From: "Dan Primack"

Name: Dan Primack

Email Address: Dan_Primack@fortune.chtah.com

Subject: Term Sheet -- Tuesday, December 7

Date: 07-12-2010 15:01:02

Message

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Tuesday -- December 7, 2010

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Random Ramblings

Last week’s overblown private equity story was about how Steve Schwarzman was temporarily moving to

Europe (the guy is on the road over 200 days a year and owns a home in France… this is not any sort of

national defection). Yesterday’s was about how AOL would merge with Yahoo, even though it hadn’t yet

bothered to discuss the matter with anyone at Yahoo.

And now we have this Bloomberg item about how The Carlyle Group is planning an IPO. Excuse me while I

yawn.

The big get here is that Carlyle co-founder Bill Conway said of a possible listing: “There will be significant

advantage to having a lot more capital… “Investors are reducing commitments to funds and making

economic terms much less attractive.”

Bloomberg also cites two anonymous sources as saying that a filing would come late next year, with pricing

most likely to occur in 2012.

Four points:

1. There is nothing new here. Carlyle has been bandying about the idea of an IPO for years. Not just

privately, but publicly. Here’s David Rubenstein speaking to the Washington Post more than three

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years ago: "It's fair to say that Carlyle . . . would be thought to be a natural candidate to go public…

We don't have our heads in the sand and we're not ignoring what's going on with Blackstone or

Fortress or others.”

2. Saying that Carlyle plans to file in late 2011 and go public in 2012 is kind of like telling people that

you plan to go on a diet sometime next summer. Intent is one thing. Follow-through is another.

3. Does Conway know that fund economics will still be “much less attractive” in late 2011? Of course

not. If GP/LP dynamics shift back to GPs (as they typically do), does that mean no IPO? Also,

would Carlyle really use IPO proceeds for future investments? If so, it would be a different strategy

than most other PE firms, which have used proceeds for liquidity, hiring incentives and/or expansion

capital (buying other investment groups, etc).

4. Carlyle’s decision will almost certainly be influenced by the IPO performance of Apollo

Management, which is next in line. And don’t be surprised if TPG Capital, not Carlyle, is next in

queue.

To be clear: I expect that Carlyle will go public someday. Maybe in 2011 or 2012. But the idea that a

calendar has been drawn up seems specious.

*** There is no bigger name in venture capital right now than Digital Sky Technologies, the Russian

Internet conglomerate run by Yuri Milner. It’s believed to be the largest outside shareholder in Facebook,

and also holds big pieces of companies like Zynga (both of which it bought at massive, late-stage

valuations). It also appears to have just lost out on a big new round for Twitter.

The group has been bankrolled by a few global investors – including Goldman Sachs and Tiger Global

Management – plus Russian oligarch Alisher Usmanov. Now I’m told that DST is looking to broaden its

capital base, with plans to raise approximately $1 billion for a new fund from “traditional” limited partners.

No books are out yet, but multiple sources tell me that a road show is expected to begin within weeks. It’s

being managed by a guy named Andy Brown out of Goldman Sachs’ San Francisco office. The investment

strategy apparently is to continue buying up shares in relatively-mature Internet startups, but ones with

slightly lesser public profiles (the “next layer,” as one LP put it).

Attempts to reach Milner and Brown were unsuccessful.

*** Some of you have asked about an RSS feed for the Term Sheet blog, which I update regularly

throughout the day. You can get the codes by going to http://money.cnn.com/services/rss. Look for Term

Sheet near the bottom of the page.

6 things to read @Fortune.com

� Pre-Marketing, including a J Crew fiduciary fail, founders keep more control of their companies,

taxpayers exit Citi and how standing by Tiger Woods helped Nike's bottom line.

� Cyrus Sanati: Hedge funds tell insider trading investigators to bring it on

� John Byrne: Wharton overhauls its MBA program

� Allan Sloan: Progressive's dividend is the way it ought to be

� Dan Primack: Quadrangle Group unveils its future plans

� Dan Primack: Let's put this bookseller merger in perspective

The Big Deal

KKR and El Paso Midstream Group, a subsidiary of El Paso Corp. (NYSE: EP) have formed a new

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midstream joint venture. Under terms of the deal, KKR will acquire a 50% interest in El Paso’s Altamont

gathering and processing assets for $125 million. Both KKR and el Paso also each will invest up to $500

million in future midstream projects. The two firms will split ownership 50/50, with El Paso managing the

effort. www.kkr.com

VC Deals

Zendesk, a San Francisco-based provider of SaaS helpdesk solutions, has raised $16 million in Series C

funding. Matrix Partners led the round, and was joined by return backers Benchmark Capital and Charles

River Ventures. The company has now raised over $25 million. www.zendesk.com

Panzura, a San Jose, Calif.-based developer of converged cloud storage and application optimization

products, has raised $12 million in Series B funding. Khosla Ventures led the round, and was joined by

CTTV Investments and return backer Matrix Partners. www.panzura.com

Estech, a San Ramon, Calif.-based developer of a minimally-invasive cardiac ablation surgical platform,

has raised $8.5 million in new VC funding. Saints Capital Everest, Telegraph Hill Partners, NBGI Ventures

and Tullis Health Investors. www.estech.com

Gazzang Inc., an Austin, Texas-based cloud infrastructure software startup, has raised $3.5 million in

Series A funding led by Austin Ventures. www.gazzang.com

OnShift Inc., a Cleveland-based, has raised $2.3 million in VC funding. Draper Triangle Ventures led the

round, and was joined by return backers Early Stage Partners, JumpStart Inc., North Coast Angel Fund

and Glengary. www.onshift.com

Private Equity Deals

Bain Capital, Cinven and New Mountain Capital are competing to acquire Dutch chemicals distributor

IMCD, according to Reuters. The company currently is owned by AAC Capital (fka ABN Amro Private

Equity), and reports €925 million in annual revenue.

