PE Week Wire: Wednesday, September 17, 2008

* Daily carnage roundup: AIG rescued, Barclays pays just $250m for Lehman Brothers’ investment banking unit (but $1.75b overall, including its NY HQ), Lehman’s investment management group — which includes its $35b private equity biz — remains on the block, Morgan Stanley considers a merger, so do HBOS and Lloyds and the Fed holds steady.

* Connie wonders if overreaching VCs are blowing the SBIR debate. For the record, so do I. At the same time, I think the Senate is using poor metrics for capping grant eligibility to VC-backed companies. Rather than making it a percentage of overall grant funding, use means-testing of VC-backed company capitalization. You’d still need to select an arbitrary limit, but it would seem far farer.

* Yesterday I noted that there are 65 PE-backed companies in registration to go public, of which 10 list Lehman Brothers among their lead underwriters. Then I gave you a dead link to the spreadsheet. Apologies. You can find it here.

* First Read, including an old Lehman Bros. recruiting video. Too early for nostalgia?

* Speaking of which: Lehman Brothers swag for sale.

* 5 Questions for Volkert Doeksen, CEO of AlpInvest.

* Erin on AIG: How much is that portfolio in the window?

* Ripplewood’s Tom Stallkamp on the 2009 U.S. auto market.

* Michael Butler, chairman and CEO of Cascadia Capital, has been serializing his upcoming book at peHUB for the past few months. Here’s an excerpt from his concluding chapter: Embracing Capitalism.

* Finally: Regular participation in the Vox Populi section of peHUB is by invite-only, and is mostly comprised of people I know. However, given the extraordinary events this week, I’d like to open it up a bit. If you are interested in making a post, please let me know via email. No promises, but I’m curious to see what’s out there that we’re currently missing. In other words: Hop on our soapbox.

Top Three

First Reserve Corp. has completed its C$3.7 billion buyout of CHC Helicopter Corp. (NYSE: FLI), a provider of helicopter services to the global offshore oil and gas industry. Morgan Stanley led the debt syndicate.

The Halifax Group has sponsored a management recapitalization of Nutrition Physiology Corp., a Guymon, Oklahoma-based provider of direct-fed-microbial feed additives to feedlots and dairies. No financial terms were disclosed.

Kuantai Yeh and John Hsin have both left Intel Capital, in order to become Shanghai-based managing directors with Highland Capital Partners.

VC Deals

Nujira, a UK-based provider of RF transmission for cellular and broadcast networks, has raised $18 million in Series C funding. BankInvest Group led the round, and was joined by return backers Amadeus Capital Partners, 3i, Cambridge Capital and Cambridge Angels.

Connectiva Systems Inc., a New York-based provider of revenue assurance software solutions to telecom operators, has raised $16.78 million in Series D funding, according to a regulatory filing. NEA-IndoUS Ventures, SAP and International Finance Corp. were joined by return backers Ovation Capital Partners and Carthage Capital Group.

eBillme, a Wilmington, Del.-based provider of online payments solutions, has raised $12 million. Canaan Partners led the round, and was joined by return backer Celtic House Venture Partners.

UpTake, a Palo Alto, Calif.-based travel search and discovery engine, has raised $10 million in Series B funding co-led by Trinity Ventures and Shasta Ventures. The company had raised $4 million in Series A funding from Shasta late last year.

Rapid7 LLC, a Boston-based provider of unified vulnerability management solutions, has raised $7 million in VC funding from Bain Capital Ventures. The company also named former Microsoft executive Mike Tuchen as president and CEO.

Proclivity Systems, a New York-based provider of a consumer targeting platform for marketers, has raised $5.5 million in Series B funding. Fung Capital led the round, and was joined by WPP, Pilot Group and undisclosed return backers.

Somo Enterprises Inc., a Palo Alto, Calif.-based mobile application startup, has raised $1.55 million in Series A funding, according to a regulatory filing. Backers include The Hit Forge and Lightspeed Venture Partners.

RPX Corp., a San Francisco-based provider of patent acquisition services, has raised an undisclosed amount of first-round funding from Kleiner Perkins Caufield & Byers and Charles River Ventures. The company’s specific offering will be unveiled next month.

Update: PowerGenix Inc., a San Diego-based nickel-zinc rechargeable battery maker, has raised $30 million in Series D funding. Bessemer Venture Partners led the round, and was joined by return backers Angeleno Group, Advent International, Braemar Energy Ventures, Granite Ventures, OnPoint Technologies and Technology Partners. The company has now raised over $60 million in total VC funding. A prior report had put the round at $23.5 million, based on a regulatory filing.

Buyout Deals

Creo Capital Partners has acquired the assets of Sataria Distribution and Packaging, an Indianapolis-based provider of third-party-logistics. No financial terms were disclosed.

Ferrovial said today that it is putting its Gatwick airport in London up for sale, with expectations that it could be worth between £2 billion and £3 billion pounds.

Hanwha Group has retained JPMorgan to sell a 9.9% stake in its Korea Life insurance unit, which could be valued at upwards of $750 million. Possible suitors include Affinity Equity, The Carlyle Group and MBK Partners.

Bug Music Inc., a Los Angeles-based music publisher sponsored by Spectrum Equity Investors, has secured a $200 million credit facility led by JPMorgan. It can be increased to $250 million, and is priced at Libor plus 2.5 percent.

PE Exits

Axia Capital Partners has sold Hydroid LLC to Kongsberg Maritime AS for approximately $80 million. Hydroid is a Pocasset, Mass.–based maker of autonomous underwater vehicles for the global military and commercial markets.

PE-Backed M&A

Choice Holdings Ltd., a portfolio company of Baird Capital Partners Europe, has acquired Domiciliary Care, a Glasgow-based domiciliary care provider. No terms were disclosed. Baird originally invested £10 million as part of a 2006 management buyout of Choice Holdings.

Eagle Rock Energy Partners (Nasdaq: EROC), a portfolio company of Natural Gas Partners, has agreed to acquire natural gas gathering and processing company Millennium Midstream Partners. The deal is valued at $236 million, including $181 million in cash. Sellers include Kayne Anderson Energy Development Co., Tortoise Capital Resources Corporation, WFC Holdings and company founders.

Firms & Funds

Chrysalis Ventures has closed its fourth fund with $175 million in capital commitments. New limited partners include Morgan Stanley, Credit Suisse, the Kentucky Teachers’ Retirement System and Health Evolution Partners. The Louisville, Ky.-based firm focuses on early-stage companies in the Midwest and South.

HBOS confirmed today that it is in merger talks with rival Lloyds TSB.

Human Resources

Brian Shortsleeve has joined General Catalyst Partners as a principal, with a focus on “leading recapitalizations, buyouts and growth equity investments in lower middle-market growth companies.” He previously was a principal with H.I.G. Capital.

David Hass has joined Bedford Capital as a partner, peHUB has learned. He previously was head of private equity for Aquilon. Bedford is a Toronto-based private equity firm focused on the lower middle-markets, and is about to begin raising its fourth fund.

Lorenzo Russo and Daryl Cohen have joined UK-based secondaries firm Vision Capital as a partner and associate, respectively. Russo previously was with Change Capital, while Cohen was last with Silver Point Principal Financial Europe.