PE Week Wire — Friday, June 24

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Just a couple quick notes on my last day as substitute teacher:

* My two-week stint with this column reminded me how much rage is actually brimming at the surface in the private equity market. Despite all the deal activity and fundraising-not to mention exit opportunities that range from okay (if you’re a venture firm) to excellent (if you’re a buyout firm)-the feedback I received shows some of you are nonetheless frustrated. In many cases, the sadness has to do with exhaustive deal quests that end in lost transactions or, perhaps a worse fate, the acquisition of an incredibly expensive asset. In other cases, the madness stems from hedge fund encroachment into buyout territory, while on the venture side entrepreneurs and VCs alike still complain about the dearth of early stage funding-even though that seems to be on the rise. With the exception of entrepreneurs, few of you are lacking for money these days, so perhaps this phenomenon I’m sensing (and maybe it’s just me) can be likened to the mass exodus to! the Jersey Shore every Friday night on the Garden State Parkway: Everyone’s happy to be driving to the beach, but the minute someone cuts you off or is driving too slow-temporary roadblocks to your destination of choice-the road rage returns. (But now that I think about it, that’s like every time I drive on the Parkway…)

** Thanks to everyone who actually read this section and sent news items to me instead of Dan. It made my job much easier. Dan will be back on Monday, so if you have news items for next week, please send them his way.

    Top Three

 

Bermuda-based Celtic Pharmaceutical Holdings has launched a $300 million fund that will target late stage VC and buyout investments in biotech and pharma companies. The fund also announced its first investment, a 20 million British pound buyout of Xenova plc , a biotech company focused on fighting cancer and drug addiction. The fund’s management includes managing general partners Stephen Evans-Freke , a biotech entrepreneur and onetime managing director at Painewebber, and John Mayo , a former director at SG Warburg. Celtic Pharma also has offices in New York and London.

New Energy Capital Corp ., a clean energy company focused renewable energy and distributed generation projects, has raised $30 million of venture financing. The California State Teachers’ Retirement System and VantagePoint Venture Partners led the funding. www.newenergycapital.com

Richard Atterbury is leaving his job at Morgan Stanley to take the same position at Lehman Brothers , the Financial Times reported. Atterbury was global co-head of the financial sponsors group at Morgan Stanley. At Lehman, he’ll have the same position but will also chair Lehman’s European leveraged finance group. Atterbury will be replaced at Morgan Stanley by David Law , deputy head of UK investment banking.

    VC Deals

 

uShip Inc. , an Austin, Texas-based online marketplace for shipping and moving, has raised an undisclosed amount of venture capital from Benchmark Capital , in its first round of fundraising. Bob Kagel, a founding partner of Benchmark Capital, has joined the uShip board of directors. www.uship.com

eProject, a Seattle-based project management software company, will announce Monday that it has raised $8 million of venture financing, The Seattle Times reported. Led by Kennet Venture Partners, the deal will also include Genevest. Founded in 1997, the company suffered major layoffs a couple years ago but turned a profit in 2004 and is now growing at an annualized rate of 70 percent, the story said. eProject’s last round of financing was a $3.7 million deal in 2002 that included Vault Capital and Pinpoint Venture Group, according to Thomson Venture Economics. www.eproject.com

    Buyout Deals

 

Charterhouse Group is considering a 260 million pound bid for private equity-backed Barracuda Group, a British pub and bar operator, according to published reports. Barracuda was founded in July 2000 with help from PPM Ventures.

3i Group has agreed to buy ABX Logistics, a unit of SNCB/NMBS, the Belgian railway company, according to published reports. The final offer could be as high as 50 million euros.

HgCapital -backed Clarion Events, a producer of trade shows, has purchased Amusement Trade Exhibitions Group for 13.5 million euros. HgCapital acquired Clarion in October 2004 in a 50 million euro MBO.

Permira and PAI have made a 1.44 billion euro bid for Spain ‘s Cortefiel, the country’s second-largest retailer, Retail Week is reporting. The bid is said to exceed an existing offer from CVC Capital Partners.

    PE-Backed IPOS


Kelso & Co. -backed Eagle Bulk Shipping, the dry bulk vessel company, raised $201.6 million in its IPO yesterday at $14 a share, down from the projected range of $16-$18.

