peHUB Wire: Friday, August 21, 2009

Did you read your New York Times yet this morning? If so, you might have seen a B1 story about next week’s FDIC vote on rules governing private equity investment in banks. It begins:

“Faced with a growing wave of bank failures, the Federal Deposit Insurance Corporation is taking extraordinary steps to attract buyers for troubled institutions to keep the fund that makes depositors whole from being drained. Federal regulators are planning next week to make it easier for private equity firms to buy insolvent lenders, according to people briefed on the situation, a move that would reduce the number of failed banks that the fund would have to support…”

Wow. The FDIC must have done a massive turnaround. Last I checked, it had proposed all sorts of rules to make it tougher for PE firms to invest in banks. Now it’s apparently scrapped all that, and th! rown in a few tasty carrots for good measure…

But there’s one giant caveat: The NY Times reporter doesn’t have a clue what he’s talking about (neither, apparently, do his editors).

The FDIC originally proposed a sweeping set of rules that would have made it much more difficult – or at least less appealing — for PE firms to invest in banks. What FDIC reportedly will vote on next week is a scaled back version of that proposal, but it’s hardly going in the reverse direction. The rules it is expected to enact next week will still make it harder/less appealing for PE firms to invest in banks.

For example, the final rule is expected to require a Tier 1 leverage ratio of 10% for three years. That’s lower than the 15% originally proposed, but still higher than the 5% requirement for non-PE-owned banks.

Need an analogy? Imagine I’m playing high school baseball again, where the typical pitches are around 60-70 MP! H. I know the other team has relievers who throw 80MPH and 90 MPH, so I’m relived when the 80 MPH hurler comes in rather than the 90 MPH one. It’s better than the worse, but still worse than status quo…

*** Layoff Alert: SVB Capital, the fund-of-funds unit of Silicon Valley Bank, last week laid off seven employees, including five investment professionals.

Firm spokeswoman Carrie Merritt said, in part: “It was a case of prioritization. For example, we’re looking at a broad global program that has taken on more of an Asia-centric focus, so we had some people in London who didn’t make as much sense to have, in terms of appropriate staffing… We also were looking to centralize some things like research with the larger SVB organization, so we basically tightened up some of those.”!

SVB Capital had approximately 40 total staffers prior to the layoffs.

*** Update #1: Pacesetter Capital Group sent over the following statement, in regards to the Burr Oak cemetery situation:

“Pacesetter Capital Group fosters economic development by providing long-term growth capital to small, mostly minority-owned businesses across the country.Perpetua Holdings is one of nearly 40 companies that Pacesetter invests in. Pacesetter had no knowledge of the alleged criminal acts committed at Burr Oak Cemetery in Alsip, Ill., and intends to vigorously defend itself in the civil litigation. We offer our heartfelt condolences to the families affected by this matter.”

*** Update #2: On Tuesday, I took some shots at Reader’s Digest CEO Mary Berner, for lauding! the “inspired vision and stewardship” of equity sponsor Ripplewood Ho ldings (which is getting wiped out via a bankruptcy-enabled recap).

Actually, I took shots at Mary “Brenner,” who doesn’t run Reader’s Digest. Suffice to say, some of you noticed. What a few readers also pointed out, however, was more interesting than my error: Mary Berner is the sister of Rob Berner, who was a partner with Ripplewood at the time of the Reader’s Digest acquisition. He left shortly thereafter, and is currently at CVC Capital Partners. I rang him up for comment, but didn’t get a reply.

*** Just received my review copy of Boulevard of Broken Dreams, a new book by HBS prof Josh Lerner. Topic is “why public efforts to boost entrepreneurship and venture capital have failed – and what to do about it.” Just some light summer reading… Hope to finish it by Monday.

*** Have a great weekend…

Top Three

Dollar General, a Goodlettsville, Tenn.-based discount retailer, has filed for a $750 million IPO. It was taken private two years ago in a $7.2 billion buyout led by KKR.

Syndiant, a Dallas-based maker of light modulating chips used in ultra-portable projectors, has raised $10.7 million in Series B funding. Backers include the Texas Emerging Technology Fund and individual angels.

