bloggingbuyouts

The $52 billion merger of Anheuser-Busch InBev has resulted in some nice opportunities for private equity firms. For example, KKR recently purchased a division of the firm -- Oriental Brewery Co. (the number two brewer in South Korea) -- for $1.8 billion.

Doesn't sound like a lot? Well, it is a big deal. In fact, it's the biggest private equity deal in nine months.

Back in 2007 -- at the height of the private equity bubble -- the Chinese sovereign wealth fund, China Investment Corp. (CIC), agreed to invest $3 billion in Blackstone (NYSE: BX). Of course, it was a disaster. In all, the investment lost roughly two-thirds of its value.

Despite all this, it looks like CIC hasn't given up on Blackstone. In fact, according to the Wall Street Journal (subscription required), CIC is prepared to invest $500 million into a Blackstone hedge fund vehicle.

In 2005, several Chinese entrepreneurs started a milk production company, Modern Dairy. No doubt, the company realized there was a huge opportunity in China for milk (right now, the country is third in the world in terms of production).

Besides, in light of some of the contamination problems in the industry (especially last year's melamine scandal), there was a need for a better approach.

Well, this Chinese dairy has caught the attention of the mighty private equity firm KKR. This week, the firm invested $150 million in Modern Dairy, according to Bloomberg.

We're still in the early stages of this trend, but it's pretty clear that the green energy sector is fast becoming a venture capital darling. Today, for example, five deals were announced in one publication alone (three VC, two acquisitions). The three investments account for $47.4 million in VC investment. And only yesterday, Solazyme picked up another $57 million in its Series C round.

In what remains a capital-constrained market, the cash is still flowing. In the private equity space, investments in clean technologies have remained steady from 2007 to 2008, despite broader economic calamity. Such commitment this early in the game may hint at what the next bubble will be.

The debate over the value of social networks will go on for months and perhaps longer. Operations like Google's (NASDAQ: GOOG) YouTube, News Corp.'s (NASDAQ: NWS) MySpace, Twitter, and Facebook have huge numbers of users. Facebook now has over 200 million users world wide.

But the websites have done poorly finding revenue models. Industry experts say that Facebook will bring in only $500 million in revenue this year and will probably lose money. That sales figure is remarkably low for a business with such a large audience.

The operator of the Tropicana Casino and Resort, which was featured in the films Viva Las Vegas and Diamonds Are Forever, filed for bankruptcy protection in May 2008. But Canadian private equity firm Onex Corp. (TSE: OCX) has now succeeded in taking over the Las Vegas icon.

Onex's main buyout fund has cobbled together a stake in the casino's senior debt that will make it the largest shareholder when a restructured Tropicana emerges from bankruptcy protection.

Though Onex will gain control of a prime location in one of the hottest spots in the city and one of the busiest pedestrian intersections in the world, it comes at a time when the fortunes of sin city are suffering due to economic conditions.

Several years ago, I talked to Jay Adelson, the cofounder of Digg, a popular news rating service. We discussed the keys to successful ventures and the importance of building an enduring platform. I liked when he said that it is critical to have an "unfair advantage."

Well, so far, things seem to be working nicely. In fact, Digg has raised $28.7 million from a group of investors including Greylock Partners, Silicon Valley Bank, Highland Capital Partners and the Omidyar Network. In all, the firm has raised about $40 million.

The capital is meant to reinforce the Digg platform. This means doubling the staff, which now stands at 75 people, adding new features like publishing analytics, and moving into foreign markets.

Of course, there have been many rumors that Digg has been exploring sellout talks with biggies like Google (NASDAQ: GOOG). But with the current uncertainty in the financial markets, it probably makes sense to wait things out. Besides, Digg has a highly loyal user base who may not want to see a deal get done.

Back in the 1990s, the founder of TPG, David Bonderman, sold once-troubled American Savings Bank to Washington Mutual, Inc. (NYSE: WM) for a big profit. In addition to the big bucks, he was rewarded with a seat on the board. So when Bonderman structured a $7 billion capital raise for the company in April, it seemed like a sign that the smart money had some keen insight, right?

However, in today's wacky market, nothing seems to work out. TPG's investment price was $8.75 per share. Keep in mind that this was a 33% discount to the current market price (there were also warrants to purchase 57.1 million more shares at $10.06 each).

What's more, TPG was savvy enough to negotiate a juicy anti-dilution clause; that is, if Wamu's stock price fell, the fund would get more shares.

The problem: with the current plunge in Wamu's stock to $2.12 per share, there will be a deluge of more shares to hit the market.

Well, according to a piece in The New York Times, it looks like TPG is going to forgo the antidilution clause -- assuming the company needs to raise more capital, which seems like a good bet. Unfortunately, this is yet another sign of the rapid deterioration of the financial sector – and how the so-called "smart money" can get things very wrong.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

VentureDeal issued its second-quarter VC funding reports, and the sector drawing the biggest increase in private financing is, not surprisingly, energy.

During the period, 60 companies got $1.3 billion in backing. That represents a nearly 300% jump from the first quarter of 2008, and a 67% increase in the number of companies funded, the report said. Naturally, the numbers were skewed a bit by a few large deals in the alternative energy sector including solar service provider SunEdison's $131 million fundraising and BrightSource Energy Inc.'s $115 million Series C round.

The sector was also boosted by fundings for cutting-edge energy technologies, such as advanced batteries and wireless power transmission.

Continue reading at TechConfidential.com.

