PE Week Wire: Tues., May 22, 2007

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New at

• Remember that Goldman Sachs-prepared list of potential buyout targets, based on projected IRRs? We now got our hands on a similar document, this time focused on opportunities in Japan.

• KPS yesterday announced that it had closed its third special situations fund with $1.2 billion. So I had 5 Questions for Mike Psaros, co-founder and managing partner of KPS. He’s got some interesting thoughts on the interplay between private equity and unions.

• Joanna on the Arrival of Ariva, a new venture capital firm run by Ajit Shah (formerly with Worldview Technology Partners) and Robert Simon (formerly with Alta Partners).

• Thomson Financial has just released a global M&A and Private Equity Snapshot, for year-to-date 2007. Get it here.

And, as always, news and analysis updated throughout the day…

Top Three

QuatRx Pharmaceuticals Co., an Ann Arbor, Mich.-based drug company focused on endocrine, metabolic and cardiovascular disorders, has raised $44 million in Series E funding. Venrock led the round, and was joined by fellow new investors T. Rowe Price, Catella Healthcare and Hercules Technology Growth Capital. Return backers include Frazier Healthcare Ventures, TL Ventures, MPM Capital, InterWest Partners, Thomas Weisel Healthcare Ventures, Stockwell Capital, H&B Capital, BioMedical Ventures, Bio Fund Ventures and Twilight Venture Partners. Aquilo Partners served as placement agent. ! QuatRx has now raised over $116 million in total VC funding since 2000, including a Series D round in 2005 that valued the company at around $106 million. It filed for an IPO last year, but later withdrew due to “unfavorable market conditions.”

Hertz Global Holdings Inc. (NYSE: HTZ) said that three shareholders plan to sell 45 million shares in a secondary public offering. The sellers are The Carlyle Group, Clayton, Dubilier & Rice and Merrill Lynch – the three firms that bought Hertz from Ford Motor Co. in late 2005 for $15 billion. No pricing terms were disclosed. The firms would still retain a combined majority shareholding in Hertz following the offering, but it would shrink from 71.59% to 55.45 percent.

LS Power has closed its second energy-focused private equity fund with $3.085 billion in capital commitments. Credit Suisse served as placement agent. The New York-based firm’s debut fund had closed on $1.2 billion in 2005.

VC Deals

Arroweye Solutions Inc., a Chicago-based provider of customized gift cards for retailers, has raised $14 million in Series C funding. Baird Venture Partners led the deal, and was joined by Adams Street Partners.

Intelliden Inc., a Colorado Springs, Colo.-based provider of standards-based network automation solutions, has raised $10 million in sixth-round funding. Matrix Partners led the deal, and was joined by fellow return backers 3i Group, Granite Global, TELUS Ventures and Westbury Partners. Intelliden has raised around $68.5 million in total VC funding since its 2000 inception, including an $11 million Series E round in late 2005.

Atlantis Components Inc., a Cambridge, Mass.-based maker of dental implants, has raised $9.8 million in Series D funding. Signet Healthcare Partners was joined by return backers ABV Holding Co., CID Equity Capital, Heron Capital Venture Fund I, Ironwood Equity Fund, Massachusetts Technology Development Corp. and VIMAC Ventures. The company has raised nearly $38 million in total VC funding since 2000.

Metatomix Inc., a Waltham, Mass.–based provider of semantic composite applications, has raised $7 million in new VC funding, according to VentureWire. Return backers include Dunrath Capital, Battelle Ventures, North Hill Ventures and return backers Apex Venture Partners, Velocity Equity Partners and Equity Resources Group. The company had raised $37.6 million in VC funding since 2000, including a 2005 venture recap and subsequent $11.3 million Series B round.

Envista Corp., a Beverley, Mass.-based developer of enterprise software for the strategic and financial management of built infrastructure, has raised around $5.76 million in Series A. The initial $5 million tranche closed quietly last September. Backers include Borealis Ventures, Egan-Managed Capital and Point Judith Capital.

