PE Week Wire: Wed., June 13, 2007

*** Some interesting replies related to yesterday’s column on the lack of buyout-backed IPO in 2007. Reader Joshua asked that I also provide data on how buyout-backed volume compares to overall IPO volume, and I’ve added a downloadable chart for 2005-2007 (which includes global IPO data). But here are the quick numbers, and they make the situation look even worse: Buyout-backed IPOs have accounted for just 15.15% of all U.S. IPO pricings so far in 2007. This compares to a 50% mark for the first half of 2006, and a 46.47% mark for the entire year.

*** Robert Rubin, former U.S. Treasury Secretary and current Citigroup executive committee chairman, yesterday added his voice to the chorus that thinks Congress should consider changing the tax treatment of carried interest. Uh oh Bob, I know a few Wire readers who just muttered that you’re a socialist…

*** Last week, I posted something at peHUB called Day in a VC Life. Yesterday, reader Danny Gillespie put together biting variation: Day in the Life of a VC-Backed CEO.

*** Charlie O’Donnell is one of my favorite bloggers, in part because he spent time on both the LP and GP side of the venture business (now he’s in an operating role). He recently discussed How to get started as a VC analyst, and it’s a must-read for those looking to get their feet in the door. If you’re more interested in the buyout biz, Ronald Alsop suggests you get to b-school ASAP.

*** The Wall Street Journal reports that KKR is having some trouble rounding up co-investment capital for its First Data buyout, in part because of its proposed fee-sharing arrangement (sub req). In other words, don’t be so quick to write off a resurgence of mega-club deals.

*** Peter Adderton is indeed now out at Amp’d Mobile.

*** We’ve reorganized the peHUB News Section a bit, so that buyout news is more accessible. We also added Sphere to the blog posts, and had some new jobs posted in the Careers Section.

*** Kara Swisher interviews uber-angel Ron Conway, who says that “third-rate” VCs are essentially bribing IT entrepreneurs to take their money (instead of from firms like Sequoia or Kleiner). Matt Marshall agrees it’s happening, but finds the development anything but troubling.

Top Three

Pershing Square Capital Management has come out in opposition to the pending $5.3 billion buyout of Ceridian Corp. (NYSE: CEN) by Thomas H. Lee Partners and Fidelity National Financial. Pershing is Ceridian’s largest shareholder with around a 15% stake, and has retained Lazard Freres to seek superior offers. Under the current deal, Ceridian stockholders would receive $36 per share, while Deutsche Bank Securities and Credit Suisse would provide leveraged financing. Ceridian is being advised by Greenhill & Company.

Broadcom Corp. (Nasdaq: BRCM) has agreed to acquire Global Locate Inc., a San Jose, Calif.-based provider of A-GPS technology to the wireless industry. The deal is valued at up to $226 million, including a $146 million up-front cash payment, and up to $80 million in possible cash earn-outs. Global Locate has raised VC funding from firms like Siemens Venture Capital, GC Investments, Motorola Ventures Firsthand Capital Management and Third Point Offshore Fund.

Avista Capital Partners of New York has closed its debut fund with $2 billion in capital commitments. Merrill Lynch served as placement agent. Avista was formed in 2005 by seven former partners who worked together at DLJ Merchant Banking, and focuses on buyout opportunities in the energy, healthcare and media spaces. It has committed approximately $1.1 billion of the fund so far, in 14 companies. They include: BioReliance Corp., Geokinetics Inc., Laramie Energy II LLC, Nycomed AS, The Star Tribune Co. and WideOpenWest.

VC Deals

Millennium Pharmacy Systems, a Wexford, Pa.-based provider of contract pharmacy services, has raised $40 million in new VC funding. Essex Woodlands Health Ventures led the deal, and was joined by Ascension Health Ventures, Essex Woodlands operating partner Steve Wiggins and return backers CHL Medical Partners, Boulder Ventures and undisclosed angels. VentureWire quotes Millennium CEO Gary Duty as saying that the round gives his company a 30% higher valuation than when it raised a $15 million round in Sept! ember 2005, but it is unclear if he’s talking pre-money or post-money. That round came with a post-money of around $29.1 million, according to Thomson Financial. Millennium has now raised over $60 million in venture funding since its 2001 inception.

