PE Week Wire: Mon., June 11, 2007

The Blackstone Group filed another amended S-1 this morning, which includes pricing info that could value the firm at more than $33.62 billion. But IPO terms are not what market voyeurs have been waiting for. No, we want executive compensation, and Blackstone has finally provided a peek.

Be forewarned that your bank account is about to look puny, even though most PE Week Wire readers are in the top 1 percent of annual earners.

Blackstone CEO Steve Schwarzman pulled down $398.3 million in 2006, which would place him only behind Steve Jobs on the Forbes list of highest-paid public company CEOs(once Blackstone is public). For funny-money context, Ken Lewis of Bank of America scored just under $100 million, while Jaime Dimon (JPMorgan), Lloyd Blankfein (Goldman Sachs) and Richard Fuld (Lehman) all made under $60 million.

But that’s not all. Schwarzman is expected to receive an additional $449 million via the IPO, or up to $677 million if Blackstone’s underwriters exercise their over-allotment. And he’d still own a 24% stake in the firm (valued at upwards of $8 billion).

And other top Blackstonians aren’t doing too badly either. Chairman Pete Peterson made $212.9 million last year, will receive around $1.9 billion from the IPO and will retain a 4% ownership stake. Other 2006 earnings included $97.3 million for president and COO Hamilton “Tony” James, $45.6 million for vice chairman J. Tomlinson Hilland $17.4 million for CFO Michael Puglisi.

It’s probably worth noting that these incredibly-high checks actually pale in comparison to top hedge fund managers, although they will obviously come closer if Blackstone’s post-IPO pop is anything close to what Fortress experienced…

*** When I was out in Colorado earlier this year for VC in the Rockies, I discussed a presentation by Me.dium, which has developed an Internet browser add-on that “reveals the hidden world of people and activity behind your browser.” The company today announced that it has raised $15 million in Series B funding, so let’s briefly revisit my original piece.

My concerns with Me.dium – albeit still in beta — were threefold. First, it had been initially developed in FireFox, and adapting it for IE was apparently proving quite challenging. Me.dium CEO Kimbal Musk told me on Friday that the beta will expand an IE version within the next week or two (i.e., problem solved).

Next up was the issue of anonymity – the current environment that web browsers are accustomed to (save for those who obsess over cookies, etc.). Me.dium can allow other users to watch you/follow you around the web. Musk said that privacy was one of his biggest concerns in launching Me.dium, but says he’s been “blown away” by how little the issue seems to bother users. For example, he says that one common response is that a large percentage of female beta testers (via BzzAgent) enjoyed going “shopping” together.

Finally, my last concern was that Me.dium could represent the point at which the browser gets too cluttered. Me.dium investors tell me not to worry, because Me.dium will be considered so valuable that users will simply drop other applications if they feel the need. And they may well be right. So let’s just call this issue outstanding, at least until formal launch later this summer.

*** Lots of interesting feedback from Friday’s column, on “Who is your customer?” Check out the conversation at peHUB – and feel encouraged to add your own thoughts…

Top Three

Hellman & Friedman has agreed to acquire UK software companies IRIS Software and Computer Software Group from HgCapital, for a combined enterprise value of £500 million. HgCapital will continue as an “active shareholder” in the combined business. IRIS provides software to the accounting industry, and had been pursued by both 3i Group and Bridgepoint Capital. CSG provides software to the legal market. HgCapital was advised on the sales by Linklaters.

WiQuest Communications Inc., an Allen, Texas-based wireless chipmaker, has raised $23 million in Series C funding. New backers include Adams Street Partners, D.E. Shaw and TriplePoint Capital. Returnees include Sequoia Capital, Menlo Ventures, Palomar Ventures and iD Ventures America. The company has raised $56 million in total VC funding.

EnerVest has closed its eleventh fund with $1.02 billion in capital commitments. The Houston, Texas-based firm acquires upstream oil and gas properties and companies in North America. It closed its previous fund at $550 million in early 2005.

VC Deals

7TM Pharma AS, a Danish drug company focused on metabolic disorders, has raised around $22 million in fourth-round funding. S.R. One Ltd. led the deal, and was joined by return backers Alta Partners, Baker/Tisch Investments, Dansk Innovationsinvestering, Index Ventures, Johnson & Johnson Development Corp., LD Pensions, Lombard Odier Darier Hentsch, Novo AS and Scottish Widows Investment Partnership.

Pixtronix Inc., a Wilmington, Mass.-based developer of portable display technology for mobile multimedia devices, has raised $20 million in Series B funding. DAG Ventures led the deal, and was joined by Gold Hill Capital and return backers Atlas Venture and Kleiner Perkins Caufield & Byers.

Me.dium Inc., a Boulder, Colo.-based developer of an interactive social browser application, has raised $15 million in Series B funding. Commonwealth Capital Ventures led the deal, and was joined by return backers Spark Capital, Appian Ventures and Brad Feld.

Daylight Solutions Inc., a Poway, Calif.-based developer of molecular detection and imaging instruments, has raised $6.5 million in Series A funding, according to a regulatory filing. Shareholders include Jade Invest (Switzerland), Magnecomp International (Singapore) and Masters Capital Nanotechnology (Chicago).

Eye-Fi, a Mountain View, Calif.-based maker of a wireless memory card that connects digital cameras to home Wi-Fi networks, has raised $5.5 million in Series A funding. Opus Capital and Shasta Ventures co-led the deal.

FastSoft Inc., a Monrovia, Calif.-based maker of products that accelerate the transfer of data over the Internet, has raised $4 million in Series A funding led by Miramar Venture Partners.

