The sun is shining, PE portfolio valuations are slowly rising (FAS 157 swings both ways) and it turns out that one of the HBS students in yesterday’s Daily Show clip used to be a venture capitalist. In other words, it’s time for some Friday Feedback:
First up are a few emails on the subject of private equity being back.
Leading us off is Donald: “You hit it on the head when you said that the real question is the definition of ‘back.’ There were tons of huge deals and lots of available credit in 2006 and 2007, but is that really the era to which we want to return? It reminds me of the ‘steroids era’ in baseball. It was fun in the moment, but painful in retrospect.”
Alex: “I don’t think private equity can be ‘back’ until firms finish dealing with the messes they created during the boom years. That also means that! it can’t be back until some of these firms disappear, like what happened with VC firms after the Internet bubble.”
Brian: “You write a perfectly good piece on whether or not private equity is back, and then ruin it by a gratuitous shot at Glenn Beck. You sir, are an a**hole.” Gotta say, I’m impressed by the way Brian combined a gripe with a John Hughes homage…
*** Jason on the Cumberland Pharma IPO: “I’m not sure I agree with you that this IPO will begin opening the floodgates for late-stage, VC-backed pharma companies. Cumberland is basically a drug acquirer and commercializer, rather than a drug developer – which is what most VC-backed companies are. That means it has actual revenue, whereas most of the companies in VC portfolios are still in Phase II or Phase III trials on their lead candidates. If the public m! arkets begin supporting IPOs from those types of companies, then we mi ght just be back down the rabbit hole.”
*** Harkin on the Avago IPO: “I am surprised nobody has focused on the use of proceeds, which includes: “approximately $53 million will be paid to our equity sponsors… in connection with the termination of our advisory agreement pursuant to its terms…Further, it is disclosed that both Silver Lake and KKR struck an agreement to be paid $2.5M each per year for 12 years(!), rising 5% per year. Give me a break…that is longer than the PE funds’ lives and multiples of their average holding periods… Completely egregious greed! I can’t imagine Silver Lake or KKR LPs are happy with this…they would surely prefer distributions, particularly in this climate.”
Harkin: First, I agree with you on the greed part. I despise portfolio company management fees, and doubly-despise full payment provisions in the event of an IPO or other liquidity event.! Second, I disagree with the suggestion that LPs would be displeased with the IPO. It’s true that the LPs will have their shares locked up for a while, but this deal gives them a clearer path to liquidity on Avago than they would have were the company to remain private (sure a straight sale might be quicker, but the ROI on M&A is usually lower).
*** Chris on the “pay-to-play” provisions, vis-à-vis state treasurers: “I am currently a Trustee for the KY State Pension fund, an independent investment consultant and people have asked me about running for KY State Treasurer in 2011. State Treasurers’ power over public pensions varies incredibly by state. In very few do they really become CIO’s. Even then their job is more cash manager than investment manager. In probably most states they serve as one of 6 to 15 board members on a public pension. In KY the Treasurer was stripped of many duties in the early 80’s and only sits on the Teachers retirement board. They! do not sit on the regular retirement board or the DC plan.”
*** Ivan: “Are you going to throw a peHUB Shindig before the Buyouts Texas event in Dallas, like how you did before the Buyouts Chicago event?”
First, a quick plug that today is the final day to get early-bird pricing for Buyouts Texas, which takes place on October 15 (go here to register — yes it’s slow, but it will come up eventually). Second, I am indeed hoping to throw an event in Dallas on October 14, but am still in search of one or two more sponsors. So if you’re willing and able, please shoot me an email…
That’s all folks… Have a great weekend…
Top Three
The U.S. Federal Reserve has given CIT Group 15 days to submit a plan for raising capital and meeting its debt obligations. The move came after CIT on Monday reiterated warnings that it may be forced to seek bankruptcy protection.
Mirion Technologies Inc., a San Ramon, Calif.-based provider of radiation detection services, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol MION, with Credit Suisse, BoA Merrill Lynch and JPMorgan serving as co-lead underwriters. The company is currently owned by American Capital.
Stephen Schwarzman, head of The Blackstone Group, was America’s highest paid CEO last year, according to a report f! rom The Corporate Library.
VC Deals
Mobile Iron Inc., a Sunnyvale, Calif.-based developer of a virtual smartphone platform, has raised nearly $11 million in Series B funding, according to a regulatory filing. Investors include Storm Ventures, Sequoia Capital, Norwest Venture Partners andBig Basin Ventures. www.mobileiron.com
Z2Live, a Seattle-based developer of a mobile multiplayer game platform, has raised $3 million in new VC funding from Madrona Venture Group. It had raised $1 million in seed funding from Madrona last fall.
RockMelt, a quasi-independent desktop client for Facebook, has raised an undisclosed amount of seed funding from Andreessen Horowitz. www.rockmelt.com
Buyouts Deals
Golden Gate Capital and Infor have completed their take-private acquisition of SoftBrands Inc., a Minneapolis-based provider of enterprise software to the manufacturing and hospitality markets. The deal was valued at approximately $80 million, or $0.92 per share. Wells Fargo Foothill, an existing SoftBrands lender, provided leveraged financing.
PE Exits
Fluke Networks has agreed to acquire AirMagnet, a Sunnyvale, Calif.-based provider of wireless LAN administration and diagnostic tools. No financial terms were disclosed. AirMagnet has raised around $4 million in VC funding from iD Ventures America, Intel Capital and VenGlobal Capital.
Great Lakes Dredge & Dock Corp. (Nasdaq: GLLD) has filed for a secondary public offering of around 12.48 million common shares. All of the shares would be offered by Madison Dearborn Capital Partners, which currently holds around 14.3 share. GLDD stock closed trading yesterday at $6.16 per share. www.gldd.com
PE-Backed M&A
Stream Global Services Inc. (AMEX: OOO) has agreed to merge with the parent company of eTelecare Global Solutions Inc. The stock-for-stock exchange would result in current Stream shareholders owning 57.5% of the combined call center company, and eTelecare shareholders holding 42.5 percent. eTelecare was taken private last December by Providence Equity Partners. Read more…
Bad News
Riya, a San Mateo, Calif.-based visual search company, will close its doors at the end of next week, according to an email sent to users this morning (and first reported by TechCrunch). The company had raised around $55 million in VC funding since 2004, including a $32 million Series C round last August. Investors included Bay Partners, BlueRun Ventures, Crosslink Capital, First Round Capital, Leapfrog Ventures and Menlo Ventures. www.riya.com
SkyPower Corp., a Canadian renewable energy company majority-owned by Lehman Brothers Private Equity, has filed for bankruptcy protection.
Firms & Funds
The Canada Pension Plan reported C$116.6 billion in assets as of June 30, compared to C$105.5 billion in assets as of March 31. Its private equity portfolio currently stands at C$13.8 billion, or 11.8% of total assets. At the end of March, the private equity portfolio was valued at C$13.4 billion, which represented 14.1% of total assets.
Canter Equity Partners has formed as a spin-off of Fidelity Equity Partners. The London-based private equity firm’s principals are Sebastian McKinlay, Paul Egan and Stephen Findlay. www.canterep.com
Graphite Capital, a UK buyout firm, is asking its limited partners for £35 million in annex capital for its seventh fund, which closed in 2007 with £555 million.
Bienville Capital Management has launched as a New York-based provider of investment services to high-net-worth individuals and institutional investors. Its principals are Cullen Thompson, Billy Stimpson and Ralph Reynolds.
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