peHUB Wire: Monday, November 23, 2009

The sky is gray, the retail stampede is approaching and I’m glad to be back in the home office. In other words, it’s time for some Monday Mouth-Off.

First up are some responses to Friday’s discussion of whether more LP-friendly fee splits will lead to the disappearance of transaction fees:

Michael: “If GPs can’t keep the fees, they won’t charge them. This short-term IRR stuff is not believable. Monitoring fees aren’t big enough to be meaningful on a large LP commitment and the hassle of collecting and then making tiny distributions will be an enormous headache for GP and LP alike. Most LPs actually prefer longer hold periods for the reason that has been mentioned before, that they want to keep their dollars working. Some nominal $100-$500K of management fees is just not worth having to keep track of. On the other hand, it seems like a natural way to make money as a GP. If I was an LP I’d take the other tradeoff, and say I’m not paying my 2%! management fee, but rather would whittle it back 1% or so and let them keep the fees they get for getting deals done. I understand there are risks to this as well, but until GPs are only investing their own money, you’ll always have agency-principal issues.”

Kelly: On charging fees and 100% carry, Warburg is not the best “canary in the coal mine.” Its investment mandate is so broad that it has done a fair amount of late-stage VC and growth capital with different practices than buyouts that on the margin might show a “false positive.”

Adam: It is really not necessary to be so negative about PE and condescending in using words like “pilfer.” PE is where a lot of people make a living. Not just earn “profits they are questionably entitled to.” Try to be a little more human or a little less biased. It does not reflect well on you, nor the industry you cover.”

*** Randy: “Good job pointing out how the SEC has been asleep at! the switch on insider trading on take-privates. What I wonder is if c ases like Galleon and 3Com indicate that the agency is now awake. If so, does that mean that we’ll see prosecutions related to future take-privates, or perhaps that those who traded illegally in the past won’t be so cavalier this time?”

*** Lars on The Carlyle Group forming a JV for the Connecticut highway rest areas: “It will be very interesting to see how the exit language is written, and what rights Connecticut has to veto the next buyer… I’m also not sure that I fancy the idea of a drive-thru Subway. It seems to defeat the purpose.” Lars, I too like seeing my veggie toppings on display, but I can pass it up for the sake of speed…

Top Three

Ciena Corp. reportedly has won the auction for the optical networking and carrier Ethernet business of Nortel, with a bid of $769 million. Ciena had originally offered $526 million, but faced competition from a joint bid by One Equity Partners and Nokia Siemens.

ExactTarget, an Indianapolis-based maker of email marketing software, has raised $70 million innew VCfunding, according to a regulatory filing. This follows a $70 million round from earlier this year, and brings the company’s total funding to around $155 million. ExactTarget said in a press release that it had raised an undisclosed amount of new funding from Technology Crossover Ventures, but did not say if existing shareholders also participated in the round. Those backers are Battery Ventures, Insight Venture Partners, Ontagu Newhall and Scale Venture ! Partners.

Ironwood Pharmaceuticals Inc. (f.k.a. Microbia), a Cambridge, Mass.-based antibacterial drug company focused on gastrointestinal disorders, has filed for a $172.5 million IPO. It plans to trade on the Nasdaq under ticker symbol IRWD, with Credit Suisse, J.P. Morgan and Morgan Stanley serving as co-lead underwriters. The company has raised over $250 million in total VC funding since 1998, from firms like Ridgeback Capital (13.41% pre-IPO stake), Venrock (11.27%), Polaris Venture Partners (8.14%), Morgan Stanley (6.9%), Fidelity Biosciences and Paperboy Ventures.

VC Deals

Receptos Inc., a San Diego-based developer of GPCR therapeutics, has raised $25 million in tranched-out Series A funding. Backers include ARCH Venture Partners, Flagship Ventures, Lilly Ventures and Venrock.

WinBuyer, an Israel-based developer of on-site comparison pricing applications, has raised $6.9 million in first-round funding. Pitango Venture Capital led the round, and was joined by Giza Venture Capital.

SantoSolve AS, a Norwegian developer of pain therapeutics, has raised $5.5 million in VC funding. Backers include Teknoinvest, InnovationsKapital and Investinor.

DigitalBridge Communications Corp., an Ashburn, Va.-based provider of WiMax broadband service to underserved communities, has raised an undisclosed amount of new venture capital funding. Schurz Communications was joined by return backers National Rural Telecommunications Cooperative (NRTC), Paladin Capital Group, CNF Investments and Novak Biddle Venture Partners. The company previously raised over $50 million in equity funding.

Buyouts Deals

Highstar Capital is leading a consortium that has agreed to invest up to $1.3 billion to expand the Port of Baltimore, according to the WSJ. The deal effectively serves as a 50-year lease, with a $100 million upfront payment and promises of various infrastructure improvements.

Gas Natural is expecting several private equity offers for its Madrid gas distribution assets, which is expected to generate more than €500 million. Bids are due Nov. 30, with suitors reported to include Carlyle Group, CVC Capital Partners, Morgan Stanley and Macquarie.

Genstar Capital has agreed to buy Atenda Healthcare Solutions, a Davie, Fla.-based operator of a specialty pharmacy, nursing care and medical equipment. The news was first reported by Buyouts magazine.

