PE Week Wire: Fri., Feb. 29, 2008

I recently had a brief email exchange with a limited partner, whose institution is looking to hire a new professional. He asked if I had any good suggestions, so I put it on my mental list of things to do while flying back to Boston (right after taking a nap).

But here’s what I learned somewhere over South Dakota: I’ve got no idea. This isn’t to say that I don’t have good relationships with dozens or LPs, or that I couldn’t identify scores more in this particular institution’s geographic region. Instead, it’s to say that I don’t really know who’s a “good” limited partner in terms of actual performance. It was kind of a startling revelation, given that I’m paid to know such things.

For starters, most institutional investors do not release aggregate alternative asset performance. Some of the public ones do, but that’s really just a drop in the bucket of endowments, private foundations, corporations, foreigns, etc. And even in the cases where we do know institutional performance, we have no idea as to who at each institution actually “led” the due diligence. And this gets double-complicated when consultants are involved.

Maybe what we need is a Midas List for limited partners. Not only to help general partners, but also to help limited partners on the prowl for help. Not exactly sure how we’d do, but I’m open to suggestions…

*** BVCA chief Simon Walker has essentially told Alcehmy Partners founder Jon Moulton to shut his yap, in regards to criticism of the private equity industry. Walker said: “There are enough enemies of capitalism attacking us without the occasional blast behind our ranks.”

Hey Simon: Not everyone “attacking” private equity is an enemy of capitalism. In fact, very few of the critics are attacking the asset class as a whole, but rather are taking issue with certain behaviors or industry standards. Putting it in such binary terms strikes me as President Bush saying “You’re either with us or against us.” Threats rather than honest persuasion. Juvenile, and far below capitalism’s intellectual aspirations.

*** Speaking of the President, he doesn’t believe we’re headed for a recession. Everyone feel better?

*** Quiz Time: Yesterday I asked you to name the Silicon Valley venture firm that is raising a seed stage digital entertainment fund, in partnership with Hollywood talent agency William Morris. A handful of you got it right: Accel Partners.

I’m hearing that a formal announcement is coming soon, and that Accel may not be alone. There may be a large corporation involved, plus another VC firm (think bi-coastal). Neither Accel nor William Morris has agreed to comment.

*** Next week is Buyouts East, during which I’ll be interviewing Carl Icahn. So far the two of us have spoken for a total of 90 seconds, so absolutely no topic is set in stone (save for the obvious generality of corporate governance). Whaddya want me to ask him?

*** I promised more info on VC in the Rockies presenters, but seem to be running quite late already. I’ll post it to peHUB later this morning.

*** Finally, we had some troubles yesterday at peHUB with the slideshow of David Rubenstein’s presentation at Super Return. Seems it was messing up the homepage, so we temporarily took it offline in order to move it. So for those who asked, here is a new working link.

*** Have a great weekend…

Top Three

WL Ross & Co. has agreed to invest up to $1 billion in bond insurer Assured Guaranty Ltd. (NYSE: AGO). The deal includes an initial purchase of $250 million in common shares, and a commitment to purchase another $750 million in common shares at the company’s option. Merrill Lynch advised Assured Guaranty on the deal.

First Reserve Corp. has agreed to acquire the solar energy unit of Spain’s Gamesa Corporacion Tecnologica SA for approximately €261 million. Gamesa Solar designs and builds solar photovoltaic plants, plus provides turn-key project management for third parties. Gamesa was advised on the deal by Citigroup.

George Bischof has joined Meritech Capital Partners as a managing director. He had spent the past eight years as a general partner with Focus Ventures, where he focused on enterprise infrastructure, digital media and technology enabled services companies. Among his portfolio companies were Isilon Systems, EqualLogic, G-Log and Wily Technology.

VC Deals

NextIO Inc., an Austin, Texas-based provider of I/O virtualization solutions, has raised $18.8 million in Series C funding. Return backers Adams Capital Management and Crescendo Ventures co-led the round, and were joined by return backers VentureTech Alliance, JK&B Capital and Dell. Two new “strategic investors” also participated. NextIO has now raised nearly $40 million in total VC funding since 2003.

Akimbo, a San Mateo, Calif.-based online video technology company, has raised $8 million in fourth-round funding. Return backers include AT&T, Blueprint Ventures, Draper Fisher Jurvetson, Kleiner Perkins Caufield & Byers and Zone Ventures. The company has now raised around $56 million in total VC funding since 1999.

Arriva Pharmaceuticals Inc., an Alameda, Calif.-based developer of anti-inflammatory therapies for treating respiratory disease, has raised $6 million in new funding from Nordic Biotech and return backer MPM Capital. The company has now raised $81 million in total funding.

