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    PE Week Wire -- Wednesday, June 7

Random Ramblings

Before writing about clean coal a few weeks ago, I emailed John Doerr to ask if Kleiner Perkins had any interest in the space. After all, no firm has become more of a clean-tech convert than KP, with Doerr serving as lead evangelist. Unfortunately, we couldn’t connect before press-time (or whatever the electronic equivalent is), and I baselessly assumed that KP might not care much about a carbon energy niche that features high capital costs and few available deals. But you know what they say about those who assume…

It turns out that KP has quietly made an investment in GreatPoint Energy Inc., a Cambridge, Mass.-based developer of low-cost gasification technologies. GreatPoint is one of just three VC-backed clean coal companies out there -- CoalTek Inc. and Powerspan Corp. are the others – and previously raised around $6.55 million in Series A funding from Advanced Technology Ventures and Draper Fisher Jurvetson. GreatPoint declined to comment, but a regulatory filing indicates that the entire Series B round is capped at $30 million, with $15 million already called down. It also indicates that I may have emailed the wrong KP partner, as Ray Lane – not John Doerr – is listed as a GreatPoint board member, alongside Bill Wiberg of ATV and Raj Atluru of DFJ.

Clean coal still facing a myriad of problems from a VC funding perspective, but KP’s participation could spark additional interest in the space. Given this country’s hefty coal reserves and even heftier energy consumption, let’s hope so.

*** The next issue of Buyouts Magazine will feature a package on the private equity market’s sprint to the public realm, including pieces on the KKR IPO, SPACs, BDCs and Onex Corp. My contribution will focus on why the sudden interest and, to be fair, whether it is really all that sudden (taking all opinions before 5pm deadline).

While doing some research, I noticed that Westport, Conn.-based private equity firm Compass Group late last month managed to go public on the Nasdaq. Don't know how I missed it, but I did. The $202.5 million IPO featured a novel structure in which the issuer is listed as an operator company rather than as an investment company, thereby removing a number of reporting requirements. To do so, Compass has pledged to take more than a 50% interest in all of its portfolio companies, and that its underlying entities must be audited at the time of acquisition. This latter qualification might seem a bit troublesome, but less so when one considers how many public-to-private buyouts are occurring (i.e., buyouts of SarBox-compliant companies).

When KKR went public in Amsterdam, I wrote that the offering might be a test run before something similar in the U.S. The Compass IPO might be able to serve as a smaller model, particularly if KKR is willing to form a side fund that only participates in the firm’s control deals.

*** Two interesting stories today. First, Reuters asks if the Dubai Ports World controversy has resulted in decreased Middle Eastern investment into the U.S. Second, the German government is considering a tax on the earnings of German-domiciled private equity funds.

*** Finally, reportedly has become one of the first well-known Web 2.0 companies to… wait for it: Fold. No VC funding to speak of, but it reminds me of an old Dennis Leary joke: “Poor Lou Gehrig. Died of Lou Gehrig's disease. How the hell did he not see that coming?”


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    Top Three

Liberty Global Inc. has agreed to sell its French cable assets to Altice and Cinven for around €1.25 billion. The deal is expected to close in the second half of this year, pending regulatory approval. In other Liberty Global news, the company received EU regulatory approval for the sale of its Swedish cable assets to The Carlyle Group and Providence Equity Partners for approximately €327 million.

GMarket Inc., a Seoul, Korea-based retail e-commerce marketplace, has filed to raise $100 million via an IPO of American depository shares. It plans to trade on the Nasdaq under ticker symbol GMKT, with Goldman Sachs and Cowen & Co. serving as co-lead underwriters. Oak Investment Partners is GMarket’s second-largest shareholder with around 12.41 million of beneficially-owned shares (28.6% pre-IPO stake), but has agreed to sell around 4.5 million of those shares to Yahoo Inc. for $60 million.

True Ventures has held a $76.975 million first close on its inaugural fund, from limited partners like Paul Capital, Park Street Capital and Capricorn Management. A final close on approximately $100 million is expected to come later this year. The San Francisco-based firm will focus on seed-stage and early-stage tech plays, and is managed by Phil Black, John Burke and Jon Callaghan.

