Cumulus Media Inc. (NASDAQ: CMLS) has announced that the management-led investor group has terminated the planned merger agreement. While there was a glimmer of hope that this was going to be rekindled, the deal spread on this was so wide that a fleet of trucks could have driven between it.
Cumulus has agreed with the investor group led by Lew Dickey, its Chairman, President and CEO, and an affiliate of Merrill Lynch's (NYSE: MER) Global Private Equity, to terminate the merger agreement which first came on July 23, 2007. The members of the investor group informed Cumulus that after exploring possible alternatives they were unable to agree on terms on which they could proceed with the buyout.
As a result of the termination of the merger agreement, the investor group has agreed to promptly pay Cumulus a merger termination fee of $15 million. In addition, the terms of the previously announced amendment to Cumulus' existing credit agreement will not take effect. Cumulus had a market cap of $253.6 million based upon a $5.81 close on Friday.
The company has also announced that its board of directors intends to explore the possible implementation of a new stock repurchase plan in the near-term in order to provide liquidity opportunities to stockholders.
It appears that the world of porn is getting more attention from private equity and venture capital investors. And, no, it isn't that private equity executives and deal makers are spending more time looking at porn than they are negotiating deals. (Well, maybe.) More importantly, a big investor in the space has won an award and may be opening a floodgate of capital
AdultVest is a private equity venture that we covered on its launch earlier this year. The company concentrates exclusively on adult industry investments, mergers and acquisitions. So far, its initial numbers are pretty stellar.
It claims to have some $7.9 billion in "available capital" to invest in adult themed businesses, and $286 million of that was raised "within the last 7 days." It also claims to have 3,809 registered investors, with 53 of those signing up in the last week. (This data is from the group's homepage.)
The big news is that AdultVest was just selected by Alternative Investment News as one of four funds nominated for the "Hedge Fund Launch of the Year" award. And last month, the company announced it was acquiring iPorn.com.
There are a number of reasons that the investment community is trying to get into and make money from porn. The most obvious one is that you are reading about it right here right now.
An interesting fund raise just closed today in the global energy sector. Lime Rock is a private equity firm that focuses on the global energy sector, and it announced today the closing of its fifth Lime Rock Partners fund, Lime Rock Partners V, L.P., with a total $1.4 billion in investor capital commitments.
Lime Rock has four predecessor Lime Rock Partners funds, and Lime Rock Partners V will make what it calls "creative, value-adding, and long-term growth capital investments" in companies in the global energy industry.
This notes that some 78 institutional investors participated in the fund, including leading endowments, foundations, and pension funds, made capital commitments to Lime Rock Partners V. It also says that it did not actively market this fund, as some 91% of capital commitments came from its existing investors.
Lime Rock Partners funds have invested $1.0 billion in 47 energy portfolio companies worldwide, which are primarily in the exploration & production, energy services, and oil service technology sectors. These funds have also realized some $1.7 billion and "continue to hold significant unrealized value in their portfolio company investments."
Lime Rock also manages Lime Rock Resources, a $450 million fund, which directly acquires and operates oil and gas properties in the United States. Lime Rock manages $3.5 billion of private capital for investment in the energy industry.
Israel Cleantech Ventures (ICV) has closed its capital raise at $75 million, according to Reuters. The original target for the fund focused on clean technology exceeded its target of $60 million and they had to turn away additional investors.
Specifically, the fund will focus on Israel based or related high growth clean technology companies in sectors such as alternative energy, water conservation and purification, emissions reduction, and technologies that allow businesses to operate more efficiently and more environmentally friendly. Funded in 2006, ICV closed its first round of funding, raising $15 million in January 2006. The Globes in Israel reported that this was above target as well.
Funds came from institutional investors as well as family funds in the U.S., Europe, and Israel, such as Robeco Private Equity, a Netherlands-based asset manager, and Piper Jaffray, a U.S. financial institution.
The fund has completed seven investments, including Aqwise (waste water treatment), CellEra (fuel cells), Citrine Renewable Energy (landfill biogas treatment), Emefcy (energy production from wastewater), Metrolight (energy efficient lighting), Project Better Place (electric vehicle infrastructure), and Pythagoras Solar (solar energy).
