Filed under: Raising money, Apax Partners

Apax Partners, which took clothier Tommy Hilfiger private in 2006 and had planned to take the company public again soon, has shelved (subscription) those IPO plans in light of the weakened capital markets.

The company said that, “Considering current volatile market conditions, management and shareholders decided to postpone an IPO process until such time that market conditions have stabilized”.

Regardless of when the IPO takes place, the $1.6 billion buyout of the company is a shining example of the value-adding changes that buyout shops can make. After Apax took it private, the company moved its headquarters to Amsterdam, and let its U.S. sales plummet by 50% in one-year, focusing instead on the European market where the label is trendier and able to sell at higher price-points.

As recently as October, it was expected that Apax would be able to book a $1.7 billion profit on the company. As strong as the performance has been of late, I can’t help wondering whether Hilfiger would do ideal remaining private. Even with improved financial statements, Hilfiger is best-known as a brand that was iconic during the 1990’s, and Apax might have a hard time getting investors to pay up for that.

Share This

Share This

Filed under: Raising money, Public or private?

Tech Confidential had an interesting conversation Wednesday with Mark Pincus, the Silicon Valley serial entrepreneur who founded the Zynga Game Network. Zynga brings players together via Facebook and other social networks and boasts several popular titles, including a version of the trendy poker game Texas Hold ‘Em and a Scrabble knockoff called Scrabulous, each with about half a million people playing daily.

The startup recently won a $10 million Series A round, led by Union Square Ventures and including Avalon Ventures, Foundry Group and power angels Reid Hoffman, founder of LinkedIn, and Clarium Capital managing partner Peter Thiel. We asked Pincus about how Facebook Inc.’s opening up its application programming interface, or API, is changing today’s on the web applications, including games.

Continue reading at TechConfidential.com.

Share This

Share This

Filed under: Rumors, Raising money, Shareholders, Public or private?

EchoStar (NASDAQ: DISH) closed at $28.64. Smith Barney says, “three ‘anti-M&A’ events have removed any take-out premium - Tax-free spin SATS, insider selling, and DISH participation in 700MHZ auction have removed M&A premium from DISH shares. We still think M&A is possible.”

DISH January option implied volatility of 43 is near its 26-week average according to Track Data, suggesting non-directional price risk.

M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Share This

Share This

Filed under: Raising money, Venture capital industry

Facebook held up Microsoft Corp. (NASDAQ: MSFT) for $240 million in funding, then tapped Hong Kong billionaire Li Ka-shing for another $60 million. Now, it has turned to three German entrepreneurs for more money, according to TechCrunch. The Samwer brothers, Alexander, Marc and Oliver, have reportedly invested in Facebook, though terms of the investment are unknown.

What’s known is that the Samwer brothers are filthy rich after selling German auction site Alando.de AG to eBay (NASDAQ: EBAY) in 1999 for $43 million, wireless ringtone and mobile games maker Jamba AG to VeriSign (NASDAQ: VRSN) in 2004 for $273 million and Germany’s answer to Facebook, StudiVZ, in 2006 for $100 million to Holtzbrinck LLC (now Macmillan Publishers).

Continue reading at TechConfidential.com.

Share This

Share This

Filed under: Raising money, Investments

Wednesday, when I checked my mail box, I had to throw most of the stuff away. Essentially, the task is really about weeding out lots of junk mail.

Well, Earth Class Mail thinks it has a better way. In fact, the company raised $13.3 million this week from investors including Ignition Partners and the Keiretsu Forum.

Basically, the service allows for on the web delivery of regular postal mail - for consumers and businesses. Yes, it’s a cool “clicks and bricks” business model, and I think it could see lots of traction (I would like to use the service, actually).

Earth Class Mail has assembled an impressive team, with operators from Microsoft (NASDAQ: MSFT) and Starbucks (NASDAQ: SBUX). Even though, I think that Kenn Dahl, who is a board member, will be key. After all, he is the president of Prime Recognition, which develops sophisticated optical character recognition software.

Interestingly enough, there is also a cleantech angle. That’s, Earth Class Mail will recycle your mail.

And, based on the mail I get, I think I could save a few trees.

Finally, if you want to check out other interesting venture capital deals, check out DealProfiles.com.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

Share This

Share This

Filed under: Raising money

New healthcare investment fund Sant

Share This

Share This

Filed under: Raising money, Investments, Public or private?

Despite plenty of turmoil in the stock market, 2007 will go down as a pretty solid one for venture-backed companies that found their way to the public markets or were bought out.

