PE Week Wire: Thursday, January 22, 2009

A few quick hits to kick off your Thursday, with an emphasis on secondaries:

*** Washington Mutual has agreed to sell its LP interests in three VC funds managed by FT Ventures, according to a filing with the U.S. Bankruptcy Court in Delaware. Industry Ventures will buy the positions for $3.46 million, plus the assumption of $6.9 million in unfunded commitments.

This one is a bit interesting, if only because it’s unusual for us outsiders to have visibility into a secondary sale’s pricing. WaMu reports that it had already funded $13.1 million, which means the deal has a discount in excess of 70 percent. Of course, WaMu is a particularly motivated seller… Expect more WaMu sale agreements to follow.

*** Email of the Day: “If I were a family office or high-net-worth individual, why would I try and sell my LP interests on the secondary market at 40-50% of NAV when I could donate them to my alma mater, take the tax deduction off of NAV, and reap the benefits of having donated a significant sum to my school? Too clever? I wonder if the tax-man would allow the deduction off of NAV (given FAS 153) or the current secondary prices?”

*** Speaking of which: Erin has a post up about a draft AICPA paper, which seems to suggest that PE firms should mark their fund values to secondary market prices, rather than to public market prices. She’s also uploaded the actual paper for your perusal.

The concept is instinctively offensive, since secondary prices are often based more on the seller’s situation than on the actual asset values (see WaMu above). But, upon further thought, is that not also true of the public markets? Certainly not saying I support the paper’s thesis, but simply that it gets more complex upon reflection.

*** Hemal Mirani has quietly left HarbourVest Partners, where she had been a managing director with the firm’s Hong Kong subsidiary. She’s moving onto another Asian private equity firm.

*** Mea Culpa: I’ve messed up a few things in the past few weeks. In reverse chronological order: (1) New Enterprise Associates no longer operates on an annual budget model. It apparently switched over to the more conventional fee model within the past couple of years. Does anyone know of firms that still use budgets? (2) Onex Partners has not closed its third buyout fund. Instead, it has secured $3 billion in third-party commitments, with a target of $3.5 billion. As reported, it also “temporarily” cut its own commitments from $1 billion to $500 million. (3) Battery Ventures did not invest in a $6.24m Series D funding for StreamBase Systems. The item should have read Bessemer Venture Partners.

*** Selfless Promotion Alert: A couple of you wrote in to make sure I was OK, because I wasn’t on CNBC this morning as expected. Yup, all good. Just got bumped. Make sure to call your local cable operator…

Top Three

Reinet Investments, a Luxembourg-based group controlled by South African billionaire Johann Rupert, has agreed to buy part of Lehman Brothers Merchant Banking.

TPI Composites Inc., a Scottsdale, Ariz.-based provider of wind turbine blades to Mitsubishi Power Systems and General Electric, has raised $20 million in Series B funding. Backers include GE, Landmark Growth Capital Partners, NGP Energy Technology Partners and Angeleno Group.

The California Public Employees’ Retirement System (CalPERS) has named Joseph Dear as its next chief investment officer. He has spent the past six years as executive director of the Washington State Investment Board.

VC Deals

Crux Biomedical Inc., a Portola Valley, Calif.-based developer of a device for treating and preventing pulmonary embolisms, has raised around $8 million in Series B funding, according to VentureWire. Return backers include Alloy Ventures and Thomas Fogarty., a San Francisco-based online sports entertainment company, has raised $3.5 million in Series A funding. Charles River Ventures led the round, with partner George Zachary taking a board seat. Other board members include Hot or Not founder James Hong and HRJ Capital’s Ronnie Lott (HRJ is not an investor in OneSeason).

Bluestreak Technology, a Montreal-based provider of Flash-based players for embedded devices, has raised C$5 million in new VC funding. No investor names were disclosed, but the company has previously raised capital from firms like BDC Venture Capital, Entrepia Ventures, First Capital Group Management and Iris Capital Management.

Axikin Pharmaceuticals Inc., a San Diego-based developer of small-molecule therapeutics for respiratory and inflammatory diseases, has raised $3 million in Series A funding. Sanderling Ventures led the round, and was joined by Mitsui & Co. Venture Partners. Axikin was formed as a spinout from Actimis Pharmaceuticals.

Trellia Networks, a Montreal-based provider of mobile policy management software, has raised US$2 million from return backers Skypoint Capital and BDR Capital.

