Yesterday we reported that California-based VC and PE fund-of-funds manager Northgate was being acquired by The Capital Partnership, an investment advisory firm and longtime Northgate investor.
One thing that jumped out in the press release was TCP saying that it would acquire 100% on Northgate’s ownership. Kind of unusual given that seller Religare Enterprises was only thought to have purchased a majority stake in Northgate six years ago (for around $200 million), and because you’d normally want firm management to have skin in the game.
So I spoke with Ali Ojjeh, TCP’s founding partner and CEO, who told me that the wording was just related to drag-along rights in the Religare agreement and that existing Northgate management would all remain (under “long-term agreements”) and that they’d soon own more of Northgate than they had previously. “Of course they’re staying,” Ojjeh said. “The assets walk out the door each night.”
And I dutifully reported those details. Soon after, however, I received a memo sent by Northgate to its limited partners, which tell a very different story.
Specifically, the service agreements with Northgate co-founders Brent Jones and Tommy Vardell will expire by December 31. Jones and Vardell — former NFL players who launched Northgate in 2000 — are generally credited with helping Northgate gain access to several venture capital firms that typically are loathe to accept fund-of-funds (e.g., Sequoia Capital). Moreover, they are both key-men on existing Northgate funds.
But they’re both out at year-end, with the firm to subsequently be led by current Northgate exec Hosein Khajeh-Hoseeiny (relocating from London to Silicon Valley) and TCP’s Ali Ojjeh.
At best, this was TCP trying to mislead me (and, by extension, the market). At worst, Ojjeh lied.
So I called him back yesterday and left a voicemail to which he didn’t reply. I also spoke with TCP’s head of biz dev, Laura Deitz (she was listed on the press release), who said she’d get me some answers but never did (and then didn’t pick up my multiple calls). An outside TCP spokesperson finally sent over a statement saying: “We don’t typically discuss in public the terms of partner agreements, and hope for no misunderstanding.” Except Ojjeh did discuss said terms, but not in an accurate way.
I sent an email to Jones, who did not return my request for comment. So no word yet on what he and Vardell plan to do come 2017, or if they have non-compete agreements that restrict their movement.
Suffice to say, Northgate — a firm with $4.8 billion in assets under management — is changing much more than its cap table. And some of its top assets are, indeed, walking out the door.
• New firm alert: Biomatics Capital Partners has been launched as a Seattle-based venture capital firm by Boris Nikolic (a physician and former Bill & Melinda Gates Foundation advisor who backed Editas Medicine) and Julie Sunderland (who, at last check, was director of program-related investments for the Gates Foundation). According to a regulatory filing, BCP is seeking upwards of $150 million for its debut fund.
• Quiz Time: Can you name the well-known venture capitalist who just launched a tech hedge fund on the side?
• Today in Theranos: Someday this item will contain good news for the Silicon Valley blood-testing startup. But today is not that day.
The latest is that Theranos confirmed that it is the subject of a criminal investigation by the U.S. Department of Justice, while other reports say that a parallel investigation is underway at the SEC. At issue is what the company did (or perhaps didn’t) tell both investors and partners (with both Walgreens and the NY State Department of Health among those receiving subpoenas). Per usual, Theranos says that it is cooperating.
THE BIG DEAL
• Dubai International Capital, a state-owned private equity group that once held $13 billion in assets under management, is shutting down, according to Bloomberg.
DIC plans to restructure around $2.5 billion in debt and sell its stake in British engineering firm Doncasters Group Ltd. before ending operations. It already has begun laying off staff and closing satellite offices. Read more.
VENTURE CAPITAL DEALS
• Proteus Digital Health, a Redwood City, Calif.-based digital feedback system for tracking patient health, has raised $50 million in Series H funding from undisclosed investors. Existing shareholders include Otsuka Pharmaceutical, Novartis Venture Fund, Sino Portfolio, ON Semiconductor, Adams Street Partners, Essex Woodlands and Frazier Healthcare Ventures. www.proteus.com
• NestAway, an Indian online real estate platform, has raised $30 million in Series C funding. Tiger Global led the round, and was joined by Yuri Milner, IDG Ventures India and Sujeet Kumar. Read more.