JLL Partners – backed Builders FirstSource , a Dallas , Texas -based provider of building materials, raised $196 million in its Wednesday IPO. As of Thursday afternoon, the stock was trading at $15.45, representing a slight loss over the $16-a-share offer price.  Joint-bookrunners on the deal were UBS Securities and Deutsche Bank Securities Inc.  JLL first bought the company in 1997 and used it as a platform for additional acquisitions. In the past year JLL Partners re-capitalized Builders FirstSource, taking special cash dividends worth roughly $375 million. Additionally, of the $196 million raised, Builders FirstSource will receive $120 million, with the remainder going to pre-IPO shareholders.

    Exits


Lion Capital (FKA Hicks Muse Europe) is in talks to divest the Barbara’s Bakery unit and the U.S. private label cereal business of its Weetabix portfolio company, The Times reported. The company hired NM Rothschild as advisor, and is said to be seeking roughly $110 million for the two companies. Lion Capital took Weetabix private in a $1.1 billion, November 2003 acquisition, which occurred prior to Lion’s split from the Texas-based Hicks Muse. At the time, the company held a 14.2% market share in the UK cereal market, controlling such brands as Alpen, Ready Brek and Weetos.



     Fund & Firm News

The European Regional Development Fund and Advantage West Midlands are launching a 20 million British pound fund that will provide capital to businesses in the United Kingdom ‘s West Midlands , according to published reports. The generalist fund will focus on investments of 500,000 pounds to 2 million pounds but can invest in projects as high as 10 million pounds as part of a syndicate. Nick Paul, chairman of Advantage West Midlands, and Clive Austin, a director with Catapult Venture Managers Ltd., will manage the fund.

Swicorp and Savola Group are teaming up to launch Intaj Capital , a private equity fund with initial funding of $60 million, Gulf News reported. The fund plans to raise $200 million in 2006.



    Miscellaneous

 

SunGard shareholders are scheduled to vote on the company’s sale to private equity firms at SunGard’s annual meeting on July 28. Shareholders of record as of June 17 will be eligible to vote.

Ripplewood Holdings’ holding company, RHJ International, intends to invest up to 100 billion yen in struggling Japanese companies over the next few years, Reuters reported.

THURSDAY, JUNE 23

Today we bring you another guest column, this one from Monte Brem , president of PCG Asset Management , an operating unit of Pacific Corporate Group. www.pcgfunds.com

“The outlook is not optimistic say venture capital firms worldwide.” – Los Angeles Times

“Venture capital fund managers generally have braced themselves for the storms ahead. There will inevitably be more insolvencies and refinancing.” — The Times of London

“.Numbers indicate a median annual rate of return. [that] is nothing less than a disaster. Next year seems very scary to all but a few venture capitalists. [They] are about as welcome these days in the typical pension fund office as junk bond salesmen.” Forbes

Recent press makes it seem that the 2000 venture capital bubble drove a stake into the heart of the VC industry, that our venture brethren have been dying a slow death for the past five years and that the VC model is now on the verge of expiring for good as pension funds reduce their exposure to venture capital. So maybe the time has come to write a personal epitaph for the venture capital era that brought us the diverse entertainment of Segway, Google and eBay – not to mention all those great dotcom Super Bowl commercials.

Factors commonly cited as evidence of venture capital’s death include too much capital chasing too few deals, an absence of attractive exit opportunities, decreased enterprise budgets for technology and the ever-popular “over saturation of technology in our increasingly complex lifestyles.” These arguments have all been raised in prose much more elegant than anything I could hope to create. The problem is that they are all hogwash (pardon my sophisticated language).

Venture capital is the core of our capitalist, entrepreneurial-focused society. It is the fuel that runs the motor of growth for this country.

Of course, this investment activity involves volatility. However, to say that the venture capital business is broken ignores the current facts. Consider that wireless phones are starting to become the first truly ubiquitous communications and media technology devices (all in the palm of your hands), broadband penetration is now reaching audience levels that will make business models hum, and large pharmaceutical companies have product pipelines that can only be fully satisfied by independent biotech companies. Where will investors be able to access the returns that will be offered by new businesses embracing these developments? Venture capital funds.

The naysayers will reply that “enterprise sales are critical to venture returns and they are not going to invest in technology at the rates that they have in the past.” To see why this view is faulty, consider any modern workplace. U.S. companies continue to adopt technology to become more efficient as well as to create new business opportunities.

