Get The Wire in your inbox each morning! Just send us an email.
The air is cold, the Big Dig tunnel is full of leaks and the un-trusty Pontiac has begun making a sound reminiscent of fingernails on a chalkboard. In other words, it’s time for Friday Feedback.
Almost all of the non-internship input this week concerned Tuesday’s column on private equity disclosure. A bunch of you believe that the threat of disclosure might not be such a bad thing for the private equity markets, given the current reality of LP overhang. Others argue that the matter will cause private institutions to pass on funds that also accept public institutions as limited partners. In fact, some private folks wrote in to suggest that it already was beginning to happen.
Beyond those points, Tony writes: “I am real tied of these country club VCs who think they are above it all. For USVP to say they are excluding those directly tied to the possible disclosure of sensitive fund data is a joke. When they make a good investment and performance is good they want you to know, when it is a bad investment, it is none of your business. How convenient.”
Michael, however, disagrees: “While I was a bit leery of the dead-horse beating with disclosure, I think that today’s piece may have been your best ever on the subject. The USVP news is very important, and is another example that shows who holds the power in the relationship between LPs and the private equity firms. Apparently investments that provide high returns are a scarcer than LP dollars, which goes right along with efficient markets theory. The line ‘the state should have no trouble finding lucrative investments for its billions’ is absolute proof that some politicians really don’t understand markets, basic economic theory, or really how hard it is to generate a return on investment.”
Charles adds: “By treating transparency as an inherently valuable goal, the Statesman has elevated it to natural rights status. Thus, the public’s right to transparency must, inAbbott’s and The Statesman‘s views,take its place among the public’s rights to privacy, free speech, to bear arms. not to mention the pursuit of happiness. Please, don’t we have enough fundamental, natural rights, already? The 49th Amendment to California’s Constitution guarantees each resident the right to fish! I can see the day on the not-too-distant horizon in which we’ll legislate our right to wear Italian hand-made shoes and Armani suits. Not only haven’t the Statesman thought much about it, as Lowery admitted, they haven’t thought about it at all, unless, of course, theunderlying goal of raising this issue is to advance a political career and publisher’s agenda. Nice job – calling them was an great idea. And, I appreciate your persistence with Abbott.”
Finally, there was a most interesting party that agreed with Tuesday’s column: The San Jose Mercury News (or at least one of its reporters). That’s right, the paper that sued groups like CalPERS in order to promote greater transparency, has sided against the slippery slope promoted by AG Abbott and the Statesman editorial board. Check out this entry on the Merc’s new SiliconBeat blog for more.
Blockbuster Inc. (NYSE: BBI) has expressed an interest in acquiring video rental chain Hollywood Entertainment Corp. (Nasdaq: HLYW) for $11.50 per share. The offer works out to approximately $700 million ion equity, plus the assumption of around $300 million in debt. The offer comes as competition to an existing bid from buyout firm Leonard Green & Partners and Hollywood Entertainment CEO Mark Wattles. The pair originally offered $14 per share in March, but later reduced it to $10.25 per share. It is worth noting, however, that dollars might not be the only factor in Hollywood Entertainment selecting a winner, since the Blockbuster offer could conceivably run into regulatory roadblocks. www.hollywoodvideo.com
BroadLogic Network Technologies Inc., a San Jose, Calif.-based supplier of semiconductor chipsets to the broadband industry, has raised $20 million in Series C funding. Time Warner Investments and Rho Ventures co-led the deal, and were joined by return backers August Capital, CDIB Venture Management, Levensohn Venture Partners, Presidio Venture Partners and Walden International. www.broadlogic.com
Adelphia Communications Corp. might be sold in one enormous chunk, instead of piecemeal, according to The New York Times. The mega-LBO could fetch upwards of $18 billion, and KKR, Providence Equity Partners and Thomas H. Lee Partners reportedly are among the firms that have begun informal talks about participating. www.adelphia.com
