peHUB Wire: Monday, April 6, 2009

The sky is gray, Rep. Sandy Levin has introduced a new carried interest tax bill and I’m hoping that the Opening Day rain holds off until Opening Night. In other words, it’s time for some Monday Mouth-Off.

First up are some emails related to the New York kickback scandal. Jeffrey leads us off: “This scandal screams out for public pension systems to create standardized processes for general partners to request fund capital. A transparent, level playing field. Let ‘finders’ stick to currying favor with private institutions.”

Ray: “Thanks for finding and printing some of the campaign contributions from GPs to Hevesi. It may be legal, but it sure ain’t kosher.” Mark: “Dan, spare us your naive indignation. This is the way business has always been done, and it’s the way it always will be done. Deals get done based on who you know, whether that be a direct investment or a fund commitment. These guys just happened to get caught.”

Jared: “If Loglisci is cleared of any wrongdoing, will you apologize for dragging his name through the mud?” Yup, although not for my larger criticism of politics interfering with public pension investment decisions (in NY and elsewhere).

*** Next up were some comments on The VC Walking Dead list, with most respondents criticizing the selectivity. Brian: “Why so shy on the Walking Dead list? The SBICs alone would bring you to more than 12.” Liam: “Trust your instinct, and publish all of the ones on your list. If a firm can prove it doesn’t deserve to be there, then you can pull them and explain why.” Brian: Because it’s a p! otentially-damaging characterization, and I wanted to have confirmation. Liam: Yeah, I’m a blogger. But not that kind of blogger.

Alex: “Thanks for posting the list, and I hope there is a Part II. You have no idea how frustrating it is to be an entrepreneur who tailors a pitch for a specific VC firm, sends it and then gets a form letter back about how the firm is not making any new investments right now. Couldn’t they have just said that on their website, and saved me the trouble?” There will be a sequel Alex, probably sometime later this month.

*** Finally, a pair of emails related to last Friday’s column on Terralliance: “Truth” wrote: The truth is that the story sounds like it could have been written by Goldman and Kleiner who truly destroyed this remarkable company… [It] makes one wonder who the heck Dan Primack actually spoke with in writing this article since he got it 180 degrees wrong. For those of us who know the truth, this story reeks of the journalist kowtowing to the almighty Goldman and KPCB rather than getting the real story.”

“Anon” wrote: “I used to work at Terralliance, and you’re just scratching the surface of what went on there. Your info is right, although I think Erlend may have been asked to resign rather than officially being “fired.” There is a lot of blame to go around, including management, the investors and employees who didn’t speak up before it was too late.”

*** Game Time: Just one game left to go, and our continued leader is Dan Doman, an associate with seed-stage venture firm G-51 Capital Management. He’s got 143 points so far, with UNC winning tonight’s tussle with Michigan State. My guess is that means Dan will be our overall winner, but it’s possible that one of the current runners-up has Michigan State winning it all. Will let you know tomorrow…

Top Three

Revolution Money, a St. Petersburg, Fla.-based P2P payment and credit card company, has raised $42 million in Series C funding. Backers include Goldman Sachs, Citigroup, Morgan Stanley, Revolution LLC head Steve Case, Revolution Money chairman Ted Leonsis, former Charles Schwab CEO David Pottruck and former JP Morgan vice chairman David Golden. The company has now raised nearly $100 million.

Apollo Management has offered to buy Legacy Reserves LP (Nasdaq: LGCY), a Midland, Texas-based oil and gas exploration company focused on the Permian Basin and mid-continent regions. Legacy unit-holders would receive $14 per unit (40% premium to Friday’s closing price), for a total equity value of $435 million. Legacy management has signaled that it would be retained, were the deal to be approved.

Arthur Peponis has joined Angelo, Gordon & Co. as co-head of private equity and special situations. He previously was with Goldman Sachs as a partner in the firm’s financial sponsors group.

VC Deals

BuyVIP, a Madrid, Spain-based fashion and lifestyle ecommerce company, has raised €14.9 million in third-round funding. Kennet Partners led the round, and was joined by return backers Bertelsmann Digital Media Investments, 3i Group and Molins Capital Inversion.