“What about the VC capital overhang?” Venture capital still consists of only 18% of all private equity and is typically 15 – 25% of large institutional investors’ private equity allocation. PCG Asset Management believes there are plenty of attractive investment opportunities to support these levels of capital commitments.

As corporate IT spending has rebounded along with increased pipelines and revenues in IT and life sciences companies, funds have renewed their interest in new company formations and early stage investing, which represented 32% of the rounds completed. Venture investment pace also jumped significantly in 2004 to $15.8 billion, a 50% increase over 2003. In addition, 67 venture-backed companies completed their IPOs in 2004, raising a total of approximately $5 billion – a significant improvement over the 22 IPOs that raised $1.4 billion in 2003.

“But what about the abysmal exit valuations?” We are certainly at a trough with respect to IPO and acquisition valuations, but if history holds, we will continue to see cycles of higher, and lower, exit multiples. And venture investors generally are quite good at timing their exits at the cycles of higher values.

“Aren’t things different this time?” This sounds strangely familiar, and seems to prove my point.

Our experience has shown that being thoughtfully contrarian pays off in private equity fund investing. The best performing vintages for private equity sub-classes are often the years when funding for the sector was at a trough in the cycle. It seems that an exceptional indicator of outsized investment returns for a vintage year is the amount of negative press surrounding the sector. Based on this negative sentiment, as well as our proprietary trend analysis, we believe that VC is about to enter another golden period, although we will likely not see the evidence of this in the form of returns for another 2 – 4 years.

Our focus will be on early stage IT companies where the new ideas for tomorrow’s economy will be fostered. In the healthcare VC sector, we believe that mid-stage (clinical trials) focused funds generate the most attractive returns within our investment horizon.

Shouldn’t we be concerned about those sage quotes at the beginning of this column? These quotes were all from 1990. Of course, we were then about to enter an unprecedented period of positive VC fund returns that spanned the remainder of the decade. I just may hold off on the epitaph.

    Top Three

 

Today’s Los Angeles Times is reporting that Thomas H. Lee Partners and former Fidelity National Financial CEO William Foley II have made an all-cash, $1.2 billion bid for Callaway Golf Co. , the country’s biggest maker of golf clubs. The story says the board has unanimously endorsed the bid, but is split over the details of the $16-a-share offer. Based in Carlsbad , Calif. , Callaway has watched its sales drop in the past few years.

French telecom equipment company Alcatel is setting up a venture capital program in China to hasten the development of broadband technology there, according to published reports. The announcement came just a week after Intel Capital revealed that it will launch a $200 million fund focused on China . It was unclear how much money Alcatel plans to invest.

A global private equity consortium has purchased Koor Industries’ 39% stake in Rosh Ha’ayin-based Telrad Networks Ltd. , a telecom solutions company, for $16.75 million. Led by Fortissimo Capital Fund, the deal also included HarbourVest and Paolim Ventures. The investment comes after a reorganization at Telrad. www.telrad.co.il

    VC Deals

 

DriveCam, Inc ., a San Diego, Calif.-based provider of systems that identify and improve unsafe driving behavior for commercial fleets, has secured $18 million in Series B funding. Menlo Ventures led the round with a $10.7 million investment, followed by JMI Equity with a $7 million investment. www.drivecam.com

Tandem Labs , a Salt Lake City, Utah-based biotech company focused on contract research organization, has raised $18.8 million from DW Healthcare Partners in its first round of funding. www.tandemlabs.com

Austin-Tetra , an Irving, Texas-based global data management company, has secured $3.5 million of venture financing. The Series B deal was led by Southwest Mezzanine , an affiliate of Growth Capital Partners, which led the second round of funding. www.austintetra.com

Blueline Services , a Salt Lake City, Utah-based company that provides drug testing and background screening, has raised $300,000 from UTFC Financing Solutions LLC, an SBIC fund. Blueline was founded in 2004. www.blueline-services.com

Capital Group Inc. has purchased a 12% stake in Brazilian retailer Magazine Luiza SA for 119.5 million Brazilian reals, according to published reports. The retailer sells consumer goods including furniture, computers, toys and cell phones, and operates 333 stores. The company is expected to go public in Brazil at some point.

    Buyout Deals

 

Huron Capital Partners -backed Printegra Corp. has acquired National Imprint Corp., which imprints envelopes and other stationery products. Huron first invested in Printegra, a Peachtree City, Ga.-based business printing company, in December 2004.

