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Term Sheet — Tuesday, December 23

Random Ramblings

Apologies for the earlier send. Not sure what happened… Below is TODAY’s Term sheet.

When news leaked over the weekend that Irving Place Capital was submitting a take-private bid for troubled apparel retailer American Apparel, two questions immediately leapt to mind:

  1. How can Irving Place afford to do any deal, given that it hasn’t raised a new fund since 2006?
  2. Would Irving Place really partner with controversial American Apparel founder (and ex-CEO) Dov Charney, as suggested by several media reports, particularly given its large number of public pension investors?

As for the first one, Irving Place had originally planned to begin raising a new fund in late 2012 but was told by LPs to wait until its performance significantly improved. So instead it received a two-year extension to the investment cycle for its $2.7 billion fund (the one from 2006), which expires in February 2015.

My understanding is that the vehicle still has $700 million in dry powder, and that the extension language allows Irving Place to get an additional 6 months to complete any deal that already is considered to be in process (a designation under which American Apparel would fall). In other words, Irving Place would simply need to complete the deal by September. The firm also has told some LPs that it is working on some other type of nontraditional capital raise — perhaps a stapled secondary? — although the American Apparel bid would not be contingent on such an event. No LP I spoke with is expecting a formal Irving Place fundraise in 2015.

As for the second piece, sources say that Irving Place has no interest in either re-installing Charney as CEO or in any other sort of senior management position. It is possible, however, that he’d be asked to serve in some sort of advisory capacity, particularly given that he’d probably be the company’s second-largest shareholder (since there is virtually no way he sells his piece at $1.30 or $1.40 per share). Whether Charney would accept such tertiary-banana status, however, is a different question altogether…

No comment from Irving Place, natch…

• What’s in a name? Intralinks did an analysis of code-names used for nearly 17,000 M&A transactions conducted in its virtual data rooms since 2009, and found that certain monikers are used more frequently than others. Here are the top five: Eagle, Blue, Phoenix, Alpha and Green. For what it’s worth, Blue bested Eagle in EMEA transactions.

• Today in cognitive dissonance: As first spotted by peHUB, Coller Capital’s recent survey of 114 limited partners found that only 12% believe having more female partners at a private equity firm would help improve returns. At the same time, however, 60% of respondents believe that having more female partners helps improve a private equity firm’s “team quality” and “team dynamics” (with 40% suggesting that risk management is improved).

Remember, LPs often talk about how they’re investing in people as much as in strategies, and elevate the importance of team dynamics. So it seems odd that something that would improve team dynamics (let alone risk management) wouldn’t also improve performance. Methinks LPs need to spend some time this holiday season to reflect and reconcile…

• Clarification: Data Collective has not yet held a final close on its $125 million “opportunity fund,” as I reported yesterday. A large close is occurring this week, with a bit of LP cat-herding to complete afterwards. Apologies.

• Publishing schedule: Just a reminder that tomorrow’s Term Sheet will be the last issue of 2014, and likely will be a mailbag. So be sure to send over any news/views today, or hold your peace and pieces until January…

THE BIG DEAL

• The Ontario Teachers’ Pension Plan and Canada’s Public Sector Pension Investment Board have agreed to acquire stakes in a portfolio of renewable energy and water infrastructure assets that currently are owned solely by Banco Santander SA. The transaction values the assets at $2 billion, with Teachers, PSP and Santander each committing “to invest significant additional amounts in the new company over the next five years.” www.otpp.com

VENTURE CAPITAL DEALS

• Vkansee Technology Inc., a Beijing-based provider of fingerprint sensors for mobile security, has raised $7 million in VC funding from the Aviation Industry Corp. of China, according to Dow Jones. www.vkansee.com

• Yetang, a Chinese ecommerce site focused on fashion and lifestyle products, has raised $5 million in VC funding led by DCM. Read more.

• Front Desk, a Seattle-based provider of client management and payment processing SaaS solutions for personal services businesses and franchises, has raised $4 million in additional Series A funding (bringing the round total to $11.2m). Demandforce co-founders Sam Osman and Rick Berry and Front Desk CEO Jon Zimmerman were joined by return backers Floodgate, Version One Ventures and Second Avenue Partners. www.frontdeskhq.com

• PuzzleSocial, a New York-based maker of mobile games like Daily Celebrity Crossword, has raised $3 million in Series A funding. KiwiTech led the round, and was joined by individual angels. www.puzzlesocial.com

PRIVATE EQUITY DEALS

• Altamont Capital Partners has sponsored a recapitalization of Hybrid Apparel, a Cypress, Calif.-based supplier of branded, licensed and private label apparel. No financial terms were disclosed, except that the founding family of Fox Head, a motocross apparel company backed by Altamont, also participated. www.hybridapparel.com

• The Austrian government has agreed to sell the Balkans network of nationalized bank Hypo Alpe Adria to Advent International (80%) and while the European Bank for Reconstruction and Development (20%). The deal is valued at upwards of €200 million, including a €50 million upfront payment. Read more.

