To ensure this email is delivered to your inbox, please add the email address firstname.lastname@example.org to your address book.
If you are having trouble viewing this email, please go here.
PE Week Wire -- Friday, August 11
Some very quick notes before I scurry off to a meeting…
*** HCA has released additional details of its buyout agreement, including confirmation that KKR, Bain Capital and Merrill Lynch are each on the hook for $1.5 billion equity checks. Each firm is allowed to syndicate up to 50% of its contribution, so long as they’re on the approved partner list that has been discussed in this space ad nausea. Two of those syndication partners were disclosed, with Citigroup committing a total of $400 million and Banc of America Securities committing $200 million (pro rata to the three firms).
It’s also worth noting that it was the HCA special committee – not KKR/Bain/Merrill – that insisted on the approved buyer list. Steve Pagliuca of Bain explains: “We’ve come across [approved syndication lists] in larger deals when, in general, companies want to preserve the opportunity for two or three groups to be able to come in and make competing bids.” In other words, such lists aren’t needed in a sub-$3 billion deal, because there are so many firms capable of committing $500 million or so. When the per firm commitment rises to $1.5 billion, however, that group is significantly reduced, this necessitating artificial ways to preserve the possibility of competitive bids.
*** The Financial Times suggested this week that 3i Group could be on the block, although it read more like idle speculation than shoe-leather reporting. The basic argument was that 3i could provide a mega-LBO firm with: (A) Entrée into the public markets, since much of 3i is listed; (2) A middle-market and upper-middle-market investment business/portfolio.
I don’t really put much stock in the first part. If a firm like Blackstone needs 3i Group in order to go public, then there are serious problems at Blackstone (and the stock would therefore tank anyway). The second part, however, sounds a bit more likely. Why not PE market consolidation? You’ve seen some very small-scale examples already – Apax/SKM, Sequoia/Westbridge – and big buyout firms already are in diversification mode via real estate, hedge funds, etc. Why not add an asset like 3i? The outstanding questions are how LPs would react and how 3i managers would remain incentivezed, but those are both workable.
*** Earlier this week, I noted that LBO-backed IPOs in 2006 are performing worse in the aftermarket than IPOs at large. Some asked if the same is true of VC-backed IPOs. The answer is yes, and it’s more pronounced. You can find specifics in Monday’s issue of PE Week, but here is a basic explanation: The public markets are becoming increasingly risk averse, particularly for new companies. The best-performing IPOs in 2006 are in sectors like retail and industrials, whereas the worst-performing are in telecom and healthcare. It is in this latter sandbox that most VCs play – linke Vonage and Iomai -- and they are paying the price so far this year.
*** Finally, pay special attention to today’s top news story. The backlash has begun…
See Full List of Current postings If you would like to be considered for any of these opportunities, click on the links above and the APPLY button on the job description. We will review your background in confidence and contact you
Apax Partners and KKR might need to reconsider their possible £2.3 billion bid for UK-based specialty jewelry retailer Signet Group PLC (NYSE: SIG). The Financial Times reports that Signet shareholders are threatening to block the sale, arguing that the private equity firms would be unable to generate more capital efficiency out Signet than can its current management team in the public markets. www.signetgroupplc.com