    Human Resources





John Burns has joined Highland Capital Partners as a senior associate.  At Highland , Burns will concentrate on growth stage investments in technology, healthcare and services companies.  Prior to this job, Burns was a vice president at Summit Partners.

    Exits


CCP Equity Partners
(formerly known as Conning Capital Partners) has agreed to sell Neovest Holdings Inc., an electronic trading company, to JPMorgan for an undisclosed amount. Under the new ownership, Neovest will operate as a wholly-owned subsidiary of JPMorgan, while Neovest CEO Bryce Byers will join the investment firm as a managing director, reporting to Emily Portney, managing director and COO of origination and distribution for the Americas. CCP has invested $9 million in Neovest since 2001, while the company also counts Total Technology Partners among its backers. The deal is expected to close next quarter. www.neovest.com



    Miscellaneous

 

South Australia ‘s biotech companies stand to benefit from a major venture capital investment that will come from a joint venture between an as-yet-unnamed investor and Bio Innovation SA, a government-backed initiative established in 2001, the Australian Biotechnology News is reporting.

The private equity-backed acquisition of Toys R Us has been approved by almost 98% of the shares that were voted. The price has not changed since the announcement in March, which means shareholders will earn $26.75 a share.

WEDNESDAY, JUNE 22

Not much time to write today (I’m starting to sound like Dan), but if you enjoyed reading Bart Schacter’s column last week on Silicon Valley—and for those of you who are indeed wishing for one more bubble—you might want to visit this link : http://www.cafepress.com/infectiousgreed

QUICK REMINDER: For the remainder of this week, please send all news items, feedback and criticism to adam.reinebach@thomson.com

    Top Three

 

picoChip , a Bath , England-based wireless semiconductor company, has raised $20.5 million in its third round of venture financing. Led by first-time investor Scottish Equity Partners, the deal also included new backers Rothschild and Intel Capital and return backers Pond Venture Partners and Atlas Venture. Since its founding in 2000, picoChip has raised a total of $41.5 million. www.picochip.com

RF Code Inc. , a Mesa, Ariz.-based RFID software company, has raised $20 million of venture financing. Led by QuestMark Partners, the company’s first insitutitonal round also includes Intel Capital and unnamed return backers. In connection with the deal, QuestMark’s Thomas Hitchner and Michael Leidesdorff will join RF Code’s board. Broadview advised RF Code on the funding.

ABN AMRO Capital has acquired Helsinki, Finland-based Loparex Group, which makes release liners for adhesive products, for 230 million euros in a management buyout. Sampo Bank provided debt for the transaction, which represents ABN AMRO’s third Nordic acquisition this year.

    VC Deals

 

Africa-focused EMP Global LLC yesterday announced investments in three companies totaling $76 million: a $21.6 million investment in Starcomms , a Lagos, Nigeria-based private telecommunications provider; $10.1 million (of a committed $40 million) in Veolia Water Maroc , a Moroccan subsidiary of Veolia Environment, which focuses on water distribution, wastewater treatment and electricity distribution; and $14.3 million in Societe Internationale de Plantations d’Heveas , a rubber exporter in the Ivory Coast and Ghana. With these deals, EMP’s AIG African Infrastructure Fund has invested $338 million into African companies and had a projected 37% return as of March 31.

Helio Volt Corp ., an Austin, Tex.-based new-age solar energy technology company, has raised $8 million in Series A funding. Menlo Park, Calif.-based New Enterprise Associates (NEA) led the round. www.heliovolt.com

Sypherlink , a Dublin, Ohio-based data management software company, has raised $3.5 million of Series A financing. Led by Battelle Ventures, the deal also included participation by Reservoir Venture Partners and some angel investors. www.sypherlink.com

Venture-backed Ikano Communications, a Salt Lake City, Utah-based provider of private-label Internet services, has secured a $16.5 million credit facility from Hercules Technology Growth Capital. Part of the financing will be used toward the recent acquisition of ISP Amerion’s subscriber base. Ikano is backed by Insight Venture Partners and Chicago Venture Partners. www.ikano.com

    Buyout Deals

 

DLJ Merchant Banking Partners has agreed to buy Wastequip Inc., a Beachwood, Ohio-based waste transportation equipment maker, from CIVC Partners for an undisclosed amount. The company has over $300 million of annual sales.

