peHUB Wire: Friday, February 20, 2009

Want an illustration of the dreaded denominator effect? Just take a look at some new numbers from the Pennsylvania Public Employees’ Retirement System (SERS), which last week released its 2009 Supplemental Budget Information. It shows that SERS had a 24.2% exposure to alternative investments at of the end of 2008. This compares to just a 15.6% exposure to alternatives at the end of 2007 (which was already higher than the system’s 14% target allocation).

The SERS document also includes details of fees paid to VC and buyout managers last year, and some fund-specific cash in/cash out information. We’ve posted it all here.

*** It’s been more than a year since Silver Lake Partners announced a new deal from its third general fund, a $9.3 billion vehicle closed at the end of 2007 (it also has a credit fund and mid-market fund. I figured that such inactivity could put Silver Lake next in line for a fund size cut, but sources tell me t! hat the firm has no interest in such a thing. Moreover, they say that Silver Lake been a bit busier than its press release void might indicate.

So I sent into the CalPERS data trove, to look at Silver Lake III call-downs since last February. It shows around $60 million in cashed checks, which is about 10% of CalPERS’ $600 million commitment to the fund. Some of that likely includes management fees, but most would be related to new transaction activity – or at least new capital infusions into existing portfolio companies.

A Silver Lake spokesman declined to comment.

*** Most of you probably have seen Rick Santelli’s mortgage-backed rant from yesterday morning’s CNBC Squawk Box. Color me unimpressed, particularly with that part about how the Chicago Merc traders are a “cross-section of America.” I totally understand the general antipathy toward Obama’s plan, but please don’t tell me that the next populist uprising will emanate from a trading pit.

*** On Tuesday, I took issue with Brave New Films’ use of Goldman Sachs as the villain for unsavory labor practices at Burger King. In the spirit of full debate, here is a response from the filmmakers, via a spokesman:

“First of all, 11% is a significant stake in a company… and they have seats on the board, so there’s plenty Goldman Sachs could do with that position to effect change for workers. Second, when Goldman and two other private equity firms took Burger King private, that was the unilateral opportunity they had to make real change for the families who work at Burger King, and they didn’t do anything. Instead, they took a bunch of money out.

Today they still have a position to advocate for change or to distance itself from the poverty wages paid there, but haven’t done so. If Goldman Sachs came out publicly with a statement condemning Burger King’s labor practices and said workers deserve a raise, then we’d certainly alter the video, or perhaps even cut a new one, to get that message out there. But, right now, our position is that Goldman Sachs is responsible, given its history with Burger King and Burger King’s economic practices.”

*** Answer Key: Last week, I asked what U.S.-based venture capital firm is losing a partner in its Israel office. The correct response was Sequoia Capital’s Yuval Baharev, who originally joined the firm in 2007. No word yet on his future plans. Prior to joining Sequoia, Baharav was a general manager of corporate development and strategy at Amdocs. Before that, he worked with the Shlomo Ben-Haim Group, Koor Technlogies Camelot Inc.

*** After writing a bit about Twitter late last week, I resolved to use our peHUB Twitter account a bit more. It’s a slow adoption, but yesterday I did a few Tweets outside of the general notifications of new content on the site. Here’s our site, if you’re interested in following.

*** Have a great weekend…

Top Three

Allied Capital Corp. has defaulted on its revolving credit facility, according to a regulatory filing. The default also constitutes default under its private notes, of which the firm had over $1 billion outstanding as of February 13.

Sopherion Therapeutics LLC, a Princeton, N.J.-based developer of anti-cancer therapeutics, has raised $55 million in Series C funding led by Zoticon BioVentures. It previously raised $73 million, from firms like Sprout Group, ProQuest, Canaan Partners, HealthCap, NewSpring Ventures, Commerce Health Ventures and Seaflower Ventures.

CVC Capital Partners has hired UBS to sell the oncology and cardiology diagnostic unit of Australian medical imaging company I-Med. The deal is expected to be worth around A$200 million (US$128m), with I-Med using proceeds to pay down debt.

VC Deals

Social Solutions, a Baltimore-based provider of nonprofit performance management software, has raised $6.5 million. Frontier Capital led the round, and was joined by return backers WWC Capital Group and IDEA Fund Partners.

Pocket Communications Northeast, a San Antonio, Texas-based provider of flat-rate, unlimited use wireless voice and data services, has secured a $25 million senior secured credit facility. The Bank Street Group served as Pocket’s financial advisor and placement agent. Last November, Pocket raised $100 million in Series A funding from Battery Ventures, Charles River Ventures and Pocket CEO Paul Posner.

Buyout Deals

Chrysler Canada has been hit with a tax-related C$500 million lien, which could further complicate the automakers request for government aid.

Polaroid Corp. has received bankruptcy court approval to hold an auction of its assets in March. Genii Capital has been named the lead bidder, or “stalking horse.”

PE Exits

Coghead Inc., a Mountain View, Calif.-based provider of a Web-based application creation and delivery platform, has ceased operations and sold its intellectual property to SAP. The company had raised around $12 million in VC funding from American Capital Strategies, El Dorado Ventures and SAP Ventures.

Merit Medical Systems Inc. (Nasdaq: MMSI) has agreed to acquire the assets of Alveolus Inc., a Charlotte, N.C.-based maker of non-vascular interventional stents. The deal is valued at $19 million. Alveolus had raised over $28 million in VC funding, from firms like Clayton Associates, MB Venture Partners, Lumira Capital Corp., Matignon Investissement et Gestion and HealthCare Capital Partners.

PE-Backed M&A

Regis Corp. (NYSE: RGS) has completed the sale of its Trade Secret retail products division to Premier Salons Beauty Inc., a Canadian portfolio company of Falconhead Capital.

Firms & Funds

Royal Bank of Scotland has hired Morgan Stanley to explore the sale of its Asian banking units.

Human Resources

Lewis Eisenberg has joined Kohlberg Kravis Roberts & Co. as a senior advisor. He is the co-founder and co-chairman of investment management company Granite Capital International.

Pantheon Ventures has promoted Brian Buenneke from principal to partner. He is based in the firm’s San Francisco office, and focuses on primary fund investments. Before joining Pantheon in 2004, Buenneke worked at HarbourVest Partners, Duke Street Capital and Paul Capital Partners.