PE Week Wire: Friday, September 12, 2008

Not much to say this morning, particularly after a day in which I got caught up arguing politics with nearly a dozen readers simultaneously (not actually policy, mind you, which is what I wish were being discussed). I’ll try to never let that happen again…

*** Carlyle Venture Partners is dead, long live Carlyle Growth Partners. That’s the message coming out of DC HQ, where Carlyle has changed the name of a group that has raised more than $1.4 billion for three funds since its 2000 inception.

Carlyle spokesman Chris Ullman says that the “cosmetic change” was quietly made within the past few months, as a reflection of the group’s investment strategy evolution. “It’s really an acknowledgement that around 70-80% of the group’s capital is being deployed to growth equity, with just 20% or so to early-stage venture in technology and healthcare… This strategy really works better with the overall firm’s core competencies.”

Probably no huge surprise, given all the personnel movement within the group, including Bob Grady giving up day-to-day operational control. But it’s still disappointing to see another VC group succumb to the lure of bigger checks and lower risk (although I’m sure that’s not how Carlyle views it or would phrase it).

*** Just thinking out loud: Could solar become the next CLEC for venture capitalists? Both take “capital intensive” to extreme levels, and VCs are hardly blinking at $100 million and $200 million rounds. There are obviously a whole host of differences, but that similarity is setting off some alarm bells in my head.

*** When is a small business not a small business? When it has raised money from venture capitalists. That’s at least the message coming from Lloyd Chapman, president of the American Small Business League, in a peHUB interview with Connie Loizos about the issue of SBIR grants. As he says:

“I don’t care what VCs say; I don’t what VCs’ opinions are. We’re talking about the U.S. government’s small business policy. VCs shouldn’t even be at the table.”

Yeah, that’s as dumb as it sounds. I find extraordinary value in the SBIR program, particularly for companies in areas without much access to venture capital. But, at the same time, the SBA should be using company promise as its primary measuring stick, not company ownership. For example, online gaming company Big Fish today raised over $80 million in VC funding but only gave away minority ownership. Is it more worthy of an SBIR grant than a one-year-old biotech startup that raised $1 million from a VC firm at a $1 million pre-money valuation (thus breaking the SBA’s 49% threshold)?

That’s just my visceral reaction, as it’s been a couple of years since I’ve really thought about the issue. Plan to write more about it later today at peHUB. All thoughts are welcome in the interim.

*** I created a Twitter account for peHUB. No idea what we’re going to do with it (if anything), but I invite you to become a follower anyway.

*** It may now be irrelevant, but the NYT reported that three private equity firms submitted bids for the 55% stake in Lehman Brothers’ investment management business: KKR, Bain Capital and Hellman & Friedman.

*** It is totally irrelevant: I can’t quite explain how excited I am that AC/DC is going back out on tour. Sure they’re older, but so am I. Last time I saw them was at a Saturday Night Live performance in NYC. Greatest part was watching most of the cast and crew sitting just out of camera range, singing along like 12-year-olds.

*** Have a great weekend. Let’s go Cassel…

Top Three

Big Fish Games, a Seattle-based online gaming and interactive entertainment portal, has raised $83.3 million in second-round funding. Backers include Balderton Capital, General Catalyst Partners and Salmon River Capital. It had previously raised around $8 million in angel funding.

Emdeon Inc., a Nashville, Tenn.-based provider of revenue cycle management services for healthcare providers, has filed for a $460 million IPO. It plans to trade on the NYSE with Morgan Stanley serving as lead underwriter. The offering will be of Class A stock, while principal shareholders General Atlantic and Hellman & Friedman will hold Class B and Class C shares, respectively, which will have 10 votes per share.

Tim Armstrong has joined H.I.G. Capital as a managing director. He previously was with Apax Partners, where he had focused on opportunities in the retail and consumer sectors.

VC Deals

Envivio Inc., a South San Francisco-based provider of IP video convergence encoding solutions from mobile to HD, has raised $25 million in new VC funding. Harbourvest and Atlantic Bridge co-led the round, and were joined by Samsung Ventures and return backers Crédit Agricole Private Equity, Crescendo Ventures, Innovacom, Harbinger Venture Management, Intel Capital, NTT Finance, Saints Capital, Sigma Designs and Solidarity Fund QFL. The company has now raised over $60 million in total VC funding since 2002.

Legend Films Inc., a San Diego-based entertainment and digital media company, has raised $5 million in Series E funding. Augustus Ventures led the round, and was joined by return backer Par Investment Partners.

UIevolution, a Bellevue, Wash.-based provider of digital multimedia publishing software has raised $5 million in Series A funding. Intel Capital led the round, and was joined by Itochu Corp.

Buyout Deals

Textron has agreed to sell its Fluid & Power division for $1 billion to UK engineering group Clyde Bowers, which is being sponsored on the deal by HarbourVest Partners and Pantheon Ventures. Leveraged financing has been committed by Bank of Scotland, Barclays, HSBC and RBS.

Clear Channel Communications, a portfolio company of Bain Capital and Thomas H. Lee Partners, on Wednesday sold $228 million of eight-year notes in the Rule 144a market. The placement originally was planned to raise $980 million.

Hammond Kennedy Whitney & Co. have acquired FURminator Inc., a Fenton, Mo.-based maker of pet-grooming tools, according to LBO Wire. No financial terms were disclosed.

OMERS Capital Partners has acquired Maxxam Analytics International Corp., a Canadian provider of analytical laboratory services, from Callisto Capital. No financial terms were disclosed.

US Renewables Group and renewable energy tech company Novo Energy LLC have partnered to form Novo Development Co., a developer, owner and operator of waste-to-energy projects. No financial terms were disclosed. The new company will be led by Tomas Campone, former president and COO of Indeck Energy Services Inc.

PE Exits

Enthrone Inc., a division of Cookson Electronics, has acquired Ormecon GmbH, a German developer of nanoscale conductive polymers. No financial terms were disclosed. Ormecon had raised VC funding from firms like Emerald Technology Ventures, CDP Capital and Future Capital.

Symantec Corp. has acquired SwapDrive Inc., a Washington, D.C.-based provider of Web-based storage solutions. The deal was valued at $124 million. SwapDrive raised around $9 million in VC funding from firms like Core Capital Partners and Contour Venture Partners.

Firms & Funds

Ascent Venture Partners is raising upwards of $200 million for its fifth fund, according to a regulatory filing. The Boston-based firm closed its fourth fund in 2003 with $140 million.

Darwin Private Equity has closed its debut fund with £217 million in capital commitments. It had been targeting £250 million. Limited partners include RIT Capital Partners, AIG Investments, Goldman Sachs, LGT Capital Partners, OXIP and Pantheon Ventures.

The Florida State Board of Administration has issued an Intent to Negotiate (ITN) with general partners who would manage private equity and/or debt vehicles focused on Florida companies.

Macquarie Infrastructure Partners is raising up to $6 billion for its second fund, according to a regulatory filing.

Human Resources

Michael Goguen, a Sequoia Capital partner who leads the firm’s cleantech investing practice, has been named co-chair of the Cleantech Network’s North American advisory board. In addition, Sequoia’s VT Bharadwaj has joined the Cleantech Network’s Indian advisory board.