peHUB Wire: Monday, May 4, 2009

Just a few very quick notes to kick off our collective Monday:

*** My favorite exchange from last Friday’s VC panel at the Nantucket Conference:

Me: If median venture capital returns turn negative for the 10-year horizon, can VC survive as an asset class?

Brad Feld: Who cares?

*** Notable mention: Skype COO Scott Durchslag “video-Skyped” in from London (the quality was stunningly good, particularly given that our side was WiFi), and made a mention of “Metcalfe’s Law.” Moderator Scott Kirsner turned his laptop around so that Durchslag could see Bob Metcalfe sitting in the front row, and then mentioned that not too many conference attendees had known what Metcalfe’s Law actually was, during Bob’s speech the day before.

Durchslag then said: “Well, we know what it is. In fact, we built an entire company around your law, and it’s doing pretty well.”

*** On Friday, Andrew Cuomo issued 100 subpoenas to investment firms and placement agents, related to the kickback scandal. And the beat goes on…

*** Personalized genetics company 23andMe Inc. has secured $11 million of a $24.26 million venture round, according to a regulatory filing. This is the company co-founded by Anne Wojcicki, wife of Google co-founder Sergey Brin, which had raised around $9 million in Series A funding from Google, Genentech, New Enterprise Associates and Mohr Davidow Ventures. Probably best described as one part personalized medicine, one part online informatics.

No investor info is disclosed on the filing, but we have learned that MDV is no longer a shareholder (it was just a small one to begin with). Not a lack of faith, but rather preclusion of possible conflict: MDV sold its 23andMe shares back to the company, after backing rival startup Navigenics.

*** Quiz Time: Can you name the UK-based venture capitalist who has left his multinational firm’s partnership, even though he’s still listed on its website. Hint: He had been in charge of the firm’s European operation.

*** General mood of Nantucket attendees was subdued optimism. I think the typical tech entrepreneur has finally internalized what the recession means to them and their company. It took a bit longer than you might have expected.

*** One week from today, a group of 17 peHUB readers will take the field at Fenway Park, as part of the Field of Dreams event. Huge thanks to these folks, as we raised over $10,000 for ABCD, an anti-poverty program here in Boston. Also, kudos to my cor! porate overlords, for chipping in to buy us peHUB jerseys. We’re ready for you, TD BankNorth.

Top Three

Irving Place Capital and Oaktree Capital Management have completed their acquisition of Richmond, Va.-based Chesapeake Corp., a bankrupt maker of paperboard and plastic packaging. The deal was valued at ! $485 million.

SolarWinds, an Austin, Texas-based provider of network management software for the SMB/SME market, has set its proposed IPO terms to around 12.12 million common shares being offered at between $9.50 and $11.50 per share. It would have an initial market cap of around $738 million, were it to price at the high end of its range. The company plans to trade on the NYSE under ticker symbol SWI, with J.P. Morgan, Goldman Sachs and Morgan Stanley serving as co-lead underwriters. Shareholders include Bain Capital Ventures (31.6% pre-IPO stake), Insight Venture Partners (31.6%) and Austin Ventures (3.4%).

Energy Future Holdings Corp. (f.k.a. TXU) reported a $442 million Q1 profit, compared to a $1.3 billion loss over the same time period last year. The company was taken private in late 2007 for $44 billion last year by KKR, GS Capital Partners and TPG Capital.

VC Deals

SDCmaterials Inc., a Tempe, Ariz.-based maker of catalysts and additives, has raised $14 million in Series B funding. Invus Financial Advisors led the round, and was joined by Emerald Technology Ventures, BASF Venture Capital and individual angels.

Applied Genetic Technologies Corp., an Alachua, Fla.-based drug developer, has raised $11.8 million in new VC funding. InterWest Partners led the round, and was joined by fellow return backers Intersouth Partners and MedImmune Ventures. The company had previously raised nearly $34 million.

Active Endpoints Inc., a Waltham, Mass.-based developer of visual orchestration systems, has raised $5 million in additional Series B funding from return backer North Bridge Venture Partners. The company had held previously raised over $15 million from North Bridge and Atlas Venture.

