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From:

"Dan Primack"

Name:

Dan Primack

Email Address:

Dan_Primack@fortune.chtah.com

Subject:

Term Sheet - - Thursday, Sept. 30

Date:

30-09-2010 14:00:36
Message

Fortune Finance

Street Sweep

Term Sheet

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Washington

The Term Sheet by Dan Primack

Thursday -- September 30, 2010

Email Dan | Follow Dan on Twitter | Subscribe

Random Ramblings
Lots of market chatter this week about layoffs at hedge fund giant D.E. Shaw, with around 10% of the 1,500-person workforce being
handed walking papers. What hasn't been reported yet, however, is that the cuts included most of the firm's venture capital group, which
has invested in such companies as Offerpal Media, WiQuest Communications, DesiHits and Adam Aircraft (big oops on that last one).
The issue, of course, is liquidity. D.E. Shaw managed around $39 billion in the middle of 2008, but has since been redeemed down to just
$21 billion. A decision was made, therefore, to halt all future investments in venture capital, due to its long-term investment horizons.
One might also assume that D.E. Shaw is looking to sell its existing portfolio on the secondary market, but you know what they say about
those who assume
Instead, the firm has retained three senior staffers - including group head Alex Wong - to manage the portfolio and make follow-on
investments when necessary. Those three also are on the hunt for a new funding source, although it's unclear if D.E. Shaw would
participate out of a future capital pool.
Wong was unavailable for comment.
*** Fundraising data: Preqin today reported that 81 private equity funds held a final close in Q3, raising an aggregate of $57 billion. That's
a small bump from the $49 billion in Q2, and Preqin says to expect a further increase "as further information becomes available."
Leading the way were U.S.-focused funds, which raised $41.2 billion. Europe came in place with $8.3 billion, while the rest of the world
(including Asia) showed with $7.8 billion.

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In terms of fund fund-type, buyout raised the most capital with $20.4 billion. This includes the $13.5 billion for Blackstone Capital Partners
VI, which leads us to an important point about Preqin fund-raising data:
The market research firm attributes all funds raised to the quarter in which a final close occurred. Blackstone, for example, had spent
around two years raising its fund -- and closed on most of the $13.5 billion long ago. This methodology is different from that of other data
providers like Dow Jones and Thomson Reuters, so expect some discrepancies when their numbers are released.
*** Housekeeping: I know that the newsletter's font is a bit small for some of you. We're aware, and are working to quickly fix it. Thanks
for bearing with us...
*** I made a semi-error yesterday when discussing the pre-IPO funding for biofuels company Amyris. Specifically, I wrote: "The key was
to somehow participate only in the Series A ($2.17) or Series C ($12.46) rounds. Except that no one did."
My statement is technically true, but ignores that fact that three investors - Kleiner Perkins, Khosla Ventures and TPG Biotech - did
manage to skip some of the costlier rounds (albeit not the Series B). I posted a full breakdown to the Term Sheet blog, including who's in
the money and who's in the red. Read it here.

6 things you should read @Fortune.com

Pre-Marketing, including why Meredith Whitney is wrong, the next source of funding for Internet startups, Steve Jobs' new home
and David Rubenstein 's China.
JP Mangalindan: Would angel collusion really be so bad?
Duff McDonald: Is Wall Street twice the size it should be?
Colin Barr: CEOs sue to water down shareholder rights
Corporate America keeps piling on the debt
Nina Easton: Public pensions are the next target of angry populists

The Big Deal

The Blackstone Group has agreed to acquire a 40% stake in Patria, a Brazilian manager of alternative assets. No financial terms were
disclosed for the deal, which is expected to close tomorrow.
This is a big deal for two reasons: (1) A major argument in favor of private equity firms going public was that they'd be able to use their
newfound public currency for expansion purposes. This would seem to be an example of that plan in action. (2) Private equity, in general,
is going gaga over Brazil (and, to a lesser extent, the rest of Latin America). This comes after around a decade of most PE firms
pretending that there was nothing south of Texas (well, except for oil).

VC Deals
Tobira Therapeutics Inc., Manalapan, N.J.-based developer of antiviral compounds to treat HIV disease, has raised $31 million in Series
B funding. Novo AS led the round, and was joined by return backers Domain Associates, Frazier Healthcare Ventures, Montreux Equity
Partners and Canaan Partners. www.tobiratherapeutics.com
eSellerPro, a UK-based provider of an e-commerce management platform, has raised 2 million from Notion Capital, according to
TechCrunch. www.ecommercepro.com
AdStruc, a New York-based online marketplace for outdoor advertising, has raised $1.1 million in VC funding. DFJ Gotham led the round,
and was joined by RRE Ventures, Founder Collective, David Cohen, Jeff Clavier, Kal Vepuri, David Tisch and Howard Lindzon.
www.adstruc.com
Northwood Ventures has invested an undisclosed amount in Zevia LLC, maker of natural, calorie-free sodas. www.zevia.com

Private Equity Deals

American Securities LLC announced that it is the buyer of Advanced Drainage Systems, a plastic pipe-maker that Berkshire Partners

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this week sold 22 years after its original investment. www.american-securities.com