Motricity Inc., a Durham, N.C.-based provider of mobile marketplace management, has raised $32 million in Series G funding. According to a regulatory filing, the company is looking for a total of $60 million. Advanced Equities led the deal (also served as placement agent), and was joined by return backers like Advanced Equities (also serving as placement agent), Intel Capital, Wakefield Group, New Enterprise Associates, Noro-Moseley Partners, Technology Crossover Ventures, Tri-State Investment Corp and Sienna Ventures. New investor Qualcomm also participated. Motricity has raised around $130 million in total VC funding since its 2001 inception. www.motricity.com
The Bisys Group Inc. (NYSE: BSG), a New York-based provider of outsourcing solutions for the financial services market, has retained Bear Stearns to help it explore “strategic alternatives.” The company also announced that CEO Russell Fradin has resigned, with chairman Robert Casale taking over as interim president and CEO. www.bisys.com
WiSpry Inc., an Irvine, Calif.-based provider of components and modules for RF system manufacturers, has raised $10.71 million in Series B funding, according to a regulatory filing. L Capital Partners was joined by return backers like Blueprint Ventures, American River Ventures and Sid R. Bass Associates. www.wispry.com
Avnera Corp., a Beaverton, Ore.-based developer of low-power semiconductors for the wireless audio and video markets, has secured $10.61 million of a $12 million Series B round, according to a regulatory filing. Intel Capital was joined by return backers Bessemer Venture Partners, Jafco Ventures and Redpoint Ventures. www.avnera.com
Oxford Semiconductor Inc., a Milpitas, Calif.-based provider of IEEE1394 and USB interface controllers for direct attached storage applications, has raised $10 million in Series B funding, according to a regulatory filing. Return backer VantagePoint Venture Partners led the deal. www.oxsemi.com
Vontu Inc., a San Francisco-based provider of data loss prevention software, has secured $10 million of a $15 million Series D round, according to a regulatory filing. GM Asset Management was joined by return backers Benchmark Capital, U.S. Venture Partners and Venrock Associates. www.vontu.com
Incuity Software Inc., a Mission Viejo, Calif.-based provider of real-time business intelligence software for manufacturing enterprises, has raised $7.3 million in Series A funding from American River Ventures and Palomar Ventures. www.incuity.com
Blurb Inc., a San Francisco-based provider of self publishing software and services, has secured $7.16 million of a $13 million Series B round, according to a regulatory filing. Return backers include Canaan Partners and Anthem Venture Partners. www.blurb.com
Cohera Medical Inc., a Pittsburgh-based medical device focused on surgical adhesives, has raised $6.79 million in Series A funding. Backers include Pittsburgh Life Sciences Greenhouse and Innovation Works.
PolyRemedy Inc., a Mountain View, Calif.-based maker of medical devices for the treatment of chronic wounds, has raised $1 million in Series A funding led by MedVenture Associates, according to a regulatory filing. www.polyremedy.com
China Concord Alliance Co. Ltd., a China-based insurance aggregator, has raised an undisclosed amount of Series A funding led by Sequoia Capital China.
DataBang Internet Media Services Inc., an Orlando, Fla.-based content and data aggregator, has raised an undisclosed amount of Series A funding. Inflexion Partners led the deal, and was joined by Village Ventures, Guideline Inc and Princeton Review president John Katzman. www.databangmedia.com
Fortress Investment Group has agreed to acquire Canadian resort operator Intrawest Corp. (NYSE: IDR) for $35 per share (32% premium to yesterday’s closing price). The total deal is valued at $2.8 billion. Goldman Sachs advised Intrawest on the deal.
