PE Week Wire: Monday, December 15, 2008

The sky is blue, Apollo Management has agreed to pay Huntsman Corp. $1 billion (it could have been worse) and in one week I’ll be on a plane to Costa Rica. In other words, it’s time for some Monday Mouth-Off.

*** First up is Mr. X, regarding my comment that a recent move by Permira could be the beginning of buyout fund size cuts: “If I’m reading that right, that’s not cutting the fund. That’s taking advantage of your LPs who are capital constrained. If my funds with portfolios acquired at 10x EBITDA tried that, I’d tell them to [expletive deleted] off.” Albert adds: “Permira should be ashamed of itself for abusing a loyal LP in this manner.”

I agree with both comments, and should have done a better job reading the (not so) fine print.

*** SH on layoffs at The Carlyle Group: “This strikes me as horribly misaligned with LPs, unless there is a corresponding cut in mgt fees or a reduction/release of fund committed capital. Generally speaking, how can firms continue to charge the same management fee while reducing their investment staffs due to ‘market conditions?’ If market conditions warrant layoffs, don’t they also warrant smaller fund sizes?”

Tim strikes a similar theme: “If I were an LP with Carlyle – particularly in its Growth Fund – I’d be asking for a reduction in the management fee I’m paying.” And Fred: “Of course they’re cutting staff and keeping fund sizes the same. That’s the only way to maintain their standard of living, given the lack of exits/carried interest.”

*** Robert: You wrote that secondary funds investing in 2006 and 2007 could have serious performance problems. I agree, but what about funds-of-funds? Won’t they be in even worse hot water, particularly since most of them are required to make a certain number of commitments to each vintage year?” Yup Robert, you’re probably right. Everyone gets to feel the pain.

*** Two different reactions to my swipe at US Air. Douglas writes: “Agreed on the US airways comment, sat on the runway last night in Manchester NH for 90 minutes heading to Philly, then sat on the runway in Philly for another hour, you would think there might be a glass of water in that, with or without ice?”

But A counters: “Airlines have to contract, in advance, their fuel. So they *might* still be paying a higher rate than what is comparable at the pump… Besides, the flight attendant doesn’t determine revenue policy, so being snippy with her is both an exercise in futility and, well, bad manners. If it were up to her, I’m sure you’d get a free soda – with a heavy splash of bourbon to mellow you out.”

*** An Anon writes in to say that folks in 1910 called it “910,” which means perhaps we really will call it “oh-ten.”

Top Three

Huntsman Corp. (NYSE: HUN) said last night that it has terminated its $6.5 billion agreement to be acquired by Hexion Specialty Chemicals Inc., a portfolio company of Apollo Management. The two sides also have settled litigation, with Huntsman to receive approximately $1 billion.

Icera Inc., a Bristol, UK-based maker of chips for mobile broadband phones and data devices, has raised $60 million Series BB funding. Return backers include 3i Group, Accel Partners, Atlas Venture, Balderton Capital and Amadeus Capital Partners. The company also has secured $10 million in debt financing from ETV Capital SA and MMV Financial Inc. Prior to this round, Icera had raised over $100 million.

The Blackstone Group plans to lay off around 7% of its 1,000 workforce, as first reported by Bloomberg. The moves would affect most of Blackstone’s business units, including its GSO Capital Partners unit.

VC Deals

RoundBox Inc., a Florham Park, N.J.-based provider of mobile broadcast software, announced that it has raised $20 million in Series C funding. peHUB first reported the round in June, based on a regulatory filing. Montagu Newhall Associates led the deal, and was joined by ITOCHU Techno-Solutions Corporation and return backers Core Capital Partners, Polaris Venture Partners and RRE Ventures.

NetShelter Technology Media, a Toronto-based provider of vertical media networks, has raised US$11.1 million in Series A funding. Backers include Rho Canada, GrowthWorks Can! adian Fund and JLA Ventures.

Semprus BioSciences Corp., a Cambridge, Mass.-based developer of functional surfaces to prevent medical device complications, has raised $8 million in Series A funding. 5AM Ventures and Panagea Ventures co-led the round.

BioStable Science & Engineering Inc., an Austin, Texas-based developer of cardiovascular implants, has raised $5.5 million in Series A funding from Santé Ventures.

SensorTran Inc., an Austin, Texas-based developer of distributed temperature sensing (DTS) technologies, has raised $3.5 million in new VC funding. Backers include Advantage Capital Partners, Expansion Capital Partners, WHEB Ventures and Stonehenge Capital Co.

