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Term Sheet — Thursday, August 7

Random Ramblings

Investcorp finally has found a buyer for SourceMedia, publisher of venerable financial trade publications like the American Banker and the Bond Buyer. We’ve learned that it is Observer Capital, a new private equity firm led by New York-based media executive and investor Joseph Meyer.

No word yet on financial details of the deal, which could be formally announced as soon as today. 

Investcorp carved SourceMedia out of Thomson Financial (now Thomson Reuters) back in 2004 for $350 million. It later split the data and publishing businesses into separate companies, selling off the data piece — renamed Accuity — in 2011 to Reed Elsevier for approximately $530 million. Investcorp also would hire bankers to find a buyer for the publishing assets — with an estimated asking price in the range of $50-$60 million — but never was able to consumate a deal.

Enter Joseph Meyer, a former investment professional (Elliott Associates, MSD Capital) who in January 2013 was named CEO of Observer Media, publisher of the New York Observer weekly newspaper and several smaller trade publications (Meyer’s brother-in-law, Jared Kushner, is the company’s owner). Late last year he quietly formed a new private equity firm called Observer Capital, to focus on mid-market private equity and special situation opportunities within the media and financial services sectors. 

He still is working at Observer Media, but most of his focus is now on the (unaffiliated) private equity and its first portfolio company, which remains stuck in the midst of a difficult print-to-digital transition.

Meyer declined to comment on Investcorp’s past troubles in selling the business, but did say: “I see large media organizations getting away from deeper niche coverage that serves people in industries. They have increased business coverage that serves financial investors, but the individuals themselves are getting less information about their communities.”

Give to get? Yesterday I expressed skepticism over early-stage investment firm Felicis Ventures pledging to always vote its shares with the founders. As one VC reader opined: “A VC that promises to never vote against the entrepreneur is like a strength and conditioning coach saying ‘Sure, you can eat candy if you want.’ The value is counter to the need.”

So I spent some time on the phone with Felicis founder and managing director Aydin Senkut, who argued (fairly convincingly) that the strategy is not a violation of fiduciary duty to his limited partners.

 He says that the promise only relates to voting its shares, not to any board-level votes (assuming that Felicis has a representative). Moreover, he feels it only becomes an issue when the decision relates to M&A, since most other shareholder votes only require a majority or super-majority that falls well short of the near-unanimity that can be required for M&A. Felicis, he says, has never in its history voted against founders in such scenarios, so this really is codifying the firm’s existing practice. This pledge will be written into future term sheet, although Felicis has an out in case of fraud.

Sounds to me like Senkut doesn’t believe he’s really giving anything up, while gaining a small leg-up among entrepreneurs in the ultra-competitive seed-stage and Series A space. Your thoughts?

• Protective clauses: A colleague recently noticed how several large tech companies provide personal security services for their CEOs, including such things as bodyguards and home monitoring systems (such expenses must be publicly reported for listed companies if they exceed $10,000 annually). So I checked proxy statements of publicly-traded private equity firms, to see if they did the same.

In short, the answer was no. No mention of such charges in public filings from Apollo, Carlyle, KKR and Oaktree. The only exception is The Blackstone Group, which listed nearly $67,000 in security expenses for CEO Steve Schwarzman.

THE BIG DEAL

•  Kellogg Co. (NYSE: K) is considering a takeover offer for British cookie and snack-maker United Biscuits, according to Reuters. United Biscuits currently is owned by The Blackstone Group and PAI Partners, and could be valued at around £2 billion. Read more.

VENTURE CAPITAL DEALS

•  Kiwi Inc., a Palo Alto, Calif.-based mobile game developer, has raised $15 million in Series B funding. Northgate Capital led the round, and was joined by DFJ and return backer Sequoia Capital. www.kiwiup.com

•  Casper, a New York-based provider of sleep solutions like a branded mattress, has raised $13.1 million in Series A funding. New Enterprise Associates led the round, and was joined by SV Angel, A-Grade Investments, Slow Ventures, Consigliere Brand Capital, Silas Capital, Cendana Capital and fashion designer Steven Alan. Return backers include Lerer Hippeau Ventures, Norwest Venture Partners, Crosslink Capital, Vaizra Investments, Queensbridge Ventures and Correlation Ventures. www.caspersleep.com  

•  Retention Science, a Santa Monica, Calif.-based provider of retention marketing solutions, has raised $7 million in Series A funding. Upfront Ventures led the round, and was joined by individual angels and return backers Baroda Ventures, Forerunner Ventures and Mohr Davidow Ventures. www.retentionscience.com

•  RedPoint Global Inc., a Wellesley, Mass.-based provider of data management and digital marketing software, has raised $5.2 million in growth equity financing. Grotech Ventures led the round, and was joined by Sagamore Ventures. www.redpoint.net

•  All DEF Digital Inc., a Los Angeles-based multi-platform digital media company and entertainment company co-founded by Russell Simmons, has raised $5 million in Series A funding. Greycroft Partners led the round, and was joined by Advancit Capital, Nu Horizons Investments and e.ventures. www.alldefdigital.com

•  Figure 1, a Toronto-based provider of photo-sharing services for healthcare professionals, has raised US$4 million in Series A funding led by Union Square Ventures. www.figure1.com

•  GridCraft, a Boulder, Colo.-based provider of data visualization solutions for business users, has raised $2.2 million in seed funding led by Bullet Time Ventures. www.gridcraft.com

•  JustPark, an app for locating non-public parking spots, has raised an undisclosed amount of new funding from Index Ventures. The company also has signed a deal to be incorporated into BMW vehicle dashboards, three years after receiving a £250,000 investment from the German automaker. www.justpark.com

