| PE Week Wire -- Wednesday, March 23|
Disclosure, Disclosure, Disclosure
I spent most of yesterday on the phone with various Texans, discussing the pending state legislation that would set parameters for disclosure of public pension fund investment information. As a quick refresher, the current bill would require that 13 different types of information be disclosed, with the legitimacy of any other Open Records requests to, presumably, be determined by Texas AG Greg Abbott. VCs, of course, are not terribly comfortable with such language, as Abbott has hemmed and hawed on the issue, and his office told me that he supports the disclosure of portfolio company information, including valuations and revenue.
Austin Ventures has even gone so far as to reject state pensions from its new fund, and UTIMCO chief Bob Boldt told a legislative committee that his group has been shut out from follow-on commitments to funds from Prospect Venture Partners, Foundation Capital, Barclays Private Equity and American Securities (not American Capital Strategies, as I erroneously reported yesterday). For a fuller picture, UTIMCO has been able to make three fund commitments so far in 2005, with Pomona Capital, Prism Ventures and OCM/GFI Power Opportunities Fund II. Q4 2004 commitments went to Union Square Ventures, Carlyle Group and Doughty Hanson & Co.
Anyway, the big question here is whether or not the bill will be modified so that certain information is explicitly excluded from Texas' Open Records law (Before continuing, it is worth noting that the Texas statute basically says that everything is subject to disclosure, unless otherwise specified in law. This is different than many other state statutes, which assume confidentiality unless otherwise specified by law).
To get some answers, I spoke to Rep. Dan Gattis, who is sponsoring the House version of disclosure legislation. Talkative guy, who clearly has a firm grasp of the relevant issues in play. Gattis said that the current legislation likely will be modified in the next two weeks, but that he could not yet provide any specific language. He also said that he believes that private equity inv*stments are vital to the future success of state pension fund programs, and that a delicate balance must be struck so that top-tier firms continue to accept Texas' money. When asked if he feels that, in general, portfolio company valuations and revenue should be kept confidential, he responded affirmatively
The problem, however, is that he believes that any sort of blanket confidentiality could become problematic if an unanticipated type of Open Records request is made (i.e., perhaps for a new type of information not considered by the legislators or VCs). As such, his leaning was that the final bill should include some sort of provision that would prevent disclosure in cases where such an action was harmful to the fund, violated trade secret, etc. That decision, of course, would be made on a case-by-case basis by AG Abbott. In other words, it's kind of the status quo, except that Abbott won't have to deal with requests related to the aforementioned 13 items.
I asked Gattis if this would appease VCs, since Abbott has been a vocal proponent of full-fledged disclosure (top-line and bottom-line). His response was that while he didn't want to speak for the AG, he believes that Abbott understands the perils of bottom-line disclosure and still has an open mind toward the matter. He added that VCs might be assuaged if Abbott made a few public comments against bottom-line disclosure, in concert with the legislative vote. Moreover, a few other folks I spoke with believe Gattis was being intentionally conservative in his conversation with me, and that the final bill likely will contain at least some specific exclusion language. Again, we'll keep watching the developments.
All of these complexities, of course, are lost on the Austin-American Statesman, which this morning has another editorial (free sub required) urging Gattis and company to "fiercely resist efforts by Austin Ventures and other private equity firms to force state investment funds to abandon transparency and embrace secrecy." The piece implies that AV and others are arguing for complete confidentiality, which isn't even close to accurate. PE and VC firms are generally OK with disclosure of where the state's money is going (i.e. which fund), how much the commitment is for, the call-down/disbursement data, internal rates of return and, in most cases, management fee data. It simply doesn't want portfolio company disclosed (which never is mentioned in the Statesman piece). The Statesman also revives an old canard about CalPERS and cronyism, which has previously been debunked in this space.
For full disclosure (not legally mandated), I called Dave Lowery of the Statesman to discuss this morning's editorial. He refused to comment, saying that he hadn't liked the tone of what I wrote after a previous discussion. Then he hung up.