Logical Therapeutics Inc., a Pittsburgh-based drug developer focused on inflammatory disease, has raised $30 million in Series B funding. SV Life Sciences led the deal, and was joined by Burrill & Co., Novo A/S, Sigvion Capital and seed backer PA Early Stage Partners. As part of the deal, Logical Therapeutics will establish new headquarters near Boston.

ISGN Technologies Ltd., an India-based provider of knowledge process outsourcing to the U.S. mortgage industry, has raised $25 million in first-round funding. New Enterprise Associates led the deal with a $20 million investment, and was joined by affiliate NEA-IndoUS Ventures.

OmniSonics Medical Technologies Inc., a Wilmington, Mass.-based developer of ultrasound technology for breaking up blood clots, has raised $20 million in Series D funding, according to VentureWire. Return backers include Canaan Partners, Domain Associates, Johnson & Johnson Development Corp., Nomura Phase4 Ventures, New England Partners, and H&Q Capital Management. The company hopes to add another $15 million to the round from outside investors. OmniSonics has raised over $90 million in total VC funding since its 1998 inception, including a $43 million Series C round at an $88 million post-money valuation.

Aylus Networks Inc., a Westford, Mass.-based provider of real-time multimedia sharing solutions for mobile networks, has raised $15 million in second-round funding from return backers Matrix Partners and North Bridge Venture Partners. The round closed at the end of April. Aylus previously raised a $10 million Series A round in 2005.

OpSource, a Santa Clara, Calif.-based provide of software-as-a-service delivery solutions, has raised $15 million in Series D funding. Crosslink Capital led the deal, and was joined by return backer Artiman Ventures. OpSource has now raised $47 million in total VC funding since its inception.

Reactive Nanotechnologies Inc., a Hunt Valley, Md.-based developer of nano-scale furnaces for soldering applications, announced that it has raised $14.3 million in Series C funding. PE Week Wire reported last week that the company had called down $10.5 million of a $17 million Series C round, according to a regulatory filing. Siemens Venture Capital led the deal, and was joined by Eastward Capital Partners and return backers Sevin Rosen Funds, SAS Investors, Toucan Capital, Silicon Valley BancVentures and the State of Maryland Department of Business and Economic Development.

iKoa Inc. has raised $9.4 million in Series A funding. Global Catalyst Partners led the deal, and was joined by Khosla Ventures. Backers include Khosla Ventures and Global Catalyst Partners. The Menlo Park, Calif.-based company describes itself as a semiconductor startup on its website, but a regulatory filing says that it is developing software for email analytics.

PermissionTV Inc., a Waltham, Mass.-based maker of an interactive Internet video technology platform, has raised $9 million in Series C funding. Castile Ventures and Point Judith Capital co-led the deal, and were joined by return backers Common Angels, CramerOnline, Inflection Point Investors, the Massachusetts Technology Development Corp. (MTDC), SAS Investors and the Venture Capital Fund of New England.

TerraPass Inc., a Palo Alto, Calif.-based purchaser of carbon credits on behalf of its customers, has raised around $5.8 million in Series A funding, according to a regulatory filing. Backers include Maveron Equity Partners and Nth Power.

OpenAds, a London-based maker of a free, open-source ad server, has raised $5 million in Series A funding. Index Ventures led the deal, and was joined by First Round Capital, Mangrove Capital Partners and O’Reilly AlphaTech Ventures.

Babyage Inc., a Hanover Township, Pa.-based online retailer of baby and children’s products, has raised $3.5 million in Series A funding from Brook Venture Partners.

Kreeda Games India Pvt Ltd., a Mumbai, India-based online gaming company, has raised an undisclosed amount of Series A funding co-led by IDG Ventures India and Softbank Bodhi Investments. The Economic Times reports that the deal is under $10 million. Kreeda takes existing games and repurposes them for the Indian market.

Pixim Inc., a Mountain View, Calif.-based developer of digital imaging systems for the security camera market, has added an undisclosed amount of capital to a Series B-1 round that originally closed in March with $15 million. In-Q-Tel was joined on the extension by return backers Mayfield Fund, Ridgewood Capital and Tallwood Venture Capital.

