Terry Garnett and Rob Theis are raising upwards of $500 million to back a small number of carve-outs from large technology companies, according to multiple sources. The pair also plans to invest in growth equity rounds for later-stage, private tech companies.
For Garnett, this is an old strategy with a new partner. Ten years ago, he left Venrock and raised $350 million for a tech carve-out fund alongside David Helfrich (ex-ComVentures). Early returns for the firm, called Garnett Helfrich Capital, were so lousy that a second fundraise was put on indefinite hold and all of the investment staff quit other than Garnett and Helfich. Since then, however, the portfolio has made a remarkable turnaround. According to public data from CalPERS, the fund featured an internal rate of return (IRR) of 23.2% and an investment multiple of 3.9x through the end of Q1 2014. Successful deals include Wyse Technology (sold to Dell) and Blade Network Technologies (sold to IBM).
We started hearing rumors last year that Garnett planned to capitalize on this revived track record, but now he formally is in market. The big change is that Helfrich is out, and Rob Theis is in (fittingly, the firm has been renamed Garnett Theis Capital). Theis has spent the past six years as a partner with Scale Venture Partners, where his deals included HubSpot, RingCentral, BrightRoll, PeopleMatter, SailThru and Scale Computing (Scale plans to transition his board seats to other partners). Before that, he spent eight years as a general partner with venture firm DCM.
Garnett and Theis first worked together in the late 1990’s, when Theis was an executive at NEON, a company that Garnett had backed via Venrock. Once Theis was with DCM, they invested a combined $2 million to help carve certain messaging and data storage assets from Network Associates, and later sold the resulting company (PGP) to Symanetec for $350 million.
The new fundraising is targeting between $450 million and $500 million, with plans to back between five or six tech carve-outs from $5 billion-plus tech companies. Targets would require between $50 million and $75 million in equity capital, have installed customer bases and the potential for 3x or 4x revenue growth over the next five years. The fund also would write a handful of $20 million to $30 million checks for growth equity opportunities. A spokesman for Garnett Theis Capital declined comment.
• Recommended reading: Erin Griffith has a great piece up about the various missteps by Hailo, a London-based mobile app for hailing yellow cabs that is pulling out of the U.S. after raising more than $100 million in VC funding. Here it is.
• #GetLiquid: I’m looking forward to seeing more than 750 of you next Tuesday night in San Francisco, at our sold-out Liquidity Event. Big thanks to our sponsors, who foot the bill for our open bar and food trucks (since the ticket proceeds go to charity). Those sponsors are: Andreessen Horowitz, Gunderson Dettmer, NEA, Preqin and TriplePoint Capital. Also excited to announce which local nonprofit will get the >$10k in ticket proceeds.
THE BIG DEAL
• Minerva Project, a San Francisco-based provider of a “reinvented university experience,” has held a first close on a Series B round that is designed to raise $70 million. TAL Education Group (NYSE: XRS) led the round, and was joined by ZhenFund, Yongjin Group and return backer Benchmark.