HydroPoint Data Systems Inc., a Petaluma, Calif.-based provider of irrigation management solutions, has raised $11.9 million in first-round funding. Investors included The Toro Co., Monitor Venture Partners, Firelake Strategic Technology Fund, Scneic Ventures and Shea Ventures. www.hydropoint.com
XOS Technologies Inc., a Sanford, Fla.-based , has raised $5.5 million in second-round funding. Beechtree Capital led the deal, and was joined by Dorchester Capital, principals of Sanders, Morris and Harris, Ledgewood Properties Inc., LBJ Holdings, Sherwood Family LLC; Carolyn Wall (former publisher of Newsweek and New York magazines and vice president/general manager of the NYC Fox Network television stations) and Frank Vuono (co-founder/partner of 16W Marketing and former president of marketing of SFX Sports Group). In addition, the McCotter Family Trust converted approximately $2 million in outstanding indebtedness into common shares. www.xostech.com
Reata Discovery Inc., a Dallas, Texas-based drug company targeting cancer and neurodegenerative disease, has raised $12 million in Series C funding. Investors included Cardinal Investment Co., Ojai Goliad, StarTech Ventures, RedBird Life Sciences Inc. and the University of Texas. www.reatadiscovery.com
Select Medical Corp. (NYSE: SEM), a Mechanicsburg, Pa.-based operator of long-term acute hospitals, agreed last month to be acquired for approximately $2.3 billion by an investment group led by buyout firm Welsh, Carson, Anderson & Stowe, and also including current shareholder Thoma Cressey Equity Partners. Now, however, a group of existing shareholders have filed a class-action lawsuit in Delaware to prevent the public-to-private deal from being consummated, arguing that the $18 per share price is not adequate. www.selectmedicalcorp.com
Forbo International SA, a publicly-traded Swiss flooring company, rejected a CHF 450 million (approx. $380 million) buyout offer from CVC Capital Partners. News of the offer, however, sent Forbo stock up over 30% per share, and Forbo said that it would hire CSFB to prepare a value analysis of the company, after which it could perhaps reconsider the bid.
Key Principal Partners has acquired Honsador Lumber Corp., a wholesaler of building products in Hawaii. The deal also includes Honsador affiliates Honolulu Wood Treating and Ariel Truss. RDV Corp. and the Hawaiian Land Development Corp. both joined Key Principal Partners as equity partners in the resulting holding company, while First Hawaiian Bank provided senior debt financing. No pricing information was disclosed. www.honsador.com
Koor Industries Ltd. has acquired a 32.5% ownership stake in Tadiran Communications Ltd. for approximately $141 million. Selling shareholders were Trefoil Israel Partners II LP (part of Shamrock Holdings) and the FIMI Israel Mezzanine Fund. Tadiran is a Holon, Israel-based provider of military communications solutions. www.tadcomm.com
Dimensional Music Publishing LLC, a private equity investment unit of JDS Capital Management, has acquired the assets of DreamWorks Music Publishing from Universal Music. The acquired catalog includes works by such artists as The Byrds, Stevie Ray Vaughn, John Denver, Ricki Lee Jones, Jimmy Eat World and Papa Roach. Music created for DreamWorks motion pictures and television programs was not included in the sale. No financial terms were disclosed, although The New York Post reports a $50 million price tag.
Bencis Capital Partners, a Dutch private equity firm, has closed its second buyout fund with Euro 250 million in limited partner commitments. www.bencis.nl
Mark Stevens, a general partner with Sequoia Capital, and his wife Mary have donated $22 million to the University of Southern California’s Viterbi School of Engineering. The gift is designed to create an institute both to commercialize faculty technology innovations and to teach students about the commercialization process. Stevens is a USC trustee and alumnus. www.usc.edu
Mark J. Harty has joined LCS & Partners in Taipei, where hisresponsibilities will include private equity and private financing.He previously was Asian Counsel with Shearman & Sterling LLP.www.lcs.com.tw/english/index.asp
Rainer Magold and Christina Ungeheuer, current partners in the Frankfurt office of Baker & McKenzie, have agreed to join the Munich office of Milbank, Tweed, Hadley & McCoy LLP as partners. www.milbankeurope.com
Lots of interesting news, rumor and innuendo floating around the cavernous cubicle this morning, so let’s get to them in that order.
