PE Week Wire: Monday, January 26, 2009

TPG Capital now has a (slightly) smaller investor roster to match its smaller fund size. Sources tell me that the moves were all one-off situations, rather than part of firm-wide layoffs (TPG has over 200 investment pros). In one case, it was just an individual’s desire to relocate. In some others, it was the dreaded “mutual decision.”

Perhaps the most notable departee is Justin Chang, a Hong Kong-based partner who had been with TPG since 1993. Chang focused on technology deals, and had sat on the boards of such TPG portfolio companies as Lenovo Group, Crystal Decisions and ON Semiconductor.

TPG also has said goodbye to Bastian Lueken, a London-based principal who focused on the European technology and industrial sectors, and Thirucherai Sathyanarayanan, a San Francisco-based vice president who joined the firm two years ago after getting his MBA from Harvard.

Finally, the firm has “transitioned” a pair of San Francisco pros into senior advisor roles. One is former partner Andrew Dechet, while the other is former principal Marshall Haines.

A TPG spokesman declined to comment.

*** Speaking of TPG, more than a few LPs have written in to say that the firm’s fund cut was not deep enough. What say you?

*** Venture capital investments fell off a cliff in Q4, according to MoneyTree data released over the weekend by PwC, NVCA and Thomson Reuters. Just $5.4 billion was disbursed to U.S.-based companies, which represents a 26% drop from the $7.3 billion disbursed the prior quarter. Moreover, the yearly total of $28.3 billion was an 8% drop from 2007 totals, which is the first year-over-year decrease since 2003.

You can download all the data here, including national and regional spreadsheets. Connie also has put together some data on the year’s most active investors.

*** Medidata Solutions filed for an $86.25 million IPO on Friday. That’s exactly 32 days since the last PE-backed IPO filing (including both buyout and VC), which was Bridgepoint Education. At this rate, we’ll barely breach double-digits in 2009.

*** In discussing WaMu’s sale of certain LP interests last week, I wrote that the sale price was at around a 70% discount. Some of you wrote in to object, saying that the base number for determining discount should be NAV rather than cost.

The objectors are right, in terms of how the secondary market usually describes discounts. In other words, if you hear that sellers are usually getting 60 cents on the dollar – the dollar in question is NAV. It’s worth emphasizing, however, that LPs are ultimately judged by cash-on-cash returns. Maybe that’s not as operative for a bankrupt LP like WaMu, but it certainly is primary for those institutions (and their managers) who still have a future.

*** A lot of you have written in to comment on last Friday’s column about radically reinventing venture capital. You can read a bunch of the feedback here, including links to other bloggers’ posts on the subject.

I’ll be revisiting this subject later in the week – including at Friday’s Columbia PE/VC Conference – so be sure to add your two cents.

Top Three

National Vision Inc., an optical retailer owned by Berkshire Partners, has acquired the Eyeglass World chain from Vision Care Holdings LLC, a portfolio company of Summit Partners. No financial terms were disclosed.

Medidata Solutions Inc., a New York-based provider of electronic data capture and data management software for clinical researchers, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol MDSO, with Citi and Credit Suisse serving as co-lead underwriters. The company has raised over $21 million in VC funding since 2002, from firms like Insight Venture Partners (33.9% pre-IPO stake), Milestone Venture Partners (7.6%) and Stonehenge Capital Fund (6.1%).

The New York State Common Retirement Fund has selected Parish Capital and Bank of America to help it expand its emerging manager private equity portfolio, which targets funds with less than $750 million in assets under management. The system has allocated $350 million to Parish, with $250 million allocated to co-investments and the remaining $100 million allocated to fund investments. The system has allocated $200 million to Bank of America, all of which is to be used for fund investments. To date, the system’s emerging manager program has invested approximately $400 million.

VC Deals

Arroweye Solutions Inc., a Chicago-based provider of customized gift cards for retailers, has secured $27.5 million of a $33.5 million fourth-round, according to a regulatory filing. Listed shareholders include return backers Baird Venture Partners and Adams Street Partners. William Blair & Co. served as placement agent. Arroweye had previously raised over $18 million.

ChaCha Search Inc., a Carmel, Ind.-based search startup, has secured around $11 million of a $30 million Series C round, according to a regulatory filing. No new shareholders are listed. The company had previously raised around $14 million from Morton Meyerson, Bezos Expeditions, Rod Canion (founding CEO of Compaq) and Jack Gill (partner at Maven Ventures). It also had secured a $2 million grant from 21st Century Technology Fund. ChaCha did not return requests for comment.