Grey Mountain Partners has acquired a majority equity stake in Bolttech Mannings LLC, a New Versailles, Penn.-based provider of technical bolting and heat treating services for industrial applications. No financial terms were disclosed.

Clearview Capital has sponsored a recapitalization of IESCO, a provider of inspection and non-destructive testing servic! es to the energy sector in California. No financial terms were disclosed.

PE-Backed IPOs

Birds Eye Foods, a Rochester, N.Y.-based maker of frozen vegetables, has withdrawn registration for a $350 million IPO. Birds Eye owner Vestar Capital Partners last week agreed to sell Birds Eye to Pinnacle Brands Corp., a portfolio company of The Blackstone Group, for approximately $1.3 billion.

Calix Networks Inc., a Petaluma, Calif.-based provider of communications access systems and software, has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol CALX, with Goldman Sachs and Morgan Stanley serving as co-lead underwriters. The company has raised around $220 million in VC funding from Foundation Capital (9% pre-IPO stake), TeleSoft Partners (8.4%), Azure Capital Partners (8.26%), Meritech Capital Partners (6.62%), Redpoint Ventures (6.02%), Contrarian Capital Management, Credit Suisse, Kinetic Ventures, Menlo Ventures and Integral Capital Partners. It ! also secured venture debt funding from Silicon Valley Bank.

Crimson Exploration Inc., a Houston, Texas-based natural gas and crude oil company, has filed for a $100 million stock offering. The company currently trades on the OTC bulletin board, but plans to list on the Nasdaq. Barclays Capital is serving as lead underwriter. Crimson is majority-owned by Oaktree Capital Management.

Fabrinet Inc., a Thailand-based provider of foundry services to optical component, module/subsystem and optics OEMs, has filed for a $150 million IPO. It plans to trade on the NYSE under ticker symbol FN, with Morgan Stanley and Deutsche Bank Securities. Earlier this year, Fabrinet canceled a proposed $250 million IPO, due to “market conditions.” Shareholders include H&Q Asia Pacific (58.3% pre-IPO stake), JDS Uniphase Corp. (6.5%) and J.F. S! hea Co. (6.5%). om

Movetis, a Belgian drugmaker, is planning to raise up to €112.4 million via an IPO. The capital would be used to fund Movetis’ European launch of a treatment for chronic constipation in women. The company was spun off in late 2006 from Janssen Pharmaceutica, with the help of VC firms like Sofinnova Partners and Life Sciences Partners.

Tesla Motors in preparing to file for an IPO, according to Reuters. The electric car maker has raised VC funding from such firms as Draper Fisher Jurvetson and VantangePoint Venture Partners.

Trony Solar Holdings Co., a Chinese thin-film solar company, has set its IPO terms to 19.5 million American depository shares being offered at between $9 and $11 per share. Backers include Intel Capital and JPMorgan Special Situations.

PE Exits

CDC Software Corp. (Nasdaq: CDCS) has agreed to acquire Truition Inc., a Toronto-based provider of an SaaS ecommerce platform for retailers and brand manufacturers. No financial terms were disclosed. Truition has raised VC funding from firms like JLA Ventures and VenGrowth.

Medidata Solutions Inc. (Nasdaq: MDSO), a New York-based provider of electronic data capture and data management software for clinical researchers, has filed for a secondary public offering of 4.5 million common stock. The company’s closing price on Wednesday was $17.39 per share, compared to its June IPO price of $14 per share. Selling shareholders include Insight Venture Partners, which currently holds 2.46 million shares for a 21.2% ownership position. Medidata’s filing did not indicate ho! w many shares Insight plans to offer.

Warner Chilcott PLC (Nasdaq: WCRX) priced a secondary offering of 20 million common shares at $22.5 per share. Sellers included: Bain Capital (3.94 million shares, 33.82 million remaining), DLJ Merchant Banking (4.23 million sold, 35.26 million remaining), JPMorgan Capital (4.23 sold, 33.82 million remaining), THL Partners (4.43 million sold, 33.82 million remaining).

PE-Backed M&A

Centerplate, a Stamford, Conn.-based concessions company owned by Kohlberg & Co., has agreed to acquire smaller rival Boston Culinary Group Inc. No financial terms were disclosed, except that the deal is worth less than the $210 million Kohlberg paid for Centerplate this past January.

Intermedix Corp., provider of billing services to emergency medical service providers in Texas, has acquired the assets of Texas ER Medical Billing Inc., a provider of revenue cycle management services for hospital-based emergency physicians. No financial terms were disclosed. Intermedix is a portfolio company of Parthenon Capital.

Firms & Funds

DeltaPoint Capital Management has held a first close on more than $50 million for its fourth fund, which is targeting a total of up to $125 million. Limited partners include the New York State Common Retirement Fund. DeltaPoint is a Rochester, N.Y.-based firm focused on buyout and growth equity investments.

Haywood Dorland Energy Capital is planning to begin marketing its debut fund later this month, according to VentureWire. The New York–based firm focuses on renewable energy projects, and was founded by veteran energy banker Steven Pottle (most recently with HSH Nordbank).

Human Resources

Howard Gwin has joined Silicon Valley growth equity firm Bridgescale Partners as a venture partner, working out of Toronto. He most recently served as president of Solect Technology Group.