peHUB Wire: Friday, August 7, 2009

A few quick notes before I hop in the sparkly Prius (J’s car, natch) for a semi-long weekend in the Berkshires…

*** Platinum Equity is fast becoming the year’s most intriguing private equity firm. Not only for the rollicking Delphi saga, but also for its counterintuitive interest in the beleaguered newspaper sector.

Los Angeles-based Platinum did its first newspaper deal just a few months ago, buying the San Diego Union-Tribune for a reported price of less than $50 million. I kind of thought it was a one-off sort of transaction, at least partially prompted by SoCal solidarity. But now that deal seems to be part of a broader strategy, judging by reports that Platinum has submitted a bid for The Boston Globe ($35m plus $59m in assumed pension liabilities).

I’ve got no idea why any private equity firm would want a broader newspaper strategy. After all, look at what happened to Avista in Minneap! olis, or the fact that Bain Capital’s Steve Pagliuca is bidding on the Globe via a nonprofit strategy (he apparently views it as a civic rescue, but not something suitable for institutional PE).

But that’s why Platinum is on my mind. Does its Globe bid mean that the firm has early indications that its San Diego deal is working? Or is it the opposite, in that San Diego can only work with some sort of economy of scale (i.e., creation of a national newspaper chain)? And is there any evidence that this generalist firm can reinvent the press? Again, intriguing…

*** Our notable quotable comes from Blackstone Group president Tony James, during yesterday’s media call. Very interested to hear your thoughts on this:

“One of the things unique about the big buyouts done in last few years was they have massive debt instruments out there which trade. I’m talking more about US ones than European ones… What’s happened in past cycles of LBOs is you overleveraged it or overpaid… you were stuck, locked in time. Now these big U.S. buyouts, because the debt trades… You can rewrite history in a sense. You can come in with more equity, buy debt at a discount, swap senior instruments for subordinated instruments… There is lots of flexibility to work with. You can actually change the cap structure and, in so doing, reduce original purchase price.”

*** I asked James about the eventual size of Blackstone VI, the new fund that so far has closed on approximately $9 billion. He replied that the deal markets can support the fund going “well into the teens,” although it “probably won’t get to $21 billion” (i.e., the size of Blackstone V).

*** Fingers crossed that Andrew Cuomo doesn’t announce a deal with Quadrangle Group late this afternoon, given that I’ve promised myself (and J) that I’ll leave work at home (office). But he does seem to have a penchant for Friday afternoon surprises…

*** I’m gonna wear a John Smoltz mask for Halloween.

*** Finally, a temporary goodbye and best wishes to peHUB venture blogger Connie Loizos, who’s heading out on maternity leave at the end of today. She’ll be missed, and we look forward to her return at the beginning of 2010… I hope everyone has a great weekend, but particularly you Connie.

Top Three

Warburg Pincus is looking to sell its 50.12% stake in Indian business process outsourcing firm WNS Global Services, according to The Economic Times. Warburg has held informal talks with potential buyers like Bain Capital and The Blackstone Group, with hopes of garnering around $400 million.

Meru Networks Inc., a Sunnyvale, Calif.-based developer of wireless infrastructure solutions, has expanded its Series E round to over $87 million, according to a regulatory filing. It had announced a $30 million first close earlier this year, led by Vision Capital. Return backers had included Clearstone Venture Partners, NeoCarta Ventures, BlueStream Ventures, The D. E. Shaw Group, Evercore Partners, Tenaya Capital and Monitor Ventures. The company has now raised over $160 million in total VC funding since its 2002 inception.

AIG has named Harvey Golub as its non-executive chairman. He succeeds Ed Liddy, who is stepping down as CEO, and who perhaps is returning to his pre-AIG job with Clayton Dubilier & Rice. Golub is the former CEO of American Express, and currently serves as non-executive chairman of Ripplewood Holdings.

VC Deals

Acetylon Pharmaceuticals Inc., a Cambridge, Mass.-based developer of HDAC inhibitor drug candidates, has raised $7.25 million in Series A funding. No investors were named, although VentureWire reports that the capital came from Kraft Group and individual angels.

Revolution Foods Inc., an Alameda, Calif.-based provider of school food services, has raised $6.5 million in new equity funding, according to a regulatory filing. Renuka Kher, a principal with NewSchools Venture Fund, is listed as a new board member. The company previously raised over $9 million from firms like Catamount Ventures and The Bay Area Equity

BroadHop, a Denver-based provider of service and policy management solutions for IP triple-play networks, has rais! ed $4.25 million in Series A funding, according to a regulatory filing. Board members include Peter Roshko of Boulder Ventures and Brian Smith of Peninsula Ventures.

