peHUB Wire: Thursday, December 17, 2009

When the SEC first made us all aware of Galleon, it promised that many more insider trading suits would be forthcoming. We wondered how many would include private equity employees, given that the 2006-2008 boom in take-private deals often included trading volume spikes just before the formal acquisition announcements.

We got a taste early last month, when the SEC charged former Friedman Fleischer & Lowe CFO Chen Tang. Then yesterday we got some more, with SEC allegations that former TPG Capital associate Vinayak Gowrish schemed to illegally profit on offers for Sabre Holdings Corp., TXU Corp. and Alliance Data Systems Corp.

Here’s how the SEC says it worked: Gowrish would get inside information about a pending deal, and then pass it onto Adnan Zaman, a former investment banker with Lazard Frères & Co. Zaman then would write coded message on yellow sticky notes — how delightfully low-tech — for a pair of options ! traders named Pascal Vaghar and Sameer Khoury, who then would buy or sell based on Gowrish’s info. There also was some trading based on non-TPG info Zaman acquired from inside Lazard.

Each of the trades was deliberately small, so as not to tip off authorities. The total illicit profits were around $500,00 — meaningful money for a PE associate, but relative chump change for a partner (at least at a firm like TPG). You can read the full SEC complaint by going here.

*** It’s worth noting, however, that earlier insider trading charges against former Blackstone employee Ramesh Chakrapani seem to be in limbo, according to a story in today’s WSJ. In other words, even the select cases brought by the SEC can be tough to prosecute.

*** Clarification: Yesterday’s note on Kevin Delbridge included the following quote: “I know some p! eople would have just said that they are fulltime and worked fewer hou rs, but I just can’t operate that way.” I added some brackets that some readers took to mean Delbridge was referring to some of his HarbourVest colleagues (in the first clause). He was not. My apologies.

*** Taking a page from TIME, we’re putting together our peHUB People of the Year. Email me your nominations ASAP, with an explanation of why the “honor” is deserved. Remember, it’s about influence, not likability or positivity.

*** Stocking Stuffer: I’m pleased to announce that we have improved the search archive functionality at peHUB, which now allows members to to search by keyword, relevance, date and story category (VC Deals, Firms & Funds, etc.). You also can access all past copies of the peHUB Wire.

Annual subscriptions cost just $195, and make the perfect holiday gift (they’re this year’s Tickle Me Elmo). Get one today.

Top Three

Apollo Management has agreed to acquire Sandusky, Ohio-based theme park operator Cedar Fair Entertainment (NYSE: FUN). The deal is valued at around $2.4 billion, including the assumption of debt. Cedar Fair owns 11 North American theme parks, including Knott’s Berry Farm in Los Angeles. Net revenue for nine months ending Sept. 27, 2009 were $810.5 million, down from $8! 77 million a year earlier (a period with 25 fewer operating days). Net income decreased to $61.7 million.

Ethicon, a subsidiary of a Johnson & Johnson (NYSE: JNJ), has agreed to acquire Acclarent Inc., a Menlo Park, Calif.-based developer of surgical devices for treating ear, nose and throat ailments. The deal is valued at $785 million in cash. Acclarent has raised just over $100 million in VC funding, from firms like Johnson & New Enterprise Associates, Delphi Ventures, Versant Ventures, Meritech Capital Partners and Johnson Development Corp. Acclarent canceled a proposed $86.25 million IPO in December 2008, citing “unfavorable market conditions.”

Onex Corp. (TSX: OCX) has closed its third p rivate equity fund with US$4 billion in capital commitments, including $500 million from Onex.

VC Deals

SonicMule Inc., a Menlo Park, Calif.–based developer of interactive sonic applications for the iPhone, has raised $8 million in third-round funding. Shasta Ventures led the round, and was joined by return backers Granite Ventures and Bessemer Venture Partners.

RepairPal, an Emeryville, Calif.-based online auto repair and maintenance information site, has raised around $7.35 million in VC funding led by Tugboat Ventures, according to a regulatory filing.

Zulily, a private sale ecommerce startup focused on children and mothers,has raised $4.6 million in new VC funding led by Maveron LLC. Zulily was founded by former Blue Nile execs Darrell Cavens and Mark Vadon.

SeeWhy Inc., an Andover, Mass.-based provider of real-time analystics on los ecommerce customers, has raised $2 million in new VC funding. Return backers include Scottish Enterprise, Logispring, Pentech Ventures and Delta Partners. The company raised $4.5 million in second-round funding earlier this year.

Carbon Hub, a London-based developer of Web-based carbon management solutions, has raised €1 millionfrom Seventure Partners and individual angels.

Mozat Pte Ltd., a Singapore-based mobile social media platform, has raised an undisclosed amount of Series A funding from Jafco Asia.

Venrock has agreed to purchase $10 million worth of common stock! in Neurocrine Biosciences Inc. (Nasdaq: NBIX), a San Diego-based drug company focused on neurological and endocrine diseases and disorders.

Buyouts Deals

Bridgepoint Capital reportedly has increased its offer for Care UK (LSE: CUK), now valuing the health and social care provider at between £275 million and £300 million. Care had rejected an unsolicited approach from Bridgepoint back in September.

Odyssey Investment Partners has completed its previously-announced acquisition of Waukesha, Wis.-based scaffolding company Safway from ThyssenKrupp AG. No financial terms were disclosed.