Bain Capital has agreed to acquire Applied Systems Inc. from Vista Equity Partners for around $675 million, according to The New York Times. Leverage will be provided by Credit Suisse and J.P. Morgan Chase. Applied Systems is a University Park, Ill.-based provider of software for the insurance market, and had received interest from other firms like Madison Dearborn Partners. www.baincapital.comwww.appliedsystems.com
First Reserve Corp. has acquired Ohmestede Ltd. from Tanglewood Investments for an undisclosed amount. Ohmestede is a Beaumont, Texas-based provider of aftermarket services, replacement parts, and fabrication for engineered shell and tube heat exchangers in North America. Harris Williams advised Ohmestede on the deal. www.firstreserve.comwww.ohmestede.com
The Watermill Group has acquired Polaroid’s contract coating business, including manufacturing facilities in New Bedford, Massachusetts. Watermill has renamed the unit MultiLayer Coating Technologies LLC. No financial terms were disclosed. www.watermill.comwww.multilayercoating.com
NBGI Private Equity has acquired The Hotgroup PLC’s traditional recruitment business for £11.2 million from Trinity Mirror PLC. It also has renamed the business Ochre House. www.nbgipe.co.uk
Palm Beach Capital has acquired TMS Health, a Boca Raton, Fla.-based provider of relationship marketing solutions for the pharma industry, from Access Worldwide Communications Inc. (OTC BB:AWWC). The deal was valued at $10.5 million. www.pbcap.comwww.tmshealth.com
Thermage Inc., a Hayward, Calif.-based maker of medical devices for the non-invasive treatment of wrinkles, has filed to raise $86.25 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol THRM, with Merrill Lynch serving as lead underwriter. The company has raised over $40 million in VC funding since its 2001 inception, from firms like Draper Fisher Jurvetson, Essex Woodlands Health Ventures, Institutional Venture Partners, Morgenthaler Venture Partners and Technology Partners. www.thermage.com
Double-Take Software Inc., a Southborough, Mass.-based provider of software for reducing downtime of business-critical systems, has filed to raise $86.25 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol DBTK, with Cowen & Co. and Thomas Weisel Partners serving as co-lead underwriters. Shareholders include ABS Capital Partners, J&W Seligman & Co. and Lake Street Capital. www.nsisoftware.com
Virtual Radiologic Corp., a Minnetonka, Minn.-based provider of remote diagnostic image interpretation, has filed to raise $75 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol VRAD, with Goldman Sachs serving as lead underwriter. The company raised VC funding last year from Generation Capital Partners and Invision Private Equity. www.virtualrad.net
Goldman Sachs and Providence Equity Partners are considering a sale of NY Yankees broadcaster YES Network, according to the New York Post. A deal could be worth up to $3 billion.
SunEdison LLC, a Baltimore-based commercial photovoltaic contractor, has acquired Team Solar Inc., a Sacramento, Calif.-based installer of PV solar electric systems. No financial terms were disclosed. SunEdison raised VC funding earlier this year from Goldman Sachs, MissionPoint Capital Partners and Allco Finance Group. www.sunedison.com
Firm & Fund News
M/C Venture Partners of Boston has closed its sixth fund with $550 million in capital commitments, according to a regulatory filing. www.mcventurepartners.com
Keefe, Bruyette & Woods, a New York-based I-bank, has filed to raise $100 million via an IPO. www.kbw.com
Evercore Partners raised $82.95 million via an IPO. It will trade on the NYSE under ticker symbol EVR. www.evercore.com
TMB Industries, a Chicago-based private equity firm, has promoted both Kelly Bodway and Jeffrey Elmer to managing director. www.tmbindustries.com
Richard Rimer is leaving Index Ventures, according to Private Equity Online. He has been a partner focused on life sciences opportunities. www.indexventures.com
Alvarez & Marsal has expanded its U.S. transaction advisory group by hiring: Anthony Caporrino, formerly of Ernst & Young, as a managing director; Jonathan Scrubbe, formerly of E&Y, as a director; Eric Lorge, formerly of KPMG, as a senior director; and Raju Patel, formerly of Deloitte & Touche, as a manager. www.alvarezandmarsal.com --------------------- Correction: Star Ventures participated on the third-round funding for Mangrove Systems Inc., which remains open. Also, the company has raised $53 million to date, as opposed to the $70 million listed yesterday.
Private Equity Week
This is a free service of Private Equity Week, the only industry publication that tracks and researches private equity deals for the entire venture capital market. The weekly newsletter and daily website give you in-depth news on industry trends, companies seeking investors, deals at all stages, participating firms, deal conditions, proceeds and pricing. The experienced business reporters of Private Equity Week go beyond the press releases to find the stories behind the headlines. Private Equity Week offers:
Informative reporting on deals at every stage Commentary on important trends in private equity Regional roundup of SEC filings Breakdowns of private equity funds Tables of venture-backed IPOs in registration and pricing Strategy and market insight on venture fund activity PEW Scoreboard: a comprehensive list of the past week's venture deals Private Equity People: a list of the comings and goings of private equity professionals
Conference Calendar: a list of upcoming private equity events