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From:

"Dan Primack"

Name:

Dan Primack

Email Address:

Dan_Primack@fortune.chtah.com

Subject:

Term Sheet -- Wednesday, November 17

Date:

17-11-2010 14:56:52
Message

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Tuesday -- November 16, 2010
Email Dan | Follow Dan on Twitter | Subscribe

Random Ramblings
There are two types of multi-millionaires in America: Those who own professional sports teams, and those
who wish they did.
Venture capitalist Joe Lacob joined the former group this week, when he and partner Peter Gruber
completed their $450 million purchase of the Golden State Warriors. Lacob previously had been a minority
shareholder in the Boston Celtics, but wasn't involved much in decision-making. Plus, he lived on the wrong
coast (now he just lives on the wrong side of a bridge).
Lacob made his money as a partner with Kleiner Perkins Caufield & Byers, the legendary VC firm he first
joined in 1987. Some of his earlier deals included AutoTrader and Sportsline, and he later refocused on the
energy sector (yes, including the infamous Terralliance deal).
But the Warriors deal seems to mark an end of Lacob's active venture capital days.
A Kleiner Perkins investor says that Lacob is not listed as a managing partner on new funds currently being
raised, and that he is not expected to do new deals going forward (although he will continue to manage
existing portfolio companies).
And then there was the following comment from SF Chronicle scribe Scott Olster:

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"This is no dilettante. Lacob, in order to run the Warriors, is putting aside his work as a venture capitalist,
whose company has been backing ideas to benefit the environment. Instead of saving the planet, Lacob
will now try to save the Warriors, and I think we can all agree he has chosen the path more vital to
mankind."
In other words, it looks like Lacob is following the path of Celtics majority owner Wyc Grousbeck -- who left
his VC gig at Highland Capital Partners in order to manage the Celts fulltime. This stands in contrast to
fellow Celts majority owner Steve Pagliuca, who still spends his days working at Bain Capital (well, when
he's not running for U.S. Senate).
No comment from Lacob or Kleiner, natch...
*** Speaking of Kleiner Perkins, the firm today filed with the SEC for that $650 million general fund we
discussed last month (its 14th). Remember, Kleiner also is raising a $750 million digital media fund.
*** Boston Consulting Group has published a study on emerging markets private equity, in partnership
with IESA Business School. The main findings are fairly milquetoast: (1) The most attractive emerging
markets for investment must be determined not only by GDP, but also by level of socioeconomic
development (e.g., regulatory systems, etc.); (2) Successful emerging market investment strategies may
differ from successful developed market investment strategies (e.g., focusing on non-control stakes, etc.).
What I did find particularly interesting, however, was the performance data. Up until 1999, emerging
markets private equity lagged far behind its developed counterpart. Over the past 30 years, the IRR for
emerging markets PE was just 12%, or around half of U.S. or European private equity IRRs. But a look
within that figure finds typical returns of 4% before 1990, 5.3% for the 1990s and 17% since 2000. In other
words, the gap is narrowing
*** Email clarification: A bunch of you apparently have had difficulties sending me emails, in part due to
the bizarre address that pops up when you hit "reply" to these missives. So please mark this down: You
can email me directly at dan_primack@fortune.com, or at danielprimack@gmail.com. Plus, I hope to have
an anonymous tip button up and working by next week....

6 things to read @Fortune.com

Pre-Marketing, including a secret rival bid for Potash, why Roger Altman visited the White House,
Warren Buffett's love letter to Uncle Sam and private equity lessons from the subway.

Bill Gurley: Silicon Valley's IPO anxiety

Bill Powell: Chanos versus China

Colin Barr: Much to regret in BoA foreclosure mess

Dan Primack: New PE & VC fund performance data from UTIMCO

JS Cournoyer: The implications of too much VC and too little talent

The Big Deal

The Blackstone Group has raised its buyout offer for Dynegy (DYN) from $4.50 per share to $5 per
share, ahead of todays shareholder vote on the deal. The move followed strong challenges from activist
investors Carl Icahn and Seneca Partners, who have argued that the original price was insufficient.
In a press release Blackstone said that $5 per share offer represents the firm's "best and final offer."

