peHUB Wire: Friday, October 23, 2009

A few remainders before starting fresh next week…

*** We’ve discussed secondaries quite a bit this year, including how the massive increases in supply and demand have not been matched by transaction volume. The most common explanation has been a wide chasm in bid/ask prices, with buyers and sellers each blaming each other for being too greedy/stingy.

Is this stalemate permanent? Not according to John Begg, a managing director with HarbourVest Partner. During a panel discussion in Quebec City, he said that for all the talk of seller liquidity troubles, the squeeze was loosened because general partners weren’t making many capital calls (particularly big GPs like mega-buyout funds). Now that deal volume is slowly beginning to pick up, Begg said he expects LPs to begin feeling more pressure to sell.

Makes sense to me, although Begg obviously comes to it from a buy-side perspec! tive. Someone on the sell-side recently told me that institutional buyers will soon regret insisting on such deep discounts over the past year, because one-off buyers have occasionally swooped in and won deals that will produce strong returns. (Irrelevant note: Begg is originally from Buffalo, but has a French accent. Not something you hear – literally – everyday…).

*** WSJ has some good scoopage this morning on the CalPERS situation, reporting that the pension system has hired Houlihan Lokey to review its relationship with Apollo Management. It also separately reported that Apollo’s funds experienced a solid performance rebound in Q3 (Relevant note: Saddens me to get beat on something like a quarterly LP letter – where’s the love, dear readers?)

Irony, of course, is that CalPERS knew absolutely everything Apollo was doing vis-à-vis Al Villalobos. How do I know? Because former CalPERS CEO Fred Buenrostro signe! d documents to that effect after each commitment (on CalPERS letterhea d, no less). These docs were part of what CalPERS sent over last week. Kind of strange/disturbing thing, however, is that the docs are fax-stamped from Apollo. Shouldn’t CalPERS have had its own copies? Going to check in on that today…

*** Terry McGuire of Polaris Venture Partners said in Quebec that the future of venture capital would be smaller funds and smaller partnerships. He declined to say if that applied to Polaris itself – methinks it does, as the firm is expected to fundraise next year – but jives with what I keep hearing from both industry headhunters and heads out hunting. Particularly here in the Boston market, where I keep hearing that there are a lot of free agents who still appear on their former firms’ websites…

*** Kip Kirkpatrick dropped out of the Illinois treasurer’s race last month. Apologies for the error. He does not appear ! to have rejoined Water Street Healthcare Partners.

*** Really? In both Dallas and Quebec City, I ran into readers who were unaware of the peHUB website. Not quite sure how that’s possible, but: There is a website called peHUB. It has lots of PE news and analysis. Updated regularly throughout the day. Even has a staff (as opposed to this email, which is a solo job). If you have never visited – again, really??? – do so now.

*** Despite how often I travel, I’m actually quite terrified of flying. Even have a whole superstitious routine that involves counting to 300 on takeoff (most doomed flights crash within the first five minutes). I should probably be even more concerned that two pilots can (allegedly) fall asleep mid-flight, but I’m actually encouraged by the automatic pilot’s steady hand…

*** Steve Pagliuca interview got pushed off to next week. ! Seems he got a better offer (let’s just say he’s lunching with a well- known “executive”).

*** Have a great weekend…

Top Three

Tellabs Inc. has agreed to buy WiChorus Inc., a San Jose, Calif.-based developer of 4G core infrastructure products, for $165 million in cash. WiChorus has raised around $40 million in VC funding, from firms like Accel Partners, Mayfield Fund and Redpoint Ventures.

MEMC Electronic Materials Inc. (NYSE: WFR) has agreed to acquire SunEdison LLC, a Beltsville, Md.-based solar energy services provider. The deal is valued at $200 million, which would be paid 70% in cash and 30% in MEMC stock. SunEdison has raised over $140 million in private equity funding, plus more than $30 million in debt financing. Backers include Greylock Partners, HSH Nordbank AG, Applied Ventures, Black River Commodity Clean Energy Investment Fund, MissionPoint Capital Partner and Allco Renewable Energy Ltd.

EverBank Financial Corp., a Jacksonville, Fla.-based financial services firm, has agreed to acquire Tygris Commercial Finance Group, a commercial finance and leasing company. The stock-for-stock transaction is expected to increase EverBank’s capital base by about $470 million. EverBankhas raisedapproximately $100 million in private equity funding from Sageview Capital. Tygris was formed in 2007 with more than $1.75 billion in equity commitments from Aquiline Capital Partners, New Mountain Capital, TPG Capital, Diamond Castle Holdings and Hamilton Lane.

VC Deals

Ensphere Solutions, a Santa Clara, Calif.-based maker of semiconductor products for various optical interfaces, has raised $4 million from Egyptian venture capital fund Ideavelopers.

Buyouts Deals

GenNx360 Capital Partners has agreed to buy GVI Security Solutions Inc. (OTC BB: GVSS), a Carrolton, Texas-based provider of video security surveillance solutions. The deal is valued at approximately $11.6 million, or $0.38 per GVI share.

PE-Backed M&A

cVidya Networks, a Tel Aviv, Israel-based provider of telecom data integrity revenue assurance and dealer management systems, has agreed to acquire ECtel Ltd. (Nasdaq: ECTX), a Rosh Ha’ayin-based provider of provider of integrated revenue management solutions for communications service providers. The deal is valued at just under $21 million in cash. cVidya has raised around $22 million in VC funding, from firms like Battery Ventures, Carmel Ventures, Hyperion, Stage One and Star Ventures.

Firms & Funds

General Electric has formed a $250 million fund to invest in healthcare technology companies. It’s called the GE Healthymagination Fund, which aligns with the company’s Healthymagination initiative.

Human Resources

Maurice Allen and Michael Goetz have agreed to join law firm Ropes & Gray, after serving as co-heads of the banking and capital markets practice groups of White & Case. The pair will help Ropes & Gray open a London office in January, which will focus on the private equity and debt markets.