peHUB Wire: Monday, August 24, 2009

peHUB Wire — Monday, August 24

Random Ramblings

A few quick notes, for the 184 of you actually working during this final week of August:

*** Is it possible that gene sequencing startups require even more cash than pharma startups? Complete Genomics today announced $45m in new funding, bringing its three-year total to around $90m. This comes just about a week after Pacific Bioscience raised $68m, bringing its total to over $180 million since just last summer. Looks like cleantech project companies have some competition…

*** Was on the phone last week with a fund-of-funds partner who is in a bunch of brand-name buyout funds. I asked about Q2 marks, and if portfolio valuations had jumped in line with the public markets. After all, mark-to-market should cut both ways.

What he said, however, was that most of his GPs had only written their portfolios up modestly in the quarter. Five or six percent, compared to the DJIA increase of nearly 9 percent. Not sure if this reflects conservative accounting or was a byproduct of this LP’s particular portfolio…

*** The prospects for KKR portfolio company IPOs are not related to KKR’s inability to price its own IPO. Apples and oranges. A more legitimate question, however, is if a rush of PE-backed IPOs would be welcomed or viewed as too much too fast (the “glut” scenario)…

*** Do any buyout pros use Twitter? I know tons of VCs who do – there’s even a directory called VentureMaven – but know of just two or three LBO folks. If you’re out there, let me know.

*** I didn’t finish Josh Lerner’s new book over the weekend, but made good progress (I blame good biking weather and some time spent with the Inglourious Basterds). But, basic points so far are twofold: (a) Major innovation centers like Silicon Valley were made possible by government action and (b) Most government action aimed at entrepreneurial ecosystem development is poorly designed and/or implemented.

*** Scott Kirsner has a great blog post this morning about how the Boston-area venture nexus has shifted from Waltham to Cambridge/Boston. One explanation he may have missed, however, is one I’ve harped on for a while: There are no restaurants/bars/coffee shops within walking distance of the Waltham office parks. And almost none within a five minute drive.

Never understood why some young VCs didn’t open up a nearby watering hole, kind of like the cops in Homicide…

*** The Blackstone Group recently sold some bonds. Would seem the relevant question, therefore, is: What does Blackstone want to buy? Another GSO-type deal? Another PE firm? Some sort of I-bank/capital markets group?


In Memoriam: Andy Nathanson, a former managing partner with Oak Hill Capital, died last Friday from a surfing accident, at the age of 51. He still served on the board of drugstore chain Duane Reade, an Oak Hill portfolio company.

Andy is survived by his wife Elyse, sons Brian and Kevin and daughter Allison. Our sympathies go out to his family.

A memorial service will take place this morning at the Congregation Emanu-El in Rye, New York.

Top Three

Advent International has agreed to acquire women’s clothing retailer Charlotte Russe Holding Inc. (Nasdaq: CHIC). The deal is valued at $17.50 per share, for a total transaction value of approximately $380 million. Charlotte Russe hadreceived an earlier buyout offer from KarpReilly Capital Partners, which at the time held an 8.6% ownership stake.

Live Gamer Inc., a platform that allows online gamers to buy and sell virtual assets with real money, has acquired TwoFish Inc., a provider of virtual economy data solutions for casual gaming and social application developers. No financial terms were disclosed. Live Gamer has raised over $26 million in VC funding, from firms like Charles River Ventures, Kodiak Venture Partners and FirstMark Capita! l. This includes a $24 million Series B round in late 2007 at a post-money valuation of approximately $60 million. TwoFish has raised around $8.5 million from Triplepoint Capital, Rustic Canyon Partners and Venrock.

OneWest Bank (fka IndyMac) turned a $182 million profit in its first full quarter under new private equity and hedge fund management. The company was bought in March for $13.9 billion by J.C. Flowers & Co., Dune Capital Management, Paulson & Co. and a George Soros hedge fund.

VC Deals

Complete Genomics Inc., a Mountain View, Calif.-based human genome sequencing company, has raised $45 million in Series D funding. Essex Woodlands Health Ventures and OrbiMed Advisors were joined by return backers Enterprise Partners Venture Capital, OVP Venture Partners, Prospect Venture Partners and Highland Capital Management. The company has now raised around $90 million in total VC funding since 2006. Read more…

Barosense Inc., a Redwood City, Calif.-! based developer of minimally-invasive devices to treat obesity, has secured around $27 million of a $30 million Series D round, according to a regulatory filing. Pappas Ventures led the round, and was joined by return backers Delphi Ventures, Frazier Healthcare Ventures, Invesco Private Capital, RWI Ventures, Synergy Life Science Partners and Wharton Ventures. The company previously raised around $26 million, and said that this round could help push its device onto the market by the end of 2010.

