Random Ramblings The leveraged buyout world seems smitten with tech. Just the past week alone has seen the $11.3 billion deal for SunGard close, a $2.65 billion deal for Agilent’s chip business get signed, HP apparently engage in talks to sell its ProCurve unit, Blackstone Group hire a high-profile tech chief and Francisco Partners continue to market its $2.5 billion-targeted second fund. Elevation Partners might even hold a final close on its own inaugural fund one of these days. In fact, some reactionaries have gone so far as to suggest an LBO market paradigm shift from Old Economy to New Economy. Before throwing in my lot with such folks, however, it’s worth noting that the LBO market is vast and contains multitudes. In other words, LBO firms aren’t adding tech at the expense of old line industry practices, but they are adding tech while maintaining old-line industry practices. Consider it like the perfectly-equipped bedroom, where private equity firms own the makers of both your mattress and high-def idiot box. No industry seems to be making this point more clearly right now than energy. I’m not talking clean-tech here, but nonrenewable, dirty oil, coal and natural gas (before telling me gas isn’t dirty, please compare it to wind). I don’t have any hard numbers in front of me, but anecdotal evidence rooted in compiling news each morning tells me that there is just a ton of big-dollar activity in the space. Examples include Warburg Pincus agreeing to pay $2.35 billion for Dynegy’s midstream assets and the very successful IPO for drill-maker Dresser-Rand (owned by First Reserve). Just today we had another energy IPO (Bronco Drilling) and a $580 million acquisition by PE-backed Complete Energy Holdings. Perhaps most important, the recently-passed federal energy bill is expected to promote future energy-related private equity deals (even though it did virtually nothing to reduce our dependence on foreign oil, or to increase fuel emission standards). Ari Nathanson of Buyouts Magazine has the details at www.buyoutsnewsletter.com. Again, multitudes over exclusion, which should please diversity-conscious LPs… *** I told you last week that I don’t own an I-pod, nor do I download podcasts via my computer. Both things remain true. However, I was interviewed yesterday by John Furrier of Podtech.net, which means that soon I will be a part – albeit an infinitesimally small one – of the podcasting phenomenon. More on this when John puts it online (probably next week). *** We reported yesterday that Vivo Ventures closed its new fund. Just felt I should re-emphasize that we told you yesterday… *** Interesting play yesterday for LifeMed, the healthcare multimedia company that raised over $6 million in a Series A round led by Battery Ventures. It seems to make sense from all accounts, particularly since its revenue model will be based more on user fees (such as fees for special services, research, database use, etc.) than on advertising, which is a major plus. Moreover, I wrote two years ago that the VC space for diabetes – the disease LifeMed is first targeting via its dLife platform – had gotten saturated on the glucose monitoring/insulin delivery sides of things, and that investors needed to look for new angles if they wanted to make money. I have a generally healthy skepticism for media deals in general (outgrowth of first-hand experience), but the company and
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The Blackstone Group has completed its $3.24 billion acquisition of Dallas-based hotel company Wyndham International Inc. (AMEX: WBR). www.blackstone.com www.wyndham.com Rockwood Holdings Inc., a
Picolight Inc., a Boulder, Colo.-based maker of optical transceivers and components, has raised $7 million in additional Series H equity funding from Inv*stor Growth Capital. It also secured $7.5 million in debt financing from ORIX Venture Finance. The entire round is now valued at $27.5 million, following an earlier $13 million close that included BA Venture Partners, Vesbridge Partners and Coral Capital Management. To date, Picolight has raised nearly $130 million in total private funding since its 1996 inception. www.picolight.com
ClairMail Inc., a Novato, Calif.-based provider of workforce mobility solutions, has raised around $8.3 million in Series A funding, according to a regulatory filing. Participants include Norewest Venture Partners and Outlook Ventures. www.clairmail.com BA Research International, a Houston, Texas-based provider generic analytical services for pharmaceutical companies, has received an undisclosed amount of private equity funding from Summit Partners. www.baresearchinternational.com Peppercoin Inc., a Waltham, Mass.-based payment technology company, has raised $8 million in Series C funding. Wall Street Technology Partners led the deal, and was joined by Pan Series Management and return backer Pod Holdings. www.peppercoin.com Alfalight Inc., a Madison, Wis.-based maker of diode lasers, has raised $7 million. GF Private Equity Group led the deal, and was joined by return backers ARCH Venture Partners, Advanced Technology Ventures, EDF Ventures, CenterPoint Ventures, Venture Investors, Wisconsin Alumni Research Foundation and Advantage Capital Partners. The company has raised approximately $67 million in total VC funding since its 1998 inception. www.alfalight.com Cruise Planners Inc., a Coral Springs, Fla.-based cruise franchisor, has received an undisclosed amount of private equity funding from Palm Beach Capital Partners. www.cruiseplanners.com www.pbcap.com Voxware Inc., a
The Neiman Marcus Group Inc. (NYSE: NMG.A, NMG.B) shareholders yesterday overwhelmingly approved a proposed $5.1 billion company acquisition by Texas Pacific Group and Warburg Pincus. Shareholders will receive $100 per outstanding share. www.neimanmarcusgroup.com Watermill Ventures has acquired a 100% stake in PFI LLC (a.k.a. Vertex Fasteners), a Pawtucket, R.I.-based distributor of industrial fasteners, fastener products and rivets. No financial terms were disclosed for the deal, which included participation from company management. www.watermill.com www.vertexfasteners.com
Monomoy Capital Partners and Hilco Equity Management have completed their $25 million buyout of Awrey Bakeries Inc., a Livonia, Mich.-based maker of frozen baked goods. The deal will include a recap of Awrey’s balance sheet, and the installation of Alden Knowles as CEO. Knowles has held senior management and turnaround positions at the bakery divisions of Bunge Foods and Hazelwood Bakeries. www.awrey.com
Goldin Capital Management, a New York-based private equity firm, has acquired the assets of Skin Nuvo International LLC, in a $15 million bankruptcy auction. The company operates a chain of 37 medical spas in the PAI Partners of Eaton Corp. (NYSE: ETN) has completed its purchase of Tractech Holdings Inc. from a shareholder group led by Edgewater Capital Partners. No financial terms were disclosed. Tractech is a Warren, Mich.–based manufacturer of specialized differentials for the commercial and specialty vehicle markets. www.eaton.com www.tractech.com Citigroup Venture Capital has acquired a 10.5% stake in department store chain La Curacao, according to The Wall Street Journal. No financial terms were disclosed.