Jon Ogg is an editor and producer for the Special Situation newsletter for 247WallSt.com.
Following a trend in new fund formation that has seen the rich get richer, Kleiner Perkins Caufield & Byers Thursday announced that it has hit up eager limited partners for $1.2 billion, closing two new funds.
The blue-chip Sand Hill Road firm launched its 13th general interest fund, KPCB XIII, garnering $700 million for investment across all the firm's investment sectors of energy and environmental technologies ("which it terms greentech"), information technology and life sciences ventures. It also raised a $500 million Green Growth Fund, which will support later stage greentech companies.
The greentech fund is a tacit acknowledgment that as an industrial sector, much of the new energy and environmental development being funded is fundamentally different from traditional venture areas such as life sciences and information technology. While ideally built on breakthrough technologies, greentech companies are typically more capital intensive in later-stage development, requiring more flexible funding models than traditional venture capital.
According to a report from the Ernst & Young's quarterly US IPO Pipeline Report, IPO activity is flattening as companies are waiting and watching to market to make their move. While that observation is obvious as a heart attack, there are some rather good details that may lead to help determine good IPO's versus bad IPO's in that report.
In the first quarter of 2008, 90 IPOs sat in the pipeline, the same amount as the last quarter of 2007. New registration was stable across the quarters, but the slide is still downward sequentially. In January there were 10 while February and March saw only 6 and 7, respectively. While the amount the registrations represent grew this quarter compared to last, $16.8 billion up to $17.3 billion, the numbers slowed toward the end of the quarter. It seems pre-IPO companies are holding tight and watching the market.
As expected, first quarter 2008 weakened compared to the first quarter in 2007. In the first quarter of 2007, 103 deals waited in the pipeline compared to 90 in 2008. In 2007, the registrants represented $22.8 billion compared to $17.3 billion in 2007. The average deal size also dropped, down to $192 million from $221 million. The largest deal in 2007, The Blackstone Group L.P. (NYSE: BX) reached $4.0 billion while in first quarter 2008, the largest was American Water Works at $1.6 billion. Visa Inc. (NYSE:V) was left off because of an end of quarter and for size issues as 'one of a kind.' Companies are also sitting in the pipeline much longer, 163 days on average compared to 113 in 2007.
Technology takes up the bulk of the pipeline with 26 registrants and $3.3 billion in dollar amount, up from $2.8 in fourth quarter 2007. Technology attracts foreign issuers with four out of five foreign issuers in the technology sector. While technology went up first quarter 2008, oil and gas dropped 60% from $5.3 billion fourth quarter 2007 to $1.9 billion. Biotech accounts for a solid 12 registrants and pharmaceuticals tally 11. California leads on a state-to-state basis, filing 16.7% of the total filings at 15. Texas and New York followed with 11 and 8, respectively.
Also according to the report... Patience and confidence are likely to ebb by June, but if you're a good company with solid business plans, practices and proven results, opportunities still await you in the markets.
Vinum Capital Management has announced the launch of a $250 million fund targeting the California and west coast wine industry, Vinum Capital Partners I, LP. The fund will focus on mid-size premium and super-premium wine properties that produce 20,000 to 150,000 cases per year.
The California-based company plans to acquire wine companies, grow and expand them, and ultimately sell the assets in this industry that receives relatively little attention from equity investors. Vinum put together a solid team with significant experience in the wine industry, totaling $1 billion in winery-related transactions.
I"ll say one thing after reading this new -- every worker in private equity probably wants to get hired by this fund.
Investment partners for the fund include Justin Faggioli, former COO of Ravenswood, Scott Setrakian, former Director of Golden State Vineyards and an M&A and financing expert, G. Craig Vachon.
The portfolio management team for the fund lists Bill Foster from Beringer, Jonathan Pey from Robert Mondavi and Fosters Wine Estates, Doug Rogers from Gallo, Southcorp, and Brown-Forman Wines, and Bob Steinhauer from Beringer.