News: Accel Partners has closed its ninth fund with $400.35 million in limited partner commitments. No press release or official Accel comment yet (London partners have been in a meeting all morning, and it’s still too early to grab anyone in Palo Alto), but the firm did recently file relevant papers with the Securities and Exchange Commission. Nothing too shocking here, as conventional wisdom was that Accel would have no problem hitting its $400 million target. I’m also hearing that Accel was able to maintain its proposed 30% carry, with LPs apparently believing the premium to be an acceptable alignment of interests, if not of profits. It’s worth noting, however, that this fund could include one significant change at Accel, but I’m less sure of that today than I was yesterday. We’ll just keep such things between us until I know for sure.
Rumor: A few days ago, a reporter called to ask my opinion of how Bush’s re-election would impact the VC industry. I gave the standard answers about how Bush and Kerry had differed on tax policy, medical research policy and other such chestnuts, and then added a quick mention about the Small Business Administration and its Small Business Investment Company (SBIC) program. I knew Kerry was in favor of maintaining the SBIC program with some alternations, whereas Bush was not nearly as enthusiastic. Nonetheless, I said, Bush had signed a stop-gap measure to deal with the program’s budget shortfall (caused, in part, by lingering effects of the Internet bubble collapse), so that it seemed like he would try to find a way to make it work to at least some extent.
Oops. According to The Deal, Bush is hoping to kill off the program in its entirety. No idea if this is why SBIC administrator Jeff Pierson just quit, but it certainly is disturbing news to small VC firms and startups alike. Bush’s main objection seems to be one of the federal government having no legitimate role as a provider of capital to private enterprise, although things like farm subsidies and airline industry bailouts due lead one to wonder about his consistency on such matters. Anyway, an SBA spokesman told The Deal that the program is here to stay – in some form – and Senator Olympia Snowe (R-ME) won’t let it die without a fight. Worth keeping an eye on, as it could prove to be the single most important policy decision Bush makes in regards to the VC and entrepreneurial classes.
Innuendo: I’ve written a lot about how veteran VC and LBO firms are having little trouble raising new funds (see Accel above). But it seems that, in some cases, lousy returns can come back to bite you. Hey Boston VCs: Do you know which one of your peers I’m talking about? You might have seen them on Storrrow Drive with signs that read: “Will work for LP commitments.”
Finally, a few additions and clarifications to yesterday’s internship list: The job listed as WireJob30@yahoo.com should have been listed as “private equity.” It is based in LA. Also, two additional opportunities:
Job: Private equity (invests direct and in funds)
Location: Washington DC
Job: Middle Market Senior/Junior Capital Provider
Location: New York
Nalco Holding Co., a Naperville, Ill.-based wastewater treatment and process-chemicals company, will begin trading on the NYSE under ticker symbol NLC. It priced over 44.44 million common shares at $15 per share (below its $17-$19 range), for a total IPO take of approximately $666.67 million. The company was formed last year, after Suez SA sold the company – then known as Ondeo Nalco – in a $4.3 billion leveraged buyout to The Blackstone Group, Apollo Management and GS Capital Partners. The three firms maintain a combined majority interest following the IPO. www.nalco.com
Amgen Inc. (Nasdaq: AMGN) has formed a $100 million corporate venture capital fund named Amgen Ventures. The new effort will be based in San Diego, and will invest in early-stage biotech companies focused on human therapeutics. www.amgen.com
PowerGenix Corp., a San Diego-based provider of rechargeable nickel-zinc batteries, has raised $10 million in Series B funding. OnPoint Technologies, a U.S. Army-supported VC firm, led the deal, and was joined by fellow new investor Braemar Energy Ventures. Existing backers Advent International, Granite Ventures and Technology Partners also participated. www.powergenix.com