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Credit Suisse First Boston has confirmed market rumor - and some reports - that its previously-announced spinout of DLJ Merchant Banking will not occur. Instead, the group will raise a new fund (said to be $1 billion or higher), while current managing partner Tom Dean will leave to form a new firm named Avista Capital. Approximately 30 professionals are staying with DLJ MB, which will be run by Steven Rattner. www.csfb.com
TelASIC Communications Inc., an El Segundo, Calif.-based fables semiconductor company, has raised $26 million in Series D funding. ComVentures led the deal, and was joined by fellow return backers Mission Ventures, The IPO Group, Agilent Technologies and Redpoint Ventures. www.telasic.com
Craig White has left Pacific Corporate Group, just three months after joining from the private markets group of Callan Associates. www.pcgfunds.com
E Ink Corp., a Cambridge, Mass.-based provider of electronic paper display technologies, has received an undisclosed amount of venture funding from Intel Capital. The company previously had raised nearly $100 million in total funding since its 1997 inception. www.eink.com
Encentuate Inc., a Foster City, Calif.-based provider of enterprise access security solutions, has raised $16 million in Series B funding. August Capital led the deal, and was joined by VSP Capital. Return backers Gabriel Venture Partners and Peng Ong (company founder and CEO) also participated. www.encentuate.com
Integrated Healthcare Systems Inc., a Kent, Wash.-based pharmacy technology company, has received $9 million in its first round of outside funding. AIG Horizon Partners Fund and another AIG-related fund participated on the deal. Cascadia Capital advised HIS on the deal. www.ihsystems.net
Provigent Inc., a Los Altos, Calif.-based provider of system-on-a-chip solutions for broadband wireless transmissions, has raised $2 million in additional third-round funding. This brings the round total to $10 million, and the company's total VC take to $21 million. Backers include Sequoia Capital, Pitango Venture Capital, Magnum Communications Fund, Ascend Technology Ventures, Delta Ventures and Qualcomm co-founder Andrew Viterbi. www.provigent.com
Dubai International Capital has agreed to acquire UK-based wax museum operator The Tussauds Group Ltd. for approximately GBP 800 million. The selling party is Charterhouse Group, which in late 2003 rejected a GBP 750 million bid from BC Partners and PAI Partners. At the time, Charterhouse was looking for upwards of GBP 900 million.
Texas Pacific Group, General Atlantic and Newbridge Capital reportedly are planning to offer $350 million for a stake in Lenovo Group Ltd., the China-based computer maker that recently acquired IBM's personal computer business for $1.25 billion, according to The Wall Street Journal.
General Motors Corp. (NYSE: GM) may sell up to a 50% stake in its GMAC commercial mortgage subsidiary for around $1 billion, according to The Wall Street Journal. Several private equity firms reportedly have expressed interest. www.gmac.com
Granville Baird Capital Partners and 3i Group have received European Commission approval for their proposed buyout of Berkenhoff GmbH, a subsidiary of ThuyssenKrupp Steel AG that manufactures nonferrous metal wire. www.thyssenkrupp.com
Industri Kaptial has agreed to sell Laho Equipment to Barclays Private Equity for GBP 110 million. Laho is a France-based construction equipment rental group that IK acquired in June 2000. www.laho.com
Citigroup Venture Capital is shopping portfolio company Euramax International Inc. for approximately $1 billion, according to The Deal. Euramax is a Norcross, Ga.-based maker of aluminum products, and reportedly has received interest from Apollo Advisors, Bain Capital, Caxton-Iseman Capital, Goldman Sachs and Warburg Pincus. CSFB is running the auction. www.euramax.com
GMT Communications Partners has acquired three companies that will help it grow the business of portfolio company Docu Group AG, a Switzerland-based provider of B2B publishing services. The acquisitions are: DBI, a publisher of news information for the German construction market; Pisa, also a news provider to the German construction market; and a 51% interest in InfoBau, which publishes information for the civil engineering sector. www.gmtpartners.com www.docugroup.info
Close Brothers Private Equity has agreed to sell its 35% position in Network Disaster Recovery Ltd. (NDR) to Phoenix IT Group PLC for GBP 37.2 million, including around GBP 8.4 million of d*bt. Close Brothers acquired its NDR stake in December 2000 from 3i Group for GBP 25 million. NDR is a UK-based provider of business continuity and disaster recovery services. www.ndr.co.uk
Wind Point Partners has acquired Waterbury Companies Inc., a Waterbury, Conn.-based maker of hygiene and pest control products. The seller was Mezzanine Management, which sponsored a management buyout of Waterbury in August 1998 from Carpenter Technology Corp. No financial terms were disclosed. www.watco.com
