PE Week Wire: Mon., July 23, 2007

Just a few very short notes this morning, as I’ve got to catch a flight for the West Coast:

*** Venture capitalists may not be seeing many carry checks, but that hasn’t stopped them from making capital calls. VC deals hit a six-year high last quarter, according to new data from Ernst & Young and Dow Jones VentureOne. Overall, VCs disbursed $7.4 billion into 717 deals. Get all the detailed data here.

*** It’s official: Amp’d Mobile is the most expensive venture capital mistake, post-bubble. More than $360 million down the drain, with little to show for it but lawsuits, animosity and fancy handsets that will soon use some other service provider. Amp’d also plans to sell off its assets via auction, and said that it “currently is in discussions with several parties.” You were right, I was wrong.

*** Goldman Sachs has just two weeks left atop the buyout throne, after which its $20 billion fund will be eclipsed by a $22 billion entry from The Blackstone Group. But Goldman isn’t sulking. Instead, it plans to form the largest-ever mezzanine fund.

Buyouts Magazine reports on its website that GS Mezzanine Partners is targeting $7 billion in equity commitments for its fifth fund, which would then be buttressed by another $5.5 billion in leverage. That alone would break records, but Goldman is apparently thinking bigger. The firm believes that it may be able to secure the entire $12.5 billion in equity, and would then add leverage on top – for a total of $18 billion.

For context, the current Goldman mezzanine fund was capped at just over $3.6 billion in equity, while Blackstone’s latest vehicle has just over $1.5 billion. Even the publicly-traded Apollo fund (Nasdaq: AINV) is well below the new Goldman target, with a market cap of just $2.3 billion.

Like with its buyout fund, a goodly portion of Goldman’s commitments will come from itself and its employees. But even if you strip those out, Goldman should end 2007 with more third-party mezzanine commitments than any other fund in history.

*** I’ll be in Redwood City from tomorrow through Friday, but still producing PE Week Wire. Gotta love those 3:30am wakeup calls… Also, I am hosting a small (or possibly not) shindig on Thursday night in Menlo Park, for PE Week Wire readers. Check for info.

Top Three

Cerberus has agreed to acquire United Rentals Inc. (NYSE: URI) for around $6.6 billion, including $2.6 billion in assumed debt. The $34.50 per share purchase price represents a 7% premium over Friday’s closing price, and a 25% premium to its closing price on the day in April when it said it would explore strategic options. United Rentals can continue to seek third-party offers through August 31. Holders of the company’s preferred stock – which includes Apollo Management with an 18% stake – have voted in favor of the Cerberus deal. Bank of America, Credit Suisse, Morgan Stanley and Lehman Brothers have committed to provide debt financing.

Meda AB, a listed Swedish drug company, has agreed to acquire Somerset, N.J.-based specialty drug company MedPointe Inc. The deal includes $520 million in cash and 17.5 million Meda shares. The stock is currently valued at around $300 million, and represents around 6% of Meda. MedPointe shareholders include The Carlyle Group, Cypress Group, Frazier Healthcare Ventures, Ferrer Freeman & Co. and company management.

Reval, a New York-based provider of financial risk management software and services, has raised $28 million in Series A recap funding. Commonwealth Capital Ventures and North Bridge Venture Partners co-led the round – part of which will be used to buy out existing shareholders. Reval had raised around $7.5 million between 2000 and 2001, from firms like Lehman Brothers, NYCIC, Nomura and Tobat Capital.

VC Deals

Horizon Therapeutics Inc., a Palo Alto, Calif.-based developer of “GI friendly” prescription non-steroidal anti-inflammatory drugs, has raised $30 million in Series C funding. Essex Woodlands Health Ventures led the deal, and was joined by return backers Scale Venture Partners, Sutter Hill Ventures and Pequot Ventures. Horizon has now raised $51 million in total VC funding since 2005.

KaloBios Pharmaceuticals Inc., a Palo Alto, Calif.-based drug development company, has raised $20 million in Series C funding. Lehman Brothers led the round, and was joined by return backers MPM Capital, Sofinnova Ventures, Alloy Ventures, 5AM Ventures, Singapore Bioinnovations Pte. and Lotus BioScience Ventures. Proceeds will be used to advanced clinical development of KaloBios’ two therapeutic antibody candidates: KB001 for rheumatoid arthritis, and KB002 for the treatment of Pseudomonas aeruginosa infections.