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Sounds similar to what the firm said just on Monday about its $4.50 per share bid, with an insider adding
that the firm would be "perfectly happy" to walk away and await an eventual bankruptcy purchase.
Does this mean Blackstone had a major change of heart overnight? Did Steve Schwarzman catch a
performance of Lombardi, and decide that winning is the only thing? Or was Blackstone's cavalier
confidence just a smokescreen designed to nudge a few fence-sitting shareholders?
You move, Dynegy shareholders

VC Deals
Marketo, a San Mateo, Calif.-based provider of revenue performance management solutions, has raised
$25 million in new VC funding. Institutional Venture Partners led the round, and was joined by return
backers InterWest Partners, Storm Ventures and Mayfield Fund. www.marketo.com
Verismo Networks, a Mountain View, Calif.-based provider of an Internet TV platform, has raised $17
million in new VC funding led by Intel Capital. www.verismonetworks.com
Verastem Inc., a Boston-based developer of oncology drugs that target cancer stem cells, has raised $16
million in Series A funding. Backers include Longwood Founders Fund, Bessemer Venture Partners,
Cardinal Partners and MPM Capital. www.verastem.com
CoolPlanetBioFuels, a Camarillo, Calif.-based developer of a technology for converting low-grade
biomass into high-grade fuel and carbon that can be sequestered, has raised $8 million in new VC funding.
North Bridge Venture Partners led the round, and was joined by GE Energy Financial Services.
www.coolplanetbiofuels.com
Ortiva Wireless, a La Jolla, Calif.-based provider of mobile video optimization solutions, has raised $8
million in Series C funding. Intel Capital led the round, and was joined by return backers Comcast
Interactive Capital, Artiman Ventures, and Mission Ventures. www.ortivawireless.com
GameGround, a New York-based developer of a personalized gaming app, has raised $5.3 million in
Series B funding. Backers include Sequoia Capital, Softbank Capital, Vodafone Ventures and Novel TMT
Ventures. www.gameground.com

Private Equity Deals

Advent International has acquired a 94.5% stake in Tinsa, a Spanish property valuation firm, from the
companys founders. The deal was valued at 100 million. www.adventinernational.com
Apax Partners, Bain Capital, EQT Partners and TPG Capital are prepping bids for German budget
fashion retailer Takko, according to Reuters. The company is expected to generate bids of around 1.25
billion. It is currently owned by Advent International. www.adventinternational.com
The Blackstone Group and TPG Capital are expected to bid for Egg, the online bank owned by
Citigroup, according to Reuters. The deadline for bids is tomorrow. Blackstones bid reportedly is in
partnership with SAV Credit, a portfolio company of Palamon Capital, Morgan Stanley Alternative
Investments and Electra Private Equity. www.citi.com
CMS Enterprises has agreed to sell its Exeter Tire-to-Energy facility in Sterling, Conn. to ReEnergy

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Holdings LLC, a portfolio company of Riverstone Holdings. No financial terms were disclosed for the deal,
which is expected to close next month. www.cmsenterprisesinc.com
EquiPower Resources Corp., a portfolio company of Energy Capital Partners, has agreed to acquire
Milford Power Co. and related companies. No financial terms were disclosed. Milford owns a 548
megawatt (MW) combined cycle gas turbine (CCGT) power plant located in Milford, Connecticut.
www.eqpwr.com.
Levine Leichtman Capital Partners has acquired Revenew International LLC, a Houston, Texas-based
provider of cost recovery solutions, from Profit Technologies Corp. No financial terms were disclosed.
www.llcp.com
Pamlico Capital has acquired ATX Networks, an Ontario-based provider of radio frequency equipment for
cable providers, from Trivest Partners. No financial terms were disclosed. www.atxnetworks.com
Renwood Opportunities Fund has acquired the assets of States Industries Inc., a Eugene, Ore.-based
maker of hardwood plywood panels. Renwood had provided States with DIP financing in August, as part of
a Chapter 11 bankruptcy restructuring. www.statesind.com
Resilience Capital Partners has acquired Indiana Limestone Co., a supplier of Indiana limestone to the
dimensional stone market. No financial terms were disclosed. This is Resilience's second addition to an
industrial minerals platform called North Coast Minerals. The first was Victor Oolitic Stone Co. (acquired
last year). www.resiliencecapital.com
Stonehenge Partners has agreed to acquire National Investment Managers Inc. (OTC BB: NIVM), a
Dublin, Ohio-based pension plan administrator and investment manager. The deal is valued at $48 million.
www.nivm.com