Glam Media, a female-focused online advertising network, has raised around $10 million in new VC funding. Mizuho Venture Capital led the round, and was joined by Japanese ad agencies Dentsu and ADK, and Japanese publishers Shogagukan, Syueisya and NikkeiBP. The company has now raised approximately $100 million, including past investments from Draper Fisher Jurvetson, Accel Partners, DAG Ventures, Hubert Burda Media, Information Capital and WaldenVC.

MedAptus, a Boston-based provider of change management solutions for the healthcare revenue cycle, has raised $6 million in new VC funding led by return backer Boston Millennia Partners. The company had previously raised around $35 million.

EA Global Holdings Ltd., a Malaysian IT outsourcing company, has raised $4 million from Aureos Capital. It is Aureos’ first investment in Malaysia.

NuView Systems Inc., a Wilmington, Mass.-based provider of HR and payroll software, has raised an undisclosed amount of growth capital from Petra Capital Partners. Madison Park Group served as placement agent.

Buyout Deals

Atlantic Street Capital has acquired EZE Trucking, a Los Angeles-based provider of specialty logistics services for the infrastructure market. No pricing terms were disclosed for the deal, which included senior debt from PNC Bank and subordinated notes from Prism Mezzanine Fund.

Deutsche Post has entered the bidding for a stake Royal Mail, which is being sold by the British government for approximately €3 billion. Other reported bidders include CVC Capital Partners and Dutch TNT.

Emerging Capital Partners has acquired a “significant minority stake” in la Nouvelle Societe Interafricaine d’Assurance Participations SA, a Cote d’Ivoire-based insurance group in French-speaking Western and Central Africa. The deal is valued a $47.7 million.

General Motors has received interest from PE firms and sovereign wealth funds, in its European business Opel.

KT Capital Partners has acquired ConArt Inc., a provider of concrete products for commercial, industrial and public buildings in the Southeastern United States. No financial terms were disclosed. Corporate Finance Associates advised ConArt on the sale.

MGM Mirage (NYSE: MGM) has hired Morgan Stanley to help it sell a number of casinos outside of Las Vegas, including MGM Grand Detroit and Biloxi’s Beau Rivage. Possible bidders include Colony Capital and Australian gaming magnate James Packer.

Ritchie Capital has filed an objection to Patriarch Partners’ victory in the assets for bankrupt Polaroid Corp., claiming that a “cap” on equity offers was improperly imposed. Several Polaroid unsecured creditors also have filed objections.

Vista Equity Partners has offered to acquire Sumtotal Systems Inc. (Nasdaq: SUMT), a Mountain View, Calif.-based provider of enterprise learning and performance management systems. Under terms of the offer, Sumtotal stockholders would receive $3.25 per share (62% premium to Friday’s closing price), which values the outstanding equity at approximately $103 million. Vista currently holds around a 13% stake in Sumtotal, and plans to nominate a slate of three directors to the company’s board, at an annual meeting on June 12.

PE-Backed Busts

Zohar Waterworks LLC, a Columbus, Ohio–based maker of water coolers and drinking fountains, has filed for Chapter 11 bankruptcy protection. The company said that it hopes to auction off its assets on May 1. Zohar was formed by Patriarch Partners in 2005, via the acquisition of Oasis Corp.’s assets.

Firms & Funds

The Riverside Company has raised $950 million for its fifth North American buyout fund, according to Buyouts. It had been targeting $900 million, and a final close is slated for May 31.

CapX Partners, a Chicago-based provider of debt to the lower middle-markets, plans to target around $225 million for its fourth fund, according to LBO Wire. It is currently investing out of a $150 million third fund that closed in 2005.

Human Resources

Velocity Venture Capital has promoted Farid Dibachi and Henry Montgomery to general partner. Montgomery also will retain his CFO role. The Folsom, Calif.-based firm also has held a first close on its $60 million-targeted third fund, according to VentureWire.

Robin Lockwood has joined Flybridge Capital Partners as a senior associate, focused on healthcare and energy-related investments. She previously was with The Boston Consulting Group.