PE Week Wire: Thurs., June 21, 2007

A reader yesterday suggested that I’m on a “crusade” to change tax treatment of carried interest for private equity funds. I actually think Congress that’s leading the charge – see the latest here from the NY Times – but let’s accept the premise that my coverage has been favorably disposed to such a change. Now it’s your turn.

This is an open call for PE Week Wire readers to explain what you think Congress should do about the tax treatment of carried interest, and why. Just hit reply to this email, or send an email to

I will run every single response here and/or on (particularly interesting ones will get separate Vox Populi posts). I also will forward the lot of them to the U.S. Senate Finance Committee. The goal is to get a comprehensive sense of how the industry feels on this extremely important issue. Divisions already have sprouted in the UK – Nicholas Ferguson’s lament that he pays a lower tax rate than his cleaning lady, for example – but we’ve heard precious little from a U.S. audience.

So please send me an email with your thoughts. PE Week Wire policy is to run only first names of feed-backers, but I would like as many “real names” as possible (only emails with real names will get submitted to Congress). If you are willing to use your full name, please indicate that in your email.

Let’s hear ya.

Top Three

Mid Europa Partners and France Telecom have agreed to acquire Austrian mobile operator One for €1.4 billion. Mid Europa would take a 65% equity stake, while existing shareholder France Telecom would hold the remainder. Sellers include German utility E.On AG, TDC AS and Telenor AS.

Whole Foods Market (Nasdaq: WFMI) plans to sell all 35 Henry’s and Sun Harvest store locations, and a Riverside, Calif. distribution center, to Smart & Final Inc., a Los Angeles-based food retailer owned by Apollo Management. The deal is contingent on Whole Foods prevailing in its current battle with the U.S. Federal Trade Commission, over its proposed merger with Wild Oats Markets.

Bret Taylor and Jim Norris have joined Benchmark Capital as entrepreneurs-in-residence. They previously were engineers with Google, where they worked on such products as Google Maps.

VC Deals

PGP Corp., a Palo Alto, Calif.-based provider of enterprise data protection, has raised $27.3 million in Series C funding. Intel Capital and D.E. Shaw Group were joined by return backers DCM and Venrock Associates.

Palo Alto Networks Inc., an Alviso, Calif.-based enterprise network security company, has raised $18 million in Series B funding, according to VentureWire. Globespan Capital Partners led the deal, and was joined by return backers Greylock Partners and Sequoia Capital. It has raised $28 million in total VC funding.

CSA Medical Inc., a Baltimore, Md.-based developer of a cryotherapy endoscopy system, has raised $8.8 million in Series A funding, according to a regulatory filing. VentureWire reports that New Markets Growth Fund led the deal.

Morganthaler Ventures has invested $6 million into the new U.S. subsidiary of Danal Co., a Korean provider of cell phone-based payment solutions. Parent company Danal has committed an additional $3.5 million to the effort, which is based in San Jose, California.

Wesabe, a New York-based personal finance startup, has raised $4 million in Series A funding. Union Square Ventures led the deal, and was joined by seed backer O’Reilly AlphaTech Ventures.

PolyTherics Ltd., a London-based company that modifies existing drugs to improve their efficacy, has raised £2.3 million in new VC funding. Longbow Capital led the deal, and was joined by The Capital Fund and Imperial Innovations.

AlgoNomics NV, a Ghent, Belgium-based provider of immunogenicity screening services and tools, has raised €1.5 million in VC funding. Baekeland Fund II led the deal, and was joined by the Gemma Frisius Fund, TrustCapital, VIB and the Flanders Institute for Biotechnology.

PixSense, a Santa Clara, Calif.-based provider of mobile photo and video management solutions, has raised an undisclosed amount of strategic funding from Qualcomm Ventures. It raised a $5.4 million Series A round late last year, co-led by ATA Ventures and Innovacom.

Buyout Deals

21 Centrale Partners has acquired Groupe Sud Robinetterie, a France-based manufacturer and distributor of high-end valves for the oil & gas, petrochemical, power generation and chemical industries. No financial terms were disclosed. GSR founders the Deprat family will retain “significant ownership” in the company, while leveraged financing for the transaction was provided by European Capital.

Actis has acquired a 70% stake in Sinai Marble, an Egypt-based marble producer that exports to over 40 countries. No financial terms were disclosed.

Cerberus European Investments has acquired the assets of troubled retail software developer Torex Retail PLC. The deal is valued at £204.4 million, with Torex assuming associated liabilities that it is unlikely to be able to pay in full.

