PE Week Wire: Friday, December 12, 2008

Greetings from Hotel Crescent Court in Dallas, which is one of the nicest establishments in which my corporate overlords have voluntarily boarded me. A bunch of quick hits before I catch a fight back to the Bay State.

*** Just asking: Secondary private equity firms are licking their lips over the discounted assets in market, but aren’t many of those same firms in hot water for assets they bought in 2006 and early 2007? A source told me over dinner last night (steak – how deliciously stereotypically Dallas) that secondary firms were, on average, still paying premiums until around Q2 of last year. That means they’ve got lots of stuff on their books that today they wouldn’t touch anywhere north of 60 or 70 cents on the dollar. If you’re a secondary firm that blew through cash in 2006 and 2007, that’s got to be some heavy baggage.

*** Speaking of secondaries, heard the following anecdote from someone else: An LP wanted to dump the unfunded piece of a brand-name buyout fund, which was only around 30% called. Willing to literally give away the unfunded commitment, so long as the buyer would fund it and pay the relevant fees. Couldn’t find any takers.

*** Consensus on my energy panel yesterday was that some sort of carbon cap and trade program will emerge from the Obama Administration. Panelists weren’t terribly happy about it, but were resigned to it.

*** Just asking II: If Blackstone Group wanted to take itself private, could it find leverage to finance the transaction?

*** Last month we reported that New Mountain Capital was launching a debt practice, with a focus on distressed opportunities. The first hire was Rob Hamwee, a onetime Blackstone pro who had been serving as president of GSC Partners. Now it seems that New Mountain has given Rob some familiar company, agreeing to terms with fellow GSC alum John Kline, who had been in charge of buying loans in the secondary market for the firm’s CDO team. He officially begins in January. Neither Kline nor New Mountain boss Steve Klinsky returned requests for comment.

*** Two people referred to 2010 as “oh-ten.” Is that really what we’re going to call it? Are we incapable of referring to a year with a single syllable? What did folks in 1910 call 1910?

*** Accel Partners yesterday announced that it had raised around $1 billion in new funds — $480 million for its debut growth fund, and $525 million for its second European venture fund. The totals might actually be a bit higher, since the firm also raises unannounced side funds.

The real amazing thing is that the fundraising took just two months, and that Accel stuck to its “one and done” close date of December 10. I had heard about the strategy last month, and figured that the firm would budge. After all, LPs are gasping for unallocated dollars, and typical fund-raising strategy is to hold a first close in December and hold a final close in January to accommodate LP calendars. But Accel made its initial timing decision in the spring, and still felt confident after its October LP meeting (where it unveiled the plan). Got to tip your hat to them…

*** Earlier this week, I suggested that public pension systems could become embroiled in bonus battles that would play out on the front pages. At issue would be managers who get cut checks for beating market benchmarks, even if both the benchmarks and their individual performance are underwater. Well, it seems that such a situation has just occurred. here.

*** There are a few more Internship Rodeo listings to post, and I’ll get to it this weekend. So check the MBA Forum on Monday.

*** U.S. Air wins the cheap bastard award, for charging me $2 to have a can of soda or bottle of water on my flights out to Dallas. I asked my stewardess/cashier for an explanation, and she told me (with a straight face) that it was due to “high fuel costs.” I asked her to come up with a better lie to tell the next outraged passenger.

*** Sign of a good hotel: Minibar contains glass jar full of gummi bears. Glad I can just itemize those as “meal.”

*** Have a great weekend…

Top Three

A proposed federal bailout of struggling U.S. automakers, including Cerberus-owned Chrysler, failed in the Senate last night.

Babson Capital, a unit of MassMutual, has closed its third mezzanine and private equity fund with $1.58 billion in capital commitments. It plans to invest in companies with enterprise values of less than $200 million.

Bank of America said yesterday that it plans to eliminate between 30,000 and 35,000 jobs over the next three years.

VC Deals

i/o Data Centers, a Scottsdale, Ariz.-based data center services company, has raised $56 million in growth equity funding led by Sterling Partners.

Lightwave Power Inc., a Cambridge, Mass.-based developer of solar cell and panel technology, has raised an undisclosed amount of Series A funding from the Quercus Trust and 21 Ventures.

Buyout Deals

Providence Equity Partners and Ayala Corp. have completed their $9 per share tender offer for eTelecare Global Solutions Inc., a provider of business process outsourcing solutions. The total purchase price was approximately $290 million.

Silver Oak Services Partners has acquired the assets of Accent Food Services, in partnership with company management. No financial terms were disclosed. Accent Food is an Austin, Texas-based provider of vending, coffee and break room refreshment services in Central and East Texas.

Vicorp Restaurants Inc. has chosen Fidelity National Special Opportunities and Newport Global Advisors, a unit of Providence Equity Partners, to serve as lead bidders for buying its assets out of bankruptcy, according to LBO Wire. The firms have offered $60 million, which will be put up during an auction next month. Denver-based Vicorp filed for Chapter 11 bankruptcy earlier this year. It had been acquired in a $225 million leveraged buyout in 2003 led by Wind Point Partners.

PE Exits

IK Investment Partners has sold Dutch online retailer Wehkamp to a group of undisclosed private investors. No financial terms were disclosed. IK and credit management company Transfair originally acquired Wehkamp in early 2006 from UK retailer GUS PLC.

PE-Backed M&A

Sage Holdings, a financial and stakeholder communications company backed by The Riverside Co., has acquired the assets of Taylor Rafferty from Xinhua Finance Ltd. No financial terms were disclosed. Taylor Rafferty is a global investor relations firm.

Firms & Funds

DFJ Dragon, the Chinese affiliate of Silicon Valley venture firm Draper Fisher Jurvetson, is raising upwards of $300 million for its second fund, according to a regulatory filing. So far it has secured $11.7 million.

Human Resources

Steven Horwitz and W. David Lee have joined Kodiak Venture Partners as an operating partner and executive-in-residence, respectively. Howitz has served as CEO of companies like Clareos, RulesPower and Q-Link Technologies, while Lee previously was a director of engineering at Analog Devices.

Suzanne Murphy has joined Tri-Artisan Partners as a managing director of fund services. She previously was with Delphi Capital Management, the holding company for Acorn Advisory Capital and Pergamon Partners.

Natural Gas Partners has promoted both David Hayes and Colin Raymond from principal to managing director. Hayes joined the firm in 1998, while Raymond joined in 2005.

Francesco di Valmarana has joined the European secondaries team of Pantheon as a principal. He previously was with Unigestion.