peHUB Wire: Friday, August 6, 2010

Greetings from Atlanta, where last night a few hundred PE/VC pros packed an old firehouse for our latest peHUB Shindig. Some notes before I hop a plane for (slightly) cooler Boston:

*** Today’s top private equity story is also its oddest: Justin Wedner’s decision to resign as president of Castle Harlan.

For the uninitiated, Wedner was named president of Castle Harlan back in 2006, as firm co-founders Len Harlan and John Castle continued to transition into more patriarchal positions (both remain fulltime). He had been with the firm since 1993, and Castle Harlan referred to the move as a “widely anticipated promotion.” In other words, an orderly succession plan.

Castle Harlan was investing out of a $1.16 billion fund at the time, and in late 2007 went out to raise Fund V with a $1.5 billion target. The process dragged on until this past March, with a final close on just $800 million (the “just” is relative to the target – any $800m fund close in early 2010 should be commended).

Wedner was fully on board throughout the fundraise, and apparently didn’t inform Castle Harlan of his decision until just the past week or so. The firm reached out to limited partners yesterday morning – trying to reach them before the news leaked – and then issued a press release about how senior managing directors Howard Morgan and Bill Pruellag were promoted to co-presidents.

What wasn’t in the release, however, was why Wedner left. I spoke with John Castle earlier this morning, who seemed to be at a genuine loss. “I’ve heard some talk that there were policy issues, but I think I’ve been totally flexible on those,” he said. “All I know is that he’s heading to Africa at the end of next week to climb Mount Kilimanjaro. After that, I’m not sure what his plans are.”

I’ve also spoken to a few Castle Harlan LPs, who were equally blindsided. One of them said: “Justin was anointed profit but, for some reason, doesn’t want it anymore. But John and Len have put together a strong team, so I’m not worried about the fund.”

Look, people leave jobs all the time for a million different reasons. But, in private equity, it’s unusual for a firm’s leader to depart just after a new fund is closed. I’m not suggesting anything nefarious, but something just seems odd here… Hoping to chat with Wedner later today, who might be able to shed additional light…

*** Atlanta note #1: I heard some very differing views of the local venture scene, but there was one consensus: There are not enough seed-stage/early-stage investors in town. It seems that most local VC firms are focused on expansion-stage or later-stage financing, and that too many early-stage deals need to find capital from folks in Boston or Silicon Valley (which often results in the company moving).

“We’ve got tons of great people and ideas coming out of Georgia Tech, but not enough people helping them start out,” one attendee told me. “A good early-stage investor could come in here and really clean up.”

*** Atlanta note #2: It seems that The Carlyle Group quietly opened an office here last week. It’s currently got just one staffer: Mark Christopher, who previously was a managing director in Lazard’s fund placement group.

*** Atlanta note #3: A final thanks to our peHUB Shindig sponsors, without whom we couldn’t have done the event (they also came up with some killer door prizes): Grant Thornton, Navigation Capital Partners, Womble Carlyle and the Atlanta Venture Forum.

Top Three

Advent International and Bain Capital have agreed to acquire the WorldPay payment processing business of RBS. The enterprise value is up to £2.025bn including a £200m contingent consideration.RBS will retain a 19.9% stake in the newly-independent business.

NXP Semiconductors NV raised around $476 million via its IPO. The company sold 34 million shares at $14 per share, compared to plans to price at between $18 and $21 per share. Backers include KKR, Bain Capital, Apax Partners, AlpInvest and Silver Lake Partners.

Justin Wender has resigned as president of Castle Harlan. He will be succeeded by new co-presidents, and former senior managing directors, Howard Morgan and Bill Pruellage.

VC Deals

Avere Systems, a Pittsburgh-based provider of demand-driven enterprise storage solutions, has raised $17 million in Series B funding. Tenaya Capital led the round, and was joined by return backers Menlo Ventures and Norwest Venture Partners. The company previously raised $15 million.

Redbeacon, a San Mateo, Calif.-based online service that lets consumers receive price quotes and book appointments for local services, has raised $7.5 million in Series A funding from Mayfield Fund and Venrock. Raj Kapoor (Mayfield) and Brian Ascher (Venrock) will joine the company’s board of directors.