Enlight Biosciences LLC, a Boston-based developer of technologies and strategies for “fundamentally transforming drug discovery and development,” said that Johnson & Johnson has joined its list of strategic investors. It also said that its total funding now totals $52 million. Enlight had previously disclosed $39 million in funding, from Puretech Ventures, Pfizer, Merck & Co. and Eli Lilly & Co.

SAManage, a Seattle-based provider of SaaS IT management solutions, has raised an undisclosed amount of first-round funding led by Xenia Venture Capital.

Buyout Deals

Charlotte Russe Holding Inc. (Nasdaq: CHIC) said it is evaluating strategic alternatives, including a possible sale of the company. The women’s apparel retailer late last year rejected a $200 million buyout offer from KarpReilly Capital Partners and H.I.G. Capital.

Fiat has a one-year option to acquire an additional 20% of U.S. automaker Chrysler, according to Reuters. The Italian group already has agreed to acquire a 35% stake from controlling shareholder Cerberus Capital Management, although that deal is dependent on Chrysler securing an additional $3 billion in U.S. government loans.

GOME, a Chinese electronics retailer, has held talks with investment firms about raising new capital. Possible buyers include existing GOME shareholders like Warburg Pincus and Morgan Stanley, plus firms like Bain Capital and Hopu Investment Management.

Moody’s Investors Service has lowered the corporate family and probability of default ratings on Allison Transmission Inc., a Speedway, Ind.-based maker of automatic transmissions for commercial and military vehicles. The Carlyle Group and Onex Partners bought Allison Transmission from General Motors in 2007, for $5.575 billion.

Trader Media Group, a subsidiary of Guardian Media Group, is seeking to buy back £20 million of its “covenant lite” syndicated loan. Apax Partners bought a 49.9% stake in Guardian Media in 2007, backed by an £835 million loan.

PE Exits

Swedish Space Corp. has agreed to acquire Universal Space Network, a Newport Beach, Calif.-based provider of satellite management services. No financial terms were disclosed. USN has raised nearly $40 million in private equity funding since 1997, from firms like Warburg Pincus and Swedish Space Corp.

PE-Backed M&A

Lincoln Educational Services Corp. (Nasdaq: LINC) has acquired the Baran Institute of Technology for approximately $25.3 million in cash. Lincoln is majority-owned by Stonington Capital.

Manatron Inc., a Portage, Mich.-based provider of property tax solutions for state and local governments, has acquired Software Techniques Inc., a provider of computer-assisted mass appraisal software to government property appraisal districts. Thoma Bravo, which took Manatron private last year for $66 million, helped finance the deal. No overall pricing terms were disclosed.

Selling Source LLC, a Las Vegas-based provider of data and consumer leads to financial service providers, has acquired the marketing unit of CompuCredit Corp. (Nasdaq: CCRT). No financial terms were disclosed for the deal, which will help Selling Source launch a consumer financial products group. Selling Source is a portfolio company of London Bay Capital.

Firms & Funds

AIG has agreed to sell its Philippines consumer banking and car financing units to a local bank ! for around $42 million.

Citigroup said that it has no plans to sell Mexican banking unit Banamex.

KBC will receive a €2 billion capital injection from the Flemish government.

Human Resources

Srinivas Akkaraju has joined New Leaf Venture Partners as a managing director and head of the firm’s West Coast biopharma practice. He previously was a co-founder and managing director of Panorama Capital.

Christine Daley has joined Oak Hill Advisors as a managing director, focused on opportunities in the stressed and distressed credit markets. She previously was a managing director with Lehman Brothers.

John Moore Jr. has joined 3i North America as a partner, with a responsibility for the group’s healthcare strategy. He previously was with Morgan Stanley as a managing director and global head of healthcare I-banking.

ABS Capital Partners has promoted Cal Wheaton from principal to general partner. He joined the firm in 2003, and focuses on the business services and healthcare sectors.

Spark Capital has promoted Alex Finkelstein from principal to general partner. He has led the firm’s investments in 5min and 8D World.

Vestar Capital Partners has promoted Daniel Boege to executive director, and promoted both Andrew Cavanna and Brian O’Connor to principal.

Andrew Doman has been named CEO of Russell Investments. He previously was a founding director of McKinsey & Co.’s UK-based European Asset Management practice. He succeeds John Schlifske, who will continue to serve as Russell’s president.