Morgan Stanley has agreed to invest up to $60 million in Bull Moose Energy, to help the San Diego-based company finance the development of biomass power production plants near urban centers.

Buyout Deals

Blackstone Group, Cerberus and Cinven have been mentioned as possible acquirers of Jaguar and Land Rover, City AM reported this morning. Codenamed “Project Swift,” Ford Motor Co. is understood to have appointed Goldman Sachs, HSBC and Morgan Stanley to find buyers for the two luxury car brands with an estimated price tag of $8 billion.

Duke Street Capital has agreed to acquire Oasis Healthcare PLC, a listed UK dental services company. The 82 pence-per-share offer would value Oasis at approximately £76.9 million.

Jones Apparel Group (NYSE: JNY) is in advanced talks to sell its Barneys New York department store chain to Istithmar for around $950 million, according to The New York Post. Istithmar is a private equity firm owned by the government of Dubai.

LLR Partners and Primus Capital Funds have invested $53 million in Community Education Centers Inc., a Roseland, N.J.–based provider of treatment, education and reentry services for adult correctional populations. Part of the funding will be used to help CEC complete its acquisition of CiviGenics Inc., a correctional services company providing offender treatment and jail management services.

The Yucaipa Cos. has acquired an undisclosed stake in UK jeweler Stephen Webster Ltd. No financial terms were disclosed.

PE-Backed IPOs

Spreadtrum Communications Inc., a Shanghai-based fabless maker of wireless chipsets, has set its proposed IPO terms to 8.767 million American depository shares being offered at between $11 and $13 per share. If it prices at the high end of its range, Spreadtrum would be valued at approximately $539 million. It plans to trade on the Nasdaq under ticker symbol SPRD, with Morgan Stanley and Lehman Brothers serving as co-led underwriters. Shareholders include New Enterprise Associates (24.24% pre-IPO stake), Fortune Venture Group (11.61%) and Pacific Venture Partners (7.7%).

PE Exits

The Blackstone Group has completed its sale of Extended Stay Hotels to the Lightstone Group for $8 billion. Blackstone retaisn a 10% stake in Extended Stay, which it acquired in 2004 for approximately $3.13 billion (including $1.13 billion in assumed debt).

Dominion Enterprises, a Norfolk, Va.-based media company, has acquired Autobase Inc., an Indianapolis-based provider of marketing and sales solutions for auto dealerships. No financial terms were disclosed. Autobase had raised $8.5 million in a 2004 venture round led by Summit Accelerator Fund.

Macquarie has agreed to sell its 45% stake in Aeroporti di Roma SpA to Gemina SA for €1.2 billion, according to Il Sole 24 Ore. Aeroporti di Roma operates airports in Rome.

Firms & Funds

The Blackstone Group’s IPO will occur during the week of June 25, according to underwriter Morgan Stanley.

Sterling Partners, a Northbrook, Ill.-based mid-market private equity firm, has closed its third fund with $1 billion in capital commitments. Sterling seeks to acquire controlling interests in companies with enterprise values of between $20 million and $150 million.

Human Resources

Mike Cassidy has joined Benchmark Capital as an entrepreneur-in-residence. His past gigs include co-founder of Stylus Innovation (Windows technology application sold to Artisoft), CEO of Direct Hit (online search sold to AskJeeves) and CEO of Xfire (online gaming community sold to Viacom).

Andrew Friendly and Gavin Kim have joined Advanced Technology Ventures as senior associates. Friendly will focus on clean-tech opportunities, and previously was with Idealab. Kim will focus on telecom and wireless deals, and previously was director of product strategy and operations for Motorola’s mobile device division.

Joan Solatar has joined The Blackstone Group as senior managing director of public markets and director of equity research. She previously was with Bank of America was a managing director and director of equity research.

Arsenal Capital Partners has promoted John Televantos to principal. He is a veteran specialty chemicals industry executive who joined Arsenal in January 2006 as an executive vice president, after having served as vice president of Hercules Inc. and president of its Aqualon Company.


Duke Endowment, not Duke Management Co., invested in Accuitive Medical Ventures II.