WHI Capital Partners of Chicago has led the buyout of AddisonMckee, a manufacturer of metal tube bending machines, end forming machines and precision tooling. Mercantile Capital Partners provided a minority co-inv*stment, while LaSalle Business Credit provided a senior credit facility and Albion Inv*stors provided mezzanine financing. www.addisonmckee.com www.whicapital.com
Nexsan Technologies, a Woodlands Hills, Calif.-based provider of ATA/SATA-based storage systems, has agreed to acquire AESign Evertrust, a lifecycle management software provider. No deal terms were disclosed. Nexsan has raised VC funding from firms like RRE Ventures, VantagePoint Venture Partners and Beechtree Capital. www.nexsan.com www.evertrust.net
Matrix Telecom, a portfolio company of Platinum Equity, has agreed to acquire Global Crossing Ltd.'s (Nasdaq: GLBC) small business group, which provides switched and dedicated voice services and data applications to an estimated 30,000 small- to medium-sized businesses. The deal is valued at approximately $40.5 million in cash. In related news, Global Crossing and Matrix Telecom have entered into a long-term carrier services agreement, under which Global Crossing will provide Matrix wholesale voice, data and IP services. Proceeds from the carrier services agreement are not included in the aforementioned $40.5 million sale price. www.platinumequity.com www.globalcrossing.com
Biovitrum AB, a Stockholm-based drug company discovery and development company, has agreed to acquire Cambridge Biotechnology Ltd., a UK-based drug discovery company focused on obesity, pain and inflammation. No financial terms were disclosed. Biovitrum's principal shareholders are MPM Capital and Nordic Capital (22% each), while Pfizer owns a 19% stake. Cambridge Biotechnology has raised VC funding from Merlin Biosciences, NW Brown Capital Partners, Northern Venture Managers, Johnson & Johnson Development Corp., HarbourVest Partners and Avlar BioVentures Ltd. www.biovitrum.com www.camb-biotech.com
Ikano Communications Inc., a Salt Lake City-based portfolio company of Insight Venture Partners, has acquired the subscriber base and certain related assets of Amerion LLC, a Pasco, Wash.-based ISP for customers in the western U.S. No financial terms were disclosed. www.ikano.com www.amerion.com
W.P. Carey & Co. announced that company president Gordon DuGan has been elected CEO. He originally joined the firm in May 1988 as assistant to the chairman, and later was senior vice president in the firm's acquisitions department. He later left W.P. Carey to take a CFO job in Colorado, but rejoined in 1997. www.wpcarey.com
Marc Raciot, former governor of Montana, has joined the board of Allied Capital (NYSE: ALD). He currently is a partner with law firm Bracewell & Patterson, and served as chairman of President George W. Bush's re-election campaign. www.alliedcapital.com
Jeb Miller has joined ComVentures as a partner. He previously was with Worldview Technology Partners, which late last year promoted him to the position of principal. www.comventures.com
Annette Grimaldi has joined Jeffries & Co. as a managing director and head of the firm's I-banking efforts in the life sciences sector. She previously was with SG Cowen, where she led the firm's I-banking activities in the biotech and emerging pharmaceuticals markets. www.jefco.com
David Halbert, founder and CEO of AdvancePCS (Nasdaq: ADVP), has launched a private equity partnership named Caris Ltd. The Irving, Texas-based group currently has $350 million under management, and will make strategic inv*stments of between $10 million and $100 million in both private and public service industry-oriented companies (i.e., healthcare, energy, financial services). Halbert will serve as a managing director, alongside former AdvancePCS executives Laurie Johansen and Leslie Simmons Brille. www.caristd.com
MFC Capital Funding Inc. has launched as a new leveraged lending firm focused on the lower, middle markets. The Chicago-based shop is being done in partnership with Minneapolis-based Marquette Financial Cos., and is being headed up by Joseph Gaffigan and Christopher Randall, both of whom previously served as senior executives of Fifth Third Bank. Edward Ryczek, a former director of One Mezzanine Capital Corp., also has joined MFC Capital Funding as a managing director. www.mfccapitalfunding.com
Multiple Capital has been formed by Coller Capital, to handle the recently-acquired venture capital portfolio of Societe Innovatech du Grand Montreal. It will be run by former Innovatech CEO Hubert Manseau, along with former Innovatech vice presidents Michel Lagueux and Andre Vaillant. www.multiplecapital.com www.collercapital.com
The Illinois Technology Development Fund has committed a total of $7.5 million to three venture capital firms: MK Capital and Beecken Petty O'Keefe & Co. each received $3 million, while Illinois Ventures received $1.5 million. The ITDF is a new effort funded by the Illinois State Treasury, and is expected to disburse up to $18 million by year end.
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March 23, 2005
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