peHUB Wire: Thursday, April 22, 2010

Earlier this morning, AXA Private Equity announced that it has acquired a $1.9 billion portfolio of limited partner positions from Bank of America. Some notes, mostly based on a conversation with AXA’s Vincent Gombault:

1. The portfolio is 90% buyout funds, of which 30% are considered “large funds.” The portfolio is considered “mature,” with around 60% of commitments already called down.

2. Bank of America originally began speaking with potential buyers 18 months ago, including firms other than AXA. This would indicate that BoA’s interest in selling was not related to the proposed Volcker Rule (within Dodd financial reform bill), which would seemingly require banks to divest private equity investments. It is possible, however, that Volcker helped push this to the finish line.

3. Gombault believes that we’ll see several more $1.5b+ secondary deals over the next 12 months.

4. He declined to discuss specific pricing for the BoA deal, but said typical secondary pricing right now was at a single-digit discount to NAV. This compares to 20-30% discounts last December, 30-40% discounts last September and up to 70% discounts at the peak of the financial crisis. The last time secondary buyers regularly paid premiums to NAV was in 2006 and 2007 (up to 20%).

5. Gombault: “Pricing is not as important to us as the strength of the assets. If you buy weak assets at a deep discount, your discount will be never-ending.”

6. Gombault just returned to France, after being stuck in NYC due to the volcano. No, that is not really relevant to anything.

7. Preqin sent over some historical secondary data, which indicates that this is the largest deal since CalPERS sold a legacy portfolio at the end of 2007 for $2.1 billion.

*** Prior to the AXA news, today’s column actually was supposed to be about a new Josh Lerner paper about direct bank investment in private equity. I’ll do that one online instead, but here are three of his findings:

(1) Bank-affiliated PE groups accounted for over 25% of all PE deals between 1983 and 2009; (2) Such deals were financed at more buyer-friendly terms when the banks were part of the equity syndicates; (3) Investments by commercial banks during peak markets have significantly higher bankruptcy rates.

*** Five PE/VC IPOs priced last night, but all five priced low. Is that a silver cloud with a dark lining?

*** Back in February, Bessemer Venture Partners announced a trio of promotions. Not mentioned was that the moves were made, in part, to succeed two existing pros who had been asked to move on.

The two departees will be Devesh Garg, a managing director of BVP India, and Justin Label, a cleantech-focused partner working out of Menlo Park. Both are still with the firm, pending new employment elsewhere.

*** I posted yesterday about a Chicago-based fund-of-funds that defaulted on a commitment to TPG Capital. The story reads a bit like the HRJ situation (minus the firm collapse), but maybe that’s only because both shops were founded by ex-NFL players…

*** Yesterday we launched our Desperate Intern Drive, with nearly 40 participating firms. I’m hoping to post some additional listings, so please let me know via email if your firm is looking to hire an intern this summer. What I need is your firm type (PE/VC/bank/etc), job location and a contact email for candidates (plus any additional info you want posted).

Top Three

AXA Private Equity has acquired a $1.9 billion portfolio of limited partnership interests in mature buyouts funds from Bank of America.

TPG Capital has agreed to buy American Tire Distributors Holdings Inc. for $1.3 billion, from Investcorp, Berkshire Partners and Greenbriar Equity Group. The deal is expected to close next quarter. American Tire is a Charlotte-based distributor of replacement tires to local, regional and national tire retailers.

The Blackstone Group reported $360 million in Q1 2010 net income, beating analyst estimates and its $82 million net income from Q1 2009.

VC Deals

Simulmedia, a New York-based company aimed at helping television companies improve ratings by lifting the effectiveness of tune-in programming spots, has raised $8 million in Series B funding. Time Warner Investments led the round, and was joined by return backers Avalon Ventures and Union Square Ventures. The company previously raised $4 million, and was founded by Dave Morgan, former founder of TACODA and Real Media.

Voxify, an Alameda, Calif.-based provider of speech recognition technologies for automating customer call centers, has raised $8 million in fifth-round funding.Return backers includeEl Dorado Ventures, Intel CapitalPalomar Ventures and Sigma Partners. The company previously had raised around $35 million.

SendGrid Inc., a cloud-based service that delivers transactional emails on behalf of companies, has raised $5 million in Series A funding. Foundry Group led the round, and was joined by seed backers Highway12 Ventures, SoftTech VC, Dave McClure and David Cohen.

MXP4, a French developer of interactive music solutions, has raised $4 million in new VC funding. Orkos Capital led the round, and was joined by return backers Sofinnova Partners and Ventech.

Macheen Inc., an Austin, Texas-based provider of cloud services for connected devices, has raised $2.75 million in Series A funding. DFJ Mercury led the round, and was joined by individual angels like Mike Maples and Tom Meredith.

Lifefactory, a Sausalito, Calif.-based maker of BPA-free glass baby and adult beverage bottles, has raised $1.65 million in Series A funding co-led by Greenhouse Capital Partners and Big Sky Partners.