Bridgepoint -backed production company ALL3MEDIA has agreed to buy Mersey Television Co., the Liverpool , England-based producer of TV programming, for an undisclosed amount. Mersey, which is backed by Lloyds Development Capital, focuses on the 16- to 24-year-old age group, capturing 11.6% of those viewers in the UK . Carolyn Reynolds, previously controller of drama at Granada ( Manchester )will be Mersey’s chief executive, while Sean Marley, Mersey ‘s current TV commercial director, has been promoted to managing director. Royal Bank of Scotland provided debt finance for the acquisition. Longacre advised ALL3MEDIA, while Deloitte & Touche and DLA advised Mersey TV.

Audax Group has teamed with management to purchase API Heat Transfer Technologies Corp . a Buffalo , N.Y.- based producer of industrial heat exchangers and heat transfer systems, from Madison Capital Partners. API Heat Transfer has more than $100 million in annual revenue and serves the HVAC and refrigeration markets, among others. Antares Capital Corp. led the senior debt portion, Apollo Investment Corp. led the mezzanine financing, and Goldsmith Agio Helms advised API on the sale. www.apiheattransfer.com

American Capital is buying Potpourri Holdings Inc., a Chelmsford, Mass.-based director marketer of consumer products, from Linsalata Capital Partners for an undisclosed amount. Potpourri’s annual revenues are now $160 million. Linsalata acquired Potpourri in October 2002.

    Exits

 

KKR has sold the majority of its 24% stake in British alternative telecom company Kingston Communications to UBS for about 70 million British pounds, according to published reports. KKR first got involved with Kingston after it sold Omnetica, a portfolio company, to Kingston for 169 million British pounds.

Venture-backed Airborne Entertainment Inc. , a Montreal-based developer of cellular content, has will be acquired by Cybird Co., a Japanese cellular services company, for $90 million, the Financial Post is reporting. Founded in 2000, Airborne had raised more than $33 million of venture financing to date.

    Human Resources





Rich Redefls has been hired as venture partner at Foundation Capital . Redelfs, who previously ran Atheros Communications, joined Foundation last year as an executive-in-residence.

Toys R Us Chief Executive John Eyler Jr . and COO Christopher Kay will step down if the private equity-backed buyout of the company is approved, The New York Times is reporting. If shareholders approve the deal tomorrow, Eyler would receive about $65.3 million and Kay would receive about $14.7 million, the story said. The toy giant is being acquired by KKR, Bain Capital and Vornado Realty Trust.

    Firm & Fund News


GE Capital’s David Spencer is leaving the company to form Emerald Hill Capital Partners , a fund-of-fund business focused on Asia . Spencer was most recently managing director and commercial leader of GE Commercial Finance Asia, and had been working for GE since 1997, founding its financial restructuring group and serving as head of M&A and business development for GE Company in Japan.

High Country Venture LLC will manage Colorado ‘s first-ever state-backed investment fund, a $25 million vehicle that will focus on seed and early-stage opportunities. At least half the fund will be invested in qualified businesses located in designated, economically disadvantaged rural and urban communities. From an industry perspective, the fund expects to invest 40% in software and other tech companies, 40% in life sciences and agribusiness companies and 20% in other sectors.

Sixteen private equity firms bowled for charity this past Monday night in Boston to raise money for the Joey Fund, whose goal is to find a cure for cystic fibrosis. For the second straight year, Battery Ventures won the bowl-a-thon, followed by second-place finisher Parthenon Group and third-place finisher Summit Partners , according to participants. For more information on the charity, go to www.joeyfund.org

TUESDAY, JUNE 21

Today’s China-focused column is quite timely considering the news below about Chinese appliance maker Qingdao Haier making a private equity-backed bid for Maytag. Qingdao Haier certainly isn’t the first Chinese company to go after a U.S. target, but the deal is a poster child for the trends detailed below. The column is written by Thomas Forest Farb, Managing Director of New America Partners, which manages private equity and hedge funds that invest in companies, both in Asia and the U.S. , that can benefit from the growth and capabilities in China . In addition, he is Managing Director of Cappello Capital Corp. and CF Asia Capital, related investment banking firms which assist in cross-border transactions with China.

Watch China

Surprisingly, many private equity firms are still making investment decisions without seriously considering the impact of China on their prospective investment. Including an analysis of the impact of China as part of due diligence is now a must. Surprisingly, some firms have not taken the global view, while others formally require that these issues be considered in due diligence.

