| PE Week Wire - Wednesday, July 30 |
Random Ramblings
Greetings from Silicon Valley, where the sun has finally emerged from its Pacific Time slumber. Since I’m out here, it only makes sense that I start with something local:
True Ventures is in the midst of raising its second fund, and has quietly held a first close on approximately $165 million. That matches the entire amount it raised the last time out, and is expected to hold a final close south of $200 million within the next couple of months.
A source familiar with the situation says that the fund is oversubscribed, and that the slight size increase will not result in larger checks or latter-round deals. Instead, it will simply have a bit more runway for follow-on investing -- a particularly important runway for True, which holds onto its companies like Joba hangs onto unexplained grudges.
The firm declined to discuss fundraising, apparently choosing its trained attorney’s interpretation of SEC regs over mine. Don’t worry guys, I won’t throw at your head.
*** Last Friday, I did a blog post about how Highland Capital Partners plans to begin investing in cleantech and energy deals. Actually, my post was based on a post by Scott Kirsner, which was based on an NPR interview of Highland partner Paul Maeder, but all of that is really beside the point.
What I’ve been pondering in the ensuing days is about the new class of cleantech investor, and if there are enough experienced bodies to satisfy the VC market’s appetite. Highland is in the market for cleantech talent (according to a local headhunter), but its initial foray is being led by Maeder, who has made his venture bones on software transactions. I’m not saying Maeder can’t make the transition -- perhaps he’s using Bob Metcalfe as inspiration -- but there should be concern that the cart is moving a bit in front of the horse.
If this lament sounds familiar, that’s because I expressed it late last year when buyout firms were raising more distressed debt funds than there were experienced managers to run them. Still too early to know if I was right...
Worth noting that the counter-argument is fairly persuasive. It posits that cleantech will be to the next decade what the Internet was to the 1990s and what software was to the 1980s: An unbridled wave of innovation that will be strong enough to carry both experienced and inexperienced investors to success. What think you?
*** I keep getting asked the same question: “Why is KKR going public now?” First, it isn’t going public now. It’s going public sometime in Q4, which could conceivably mean sometime after Christmas. Second, KKR going public now via this structure makes much more sense than going public then (pre-credit crunch) or later (2011?) does.
KKR management is not selling any shares in the IPO, so the initial trading price doesn’t much matter to their wallets. In fact, it arguably gives them lots of upside and relatively little downside. Ditto for the new execs they recruit using this “public currency.” The only flip side is that stock purchases of other asset managers (e.g. Blackstone/GSO) will be a bit more difficult, but there is no good reason for why KKR will trade at more of a discount than would its prospective targets.
In fact, the only thing I still can’t figure is why KKR isn’t wrapping KKR Financial -- its NYSE-listed real estate investment trust -- into the transaction. Only legit explanation I’ve heard is that KKRF is more independently-managed than is the Amsterdam-listed vehicle, but that would just require a bit of hierarchical rejiggering (small potatoes compared to the whole enchilada).
*** I’m moderating a panel today on portfolio valuation issues here in Menlo Park. It will actually be more of a group discussion. If you can’t make it and have issues you think we should discuss, please pass them on.
*** Finally, I’m looking forward to seeing a bunch of you tonight at The Dutch Goose (a mischievous reader emailed to say we should have held it at Mervyn’s Cafe). Special thanks to the Palo Alto office of Dorsey & Whitney LLP for sponsoring, and to Formative Ventures for offering up its parking lot...
New at peHUB
* peHUB First Read, including how optimists buy iPhones and pessimists buy gold.
peHUB Second Opinion, including how I-bankers are streaming into corporate development.
Monomoy bought catalog retailer Missy Group yesterday. Was it a contrarian play?
Q&A with Richard Wolpert of The Mailroom Fund, a joint venture between Accel Partners, AT&T and the William Morris Agency.
CVRx, a Minneapolis-based developer of an implantable device to control hypertension, has raised $84 million in Series E funding. New Enterprise Associates and Johnson & Johnson Development Corp. co-led the round, and were joined by return backers BBT Fund, Thomas Weisel Healthcare Venture Partners, InterWest Partners, Frazier Healthcare Ventures and SightLine Partners. The company has now raised over $209 million in total funding. Read more...
The Blackstone Group has teamed up with Investment Corp. Dubai to bid on UK media group Informa PLC (LSE: INF), according to The Financial Times. Earlier reports had an alternate consortium of Carlyle Group, Providence Equity Partners and Hellman & Friedman, but today’s FT story says that Hellman & Friedman has walked away. Read more...
Mervyn’s has filed for Chapter 11 bankruptcy protection, four years after being carved out of Target Corp. for $1.2 billion. Buyers in that deal included Sun Capital Partners, Cerberus Capital Management, Lubert-Adler and Klaff Partners. Cerberus is no longer a shareholder in the retail operation, although it maintain equity in a real estate spinoff. Read more...
Cytochroma, a Markham, Ontario-based drug company focused on diseases and disorders related to vitamin D deficiency, has raised C$45 million in Series C funding. Mitsubishi Tanabe Pharma Corp. led the round, and was joined by return backers Vengrowth Advanced Life Sciences Fund, Caisse de Depot et Placement du Quebec, Novo AS, Canadian Medical Discoveries Fund, BDC Capital, VentureLink and GrowthWorks. Read more...
