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From:

"Dan Primack"

Name:

Dan Primack

Email Address:

Dan_Primack@fortune.chtah.com

Subject:

Term Sheet -- Monday, October 18

Date:

18-10-2010 13:58:39
Message

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Monday -- October 18, 2010
Email Dan | Follow Dan on Twitter | Subscribe

Random Ramblings
Todays column didnt quite come together in time (apologies), so just a few very quick hits to kick off your
Monday:
*** Citigroup today bested analyst expectations by reporting $2.15 billion in Q3 net income. For context,
the mega-bank lost $3.24 billion during the same period in 2009.
One dark cloud, however, was a negative $8 million mark in its brokerage and asset management business
(compared to a positive $141 million in Q2 2010). Citi said the drop was mainly due to mark-downs on
private equity investments.
You might recall that Citi sold around $1 billion in private equity interests this past summer to Lexington
Partners, which represented approximately one-third of Citis private equity assets. Since then, Ive been
hearing rumors that Citi has engaged in informal talks to sell a bunch more of its portfolio, which is said to
include a bunch of mega-fund positions. Got to wonder if the earnings drag makes Citi a motivated seller,
or if it slows down until portfolio valuations rebound
*** Average purchase price multiples paid by PE firms for new portfolio companies rose to 8.7x EBITDA
in Q3, according to Standard & Poors Leveraged Commentary and Data. This is a rise from 8.5x the prior
quarter.

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*** Personnel note: Joel Hollander is out at WPP Group, where he was an executive vice president
responsible for infrastructure services. Prior to joining WPP, he spent five years as CTO of Interpublic
Group.
*** Cash4Gold: On Friday I reported that Highland Capital Partners is no longer a shareholder in the
parent company of Cash4Gold. General Catalyst has since confirmed that it too is out, although it declined
to specify why or how (based on an apparent confidentiality agreement with the company). Also, one of
General Catalysts limited partners emailed to say that Cash4Gold was still in the firms portfolio as of Q2,
and had been written down nearly to zero.

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The Big Deal

Ice Energy, a Windsor, Colo.based maker of energy-efficient cooling systems, has raised $24 million in
Series C funding. TIAA-CREF was joined by return backers Energy Capital Partners, Good Energies, Sail
Ventures and Second Avenue Partners.
This is the days largest announced VC round (so far), but that isnt why its our big deal. Instead, its
because TIAA-CREF participated with a direct investment of $4.5 million.
This deal is part of a new partnership with VC firm Good Energies, whereby TIAA-CREF will invest in
companies focused on energy efficiency and green building technology. More broadly, it is part of a
growing trend whereby groups that traditionally invest in startups via VC funds (i.e., as limited partners), are
taking a harder look at direct investments.

VC Deals
Nexidia, an Atlanta-based provider of audio search and speech analytics solutions, has raised over $23
million in new VC funding. BlueCross BlueShield Venture Partners, Sandbox Industries and HarbourVest
Partners were joined by return backers H.I.G. Ventures, Paladin Capital Group, Boston Millennia Partners,
Morgan Stanley and Cordova Ventures. www.nexidia.com
ShareThrough, a San Francisco-based provider of social video advertising solutions, has raised $5 million
in Series A funding. North Bridge Venture Partners led the round, and was joined by return backer
Floodgate. www.sharethrough.com
StudyBlue, a Madison, Wis.-based provider of online class prep for college and high school students, has
raised $3.65 million in VC funding, according to a regulatory filing. No investor information was disclosed.
www.studyblue.com
SoundCloud, a Berlin, Germany-based online audio platform for music professionals, is in talks to raise a

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significant new round of VC funding from Index Ventures and Union Square Ventures, according to All
Things D. The company previously raised 2.5 million from Doughty Hanson Technology Ventures.
www.soundcloud.com
OverDrive, a Cleveland-based digital distributor of eBooks, audiobooks, music and video, has raised an
undisclosed amount of funding from Insight Venture Partners. www.overdrive.com
Oxeon AB, a Swedish provider of carbon reinforcements, has raised an undisclosed amount of funding
from InnovationsKapital. www.innkap.se