Polatis Ltd., a UK-based developer of ultra-low loss optical switches, has raised $9.4 million in third-round funding. Return backers included 3i Group, Alta Berkeley Venture Partners, EonTech Ventures and Prelude Trust PLC. The company now has raised approximately $20 million in total VC funding since its 2000 inception. www.polatis.com
BoardVantage Inc., a Menlo Park, Calif.-based provider of corporate governance software, has raised $5.5 million in venture capital funding. Bay Partners led the deal, and was joined by return backers Foundation Capital. www.boardvantage.com
Paciolan, an Irvine, Calif.-based provider of automated ticketing software, has raised an undisclosed amount of strategic funding from Comcast-Spectacor. The transaction also includes an agreement whereby Paciolan will provide the technology platform for Comcast-Spectacor’s ticket management business. www.paciolan.com
The Blackstone Group has agreed to acquire Gerresheimer Glas AG, a Germany-based packaging company owned by Investcorp and JPMorgan Partners. No financial terms were disclosed. The selling parties acquired Gerresheimer Glas in 2000 from Viag AG. www.gerresheimer.com
Fenway Partners said that portfolio company AAC Group Holding Corp., the parent company of class ring and yearbook provider American Achievement Corp., has completed a recapitalization. The transaction includes $89.2 million in gross proceeds from 10.25% senior discount notes due 2012, with Fenway and its fellow investors retaining full company ownership. www.cbi-rings.com
Patriarch Partners has completed its acquisition of Galey & Lord Inc., an Atlanta-based supplier of denim, khaki and corduroy fabrics for the fashion apparel and uniform markets. Following the deal, all Galey & Lord operations have emerged from Chapter 11 bankruptcy protection. No financial terms were disclosed.
The European Union Commission has okayed CVC Capital Partners‘ pending sale of Spanish vehicle inspection outfit Corporativa de Servicios Grupo Itevelesa to Apax Partners and Banco Santander Central Hispano.
Warburg Pincus and Providence Equity Partners are in advanced talks to buy Telcordia Technologies Inc. for approximately $1.3 billion, according to The Wall Street Journal. Telcordia is a Piscataway, N.J.-based telecom software company originally formed by AT&T, and sold for $700 million to Science Applications International Corp. (SAIC) in 1999. www.telcordia.com
LLR Partners, a Philadelphia-based private equity firm, is planning to close its second fund with $300 million in the first quarter of 2005. So far, it has closed on approximately $250 million. www.llrpartners.com
Voyager Capital, a Seattle-based venture capital firm, has joined the Open Source Development Labs, an Oregon-based non-profit consortium dedicated to accelerating the adoption of Linux. The group has more than 60 members, but Voyager is its first venture capital firm. www.osdl.org
Hans Kempers, former president of Ahold Real Estate, has joined the board of publicly-traded venture capital firm Hansen Gray & Co. www.hansongray.com
Time to Make A Match
We have over 30 firms that asked to participate in our summer intern matching program. Some are looking for one intern, some are looking for multiple interns. Some of the positions are paid, some are not. Each of the positions is only open to current MBA candidates looking for summer employment. Apologies to everyone else, including recent MBA grads. For those who qualify:
1. Scan the list of available internship opportunities below. If one interests you, please send a resume and cover letter to the appropriate email address. The poster is not required to respond or acknowledge receipt. If interested, they will contact you.
2. In order to help prospective employers wade through the hundreds of applicants, please include the following in the email subject header: “Full Name – Name of Person With Whom You’d Most Like to Have Dinner.” The person can be living or dead, and feel free to explain yourself in the cover letter.
3. Do not copy me on your emails. My inbox is full enough. Also, it is possible that these Yahoo accounts will fill up quickly. If your email bounces back, just wait a few hours, and hopefully the firm will clear out space.