Blue Wolf Capital has agreed to sponsor a reorganization of Gloucester Engineering Co., a bankrupt provider of equipment for the
plastics extrusion and converting industry. No financial terms were disclosed. www.blue-wolf.com
Huntsman Gay Global Capital has acquired a majority stake in iQor Holdings, a New York-based business processing outsourcing
(BPO) company. No financial terms were disclosed. Starr International also participated in the deal, while existing iQor backer
Guggenheim Partners retains an equity position. www.iqor.com
Investcorp has agreed to invest $50 million into Tiryaki Agro, a Turkish provider of trading and supply chain services for agro
commodities. The deal provides Investcorp with a "significant minority" stake. www.investcorp.com
Ridgewood Energy Corp., a Montvale, N.J.-based oil and gas exploration company, has raised an undisclosed amount of strategic
funding commitments from Riverstone/Carlyle Global Energy and Power Funds. The capital will be used for a series of deepwater oil
exploration projects located in the Gulf of Mexico. www.ridgewoodenergy.com
Thoma Bravo has completed its acquisition of Landesk from Emerson (NYSE: EMR). No financial terms were disclosed. Landesk is a
Salt Lake City-based provider of systems lifecycle management, endpoint security and IT service management. www.thomabravo.com
Six3 Systems Inc., a McLean, Va.-based provider of solutions and services to the U.S. national security and defense intelligence
communities, has acquired Novii Design LLC, a provider of large-scale data fusion systems, cyber solutions and enterprise architectures
to the intelligence community. No financial terms were disclosed. Six3 Systems is a portfolio company of GTCR. www.six3systems.com
Vision Capital has acquired Terphane, a Brazilian manufacturer of specialty polyester films. No financial terms were disclosed. The
sellers were company lenders, who took over Terphane earlier this year from private equity firm Rhone Capital. www.visioncapital.com
Warburg Pincus has agreed to invest up to C$35 million into Protox Therapeutics Inc. (TSX: PRX), a Vancouver-based developer of
receptor targeted fusion proteins for the treatment of prostate diseases and cancer. The deal includes an initial C$10 million tranche, and
a C$25 million follow-up based on Protox meeting a regulatory milestone. www.protoxtherapeutics.com

PE-backed IPOs
ChinaCache Network Technology, a Beijing-based provider of content distribution networks in China, has set its IPO terms to 5.5 million
American depository shares being offered at between $10 and $12 per share. It plans to trade, with BoA Merrill Lynch and Deutsche Bank
Securities serving as co-lead underwriters. The company has raised over $31 million in VC funding, from Qiming Venture Partners,
Ignition Partners, CV Starr International, Susquehanna International Group China. Return backers Jafco Asia, Intel Capital Investor AB.
www.chinacache.com
QR Energy LP, a vehicle formed by an affiliate of Quantum Energy Partners to acquire producing oil and natural gas properties in North
America, has filed for a $300 million IPO. It plans to trade on the NYSE, with Wells Fargo Securities serving as lead underwriter.
www.quantumep.com

Exits

Apple reportedly has acquired Polar Rose, a Swedish developer of automatic facial recognition with 3D modeling for visual search
applications. TechCrunch estimates the deal value at around $29 million. Polar Rose had raised over $5 million in VC funding from Nordic
Venture Partners. www.polarrose.com
Aureos Capital has sold its minority stake in Orange Madagascar, an African telecom company controlled by France Telecom. No
financial terms were disclosed. www.aureos.com
CambridgeSoft Corp., a Cambridge, Mass.-based maker of life science enterprise solutions like e-notebooks, has paid $40 million to buy
bought back all shares held in the company by Edison Ventures. Edison had invested around $5 million. www.edisonventures.com
Goldman Sachs has sold nearly a quarter of its holdings in Industrial and Commercial Bank of China, for approximately $2.25 billion.
Goldman will retain around a 3% stake in the Hong Kong-based bank. www.gs.com

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Providence Equity Partners has sold a 16.7% stake in German cable operator Kabel Deutschland (DE: KD8Gn) for around 412.5
million. This would bring Providence's stake below 50 percent. It previously held a 60.37% position. www.provequity.com
Zayo Group tomorrow is scheduled to complete its purchase of American Fiber Systems Holding Corp., a provider of metropolitan fiber
network and telecom services. No financial terms were disclosed. AFS was founded by David Rusin, the former president of Frontier
Communications, and raised venture capital from Sierra Ventures, Lucent Ventures and North Atlantic Capital. www.afsnetworks.com

Other Deals
Atlassian, an Australian provider of software for streamlining product development, has acquired BitBucket, a provider of free sourcecode hosting. No financial terms were disclosed. Atlassian has raised $60 million from minority shareholder Accel Partners.
www.atlassian.com

Firms & Funds

Lion Capital, a UK-based buyout firm focused on the consumer sector, has secured around 1 billion in commitments for its third fund,
according to Reuters. Lion is looking for a total of 2 billion, with a 1.75% management fee on the first 1.5 billion raised and a 1.5%
management fee for additional commitments. www.lioncapital.com
Kleiner Perkins Caufield & Byers is raising a yuan-denominated fund to invest in Chinese companies, according to VentureWire. The
reports suggests that it may already have hit its Y600 million ($89.4m) target. www.kpcb.com
Vision Capital, a UK-based buyout firm, has opened an office in New York. It will be led by Matthew Constantino, who previously was a
partner with Apollo Management and head of private investments for Apollo's strategic value fund. www.visioncapital.com

Moving In, Up and On

Erik Sebusch has joined Bertram Capital, a San Mateo, Calif.-based growth equity firm, has promoted Jared Ruger and Kevin Yamashita
to the position of partner. Ruger is a founding member of Bertram, and focuses on investments in the business services space.
Yamashita joined the firm in 2007 from Calera Capital. www.bertramcapital.com
Ruud Hendriks has joined KKR as a senior advisor for the Netherlands. He previously served as chairman of Goldman Sachs Asset
Management Benelux. www.kkr.com

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