Buyout Deals

European Capital has acquired 33 Miles Ltd., a UK-based provider of software to the publishing and financial services sectors. European Capital paid a total of €83 million (including leveraged financing) for a 60% stake, while Miles 33’s previous owners and senior management will retain the other 40 percent.

Ford Motor Co. has reportedly retained Goldman Sachs, Morgan Stanley and HSBC to help sell its Jaguar and Land Rover brands. Initial press reports suggested that Alchemy Partners could be a buyer, buy Alchemy’s Jon Moulton denied interest in a morning interview with Dow Jones.

Kronos Inc. (Nasdaq: KRON) shareholders have approved a $55 per share buyout offer led by Hellman & Friedman. The total deal values Kronos at approximately $1.8 billion, and is expected to close today.

Och-Ziff reportedly has agreed to acquire UK tool hire business HSS from 3i Group for £300 million. 3i is sponsored a £145 million management buy-in of HSS in December 2003, with ABN Amro leading the leveraged financing.

Onex Corp. announced that it has joined a private equity consortium that is in talks to acquire Canadian telecom giant BCE Inc. Other members of the group include KKR, Canadian Pension Plan Investment Board and Caisse de depot et placement du Quebec.

Providence Equity Partners has agreed to acquire a 66% stake in San Mateo, Calif.-based comparison shopping engine NexTag Inc. for around $830 million, according to The Wall Street Journal. News of the pending sale was first reported by GigaOm. NexTag had raised around $31 million in VC funding from firms like Morgenthaler Ventures and Technology Crossover Ventures.

PE-Backed IPOs

ZARS Inc., a Salt Lake City-based developer of non-invasive drug delivery technologies, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol ZARS, with Cowan & Co. and CIBC World Markets serving as co-led underwriters. ZARS has raised around $29 million in total VC funding since 2000, from firms like Draper Fisher Jurvetson (23.1% pre-IPO stake), Wasatch Ventures (7.6%), vSpring (5.4%), ePlanet Ventures, CDIB BioScience Venture Management and Tenex.

Data Domain Inc., a Santa Clara, Calif.-based provider of storage appliances for disk-based backup and network-based disaster recovery, has set its proposed IPO terms to 7.39 million common shares being offered at between $11.50 and $13.50 per share. At the top of its range, Data Domain would be valued at nearly $700 million. It plans to trade on the Nasdaq under ticker symbol DDUP, with Goldman Sachs and Morgan Stanley serving as co-lead underwriters. Data Domain has raised around $41 million in VC funding since 2002, from firms like Greylock Partners (30.3% pre-IPO stake), New Enterprise Associates (28.9%), Sutter Hill Ventures (16.8%) and HRJ Capital.

ShoreTel Inc., a Sunnyvale, Calif.-based provider of IP telecom systems for enterprises, has set its proposed IPO terms to 7.9 million common shares being offered at between $8.5 and $10.5 per share. At the top of its range, ShoreTel would be valued at around $433 million. It plans to trade on the Nasdaq under ticker symbol SHOR, with Lehman Brothers and JPMorgan serving as co-lead underwriters. ShoreTel has raised around $107 million in VC funding between 1997 and 2004, from firms like Crosspoint Venture Partners (27.9% pre-IPO stake), Foundation Capital (20.4%), Lehman Brothers Venture Partners (22.7%), JPMorgan Capital (5.3%), Focus Ventures, Globespan Capital Partners, Matrix Partners and Norwest Venture Partners.

PE Exits

Arcapita of Bahrain has sold Roxar, a Norwegian oil and gas metering business, to CorrOcean for approximately $370 million. The sale provided nearly a twofold return for Arcapita, which bought Roxar for $200 million in March 2006, with leveraged capital provided by Royal Bank of Scotland and Barclays Bank

MVC Capital has agreed to sell Latvian portfolio companies Baltic Motors Corp. and SIA BM Auto to Inchcape PLC (LSE: INCH), for approximately $120 million.

Firms & Funds

Accuitive Medical Ventures has closed its second fund with $175 million in capital commitments. VentureWire reports that limited partners include Duke Management Co., Performance Equity Management, Brooke Private Equity Associates, AlpInvest Partners, Searle Charitable Trust, Procific, ITT Corp. and Credit Suisse. NelCap Advisers served as placement agent.

Braemar Energy Ventures is raising its second fund with a $200 million target, according to VentureWire. The New York-based firm raised $60 million for its first fund in 2003.

Bridges Ventures, a UK-based community/social investment firm, has closed its second fund with £75 million in capital commitments. BV was co-founded five years ago by Ronald Cohen of Apax Partners, Tom Wingh of New Look PLC and 3i Group.

DFJ Frontier has held a $35 million first close on its second fund, which is targeting around $80 million. The firm focuses on seed-stage and early-stage IT companies in California, with offices in both Sacramento and Santa Barbara.

Inveni Capital has held a first close on its debut fund with over €20 million in capital commitments, from LPs like The University of Helsinki. The final target is between €50 million and €70 million. Inveni is a life sciences VC firm with offices in Finland and Germany.

W Capital Partners is raising up to $750 million for its second direct secondaries fund, according to a regulatory filing. LBO Wire reports a formal target of $500 million. Probitas Partners is serving as primary placement agent.

Human Resources

Francois Bernardeau and Julian Asquith have joined London-based secondaries firm Headway Capital as a senior advisor and CFO, respectively. Bernardeau previously was president and CEO of Natexis Private Equity Opportunities, while Asquith was fund controller at Babcock & Brown. Headway also announced that it soon plans to raise its second fund.