Strangeloop Networks Inc., a Vancouver-based maker of a network appliance for accelerating Web applications based on Microsoft’s framework, has raised Cnd$11.5 million in Series A funding. No investor information was disclosed.

MediaBank, a Chicago-based provider of procurement, operations technology and analytics to the advertising industry, has raised $10.5 million in VC funding from New Enterprise Associates. It is the company’s first institutional infusion.

GuardianEdge, a San Francisco-based provider of endpoint data protection for the enterprise, has raised $10 million in Series B funding. Cargill Ventures led the deal, and was joined by Thomvest Ventures, Inc., Altos Ventures and Cardinal Venture Capital. The company also secured $3.5 million in venture debt.

ConteXtream Inc., an Israel-based provider of grid-edge routing by using clustered “off-the-shelf” hardware, has raised $9.6 million in Series A funding. Backers include Norwest Venture Partners, Soffinova Venture, Gemini Israel Funds and Benhamou Global Ventures.

Mtivity Ltd., a UK-based developer of marketing management software, has raised $7.08 million in third-round funding. Hotbed led the deal, and was joined by return backers Albany Ventures and YFM Group.

Awareness Inc. (f.k.a. iUpload), a Waltham, Mass.-based provider of social media platform for enterprises, has raised $7 million in Series A funding from Greylock Partners and North Bridge Venture Partners.

Vela Systems, a Somerville, Mass.-based maker of software that streamlines field administration for the AEC (architecture, engineering & construction) industry, has raised $6 million in Series A funding. Commonwealth Capital Ventures and GrandBanks Capital co-led the deal, and were joined by seed backers CommonAngels, Launchpad Venture Group and individual angels.

Nuon Therapeutics Inc., a San Francisco-based developer of drugs for chronic inflammatory diseases like multiple sclerosis and rheumatoid arthritis, has raised $5 million in Series A funding from GBS Venture Partners of Australia. The company also named a new CEO: Rodney Pearlman, president and CEO of Saegis Pharmaceuticals until its acquisition this past January by Denmark’s H. Lundbeck.

Ztar Mobile Inc., a Dallas, Texas-based mobile virtual network enabler, has raised $4 million in Series A funding, according to a regulatory filing. Novak Biddle Venture Partners led the round. Earlier this year, Ztar and MGA Entertainment teamed up to market the first Bratz™ Mobile phone at Wal-Mart.

NeuroDerm Ltd., an Ofakim, Israel-based developer of transdermal therapies for CNS diseases, has raised $2.5 million in Series A funding. Angel backers included Robert Taub, founder and CEO of Omrix Biopharmaceuticals. Prior seed backers included Ofakim High Tech Ventures.

Grockit Inc., a San Francisco-based online test prep school, has secured $2.3 million of a $2.7 million Series A round, according to a regulatory filing. Benchmark Capital led the deal, with Mitch Lasky taking a board seat. Grockit founder Farbood Nivi has been teaching exam prep for Kaplan since 1998, and was even named Teacher of the Year by The Princeton Review in 2002. Grockit will provide a cheaper alternative for test takers, who will be taught via WebEx.

ConnectivHealth, a Nashville, Tenn.-based provider of healthcare information, has raised $2.1 million. Backers include Chrysalis Ventures, Petra Capital Partners and ConnectivHealth president and CEO Scott McQuigg and other members of company management.

OpTier Inc., a New York-based provider of business transaction management technology, has raised an undisclosed amount of strategic funding from Cisco Systems. The deal comes after OpTier recently raised $15 million in third-round funding from Gemini Israel Funds, Pitango Venture Capital, Carmel Ventures and Lightspeed Venture Partners. OpTier has raised over $40 million in total VC funding since 2003.

Buyout Deals

American Standard Companies Inc. (NYSE: ASD) has agreed to sell its global Bath and Kitchen products business to Bain Capital for $1.755 billion. Bank of American and Credit Suisse have committed debt financing. Lazard is advising ASD on the sale, while Bain is being advised by Lehman Brothers.

Vista Equity Partners has agreed to acquire the Diagnostic Systems business of Misys Healthcare Systems, a unit of Misys PLC. No financial terms were disclosed. The sale includes all business assets, technology and products associated with the current hospital systems diagnostic portfolio, including the Misys Laboratory, Commercial Laboratory and Clinical Financial products — as well as stand-alone systems for radiology and pharmacy departments. The deal is expected to close by October.