Bronco Drilling Company Inc., an Oklahoma City-based provider of contract land drilling services to the oil and natural gas industries, priced 5.1 million common shares at $17 per share, for an IPO take of approximately $86.7 million. It originally filed to price 4.7 million shares at between $14 and $16 per share. Johnson Rice & Co. and Jefferies & Co. served as lead underwriters. The company was formed in June 2001 by affiliates of Wexford Capital, which held a 100% pre-IPO ownership stake and a 72% post-IPO stake. www.broncodrill.com Team Health Inc., a Knoxville, Tenn.-based provider of outsourced physician staffing and administrative services to hospitals and other healthcare providers, has filed to raise $172.5 million via an IPO of common stock. It plans to trade on the NYSE under ticker symbol THH, with Lehman Brothers and Merrill Lynch serving as lead underwriters. Significant shareholders include Madison Dearborn Partners (36% stake), Cornerstone Equity (36%) and Beecken Petty O’Keefe & Co. (8%). www.team-health.com
Symantec Corp. (Nasdaq: SYMC) has agreed to acquire Sygate Technologies Inc., a Fremont, Calif.-based provider of endpoint compliance solutions. No financial terms were disclosed. Sygate has raised around $35 million in VC funding since its 1995 inception, from firms like Trident Capital, Trinity Ventures, CIR Ventures, Intersil Corp. and MVC Capital. www.symantec.com www.sygate.com EMC Corp. (NYSE: EMC) has agreed to acquire Rainfinity Inc., a San Jose, Calif.-based provider of virtualization solutions for heterogeneous networked attached storage and file system environments. The deal is valued at less than $100 million, and is expected to close later this month. Rainfinity has raised $42 million in VC funding from firms like Carlyle Venture Partners, Alloy Ventures, New Enterprise Associates, Intel Capital and Invesco Private Capital. www.emc.com www.rainfinity.com Complete Energy Holdings LLC has completed its $580 million acquisition of La Paloma Generating Company LLC, from a creditor group that included financial institutions and hedge funds. Complete Energy counts private equity firm Engage Inv*stments among its owners. www.complete-energy.com Interwoven Inc. (Nasdaq: IWOV) has acquired Scrittura Inc., a New York-based provider of document automation technology. The deal is valued at approximately $16.3 million in cash, plus the possibility of an additional $2 million if certain revenue and operating contribution goals are achieved by December 31. Scrittura had raised VC funding from firms like LV Equity Partners, Walden Capital Partners, Penny Lane Partners, Hudson Venture Partners and Middlebury Venture Partners. www.interwoven.com www.Scrittura.com Syndesis Inc., an Ontario-based provider of end-to-end provisioning and activation solutions for service offerings, has agreed to acquire CoManage Corp., a Wexford, Pa.–based provider of data integrity management solutions for telecom service providers. No financial terms were disclosed. Syndesis has raised VC funding from such firms as Greylock, Helix Inv*stments,Pequot Capital Management, Sequoia Capital and VenGrowth. CoManage has raised VC funding from Adams Capital Management, Apax Partners, Bessemer Venture Partners, Columbia Capital, Goldman Sachs, Highland Capital Partners and Lucent Venture Partners. www.syndesis.com www.comanage.com
Javed Kahn has joined The Blackstone Group as deputy managing director of the firm’s newly-opened office in Jan Gaulding has been named chief financial officer of General Bandwidth Inc., an Austin, Texas-based VoIP equipment manufacturer. She previously served as CFO of General Bandwidth shareholder Sevin Rosen Funds. www.genband.com Andrew Brown and Ryan Magee have joined Westport, Conn.-based Patriot Capital Funding Inc. (Nasdaq: PCAP) as vice president and assistant vice president, respectively. Both men previously worked with GE Commercial Finance’s global sponsors group. www.pat-cap.com
Raymond Nolte has joined Citigroup Alternative Inv*stments has CEO of its hedge funds-of-funds group, effective September 1. He previously served as a managing director and vice chairman of the Deutsche Bank Absolute Return Strategies Fund-of-Funds and the Single Manager Hedge Fund business. www.citigroup.com
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August 17, 2005 
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