PE Week Wire: Tuesday, September 23, 2008

Greetings from Denver, where tonight were hosting a peHUB Shindig at the Wynkoop Brewing Co. Get your ticket here, if you havent already. Then onto San Francisco tomorrow, and Seattle on Thursday.

*** Antibody developer KaloBios Pharmaceuticals this morning announced that it has raised $20 million in a first close of its Series D funding round (it wants to close the total round at $30m). Notably absent from the participating investor list was Lehman Brothers, which had led the companys Series C round last year.

This seemed like an interesting omission, particularly given that Lehmans venture capital operations are not part of the bankruptcy proceedings. Instead, they are part of the investment management unit that is currently being auctioned off to the highest PE bidder (a process which everyone thought would have wrapped up by now). So I called KaloBios CEO Dav! e Pritchard this morning to find out what had happened.

He explained that the exiting Lehman investment came not from Lehman Venture Capital, but from Lehman Healthcare Group, which invested directly off of the firms balance sheet. Pritchard said that Lehman had committed to coming in pro rata for the scheduled close last Friday, but then bailed as news of the bankruptcy emerged. This left KaloBios in a hole, which was filled by other participating investors.

It all happened so fast, Pritchard said. I dont think they realized what was really happening until the very last minute.

*** Daily carnage update: KKR reports huge first-half loss, TD Bank considers a bid for WaMu, Fluidigm p ostpones IPO (shocker), Carlyle may take some of those toxic asets off Paulson’s hands (assuming he gets them) and “corrupt Asians” feel vindicated by Wall Street bust.

*** In yesterdays column, I lauded Bob Willumstad for passing up a $22 million severance package from AIG. I noted that he had only served for three months, and that he had failed in that time to enact a restructuring plan that could have saved the insurance giant sans Hank Paulson. A couple of you wrote in to complain, saying that no CEO could have pulled off such a feat in such a short period of time. I concur, which is even more reason why Willumstad was right to decline the money. In a r! elated item, Brysam Capital has not responded to requests for comment about the possibility of Willumstad returning to the partnership fold. But it still stands to reason that he will do so.

*** As a quick addendum, I do wish Democrats on the Hill would stop trying to tie executive compensation limits into the current bailout bill. Yes there is legitimacy to their arguments — remember, I once chided Centerview Capital for hiring ex-Gillette chief Jim Kilts for this very reason — but those dollars are miniscule when compared to the scope of whats being discussed. Dont sweat the small stuff. Literally.

*** I chatted on yesterdays flight with my neighbor, an obstetrician returning home to Denver. After telling her my profession, she asked me to: (A) Explain what was happening in the financial markets, and (B) Predict what was coming next.

It was the same conversation Iv! e had with just about everyone in my path over the past week, includin g some college friends who stopped by Sunday to watch the Patriots game (which sadly became a Wii MarioKart session by the end of Q3). Id imagine that many of you have experienced the same, so Im interested in your responses. How do you explain all this to non-financial types? The first part is obviously easier than the latter, particularly since few of us (myself not among the few) were predicting anything nearly this volatile. But let me know what your stock response has become, and perhaps how much your believe in it.

*** Administrative Note: I’m working remotely, and could not get the “Read more” links to work properly on the news items. But the extra info is available, if you go to the News Section of peHUB.

Top Three

Trion World Network Inc., a Redwood City, Calif.-based publisher of server-based games, has raised $70 million in Series C funding. ACT II Capital led the round, and was joined by DCM, Trinity Ventures and return backers Rustic Canyon, Time Warner, Peacock Equity and Bertelsmann.

Aricent, a Palo Alto, Calif.-based technology outsourcing company, has raised $60 million in new funding commitments from The Family Office (Bahrain) and return backer KKR. Other company shareholders include Sequoia Capital.

Francisco Partners has invested $85 million in Aconex, an Australia-based provider of online management solutions to the global construction and engineering markets.

VC Deals

OpTier Inc., a New York-based provider of business transaction management technology, has raised $47.5 million in fourth-round funding. Index Ventures and Morgan Stanley were joined by return backers Cisco Systems, Gemini Israel Funds, Pitango Venture Capital, Carmel Ventures and Lightspeed Venture Partners. OpTier has now raised around $90 million in total VC funding since 2003. OpTier also announced that it has secured a $15 million line of credit from Plenus Venture Lending.