If you have kept up with the wine, beer, and spirits industry, you'll get the significance of this as both Beringer and Mondavi are formerly public companies. Fosters acquired Beringer earlier this decade. Constellation Brands (NYSE: STZ) also acquired Robert Mondavi.
Quaker BioVentures closed its second fund that focuses on life science companies in the Mid-Atlantic region at $420 million, beating a target of $120 million.
The first fund closed for $280 million and invested in 24 companies. The fund has been successful, with Amicus Pharmaceuticals going public last May, while Eximias and MedMark were each acquired in spring of 2006. BioRexis Pharmaceutical Corp. and Precision Therapeutics are pending acquisitions.
The second fund has already invested in five companies including Argolyn BioScience, Diasome Pharmaceuticals, EKR Therapeutics, Optherion, and Transave. Quaker's partners for the fund include Sherrill Neff, Brenda Gavin, Richard Kollender, Ira Lubert, Adele Cirone Oliva and Dr. Matthew Rieke. The limited partners for the second fund have not been disclosed, however, Thomson Reuters reported that the Pennsylvania Public School Employees' Retirement System and the Pennsylvania State Employees' Retirement System have invested.
A report inthe Financial Times says that Merrill Lynch & Co. Inc. (NYSE: MER) is holding talks with TPG about forming closer ties. This may include the possibility of the private equity firm investing in Merrill Lynch if the investment bank needs more capital. John Thain met with key executives from TPG according to the report.
The companies have apparently been in discussions since last fall. One affiliate had offered to put in as much as $3 billion into Merrill Lynch. Merrill Lynch raised some $12+ billion in funds elsewhere for different terms.
What is interesting here is that the article notes that TPG doesn't want to appear too close to Merrill Lynch, because of the appearance of being too close to a competitor.
The company has also raised additional funds this month by selling fixed income and preferred securities.
John Thain's suspenders and belt might be a little tighter since he went on record saying Merrill Lynch will not need any more capital.
We've been digging around for the the coming layoffs at private equity firms to get a good handle on just what the economic downturn and credit crunch will mean to all the B-School kids who wanted to be the next multi-millionaires and billionaires. While no hard numbers are out industry-wide yet (at least that you can hang your hat on), there are some things trickling out.
The Deal Journal, of the Wall Street Journal, noted in a post today that American Capital Strategies (NASDAQ: ACAS) plans to let go an unspecified number of staffers in middle markets. As you can see in the chart below, they have had their fair share of pain in the process.
Dan Primack, of Private Equity Hub, also wrote a piece noting that no one is getting hired in finance anymore, so he linked to an M&A article about "how to get fired."
Our own Zac Bissonnette wrote here on BloggingBuyouts at the end of February about how M&A was down so much that dealmakers were set for big layoffs.
But here we are at the end of April and no major firings have come the way of dealmakers. Since they cannot all jump into "distressed mortgages and loans" and since they cannot all go to work for a SPAC immediately, it seems only a matter of time and that time is sooner rather than later.
The one thing you can bet on is that there won't be press releases out of private equity firms. They are private for a reason, well most are still private. When the news does come out it's probably safe to assume that the firms will say this is merely a reflection of the current conditions or something of the like. Just keep in mind that companies don't fire waves or groups of workers if they think they will be needed in a few months time.
Who knows, maybe they will just announce worker furloughs through the end of summer.
Warburg Pincus has recently announced the closing of a $15 billion global private equity fund, Warburg Pincus Private Equity X. Many existing investors increased funds to WP X and includes various investors such as public and private pension funds, endowments, and global financial institutions such as Washington State Investment Board and GE Asset Management.
Warburg Pincus currently manages over $35 billion in assets globally. The global fund will focus on businesses in any growth stage in core industries in North America, Europe, and Asia. The company invests across geographies, industries, and business growth stages from a single global fund, always with a focus on growing businesses and growing regions.
They have significant experience in consumer and retail, energy, financial services, healthcare, life sciences, industrial, technology, media and telecommunications. Typically, Warburg provides funding for the creation of business or to expand them where long run growth and sustainability is a central factor.
Morgan Stanley (NYSE: MS) looks like they are getting busy on the private equity side, while others are not.