Origin Digital Inc., a Weehawken, N.J.-based video applications service provider, has raised $5.5 million in Series A funding from Constellation Ventures. The round closed last December.

MBA Polymers Inc., a Richmond, Calif.-based recycler of plastics and durable goods,announced that it has raised $20 million in Series E funding, as first reported by PE Week Wire last week. Participants include Benchmark Capital Europe, Doughty Hanson Technology Ventures, Asia West and Aloe Environment Fund.

Saylent Technologies Inc., a Franklin, Mass.–based provider of of debit card portfolio management solutions, has raised an undisclosed amount of Series A funding. The Venture Capital Fund of New England led the deal, and was joined by Seed Venture Finance and individual angels.

SunLink Corp., a Larkspur, Calif.-based provider of solar mounting systems for the commercial market, has raised an undisclosed amount of Series B funding led by Clean Pacific Ventures.

Buyout Deals

Bain Capital Partners and Catterton Partners have increased their buyout offer for OSI Restaurant Partners Inc. (NYSE: OSI), a restaurant operator whose brands include Outback Steakhouse, Cheeseburger in Paradise, Roy’s and Carrabba’s Italian Grill. The amended deal raises the price per share from $40 to $41.15. A shareholder vote is scheduled for May 25, while OSI founders Chris Sullivan, Robert Basham and J. Timothy Gannon also are participating on the bid. Wachovia Securities is serving as financial advisor to OSI.

Providence Equity Partners has agreed to acquire a majority stake in Decision Resources Inc. from Castanea Partners and Boston Ventures. No financial terms were disclosed. Decision Resources is a Waltham, Mass.–based research and advisory firm focused on pharmaceutical and healthcare issues.

British Airways has agreed to join a TPG-led consortium making a bid for Iberia Lineas Aereas de Espana SA, Expansion reported on its website late yesterday without citing a source. According to the report, BA decided to join the consortium, which also includes Spanish private equity firms Vista Capital, Ibersuizas and Quercus after “intense” talks.

Blackstreet Capital Management has acquired Swift Spinning Inc., a Columbus, Ga.–based cotton yarn manufacturer, from Marubeni Corp. No financial terms were disclosed.

The Carlyle Group reportedly has dropped out of the auction for Orange, the Dutch subsidiary of France Telecom. It had been part of a group that still includes Providence Equity Partners and Rabo Capital – which is on the shortlist alongside T-Mobile and ABN Amro Capital.

PE-Backed IPOs

Addex Pharmaceuticals Ltd., a Geneva, Switzerland-based drug company focused on CNS disorders,priced its IPO shares at SFR 73 sfr each (SFR 58-75 range), for an IPO take of approximately SFR 137 million ($111 million). This gives Addex, which began listing on the Swiss stock exchange today, a market capitalization of around SFR 428 million ($348 million). Addex had raised around $148 million in venture capital funding from firms like Index Ventures, TVM Capital, Bio*One Capital, Roche Venture Fund, PolyTechnos Venture Partners, S.R. One, Sofinnova Partners, Initiative Capital and Vinci Capital.

Limelight Networks Inc., a Tempe, Ariz.-based provider of an online network that delivers live and on-demand digital media, has set its proposed IPO terms to 14.4 million common shares being offered at between $10 and $12 per share. It plans to trade on the Nasdaq under ticker symbol LLNW, with Goldman Sachs and Morgan Stanley serving as co-lead underwriters. Limelight raised $130 million in VC funding last year from GS Capital Partners (45.2% pre-IPO stake) and Oak Investment Partners (9.2%).

PE-Backed M&A

Intel Corp. and STMicroelectronics announced plans to merge their flash memory businesses into a new company that would have annual sales of $3.6 billion. Intel would hold a 45.1% position, STMicro would hold 48.6% and the remaining 6.3% would go to Francisco Partners, in exchange for a $150 million investment.

