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    PE Week Wire -- Monday, November 14


Just Linking Around

*** Lots of good feedback to Friday’s column on the Abry Partners vs. Providence Equity Partners lawsuit, including some interesting questions about what Providence should -- and shouldn’t -- be required to know about its portfolio company. I’ll delve back into it later this week. In the meantime, here’s a piece I wrote for Buyouts on an older legal skirmish that already has been settled out-of-court: Staples vs. Platinum Equity.

*** Speaking of recent Buyouts articles, falling metropolitan newspaper circulation figures do not dampen the optimism I expressed here, which mostly centered on the still-thriving community newspaper business. Overall, however, I do not believe newspapers are dying – just that they are gaining more Internet readers at the expense of their print readers. Focus on circulation figures may soon become outdated (kind of like the category of “Internet companies.”).

*** Bill Burnham of Celsius Capital isn’t sold on all this venture funding for wireless email middleware companies. Good post, save for giving the WSJ credit for breaking the Visto news (did that sound petty enough?)…

*** Jeff Bussgang of IDG Ventures Boston on inside rounds vs. outside rounds.

*** The NY Times agrees that the mega-buyout space is bubble-prone. Nothing terribly new to regular readers of this space, save for some nearly-nervous quotes from still-bullish Blackstone Group president Hamilton James. Remember, this is the firm whose recent mantra seems to have been "bigger is better, because it's bigger." Now that the NYT has published this piece in its Sunday edition, expect a lot more popular press examination of the issue (one of the few major metro dailies with a circulation increase…).

    Top Three

Vestar Capital Partners has agreed to sell FL Selenia SpA to Kohlberg Kravis Roberts & Co. The deal is valued at approximately 835 million euros (including assumed debt), and is expected to close before year-end. FL Selenia is a Turin, Italy-based producer of branded automotive lubricants and other functional fluids in Europe. Financing and debt facilities for the deal will be underwritten by Mizuho Corporate Bank and HVB.

IHS Inc., an Englewood, Colo.–based provider of technical information and decision-support tools to customers in various industries, priced 14.5 million common shares at $16 per share ($14.50-$16.50 range), for an IPO take of approximately $232 million. It has begun trading on the NYSE under ticker symbol IHS, with Goldman Sachs and Citigroup having served as lead underwriters. Significant shareholders include General Atlantic and Urvanos Inv*stments Ltd.

Brian Roberts has agreed to join Evercore Partners as a managing director, as first reported by PE Week. He has spent the past two years in charge of corporate development for Microsoft, which means that he oversaw the sourcing, evaluation and execution of all Microsoft acquisitions and investments. Microsoft has not yet hired a replacement, but said that existing managing director Marc Brown will lead corporate development in the interim.

    VC Deals

Strix Systems Inc., a Calabasas, Calif.–based provider of wireless mesh networking, has raised $12 million in sixth-round funding. Crosslink Capital led the deal, and was joined by return backers El Dorado Ventures, Palomar Ventures, UV Partners and Windward Ventures. Strix has raised $54 million in total VC funding since its 2000 inception.

Biocare Solutions Ltd., a UK-based provider of enviro-friendly household cleaning products, plans to raise Gbp4 million in VC funding before an AIM flotation scheduled for Q1 2006.

Reflexion Network Solutions Inc., a Woburn, Mass.-based provider of anti-sp*am email software, has raised $2.75 million in a Series B funding round led by Boston Capital Ventures.

GraniteEdge Networks Inc., a Bellevue, Wash.-based, has closed its Series A funding round with a $1.5 million infusion from The Acartha Group. This brings the round total to just under $8 million, including earlier commitments from OVP Venture Partners and Outlook Ventures. In other GraniteEdge news, the company has named Tony Naughtin, former CEO of Internap Network Services Corp., as its new CEO.

    Buyout Deals

The Carlyle Group is interested in acquiring UK-based telecom company Kingston Communications (LSE: KCOM) for up to Gbp437 million, according to multiple press reports.

Code, Hennessey & Simmons has agreed to sell Pittsburgh, Pa.-based packaging company Precise Technology Inc. to Rexam PLC (Nasdaq: REXMY) for $257.5 million, including assumed debt.

    PE-Backed IPOs

Liquidity Services Inc., a Washington, D.C.-based operator of an online auction marketplace for wholesale, surplus and salvage assets, has filed to raise $86.25 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol LQDT, with Friedman Billings Ramsey and RBC Capital Markets serving as lead underwriters. The company raised around $20 million in Series C funding from ABS Capital Partners, in exchange for a 14.6% pre-IPO ownership position.

Wood Resources LP, a Greenwich, Conn.-based distributor of wood products for industrial and commercial customers, has set its proposed IPO terms to 4.25 million common units being offered. It plans to trade on the NYSE under ticker symbol WRC, with UBS serving as lead underwriter. Mezzanine firm GarMark Partners is listed as a significant shareholder.

Argent Energy, a Scottish biodiesel company controlled by Cinven, has resurrected its public flotation plans, following a UK government ruling that would require 5% of all fuel sold in the UK to come from renewable sources, according to The Herald.

    PE-Backed M&A

Devcon International Corp. (Nasdaq: DEVC) has acquired Coastal Security Co., a Boca Raton, Fla.-based provider of electronic security services. The deal is valued at approximately $50.4 million in cash, with selling shareholders including EnerTech Capital and TL Ventures. Devcon also received $78 million in senior loans from CapitalSource, which will help fund with Coastal Security acquisition, and also support growth initiatives.

Aptuit Inc., a Greenwich, Conn.-based provider of streamlining and support services for drug developers, has agreed to acquire InfoPro Solutions Inc., an Agoura Hills, Calif.-based provider of information systems for the drug development market. No financial terms were disclosed for the deal, which is expected to close either this quarter or in Q1 2006. Aptuit raised $150 million in private equity funding from Welsh, Carson, Anderson & Stowe earlier this year.

    Firm & Fund News

JPMorgan Worldwide Securities Services has launched JPMorgan Private Equity Fund Services, a new business unit that will provide outsourced fund administration services to private equity firms and institutional limited partners.

OnCore Capital, a New York-based VC firm, is looking to raise $150 million for its inaugural fund, according to VentureWire. The firm is co-founded by former Flatiron Partners pro Bob Greene and former Provender Capital Group general partner Derek Jones.

    Human Resources

Quaker BioVentures has promoted Matt Rieke and Richard Kollender to partner, and Geeta Vemuri to vice president.

Samantha Carey has been named a principal in the life sciences practice of executive search firm Christian & Timbers. She previously was a partner with H.M. Long Global Healthcare, a division of Rhodes Associates.

Bill Fairfield, chairman of DreamField Capital Ventures, has joined the board of infoUSA Inc. (Nasdaq: IUSA).

David Sullivan has joined Nutter McClennen & Fish as a partner in the law firm’s corporate tax practice. He represents emerging businesses, with a particular emphasis on structuring and implementing financing, venture capital, joint venture, merger and development transactions. Prior to joining Nutter, Sullivan was a partner with Foley & Lardner LLP.

Lawrence Colton, Stuart Johnson and Gary Thomas have joined law firm Powell Goldstein LLP as partners, while David Watson has joined as counsel. Colton focused on IP, and previously was founder and principal of Technoprop Colton. Johnson focuses on private equity and venture capital, and previously was co-chair of the corporate practice group with Arnall Golden Gregory LLP. Thomas joins focuses on labor and employment, and previously was a partner at Fisher & Phillips LLP. Watson will be in the tax department, after having been a partner with Gambrell & Stoltz LLP.

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November 14, 2005

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