Candover Investments announced that Colin Buffin will step down as senior managing director, and Tian Tan will step down as finance director. Marek Gumienny will become chairman, while John Arney will become managing partner.

VC Deals

Amyris Biotechnologies Inc., an Emeryville, Calif.-based synthetic biology company that developers renewable hydrocarbon biofuels, has secured $24.75 million of a $62 million Series C round, according to a regulatory filing. The company previously raised more than $120 million, from firms like Khosla Ventures, Kleiner Perkins Caufield & Byers, DAG Venturesand TPGBiotech.

Urgent Career, a New York-based based provider of tools for assessing sales professionals, has raised an undisclosed amount of Series A funding from iNovia Capital.

Sequoia Communications, a San Diego-based fabless RF semiconductor company, has decided to shut down after failing to secure new funding. The company had raised over $70 million in VC funding, from firms like BlueRun Ventures, Gabriel Venture Partners, Huntington Ventures, Motorola Ventures and Tallwood Venture Capital.

Buyouts Deals

Change Capital Partners has agreed to acquire Hallhuber GmbH, a German maker of women’s clothing and accessories, from Italy’s Stefanel. The deal includes a €25 million up-front payment and a possible €4 million earn-out.

CVC Capital Partners is in non-exclusive talks to buy over a 90% stake in Austria-based Constantia Packaging, for around €510 million.

Huntsman Gay Global Capital has acquired a majority stake in Grand Isle Shipyard Inc., an oilfield contractor in the Gulf Coast region, according to LBO Wire. No financial terms were disclosed.

JC Flowers & Co. is in talks to sell investment bank Fox-Puitt Kelton Cochran Caronia Waller to Australia’s Macquarie Group, according to WSJ’s Deal Journal blog. The deal could be worth upwards of $150 million, which is twice what JC Flowers paid in 2006 to buy Fox-Pitt from Swiss Re.

Nova Capital Management and FF&P Private Equity have agreed to acquire OC Oerlikon’s China business, which makes coated optical components for the global projection display and other optical component markets. No fi! nancial terms were disclosed.

The Ontario Teachers’ Pension Plan has agreed to buy a 7.7% stake in Maple Leaf Sports and Entertainment, bringing its total position to 66 percent. The seller is CTVGlobalmedia.

Reader’s Digest Association said that almost 80% of its senior secured lenders have agreed in principle to the company’s restructuring plan.

Wincove Capital has acquired GI Plastek Wolfeboro LLC, a Wolfeboro, N.H.-based maker of plastic injection molded products. No financial terms were disclosed.

Broadweave Networks, a South Jordan, Utah-based f! iber-optic service provider, has agreed to merger with local CLEC Veracity Communications. No financial terms were disclosed. Broadweave last year had agreed to a $40.6 million investment from Soronson Capital,but the transaction ultimately did not occur.

GEI Industries, a Bohpal, India-based provider of heat transfer solutions to the oil and gas industry, has sold a 10% equity stake to Mauritius-based BanyanTree Growth Capital. No financial terms were disclosed.

PE-Backed M&A

Church’s Chicken, an Atlanta-based quick-service restaurant chain, has acquired 23 former Mrs. Winner’s locations from Famous Recipe Company. No financial terms were disclosed. Friedman Fleischer & Lowe bought Church’s Chicken last month from Arcapita for between $300 million and $390 million.

PE-Backed Exits

Robert Bosch North America has agreed to acquire Akustica Inc., a Pittsburgh-based provider of acoustic system-on-chip solutions. No financial terms were disclosed. Akustica has raised more than $40 million in VC funding, from firms like Rangos Investments and Mobius Venture Capital.

Firms & Funds

KKR has raised over €400 million for an annex to its second European buyout fund, a €4.5 billion vehicle originally raised in 2005. The firm reportedly had been looking for upwards of €700 million.

Sentica Partners, a Finland-based buyout firm focused on the middle markets, has closed its third fund with €113 million in capital commitments.

Human Resources

Shawn Singh has joined VistaGen Therapeutics as CEO. He previously was managing principal of Cato BioVentures, a VistaGen investor.