SolarWinds, an Austin, Texas-based provider of network management software for the SMB/SME market, has acquired Neon Software Inc. of Lafayette, Calif. and ipMonitor Inc. of Gatineau, Quebec. SolarWinds has raised around $48.5 million in VC funding from Bain Capital Ventures, Insight Venture Partners and Austin Ventures.

PE Exits

Boulder Specialty Brands Inc. (OTC BB: BDSBU) has completed its acquisition of GFA Brands Inc., provider of heart-healthy food products, for approximately $465 million in cash. Sellers include TSG Consumer Partners, which acquired a stake in GFA over two years ago.

Cisco Systems Inc. has agreed to buy BroadWare Technologies Inc., a provider of IP-based video surveillance software. No financial terms were disclosed for the deal, which is expected to close by the end of July. Broadware has raised around $33.85 million in total VC funding since 2000, from firms like New Vista Capital, Sigma Partners, Defta Partners, Hitachi Ltd., mc3 Ventures and Dali Hook Partners. It has 38 employees, with offices in Santa Clara, Calif. and McLean, Virginia.

Emap PLC has agreed to acquire GroundSure, a UK-based provider of environmental due diligence, from shareholders like Metropolitan Venture Partners. The deal is valued at up to £44 million, including an initial £30 million cash payment and up to £14 million in earn-outs over the next two years.

On2 Technologies Inc. (AMEX: ONT) has agreed to acquire Hantro Products Oy, a Finland-bsed provider of video technology for mobile devices. The deal is valued at approximately $58.5 million in cash and stock. Hantro has raised around $27 million in VC funding since 1999, from firms like Nexit Ventures, Menire Corp., StartupFactory AB, CapMan Capital and 2M Invest AS. It was advised on the sale by Mooreland Partners.

SOA Software Inc., a Los Angeles-based provider of SOA and Web services management, security and governance solutions, has sold its services business to India-based Zensar Technologies Ltd. for $24.9 million in cash. SOA has raised over $40 million in VC funding since 1998, from firms like Draper Fisher Jurvetson, Redpoint Ventures, Mellon Ventures, Paladin Capital Group, Goldman Sachs and Palisades Ventures.

Vector International has agreed to acquire Icarus, a Belgium-based maker of piping and valves for extreme environments and service conditions. No financial terms were disclosed. Sellers include HitecVision Private Equity and Verdane Capital.

Firms & Funds

Emergence Capital Partners has closed its second fund with $200 million in capital commitments, according to VentureWire. The San Mateo, Calif.-based venture capital firm focuses on early- and growth-stage opportunities for tech-enabled services companies. Limited partners include CalPERS, Fairview Capital Partners, Morgan Stanley, University of Michigan and University of Minnesota.

The Quadrangle Group, a New York-based private equity firm focused on the media and communications market, has opened an office in London. !

Human Resources

Dave Brown has joined Lehman Brothers as a senior vice president in the firm’s private equity fund marketing group. He previously was a director with New York Life Investment Management, and before that was an NFL quarterback with both the New York Giants and Arizona Cardinals.

John Morningstar and William Ramsey have joined Wellspring Capital Management as a principal and executive director, respectively. Morningstar previously was with Castle Harlan. Ramsey was a senior operating executive with Honeywell and its predecessor Allied Signal.

Eric Paley has joined IDG Ventures Boston as a senior advisor. He is the former CEO and co-founder of Brontes Technologies, a former IDG portfolio company that was acquired late last year by 3M.

Morgan Joseph has named Scott Berman and Peter Olaynack as co-heads of the firm’s financial sponsors group. Berman will continue as head of Morgan Joseph’s exclusive sales group, while Olaynach will continue in his client management and business development role.

Len Nannarone has joined the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo as a member of the firm’s corporate practice, with a focus on private equity. He previously was a partner at Greenberg Traurig and in-house counsel to Intel Capital.

J.P. Bruynes and William Sturman have joined the New York office of Akin Gump Strauss Hauer & Feld LLP as partners in the investment funds/private equity practice. Bruynes previously was with Arnold & Porter, while Sturman joins from Debevoise & Plimpton.