Buyout Deals

ComVest has agreed to acquire NationsHealth Inc. (OTC BB: NHRXE), a Sunrise, Fla.-based home delivery provider of diabetes supplies, insulin pumps, medications and other medical products. The deal is valued at approximately $3.4 million, or $0.12 per NationsHealth share.

Kohlberg Kravis Roberts & Co. is finalizing an agreement to buy South Korean-based Oriental Brewery from InBev for around $1.8 billion.

Milestone Partners has sponsored the recapitalization of Blaschak Coal Corp., a Mahanoy City, Penn.-based miner, preparer and marketer of anthracite coal. No financial terms were disclosed. Harris Williams & Co. advised Blaschak on the deal.

The Sterling Group, a Houston-based private equity firm, has acquired Velcon Filters LLC, a Colorado Springs, Colo.-based filtration system manufacturer. No pricing terms were disclosed for the deal, which included leveraged financing from BNP Paribas and Amegy Bank of Texas.

PE-Backed IPOs

Diamondback Energy Services Inc., an Oklahoma City-based acquisition company focused on service-oriented companies in the oil and natural gas industry, has canceled its proposed $86.25 million IPO. It had planned to trade on the Nasdaq under ticker symbol FANG, with Jefferies & Co. serving as lead underwriter. Diamondback is controlled by Wexford Capital.

SeaCastle Inc., a Wilmington, Del.-based lessor of intermodal equipment used in global containerized cargo trade, has canceled its IPO. It had originally filed for its IPO in September 2007, with Bear Stearns as lead underwriter, and officially postponed the offering in January 2008. It had planned to offer 20 million common shares at between $15 and $17 per share, with an initial market cap of approximately $2.2 billion, were it to price at the high end of its range. Fortress Investment Group holds a 97.4% ownership position.

PE-Backed M&A

Avalign Technologies Inc., a medical device outsourcing platform backed by RoundTable Healthcare Partners, has acquired NGInstruments Inc., a maker of surgical cutting tools flike drills, taps and reamers. No financial terms were disclosed. NGInstruments is the fourth Avalign acquisition, following Nemcomed, Instrumed International and Advantis Medical.

Big Fish Games, a Seattle-based online gaming and interactive entertainment portal, has acquired Vancouver-based Grubby Games. No financial terms were disclosed. Big Fish has raised over $90 million in VC funding from firms like Balderton Capital, General Catalyst Partners and Salmon River Capital.

Sarnova, a distributor of health care products in the emergency medical services (EMS) and respiratory markets, has acquired Blue Ridge Medical Inc., a supplier of pharmaceuticals to the EMS community. No financial terms were disclosed. Sarnova is a portfolio company of Water Street Healthcare Partners.

PE Exits

Acme Packet Inc. (Nasdaq: APKT) has acquired Convergence Inc., a Maynard, Mass.-based provider of IP communications security. The deal was valued at $22.8 million, including $22.2 million of Acme Packet common stock. Convergence had raised over $45 million in VC funding from firms like Highland Capital Partners, Globespan Capital Partners and North Bridge Venture Partners.

American Capital has sold Vero Beach, Fla.-based general avaiation company Piper Aircraft Inc. to Imprimis for an undisclosed amount.

The Azrieli Group has bid for part of Cerberus Capital Management’s and Gabriel Capital Corp.’s 9.8% stake in Bank Leumi. No further details were disclosed.

Intelius Inc. has acquired Spock Networks Inc., a Menlo Park, Calif.-based people search engine operator. No financial terms were dislcosed. Spock had raised a $7 million Series A round from Clearstone Venture Partners and Opus Capital.

Fund News

GrowthWorks, a Canadian venture capital group, has signed a letter of intent to acquire Vancouver-based mutual fund manager Mavrix Fund Management Inc. (TSX:MVX).

Human Resources

Oliver Gardey has joined Pomona Capital as a London-based partner. He previously was a partner with Adams Street Partners.

Greg Steve has joined Huron Capital Partners as a Pittsburgh-based principal. He previously was a managing director and regional manager with National City Business Credit.

Thomas Klein has joined the Silicon Valley office of law firm Greenberg Traurig LLP, as a shareholder in the law firm’s corporate and securities practice. He will focus on startup and VC transactions, M&A and public company representation. Klein previously was with Wilson Sonsini Goodrich & Rosati.