PE-backed IPOs
Booz Allen Hamilton Inc., a McLean, Va.-based provider of management and technology consulting
services to the U.S. government, raised around $238 million in its IPO. The company priced 14 million
shares at $17 per share ($17-$19 range), while Morgan Stanley and Barclays Capital served as co-lead
underwriters. The company was formed two years ago, when Booz Allen separated its U.S. government
business from its global commercial business, with The Carlyle Group buying a majority stake in the former
for $2.54 billion. www.boozallen.com
Kayak, a Norwalk, Conn.-based meta search engine for travel, has filed for a $50 million IPO. Morgan
Stanley and Deutsche Bank Securities are serving as co-lead underwriters. The company reports net
income of $6.16 million on $128 million in revenue for the first nine months of 2010, compared to $10.44
million in net income on around $86 million in revenue for the same period in 2009. Kayak has raised over
$220 million in VC funding, including a $196 million round that helped finance a 2008 acquisition of rival
SideStep. Kayak shareholders include General Catalyst Partners (29.76% pre-IPO stake), Sequoia Capital
(17.6%), Accel Partners (12.9%) and Oak Investment Partners (8.75%). www.kayak.com

Exits

The Blackstone Group has sold its remaining 20% stake in London-listed cinema group Cineworld Group
PLC for just over 71 million. www.cineworld.co.uk

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Imagination Technologies (LSE: IMG) has agreed to buy HelloSoft, a San Jose, Calif.based provider of
VOIP and convergence technologies. The deal is valued at up to $47 million, including $20.2 million in upfront cash. HelloSoft investors include Venrock, Soffinova Ventures, iD Ventures, TD Capital, Entrepia and
JumpStartUp Venture Fund. www.hellosoft.com
Lactalis, a European dairy group, has offered to buy French yogurt maker Yoplait, which is 50%-owned by
PAI Partners. No financial terms were disclosed, although Reuters reports that the bid values Yoplait at
around 1.3 billion.
Palisades Associates has agreed to sell TVC Communications LLC to Wesco International Inc.
(NYSE: WCC) for approximately $246.5 million. TVC is an Annville, Penn.-based distributor of broadband
communications network infrastructure products. www.tvcinc.com

Other Deals
General Motors has significantly increased the terms of its IPO, meaning that the offering now
could raise upwards of $22.7 billion. The revised terms have GM offering 478 million common
shares at between $32 and $34 per share, plus another $4 billion worth of preferred stock. It
originally had filed to sell 365 million common shares at between $26 and $29 per share, plus
$3 billion worth of preferred stock. www.gm.com
Vanguard Natural Resources (NYSE: VNR) has agreed to acquire Denbury Resources Inc.'s
(NYSE: DNR) interests in Encore Energy Partners LP (NYSE: ENP). The deal is valued at $380
million.

Firms & Funds

CapMan PLC has agreed to sell 30% of Access Capital Partners, a European private equity funds-offunds manager it co-founded in 1999, to Phojola. As part of the deal, Access will acquire Pohjola Private
Equity Funds from Phojola, which will increase its capital under management to around 4.5 billion. Also,
Access managers will sell an additional 10% ownership stake in their firm to Phojola, which will hold a total
of 40 percent. www.capman.com
CIG Corp., a wealth management and business advisory firm, said that it has formed a private equity fund
focused on the healthcare sector, called CIG Capital Partners. No additional details were disclosed.
www.cigcorporation.com
Headwaters MB has formed a financial institutions I-banking practice, with a focus on M&A and capitalraising for community banks with assets of up to $3 billion. The group will be based in Chicago, and
includes new hires Jacob Eisen (formerly with Capital Insight Partners), Eliot Stark (Capital Insight
Partners) and Brian Ytterberg (Howe Barnes Hoefer & Arnett). www.headwatersmb.com

Moving In, Up and On

Barclays Private Equity is making several management changes ahead of its spinout into an independent
firm, according to Dow Jones. Guillaume Jacqueau will become sole head of the group, whereas he
previously was one of three leaders. The other two were Peter Hammermann and Paul Goodson.
Hammermann will run the firms German office, while Goodson plans to depart. Also, London-based
managing director Owen Clarke will serve as CIO.
Sebastien Bowen has joined Pomona Capital as a London-based investment director, with a focus on

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secondary investment analysis and deal sourcing. He previously was a director with MetLife Investments
and, before that, worked for AXA Private Equity. www.pomonacapital.com
Jim Derks has joined Allegiance Capital Corp. as a managing director, and head of a new Minneapolis
office. He previously formed and managed LaSalle Banks investment banking unit. www.allcapcorp.com
Richard Kradjel has joined Societe Generale as a managing director and head of equity private
placements in the U.S. He previously ran equity private placements for Jefferies. www.societegenerale.com

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