The sky is dark, the Final Four is set and we’re just a few days away from our Boston Shindig (just 40 tickets left). In other words, it’s time for some Monday Mouth-Off.
First up are some responses to last Wednesday’s column, about the LP collusion canard.
Sean begins: “You are correct in the ILPA is nothing new. Many of us remember the ‘Mercer Report’ from 1996, which gathered ‘key terms and conditions for private equity investing.’ This 85+ page report was sponsored by CalPERS, CalSTRS, Mass PRIM, Michigan Retirement System, NY State and local retirement systems and other public entities. It attempted to detail a set of “best practices” for LPs. And frankly, it had no material impact on the majority of GPs back then. Any sort of one-sided, group-think exercise (whether LP-biased or GP-biased) will likely be categorically dismissed by the targeted party. Nothing will replace a thoughtful, tailored ! negotiation process. And experienced GP fund managers and LP investors know this.”
Byrne: “Most investors can’t collude, but a group of well-known ones could. There are thousands of institutions, but there’s a much shorter list of funds that provoke this reaction: ‘Oh, X is committing capital? Sign me up!’ or at least ‘I’ll take a second look, then!’ And those folks could collude to get better terms. Sadly, the benefits would mostly accrue to their hangers-on, and dividing the spoils more equitably would lead to even worse antitrust issues.”
Alex: On the issue of LP collusion, you are absolutely correct when you say things have not changed in any significant way since the ILPA guidelines. Most knowledgeable LPs already knew the terms they wanted to get in an ideal world. Today it comes down to supply and demand, as it always has. If a fund knows they have more interest in capital commitments than the fund size then they have the leverage over mos! t LPs. If they are worried about raising $$ if a few major LPs were to drop out, then the LPs have the leverage on terms. Obviously, the performance and status of the fund we are talking about drives this supply/demand equation.”
*** A couple opposing emails on last Monday’s Yale allocation item. Andy: “Your article on Yale was very refreshing. I see these announcements all the time and they are always spun as institutional support for PE. The reality is, they have no choice but to increase the allocation as they are over-committed.”
Evan: “I think you are selling Swensen short. He might have allocation issues, but he could have responded by announcing plans to sell lots of existing assets on the secondary market, or by freezing new alternative investments. Instead, he indicated faith in the asset class.”
*** An LP on Friday’s Elevation piece: “I completely agree that the statement about Elevation being the worst-run institutional fund in the U.S. gives hyperbole a bad name. Unfortunately, some of our clients get wind of those types of articles and can’t sort out the sensationalism from the facts… While Elevation certainly has its issues, it is not as bad as the 24/7 article indicates. I know it’s not the worst-run fund because I, unfortunately, have personal knowledge of others that are worse.”
*** Jorge: “Where are the March Madness updates? Don’t you usually keep track of the leaders for us?”
Apologies on this, as I’ve been negligent. So: Our current leader is Bob Aspell of Sverica International, who has Duke beating Kansas in the final game. Normally the Kansas blunder would be bracket buster, but probably not this year…
In second place is someone calling his team Longhorn, which has Syracuse beating Duke in the Finals. And i! n third place is Dan Stevens, an analyst with Industry Ventures, who a lso has Duke beating Kansas. Unfortunately for Dan, he has no way of beating Bob (although some others do).
Remember, the winner will be in charge of this space one week from Friday (which happens to coincide with my annual sojourn to Chapel Hill).
Top Three
Madison Dearborn Capital Partners has agreed to acquire BWAY Holding Co. (NYSE: BWY), a North American supplier of general line rigid containers. The deal is valued at $20 per share, or approximately $915 million (including assumed debt). BWAY’s stock closed trading Friday at $17.35 per share.Bank of America Merrill Lynch and Deutsche Bank Securities have provided debt financing.
Hostway Corp., a Chicago-based provider of web hosting and cloud hosting services, has raised $110 million in private equity and debt funding. Veronis Suhler Stevenson led the deal, and was joined by Fortress Capital, Regiment Capital and Phoenix Life. Houlihan Lokey advised Hostway on the deal.
NXP, a Dutch semiconductor co! mpany, is considering an IPO that could raise upwards of $1 billion, according to Bloomberg. NXP was carved out of Philips Electronics in 2006 by KKR, Silver Lake Partners, Bain Capital, Apax Partners and AlpInvest Partners.
