PE Week Wire: Mon., April 23, 2007

I did not attend the Buyouts Awards ceremony over the past few years. Not because it was a lunch instead of a dinner (I eat both), but rather because I already knew who won. This year, however, I was kept completely in the dark. Perhaps as punishment for not spending countless hours helping to select the winners. Perhaps it was so that I would attend. Perhaps it’s because I sometimes give away 24 spoilers on Tuesday mornings…

Complete aside: Does anyone care about saving Audrey Raines? Can’t Jack find something – anything else – to do for the next 12 hours? Maybe the cougars are after Kim again…

Anyway, back to the Buyouts Awards. I went, and watched The Carlyle Group take home Firm of the Year, Large Market Deal of the Year (shared w/ Bain & TH Lee) and Emerging Markets Deal of the Year. In each case, Carlyle received a spiffy glass cube with some frosted writing on it. No idea if the cubes said “2006” or “2007” – the former being when Carlyle did the work it was being honored for, and the latter being when it actually was honored. Kind of like wondering if the Cots are 2006 or 2007 Super Bowl champs.

If I were a betting man (which I actually am, so that was rhetorical), I’d wager on Hellman & Friedman winning the 2007 or 2008 award – whichever is technically given out next spring. New fund, DoubleClick sale, Catalina, etc. But, until then, a few quick notes about both Carlyle and some of its former partners:

*** John Harris has decided to step down as Carlyle Group’s chief financial officer, after about ten years on the job. All indications are that the move is amicable (legitimately so, not PR speak for “we hate each other’s guts”), with Harris expected to become a senior advisor to the firm.

A Carlyle spokesman confirmed the move, and said: “John is moving on for family and personal reasons that are all positive, and which will enable him to fulfill personal goals. A search for a new CFO has begun.”

*** There was a trade press report last week that Relativity Fund had held a $100 million first close for its inaugural fund, but sources tell me that the report was premature. The firm has soft circles in excess of that amount, but a formal first close won’t come for another couple of months (probably on $150m). A final close on its $300 million target is expected for year-end or early 2008.

What’s the Carlyle connection? Relativity was founded last year by former Carlyle partner Leslie Armitage, along with Joyce Johnson-Miller, former Cerberus managing director and JME Opportunity Partners founder.

*** Last, but certainly not least, is some word on Ewing Management Group, the Dallas-based turnaround firm that spun out of Carlyle a few years back. EMG raised $1 billion for its inaugural fund in late 2004, with CEO Ed Ewing serving as the largest single investor (management put up around $200m total). Then it got a bit strange.

Dow Jones reported last month that EMG had not done any deals out of that fund, and that it was planning to close its New York satellite office (it also has an office in Shanghai). The piece suggested that the roadblock was Ewing himself, who refused to do deals with single-through-triple potential – he only wanted certifiable homeruns. Ewing did not comment for the piece, although his Dallas colleague Tom Keane did and seemed to acknowledge the premise.

All of this brings us to last Friday, when I heard rumors that EMG also was planning to shutter its Dallas office. This time Ewing wanted to talk – in large part because he felt wronged by Dow Jones. This isn’t to say that he turned to me as a sympathetic ear. No – he wanted to express his sentiment that it’s none of my damn business what he – as a private investor – does. Or, as he put it: “I hope to someday have enough free time to care about when private investors open offices, close offices or lay people off. It would be a much more relaxing way to make a living.”

Let’s ignore the bluster, and instead discuss the specifics. Ewing emphatically states that he is not closing Dallas – “I own the building” – but did imply that layoffs have occurred. Why lay people off in Texas after closing New York? The reason seems to be that Ewing has become enamored of China, where EMG recently bought two separate companies. He declined to say if the China transactions came from the $1 billion fund, or a separate vehicle (which means the original Dow Jones story may, or may not, have been accurate).

Ewing explained that deals in China make more fiscal sense to him than do ones in North America. “I sincerely admire people who pay 12x cash flow and lever 5, 6, or 7 times,” he said. “I strongly hope they can make money that way, but I just don’t have those skills.”

He did not specifically cite Dow Jones’ doubles vs. homerun issue – but did acknowledge that he’s willing to go “nine years” before his next deal, if that’s what it takes. “I’m the largest single investor… Would you invest a certain amount of your own money because of the calendar, even if you didn’t think it was a great opportunity? Me neither.”