One of the few mistakes to be made in analyzing China is to underestimate its capabilities. China is now the leading supplier in over 100 product categories. It has achieved the greatest and longest record of economic growth that has been recorded. China cannot be easily discounted – it is likely to succeed as a result of its well educated and disciplined labor force, its high savings rate, low production costs, stable and business-oriented government and massive infrastructure investments. In comparison, while the U.S. is patching its creaky infrastructure, China is boldly initiating major infrastructure projects, although often to the detriment of environmental practices found in other parts of the world. For instance, the Three Gorges Dam project is the largest engineering project in the world, far exceeding Boston’s Big Dig, and being brought in a lot closer to budget and schedule.

When conducting its due diligence, there are at least four impacts of China that a private equity firm should consider before making an investment:

  • The U.S. prospective investment’s own international sales may be at serious risk – China ‘s own expertise in Asia is winning Asian markets. There are 56 million ethnic Chinese dispersed in Asia who are not in residence on the mainland. This has given the Chinese the knowledge of each of the Asian markets that allow it to be ferocious competitors. And although the press in the U.S. has focused on the impact of Chinese sourced or manufactured goods in the U.S., one hears little discussion of a related problem – China is not only impacting the U.S. market, but is also competing with U.S. firms in foreign markets such as Europe, Latin Am eric a and Africa.
     
  • China ‘s ability to produce goods and services at a significantly lower cost is disrupting the current supply chains – An incredible 55% of the exports of China are related to foreign-owned entities, suggesting all of these products are part of a company’s supply chain. This exporting machine is having a significant impact on the structure of many U.S. industries. If ignored, this can devastate a company, if embraced these goods can create an opportunity for a U.S. company to be more competitive, allowing it to build value in other parts of the business. Wage differences can range easily from being 10 to 40 times higher in the U.S. in the manufacturing area. Even financial analysts have compensation approximately five times higher in the U.S.
     
  • China is having a significant impact on the input costs of many companies – Businesses with inputs that are also in demand in China are potentially vulnerable to not only higher prices but actual scarcity. China is negotiating for commodity after commodity exclusive supply contracts that are turning fungible products into ones that could be unavailable at even greatly higher costs in a shortage situation. China is no longer a marginal player. At the same time that the activity in China has driven up certain natural resource prices, China ‘s production capability has also put pressure on margins – a double whammy. Maytag, for instance, has suffered from increased cost of steel for its washing machines, while also seeing increased competitive pricing on its products from imports from Haier.
     
  • Chinese domestic companies are globalizing by developing their own export capability or establishing direct distribution in the U.S. , challenging domestic companies directly – Chinese companies often have very competitive, unconsolidated internal markets running at overcapacity of 20% to 40%. Chinese companies are attempting to achieve scale and operating leverage by exporting and by developing their brand. We already have some significant Chinese brands, including Lenovo, Huawei, Haier, Tsingtao , Giordano, and in the industrial arena, PetroChina and COSCO Shipping.
     
    There are many product areas where the Chinese supplier can go directly to the U.S. customer of a prospective investment. This will typically occur with products that are lower in technology, closer to commodities rather than brands, do not require much advanced engineering or training, service or ongoing maintenance. Product areas where there is a low end segment may be more vulnerable to a toe hold and then a movement upwards in quality and price. And having higher technology does not necessarily make for a defensible position. Like Japan , Taiwan and Korea , China is quickly climbing the value-added trail.

U.S. private equity firms have to learn to analyze China along at least these four dimensions. They have to be careful not to lose their markets entirely to Made in China . But protectionism won’t work, nor will ignoring it, only understanding the opportunity and embracing it will. Unfortunately, understanding how to do business in China is not an easy task for the smaller and mid-sized U.S. firm. It will require some significant expenditure of effort and funds.

    Top Three

 

Blackstone Group , Bain Capital and Chinese appliance company Qingdao Haier Ltd. are now teaming up to bid for Maytag Corp. , today’s Wall Street Journal is reporting. The offer is expected to be about 7% higher than the existing $1.1 billion offer from Ripplewood Holdings that Maytag already agreed to.

JPMorgan Partners – and Apollo Management -backed AMC Theatres and Loews Cineplex , controlled by a consortium consisting of Bain Capital , the Carlyle Group and Spectrum Equity Investors , have entered into a definitive merger agreement. Marquee Holdings, the holding company of AMC, will house the combined business, while stockholders of LCE Holdings (the holding company for Loews) will receive a 40% stake in the combined company. The companies intend to refinance the senior credit facilities in connection with the merger. The deal is seen closing within six to nine months.