• Ninja Logistics Pte Ltd. (a.k.a. Ninja Van), a provider of tech-enabled last-mile logistics in Singapore, Malaysia and Indonesia, has raised $30 million in new VC funding. The Abraaj Group led the round, and was joined by B Capital Group, YJ Capital and return backer Monk’s Hill Ventures. www.ninjavan.sg
• Insightly, a San Francisco-based provider of online CRM solutions for small businesses, has raised $25 million in Series C funding. Scott Bommer led the round, and was joined by return backers Emergence Capital Partners, Cloud Apps Capital Partners and Sozo Ventures. www.insightly.com
• Diamanti, a data center infrastructure startup led by former Cisco exec Jeff Chou, has raised $12.5 million in VC funding from Goldman Sachs, Charles River Ventures, Draper Fisher Jurvetson and GSR Ventures. Read more.
• Waltz Networks, a San Francisco-based startup focused on automatic real-time network control, has raised $6.75 million in Series A funding from New Enterprise Associates. It also secured $1.4 million in National Science Foundation grants. www.waltznetworks.com
• Rinse, a San Francisco-based on-demand laundry service, has raised $6 million in Series A funding. Javelin Venture Partners led the round, and was joined by Arena Ventures, Base Ventures, CAA Ventures, Accelerator Ventures, Expansion VC, Otter Rock Capital and Structure Capital. www.rinse.com
• Sharper Shape, a provider of automated drone-based asset inspections, has raised $3.25 million in new VC funding. Straightforward Capital led the round, and was joined by consulting firm Partners in Performance. The Finland-based company has satellite offices in Palo Alto and North Dakota. www.sharpershape.com
• Gradescope, a cloud-based educational grading platform, has raised $2.6 million in seed funding. Freestyle Capital, Bloomberg Beta, House Fund and Reach Capital were joined by return backer K9 Ventures. www.gradescope.com
• Betaout, an India-based marketing automation platform for e-commerce companies, has raised $1.5 million in Series A funding. Backers include Beenext, Stanford Angels, Letsventure, Chennai Angels, Hyderabad Angels, Mumbai Angels and Sam Yagan. Read more.
PRIVATE EQUITY DEALS
• Apax Partners has agreed to acquire a 60% equity stake in Duck Creek Technologies, the insurance software business of Accenture (NYSE: CAN), No financial terms were disclosed. www.accenture.com
• Bridgepoint and Summit Partners have agreed to acquire Calypso Technology Inc., a San Francisco-based provider of trading and risk management software. No financial terms were disclosed. www.calypso.com
• Clayton Dubilier & Rice and IK Investment Partners are among several bidders heading into the final round of an auction for German sausage casings maker Kalle, which is being sold by Silverfleet Capital, according to Reuters. The company generated around €50 million in 2015 EBITDA. Read more.
• KKR is among those submitting a first-round bid for a 40% stake in Greenstone, an Australian insurance company backed by Hollard Investments, according to The Australian. Read more.
• Kohlberg & Co. has agreed to acquire The Meadows of Wickenburg LP, a Wickenburg, Ariz.-based addiction rehabilitation center, from American Capital. According to Dow Jones, the deal is valued at around $180 million, with The Meadows recording approximately $15 million in 2015 EBITDA. www.themeadows.com
• Thomas H. Lee Partners is in “advanced talks” to acquire Give and Go Prepared Foods Corp., a Toronto-based maker of frozen and thaw baked goods that is currently owned by OMERS Private Equity, according to Reuters. The deal is expected to be worth just south of $800 million. Read more.
• Valentus Specialty Chemicals Inc., a coatings industry platform sponsored by Huron Capital Partners, has acquired the floor finishes business of Memphis, Tenn.-based Precision Technology LLC. No financial terms were disclosed. www.huroncapital.com
• YP Holdings, a yellow pages publisher owned by Cerberus Capital Management, is among the first-round bidders for Yahoo, according to Bloomberg. Read more.
• Yum Brands has receives takeover interest in its China business, which operates more than 7,100 Pizza Hut and KFC locations, from an investor consortium that includes China Investment Corp., KKR and Baring Private Equity Asia, according to Bloomberg. The deal could be worth between $7 billion and $8 billion. Read more.