*** Still looking for additional firms to participate in our next Internship drive. If your firm is looking to hire a 1st year MBA candidate for this summer, please send me an email…

Top Three

Clear Channel Communications (NYSE: CCU) has agreed to sell its 56-station television group to Providence Equity Partners for approximately $1.2 billion. The deal is expected to close in Q4, pending regulatory approval. The sale is not contingent on shareholder approval of a proposed $19.5 billion buyout offer of Clear Channel by Bain Capital and Thomas H. Lee Partners.

Acclarent Inc., a Menlo Park, Calif.-based developer of surgical devices for treating ear, nose and throat ailments, has raised around $35 million in Series C funding, according to a regulatory filing. Meritech Capital Partners led the deal, and was joined by Delphi Ventures, New Enterprise Associates and Versant Ventures.

Flint Group, a portfolio company of CVC Capital Partners, has agreed to acquire Day International Inc., a Dayton, Ohio–based provider of printing blankets, sleeves, image transfer media and pressroom chemicals. Sellers include GSC Group, Cowen & Co. and Day management. No financial terms were disclosed.

VC Deals

Xactly Corp., a San Jose, Calif.-based provider of sales compensation and performance management software, has raised $15 million in Series C funding. Alloy Ventures led the deal, and was joined by return backers Bay Partners, Rembrandt Ventures, Outlook Ventures and Spinner Asset Management. The company has now raised around $27 million in total VC funding since its 2005 inception.

eMeter Inc., a Redwood City, Calif.-based provider of energy information management solutions for utility mass market and C&I deployment., has raised $11.79 million in Series D funding led by Foundation Capital, according to a regulatory filing.

AmberPoint, an Oakland-based provider of SOA runtime governance software, has raised $9 million in fifth-round funding. SAP Ventures was joined by return backers Crosslink Capital, Meritech Capital Partners, Motorola Ventures, Norwest Venture Partners and Sutter Hill Ventures. AmberPoint has raised around $50 million in total VC funding since its 2001 inception.

Nomis Solutions Inc., a San Bruno, Calif.-based provider of price optimization technology for banking and finance, has raised $8 million in Series C funding. Bain Capital Ventures led the deal, and was joined by SVB Capital, August Capital and Red Rock Ventures.

Xeround Systems Ltd., an Israel-based provider of database solutions for telecom providers, has raised $7 million in second-round funding from return backers Benchmark Capital and Giza Venture Capital. The news was first reported by Globes Online. Xeround raised $6.5 million in Series A funding two years ago.

CircuLite Inc., a Hackensack, N.J.-based developer of circulatory assist technology for the management of chronic heart failure, has raised $5 million in additional Series B funding, to close the round at $25 million. Credit Agricole Private Equity provided the final tranche, joining earlier backers Forbion Capital Partners, Foundation Medical Partners, Oxford Biosciences Partners and SB Life Science Ventures.

Lab One, an Israel-based technology incubator, has raised $3.5 million in venture funding. Midgal Capital Markets and Bear Stearns Asset Management co-led the round, and were joined by the Tel Aviv Economic Development Authority and Lab One co-founders Yuval Cohen and Adoram Gaash.

Buyout Deals

Fortress Investment Group has agreed to acquire Interpool Inc. (NYSE: IPX), a Princeton, N.J.-based suppliers of equipment and services to the transportation industry. The total deal is valued at approximately $2.4 billion (including assumed debt), with Interpool shareholders to receive $27.10 per share in cash. Interpool previously had received a $24 per share offer led by company chairman & CEO Martin Tuchman. Tuchman and other significant Interpool stockholders have agreed to vote their 40% ownership stake in favor of the Fortress agreement.

GS Capital Partners, Kelso & Co., ValueAct Capital and Parthenon Capital have completed their $27.85 per share buyout of Adesa Inc. (NYSE: KAR), a Carmel, Ind.–based provider of automotive salvage auction and claims processing services. The deal was valued at approximately $3.2 billion, including $700 million in assumed debt. In a related move, Adesa has acquired Insurance Auto Auctions Inc., an auto salvager and claims processing company owned by Kelso and Parthenon. The total transaction – including both IAAI and the assumed debt – is valued at approximately $3.7 billion.

