peHUB Wire: Monday, April 27, 2009

“It’s over now. You know, I’m glad. I need the rest.”

– Tommy Lee Jones in The Fugitive.

That’s got to be the feeling over at Quadrangle Group HQ this morning, after the firm won an LP vote that will allow it to invest the $500 million remaining in its $2 billion second fund. Sure Quadrangle still got to deal with kickback-related investigations ranging from New York to California – think they’ve tacked Rattner’s headshot to a few dartboards yet? – but the ability to keep investing means that the firm gets to remain… well, a firm.

None of this should be terribly surprising, given our prior reporting that Quadrangle had granted several concessions to investors by last weekend, including a reduction in management fees. It then sweetened the pot even more, after new allegations surfaced that Quadrangle had used disgraced “placement agent” Hank Morris to win fund commitments from public pensions in places like New Mexico and New York City.

But that’s not to say that things weren’t a bit dicey near the end. For example, I spoke with two Quadrangle LPs on Wednesday who told me that Quadrangle should easily win its vote. By late Friday, however, those same LPs were a bit more circumspect – in part because the pension systems of both New York City and New York State announced that they had voted in favor of ending the investment period (although it’s unclear if either was allowed to make such announcements, due to confidentiality restrictions). In the end, though it seems that the LPs without PR problems (i.e., the vast majority) realized that their best chance for returns from monies already invested was to keep Quadrangle in business.

*** Julio Ramirez has quietly resigned from Park Hill Group, a fund placement agency owned by The Blackstone Group. No word yet on his future plans, or the reason for his departure.

Ramirez joined Park Hill in 2005 from Weatherly Capital Group, and was the only partner in its Los Angeles office. A Blackstone spokesman confirms that the LA satellite is now closed, with all of Park Hill’s West Coast business now operating out of San Francisco.

*** Venture capital performance fell across all time horizons in the fourth quarter of 2008, according to data released this morning by Thomson Reuters and the National Venture Capital Association. On the up-side, however, performance is positive for all horizons three-years and out, and VC has outperformed public market indices — including the Nasdaq and S&P 500 — for all measured time periods.

I wanted to share one additional data point, for the sake of context. The nine-year pooled IRR horizon is just 1.3%, compared to the 10-year pooled IRR horizon of 15.5 percent. Why does that matter? Because the nine-year figure does not include many vestiges of the dotcom boom. Come January 1, 2010 – the long-term VC performance data will look very different…

Top Three

InBev has picked KKR as the preferred buyer for South Korea’s Oriental Brewery, after the buyout shop increased its bid to more than $1.9 billion. Other bidders reportedly included Affinity Equity Partners and MBK Partners.

Shinsei Bank (T: 8303) and Aozora Bank (T: 8304) have entered into merger talks. J.C. Flowers & Co. holds around a one-third stake in Shinsei, while Aozora is majority-owned by Cerberus Capital Management.

Sebastian Thrun has joined Charles River Ventures as a senior advisor. He is a professor of computer science and electrical engineering at Stanford University, and also serves as a principal engineer at Google (where he helped create Google StreetView).

VC Deals

Quanzhou Peak Shoes Co. Ltd., a Chinese sports apparel maker, has raised nearly $60 million in new VC funding, according to VentureWire. Legend Capital and CCB International joined return backer Sequoia Capital China on the round.

ProtAffin AG, an Austrian developer of drugs that target cell-surface glycan structures, has raised €14.1 million in Series B funding. Atlas Venture and S.R. One Ltd. co-led the round, and were joined by return backers Aescap Venture, Entrepreneurs Fund and Z-Cube.

Opscode Inc., a Seattle-based cloud infrastructure automation company, has raised $2.5 million in Series A funding. Draper Fisher Jurvetson led the round, with DFJ venture partner Bill Bryant joining the Opscode board of directors.

Monica Healthcare Ltd., a UK-based developer of miniature wireless technology for monitoring the monitor the well-being of expectant mothers and their fetuses, has raised £1.1 million in VC funding. PUK Ventures led the round with a £750,000 commitment. Monica Healthcare is a spinout from the University of Nottingham.

