PE Week Wire: Thursday, January 15, 2009

Last November, we reported that former Citizens Financial chief Steve Steinour was in talks with The Blackstone Group to partner on a “multi-billion dollar” fund that would buy distressed banks and other financial services companies. What we didn’t know was that, just weeks later, Steinour was approached by Huntington Bancshares (Nasdaq: HBAN) to become its new president and CEO. He accepted, and a formal announcement was made yesterday.

“Blackstone was a terrific organization, and I got to work with a number of the team members there,” Steinour explains. “It quite possibly could have ended up different [had the fundraising environment been better]. When we came together late in the summer, it was with the expectation of reaching into their global network. But once October came, it became obvious that it was going to be much more difficult.”

Steinour competed against Huntington in certain Michigan and Ohio markets while with Citizens, and says that he “was always very impressed with the institution and the quality of its products.” He also surprised me a bit by saying that his plans are more focused on organic growth than acqusitions. Not only was Steinour obviously planning to be an acquiror as a private equity investor, but that also had been his reputation with Citizens.

Finally, it’s worth noting that Steinour’s move to Huntington formally ends his role with CrossHarbour Capital Partners, a Boston-based alternative asset manager that he joined last May as a managing partner. The plan had been to raise the financial services fund in partnership with Blackstone, but under the CrossHarbour umbrella.

*** Yesterday we reported that eBay founder Pierre Omidyar is back in the operating saddle, with a new startup called Ginx (official corporate name is Peer News Inc.). Both ReadWriteWeb and TechCrunch were able to scoop up additional details, all of which culminated in Ginx issuing a brief press release.

*** Yesterday we also reported that Kleiner Perkins was raising annex funds for its eleventh (2004) and twelfth (2006) funds, plus had reopened fundraising for both its thirteenth fund (2008) and its Green Growth Fund (2008). Laura Kruetzer of VentureWire this morning adds that the Fund XI annex target is $150 million.

*** Time to officially close the book on the long-running VSP Capital saga, as the firm has sent out final distribution checks for VSP Capital III.

*** Last week, Erin wrote a peHUB post about pending layoffs at GE Capital. It’s now become something of a de facto messageboard for worried GE Capital employees (and a few corporate defenders), so we’re keeping it outside of the paid archives for a while longer.

*** Reminder: You can send us anonymous tips by going here. But if you want a reply (which some of you indicate you do), make sure to leave an email address. The whole thing about anonymous tips is that we don’t know who you are unless you go out of your way to tell us…

*** Publishing Note: I’m taking tomorrow off to join J down in New Orleans (she’s got a conference, I’ve just got a desire to see the city). Erin will be pinch-hitting, so be sure to send her any news or other stuff that deserves to be in tomorrow’s edition. I’ll be back Monday, for the handful of you working the holiday…

Top Three

Cephalon Inc. (Nasdaq: CEPH) and Ception Therapeutics Inc. have signed an agreement whereby Cephalon gets the option to purchase all outstanding capital stock of Ception. Under terms of the deal, Cephalon will pay $100 million upfront, and another $250 million if it chooses to exercise the option. Ception Therapeutics is a Malvern, Pa.-based drug company whose lead candidates are anti-inflammatories. It has raised around $88 million in VC funding, from firms like Essex Woodlands Health Ventures, Investor Growth Capital, MDS Life Sciences, New Science Ventures a! nd Aperture Venture Partners.

Clessidra has agreed to acquire a minority stake in the Italian fashion house run by Roberto Cavalli. No additional terms were disclosed, except that Cavalli was known to be looking to sell between 15% and 20 percent.

Mount Kellett Capital Management, a global private equity firm formed last year by former Goldman Sachs partner Mark McGoldrick, has raised at least $1.5 billion for its debut fund.

VC Deals

Schoolwires, a State College, Penn.-based provider of online portals and content management solutions for K-12 schools, has raised $12 million in its first round of institutional funding. Kennet Partners led the round, with Kennet principal Eric Filipek joining the company’s board of directors.

Novaled AG, a German developer of organic light-emitting diodes for lighting and display products, has raised €8.5 million in third-round funding. Participants include eCAPITAL, TechnoStart, KfW, TUDAG, Credit Agricole Private Equity, TechFund and CDC Innovation.

Open Kernel Labs, a Chicago-based provider of embedded virtualization software for mobile phones and broadband internet devices, has raised $7.6 million in new VC funding. Chrysalis Ventures led the round, and was joined by Citrix Systems and return backer Neo Technology Ventures.