VC Deals
Fulcrum Microsystems Inc., a Calabasas, Calif.-based developer of circuit architecture for fabless semiconductors, has raised around $15 million in sixth-round funding, according to a regulatory filing. The company previously raised over $96 million from New Enterprise Associates, Infinity Capital, Palomar Ventures, Worldview Technology Partners and Granite Ventures. www.fulcrummicro.com
ReadyForce, a Menlo Park, Calif.-based developer of applications that will create a virtual marketplace for on-demand labor, has raised around $12.2 million in VC funding from Menlo Ventures and U.S. Venture Partners, according to VentureWire. The company was founded by former LiveOps CEO! Bill Trenchard. www.readyforce.com
Wix, a developer of an online application for creating Flash-based websites, has raised $10 million in Series C funding. Benchmark Capital led the round, and was joined by return backers Bessemer Venture Partners and Mangrove Venture Capital. The company previously raised $10 million.It has offices in New York and Israel.www.wix.com
Hemosphere Inc., an Eden Prairie, Minn.-based maker of vascular access devices for dialysis patients, has raised $9.35 million in VC funding, according to a regulatory filing. David Shulte of Kaiser Permanente Ventures is listed as a new board member. The company previously raised over $27 million from Three Arch Partne! rs, Ascension Health Ventures, Affinity Capital Management, Cutlass Ca pitaland Sapient Capital Management. VentureWire refers to the round as a Series A-1 recap. www.hemosphere.com
Daintree Networks Inc., a Mountain View, Calif.-based provider of energy-saving wireless control solutions for commercial buildings, has raised $8 million from the VC arm of Lend Lease.
Scientific Conservation Inc., a Berkeley, Calif.-based provider of energy efficiency and system optimization solutions for commercial buildings, has raised $5 million in Series A funding from Draper Fisher Jurvetson. The company also named Russ McMeekin, former CEO of Progressive Gaming International, as its new CEO.
Smish, an Aliso Viejo, Calif.-based platform for third-party PC and netbook apps, has raised $2 million in VC funding from an undisclosed “private investor.” It had previously raised $2 million in angel funding.
Thermalin Diabetes Inc., a Cleveland-based developer of insulin treatments for patients with diabetes, has raised $250,000 in seed funding from JumpStart Ventures.
Buyouts Deals
The Carlyle Group has acquired a 30% stake in General Lighting Co., the largest lighting fixture manufacturer in Saudi Arabia. No financial terms were disclosed for the deal, which is Carlyle Group’s first in Saudi Arabia.
CKX Inc. (Nasdaq: CKXE), owner of the “American Idol” TV show franchise, confirmed that it is “engaged in discussions regarding a possible transaction involving the sale of the company.” The WSJ reported on Saturday that One Equity Partners was in late-stage negotiations to buy CKX for around $6 per share, which would value the! company’s equity at approximately $560 million.
CVC Capital Partners has won minority shareholder approval for its $790 million acquisition of a control stake in Indonesian department store operator Lippo Group.
DFS is not for sale, according to the UK sofa chain’s founder and chairman. The company had said in February that it had hired advisors to explore strategic options.
Templeton Asset Management has acquired a 5.3% stake in India’s Shiv-Vani Oil & Gas Exploration Services. The deal was valued at $20.6 million.
PE-Backed IPOs
China Lodging Group Ltd., a Chinese discount hotel chain, raised $110.25 million in its IPO. The company priced 9 million American depository shares at $12.25 per share, and closed its first day or trading at $13.92 per share. Company shareholders include Chengwei Ventures (4.93% post-IPO stake), IDG Venture Capital (2.85%) and Northern Light Venture Capital (2.12%).
SeaCube Container Leasing Co., a Park Ridge, N.J.-based container leasing company, has filed for a $165 million IPO. It plans to trade on the NYSE under ticker symbol SC, with Citi, J.P. Morgan, Deutsche Bank and Wells Fargo serving as co-lead underwriters. The company reports $142 million in 2009 revenue, compared to $239 million in 2008. SeaCube is a subsidiary of SeaCastle, a Fortress Investment Group portfolio company that canceled its own IPO last May. ! www.seacastleinc.com
PE Exits
Nokia (NYSE: NOK) has agreed to acquire Novarra Inc., an Itasca, Ill.-based provider of mobile Internet browsing software. No financial terms were disclosed. Novarra has raised around $88 million in VC funding, from JK&B Capital,Qualcomm, Fort Washington Capital Partners, Kettle Partners and Colorado Investment Securities.
SunPower Corp. (Nasdaq: SPWRA) has completed its acquisition of SunRay Renewable Energy, a Malta-based developer of European solar energy projects. The deal was valued at approximately $277 million, including $235 million in cash and $42 million in a letter of credit and promissory notes. Last year, SunRay receiv! ed a $200 million equity commitment from Denham Capital Management.
Firms & Funds
Pacific Century Group has completed its acquisition of PineBridge Investments from AIG. PineBridge is a multi-strategy investment manager with $87.3 billion in assets, including private equity.
Human Resources
David Cohen has joined Centerview Partners as a New York-based partner in the firm’s general industrial and financial sponsors groups. He previously was a managing director withOne Equity Partners.
Sanderling Ventures has promoted Peter McWilliams to managing director. He had been a principal, after having joined the firm as a senior associate in 2000.
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