PE Week Wire: Wednesday, November 12, 2008

Greetings from the Grand Hyatt on H Street in Washington DC, where my room is overlooking… other rooms. Hopefully it’s a nice day for flying.

Big thanks to the 150 or so of you who came out last night for our peHUB Shindig, and for choosing to donate the ticket proceeds to Fisher House, a builder and operator of homes away from home for military families, to be with their loved one during hospitalization for an injury, disease or illness. Kind of like a military version of Ronald McDonald Houses, and particularly appropriate for the Veterans Day holiday. We’ll certainly return to DC next year.

But tonight it’s onto New York City, which is quite sold out. Then it’s onto Boston for tomorrow night, where there are just a handful of tickets remaining (fewer than 30). Get them here. And, by demand of certain readers, in Boston I’ll be wearing the Boston Bruins jersey recently deemed best conference chachke ever.

As always, big thanks to our regional sponsors Dechert LLP and Square 1 Bank, and also to local Boston sponsors Atlas Venture and Polachi & Co.

*** Today’s big news involve! s TARP, and a WSJ report that the Treasury Department will only provide money to companies that are first able to secure private capital. And it seems that whole thing about buying up troubled loan packages and reselling them — you know, the plan actually pitched to Congress — has been scrapped. Hank Paulson will hopefully provide some specific details, and receive some tough questions, during this morning’s press conference (which may already be over by the time you read this).

Two quick thoughts in the interim: (1) If KKR Financial reorganizes into a bank holding company in order to qualify for TARP, can it gets its private capital infusion from KKR? I’d like to think not, but I’d also like to think that qualifying bank holding companies actually had to be bank holding companies on the day TARP was passed (i.e., a reverse grandfather clause). More than a few people last night joked about turning their family finances into banks, and I’m pretty sure my $20 loan to a friend for dinner qualified as both lending and direct economic stimulation. (2) This plan could have the effect of providing “leverage” to private equity firms that can’t find it elsewhere, and probably at very attractive “terms.” Were I at the press conference, I’d want to know what type of oversight would be on such investments.

*** Lot of folks have been asking about Obama and carried interest tax. In particular, they wonder about his proposal to suspend capital gains taxes on investments in small companies. I’ve heard some people say the definition of small business would be a $50 million valuation, which would cover most initial venture capital investments.

But there are still lots of needed nuances here. For example, what if a firm invested in a $5 million valuation at Series A, but then $60 million valuation at Series C. Who’s going to work out the math? Will we see lots and lots of $49.9 million valuations? Will multi-stage VC firms refocus on the early-stage?

I know, I know… the guy isn’t even president yet. Consensus last night was that the honeymoon lasted less than a week.

Top Three

GTC! R has committed up to $250 million to form a new medical device acquisition platform called Devicor Medical Products LLC. The Pleasant Prairie, Wis.-based company will be run by Thomas Daulton, a former senior executive with Cardinal Health.

Accera Inc., a Broomfield, Colo.-based drug company focused on Alzheimer’s disease and related neurodegenerative diseases, has raised $35 million in Series C funding. Inventages Venture Capital led the deal, and was joined by fellow return backers Posco BioVentures.

The Carlyle Group has sold Crest Communications Corp. to Alaska Communications Systems Group Inc. (Nasdaq: ALSK) for approximately $70 million. Crest is a Hillsboro, Ore.-based owner and operator of fiberoptic cables connecting Alaska to the mainland U.S. and Alaskan cities to each other. It wa was bought out of bankruptcy by Carlyle for approximately $30 million in 2002.

VC Deals

be2, a London-based global matchmaking site, has raised €15 million in second-round funding from the Index Ventures Growth Fund. It had previously raised capital from Banexi Ventures and individual angels.

Trust Digital, a McLean, Va.-based provider of enterprise mobility management solutions, has raised $14.5 million in Series C funding. Summerhill Venture Partners led the round, and was joined by Fairhaven Capital, Core Capital Partners, Avansis Ventures, MMV Financial and Square 1 Bank.