According to the fourth quarter Exit Poll done by Thomson Financial and the National Venture Capital Association, 31 venture-backed companies went public in the fourth quarter, the most since the third quarter of 2000, raising $3 billion. For the year, 86 venture-backed companies went public, raising $10.3 billion, a 51% increase in volume over 2006, when 57 companies went public, and more than doubling the $5.1 billion those companies raised.

However, only 45 venture-backed companies were acquired in the fourth quarter, the lowest number of M&A exits since the first quarter of 1998, when there were 44 M&A exits. For the year, though, there were 304 venture-backed M&A transactions with a total disclosed value of $23.7 billion, the highest disclosed value since 2000.

Continue reading at TechConfidential.com.

Share This

Share This

Filed under: Web services, Social Software

Glassbooth, the presidential election voting aid we previously covered, has released a Facebook application so that you can put their helpful quiz on your Facebook profile (between your “Hot or Not” and “Which Friends character are you?” apps).

After you take the quiz via the application, results showing your top three candidates are displayed on your Facebook profile. Your friends can click the candidates to see why you agreed with them (based on degree of similarity on specific issues).

Your friends can also add the application to their profiles and take the quiz to show for whom Glassbooth suggests that they vote.

Read

Share This

Share This

Filed under: Raising money, Private equity industry

I love when experts declare the obvious. Talking about the glut of private equity debt that investment banks are now looking to push onto investors, John Eydenberg, head of leveraged finance for the Americas at Deutsche Bank AG in New York, told Bloomberg that “the market can absorb all these deals. It is a question of time and price”.

Well, duh. But isn’t that kind of like saying that a store will be able to unload all those ugly, out of style clothes — it’s just a matter of time and price? Given an infinite amount of time and a willingness to sell at any price, pretty much anything can be sold!

And that’s the situation with private equity right now. Investment banks which must place billions of bonds to finance buyouts are having trouble finding buyers in the midst of the credit crunch. Banks are frequently offering investors bonds at a 5-10% discount to face value.

The difficulty banks are having in placing debt — and the extra yield investors are demanding — should prolong the slowdown in buyouts. And if investors aren’t eager to purchase the bonds, investment banks won’t be eager to finance buyouts.

Share This

Share This

Filed under: Financials and analyticals, Raising money, Private equity industry

BusinessWeek reports that The Bear Stearns Companies (NYSE: BSC), which reported earnings today, is behind $10 billion worth of Collateralized Debt Obligations (CDOs) at Citigroup Inc. (NYSE: C) and Bank of America (NYSE: BAC). It all comes down to yet another new word to add to your financial vocabulary — Klio Funding — a brand of CDO that enabled Bear to sell to the $2 trillion money market fund industry.

What is Klio Funding and how did it cause all this damage? Klio Funding is “an entity” that sells Commercial Paper (CP) — short-term loans — and uses it to purchase higher-yielding long term investments. Since Citigroup had agreed to refund investors’ initial stakes plus interest — through liquidity puts — money market funds that purchased Klios thought they would get higher yields at low risk.

Meanwhile, Ralph Cioffi — who headed up three Bear hedge funds which eventually folded — used money raised from the Klios to purchase CDOs and to lock in year-long financing for his hedge funds. This is significant because hedge funds typically can only borrow money for weeks at a time due to their risk. Cioffi’s CDOs were popular, raising $100 billion.

The Klio structure turned out to be a pyramid scheme according to Yale University economist Robert J. Shiller. As new investors arrive to the celebration, they bid up prices, boosting returns for those who got in earlier. The huge gains attract more investors, and the cycle continues — as long as the players don’t try to take out their money en masse.

That’s exactly what happened this spring. Cioffi tried to sell more CDOs to raise money to prop up the hedge funds he managed. But just after raising $4 billion in Might, his hedge funds imploded, wiping out $1.6 billion of investors’ money. In November, Citigroup and Bank of America wrote down some $10 billion in CDOs thanks to their liquidity puts. The financial system faces at least $500 billion in write-downs — creating a large capital hole that needs to be filled.

The lesson for investors is clear. If you hear lots of new vocabulary words coming out of Wall Street, someone is making big amounts of money in the short-term that’ll eventually blow up, leaving others to pay the costs. If you’ve invested in something with a name you don’t comprehend, find out what it is. If it sounds too good to be true, it probably is.

We already know that James Cayne, Bear’s CEO, is paying the price by not getting a bonus. The question is whether he’ll be able to keep his job.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup shares and has no financial interest in the other securities mentioned.

Share This

Share This