StatSheet, a Durham, N.C.-based online sports data visualization platform, has raised $1.3 million in first-round funding led by Valhalla Partners.

Buyouts Deals

Macquarie Group and Providence Equity Partners are among bidders for China Network Systems Co., which is being sold by MBK Partners for around $2 billion.

Rio Tinto (LSE: RIO) has agreed to sell a controlling stake in its French aluminum unit to Apollo Management (51%) and a French state-owned fund (10%). No financial terms were disclosed, except that new debt is not involved.

Irving Place Capital has completed its acquisition of Mold-Rite Plastics Inc., a Plattsburgh, NY.-based maker of caps and jars for the drug, nutraceuticals and personal care markets. No financial terms were disclosed. Phil Yates, former CEO of Graham Packaging and an Irving Place senior advisor, has joined Mold-Rite as executive chairman.

Wellspring Capital Management has acquired Jen-Coat Inc., a maker of flexible packaging for the food, healthcare and industrial markets, from CGW Southeast Partners. No financial terms were disclosed.

PE-Backed IPOs

IntraLinks, a New York-based provider of SaaS solutions for securing managing and sharing content, raised $143 million in its IPO. The company priced 11 million common shares at $13 per share, compared to a $14 to $16 per share offering range. TA Associates held a 53.7% pre-IPO stake, based on a 2007 recapitalization. Rho Ventures held a 34.4% stake via both the recap and prior investment.

NuPathe Inc., a Conshohocken, Penn.-based drug developer focused on the central nervous system, has cut its IPO pricing terms from $14-$16 per share to $10 per share. It still plans to offer five million common shares. NuPathe has raised $53 million in VC funding, from firms like Quaker BioVentures, Safeguard Scientifics, Battelle Ventures, Birchmere Ventures, S.R. One Ltd.

PE-Backed M&A

Image Metrics Inc. (OTC BB: IMGX) has acquired FacePro, a provider of lip sync technologies. No financial terms were disclosed. Image Metrics had raised VC funding from firms like Saffron Hill Ventures before going public earlier this year., a Dover, N.H.-based online secondary marketplace for timeshares, has acquired Canadian competitor RapidResale. No financial terms were disclosed. SellMyTimeshareNOW has raised $10 million in VC funding from Edison Venture Fund.

Scientific Games Corp. (Nasdaq: SGMS) has acquired GameLogic Inc., a Waltham, Mass.-based provider of solutions that help casino operators enchance customer relationships and attract new players. No financial terms were disclosed. GameLogic had raised around $28 million from Bain Capital Ventures, General Catalyst Partners and Maveron.

Zynga has acquired Japanese social game company Unoh for an undisclosed amount. Zynga has raised around $390 million in total VC funding, from Softbank, Digital Sky Technologies, Andreessen Horowitz, Tiger Global, Institutional Venture Partners, Kleiner Perkins Caufield & Byers, Union Square Ventures, Foundry Group and Avalon Ventures.

PE Exits

Veritas Capital has agreed to sell McNeil Technologies Inc. to Aecom Technology Corp. (NYSE: ACM) for around $355 million in cash. McNeil provides mission-critical services to U.S. federal government clients.

Firms & Funds

Fortress Investment Group said that its pretax distributable income rose 24% in Q2 from the same period last year.

Keytone Ventures is raising up to $300 million for its second fund, according to a regulatory filing. MVision is serving as placement agent. The Beijing-based VC firm is run by former Kleiner Perkins pro Joe Zhou, and raised $200 million for its debut fund last year.

Human Resources

Meyrick Cox has agreed to join Moelis & Co. as a managing director in the firm’s London office. He previously was with Rothschild, as gobal head of the auto and steel group.

Bei Duoguang is leaving China International Capital Corp., where he has been a senior banker for the past 12 years.

Robert Galvin has joined The Blackstone Group as CEO of Equity Healthcare, the firm’s health management company for portfolio companies. He previously was with GE as chief medical officer and executive director of health services.