Private Equity Deals

Alliance Boots, a British pharmacy chain owned by KKR, has acquired a majority stake in German drug
distributor Anzag, according to a local press report. Alliance Boots already held a 30% stake in Anzag, and
now has an 80% position after acquiring the shares of Sanacorp, Phoenix and Celesio. www.kkr.com
AutoTrader.com has acquired vAuto, a provider of software tools for used-vehicle management, pricing
and inventory optimization. No financial terms were disclosed. AutoTrader is owned by Cox Enterprises,
Providence Equity Partners and Kleiner Perkins Caufield & Byers. www.autotrader.com
AXA Private Equity is in talks to acquire a 49% stake in Italian healthcare firm Gruppo Kos, according to
Plus24. No financial terms were disclosed. www.kosgroup.com
DW Healthcare Partners has withdrawn its $17.63 million offer to acquire Cryo-Cell International Inc.,
due to the Cryo-Cell board's refusal to meet with DWHP regarding the proposed transaction.
www.dwhp.com
Engine Group, a UK marketing firm, has raised 62.5 million in private equity funding from H.I.G. Capital.
The deal includes a 32.5 million up-front payment, plus another 30 million over the next two years.
www.theenginegroup.com
Hero Honda Motors, an Indian motorcycle maker, is receiving private equity interest in a minority stake,
according to the Economic Times. The deal would see Hero Honda buy back a 26% stake from Japans
Honda Motors, and then sell off up to an 18% position to private equity firms. Interested suitors include The
Carlyle Group, KKR and Warburg Pincus.
ICV Partners has acquired Mallet & Co., a Carnegie, Penn.based manufacturer of oils, ingredients and
equipment used in the commercial baking industry. No financial terms were disclosed.
www.icvpartners.com
KKR has offered to acquire Australian financial services firm Perpetual (AX: PPT) for up to $1.73 billion, or
at least a 23% premium to Fridays closing share price, via a non-binding bid. Perpetual has retained
Goldman Sachs as a financial advisor. www.kkr.com
Spectrum Equity Investors has agreed to acquire Trintech, an Ireland-based provider of financial
governance, risk management and compliance software. The deal is valued at $129.4 million, or $6.60 per
share. Trintech is being advised on the deal by William Blair & Company. www.trintech.com
TPG Capital has agreed to acquire an 18.45% stake in Hong Kong Energy, a listed alternative energy

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developer, for approximately $50 million. www.tpgcapital.com

PE-backed IPOs
Le Gaga Holdings Ltd., one of the largest greenhouse vegetable producers in China, has set its IPO
terms to around 10.87 million American depository shares being offered at between $7.50 and $9.50 per
share. It plans to trade on the Nasdaq under ticker symbol GAGA, with BoA Merrill Lynch and UBS serving
as co-lead underwriters. Company shareholders include Sequoia Capital China (18.9% pre-IPO stake), SIG
China Investments (7.44%) and Walden International (5.48%).
Xueda Eeducation Group, a Beijing-based provider of tutoring services for primary and secondary school
students in China , has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol XUE,
with Goldman Sachs (Asia) serving as lead underwriter. Significant shareholders include CDH Venture
Partners.

Exits
Exponent Private Equity has hired NM Rothschild to help it sell or float TrainLine, a company that sells
British rail tickets via the Internet and call centers. Exponent acquired TrainLine in 2006 from Virgin Group
for 163 million. www.thetrainline.com
Golden Gate Capital has hired Moelis & Co. to help sell Orchard Brands Corp., a clothing retailer for
those 55 and older, according to Bloomberg. It is unclear if bids would be higher than Orchards $700
million debt load. www.orchardbrands.com

Other Deals
Northeast Utilities (NYSE: NU) and NStar (NYSE: NST) have agreed to merge. The deal would create
one of the nations largest utilities, with an enterprise value of $17.5 billion. www.nstar.com
Quicksilver Resources Inc. (NYSE: KWK) has received takeover interest from a group that includes
members of the Darden family. Shares in the oil and natural gas exporter rose 14% today in pre-market
trading.

Firms & Funds

Amwal Alkhaleej, a Saudi Arabia-based private equity firm, next year plans to raise up to $500 million for
a new fund. About half of the money would be invested in Saudi companies, while the rest would be
committed to other countries in the GCC region. www.amwalalkhaleej.com
Citigroup reported earnings today, and said its brokerage and asset management revenue sell from $141
million in Q2 to negative $8 million in Q3. It said the drop was mainly due to mark-downs on private equity
investments. www.citi.com
Invest AD, the Abu Dhabi state-owned investment group, plans is raising a new private equity fund,
according to Reuters. The vehicle is expected to hold a $175 million first close by the end of this year, and
a $400 million final close in mid-2011. www.investad.ae

Moving In, Up and On

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Kate Barker has agreed to join Electra Private Equity as a non-executive director. She currently is a
senior adviser to Credit Suisse, and recently completed her third term as a member of the Monetary Policy
Committee of the Bank of England. www.electraequity.com
Andrew Code is transitioning out of Code Hennessy & Simmons, the Chicago-based private equity firm
he co-founded in 1988, according to Buyouts newsletter. The move comes as CDH prepares to raise its
sixth fund, which is expected next year. www.chsonline.com
Charlotte Kim has joined Wilson Sonsini Goodrich & Rosati as a New York-based partner in the firms
corporate finance practice. She previously was with Choate Hall & Stewart. www.wsgr.com

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