Cliffwater LLC is looking to hire a Private Equity Associate based in Marina del Rey, CA.
Cliffwater is an investment consultant to pension plans, endowments and foundations.

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    VC Deals

Pelikan Technologies Inc., a Palo Alto, Calif.-based developer of hand-held glucose monitoring devices for people suffering from diabetes, has secured $19.83 million of a $29.75 million Series E round, according to a regulatory filing. Backers include Swissfirst Bank, Lombard Odier, HBM BioVentures, Mannheim LLC and Heidelberg Innovation.

ANDA Networks Inc., a Sunnyvale, Calif.-based provider of carrier-class Ethernet solutions for fiber and copper-based access networks, has raised $10.5 million in new VC funding. Return backers include Venrock Associates, Highland Capital Partners and Crimson Investment.

OQO Inc., a San Francisco-based developer of hand-held personal computers, has raised around $5.4 million in additional Series D funding, according to a regulatory filing. The company held a $20 million first close late last year with participation by Paladin Capital Group, Azure Capital Partners, AsiaTech Management and Motorola Ventures.

Ideal Image Development Inc., a Tampa, Fla.-based provider of laser hair removal services, has raised $16 million in combined private equity and debt funding. H.I.G. Capital led the equity tranche, while ORIX Venture Finance provided the debt.

Luxury Link, a Los Angeles-based provider of online luxury travel services, has raised $9 million in new VC funding co-led by San Francisco Equity Partners and El Dorado Ventures.

SoonR Inc. of Campbell, Calif. has secured $4.53 million of a $6.04 million Series A funding round led by Clearstone Venture Partners, according to a regulatory filing. The company enables mobile access to PC-based information and applications from any cell phone over any carrier network.

Blue Medical Supply Inc., a Marietta, Ga.-based provider of supply chain solutions to the medical market, has raised $5 million in new VC funding. Ballast Point Partners led the deal, and was joined by Spring Point Ventures.

Avvo Inc., a Seattle-based online company focused on helping consumers better navigate the legal industry, has raised $3 million in Series A funding from Benchmark Capital.

Xignite Inc., a Foster City, Calif.-based provider of on-demand financial web services for mission-critical applications, has raised $2.2 million in Series A funding, according to a regulatory filing. Backers include Altos Ventures and Startup Capital Ventures.

The DNA Repair Co., Menlo Park, Calif.-based biotech company focused on treating cancers associated with defective DNA repair mechanisms, has raised $2 million in Series A funding from Mohr, Davidow Ventures, according to a regulatory filing. The company’s technology is based on a patent held by both the Oregon Health & Science University and the Dana Farber Cancer Institute at Harvard.

Bullhorn Inc., a Boston-based provider of on-demand staffing and recruiting software, has raised $1.5 million in Series C funding, according to a regulatory filing. Company shareholders include GE Pension Trust and Charter Venture Capital.

CS-Keys Inc., an Indiana–based developer of cancer-specific biomarkers using proteomics, has raised $285,000 in startup funding from the Indiana Seed Fund. The company’s technology is being spun out of a lab at the Indiana University School of Medicine.

Market Strategies Inc., Livonia, Mich.-based provider of custom and syndicated market research, has received an undisclosed amount of private equity funding from Veronis Suhler Stevenson.

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    Buyout Deals

JLL Partners has agreed to acquire check-cashing store operator ACE Cash Express Inc. (Nasdaq: AACE) for $30 per share, or $421 million.

Investcorp and Banc of America Capital Investors have acquired FleetPride Corp., a The Woodlands, Texas–based independent distributor of aftermarket heavy-duty truck and trailer parts. Company management also participated, although no financial terms were disclosed. Watch Hill Partners advised Investcorp on the deal.

Advent International has agreed to acquire a majority stake in BondDesk Group LLC, a Mill Valley, Calif.–based provider of an odd-lot fixed-income electronic trading platform. No financial terms were disclosed.