We first wrote about Minerva back in 2012, and the group recently welcomed 29 students into its inaugural class (it received around 2,500 applicants, and accepted 2.6%). Check Fortune.com later today for an updated story. www.minervaproject.com
VENTURE CAPITAL DEALS
• Selecta Biosciences Inc., a Watertown, Mass.-based developer of targeted antigen-specific immune therapies, has raised $20 million in new VC funding. Return backers include Polaris Venture Partners, Flagship Ventures, OrbiMed Advisors, NanoDimension, Rusnano, I2BF, Eminent Venture Capital and Leukon Investments. www.selectabio.com
• Thismoment, a San Frandcisco-based content marketing platform, has raised $17.6 million in Series D funding. Return backers include Sierra Ventures, Trident Capital and UMC Capital. www.thismoment.com
• EverTrue, a Boston-based social donor management platform, has raised $8 million in Series B funding. Bain Capital Ventures led the round, and was joined by Silicon Valley Bank. www.evertrue.com
• Viewics Inc., a Sunnyvale, Calif.-based healthcare analytics and data platform company, has raised $8 million in new VC funding led by Canvas Venture Fund. www.viewics.com
• Nara Logics Inc., a Cambridge, Mass.-based big data analysis and personalization platform, has raised $6 million in Series A-2 funding from .406 Ventures and existing shareholders. www.naralogics.com
• OneEnergy Renewables, a Seattle-based developer of distributed, utility-scale solar photovoltaic projects, has raised $5 million in Series B funding. Ecosystem Integrity Fund led the round, and was joined by return backer Element 8. www.oneenergyrenewables.com
• Geofeedia, a Chicago-based provider of location-based social media intelligence solutions, has raised $3.5 million in Series A funding. Hyde Park Venture Partners led the round, and was joined by Blue Vista Ventures and Glade Brook Capital. www.geofeedia.com
• H3 Financial Services Inc., an Aliso, Viejo, Calif.-based provider of a patient financing software suite for the dental and veterinary markets, has raised an undisclosed amount of Series A funding led by Connexus Equity Management Partners. www.h3financialservices.com
PRIVATE EQUITY DEALS
• Golden Gate Capital has signed a nondisclosure agreement with Ann Inc. (NYSE: ANN), the parent of women’s apparel retailer Ann Taylor in which Golden Gate previously had reported a 9.5% equity stake. Read more.
• Harrison Gypsum, a Norman, Okla.-based portfolio company of H.I.G. Capital, has acquired The Gravel Co., a producer of aggregate materials like sand, gravel and limestone. The combined company will do business as ACG Minerals. www.harrisongypsum.com
• IronGate Energy Services, a portfolio company of Clearlake Capital Group, has acquired Sun Tubular Services, a provider of rental services to E&P operators in the Permian Basin. No financial terms were disclosed. www.irongatees.com
• Leeds Equity Partners has acquired iModules Software, a Leawood, Kansas-based provider of constituent engagement management software for educational institutions. No financial terms were disclosed. www.imodules.com
• MergeWorthRx Corp. (Nasdaq: MWRX), a special-purpose acquisition company focused on the U.S. healthcare market, has agreed to acquire AeroCare Holdings Inc., an Orlando, Fla.–based provider of in-home respiratory therapy services. AeroCare generates around $150 million in annual revenue, and is backed by Ferrer, Freeman & Co. and MTS Health Partners. AeroCare shareholders will retain a 53% stake in the combined company. www.aerocareusa.com
• The Riverside Co. has acquired Spectrio, an Oldsmar, Fla.-based marketing firm focused on digital signage managed services and on-hold messaging. No financial terms were disclosed. www.spectrio.com
• UniCredit, Italy’s largest bank, has agreed to sell more than €5 billion worth of bad loans to a private equity consortium led by AnaCap Financial Partners, according to the FT. Read more.
• Vista Equity Partners has agreed to acquire Navex Global, a Lake Oswego, Ore.-based provider of employee compliance training software. No financial terms were disclosed. www.navexglobal.com
• Dominion Midstream Partners LP, a Richmond, Va.-based provider of LNG transportation and related services, raised $368 million in its IPO. The company priced 17.5 million shares at $21 per share (high end of $19-$21 range), for an initial market cap of approximately $1.34 billion. It will trade on the NYSE under ticker symbol DM, while Barclays and Citigroup served as lead underwriters.