Buyout Deals

Accel-KKR has agreed to acquire Sumtotal Systems Inc. (Nasdaq: SUMT), a Mountain View, Calif.-based provider of enterprise learning and performance management systems. The $3.80 per share offer would value Sumtotal at approximately $124 million, and tops a $3.25 per share bid made by Vista Equity Partners earlier this month.

Actis Capital and HSBC Private Equity are said to be considering bids for a majority stake in Franklin Offshore, an oil services company being auctioned off by 3i Group. The deal is expected to be worth around $400 million, with J.P. Morgan running the process.

Performance Designed Products LLC, a maker of video game accessories, has sued Dreamgear LLC for patent infringement and trade dress infringement. PDP is a portfolio company of Patriarch Partners.

Power-One Inc. (Nasdaq: PWER), a Camarillo, Calif.–based provider of power conversion and power management solutions, has raised $60 million in PIPE financing from Silver Lake Sumeru. The deal includes $23.6 million in convertible preferred stock, $36.4 million in senior convertible notes due 2019 and 8.7 million warrants for Power-One common stock.

Starwood Hotels & Resorts has received a preliminary injunction from a U.S. district judge, preventing Hilton Hotels from continuing to develop a new luxury brand called Denizen Hotels. At issue is a pair of ex-Starwood employees who Hilton hired to launch Denizen, and who Starwood claims stole trade secrets. Hilton is a portfolio company of The Blackstone Group.

Terra Firma Capital Partners is planning to make a bid for London’s Gatwick Airport, according to Spanish newspaper El Pais. The company is being sold by BAA, which is owned by Spain’s Ferrovial.

PE Exits

NewPage Group Inc., a coated paper manufacturer owned by Cerberus Capital Management, has retained Sanabe & Associates to help sell the company’s facility in Kimberley, Wisconsin. Earlier this year, NewPage used Sanabe to sell its Little Quinnesec hydroelectric facility in Niagara, Wis., to a portfolio company of Investors Funds and Northbrook Energy LLC.

PE-Backed M&A

Heartland Dental Care Inc., an Effingham, Ill.-based chain of affiliated dental practices, acquired six dental practices in the first quarter. It also opened two new facilities, bringing its total number of practices to 238. Code Hennessey & Simmons acquired an undisclosed stake in Heartland Dental last summer.

Firms & Funds

3i Group (L: III) said yesterday that it may issue new shares to raise capital, although it did not comment on a UK press report that it could raise upwards of £700! million.

DFJ Frontier has closed its second seed-stage fund with $55.4 million in capital commitments. Limited partners include CalPERS, Credit Suisse, Hamilton Lane, LACERS and the Oregon Growth Account. The firm also promoted Frank Foster from venture partner to partner, and opened new offices in Los Angeles and Portland, Oregon.

Invesco and its WL Ross affiliate announced that they are prepared to commit $1 billion to the Public-Private Investment Program (PPIP).

Kohlberg Kravis Roberts & Co. is trying to raise a €730 million annex fund to KKR’s European Fund II, a €4.5 billion vehicle that closed in late 2005.

Human Resources

David Bain and Michael Wilkins have joined M&A advisory Sagent Advisors as managing directors, in the firm’s telecom, tech and media practice. They previously were with Wachovia Securities. Bain oversaw Wachovia’s tech M&A practice, while Wilkins ran Wachovia’s Internet, digital media and Internet infrastructure I-banking group. Also joining Sagent as an associate is Trent Read.

Sujit Banerjee has joined Element Partners, a growth equity firm focused o the cleantech space, as an operating partner. He previously was a partner with BlueRun Ventures, where he will continue to serve as an operating partner for mobile and consumer investments. While with BlueRun, Banerjee opened an India office and launched the firm’s cleantech practice.

James Hooke has been named CEO of Macquarie Infrastructure Management, after having served as a New York-based managing director in Macquarie’s capital funds division since 2007. He succeeds Peter Stokes, who is returning to Australia.

John Harvey III has joined Proskauer Rose as a Boston-based partner, with a focus on the tax aspects of fund formations and investment transactions. He previously was director of hedge fund tax for Wellington Management Co. and, before that, was an associate with Proskauer.

Tom Kelly has joined The Blackstone Group as a managing director in its corporate advisory group, where he will lead an effort to provide PE fundraising services to businesses and corporations. He will be based in Menlo Park, and previously was a managing director with KEMA Partners.