Solix Biofuels, a Fort Collins, Colo.-based developer of algae-based intermediates for fuel and chemical production, has raised $10.5 million in Series A funding. It also has secured a $5 million equity commitment to help build algae biofuel facility near Durango, Colorado. I2BF Venture Capital and Bohemian Investments co-led the round, and were joined by Southern Ute Alternative Energy LLC, Valero Energy Corp. and Infield Capital.

PeerApp Ltd., a Newton, Mass.-based provider of media caching and bandwidth arbitrage solutions for ISPs, has raised $8 million in Series B funding. Return backers includePilot House Ventures, Evergreen and Cedar Fund.

Helpmycash, a Barcelona-based provider of online recommendations on consumer finance products, h! as raised €3 million in Series A funding from Debaeque.

OpenCandy, a San Diego-based provider of distribution and revenue solutions for software developers, has raised $3.5 million in Series A funding from Bessemer Venture Partners, O’Reilly AlphaTech Ventures, Reid Hoffman and Jordan Greenhall.

Solaria Inc., a Fremont, Calif.-based developer of photovoltaic module production solutions, is planning to raise up to $100 million in Series D funding next year, according to VentureWire. The company has raised around $72 million in VC funding from backers like Q-Cells AG, Sigma Partners NGEN Partners.

Buyout Deals

AEterna Zentaris Inc. (Nasdaq: AEZS) has agreed to sell Cowen Healthcare Royalty Partners its rights to royalties on future sales of Cetrotide, covered by AEterna’s license agreement with Merck Serono. The agreement with Cowen is valued at $52.5 million, plus another $2.5 million in possible earnouts. Cetrotide is a treatment for in virto fertilization.

Bain Capital Ventures has sponsored a minority recapitalization of Archer Technologies, an Overland Park, Kansas-based provider of enterprise governance, risk and compliance solutions. No financial terms were disclosed. McColl Partners advised Archer on the deal.

Canal Partners has acquired a majority stake in, a Beaverton, Ore.-based online provider of qualified leads for ground transportation providers. No financial terms were disclosed, although Canal’s website says its typical investments are between $1 million and $5 million for companies worth between $5 million and $30 million.

Palamon Capital Partners has acquired a “significant” stake in DS Produkte, a German provider of multi-channel consumer goods supplier. No financial terms were disclosed.

Platinum Equity has completed its acquisition of < span style=”font-weight: bold;”>SCM Metal Products Inc. from Gibraltar Industries Inc. (Nasdaq: ROCK), for an undisclosed amount. SCM makes and distributes copper-based powder and pastes and copper oxide powders.

PE Exits

Affymetrix Inc. (Nasdaq: AFFX) has agreed to acquire Panomics Inc., a Fremont, Calif.-based provider of assay products for a variety of genetic, protein and cellular analysis applications. The deal is valued at $73 million in cash, and is expected to close by year-end. Panomics had raised over $25 million in VC funding from firms like Affymetrix, 5AM Ventures, Allen & Co., Battelle Ventures, Bay City Capital, Bio*One Capital, Frazier Healthcare Ventures, HBM Bioventures and Novartis.

PE-Backed M&A

SpringSource, a San Mateo, Calif.-based provider of an enterprise Java application server, has acquired G2One Inc., maker of Groovy and Grails. No financial terms were disclosed. SpringSource has raised over $15 million in VC funding from Benchmark Capital and Accel Partners.

Firms & Funds

Robeco has begun raising its second private equity fund-of-funds for firms that are willing to sign onto a set of investment principles aligned with UN principles for “responsible investment” The target capitalization is €250 million, with Robeco parent company Rabobank serving as a cornerstone LP.

Human Resources

Paolo Cantarella has joined Advent International as an operating partner focused on the industrial sector. He previously served as CEO of Fiat SpA between 1996 and 2002.