Motionbox, a New York-based personal video sharing and storage site, has raised $6 million in Series C funding. Constellation Ventures led the round, and was joined by fellow return backers Canaan Partners and SAS Investors.

Firecomms, a Cork, Ireland-based provider of high-speed plastic optical fiber components, has raised $5 million in new VC funding. Swisscom, Alps Electric of Japan and GP Bullhound Sidecar were joined by return backers Atlantic Bridge, ACT Venture Finance and Enterprise Ireland., a Bellevue, Wash.-based provider of an SaaS-based work management tool, has raised $1.25 million in Series B funding. Madrona Venture Group led the round, and was joined by CEO Brent Frei.

Meez, a San Francisco-based social entertainment community, has raised an undisclosed amount of VC funding led by Anthem Venture Partners. The company also acquired Pulse Entertainment Inc., a San Francisco-based provider of avatar messaging services for mobile phones and websites. Meez had previously raised VC funding from Battery Ventures and Transcosmos, while Pulse had raised over $50 million from firms like Anthem, DFJ, El Dorado Ventures, Encore Venture Partners and Mobius Venture Capital.

MiLife, a provider of technology solutions for personalized weight management, has raised an undisclosed amount of VC funding from New Venture Partners and Unilever Ventures. The company recently spun out from Unilever Corporate Research., an Albertson, N.Y.-based provider of online tools for contractors to collaborate with facilities managers, has raised an undisclosed amount of Series B funding led by SJF Ventures.

Buyout Deals

Austin Ventures has formed Century Payments Inc., a Dallas-based acquisition platform focused on the payment processing market. The company will be run by Robert Wechsler, an AV executive-in-residence who previously was an executive vice president and head of global sales and services for Chase Paymentech Solutions. AV is committing up to $50 million to the company, which already has made three acquisitions.

Greatwide Logistics Services, a Dallas, Texas-based provider of third-party logistics, has received bankruptcy court approval for its acquisition by a group of its first-lien secured holders, including affiliates of Centerbridge Capital Partners and D. E. Shaw. The company had been acquired for $730 million in late 2006, by Investcorp and Hicks Holdings, while seller Fenway Partners retained a minority stake. It filed for Chapter 11 protection last October.

Warburg Pincus has agreed to buy $175 million of common stock in Nuance Communications Inc. (Nasdaq: NUAN). Warburg Pincus already holds approximately 15% of all outstanding Nuance shares.

PE-Backed M&

Alpine Biomed, a Fountain Valley, Calif.-based maker of diagnostic equipment used in gastroenterology, urology and neurology, has acquired Stellate Systems Inc., a Montreal-based maker of neurodiagnostic systems. No financial terms were disclosed. Alpine Biomed is a portfolio company of Water Street Healthcare Partners.

MedAvant Healthcare Solutions, a Santa Ana, Calif.-based provider of technology for the electronic exchange of medical claims and clinical information, has acquired the Medicare crossover business of HDM Corporation. No financial terms were disclosed. Marlin Equity Partners acquired the assets of MedAvant out of bankruptcy last fall.

NPC International Inc., a Lenexa, Kan.-based franchisee and operator of Pizza Hut franchises, has agreed to acquire 51 additional units from Pizza Hut Inc. for $14.4 million in cash. NPC was acquired in 2006 by Merrill Lynch Global Private Equity, and currently operates 1,098 restaurants and delivery/carryout un! its in 27 states.

Firms & Funds

The Los Angeles City Employees’ Retirement System has rescinded a $5 million commitment to Citifront Capital Partners, a small and mid-market buyout fund-of-funds. The move came at the recommendation of LACERS consultant PCA, based on the fact that Citifront had failed to secure a minimum of $50 million in capital commitments (including LACERS’ commitment). We’ve posted the LACERS document here.

Saybrook Capital has held a $160 million close on its $300 million-targeted distressed fund, according to LBO Wire.

Spectrum Equity Investors has held a first close on its sixth fund, which is targeting $1.25 billion.

JPMorgan Chase & Co. posted a Q4 2008 profit of $702 million, which was down from $3 billion in Q4 2007. This is the firm’s first quarterly report to include results from Washington Mutual.

Human Resources

Cam Lanier III has joined Kinetic Ventures as a senior director. He currently is chairman of ITC Holding C0., and previously helped found Interstate Communications (sold to MCI for $1.2b in 1990).

Will Hunsinger has joined Seattle-based venture firm Maveron LLC as an entrepreneur-in-residence. He most recently served as CEO of Maveron portfolio company Adeze.

Good Energies has promoted Will Nesbitt to managing director. He had joined the firm in 2007 as a director, after having been a managing director with Kirkland Investment Corp.