PE-Backed IPOs

AVEO Pharmaceuticals Inc., a Cambridge, Mass.-based oncology drug company, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol AVEO, with J.P. Morgan and Morgan Stanley serving as co-lead underwriters. The company has raised around $151 million in VC funding, from firms like Biogen Idec (14% pre-IPO stake), MPM Capital (10.7%), Highland Capital Partners (9.9%), Venrock (8%), Prospect Venture Partners (7.8%),Bessemer Venture Partners, Merlin BioMed Group, Mitsubishi UFJ Financial Group, Flagship Ventures, Oxford Bioscience Partners, Greylock Partners, Lotus Biosciences, GE Capitaland Vatera Holdings.

Cobalt International Energy LP (NYSE: CIE) shares closed flat in their first day of trading, at $13.50 per share. The Houston,Texas-based oil and gas exploration and production company focuses on the Deepwater Gulf of Mexico, and ha! d received private equity funding from First Reserve Corp., Goldman Sachs, Carlyle/Riverstone, KERN Partners and company management.

Falck, a Danish ambulance operator backed by Nordic Capital and ATP Private Equity Partners, said it is “in the process of selecting advisers for the company’s potential IPO.”

Team Health Holdings LLC (NYSE: TMH) shares rose 6.75% on their first day of trading, following a low IPO price of $12 per share. The Knoxville, Tenn.-based company provides outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers. The Blackstone Group held over a 90% pre-IPO ownership position.

Kraton Performance Polymers, a Houston-based maker of polymers used in products such as disposable baby diapers and razor blades, raised $139 million in its IPO. The company priced served as lead underwriter. Shareholders include TPG Capital and JPMorgan Partners.

PE-Backed M&A

Cornerstone Records Management, a records information management company backed by Sterling Partners, has acquired the assets of Hamilton Records Management Inc., which will expand Cornerstone’s New York Metro operations.

Definition 6, an Atlanta-based interactive marketing agency, has acquired Leach Communications Inc., a New York-based public relations and Web services firm. No financial terms were disclosed. Earlier this year, Definition 6 raised $15 million in private equity funding from Navigation Capital Partners.

Gizmoz of San Francisco and Daz 3D of Draper, Utah have merged, in order to form a combined online marketplace for inter-compatible digital characters and accessories. No financial terms were disclosed. Gizmoz had raised around $37 million, from Benchmark Capital, Columbia Capital, DoCoMo Capital and NGI Capital. Daz had raised just over $4 million from Highway 12 Ventures.

PE Exits

AutoDesk (Nasdaq: ADSK) has acquired Israeli EDA software developer PlanPlatform for $25 million, according to The report says that PlanPlatform, formerly known as VisualTao, had raised $4.3 million from Sequoia Capital Israel and company management.

Oclaro Inc. (Nasdaq: OCLR) has acquired Xtellus Inc., a Denville, N.J.-based developer of optic components for multi-wavelength, reconfigurable optical networking systems. No financial terms were disclosed. Xtellus had raised around $16.3 million in VC funding, from Alta Berkeley Venture Partners, Israel Seed Partners and NanoDimension LP.

Firms & Funds

EMP Global has closed its Central American Mezzanine Infrastructure Fund with $150 million in capital commitments. Limited partners include Finnish Fund for Industrial Cooperation, Inter-American Development Bank, IFC, Netherlands Development Finance Company, Central American Bank for Economic Integration and Mexican Fondo de Fondos.

The INext Fund has launched as a $58 million fund-of-funds focused on Indiana’s life sciences market. It will be managed by BioCrossroads and Credit Suisse. LP commitments were provided by such groups as Eli Lilly, the Indiana State Teachers Retirement Fund, Indiana University, Purdue, Notre Dame and the Fairbanks Foundation.

Morgan Stanley Investment Management has launched a program aimed at providing capital, advice and infrastructure solutions to emerging asset managers, with a particular emphasis on minority and women-owned asset managers.

TechStars, a startup boot camp for software entrepreneurs, plans to launch a Seattle program next fall, with Andy Sack as executive director. TechStars be gan operation in Boulder, Colo. three years ago, and last year opened its first satellite program in Boston.

Human Resources

Doughty Hanson & Co. has promoted Mark Corbidge and John Leahy to co-heads of private equity.

HarbourVest Partners has promoted Peter Lipson, Julie Ocko and Mary Traer to the position of managing director. Traer also was named chief administrative officer. Other HarbourVest promotions include: Karin Lagerlund to chief financial officer, Sebastiaan van den Berg to principal and Bruce Pixler, Catherine Shih, and Abraham Soquar to vice president.

! Hercules Technology Growth Capital has hired four new managing directors: Ernie Panos, Keith Cox, “Mac” Gerlach and Todd Jaquez-Fissori. Panos (previously with HighPoint Capital Management) and Cox (NewStar Financial) will be based in Boston, while Gerlach (Triplepoint Capital) and Jaquez-Fissori will be based in Palo Alto. peHUB previously reported on Jaquez-Fissori’s move.

Jacques Galante and Henry Ormond have joined Leeds Equity Partners as managing directors. Galante previously was a principal with The Carlyle Group, while Ormond was a principal with Quadrangle Group.

William Kahn has joined Seyfarth Shaw as a W! ashington, D.C.-based partner in the law firm’s corporate office. He previously was with Hogan & Hartson LLP.