News digest, April 30, 2007

SEIU report asks buyout firms to share

The Service Employees’ International Union issued a 44-page report last week that essentially asks buyout firms to share its prosperity with portfolio company workers.

The labor union, which primarily represents health care and building maintenance workers, criticizes the wealth disparity between the private equity professionals who profit from deals and the workers who carry out operational changes at portfolio companies. “There is more than enough wealth in the private equity industry for the buyout firms to continue to prosper while also adapting their business model to expand opportunities to benefit workers, communities and the nation,” the report states.

The labor union, which represents about 1.8 million workers nationwide, does not directly invest in private equity funds, but many of its members do so via smaller unions or corporate pension funds.

During a conference call last week, SEIU emphasized that this report is “the beginning of a conversation” and that labor union is currently just endorsuing a set of guiding principles, not specific policies.

KP announces China fund, new office

Kleiner Perkins Caufield & Byers announced last week that it has opened an office in China, where it will invest from a $360 million venture fund. The China team, with offices in Shanghai and Beijing, will include former Softbank Asia Infrastructure Fund partner Joe Zhou, Tina Ju, David Su and Forrest Zhong from the Chinese investment firm TDF Capital, which Kleiner Perkins is absorbing.

The fund will invest in Internet, media and wireless communications and other technologies, such as what the firm calls greentech. The firm has invested in China, but this is its first satellite office.

SEC weighs angel investing proposal

A new Securities and Exchange Commission proposal would raise the minimum net worth of accredited investors from the current $1 million to $2.5 million for pooled investments. The SEC said that the rule is intended to protect investors from high risk vehicles, such as hedge funds. But some critics say that the rule could hamper funding for startsups by squeezing out angel investors.

“You’d have fewer people who could qualify as accredited, which would restrict the ability of companies to raise money in certain cases,” Mel Pirchesky, CEO of Eagle Ventures Inc., told the Pittsburgh Business Times.

Israeli tech companies score more than $400M

the IVC Research Center reported last week that 121 Israeli tech companies raised $406 million during the first quarter from local and foreign VCs, a 13% increase from the $360 million raised by 101 companies in the same quarter of 2006.

The IVC report also indicated that the first quarter was another successful period for seed companies with 29 early stage companies raising $54 million, or 13% of the total capital raised.

Communications was the hottest investment sector, as 33 such companies raised $124 million, or nearly one-third, of the total capital raised, followed by 20 companies in the life sciences sector with $68 million. or 16%, of the total. But an IVC spokesperson said that the Internet sector in Israel is one of the fastest growing sectors. In Q1, 17 Internet companies raised $64 million during Q1, compared to just $21 million in the same quarter last year.

MPM Capital, Reliance partner on India effort

MPM Capital

has formed a partnership with Reliance Life Sciences of India, to help grow India’s life sciences industry. RLS has become a limited partner in MPM’s latest fund, which will allocate a portion of its capital for Indian companies.

MPM last year raised $550 million for MPM BioVentures IV. The firms declinded to say how much RLS has invested, but various press reports have said that RLS has agreed to invest between $50 million and $70 million to the fund.

In addition, MPM will provide office space for a RLS investment professional dedicated to the MPM/RLS partnership, and will explore the potential for a new India-only seed fund.

We believe that MPM represents the best partner for the effort, based on its scale, its leadership in healthcare venture capital, and its team,” said RLS Chairman Mukesh Ambani. —PE Week staff