Purfresh, a Livermore, Calif.-based provider of clean solutions for food and water, announced that its $25 million Series C round (announced last December) included a $5 million investment from Perella Weinberg Partners. It had not previously disclosed Perella Weinberg’s participation. The round was led by Chilton Investment Co., with other backers including Chrysalix Energy, Foundation Capital and Grauer Capital.

Arthrosurface Inc., a Franklin, Mass.-based developer of joint resurfacing systems, has raised approximately $4 million in Series F funding. Return backers include Boston Millennia Partners. Arthrosurface has now raised around $31 million in private equity.

Monitoring Division Inc., a provider of networking performance monitoring, has raised $3.85 million in first-round funding. Starfish Ventures and National ICT Australia co-led the round. Monitoring Division has offices in both Silicon Valley and Australia.

Buyout Deals

Asyst Technologies Inc. (Nasdaq: ASYT) said that it’s board has rejected an unsolicited $5-$6 per share buyout approach from The Gores Group and Aquest Systems Corp., because it “undervalued” the company. Asyst makes automation technology for makers of semiconductors and flat panel displays. Gores is a private equity firm, while Aquest is a VC-backed provider of semiconductor equipment that has raised around $22 million from Global Catalyst Partners, Menlo Ventures and Walden International.

Bain Capital and Huawei Co. are planning to resubmit an application for U.S. approval of their proposed $2.2 billion buyout of 3Com Corp., according to The Wall Street Journal. The revised proposal would keep the ownership percentages intact, but would limit China-based Huawei’s access to certain 3Com technologies deemed sensitive to U.S. homeland security interests.

Providence Equity Partners has received FTC approval for a deal to buy online nursing education company Assessment Technologies Institute LLC. No financial terms were disclosed.

Sears Holding Corp. (Nasdaq: SHLD) has made a $4.55 per share buyout bid for retailer Restoration Hardware Inc. (Nasdaq: RSTO). The move comes just as Restoration’s go-shop window was closing, related to an offer from private equity firm Catterton Partners. Catteron originally had offered to buy Restoration for $6.70 per share, but later lowered the bid to $4.50 per share.

Treadstone Capital Management and Drum Capital Management have acquired a controlling interest in the assets of Nichols Brothers Boat Builders, a Freeland, Wash.-based manufacturer of steel and aluminum boats. Nichols had filed for bankruptcy protection last November, and the buyers have committed to invest up to $15 million in new working capital.

PE Exits

Univision has agreed to sell its music recording unit to Universal Music Group. No financial terms were disclosed, although the LA Times reports a sales price of nearly $140 million. Univision was acquired last year for $12.3 billion by Madison Dearborn Partners, Providence Equity Partners, Haim Saban, Thomas H. Lee Partners and TPG Capital.

PE-Backed M&A

iSoftStone Information Service Corp., a Beijing-based provider of IT consulting and software services, has agreed to acquire Akona Consulting, a Seattle-based business and technology consultancy. No financial terms were disclosed. iSoftStone has raised VC funding from AsiaVest Partners, Infotech Ventures, Mitsui & Co. and Fidelity Asia Ventures.

SafeNet Inc., an information security company owned by Vector Capital, has agreed to acquire Ingrian Networks Inc., a Redwood City, Calif.–based provider of enterprise data protection and privacy solutions. No financial terms are being disclosed for the deal, which is expected to close within the next month. Ingrian has raised over $57 million in VC funding since 2000, from firms like Prism VentureWorks, Globespan Capital Partners, Menlo Ventures, Jafco and HighBAR Ventures.

Firms & Funds

Endless LLP, a UK-based buyout and turnaround firm, has closed its second fund with £164 million in capital commitments.

First Reserve Corp. next month will begin raising its twelfth fund with a $12 billion target, according to LBO Wire. A final close is expected in Q1 2009, as its current $7.8 billion fund was only 48% invested at the end of 2007. First Reserve is a private equity firm focused on the energy market.

Human Resources

Christopher Varelas is leaving Citigroup, where he serves as co-global head of tech media and telecom I-banking. His new job will be as a founding partner of Bigwood Capital, a new private equity firm formed by former Flextronics CEO Michael Marks, who currently serves as a senior advisor to KKR.

Rick Anderson has joined venture capital firmPTV Sciences as a managing director. He previously was company group chairman for Johnson & Johnson, and worldwide franchise chairman for Cordis Corp.

Jeff Schrock has joined Monster Venture Partners as a venture partner. He previously was VP of corporate development for RealNetworks.

Vestar Capital Partners has promoted Peter Calamari to principal and Brendan Spillane to executive vice president. Calamari joined Vestar in 1999, and previously was a vice president in the firm’s consumer group. Spillane joined as a vice president in 2006, and will continue to serve as corporate CFO.