RichRelevance, a San Francisco-based provider of personalized ecommerce recommendations, has expanded its Series B round to $12.5 million, according to a regulatory filing. It had previously held a $4.2 million first close last August. Backers includeGreylock Partners, Tugboat Ventures,DFJ and Draper Richards.

Bandspeed Inc., an Austin, Texas-based provider of access point solutions for WiFi management, has secured $4.5 million of a $9.5 million VC round, according to a regulatory filing. Guggenheim Technology Ventures and return backer JatoTech Ventures are listed as shareholders. The company previously raised around $44 mi! llion since 2001, from firms like JatoTech, CenterPoint Venture Partne rs, Cisco Systems and MSD Capital.

WeFi Inc., a Dover, Del.-based developer of a community-based global WiFi network, has raised $7 million in Series B funding, according to a regulatory filing. It also has secured a commitment for $3 million more, based on the achievement of certain milestones. Backers includeLightspeed Venture Partners and Pitango Venture Capital. The round was announced earlier this week, but without dollar details.

Buyouts Deals

Kelso & Co. has formed Delphin Shipping LLC, a Marshall Islands-based acquisition platform focused on the dry bulk and other shipping sectors. No financial terms were disclosed. Delphin also has signed an agreement with Eagle Bulk Shipping (Nasdaq: EGLE), whereby Eagle “will have the initial opportunity to acquire any dry bulk vessels being evaluated for purchase by Delphin and will have a right of first offer on the sale of any drybulk vessel by Delphin.”

Rasmussen Reports LLC, an Asbury Park, N.J.-based public opinion research firm, has raised an undisclosed amount of growth funding from Noson Lawen Partners. Boxwood Partners advised Rasmussen Reports on the transaction.

SunOn! e Solutions, a Lincoln, Neb.-based carbon offset company, has raised an undisclosed amount of growth capital from C-Quest Capital.

Moody’s Investors Service sharply lowered its peak default rate forecasts for speculative-grade companies.

PE-Backed M&A

Southcross Energy LLC, a Dallas-based natural gas transportation and processing company, has completed its $220 millionacquisition ofthe Mississippi, Alabama and South Texas assets of Crosstex Energy LP (Nasdaq: XTEX). Southcross Energy is a portfolio company of Charlesbank Capital Partners.

PE Exits

Atrinsic Inc. (Nasdaq: ATRN) has acquired, a Brentwood, Calif.-based e-commerce platform that allows buyers and sellers to tap into social networks like Facebook. No financial terms were disclosed. ShopIt had raised a small amount of VC funding from Propulsion Ventures and Helios Investment Partners.

PacificSource Health Planshas acquired Primary Health Inc., a Boise, Idaho-based health insurance provider. No financial terms were disclosed. Primary Health had raised around $41 million in VC funding between 1995 and 2000, from firms like Accel Partners, Capstone Ventures, Carlyle Venture Partners, Coleman Swenson Booth,JPMorgan Capital, New Enterprise Associates, Piper Jaffray Ventures and SightLine Partners.

Sigma-Aldrich (Nasdaq: SIAL) has acquire! d ChemNavigator Inc., a San Diego-based provider of discovery research informatics software tools for the design, selection and procurement of chemical compound libraries. No financial terms were disclosed. ChemNavigator raised VC funding in 2000 from AsiaVest Partners, 3V SourceOne Capital, Castle Rock Ventures, Chitung Venture Capital, Global Life Science Ventures, Hotung International, UOB Venture Managementand Taurus Enterprises.

Human Resources

Gary Gysin has joined U.S. Venture Partners as an entrepreneur-in-residence, with a focus on cloud services, networking & storage and smart grid. He previously was president and CEO of USVP portfolio company Asempra Technologies (sold to BackBone Software earlier this year), which provides recovery solutions for Windows apps and data.

Peacock Equity, a joint investment fund of GE Capital and NBC Universal, has named two new board members: Lauren Zalaznick, president of NBC Universal Women and Lifestyle Entertainment Networks, and Jessica Schell, senior vice president, NBC Universal Digital Strategy and Business Development. In related news, Ben Silverman is leaving the board, after recently announcing his resignation from NBCU.