PE Week Wire: Friday. December 5, 2008

This offers absolutely no help to the 533,000 Americans who lost jobs last month, but… The 6th Annual Internship Rodeo has begun, for first-year MBA candidates in search of summer internships in the private equity market.

Fifty-four listings are up so far, including from firms that focus on venture capital, growth equity, leveraged buyouts, funds-of-funds, investment banking, M&A and more. We’ve even got a handful in Asia and Europe.

Listings can be found in the MBA Forum section of, under the Internship folder of the Employment section. To access MBA Forum, you must have an Access Code specific to your business school. If you do not have such a code, please contact the head of your PE/VC Club. If that fails, you also can email me (but please ask them first).

If you are a procrastinating firm that wants to offer a summer internship, please email me with your firm type, firm location and any other relevant info. Also let me know if you want your firm name disclosed. I will accept/post new listings through 4pm today. After that, you’ll have to wait until the Desperate Interns Drive in April. Good luck to all.

*** Yesterday I asked when private equity firms would begin cutting their fund sizes, in light of: (a) Layoffs which reduce management fee needs, (b) Less work because of reduced deal-flow and (c) Limited partner capital constraints.

Apparently, all I had to do was ask. Check out the following statement from SVG Capital, which is a cornerstone investor in Permira IV, an €11.1 billion fund closed in 2006:

Permira has approached its investors with a proposal whereby, subject to the requisite investor approval, an investor may elect to cap its commitment to Permira IV at 60% of an investor’s original commitment (against a current called amount of 52%). Those investors who do not elect to cap their commitment to Permira IV will continue to participate in all new Permira IV investments. An investor may elect to cap all or part of its commitment. The proposal would require electing investors to accept a 25% reduction in their entitlement to distributions from the fund, which would accrue to continuing investors, and to continue to pay management fees based on original commitments during the investment period of Permira IV.

LP sources I spoke with yesterday still don’t believe that U.S. firms will cut existing fund sizes (which is different than lowering targets for funds currently in market or coming to market, a la Blackstone or KKR). But I heard the same thing about private equity layoffs just a few weeks ago, before Carlyle fired its opening salvo. Once the damn has been broken, it’s a lot easier for others to slide through…

*** Regular readers know I’m fascinated by this issue of a cleantech VC funding gap, particularly for industrial-type companies (biofuels, electric cars, etc.). I discussed the topic a bit yesterday with the CEO of Coskata, a cellulosic ethanol company that has quietly raised $40 million in new VC funding led by Blackstone Cleantech Venture Partners. Read the full story.

*** Best part about Coskata’s CEO is that when you call the company, his name is “not recognized” by the automated operator. It’s apparently intentional…

*** I’ve created a peHUB group on LinkedIn. Like with the peHUB Facebook group and peHUB Twitter account, we’ll see if it becomes useful…

*** Tomorrow morning I’ll be moderating the opening keynote at MIT’s Venture Capital Conference (which seems to be sold out). Hope to see a bunch of you there. And, for those who have asked, I can’t make the speaker’s dinner tonight, because I’ve got to see a man in Quincy about a beer. But don’t worry, I’ll wake up in time…

Top Three

Ontario Teachers’ Pension Plan is floating a proposal whereby it would no longer lead a take-private buyout of BCE Inc., but instead would lead a minority investment of between C$8 billion and C$10 billion. Under such a plan, BCE would remain public. Consortium member Providence Equity Partners is reported to have signed on to such a plan, although no word yet on Madison Dearborn Capital Partners or Merrill Lynch Global Private Equity.

Coskata Inc., a Warrenville, Ill.-based developer of technologies for processing biorefuse into ethanol, has raised $40 million in Series C funding led by Blackstone Cleantech Venture Partners.

Freescale Semiconductor Inc. said it will use its PIK option to make an interest on its debt payment next year, in lieu of making a cash payment. Freescale was bought for $17.6 million in 2006 by Blackstone Group, Carlyle Group, Permira and Texas Pacific Group.

VC Deals

Broncus Technologies Inc., a Mountain View, Calif.-based developer of medical devices for emphysema and other lung diseases, has raised $38 million in Series G funding. Ares Life Sciences led the round with a $25 million investment, and was joined by return backers Abingworth, Bio*One/Singapore, Charter Ventures, HBM BioVentures, JAIC America, Menlo Ventures, Pac-Link Ventures, Saints Capital and Sightline Ventures. The company had previously raised around $73 million, and earlier this year canceled aplanned IPO.

PureWave Networks Inc., a Mountain View, Calif.-based provider of 4G wireless base stations, has raised $12 million in Series B funding. ATA Ventures and Leapfrog Ventures were joined by return backers Allegis Capital and Benhamou Global Ventures.

GlassHouse Technologies Inc., a Framingham, Mass.-based provider of storage consulting and services, has raised $9.8 million in Series F funding, peHUB has learned. Cisco Systems came in as a new investor. GlassHousehas spent the past year in registration for a $100 million IPO, after having raised over $64 million in VC funding from firms like GrandBanks Capital, Jafco, Kodiak Venture Partners, Montagu Newhall Associates, Paladin Capital Management, Shiprock Capital, Delland Sigma Partners. It also secured $16 million in convertible note financing from LRG Capital Group, Velocity Capital Group and Leader Ventures.

LucidMedia, a Reston, Va.-based provider of an online contextual display advertising platform and meta-network, has raised $8.8 million in new VC funding. Backers include Lake Street Capital, RLI Partners, Melton Investments, Redleaf Group and Milan Mandaric., a developer of an online finance exchange with offices in the UK and San Francisco, has raised £3.5 million in VC funding led by BayTech Venture Capital.

Buyout Deals

Doosan Corp. of South Korea is considering a sale of its spirits-making division, which could be worth upwards of $500 million. Interested suitors could include MBK Partners and Affinity Equity Partners. Last month, Doosan sold its packaging division to MBK Partners for $270 million.

PNC Equity Partners and Madison Capital Funding have sponsored a recapitalization of Caldwell & Gregory, a Manakin-Sabot, Va.-based provider of laundry equipment and laundry rooms for colleges, apartments and coin laundries, according to LBO Wire. No financial terms were disclosed.

Moody’s Investors Service has downgraded Dayton Superior Corp.’s (Nasdaq: DSUP) corporate family rating from B2 to Caa1. It also has reduced ratings on its senior and subordinated debt. Dayton is a Dayton, Ohio-based concrete forming and shoring rental company, which was taken public in late 2006 by private equity backer Odyssey Investment Partners. Odyssey still holds more than 30% of the company’s outstanding shares.

Moody’s Investors Service has downgraded The Reader’s Digest Association’s corporate family rating and probability of default rating from B2 to B3. Reader’s Digest is a portfolio company of Ripplewood Holdings.

Mubadala Development Co. has agreed to acquire a 24.9% stake in The John Buck Co., an employee-owned Chicago-based real estate services company. No financial terms were disclosed. The investment follows the March signing of a joint venture between the two firms.

Firms & Funds

Huntsman Gay Capital Partners has hit the $1.25 billion cap for its debut fund, although it’s expected to accept a few more commitments before closing early next year.

Lee Equity Partners has secured more than $1 billion in capital commitments for its debut fund, which will focus on mid-market media, financial services and retail companies. The firm expects to close on $1.5 billion in the coming months.

Human Resources

U.S. employers shed 533,000 jobs in November, which is the worst monthly total in 34 years.