Job: M&A, private capital raising
Location: San Francisco
Job: Private equity investing in the Caribbean
Job: PIPE, soon to launch LBO and ABL funds
Location: New York
Job: Merchant banking
Job: Late-stage investing in business services space
Location: New York
Job: VC (some buyout)
Location: Washington DC
Job: Software-focused private equity/M&A
Location: San Francisco
Location: Ft. Lauderdale, FL
Job: Corporate VC, focus on semiconductors
Location: San Jose, CA
Location: Los Angeles
Location: White Plains, NY
Job: Mid-market M&A
Location: Houston, TX
Job: Mid-market LBO
Location: Greenwich, CT
Job: Early-stage VC
Location: Raleigh, NC
Location: Hong Kong & Amsterdam
Job: Mid-market buyout
Location: Seoul, South Korea
Job: Lower middle-markets private equity
Location: Conshohocken, PA
Job: Small-market buyout
Location: Portland, OR
Job: Non-control private equity
Location: New York
Job: Special situations
Location: New York
Location: Columbus, Ohio
Job: IT-focused VC
Job: Networking startup (non-investment)
Location: New York
Job: Mid-market buyout
Location: Boulder, CO
Job: Secondary acquisitions
Location: San Francisco
Job: Investment management
Location: Los Angeles
Verizon Communications Inc. (NYSE: VZ) has completed the sale of its Canadian directories business to Bain Capital for $1.54 billion. Known as SuperPages, the business comprises GTE’s former Dominion Directory Services and the Canadian directories purchased from TELUS in 2001. It is the second-largest directories publisher in Canada. www.superpages.com
NGP Capital Resources Co., a business development company (BDC) formed by private equity firm Natural Gas Partners, will begin trading on the NYSE under ticker symbol NGC. The company priced 16 million common shares at $15 per share, for a total IPO take of approximately $240 million. NGP had filed to price 17 million shares at $15 per share. It is the fourth BDC from a private equity firm to price this year, following earlier offerings from Apollo Management, Ares Management and Prospect Street Capital. Other proposed offerings from firms like KKR, Blackstone Group and Thomas H. Lee Partners have either been canceled, or have not yet materialized. www.naturalgaspartners.com
TradeBeam Holdings Inc., a San Mateo, Calif.-based provider of global trade management solutions, has raised $18.25 million in new VC. The Carlyle Group led the deal, and was joined by return backers Sigma Partners, Enterprise Partners Venture Capital, Sprout Group and Silicon Valley Bancventures. The company now has raised approximately $45 million in total VC funding since its 2000 inception. www.tradebeam.com
PocketThis Inc., an Oakland-based provider of mobile data services software, has raised $12 million in Series C funding. New investors American River Ventures and Crosslink Capital were joined on the deal by return backers Mobius Venture Capital, SeaPoint and Innovacom. The company now has raised approximately $32 million in total VC funding since its 1999 inception. www.pocketthis.com
Extricom Ltd., a Herzlia, Israel-based WLAN company, has held a $5.6 million first close on its second round of VC funding. Vertex Venture Capital led the deal, and was joined by seed backer Magnum Communications Fund. Extricom plans to close out the round with a total of $8 million within the next two months, and already has signed commitments for the remaining $2.4 million. www.extricom.com
ViOptix Inc., a Fremont, Calif.-based developer of non-invasive local tissue oxygen measurement devices, has raised $9.2 million in Series C funding. MDS Capital led the deal, and was joined by return backers Morningside Group, Vivo Ventures (f.k.a. BioAsia) and Trident Investments. www.vioptix.com
Sigaba Corp., a San Mateo, Calif.-based provider of secure messaging solutions, has received an $8 million private equity investment from Symantec Corp. and Liberty Partners. www.sigaba.com
Senior Health Holdings, a Birmingham, Ala.-based holding company for a Boston-based subsidiary that provides senior healthcare benefits and support services, has raised $7.5 million in venture capital funding. Investors included Noro-Moseley Partners, Council Ventures, SSM Ventures and New Capital Partners.