• Great Western Bank, a Sioux Falls, S.D.-based community bank, raised $288 million in its IPO. The company priced 16 million shares at $18 per share (below $21-$24 range), for an initial market cap of approximately $1.04 billion. It will trade on the NYSE under ticker symbol GWB, while Deutsche Bank Securities and BofA Merrill Lynch served as lead underwriters. www.greatwesternbank.com
• Ocean Rig Partners LP, a master limited partnership formed by Ocean Rig (Nasdaq: ORIG) to own three deepwater drilling rigs near Angola, has filed for a $305 million IPO. It plans to trade on the Nasdaq under ticker symbol ORLP, with Barclays listed as left-lead underwriter. Ocean Rig is a subsidiary of Dru Ships (Nasdaq:DRYS). www.ocean-rig.com
• Encore Consumer Capital has sold The Isopure Co. LLC, a Hauppauge, N.Y.-based maker of protein powders and drinks, to Ireland’s Glanbia PLC for $153 million. www.theisopurecompany.com
• GS Capital Partners and TPG Capital are seeking a buyer for British crane rental company Ainscough Crane Hire Ltd., according to Bloomberg. The deal could be valued at more than £400 million, with AEA Investors and Silverfleet Capital among potential suitors. Read more.
• The Middleby Corp. (Nasdaq: MIDD) has agreed to acquire U-Line Corp., a Milwaukee-based maker of undercounter appliances like ice-cutters and refrigerators, from Linsalata Capital Partners. No financial terms were disclosed. Harris Williams & Co. managed the process. www.u-line.com
• SoftBank has agreed to acquire Korean film and television production company DramaFever. No financial terms were disclosed. Re/Code had previously reported that IAC/InterActiveCorp was in talks to acquire DramaFever, which has raised VC funding from such firms as MK Capital, Bertelsmann, AMC Networks and NALA Investments. Read more.
• Abbvie (NYSE: ABBV) said that it is reconsidering its $54 billion takeover bid for Shire PLC (LSE: SHP), in another response to President Obama’s crackdown on so-called “tax inversion” deals. Read more.
• CTPartners Executive Search Inc. (NYSE: CTP) has agreed to acquire Austrian executive search firm Neumann. No financial terms were disclosed. www.ctnet.com
• Qualcomm (Nasdaq: QCOM) has agreed to acquire British chip-maker CSR Ltd. (LSE: CSR) for approximately £1.6 billion. Read more.
FIRMS & FUNDS
• Bridgepoint has held a €2 billion first close for its fifth European buyout fund, according to Dow Jones. It began raising the fund back in May with a €3.5 billion target. Read more.
• Canaan Partners, a bi-coastal venture capital fund focused on both tech and life sciences companies, has begun raising its tenth venture capital fund, according to a regulatory filing. http://www.canaan.com
• Unison Capital, a Japanese private equity firm, is raising a $250 million fund to invest in South Korea, according to Dow Jones. www.unisoncap.com
• Vista Equity Partners, an Austin, Texas-based private equity firm focused on the tech industry, has closed its fifth fund with $5.775 billion in capital commitments. www.vistaequitypartners.com
• WL Ross & Co. is planning to raise between $1 billion and $2 billion for its next flagship private equity fund, according to Bloomberg. The firm had raised $4 billion for its fourth fund in 2007, before gathering just $640 million for its fifth fund in 2012. Read more.
• X Fund, an on-campus venture effort co-sponsored by NEA and Harvard University, has secured for than $73 million for its second fund, according to a regulatory filing. Read more.
• A Delaware judge yesterday ruled that KKR Financial shareholders cannot challenge the credit business’ acquisition by KKR. Read more.
MOVING IN, UP, ON & OUT
• Frédéric Devos has joined Macquarie Capital as global head of portfolio management, a newly-created position. He previously was a partner with CVC Capital Partners, and before that served as CEO of Veolia Water UK, Ireland and Northern Europe. www.macquarie.com
• David Wilton has agreed to join Morgan Stanley Alternative Investment Partners as a managing director focused on “private equity impact investing.” He previously was chief investment officer of the International Finance Corp., where he also led private equity investing. Before that he managed private equity and real estate investing for the World Bank Pension Fund. www.morganstanley.com
Share today’s Term Sheet: