peHUB Wire: Friday, February 5, 2010

The sun is shining (for now), the unemployment rate is falling and it’s nice to be back in the home office after another brief sojourn to New York City. In other words, it’s time for some Friday Feedback. No one topic today, but rather a bit of potpourri:

*** Two emails on the issue of weak PE fundraising in what should be a strong vintage: David: “The whole reason that ‘the best private equity returns come from investments made in economic downturns’ is precisely because ‘fearful hearts have overwhelmed logical heads.’ This is exactly what creates the above-normal returns.Where do you think the lack of competition for new deals comes from?Try not to be su! rprised by it.”

Rev: “The problem is the disincentive of being ‘wrong’ outweighs the reward of being ‘right’ for most LPs and even more so for their consultants, i.e. little to no reward for high returns, poor performance and you are fired.”

*** Sol on my item about the Teamsters protest: “This is a pretty common scenario in the retail industry: Name and shame by activists, followed by denial by company X, followed by mud-slinging on both sides. Companies who have been dealing with this since the mid 90’s have taken a more collaborative approach and engaged in multi-stakeholder initiatives to address what cannot be argued, are industry-wide problems in the supply chain. Whether or not DG still uses these facilities, few companies can claim that these problems don’t exist anywhere in their supply chain. The fact that the groups linked the issues back to the PE investor is a trend that is only likely to increase. PE investors should consider incorp! orating such risks into their DD processes. And it’s not just foreign supply chains that can be the source of these risks…labor practices in domestic retail stores can also lead to costly legal battles.”

*** Michael on Seth Gardner’s move from Cerberus to Fuqua: “Call me a skeptic, but I don’t believe that it will make much difference. Kids going to business school have had plenty of pre-school experience, in many cases working at the very investment banks vilified by the government and media outlets… Those real life experiences, to his point about potential sources of the best lessons, are going to be more ingrained than a 9-week class a student is enrolled in while simultaneously looking for a job.”

*** Andy: “I saw you tweeted about driving back from New York City in a recalled Toyota. New car?”

Well, new to me Andy. This is yet another hand-me-down vehicle from J, who is currently skipping around town in a new Prius. To be fair, she didn’t know the car was pre-programmed kill me at the time of the switch…

*** Kate: “Which team are you rooting for on Sunday?”

Who ‘dat?

Top Three

The Blackstone Group and Resolution reportedly are considering a joint bid with National Australia Bank, for more than 300 Royal Bank of Scotland branches.

Layered Technologies Inc., a Plano, Texas-based provider of on-demand and cloud computing IT infrastructure, has raised $20 million in growth equity funding. Accel-KKR led the round, and was joined by return backers Enhanced Equity Fund and Pangloss International.

Marlin Equity Partners has acquired certain assets of Unisys Corp. (NYSE: UIS), and spu! n them into a new company called Burroughs Payment Systems Inc. No financial terms were disclosed for the deal, which included Unisys’ payment hardware, payment supplies, U.S.-based payment maintenance and associated R&D groups.

VC Deals

Gigamon, a Milpitas, Calif.-based provider of data access networking solutions, has raised $22.8 million from Highland Capital Partners. It is the company’s first round of institutional funding.

Quantiam Technologies, an Edmonton, Alberta-based advanced materials company, has raised $6 million from BASF Venture Capital and Ursataur Capital Management.

MeXvio, a Mexan provider of solutions for self-construction of low-income homes, has raised M$63 million (US$4.6m) in VC funding from IGNIA Fund.

CyPhy Works Inc., a Framingham, Mass.-based robotics startup run by iRobot co-founder Helen Greiner, has raised $1.75 million in Series A funding led by General Catalyst Partners.

InSite Wireless Group, an owner and operator of wireless communication tower site facilities and distributed antenna systems, has raised an undisclosed amount of private equity funding from Catalyst Investors.

Buyouts Deals

Carl Zeiss AG has agreed to inject new capital into its eyeglass lens division, Carl Zeiss Vision, which broke its loan covenants for the second time last September. The deal would dilute EQT Partners’ stake in Carl Zeiss Vision.

Cinven reportedly is considering a £500 million bid for UK furniture retailer DFS. Permira also is said to be planning an offer.

Tregaron Capital has acquired Economic Modeling Specialists Inc., an Idaho-based provider of labor statistics and economic impact studies. No financial terms were disclosed. EMSI was represented on the sale by Woodbridge Group.

PE Exits

Allergan Inc. (NYSE: AGN) has acquired Serica Technologies Inc., a Medford, Mass.-based developer of a silk-based biomaterial platform for connective tissue repair. No financial terms were disclosed. Serica had raisedaround $14.5 million inVC funding, fromPrism VentureWorks, Morningside Technology Ventures and Ivy Capital Partners.

BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) has agreed to acquire LEAD Therapeutics Inc., a San Bruno, Calif.-based drug company whose lead product is for patients with rare, genetically-defined cancers. The deal could be worth upwards of $97 million, including an $18 million up-front payment. LEAD has raised around $22 million in VC funding from ProQuest Investments, Pappas Ventures and Mustang Ventures.

Firms & Funds

Ascent Capital, an Indian growth equity firm, has closed its third fund with $350 million in capital commitments.

China Investment Corp. has received UK regulatory approval to acquire a 2.3% stake in the management company of Apax Partners. CIC also has committed around $950 million to the Apax Europe VII fund.

Thailand’s $10 billion government pension fund said that it will increase its overseas investments, including PE fund investments and direct infrastructure and real estate investments. It did not give specific numbers.

Human Resources

Pinal Nicum has joined Adams Street Partners as a London-based partner on the firm’s secondary team. He previously was with Coller Capital.