Buyouts Deals

Advent International has acquired UK sofa retailer DFS for an undisclosed amount. This comes less than a month after the company’s founder said DFS was not for sale, despite persistent press reports of a £500 million auction.

The Blackstone Group has joined a group bidding to buy budget hotel chain Extended Stay, according to Reuters. Blackstone is teaming with Centerbridge Partners and Paulson & Co., which are facing a rival bid from Starwood Capital Group.

Goldman Sachs reportedly is considering a takeover of insolvent German department store chain Karstadt, if no other investor emerges.

Magic Brands, the parent of the Fuddruckers and Koo Koo Roo restaurant chains, has filed for prepackaged Chapter 11 bankruptcy protection. It also has struck a deal to be acquired Tavistock Group for $40 million. More than 130 Fuddruckers restaurants operated as franchises are not part of the bankruptcy.

Oak Hill Capital Partners has agreed to acquire The Hillman Companies Inc. from Code Hennessy & Simmons, Ontario Teachers’ Pension Plan and certain members of company management. The deal is valued at $815 million, with Hillman’s publicly traded trust preferred securities to remain outstanding on the NYSE-AMEX. Hillman is a Cincinnati-based distributor of hardware items to retail customers.

Ziggo, a Dutch cable operator owned by Cinven and Warburg Pincus, has issued a €1.2 billion bond offering to repay mezzanine credit facilities. The unsecured notes would be due in 2018.

PE-Backed IPOs

Alimera Sciences Inc., an Atlanta-based ophthalmic pharmaceutical company, raised around $72 million in its IPO. The company sold6.5 million common shares at $11 per share, compared to original plans to sell 6 million shares bat between $15 and $17 per share. Alimera willtrade on the Nasdaq under ticker symbol ALIM, while Credit Suisse and Citi served 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%). It also received a total of $16.7 million from the sale of two OTC allergy products and a lubricating eye from to Bausch &

Codexis Inc., a Redwood City, Calif.-based provider of solutions for pharma chemical process development and manufacturing,raised around $78 million via its IPO. The company pricedsix million shares being offered at $13 per share, or the low end of its $13-$15 per share range.The company’s initial market cap is approximately $441 million. It will trade on the Nasdaq under ticker symbol CDXS, while Credit Suisse served as lead underwriter. Codexis had raised just over $80 million in VC funding since 2002, from firms like CCTV Investments, CMEA Ventures, Pequot Capital, Bio*One Capital and Pfizer. It canceled a previous $100 million IPO attempt in September

DynaVox Inc., a Pittsburgh-based maker of software and devices that assist people in overcoming speech, raised around $140.6 million via its IPO. The company sold nearly 9.4 million shares at $15 per share (low end of $15-$17 range). DynaVox willtrade on the Nasdaq under ticker symbol DVOX, while Piper Jaffray and Jefferies & Co. served as co-lead underwriters. Shareholders include Vestar Capital Partners and Park Avenue Equity

Falck AS, a Danish ambulance service backed by Nordic Capital and ATP Private Equity Partners, is exploring an IPO on the Copenhagen bourse. The company is believed to be valued at between $1.6 billion and $1.8 billion.

Global Geophysical Services Inc., a Missouri City, Texas-based provider of technology that collects seismic data for oil and gas industry, raised around $90 million via its IPO. The company sold 7.5 million shares at $12 per share, compared to plans to offer11.5 million shares at between $15 and $17 per share. Global Geophysical will trade on the NYSE under ticker symbol GGS, while Credit Suisse and Barclays Capital served as co-lead underwriters. Backers include Kelso & Co. and Wayzata Opportunities Fund. GGS filed for a $145 million IPO in 2006, but pulled the registration last year.

SPS Commerce, a Minneapolis-based provider of on-demand supply chain management solutions, raised around $59.5 million via its IPO. The company sold 4.96 million shares at $12 per share, compared to plans to offer 3.3 million shares at between $11 and $13 per share. The company’s initial market cap is around $131 million, and it will tradeon the Nasdaq under ticker symbol SPSC. Thomas Weisel Partners served as lead underwriter. SPS Commerce hasraised around $71 million in VC funding, with current shareholders include Adams Street Partners, Granite Ventures, River Cities Capital Funds, Split Rock Partners, Pacific Capital Ventures and Axiom Venture

Firms & Funds

The Carlyle Group and RPK Capital have formed a $1 billion joint venture to acquire commercial aviation assets, including aircraft and engines. Carlyle’s commitment is up to $600 million.

Human Resources

Marcus Badger has joined Corridor Capital as a principal. He previously was with Frontenac Company.

Jack Gavin has joined LLR Partners as an operating partner, with a focus on business services companies. He is the former president and CEO of Drake, Beam, Morin.

Gary Pritchard and Susan Healy have joined Global Infrastructure Partners as a senior operating principal and head of investor relations, respectively. Pritchard most recently ran SABIC Innovative Plastics’ supply chain, while Healy spent 13 years in IR with The Carlyle Group.