peHUB Wire: Monday, November 2, 2009

It’s been at least two years since I first began wondering when a private equity pro would get accused of insider trading. Really thought it would happen sooner – and on a grander scale – but better late than never (caught).

The first to fall is Chen Tang, who briefly served as chief financial officer with buyout shop Friedman Fleischer & Lowe. He had previously served as CFO for both Prospect Venture Partners and Tallwood Venture Capital.

Tang and several others were accused last Friday by the SEC of making more than $8 million in “illicit profits from unlawful trades in the securities of Tempur-pedic International, Inc. and Acxiom Corporation.”

Friedman Fleischer & Lowe itself is not named in the complaint, and reportedly suspended Tang once the SEC informed the firm of its investigation (he was later fired).

The SEC alleges that Tang learned his firm – an existing Tempur-Pedic shareholder with a seat on the company’s board – plann! ed to make a “large, market-moving purchase” of Tempur-Pedic securities, which would be disclosed after Tempur-Pedic pre-announced that it would miss its quarterly earnings forecast. Tang then is said to have tipped off various friends (now co-defendants), who ultimately reaped nearly $2 billion by trading on the information.

The Acxiom trades allegedly were based on information from Ronald Yee, who was CFO of San Francisco-based hedge fund ValueAct Capital (which also is not named in the complaint).

The SEC promised to shortly bring several insider trading cases following Galleon, so this really could be just the tip of the iceberg. Really not too surprising, given: (a) How many transactions there were between private equity firms and publicly-traded companies, and (b) How a public company’s trading volume almost always seemed to spike just before being outed as a private equity target.

*** Last week, a cleantech panelist noted that some ! European infrastructure funds were proposing 15-year and 20-year inves tment cycles. While unusual, it apparently isn’t novel. Nor is it only for infrastructure.

It appears that New York-based buyout firm Lindsay Goldberg effectively has a 20-year investment cycle for its third fund, which closed earlier this year with $4.7 billion in capital commitments. The official fund term is 10 years, but a source says that it includes 10 one-year extensions at the GP’s discretion. As the firm says on its website:

“We can invest capital in a business for up to ten years, or twice the duration of most funds; we can be partners in a business for up to twenty years, or twice the duration of most funds.”

I had expressed skepticism that LPs would bite at such a long-term capital tie-up, but I stand corrected. Lindsay Goldberg’s money came from a variety of LP sources, including public pension plans in Canada, Indiana, Louisiana, New York and Wisconsin. Wonder if this could become a trend…

*** Twitter has been a great boon to peHUB, becoming the second-highest driver of traffic to the site (this email is first). But last week our account got hacked, and our followers got phished. Then it happened again this morning. I first sent a message toTwitter’s help desk four days ago, but no reply yet save for the automated type. Maybe that’s because Twitter apparently has fewer than 10 customer service reps. You’d think ! Twitter could afford a few more, given that it’s got well over $100 million in the bank…

Top Three

CIT Group yesterday filed for a prepackaged bankruptcy.

Dollar General Corp., a Goodlettsville, Tenn.-based discount retailer owned by KKR, has set its IPO terms to 34.1 million common shares being offered at between $21 and $23 per share. It would have an initial market cap of approximately $7.83 billion, were it to price at the high end of its range. KKR bought the company for $7.2 billion in 2005, including around $2.8 billion in equity. Dollar General plans to trade on the NYSE under ticker symbol DG, with Citi, Goldman Sachs and KKR serving as co-lead underwriters.

BNY Mellon Asset Management has acquired a 20% stake in Siguler Guff & Company, a multi-strategy private equity firm with over $8 billion in assets under management. No financial terms were disclosed.

VC Deals

Pulmatrix, a Lexington, Mass.-based developer of drug therapies for infectious and progressive respiratory diseases, has raised $30.2 million in Series B funding. Arch Venture Partners and Novartis Bioventures Fund co-led the round, and were joined by return backers Polaris Venture Partners and 5AM Ventures. The company previously raised $14.5 million. In other Pulmatrix news, the company recently received a $2.2 million grant from the National Institute of Allergy and Infectious Diseases.

Bling Nation, a Palo Alto, Calif.-based provider of mobile payment solutions, has raised $20 million in Series B funding. Balderton Capital led the round, and was joined by return backers CampVentures, Lightspeed Venture Partners and Meck Ltd. The company previously raised an! $8 million Series A round.

Link_A_Media Devices Corp., a Santa Clara, Calif.-based provider of data recovery and transport technologies for storage devices, has raised $18 million in Series A funding. Lightspeed Venture Partners led the round, and was joined by return backers Itochu Technology Ventures, Keynote Ventures and SunAmerica Ventures.

Beijing Goldenway Bio-Tech Co Ltd., a developer of microorganism technologythat converts kitchen waste into microbial protein feed, has raised $11.7 million in VC funding from Tsing Capital.

BlueCat Networks, a Toronto-based provider of provider of enterprise-class IP addre! ss management platforms, has raised US$11 million from Bridges cale Partners.

Intelleflex Corp., a Santa Clara, Calif.-based provider of extended capability RFID solutions, has held an $8 million first close ona Series A recap round.New Venture Partners was joined by return backers Arcapita Ventures, Morgenthaler Ventures and The Woodside Fund. Intelleflex previously raised around $50 million in VC funding since 2004.