Twitter reportedly is raising at least $20 million in Series D funding at a valuation of approximately $250 million, according to a report on TechCrunch. Institutional Venture Partners is believed to be leading the deal, with return backers Spark Capital and Union Square Ventures also participating. The size of Twitter’s last round was undisclosed, although a regulatory filing suggested that it was approximately $17 million (earlier reports pegged it at $15m).

Stretch Inc., a Sunnyvale, Calif.-based maker of software-configurable processors, has raised an additional $15 million in Series B funding. This brings the round total to over $42 million, and the company’s total venture capitalization to nearly $115 million. Backers include Worldview Technology Partners, Oak Investment Partners and Menlo Ventures.

Virtual Computer Inc., a Westwood, Mass.-based provider of PC lifecycle management solutions, has raised $15 million in Series B funding. Return backers Flybridge Capital Partners and Highland Capital Partners co-led the round, and were joined by new strategic backer Citrix Systems.

Talend, a Palo Alto, Calif.-based provider of open source data integration software, has raised $12 million in Series C funding. The round was co-led by Balderton Capital and return backer AGF Private Equity. Talend had previously raised $8 million.

Lumigent Technologies Inc., an Acton, Mass.-based provider of data auditing for compliance and security, has raised a $6 million recap round from return backer North Bridge Venture Partners, according to VentureWire. A regulatory filing dated January 7 indicates that only half of the round has been called down. Existing shareholders Greylock Partners and Solstice Capital did not participate.

Coulomb Technologies, a Campbell, Calif.-based developer of networked vehicle charging infrastructure for plug-in vehicles, has raised $3.75 million in Series A funding led by Estag Capital (Germany).

Digitalsmiths, a Morrisville, N.C.-based provider of broadband video indexing, analytics and publishing solutions, has raised an undisclosed amount of strategic funding from Cisco Systems. The company had previously raised nearly $22 million from .406 Ventures, The Aurora Funds and Chrysalis Ventures.

Buyout Deals

Ancor Capital Partners and Merit Capital Partners have acquired Tom Cat Bakery Inc., a New York-based commercial bakery specializing in artisan breads and sweet goods. No financial terms were disclosed. Tom Cat was advised on the deal by McGladrey Capital Markets.

The Riverside Company announced that it has acquired Sencore Inc., a Sioux Falls, S.D.-based maker of measuring instruments used in troubleshooting by broadcasters, manufacturers of broadcast hardware, video production engineers, cable operators and retailers of audio and video and audio products. No financial terms were disclosed for the deal, which Buyouts magazine first reported on last month.

Topspin LBO has acquired Hart Systems Inc., a New York-based provider of self-scanned physical inventory systems, according to LBO Wire. No financial terms were disclosed.

PE Exits

LDC, the private equity arm of Lloyds TSB, has put legal services company National Accident Helpline back on the auction block, according to a UK press report. LDC originally retained PricewaterhouseCoopers to sell the company last summer for between £70 million and £90 million, and now is reported to be seeking £60 million with PwC again serving as broker.

PE-Backed M&A

The Active Network, a San Diego-based online community and application technology provider for the active lifestyle/sports market, has agreed to acquire campground reservation provider ReserveAmerica from IAC (Nasdaq: IACI). No financial terms were disclosed. Active Network has raised over $275 million in VC funding, from groups like ABS Ventures, Austin Ventures, Canaan Partners, Charles River Ventures, Dominion Ventures, ESPN, Kettle Partners, Enterprise Partners VC, North Bridge Venture Partners and Ticketmaster.

Firms & Funds

The California State Teachers’ Retirement System (CalSTRS) next month will consider a recommendation that it increase its target private equity allocation from 9% to 12 percent. It also will discuss an increase of its real estate allocation from 12% to 15 percent.

Sail Venture Partners is raising its second fund, according to a regulatory filing. The Costa Mesa, Calif.-based firm has already secured $61 million in LP commitments, and hopes to raise upwards of $250 million.

Human Resources

David Benin has joined Close Brothers as a managing director in the firm’s Paris office. He will co-lead the firm’s Advanced Manufacturing team, and previously was an I-banker with Morgan Stanley.

GMT Communications Partners, a private equity firm focused on the European communications sector, has made three promotions: Jonathan Gillbanks to managing director, Sebastian Sipp to principal and Vikram Krishna has to senior associate.

Meredith Niles has been named an investment manager with Impetus Trust, a UK venture philanthropy organization. She is a former executive director with Goldman Sachs who, most recently, worked with the Junior League of London.

Lynsey Register has joined Hermes Private Equity as an investment manager. She previously worked with private equity fund-of-funds manager Kedge Capital and, before that, BlackRock.