SpectraGenics Inc., a Pleasanton, Calif.-based developer of OTC consumer cosmetic medical devices, has called down around $30 million of a $37 million Series E round, according to a regulatory filing. Aisling Capital led the round, and was joined by return backers like De Novo Ventures, Technology Partners, GVC (Japan) and Vivo Ventures. www.spectragenics.com
Alphion Corp., a Princeton Junction, N.J.-based maker of integrated photonic components, has secured $12.56 million of a $30 million Series E round, according to a regulatory filing. The only listed outside shareholder is Tallwood Venture Capital. www.alphion.com
Voyage Medical Inc., a Santa Clara, Calif.-based cardiac medical device company, has called down $20 million of a $22.05 million Series B round, according to a regulatory filing. Kleiner Perkins Caufield & Byers and Three Arch Partners were joined by return backer RWI Ventures. Dana Mead of KP and William Harrington of Three Arch received board seats. The company does not have a website.
Clickable, a New York-based provider of search advertising solutions, has raised $14.5 million in Series B funding. The Founders Fund led the round, and was joined by return backers Union Square Ventures and FirstMark Capital. Read more...
Voltaix, a maker of materials designed to enhance the performance of semiconductor chips and solar cells, has raised $12.5 million from Intel Capital. Voltiax has facilities in Branchburg, N.J. and High Springs, Florida.
Crescendo Networks Ltd., an Israel-based provider of Web application acceleration and optimization, has raised $9.5 million in third-round funding. The Challenge Fund was joined by return backers Evergreen Venture Partners, Apax Partners, Magma Venture Partners, StageOne Ventures and Convergent Capital. The company has now raised $36.2 million in total funding. Read more...
MeetUp Inc., the New York-based “Web meets world” company, has raised $7.5 million in Series D funding, according to a regulatory filing. The round had been announced earlier this month, but without a dollar amount. Union Square Ventures led the round, while other shareholders include Draper Fisher Jurvetson and Omidyar Network. www.meetup.com
Cequint Inc., a Seattle-based developer of caller ID technology for mobile phones, has expanded its Series B round to a total of $7.1 million, according to a regulatory filing. iSherpa Capital led the deal, and was joined by return backer Benaroya Capital. www.cequint.com
Derivix, a New York-based provider of pricing and analytics solutions to the options trading market, has raised $6.7 million in Series A funding from Goldman Sachs and Susquehanna Growth Equity. Read more..
Local Marketers, a Seattle-based online marketing company that uses a pay-per-contact model, has raised $4.1 million in Series A-2 funding from Madrona Venture Group. Read more... HourTown Inc., a Palo Alto, Calif.-based maker of online scheduling software for small business owners, has secured $450,000 of a $1 million Series A round led by Baseline Ventures, according to a regulatory filing. www.hourtown.com
TimeFox Inc. (aka PlayCafe), a Redwood City, Calif.-based developer of an “online game show,” has raised $930,000 in Series 1 funding led by First Round Capital, according to a regulatory filing. www.playcafe.com
Zogenix Inc., a San Diego-based drug company focused on pain management and CNS disorders, has secured an $18 million secured loan facility from Oxford Finance Corp. and CIT Healthcare. The company is currently in registration for an $86.25 million IPO, and has raised $78 million in VC funding from Domain Associates (23.2% pre-IPO stake), Clarus Ventures (23.1%), Scale Venture Partners (15.4%), Thomas McNerney & Partners (13.2%) and Abingworth Ventures (10%). Read more...
Angelica Corp. (NYSE: AGL) shareholders voted to approve a $22 per share buyout offer from Lehman Brothers Merchant Banking Partners. The total deal is valued at around $210 million, and is expected to close next week. Angelica is a St. Louis-based provider of linen and textile solutions to the healthcare market. It is being advised on the deal by Morgan Joseph & Co.
Chicago Growth Partners recently announced that it had led a recap of Royall & Co. Holdings, a Richmond, Va.-based provider of recruitment services to traditional colleges and universities. It did not disclose any pricing information, but a regulatory filing reveals that the deal's equity tranche was $92 million. In additional, the filing indicates that Goldman Sachs Private Equity Opportunities also participated. www.royall.com
MML Capital Partners has led a $75 million mezzanine investment in Yonkers Racing Corp., which manages New York State's largest gaming facility. New York Life Capital Partners, a limited partner in MML, participated as a co-investor. www.mmlcapital.com
China Distance Education Ltd., a Beijing-based provider of online education and test preparation courses, has raised $61.25 million in its IPO. The company priced 8.75 million American depository shares at $7 per share, which was the low end of an already-reduced price range. It plans to trade on the NYSE Arca, while Citi and Merrill Lynch served as co-lead underwriters. Shareholders include Orchid Asia Group Management and Morningside Technologies. www.chnedu.com
Help/Systems Inc., an Eden Prairie, Minn.-based provider of automated operations and business intelligence software, has acquired PowerTech Group, a Kent, Wash.-based provider of security software. No financial terms were disclosed. Audax Group acquired Help/Systems from Summit Partners late last year, while PowerTech had raised VC funding from Bluestem Capital and SeaPoint Ventures. www.powertech.com
Monessen Hearth Systems, a Paris, Ky.-based maker of hearth products and accessories, has acquired the assets of rival CFM Corp., which had been in bankruptcy protection. No financial terms were disclosed. Monessen is owned by The Riverside Co. Read more...
Golub Capital has promoted both Gregory Cashman and Andrew Steuerman to the position of senior managing director. Read more...
Quaker BioVentures has promoted Geeta Vemuri to partner. She joined the firm as a senior associate in 2003.
Nick Ashmore has been named private equity portfolio manager for Ireland’s National Pensions Reserve Fund, according to Dow Jones. He has been with the group since 2006, after having been with Adams Street Partners. The position became available when Ronan Cunningham left to join General Atlantic.
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