PDC Biotech GmbH, a Vienna, Austria-based women’s health drug startup whose first product focuses on preterm labor and primary dysmenorrhea, has raised over €4 million in Series A funding. MIG Verwaltungs AG and Edmond de Rothschild Investment Partners co-led the round.

Bellicum Pharmac! euticals Inc., a Houston-based drug startup focused on prostate cancer, has raised $4.5 million in Series A and convertible note financing. The company has now raised a total of $8.5 million, including$1.45 million from the Texas Emerging Technology Fund.

Scoopler, a real-time search engine startup, has raised an undisclosed amount of seed funding from Ron Conway, Michael Birch, Avalon Ventures and XG-Ventures.

Aurora Feint Inc., a Burlingame, Calif.-base social gaming platform for the iPhone, has sold a 20% equity stake to Japanese social network operator DeNA. No financial terms were disclosed.

Buyouts Deals

The Blackstone Group, KKR and Temasek are among those expected to submit first-round bids for AXA’s stake in Chinese insurer Taiking Life. The deal is expected to be valued just north of $1 billion.

Baring Private Equity Asia has acquired a 16.5% stake in Singapore-listed confectioner Hsu Fu Chi. The deal was valued at US$135 million.

CapMan has agreed to acquire a majority stake in SRK Konsultation AB, a Swedish provider of residential care, treatment and educational services for young people and adults. No financial terms were disclosed.

Citigroup received three final-round bids for Japanese telemarketer Bellsystem24, which is expected to fetch more than $1 billion. The bidders were: Bain Capital, Permira and a team of The Blackstone Group with CVC Capital Partners.

Lightyear Capital has agreed to acquire $40 million of common stock in Bend, Ore.-based community bank Cascade Bancorp (Nasdaq: CACB). Existing Cascade shareholder David Bolger also agreed to buy an additional $25 million worth of common stock.

Platinum Group has acquired the assets of G.C. Peterson Machinery Co., a Minneapolis-basedmaker of wood! working and plastics equipment.No financial terms were disclosed.

PE-Backed IPOs

Alimera Sciences Inc., an Atlanta-based ophthalmic pharmaceutical company, has filed for an $80 million IPO. This comes less than two months after Alimera withdrew registration for a $75 million IPO due to “current public market conditions.” It had planned to trade on the Nasdaq under ticker symbol ALIM, with Credit Suisse and Citi serving as co-lead underwriters. Alimera has raised just over $71 million in VC funding since 2004, from firms like Scale Venture Partners (18.44% pre-IPO stake), Domain Associates (18.44%), Intersouth Partners (18.44%), Polaris Venture Partners (18.44%) and Venrock Associates (14.93%).

TeleNav Inc., a Sunnyvale, Calif.-based provider of voice-guided navigation services for mobile phones, has filed for a $75 million IPO. J.P. Morgan and Deutsche Bank Securities are serving as co-lead underwriters. The company has raised around $35 million in VC f! unding, from firms like Menlo Ventures (14.25% pre-IPO stake), iGlobe Partners (10.31%), Tenaya Capital and Sycamore Ventures.

PE-Backed M&A

PSC Info Group, a portfolio company of Roark Capital Partners, has acquired North Shore Agency, a Melville, N.Y.-based provider of outsourced data management services. No financial terms were disclosed.

PE Exits

Baring Private Equity Asia has hired UBS to advise on the sale of Malaysian retailer Courts Mammoth, which could fetch upwards of $300 million. Baring led an $84 million buyout of Courts Mammoth in 2007.

Firms & Funds

Ballast Point Ventures has secured $140 million in limited partner commitments for its second fund, according to a regulatory filing. It has a total target of $150 million. The St. Petersburg, Fla.-based firm raised around $53 million for its debut fund in 2003, with Raymond James as its lead investor.

Fortress Investment Group may aggregate $650 million in commercial loans into the first new commercial mortgage-backed security eligible for a federal lending program, according to Commercial Mortgage Alert.

SJ Berwin has opened an office in Shanghai. This is the law firm’s 12th office overall, and second in East Asia.

Human Resources

Kaisa Arovaara is stepping down as chief financial officer of CapMan, effective January 31, 2010. she joined the firm in 2006, and will be replaced on an interim basis by senior partner Olli Liitola.

Luke Belcastro and Peggy Marshall have joined Jefferies as New York-based managing directors in the firm’s fund placement group. They previously were with Mallory Capital Group as a partner and principal, respectively. Jefferies also has hired Joseph Nagae as a London-based senior vice president. He previously was a director in Citigroup’s fund placement unit.

Peter Comb has stepped down as head of Permira Debt Managers, a business for! med in early 2007 by Permira Advisors, according to Dow Jones. Prior to joining Permira, Comb had been with Lehman Brothers as chairman of leveraged finance and co-head of financial sponsors. No word yet on his future plans.

Kirtland Capital Partners has named Tom Littman president and senior partner. John Nestor will become chairman, while maintaining his roles as CEO and senior managing partner. Littman joined Kirtland in 1995, while Nestor joined in 1986.