Onset Technology Inc., a Santa Cruz, Calif.-based provider of enterprise access software for wireless handheld devices, has raised $2 million in new Series C funding from Jerusalem Global Ventures. The Series C round now totals $3.75 million, following an earlier investment from Catalyst Fund, Polar Communications and the Challenge Fund. www.onsettechnology.com
Bridgepoint Capital has agreed to sell UK-based insurance broker to Willis Group Holdings Ltd. (NYSE: WSH) for an undisclosed amount. Opus was originally acquired by Bridgepoint in September 1998, and has annual general insurance and group benefit revenue of approximately $24 million. www.opuscompany.com
Spiegel Inc. (OTC BB: SPIEGEL) has taken its bankrupt Eddie Bauer unit off the auction block, according to The Deal. The unit reportedly had received bids from Bain Capital, Apollo Management, KKR, CSFB Private Equity and Cerberus Capital Management. The problem, it seems, is that the bids were in the range of 4600 million to $700 million, while Spiegel was looking for upwards of $1 billion. www.spiegel.com
China Netcom Corp., a Beijing-based fixed-line telecom provider in China and data communications operator throughout Asia, yesterday priced a $1.13 billion IPO. It will begin trading next Tuesday on the NYSE under ticker symbol CN, and on Wednesday in Hong Kong under ticker code 0906. In February 2001, Goldman Sachs and News Corp. (NYSE: NWSA) invested $325 million into China Netcom for a 12% ownership position. www.cnc.net.cn
ZipRealty Inc., an Emeryville, Calif.-based provider of residential services over the Internet, will begin trading on the Nasdaq under ticker symbol ZIPR. The company priced 4.55 million common shares at $13 per share (above its $10-$12 offering range), for a total IPO take of approximately $59.15 million. The company has raised over $57 million in VC funding, from significant shareholders like Benchmark Capital, Pyramid Technology Ventures, Vanguard Ventures, Venture Strategy Partners, Iverson Financial Corp. and Barrington Partners. www.ziprealty.com
Inion Ltd., a Finnish developer of polymer-based surgical implants, plans to raise approximately GBP 30 million by floating on the London Stock Exchange. The company has received VC backing from CapMan Capital Management Oy, Odlander, Fredrikson & Co., POD Holding and Bio Fund Management Oy. www.inion.fi
W.P. Carey & Co. LLC, a New York investment firm focused on long-term corporate financing, has opened an office in Dallas, Texas. Anne Coolidge Taylor, a managing director with W.P. Carey, will head up the new office. www.wpcarey.com
Kirkland & Ellis International LLP plans to open an office in Munich, Germany, which will focus on private equity and M&A work. The law firm’s German practice will continue to be run by Thomas Verhoeven, who will move from London to Munich early next year. The new office will be co-managed by Volker Kullmann, who previously served as a partner with Clifford Chance. www.kirkland.com
Bain Capital Ventures announced that it has hired Benjamin Nye as a venture partner, and Michael Fleisher as an executive-in-residence. Nye most recently served as a senior vice president with Veritas Software Corp. (Nasdaq: VRTS), while Fleisher served as chairman and CEO of Gartner Inc. Both men will work on Bain Capital Ventures’ $250 million fund, which formally was announced this morning. www.baincapitalventures.com
The Carlyle Group has added four members to its European leveraged finance team: Colin Atkins joins as a director, after having served as a director of the leveraged finance business at Prudential M&G; Nilesh Desai joins as an associate director, after having served as a vice president responsible for monitoring credits for Citigroup’s European leveraged finance portfolio; Caroline Goldsmith came aboard in September as an associate director, after having served in a similar role at Prudential M&G; and Stuart Mackenzie has joined as a senior associate, after having worked with Alcentra. www.carlyle.com
Armond Hairapetian has joined Miramar Venture Partners as an entrepreneur-in-residence. He most recently served as general manager of the optical products division of Broadcom Corp. (Nasdaq: BRCM). www.miramarvp.com
Reasons? We Don’t Need No Stinking Reasons!
One pitfall of writing a daily column is the inevitable beating of dead horses. Today, however, the deceased really do deserve a few more whacks.
So again we tackle the issue of private equity disclosu