Creo Capital Partners has agreed to acquire Chris’ & Pitt’s Food Products Inc., a Houston, Texas–based marketer and distributor of barbeque sauces and frozen entrees through retail, warehouse and food service channels. No financial terms were disclosed. John Labbett, CEO of two of Creo’s current food portfolio companies — First Street Food Group and National Harvest Group — will assume the rule of CEO of C&P.

Court Square Capital Partners has agreed to buy Newmarket International Inc. from Summit Partners, according to LBO Wire. No financial terms have been disclosed. Newmarket is a Portsmouth, N.H.-based provider of sales and catering software to the hospitality industry.

Crownbrook Capital has acquired American Conveyor Corp., a Ridgewood, N.Y.-based provider of conveyor equipment to the food and beverage industry, according to LBO Wire. No financial terms were disclosed.

Terra Firma has expressed interest in the 26 UK hospitals recently put on the block by Bupa, according to The Guardian. Other suitors reportedly include Blackstone Group, Cinven, TPG and Macquarie Bank. Citigroup is managing the process, which is expected to generate between Gbp1 billion and Gbp1.25 billion.

Thomson Learning, a unit of Thomson Corp. (NYSE: TOC), has six bidders, according to The Times of London. The deal could be worth upwards of $3.5 billion, with interested suitors including: Carlyle Group, KKR, Bertelsmann, Warburg Pincus, Apax Partners and a consortium of Blackstone/Bain/TH Lee. (Thomson Corp. is the parent company of peHUB publisher Thomson Financial).

PE-Backed IPOs

This week’s IPO calendar includes expected pricings from: Cinemark Holdings, OceanFrieght Inc., Ocean Power Technologies Inc., Pharmasset Inc., a CardioMEMS Inc. and Edenor.

PE-Backed M&A

International Automotive Components Group North America, a portfolio platform of W.L. Ross & Co., has agreed to acquire the North American automotive flooring and acoustics components business of Collins & Aikman. The purchase price is $134 million.

JGI, a Rochelle Park, N.J.-based enterprise software and business intelligence company, has acquired ValueMine Consulting, a New York-based boutique management consulting firm focused on profit improvement and management processes. No financial terms were disclosed. JGI has raised around $14 million in VC funding from firms like Edison Venture Fund and HarbourVest Partners.

PE Exits

Warburg Pincus plans to offer 10 million shares of TransDigm Group Inc. (NYSE: TDG), via a secondary public offering. If successful, the deal would reduce Warburg Pincus’ ownership position in TransDigm from 69% to around 48.6 percent.

Parallax Capital Partners has agreed to sell MultiGen Paradigm Inc. to CAE (NYSE: CGT) for US$16 million. MultiGen is a Richardson, Texas-based provider of real-time, commercial-off-the-shelf software for creating and visualizing simulation solutions.

Firms & Funds

European Venture Partners has closed its third venture debt fund with €200 million in capital commitments, and changed its firm name to Kreos Capital. Limited partners include Merrill Lynch, Deutsche Bank and the European Investment Fund.

Edison Venture Fund of Lawrenceville, N.J. has closed its sixth fund with $258 million in capital commitments. It already has seven portfolio companies: Corasworks, Fishbowl Marketing, Miria Systems, M5, NeatReceipts, Optinuity and Scivantage.

Quaker BioVentures of Philadelphia has held a $164.85 million first close for its second fund, according to a regulatory filing. Limited partners include the Pennsylvania State Employees’ Retirement System, University of North Carolina and the Pennsylvania Public School Employees’ Retirement System. The filing indicates a $300 million cap, but VentureWire last week reported that the firm might raise up to $400 million.

Aureos Capital is looking to raise $100 million for a new private equity fund focused on Central Asia, with a particular concentration on Kazakhstan and Azerbaijan.

Human Resources

Alfonso Cortina has joined TPG as the firm’s senior advisor in Spain. He is the former chairman and CEO of Repsol YPF SA. He also has served as chairman of Inmobiliaria Colonial and chairman and CEO of Portland Valderribas and Cementos

Nik Shah has joined HIG Ventures, after having been a senior associate with Landmark Partners.

Morgan Stanley has named Stephen Roach as Asia chairman, succeeding the retiring Alasdair Morrison. Roach has been with Morgan Stanley for 25 years, most recently as a managing director and chief economist. He will relocate to Hong Kong in September.