• Gemphire Therapeutics Inc., a Northville, Mich.-based developer of therapies for the treatment of dyslipidemia, has filed for a $60 million IPO. It plans to trade on the Nasdaq under ticker symbol GEMP, with Jefferies and Cowen & Co. serving as lead underwriters. Shareholders in the pre-revenue company include Pfizer. www.gemphire.com
• PhaseRx Inc., a Seattle-based developer of products for the treatment of inherited enzyme deficiencies in the, has filed for a $30 million IPO. It plans to trade on the Nasdaq under ticker symbol PZRX, with Laidlaw & Co. serving as sole underwriter. Shareholders include 5AM Ventures, Alexandria Equities, Arch Venture Partners, Savoy Therapeutics and Versant Ventures. www.phaserx.com
• Castle Harlan has sold Baker & Taylor Inc., a Charlotte, N.C.-based provider of print and digital books to libraries, institutions and retailers, to Follett Corp., a Westchester, Ill.-based provider of technology services and content to the education sector. No financial terms were disclosed. www.baker-taylor.com
• BC Partners has hired Goldman Sachs to find a buyer for SGB-SMIT, a German power transformer maker, according to Reuters. The private equity firm had tried to sell the company four years ago to China’s State Grid, but that transaction failed due to “political intervention.” Read more.
• Ethicon, a medical device unit of Johnson & Johnson (NYSE: JNJ), has acquired NeuWave Medical Inc., a Madison, Wis.-based maker of minimally-invasive soft tissue microwave ablation systems, from H.I.G. Capital. No financial terms were disclosed. www.neuwavemedical.com
• Graduateland, a Denmark-based career network, has acquired Tyba, a Madrid-based recruitment platform for junior talent. No financial terms were disclosed. Tyba had raised around $4 million in VC funding from an affiliate of the Kuwaiti Investment Authority and Sunstone Capital. Read more.
• KKR is seeking buyers for Indian drug-maker Gland Pharma Ltd., according to Reuters. Suitors could include Advent International and Baxter International (NYSE: BAX), with a deal expected to be worth between $1 billion and $1.5 billion. Read more.
• Vision Capital has hired Jefferies to find a buyer for United Initiators, a German specialty chemicals company that could be valued at more than $450 million, according to Bloomberg. Read more.
• Signature Healthcare Services LLC (a.k.a. Aurora Behavioral Heal Care), a Corona, Calif.-based owner and operator of 14 acute psychiatric hospitals, has hired Goldman Sachs to find a buyer for the company, according to the WSJ. Aurora reportedly generated around $130 million in 2015 EBITDA. Read more.
FIRMS & FUNDS
• Ardian has closed its seventh private equity secondaries fund with $10.8 billion in capital commitments. It also has raised around $3.2 billion for a new fund-of-funds. www.ardian.com
• Manuela Del Castillo Sposito is seeking to sell her 79% stake in Italian buyout firm Clessidra, following the January death of her husband, Clessidra founder Claudio Sposito, according to multiple media reports. One local newspaper suggested that Coller Capital and Neuberger Berman have expressed interest in the stake. Read more.
• Speyside Private Fund Advisers has closed its debut fund with $130 million in capital commitments. The firm has operated for the past decade as a fundless sponsor, focusing on special situations buyouts in the chemicals, industrials/metal forming and food ingredients sectors. www.speysideequity.com
MOVING IN, ON & UP
• Bill Berry, former CEO of American Tire Distributors, has joined private equity firm Soundcore Capital Partners as an operating partner. www.soundcorecap.com
• Brijesh Jeevarathnam has joined Adams Street Partners as a Menlo Park, Calif.-based partner and co-head of global VC fund investments, effective June 1. He previously was with Commonfund as a managing director and co-head of global VC and global emerging markets. www.adamsstreetpartners.com
• Christian Kleeberg has joined Fried, Frank, Harris, Shriver & Jacobson LLP as a Frankfurt-based partner in the law firm’s M&A and private equity practices. He previously was a partner at Taylor Wessing. www.friedfrank.com
• Jon Nemo has joined private equity firm AE Industrial Partners as a partner. He previously was with investment bank Harris Williams & Co. as a managing director and head of its aerospace, defense and government services group. www.aeroequity.com
• Mike Vernal is joining Sequoia Capital as a partner. He has spent the past eight years with Facebook, most recently leading search and developer products. Read more.
• Bob Beasley has joined Centerview Partners as an associate. He previously worked in the leveraged finance group of BofA Merrill Lynch. www.centerviewpartners.com
• Emily Calkins has joined Mainsail Partners as an associate. She previously worked in the private placements and growth equity capital raising unit of Credit Suisse. www.mainsailpartners.com
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