• The Carlyle Group has agreed to acquire PrimeSport, an Atlanta-based sports travel and event management company, from Clearlake Capital, according to an FTC filing. www.primesport.com

• Cinven has acquired Northgate Public Services a UK-based provider of services like electricity and gas metering, from KKR portfolio company Northgate Information Solutions. No financial terms were disclosed. www.northgate-ispublicservices.com

• Clinical Research Laboratories Inc., a Piscataway, N.J.-based contract lab for the cosmetic, personal care, and pharma industries, has raised an undisclosed amount of private equity funding from Bison Capital Partners. www.crl-inc.com

• Diversis Capital has acquired a majority position in Blue Software, a Des Plaines, Ill.-based provider of artwork and label management software for the enterprise, from Matthews International (Nasdaq: MATW). No financial terms were disclosed. www.bluesoftware.com

• Morgenthaler Private Equity has acquired Bowles Fluidics Corp., a Columbia, Md.–based maker of fluid distribution products. No pricing terms were disclosed. Madison Capital Funding provided senior debt, while Hancock Capital Management and Hartford Investment Management Co. provided subordinated debt. www.bowlesfluidics.com

• NEP Group Inc., a Pittsburgh-based provider of broadcast and live event service, has acquired Faber Audiovisuals, a Dutch provider of audiovisual production solutions. No financial terms were disclosed. NEP Group is a portfolio company of Crestview Partners. www.nepinc.com

• Riviera Travel, a UK-based provider of overseas escorted tour holidays and river cruises, has secured an undisclosed amount of private equity funding from Phoenix Equity Partners. www.rivieratravel.co.uk

• Sound Physicians, a Tacoma, Wash.-based hospitalist and post-acute care organization, has acquired Cogent Healthcare, a Brentwood, Tenn.–based hospitalist and intensive care organization, from Waud Capital Partners. No financial terms were disclosed. Sound Physicians is a portfolio company of TowerBrook Capital Partners. www.soundphysicians.com

• WorldPay, a UK-based payments tech company backed by Advent International and Bain Capital, has completed its previously-announced acquisition of SecureNet Payment Systems, an Austin, Texas-based provider of multi-channel commerce technology, from Sterling Partners. No financial terms were disclosed. www.worldpay.com

IPOs

• AltheaDx Inc., a San Diego-based molecular diagnostics company focused on personalized medicine, has filed for a $69 million IPO. The company plans to trade on the Nasdaq under ticker symbol IDGX, with Citigroup and Jefferies serving as lead underwriters. It reports a $5.9 million net loss on $13.6 million in revenue for the first nine months of 2014. Shareholders include Telegraph Hill Partners (43.9% pre-IPO stakew) and Alma Life Sciences (24.5%). www.altheadx.com

• BeneChill Inc., a San Diego-based maker of rapid cooling products to help treat brain ischemia and traumatic brain injury, has filed for a $13.8 million IPO. It plans to trade on the NYSE MKT under ticker symbol BNCH, with Dawson James Securities serving as sole underwriter. The company reports a $4 million net loss on $368,000 in revenue for the first nine months of 2014. It has raised over $13 million in VC funding. Shareholders include HealthCap (21.9% pre-IPO stake), MedVenture Associates (17.2%), NGN BioMed (16.4%), Physio-Control International (8.4%) and Rütli Foundation Solon Medical (8.2%). www.benechill.com

• Infraredx Inc., a Burlington, Mass.-based developer of medical devices for the diagnosis and management of coronary artery disease, has filed for a $55 million IPO. It plans to trade on the Nasdaq under ticker symbol REDX, with RBC Capita, Markets, Canaccord Genuity and BMO Capital Markets serving as lead underwriters. The company reports a $24.5 million net loss on $3.68 million in revenue for the first nine months of 2014. It has raised more than $175 million in equity funding from backers like Sanderling Ventures, Nipro Corp. and Eastwood Capital. www.infraredx.com

• Sol-Wind Renewable Power LP, a New York-based owner and operator of solar and wind power generation assets, has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol SLWD, with UBS and Citigroup serving as lead underwriters.

EXITS

• Change Capital Partners has sold Hallhuber Beteiligungs GmbH, a Germany-based women’s fashion designer and retailer, to Gerry Weber International AG (DB: GWI1). No financial terms were disclosed. www.gerryweber-ag.de

• Sonavation, a Palm Beach Gardens, Fla.-based provider of biometric ultrasound technology for digital security, has acquired the assets of Arkami Inc., an Aliso Viejo, Calif.–based provider of hardware and software for secure authentication password management. No financial terms were disclosed. Arkami had raised just under $2 million in VC funding from investors like McNeel Capital. www.sonavation.com

OTHER DEALS

• Builders FirstSource Inc. (Nasdaq: BLDR) has acquired Empire Truss Ltd., a Huntsville, Texas-based maker of custom designed roof trusses and floor trusses. No financial terms were disclosed, except that Empure’s fiscal2014 revenue was around $11 million. www.bldr.com

• Cargill said that it has ended its pursuit of Dutch animal feed company Nutreco, which already has agreed to be acquired by SHV Holdings for €2.98 billion. Read more.

• Goldman Sachs has completed its sale of metals warehousing business Metro International Trade Services to a subsidiary of Switzerland-based Reuben Brothers. No financial terms were disclosed. www.goldmansachs.com

• Morgan Stanley has canceled its agreed-upon sale of a large oil trading and storage business to Russia’s Rosneft, after an inability to secure regulatory approvals. Read more.

• Procter & Gamble (NYSE: PG) has agreed to sell some of its soap brands, including Camay and Zest (outside of the North American and Caribbean markets) to Unilver for an undisclosed amount. Read more.

• TheScore Inc. (TSX: SCR) has agreed to acquire daily fantasy sports game Swoopt from San Francisco-based ApptheGame Inc. No financial terms were disclosed. www.thescore.com

• SeaChange International Inc. (Nasdaq: SEAC) has agreed to acquire Timeline Labs, a Santa Monica, Calif.-based provider of a platform for media companies to find and analyze social media content in real-time. No financial terms were disclosed. www.timelinelabs.com

FIRMS & FUNDS

• Daum Kakao, a listed South Korean Internet company, said that it will launch a $91 million venture capital fund called K Venture Group, which will focus on startups both inside and outside of Korea. Read more.

MOVING IN, UP, ON & OUT

• No personnel items this morning.

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