The investment banking, brokerage, and private equity firm plans to launch a private equity unit in India May 1, using funds from its Asia-specific private equity fund for $1.5 billion that closed last year. Reutershas reported that the unit will be managed by Aluri Srinivasa Rao. Previously, he worked at ICICI Venture of ICICI Bank, India's No. 2 lender. Morgan Stanley already has an investment bank and an asset management firm in operation in India, and the private equity growth in India is a response to India's rapid economic growth and opportunities. The report also noted that The State Bank of India reportedly is in talks with multiple foreign firms to start private equity funds in India.
Morgan Stanley's real estate fund, Special Situations Fund III, completed its third offering in a report by MarketWatch raising $2.5 billion. Most funding came from foreign investors. The completion of this fund brings the total Special Situation funding to $5.9 billion.
Raising "funds" isn't necessarily the same as entering deals, but generally the latter follows suit for a portion of the funds.
While venture capital investments are still strong, the rate that VC's are putting funds into ventures appears to be slow. A MoneyTree Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA) based on data provided by Thomson Reuters shows these trends today.
Investment levels and deal volume dropped, but the report says that venture capital remains strong with deep pockets this quarter with what is still the fifth highest level of investment since 2001. Venture capital investments totaled $7.1 billion in the first quarter of 2008, down 8.5% from last quarter 2007 of $7.8 billion. Deal volume also decreased slightly, down to 922 deals from 1,045 deals.
What industries are taking the bulk of the cash? Life Science (which includes biotech and medical devices) took a third of total cash at $2.3 billion and 24% of deals at 220. The Clean Tech center took $625 million in 44 deals, a 6% dip in investment levels from last quarter. Internet-specific companies tagged $1.3 billion in 195 deals, down 7% from last quarter. Semiconductors saw investment levels going up to $566 million from $458 million. The quarter also saw a trend of decreasing investment levels in companies receiving their first-time financing. Companies receiving first-time financing received $1.6 billion in 294 deals, down from $2.2 billion on 360 deals. Media/Entertainment is the only industry seeing a jump in first-time financing.
This also shows the stages on top of the industries. Seed/early stage companies dipped to $1.7 billion with an average deal size for seed being $3.6 million and $5.7 million for early stage companies. Expansion stage financing stood unmoved at $2.9 billion with an average deal size of $9.0 million. Investments in late stage deals also dropped, hitting $2.6 billion with an average deal size of $9.6 million.
Jon Ogg is a producer and editor of the Special Situations newsletter for 247WallSt.com.
An article by South-African based Business Report summarizes private equity trends this year amidst the crunched credit markets and slowing U.S. Economy. While it isn't exactly 2007 or 2006, the numbers are still impressive.
According a Private Equity Intelligence Study cited in the article, in the first three months of 2008, private equity funds have raised $163.5 billion.
Last year, leveraged buyouts tripled the $73 billion posted in the same period this year. This article is also confirming what we have started seeing in many such private equity trends for the start of 2008, as it notes that leveraged buyouts are being replaced with distressed debt. That is amounting to $40 billion being raised by 31 firms so far. For example, Bain Capital's hefty $13.5 billion fund targets distressed debt, as well as venture and property.
IndexAtlas has announced the launch of the $50 million Art Industry Fund, an alternative private equity fund targeting only businesses that serve the art industry.
This will include such operations as auction houses, advisory services, financial and security firms, software and media companies. Each investment is intended to last four years and will range from $3 to $8 million. The fund is expected to close by December 31, 2009.
CEO and founder of IndexAtlas, Sergey Skaterschikov, believes the fund will generate an IRR of 35% and bases his investing strategy on his book, "Skate's Art Investment Handbook." Skaterschikov established IndexAtlas in 2001 and manages $400 million in fully invested funds and has advised on $2.4 billion in transactions.
There have been many such reports in here showing how there has been a convergence of private equity and venture capital. If this isn't a prime example of that, then nothing else is.
If I didn't know better, it almost sounds a lot like a Sotheby's (NYSE: BID) incubator fund, although it's not.
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Vinum Capital Management has announced 