Bay Grove Capital has acquired Flint River Services Inc., a cold storage company with three facilities in

Georgia. No financial terms were disclosed. www.baygrovecapital.com

Black Pearl Capital Partners and Aeternum Capital have acquired a British bio-diesel refinery in

Bromborough. No financial terms were disclosed. www.blackpearlcap.com

GHX Industrial LLC, a Houston-based provider of gaskets and hoses, has acquired Stockton, Calif.-based

Delta Rubber Company. No financial terms were disclosed. GHX is a portfolio company of The CapStreet

Group. www.ghxinc.com

Irving Place Capital has agreed to acquire Thermadyne Holdings Corp. (Nasdaq: THMD), a St. Louis–

based maker of metal cutting and welding products and accessories. The deal is valued at $422 million, or

$15 per share. Oppenheimer & Co. is advising Thermadyne on the transaction. www.irvingplacecapital.com

KRG Capital Partners has agreed to acquire the parent company of AllPoints Foodservice from

Pfingsten Partners. No financial terms were disclosed. AllPoints is a Mount Prospect, Ill.-based distributor

of replacement parts, supplies and equipment to the foodservice industry. www.allpointsfps.com

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Mid Europa Partners has agreed to sell Èeské Radiokomunikace, a Czech provider of radio, data and

telecom services, to Macquarie. The deal is valued at approximately €574 million, with Goldman Sachs

International advising the sellers. www.mideuropa.com

Sun Capital Partners has acquired the Ontario pork processing business of Maple Leaf Foods Inc. (TSX:

MFI). No financial terms were disclosed. www.suncappart.com

PE-backed IPOs

Targa Resources, a Houston-based provider of midstream natural gas and natural gas liquid services,

raised approximately $360.3 million in its IPO. The company priced 16.4 million shares at $22 per share,

above the company’s $19-$21 per share offering range. It will trade on the NYSE under ticker symbol

TRGP, while Barclays Capital, Morgan Stanley and BoA Merrill Lynch served as co-lead underwriters.

Company backers Warburg Pincus and Merrill Lynch Ventures both sold shares as part of the offering.

Exits

Advent International has sold its stakes in Uruguayan bank Nuevo Banco Comercial and Uruguayan

consumer finance company Pronto to Scotiabank. No financial terms were disclosed.

www.adventinternational.com

Citigroup Venture Capital International and Partners in Life Sciences have launched an auction for

portfolio company Biofarma, according to Reuters. The Turkish generic drug-maker could garner in excess

of $500 million. J.P. Morgan is managing the process.

Juniper Networks (NYSE: JNPR) has acquired Altor Networks, a Redwood Shores, Calif.-based provider

of virtualization security technology. The deal is valued at $95 million in cash. Altor had raised around $16

million in VC funding, from Accel Partners, DAG Ventures and Foundation Capital.

www.junipernetworks.com

Mid Europa Partners has agreed to sell Aster, a provider of media and communications services in

Poland, to a Polish affiliate of Liberty Global Inc. The deal is valued at approximately €600 million, and is

expected to close in 2011. www.mideuropa.com

Other Deals

Aetna (NYSE: AET) has agreed to acquire Medicity, a Salt Lake City-based provider of health information exchange solutions, for approximately $500 million. www.medicity.com

AGL Resources (NYSE: AGL), a natural gas distributor focused on the Southeastern U.S., has agreed to acquire Nicor Inc. (NYSE: GAS) for approximately $2.4 billion in cash and stock. The $52.32 per share deal represents around a 20% premium to Nicor’s closing price on December 1, after which talk of a possible deal emerged.

Noranda Aluminum (NYSE: NOR), a Franklin, Tenn.-based portfolio company of ApolloManagement, priced ten million common shares at $11.35 per share. Underwriters have the option to purchase an additional 1.5 million shares. Proceeds will be used to pay down debt. www.norandaaluminum.com

Scotts Miracle-Gro (NYSE: SMG) has agreed to sell its Global Professionals unit to Israel Chemicals for approximately $270 million.

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Firms & Funds

The Carlyle Group has agreed to acquire a 55% stake in Claren Road, a long/short credit hedge fund with

$4.5 billion in assets under management. No pricing terms were disclosed for the deal, which includes

cash, an ownership stake in Carlyle and performance-based earn-outs. www.carlyle.com

PineBridge Investments has launched an emerging markets corporate bond fund. It begins with $25

million, and is being managed by Steve Cook. www.pinebridge.com

Moving In, Up and On

First Round Capital has promoted Charlie O’Donnell from entrepreneur-in-residence to principal.

www.firstround.com

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