PE Week Wire: Monday, September 15, 2008

Any chance you were at Chicago O’Hare late last night? If so, you might have noticed someone sitting in the corner, muttering about how dumb he had been to spend a “computer-less weekend” away, while Wall Street burned. Really wish you’d come over to say hello…

My original plan today was to discuss SBIR grants, and whether or not VC-backed companies should qualify. We’re going to table that for a bit, although you can pass the time by reading some of my dated thoughts. After all, there are obviously some bigger fish to fry (or Brothers to bake).

My goal today is to use peHUB as a platform for describing what is going to happen to the private equity programs/portfolios/teams/etc. at the firms we already know are in severe flux. I’ll be spearheading our Lehman Brothers coverage (send relevant emails here), while Erin will focus on AIG (send relevant emails here). We’ll also be looking into Merrill, WaMu and anything else that hits.

As always, you’re our best sources. Drop us a line, or use the anonymous tip option. Flood us with info.

On the Lehman front, I’ve been told that an announcement regarding the sale (or breakup) of Lehman’s investment management unit should come within days, not weeks. That unit includes private equity (buyouts, VC, fund-of-funds, etc.), and the sale could be anything from the original 55% stake to a 100% management buyout. Could be fascinating to see the types of walls that get erected if a Bain Capital were to hold Lehman Private Equity as a portfolio company…

It also seems that there is finally some discussion emerging about the private equity group attempting an independent spinout (e.g., CCMP Capital, the original Metalmark Capital, etc.), although no real groundwork has been laid yet. It is certainly an issue of chatter among LPs.

Worth emphasizing that Lehman’s private equity group is not part of the bankruptcy filing, nor are the Lehman broker-dealers that have made cornerstone commitments to the group‘s various funds. As of right now, the entire Lehman private equity team is employed and working (they are not among those walking around with cardboard boxes). That said, the secondary markets are already buzzing about Lehman stakes going up for sale. Ditto for the issue of AIG’s stake in Blackstone Group.

Lots more at peHUB throughout the day. Keep checking in…

Top Three

NBC Universal, Bain Capital and The Blackstone Group have completed their $3.5 billion acquisition of The Weather Channel from Landmark Communications.

Five Below, a Philadelphia-based retailer of discount merchandise to the teen and pre-teen market, has raised $17 million in private equity funding. Return backer LLR Partners led the deal, and was joined by Blue 9 Capital.

Mike Dodd has joined Austin Ventures as a venture partner. He previously was senior vice president of corporate development for Omniture Inc.

VC Deals

Zetta, a Sunnyvale, Calif.-based provider of cloud storage solutions for enterprises, has raised $10.68 million in Series A funding from Sigma Partners and Foundation Capital.

FrameMax Inc., a Poway, Calif.-based maker of prefabricated light-gauge steel framing products for the U.S. building industry, has raised $10.1 million in Series C funding, according to a regulatory filing. Backers include Arcapita Ventures, Cross Creek Capital, H.I.G. Ventures and Nvestech LLC.

Infobright Inc., a Toronto–based provider of analytic data warehousing, has raised US$10 million in Series C funding. Sun Microsystems was joined by return backers Flybridge Capital Partners and RBC Venture Partners.

AppNexus Inc., a New York-based maker of a virtualized cloud computing platform for online advertising applications, has raised around $8 million in Series B funding, according to a regulatory filing. Backers include First Round Capital, Khosla Ventures, Kodiak Venture Partners and Venrock.

CrossLoop Inc., a Campbell, Calif.-based provider of computer support services via deskrop sharing software, has raised $6 million in Series B funding. Venrock led the round, and was joined by return backer El Dorado Ventures. Rich Moran of Venrock has joined the CrossLoop board of directors.

O Beverages Inc., a Cambridge, Mass.-based maker of bottled water with electrolytes, has raised $6 million in Series D funding, according to a regulatory filing. Highland Consumer Fund led the round.

FRiENDi mobile, a mobile virtual network operator in the SAMEA region, has raised an undisclosed amount of VC funding from Millennium Private Equity, a subsidiary of the Dubai Financial Services Authority. FRiENDi mobile previously raised funding from ePlanet Ventures.

Zemanta Ltd., a Slovenia-based browser plug-in for to help bloggers simplify their content creation process, has raised first-round funding from Union Square Ventures.

Buyout Deals

Champ Private Equity, the Australian affiliate of Castle Harlan, has acquired LCR Lindores Group, an Australian industrial and mining services company. No financial terms were disclosed.

Lyceum Capital has agreed to acquire Carewatch Care Services from publicly-traded Nestor Healthcare Group PLC, for £37 million. Barclays is providing leveraged financing for the deal, which is subject to approval of Nestor shareholders. Carewatch provides home-based social care services in the UK.

Capital for Business, a private equity unit of Commerce Bancshares, has acquired SoTel Systems, a Maryland Heights, Mo.-based provider of enterprise telecom equipment. No financial terms were disclosed for the deal, which was first reported by the St. Louis Business Journal.

PE-Backed IPOs

Fluidigm Corp., a South San Francisco-based provider of integrated fluidic circuits for the life sciences market, is scheduled to go public this week. Its current IPO offer is5.3 million common shares at between $14 and $16 per share, which would give it an initial market cap of approximately $372 million, were it to price in the middle of its range.

Fluidigm plans to trade on the Nasdaq under ticker symbol FLDM, with Morgan Stanley serving as lead underwriter. It has raised nearly $200 million in total VC funding since 1999, from firms like Bio*One Capital, Versant Ventures, EuclidSR Partners, InterWest Partners, Alloy Ventures, InterWest Venture Partners and Lilly Ventures.

PE-Backed Exits

HM Capital Partners is selling its remaining 7.1 million units in midstream natural gas services provider Regency Energy Partners LP (Nasdaq: RGNC), via a secondary public offering. The units represent a 13% ownership stake in the company, and closed trading Friday at $20.35 per unit.

Quest Software Inc. (Nasdaq: QSFT) has acquired NetPro Computing Inc., a Phoenix-based provider of Microsoft infrastructure optimization solutions. The deal was valued at approximately $78.7 million in cash. NetPro had raised VC funding from firms like JMI Equity, Kennet Venture Partners, Grayhawk Venture Partners, Novell Ventures, Pinecreek Capital Partners and Diamond Ventures.

Human Resources

Lisa Bonner Haines has joined Charles River Ventures as general counsel. She previously was associate general counsel for Monster Worldwide.

Spark Capital today confirmed earlier reports that it has added Mo Koyfman as a principal. He has spent the past six years in various roles with IAC, and will split his time between Boston and New York.