HCA has sold its two Geneva, Switzerland hospitals – Clinique de Carouge and Hospital de la Tour – to Colony Capital. No financial terms were disclosed. HCA is owned by KKR, Bain Capital and Merrill Lynch Capital Partners.

H.I.G. Capital has acquired a majority equity interest in Lucas Group, an Atlanta-based leading executive recruitment firm. No financial terms were disclosed for the deal, which was done in partnership with the Lucas Group’s founder and management. Lucas Group has a diversified client base, and also specializes in placing ex-military personnel.

Leerink Swann & Co., a Boston-based I-bank focused on the healthcare market, has agreed to receive a $35 million minority investment from Lovell Minnick Partners and the March Group.

STS Logistics, a Russian provider of freight forwarding, warehousing, and customs services, has received a $21.1 million minority investment from Great Circle Capital.

Cozymel’s Mexican Grill is being shopped by Houlihan Lokey, according to LBO Wire. The 11-unit restaurant chain is currently owned by restaurant industry veteran Jack Baum and former Perot Systems CEO Morton Meyerson.

U.S. Energy Systems Inc. (Nasdaq: USEY) has retained Jefferies & Co. to explore strategic alternatives. The clean energy company is currently trading at $1.24 per share, which gives it a market cap of around $40 million.

PE-Backed IPOs

SuccessFactors Inc., a San Mateo, Calif.-based provider of on-demand performance and talent management software, has filed for a $125 million IPO. It plans to trade on either the Nasdaq or NYSE Arca, with Morgan Stanley and Goldman Sachs serving as co-lead underwriters. Shareholders include Greylock Partners (32.3% pre-IPO stake), TPG Ventures (20.1%), Cardinal Ventures (9.2%), Canaan Partners (7.6%), Emergence Capital Partners (6.7%) and Granite Global Ventures (5.3%).

PE Exits

BMC Software (NYSE: BMC) has acquired RealOps, a Herndon, Va.-based provider of run book automation solutions. No financial terms were disclosed. RealOps had raised $16.5 million in VC funding since 2005, from firms like Palomar Ventures and Valhalla Partners. It was advised on the sale by Redwood Capital Group.

Emerging Capital Partners has sold its stake in African rubber producer Societe Internationale de Plantations d’Heveas (NYSE Euronext: SIPH), for $49.8 million. ECP’s exit was made via block sales on the NYSE Euronext Paris exchange and the sale of call options.

TSG Consumer Partners has sold its stake in Harry’s Fresh Foods to Basic American Foods for an undisclosed amount. Harry’s is a Portland, Ore.-based provider of fresh and prepared foods. TSG acquired its interest in June 2003.

PE-Backed M&A

R.J. O’Brien & Associates LLC has agreed to merge with fellow futures brokerage Iowa Grain Company. Both companies are members of the Chicago Mercantile Exchange and Chicago Board of Trade. No financial terms were disclosed for the deal, which is expected to close by August 31. R.J. O’Brien is owned by Spectrum Equity Investors and Technology Crossover Ventures.

Human Resources

Sequoia Capital has made three new hires, according to PE Week. They are: Jason Werlin, a former TA Associates pro and recent Stanford Biz School grad, who will join the growth-stage team; Abhay Pandey, former head of real estate and infrastructure investment banking at DSP Merrill Lynch, who will focus on India; and Yuval Basharav, former general manager of corporate development for Amdocs, who will focus on Israel.

Howard Steyn has agreed to join Catterton Partners as a principal, effective in early September. He previously was a principal with Bain Capital Ventures.

Peter Nachtwey has agreed to become chief financial officer of The Carlyle Group, as first reported by The Financial Times. He replaces John Harris, who had served as Carlyle CFO for the past decade. Harris has become a senior advisor.

Energy Investors Funds has hired Warren MacGillivray as a Boston-based senior vice president in the asset management group, and Jason Kahan as a New York-based associate. MacGillivray previously was a senior vice president with GE Energy Financial Services, while Kahan was with Citigroup as an analyst in the firm’s I-banking power group.

Jason Baker has joined healthcare IT advisory firm Healthcare Growth Partners as a managing director. He previously was head of business development for Cerner