Altair Semiconductor, a Hod Hasharon, Israel-based developer of mobile WiMAX processors for handsets and other handheld devices, has raised $22 million in Series C funding. Pacific Technology Fund led the round, and was joined by ETF Venture and return backers Bessemer Venture Partners, Bessemer Venture Partners, BRM Capital, Giza Venture Capital and Jerusalem Venture Partners.

Pentadyne Power Corp., a Chatsworth, Calif.-based provider of flywheel energy storage systems, has raised $22 million in new private funding, including the conversion of existing convertible notes. No investor details were disclosed.

KaloBios Pharmaceuticals Inc., a South San Francisco-based developer of antibody therapeutics, has raised $20 million in the first close of its Series D funding round. Mitsubishi UFJ Capital and Genzyme Corp. co-led the round, and were joined by return backers MPM Capital, Alloy Ventures, GBS Ventures, Sofinnova Ventures, Singapore Bioinnovations, Pte., 5AM Ventures and Lotus Bioscience Ventures., a San Mateo, Calif.-based platform to help online publishers monetize video content, has raised $13 million in Series B funding. Spark Capital led the round, and was joined by return backers Redpoint Ventures and Gemini Israel Funds.

Right90, a Foster City, California-based sales forecaster, has raised $10 million in Series C funding. Horizon Ventures led the round, and was joined by return backers InterWest Partners, Shasta Ventures and US Venture Partners. The company has now raised $27 million in total VC funding.

U.S. Genomics, a Woburn, Mass.-based developer of single-molecule biology technologies for diagnostics and biodefense applications, has raised $4.5 million in private equity funding from Becton, Dickinson & Co. The two companies also entered a strategic partnership to collaborate on the creation of an infectious disease diagnostic platform., a Boston-based operator of a trading platform for books, CDs, DVDs and video games, has raised $3.35 million in Series C funding led by Safeguard Scientifics.

Buyout Deals

Huron Capital Partners has formed DOCetera Corp., an acquisition platform company for the document process outsourcing and total process outsourcing market. It will be run by Tom Olivia, former president of Cenveo Corp. (NYSE: CVO). No financial terms of Huron’s commitment were disclosed.

Legg Mason (NYSE: LM) yesterday denied a NY Post report that it is considering a take-private plan that could include private equity sponsors like KKR.

Rockwell Diamonds Inc. (TSX: RDI) is asking stockholders to reject a $0.36 per share buyout offer from Pala Investments Holdings, which would value Rockwell at $85.7 million. Pala already holds a 19.9% stake in Rockwell, which owns interests in alluvial diamond projects and properties in South Africa and the Democratic Republic of Congo.

TA Associates has invested C$98 million in Radialpoint, a Montreal-based provider of managed digital home security and care service to broadband service providers.

Human Resources

Dror Nahumi has joined Norwest Venture Partners as an Israel-based partner. He most recently was executive VP and chief strategy officer of Israeli telecom company ECI.

Jean-Nol Odier has joined PCG Asset Management as a managing director, where he will focus on international business development and open an office in Singapore. He previously was with BNP PAribas n Hong Kong, where he developed a wealth management platform for family offices and high-net-worth individuals. Read more…

Basil Sakellis has joined HSBC Private Equity as an investment manager. He previously was with European Capital.

David Williams, former CEO of building products specialist SIG, has joined Permira as a senior advisor.

H.I.G. Capital has promoted Bret Wiener to managing director. He joined the firm in 2004, as a member of its middle-markets practice.

Karen Davis has joined the corporate restructuring services group of Amherst Partners as a director. She will be based in Columbus, Ohio, and previously was CFO of Performance Site Company.

Energy Investors Funds, a private equity firm focused on the energy sector, has made several new hires: Alycia Goody as vice president and assistant general counsel (formerly BTU Ventures); Andrew Pike as vice president (Wells Fargos debt capital markets group), Christina Anzel as director of fundraising and IR (Latham & Watkins), Carl Lemke as director of tax (PwC), Noshir Irani as associate (Deutsche Bank), Ben Pike as associate (Merrill Lynch) and Beth Buckley as senior accountant (Fidelity Investments).