peHUB Wire: Friday, May 7, 2010

Yesterday I felt a bit like Lloyd Bridges in Airplane, when he picked the wrong day to quit drinking, quit sniffing glue, etc. Seems I picked the wrong day to take an afternoon drive from New York to Boston.

At around the time I was cruising past Bridgeport, California AG Jerry Brown filed a civil suit against former CalPERS CEO Fred Buenrostro and his placement agent pal Alfred Villalobos. Seems the Dow also had a bit of trouble, but I was blissfully unaware thanks to the satellite radio J recently gave me as a birthday gift (kept it on E Street Radio). As such, apologies for not sending out any sort of email alert.

Anyway, this CalPERS news should be no surprise to regular readers of this space. Nor should allegations that Villalobos pitched Apollo and Aurora Capital funds without having a brokers-dealer license (we previously reported it) or that Villalobos/Buenrostro didn’t share related disclosure forms with anyone else at CalPERS (we previously published said forms, but wondered why they came with fax stamps from Apollo – as if CalPERS didn’t have its own original copies).

Some additional notes:

*** Perhaps the most surprising part of the complaint involves Leon Shahinian, a CalPERS senior investment officer responsible for alternative investments. Brown alleges that in May 2007, Villalobos and Shahinian on a private jet to New York City in order to attend an Apollo-related fundraiser. The two also stayed in a suite at the Mandarin Oriental Hotel. Both expenses were paid by Villalobos, but later reimbursed by Apollo (total of around $63k). Shahinian allegedly did not disclose the gifts to CalPERS. Just a couple of months later, CalPERS invested $700 million for a minority ownership stake in Apollo’s management company.

Shahinian is not being charged in the complaint, but CalPERS has placed him on “administrative leave.” In a letter sent yesterday to general partners, CalPERS chief investment officer Joe Dear wrote: “If your organization has given permission to Leon Shahinian to access any CalPERS related information via the we! b or any other remote access, please have his account suspended.” A Ca lPERS spokesman declined further comment on what he termed “a personnel matter.”

*** In his complaint, Brown alleges that Apollo boss Leon Black did have an interaction with both Villalobos and Shahinian. There is no accusation that Apollo engaged in fraud. Of course, there also continues to be no explanation for why Apollo was using Villalobos as a placement agent, or why it continued to do so after the management company deal was closed.

*** Buenrostro has been working for Villalobos since leaving CalPERS, which has been public record for a while. What’s new, however, is Brown’s allegation that Buenrostro had a longstanding job offer from Villalobos while still CalPERS CEO, including the promise of a condominium. Buenrostro is accused of not disclosing to offer to CalPERS.

*** The complaint seems to suggest, at points, that Buenrostro and Villalobos hoodwinked the rest of Ca! lPERS – save for board member Chuck Valdes, who has his own related troubles. It may well be true, but it’s also true that many at CalPERS were aware of the relationship between the two. Not only was Villalobos a regular presence in Buenrostro’s office, but Villalobos even opened his Lake Tahoe home in 2004 for Buenrostro’s wedding. Many within CalPERS knew something was rotten, even if they wouldn’t – or perhaps couldn’t – do anything about it.

Top Three

HCA, the hospital chain owned by KKR and Bain Capital, today filed for a $4.6 billion IPO.

The Blackstone Group, THL Partners and TPG Capital are in talks to acquire payment processing company Fidelity National Information Services Inc. (NYSE: FIS), which has a current market cap of around $10.8 billion. THL and Wa! rburg Pincus already hold signficiant equity stakes in Fidelity National.

Harmonic Inc. (Nasdaq: HLIT) has agreed to acquire Omneon Inc., a Sunnyvale, Calif.-based provider of digital content storage and processing systems for media companies. The deal is valued at approximately $274 million, including $191 million in cash and 17.1 million Harmonic common shares.! Omneon recently canceled a $115 million IPO, citing “current market conditions.” It had raised around $100 million in VC funding since 1998, from firms like Norwest Venture Partners (16.1%), Accel Partners (16.1%), Advanced Technology Ventures (16.1%), Meritech Capital Partners (7.6%), Invesco Private Capital (6.5%) and Lucent Ventures (5.5%).

VC Deals

Criteo, a provider of personalized purchasing recommendations and online advertising, has raised $7 million in Series C funding led by Bessemer Venture Partners. The company previously raised $13 million from Index Ventures, AGF Private Equity and Elaia Partners. In other Criteo news, the company is relocating its headquarters from France to Silicon Valley.