Discera Inc., a San Jose, Calif.-based fabless analog semiconductor company that makes miniature silicon resonators for the frequency and timing control markets, has raised an undisclosed amount of fouth-round funding, according to Venturewire. The company previously had raised $48.5 million from firms like Scale Venture Partners, Horizon Ventures, 3i Group, Partech International and Ardesta LLC.

Buyout Deals

Premier Foods (LSE: PFD) is in talks with investment banks and private equity firms about a possible £700 million infusion. According to UK newspaper reports, contacted PE firms include Bain Capital, Blackstone Group, Lion Capital and Permira.

Riverstone/Carlyle Global Energy and Power Fund has completed its C$1.1 billion acquisition of Gibson Energy, the Canadian midstream oil and gas unit of Hunting PLC.

PE-Backed IPOs

Aegerion Pharmaceuticals Inc., a Bridgewater, N.J.-based drug company focused on cardiovascular and metabolic diseases, has withdrawn registration for an $86.25 million IPO, due to “market conditions.” This is the second time in as many years that Aegerion has canceled a proposed IPO. It had planned to trade on the Nasdaq, with Piper Jaffray and Thomas Weisel serving as co-lead underwriters. Aegerion has raised around $44 million in total VC funding, from firms like Index Ventures, Advent International, Alta Partners, Scheer & Co. and MVM Life Science Partners.

Epocrates Inc., a San Mateo, Calif.-based provider of clinical information and support tools to healthcare professionals, has withdrawn plans for a $75 million IPO. It had planned to trade on the Nasdaq, with Citi serving as lead underwriter. In a letter to the SEC, Epocrates said that the IPO would have been “discretionary financing.” The company has raised over $86 million in VC funding, from firms like The Sprout Group (17% stake), Goldman Sachs (16%), InterWest Partners (12.7%), Draper Fisher Jurvetson (10.4%), Three Arch Partners (10.3%) and Bay City Capital (7.3%).

PE-Backed M&A

Happ Controls LLC, a portfolio company of Pfingsten Partners, has acquired the Chempower Ohio Precision Sheetmetal and Owens Precision Fabricators divisions of Holiday Properties Acquisition Corp. It had previously acquired Holiday Properties’ Technibus unit. No financial terms were disclosed for any of the transactions, which were initiated by McGladrey Capital Markets.

Mark Andy, a St. Louis-based printing equipment company, has acquired the assets of Rotoflex International, a provider of web inspection and finishing equipment. No financial terms were disclosed. American Industrial Partners acquired Mark Andy earlier this year from Morgenthaler Partners.

The Olon Group Inc., a platform acquisition company focused on the office furniture and consumer cabinet markets, has acquired Creative Products Inc., a Canadian maker of profile-wrapped components. No financial terms were disclosed. Olon Group is sponsored by Huron Capital Partners.

Firms & Funds

3i Group plans to sell its stakes in up to 70 portfolio companies to Chamonix Private Equity, according to the Daily Telegraph.

Alcedo, a private equity firm focused on mid-market opportunities in Northern Italy, has closed its third fund with €178 million in capital commitments.

HSBC Private Equity has raised $1.25 billion for its sixth Asia-focused private equity fund. So far it has invested $175 million of the fund into three companies.

Macquarie Group reportedly has bid for Citigroup’s Australian retail stock-brokering and wealth management unit.

Human Resources

David Bonderman, a co-founding partner of TPG Capital, has resigned from the board of Washington Mutual Inc. TPG had led a $7 billion capital infusion into WaMu in April, but the company filed for Chapter 11 bankruptcy just five months later.

Paul, Hastings, Janofsky & Walker LLP has added three partners to its European finance team: Alberto Del Din will be based in Milan, and previously was a partner with Bonelli Erede Pappalardo; Alessandro Stoppa also will be based in Milan, and previously was with Babcock & Brown; Lorenza Talpo will be based in London, and previously was with Bonelli Erede Pappalardo.

Key Principal Partners has promoted Jonathon Leffers from an analyst to an associate.

MorrisAnderson, a Chicago-based turnaround advisory, has promoted Kenneth Yager from managing director to principal and equity owner. He joined the firm in August 2005.

Neil Aaronson has been named CEO of Hilco Real Estate, after having served as executive vice president of the group’s parent company Hilco Trading LLC. He succeeds Mitchell Kahn, who is leaving Hilco.