ProFibrix BV, a Dutch developer of products for hemostasis and regenerative medicine, has raised $11 million in Series B funding. Gilde Healthcare Partners led the round, and was joined by return backer Index Ventures.

Liquidia, a Morrisville, N.C.-based developer of fluoro-polymer materials for the life sciences and advanced materials market, has raised$7.03 million in Series C funding. Canaan Partners led the deal, and was joined by Pappas Ventures and return backers New Enterprise Associates and Firelake Capital. Existing shareholder the Wakefield Group did not

Fanbase, a San Francisco-based operator of an online almanac of pro and college athletes, today announced its public launch. The company also said that it is backed by an undisclosed amount of VC funding from Benchmark Capital.

TipJoy, a blogging micropayment startup based in Cambridge , Mass. , announced that it is ceasing operations. It had raised $1 million in Series A funding last fall, from Betaworks, The Accelerator Group, Chris Sacca and David Shen Ventures.

Buyouts Deals

Lonza, a Swiss pharma industry supplier, has offered to buy Canadian drugmaker Patheon (TSX: PTI) for $460 million, or $3.55 per share. The offer is substantially higher than an existing $2 per share bid from JLL Partners, which has been building its stake in Patheon since originally bidding last December.

Milacron Inc., a plastics processing and industrial fluids company, has exited bankruptcy protection with a new group of investors that includes Avenue Capital Group and DDJ Capital Management. It also has secured a new revolvingcredit facility led by Wells Fargo Foothills. Prior to entering bankruptcy protecti! on, Milacron had been minority-owned byBayside Capital, an affiliate of H.I.G. Capital.

Tribune Co. has reached a deal to sell the Chicago Cubs to the Ricketts family for $845 million. The deal includes a 95% stake in the baseball franchise, Wrigley Field and Tribune’s interest in Comcast SportsNet.

U.S. regulators on Friday closed Texas lender Guaranty Bank, and sold its assets to Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA).

Warner Chilcott has agreed to acquire Proctor & Gamble’s prescription drug unit for more than $3 billion, according to the WSJ. Both Cerberus Capital Management and Forest Labs reportedly were interested in the business.

PE-Backed M&A

Canpages Inc., a Canadian local search and directories publisher, has agreed to acquire, an online social media platform. No financial terms were disclosed for the acquisition, which was Canpages’ fourth this year. Canpages is owned by HM Capital Partners.

Ranger Aerospace, a PE-backed aerospace and defense industry acquisition platform, has acquired US Logistics Inc., a government outsourcing contractor specialized in aircraft technical services, tactical vehicle overhauls and repairs, technical staffing and base logistics. No financial terms were disclosed. Ranger Aerospace shareholders include First New England Capital, Argosy Inve! stment Partners and Plexus Capital.

Stir Crazy Restaurants, a portfolio company of The Walnut Group, has merged with fellow Asian food restaurant chainFlatTop Grill, owned by Happy Valley Corp. No financial terms were disclosed.

PE-Backed Exits

Intel has acquired RapidMind Inc., a Waterloo, Ontario-based developer of a software development platform. No financial terms were disclosed. RapidMind had raised C$10 million in Series A funding fromVentures West, EdgeStone Capital Partners and seed backer BDC Venture Capital.

Firms & Funds

Advantage Capital Partners has raised $55 million for a fund that will focus exclusively on companies based in Illinois. The fund’s investments will be made in partnership with the llinois New Markets Development program, while limited partners include First Bank, Southwest Bank (an M&I Bank subsidiary) and U.S. Bancorp’s Community Development Corporation.

Cerberus Capital Management’s core hedge fund clients have opted to withdraw the majority of their money in the funds, according to the WSJ. The withdrawing clients represent more than $4 billion of the $7.7 billion of assets in the Cerberus Partners vehicles.

Edge Healthcare Partners has launched as an Atlanta-based investment bank that will provide M&A and other advisory services to mid-market healthcare companies. The firm’s principals previously were with Houlihan Lokey, Smith Barney andSunTrust Robinson Humphrey.

HLM Venture Partners is raising up to $200 million forits latest healthfund, according to a regulatory filing. The Boston-based VC firm investors healthcare technology and services sectors. Its last fund was capped at around $215 million in 2005.

Human Resources

Matthew Nordan has joined Venrock as a vice president. He will focus on energy, environmental and materials tech opportunities out of the firm’s Cambridge, Mass. office. He is a co-founder and former president of Lux Research.

Peter Rothstein has joined the New England Clean Energy Council as a senior vice president, where he will lead the group’s clean energy innovation consortia. He previously was an executive-in-residence with Flagship Ventures.

Xie Tao has resi! gned from PricewaterhouseCoopers, where he was the lead partner for corporate finance in China.