Enerkem Technologies Inc., a Montreal-based provider of synthetic gass and other alternative fuels, has raised C$3.35 million in funding from Alberta Energy. It will be used to help build a waste-to-biofuels plant in Edmonton. The company recently raised C$53.8 million from Waste Management, Rho Ventures, Braemar Energy Ventures, BDR Capital and Cycle Capital.

Buyouts Deals

Bain Capital reportedly has short-listed three buyout firms – Unitas Capital, Permira and Barings Private Equity – to buy the Asian assets of Outback Steakhouse. A deal is expected to be valued at around $300 million, and would include restaurant chains in South Korea, Japan and Hong Kong (plus business rights in China).

KKR has agreed to invest around $164 million into an unlisted subsidiary of India’s Dalmia Cement (Bharat) Ltd. The capital will be used to form India’s largest private cement company.

THL Partners has agreed to buy pharma services provider InVentiv Health Inc. (Nasdaq: VTIV), for around $1.1 billion. InVentiv stockholders would receive $26 per share, or a 7% premium to Wednesday’s closing price. The company’s stock already had risen 42% since March 26, when it confirmed investor approaches.

Tregaron Capital has acquired the assets of Economic Modeling Specialists Inc., a Moscow, Idaho-based provider of em! ployment data and economic analysis. No financial terms were disclosed .

PE-Backed IPOs

Smile Brands Group Inc., a Santa Ana, Calif.-based provider of support services to dental groups in the U.S., has canceled its IPO plans. The company had been expected to offer 7.35 million common shares at between $16 and $18 per share. Private equity firm Freeman Spogli & Co. holds a 77.3% ownership position. Other shareholders include CalSTRS (9.8%), Gryphon Investors (6.5%) and ASF Co-Investment Partners (6.5%).

Telegent Systems Inc., a Sunnyvale, Calif.-based provider of mobile TV solutions, has withdrawn registration for a $230 million IPO. It has raised around $50 million in VC funding since 2000, from firms like New Enterprise Associates (24% pre-IPO stake), Walden International (24%), Index Ventures (12.8%) and Northern Light Venture Capital.

PE Exits

BASF reportedly is in advanced talks to acquire German additives supplier Cognis, which is owned by Permira and GS Capital Partners. A deal could be valued at approximately €3 billion.

Champlain Capital Partners has sold Earth Cool Company Inc. to The Charles Machine Works Inc. (aka Ditch Witch). No financial terms were disclosed. Earth Tool is a maker of piercing tools, bursting systems, pneumatic hammers and horizontal directional drills.

The Corporate Executive Board (Nasdaq: EXBD) has agreed to acquire Iconoculture, a Minneapolis-based consumer research and advisory company. The deal includes an $18 million up-front cash payment plus possible earnouts. Iconoculture has raised over $16 million in VC funding from firms like Portage Venture Partners, Quatris Fund, StarTec Investments, General Mills, Winton Partnersand VSP Capital.

Hain Pure Protein Corp. has agreed to sell its Kosher Valley brand to Empire Kosher Poultry for an undisclosed amount. HPPC is a joint venture between Pegasus Capital Advisors and The Hain Celestial Group Inc.

Jack Henry & Associates Inc. (Nasdaq: JKHY) has agreed to acquire iPay Technologies, an Elizabethtown, Kentucky-based provider of electronic bill pay solutions. The deal is valued at $300 million in cash, and is expected to close next month. Spectrum Equity Investors and Bain Capital Ventures recapped iPay in late 2006.

Human Resources

Doug Fambrough has stepped down as a general partner with Oxford Bioscience Partners, in order to become CEO of Oxford portfolio company Dicerna Pharmaceuticals Inc. He will remain as a venture partner with Oxford. Dicerna is a Cambridge, Mass.-based RNA interference company that has raised over $21 million in VC funding from Oxford, Abingworth Management and Skyline Ventures.

Rob Firth has joined BoA Merrill Lynch as head of its European financial sponsors team. He previously was with Deutsche Bank.

Jonathan Goldstein has joined Advantage Capital Partners as a managing director, with a focus on tax-incentive investing. He previously was an SVP with McCorm! ack Baron Salazar. The firm also made several promotions: CharlesBooker and Jeremy Degenhart to principal andChristopher Harris to senior associate.

Erling Gustafsson is stepping down as president of AP6, a $2.4 billion Swedish pension fund. He will remain with the group until his successor is identified.

Todd MacLean has joined Accel Partners, with a focus on growth equity investments in the IT space. He previously was a director with Bain Capital Ventures and, before that, was a vice president with Summit Partners. VentureWire first reported the move.