before we invaded.” Note: I never suggested that Bush/Cheney alleged that Iraq had a role in 9/11. Instead, I said that they regularly juxtaposed the two, so that people would make the inference themselves. Don’t believe me? In a poll at the start of the war, polls showed that over 20% of Americans believed that Iraq was directly involved in 9/11. There were bombs being dropped on Baghdad with words to the effect of “9/11 Payback” written on them. Where do you think people got such ideas?