•  Growl Media, a Dubai-based developer of educational entertainment content for young children, has raised an undisclosed amount of Series A funding from Auvest Group. www.growlmedia.com

PRIVATE EQUITY DEALS

•  Bendon Inc., a portfolio company of Wicks Group, has acquired Artistic Studios Ltd., a San Francisco–based maker of children’s activity products, art sets, and crafts. www.aslpublishing.com

•  The Blackstone Group and GS Capital Partners have completed their previously-announced $975 million acquisition of Ipreo, a New York-based provider of market intelligence and productivity solutions to capital markets and corporate professionals, from KKR. www.ipreo.com

•  Brookside Equity Partners has sponsored a minority recapitalization of SelectQuote Inc., a San Francisco–based insurance distributor. www.selectquote.com

•  ECS Tuning, a Wadsworth, Ohio–based auto ecommerce company, has raised an undisclosed amount of private equity funding from Bertram Capital. www.esctuning.com

•  Evergreen Pacific Partners has acquired SafeWorks Holdings Inc., a Seattle-based maker of suspended access products, from Wynnchurch Capital. No financial terms were disclosed.

•  Sterigenics International, a Deerfield, Ill.–based provider of outsourced contract sterilization services, has completed its previously-announced take-private acquisition of Nordion Inc., an Ottawa–based provider of products and services to the global health science market. The deal was valued at approximately $727 million, or $10.48 per Nordion share (the company has simultaneously delisted from the NYSE). Sterigenics is a portfolio company of GTCRwww.gtcr.com

•  Succession Capital, a subsidiary of Lynx Equity, has acquired Wine Valley Siding Supply Inc., a Bothell, Wash.–based distributor of wood and fiber cement siding. No financial terms were disclosed. www.winevalleysiding.com

 Trivest Partners has sponsored a recapitalization of Advanced Discovery, a Mountain View, Calif.–based provider of ediscovery services and document review for law firms and corporate legal departments. No financial terms were disclosed. www.advanceddiscovery.com

•  Vance Street Capital has acquired Eirtech Aviation, an Ireland-based aviation coating services company. No financial terms were disclosed. Vance Street also said that it would form International Aerospace Coatings Holdings LP, as an umbrella platform for Eirtech and existing portfolio companies Leading Edge Aviation Services Inc. and Associated Painters Inc. www.eirtechaviation.ie

IPOs

China International Capital Corp., a Chinese investment bank, has picked ABC International Holdings and CCB International to co-lead a Hong Kong IPO, according to Bloomberg. The float could value CICC at more than $3 billion. Read more.

• iDreamSky Technology Ltd., a Chinese mobile game publishing platform, raised $116 million in its IPO. The company priced 7.7 million shares at $15 per share (above $12-$14 range), and will trade on the Nasdaq under ticker symbol DSKY. Credit Suisse and J.P. Morgan served as lead underwriters. The company reports $5.3 million of net income on $28 million in revenue for Q1 2014. Shareholders include Redpoint Ventures (16.6% pre-IPO stake). www.idreamsky.com

• T2 Biosystems, a Lexington, Mass.-based developer of magnetic biosensor detection technology, raised $57 million in its IPO. The company priced 5.2 million shares at $11 per share (below $15-$17 range), and will trade on the Nasdaq under ticker symbol TTOO. Goldman Sachs and Morgan Stanley served as lead underwriters. The company had raised over $80 million in VC funding from Goldman Sachs, Polaris Partners, Flagship Ventures, Aisling Capital, Flybridge Capital Partners Physic Ventures, Arcus Ventures, Partners Healthcare, Camros Capital and WS Investments. www.t2biosystems.com

EXITS

 Google (Nasdaq: GOOG) has acquired Directr, a Boston-based startup that lets users create, collaborate on and share short films. No financial terms were disclosed. Directr had raised a small amount of VC funding from NextView Ventures, Boston Seed Capital and Advancit Capital. www.directr.co

 Palladium Equity Partners has sold Sahale Snacks Inc., a Seattle-based maker of branded nut and fruit snacks, to The J. M. Smucker Co. (NYSE: SJM). No financial terms were disclosed for the deal, which is expected to close next month. Sahale is expected to generate around $50 million in net sales for 2014. www.sahalesnacks.com

Practice Fusion, a cloud-based electronic health records platform, has acquired Ringadoc, a West Hollywood, Calif.-based platform that enables audio and video consultations with doctors. No financial terms were disclosed. Ringadoc had raised seed funding from Founders Fund, Siemer VC, Telegraph Hill Group and individual angels like Practice Fusion founder and CEO Ryan Howard. www.ringadoc.com 

OTHER DEALS

• CST Brands Inc. (NYSE: CST) has agreed to acquire the membership interests of Lehigh Gas GP LLC, the general partner of Lehigh Gas Partners LP (NYSE: LGP) from Lehigh Gas Corp. for approximately $85 million in cash and stock (including $17m in cash). www.cstbrands.com

FIRMS & FUNDS

•  Qualcomm Inc. (Nasdaq: QCOM) has agreed to invest upwards of $150 million into Chinese start-ups, via its Qualcomm Ventures unit. www.qualcommventures.com  

MOVING IN, UP, ON & OUT

•  Francisco Saraiva Gomes has been named CEO of Pontos Aqua Holdings, a new private equity platform focused on the aquaculture and seafood industry. He previously led the aquaculture business at Novus International Inc. Pontos Aqua was formed earlier this year, with a $75 million initial equity commitment from Tincium Inc. www.tincium.com

•  Hercules Technology Growth Capital has hired three new investment professionals focused on the energy and renewable technology sector: Brian Sapp as managing director (previously with R.W. Baird & Co.); Micah Merrick as principal (previously with Saint-Gobain) and Catherine Jhung as principal (previously with Cleantech Group). www.htgc.com