General Atlantic LLC has invested $127 million (728 million DKr) for a minority stake in Saxo Bank , an investment bank that focuses on online trading. Saxo Bank is based in Copenhagen, Denmark.

    VC Deals

 

Energy Innovations, Inc ., a Pasadena, Calif.-based developer of solar power systems, has raised $16.5 million of venture financing. MDV-Mohr Davidow Ventures led the round with add-on funding provided by existing backer Idealab. The company is developing what it says is the first low-cost rooftop solar system. www.energyinnovations.com

Sanovia Corp. , a Philadelphia, Pa.-based provider of health plan solutions aimed at improving clinical outcomes and reducing costs, has raised $5 million of Series A funding. New-backers HLM Partners and Claritas Capital co-led the deal. HLM Managing Partner Peter Grua and Claritas Vice President Shad Weaver have joined Sanovia’s board.

TriMed Research Inc. , an Omaha, Neb.-based biotech company focused on treating intestinal infections, has raised 5 million euros of venture capital from inventages Inc. and Seroba Bioventures. In connection with the deal, inventages’ Eric Sieber and Seroba’s Alan O’Connell will join TriMed’s board. TriMed is a joint venture of the University of Nebraska Medical Center, UNeMed Corp. and Ireland-based Tridelta Development Ltd. www.trimedres.com.

    Buyout Deals

 

Gresham Private Equityhas purchased Australian Pacific Paper Products from Castle Harlan Inc. ‘s Australian affiliate for A$75 million. Castle Harlan Australian Mezzanine Partners (CHAMP) bought APPP, Australia ‘s second-largest manufacturer of disposable diapers, in December 2002 for $53 million and recouped 80% of its original investment through a recap in May 2004. From all appearances, there was no leakage in this transaction for CHAMP, which earned a return of 2.6x and an IRR of 56% with the sale. Based in Melbourne , Australia , APPP is also a major distributor of adult incontinence products and had revenues in 2004 of A$104 million and EBITDA of A$13 million.

Nautic Partners has partnered with the management of HB Performance Systems Inc. , a non-automotive brakes manufacturer, to acquire the company. Based in Mequon , Wis. , with additional operations in Taiwan , HB makes custom braking systems used in motorcycles, bicycles, snowmobiles and ATVs.

Wynnchurch Capital Partners has acquired United Fixtures Company, a South Bend, Ind.-based manufacturer of retail and industrial storage systems. Terms of the deal were not disclosed.

    Firm & Fund News


Carlyle Group
and Extell Development Co. have agreed to buy a large tract of land and three apartment buildings on Manhattan ‘s Upper West Side from a group of Hong Kong investors and Donald Trump for $1.76 billion. Upon closing, Carlyle and Extell will sell the three apartment buildings to Equity Residential. The land, which spans an area between 59 th and 65 th Streets and between West End Avenue and Riverside Boulevard , can accommodate the future construction of more than 10 buildings, Carlyle said. The deal is slated to close next quarter or the fourth quarter. Carlyle made the investment through Carlyle Realty Partners IV.

The New Mexico State Investment Council has been advised to consider investments of up to $15 million in both Village Ventures II and ITU Ventures New Mexico . Its advisory committee has also recommended investments of $20 million apiece in St. Cloud Capital Partners II and Falcon Mezzanine Partners II . The council is scheduled to vote on these investments on June 28.

Semaphore , a Boston-based consultant, has been appointed to manage two New York City and State funds, the New York Community and Investment Company (NYCIC) and the New York State Business Venture Fund (NYSBVF) . The funds include two-dozen portfolio companies, with Semaphore managing both debt and equity for the funds’ life cycle. www.sema4usa.com

    Exits

 

3i Group has sold NNC, the British nuclear services company, to AMEC plc for 25.3 million British pounds. The deal represents a 3x return for 3i and an IRR of close to 30 percent. 3i acquired NNC in a management buyout in September 1999 for an undisclosed amount.

Gruner & Jahr is shopping magazines Fast Company and Inc. for about $35 million, the New York Times is reporting. The sale would represent a massive loss for the publishing giant, which bought the titles for more than 10 times that amount.

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