EG Capital Group has acquired the Personal Healthcare Products business of Water Pik Technologies Inc., which is owned by The Carlyle Group and Zodiac SA. The deal is valued at $124 million ($32m of equity), according to S&P. Following the sale, what remains of Water Pik will be renamed Jandy.

Pegasus Capital Advisors has acquired a majority stake in LED Effects, a Sacramento, Calif.–based provider of LED lighting design and engineering. No financial terms were disclosed. As part of the deal, Govi Rao, a senior executive at Philips Lighting North America, will join LED Effects as its new president and CEO.

Sun Capital Partners has agreed to acquire the fabrics division of Interface Inc. (Nasdaq: IFSIA). The transaction is valued at up to $70 million, including a $63.5 million up-front cash payment. The fabrics division makes interior fabrics and upholstery products for automobiles, and markets under the Guilford of Maine, Chatham and Terratex brands, and provides specialized automotive textile solutions.

PE Exits

Apax Partners has put Global Refund, a Swedish-based VAT refund service for tourists, up for sale with a price tag of approximately $557 million. Hawkpoint was appointed for the sale earlier in the year, and a source close to the auction said that interest so far has come predominantly from mid-market private equity houses. Cendant Corp. sold its Global Refund subsidiary, known at the time as Europe Tax Free Shopping, for approximately $160 million in August 1999. Since then, Apax is understood to have carried out a refinancing in 2004, terms for which are not known.

New Energy Capital Corp. has sold Iroquois Bio-Energy Company LLC, a 45 million gallon per year ethanol plant located in Rensselaer, Ind., to Babcock & Brown (ASX: BNB). No financial terms were disclosed. New energy owned 57% of the facility, and is funded by VantagePoint Venture Partners.

PE-Backed M&A

Connextions Inc., an Orlando, Fla.-based business process outsourcing firm, has acquired bConnected Software Inc., a Louisville, Colo.-based provider of technology solutions for the healthcare industry. No financial terms were disclosed. Connextions is a portfolio company of New Mountain Capital.

CT Technologies Holdings, a portfolio company of ABRY Partners, has acquired Smart Document Solutions LLC from Arcapita for $185 million. Smart Document Solutions is an Alpharetta, Ga.-based provider of comprehensive health information management services and solutions to hospitals and physician clinics in the United States. Arcapita acquired a 90% stake in June 2002 for approximately $90 million.

Sunshine Holdings Corp., a Scottsdale, Ariz.–based publisher of regional magazines targeting healthcare and real estate professionals, has acquired True North Custom Publishing LLC, a Chattanooga, Tenn.-based publisher of custom magazines, newsletters and Web content to local community hospital clients and regional healthcare systems. No financial terms were disclosed. Sunshine is a portfolio company of H.I.G. Capital.

Other Deals

Adam Aircraft, an Englewood, Colo.-based maker of twin-piston and jet airplanes out of carbon composite materials, has raised $105 million via a senior secured credit facility placed by Morgan Stanley Senior Funding. It previously raised $182 million in venture capital funding, from Goldman Sachs, DCM, Mesirow Financial, W Capital Partners, D.E.Shaw Laminar Portfolios, Acadia Woods Partners and Hunt Growth Capital.

XATA Corp. (Nasdaq: XATA), a Minneapolis-based company that optimizes fleet operations for the commercial trucking industry, has raised $6 million in PIPE financing from existing shareholder Trident Capital. The deal is structured as Series B preferred stock and warrants to purchase XATA common stock. Trident now holds a 42% ownership stake in XATA.

Firms & Funds

The Carlyle Group plans to raise $400 million by listing a publicly-traded vehicle on the Euronext Amsterdam, according to an advertisement Carlyle took out in financial daily Het Financieele Dagblad. Carlyle said it would issue 18.9 million shares at between $20 and $22 per share, with a 2.9 million share over-allotment available to the underwriters.

GSC Group has closed its fifth collateralized debt obligation fund with €300 million in capital commitments. The fund has a target portfolio of 90% senior and 10% subordinated notes, and will invest primarily in private equity-backed transactions.

Madison Dearborn Partners of Chicago is planning to begin raising a $10 billion fund later this year, according to LBOWire. Its current fund closed on $6.5 billion just over a year ago.

Human Resources

Emporia Capital, the specialty asset management and lending subsidiary of Cohen & Co., has added three executive vice presidents in its leveraged loan asset management business. They are: Wade Winter, Jonathan David and Richard Barger. Each was previously a senior vice president for the broadly syndicated loans business of Jefferies Capital Management.

Michael Nelson has joined the private equity group of Republic Financial as a senior associate. He previously was with Piper Jaffray.