With global markets in turmoil – and as the credit crunch worsens – AIG (NYSE: AIG) has the miserable task of raising $75 billion to meet its capital requirements. The firm has talked to various private equity firms, who have basically wanted the keys to the operation. There were even talks with Warren Buffett.

No doubt, AIG is scrambling to assess its asset base as well. Which could fetch good values?

Interesting enough, there is one asset that hasn't received much attention: an equity stake in Blackstone Group LP (NYSE: BX).

About 10 ears ago, AIG invested roughly $150 million in the private-equity powerhouse. Now, the stock is worth about $700 billion. Moreover, AIG has investments in Blackstone funds that amount to about $1 billion.

So yes, AIG may dump these holdings on the market – and put pressure on Blackstone's shares, right?

Perhaps. Although, investors don't seem to be concerned (the stock price has held steady in the current financial storm). Then again, Blackstone doesn't have balance sheet issues. More importantly, the firm has been bulking up its abilities to capitalize on distressed investments – which seems spot-on right now.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

It's admittedly a warning that's been circulating for a long time now without ever seeming to lead to much, but venture buyout investor Terry Garnett sounded another alarm about the unsustainable economics of the VC sector on Wednesday when he said it was "perplexing" that so much money continued to flow into venture capital.

Citing some gloom-and-doom forecasts that the roughly 1,000 venture capital firms operating today should contract to about 100, Garnett said "that's probably not too far off the mark." Garnett, himself a former venture capitalist with Venrock Ventures who went on to co-found the venture buyout firm Garnett & Helfrich, which spins out businesses from global companies, said the venture model simply did not support the $35 billion of new investments that was poured into startups last year.

Behind some of the highest-profile Web 2.0 startups, he said, there were a host of other startup companies receiving funding but generating a lot less hype and standing less chance of succeeding. The result: "an incredibly bifurcated model" in which the very top tier of VC firms do well and all the others lose money.

Continue reading at TechConfidential.com.

Sometimes you get the feeling that if all of the alternative-energy companies receiving funding these days wind up living up to their promise, we just might be able to make a dent in this energy debacle we find ourselves in. VCs are betting big on a couple of solar-related companies they feel are doing some exciting things to get us to the point where we will rely more on renewable energy.

Late Wednesday, AVA Solar, an advanced thin-film photovoltaic module manufacturer, announced it had raised $104 million in a second round. The investment was led by DCM and included new investors Technology Partners, GLG Partners and Bohemian Companies LLC as well as prior investors, including Invus LP. The funding will be used to complete AVA's first production facility in Longmont, Colo., which will have the capacity to produce 200 megawatts of power photovoltaic modules annually.

The VCs are betting on AVA's ability to produce high efficiency solar energy panels on the cheap. They also are designed for use in a variety of climates, capable of operating in both hot and cold regions under a variety of conditions.

Continue reading at TechConfidential.com.

The Active Network, which operates a bunch of sports related Internet properties including 10-K race registration sites, has landed a whopping $80 million in Series F money in a round led by ESPN.

The investment, which was also supplied by previous investors Canaan Partners, North Bridge Venture Partners and Performance Equity Partners, brings the total raised by the ten-year-old company to more than $275 million, according to TechCrunch.

For ESPN, the investment builds upon $20 million it sunk into The Active Network two years ago. The company merged in 2001 with MyTeam.com and since then has struck a number of acquisitions, including the purchases of InfoSpherix and Hy-Tek Sports Software earlier this year. It filed to go public in 2004, but withdrew the filing four months later.

Continue reading at TechConfidential.com.

When God starts telling you to use geothermal energy, you should probably listen. Google Inc. (NASDAQ: GOOG), a company many think can do no wrong, is jumping on the geothermal bandwagon, announcing on Tuesday it is investing $10.25 million in two geothermal companies, AltaRock Energy Inc. (as part of the company's $26.25 million Series B, also announced Tuesday) and Potter Drilling Inc., while also awarding a $489,521 grant (how did they come up with that number?) to the Southern Methodist University Geothermal Lab to study geothermal resources.

Google last November announced it would launch a renewable energy venture through its philanthropic arm, and would be investing in two companies, eSolar Inc. and Makani Power Inc. It also participated in a $115 million Series C round of funding in solar power firm BrightSource in May.

The news from Google comes just days after geothermal energy services company ThermaSource LLC announced a $41.5 million round of funding.

Continue reading at TechConfidential.com.

The internet probably doesn't need another online photo site, but ScanCafe Inc. is not your typical online digital photo service a la Eastman Kodak Co.'s (NYSE: EK) KodakGallery and Shutterfly Inc. (NASDAQ: SFLY). As its name implies, ScanCafe provides photo scanning and restoration services. The Burlingame, Calif.-based company announced on Tuesday it has received $5.5 million in Series B funding in a round led by Sigma Partners. The company is using $1.5 million of that money to pay off debt, while also adding employees, investing in new technology and expanding its global reach.

ScanCafe allows people to mail in photos slides and negatives, then restores and organizes all images and provides customers with access to a secure online library to view, select and share the images. They are only required to pay for the images they keep, though with a 50% minimum commitment. All selected images are then burned to a DVD or CD and shipped back to the customer with the originals.

Digging a little deeper, this review of the service from News.com reveals that one of the ways ScanCafe is keeping costs of its service down is by outsourcing the scanning work to India, so anyone worried about sending precious photos halfway around the world (that's an estimate) will have to give some thought to using the service.

Continue reading at TechConfidential.com.