Trivest Partners has put diet center and herbal supplements company Herbal Magic ULC on the auction block, according to The Deal. CIBC World Markets is running the process.

Berkshire Partners is waiting on second-round bids for thrift store operator Savers Inc., according to The Deal. The auction could net up to $500 million, and is being run by CIBC World Markets.

The Carlyle Group and France Telecom reportedly are in exclusive talks to acquire Austrian mobile operator One for more than €1.5 billion. France Telecom already holds a 17.45% stake in One, while other shareholders include E.ON, Telenor and TDC.

The Carlyle Group has acquired Bull Valley Golf Club Inc., a private 18-hole championship golf course and country club located in Woodstock, Illinois. No financial terms were disclosed. Corporate Finance Associates advised Bull Valley on the deal.

    PE-Backed IPOs

LoopNet Inc., a San Francisco–based operator of an online marketplace for commercial real estate, priced six million common shares at $12 per share ($11-$13 range), for an IPO take of approximately $72 million. It will trade on the Nasdaq under ticker symbol LOOP, while Credit Suisse served as lead underwriter. LoopNet had raised around $31.35 million in total VC funding, from firms like Brentwood Associates, Rustic Canyon Ventures, Trinity Ventures, Suez Ventures and Oak Investment Partners.

    PE Exits

Riverlake Partners has sold Stock Equipment Company Inc. to Schenck Process of Germany for an undisclosed amount. Stock Equipment is a Chagrin Falls, Ohio-based provider of bulk material handling systems and electronic controls for coal-fired power plants.

ADVA Optical Networking has agreed to acquire Movaz Networks Inc., an Atlanta-based provider of wavelength division multiplexing equipment. The deal is valued at up to $81 million, including $6 million in cash, around 6.53 million shares of ADVA common stock and the earn-out possibility of another one million shares. Movaz raised around $189 million in VC funding since its 2000 inception, from firms like Menlo Ventures, Worldview Technology Partners, Oak Investment Partners, Anschutz Investment Co. and Meritech Capital Partners.

    PE-Backed M&A

Emerald Waste Services LLC has acquired Disposal Depot Inc. and MB Environmental Inc., two solid waste services companies located in Northwest Florida. No financial terms were disclosed. Emerald Waste is a solid waste platform company formed by WHI Capital Partners earlier this year.

Whitehill Technologies Inc., a Canadian provider of document automation services, has acquired Dayton, Ohio-based document services provider InSystems from Standard Register for an undisclosed amount. Whitehill has raised VC funding from Latitude Partners and GrowthWorks Canadian Fund.

BenefitMall Inc., a Dallas-based provider of services for brokers selling small-group employee benefits, has acquired Weston Group Benefits LLC of New York City. No financial terms were disclosed. BenefitMall has raised around $76 million in VC funding from firms like Austin Ventures, Humana Venture Capital, MetLife, Morgan Stanley Venture Partners and Technology Crossover Ventures.

    Other News

Fulcrum Global Partners, a New York-based market research firm backed by Rosemont Investment Partners, is shutting down, according to the NY Post.

Golf Galaxy Inc. (Nasdaq: GGXY), an Eden Prairie, Minn.-based retailer of golfing goods, has withdrawn registration for a proposed secondary public offering of 3.13 million common shares. Sellers had been expected to include William Blair Capital Partners, Primus Capital and FdG Capital Partners. No reason was given for the decision, although it likely had to do with a share price that had fallen around 35% since the original S-1 was filed on May 3.

    Firm & Fund News

Perseus LLC of Washington, D.C. is raising up to $1 billion for its seventh buyout fund, according to a regulatory filing. It already has secured around $95.2 million.

OmniCapital Group is raising up to $100 million for its inaugural tech VC fund, according to a regulatory filing. The Westfield, N.J.-based firm is run by former Bell Labs president Arun Netravali, and already has secured over $15 million in capital commitments.

    Human Resources

Jennifer Christensen has joined Chicago-based Wynnchurch Capital Partners as director of marketing. She previously served as executive director of the Alliance of Merger & Acquisition Advisors.

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:
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June 7, 2006

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