peHUB Wire: Thursday, January 7, 2010

Private equity fundraising fell off a cliff in 2009, according tofigures released this morning by research company Preqin. Nothing shocking here, although it’s always good to have data backing up a narrative we pushed for the past 12 months.

Preqin reports that 482 global funds raised $246 billion last year, which is down 61% from the $636 billion raised in 2008. It’s also theweakest yearly total since 2004. The fourth quarter was actually the 2009 low-point, with just $35 billion raised by 75 funds.

As a quick methodology note, Prequin attributes dollars to when a fund holds its final close, as opposed to when the commitments are circled. In other words, a firm could hold a $1 billion first close in 2008, add another $200 million in2009 and the entire $1.2 billion would be considered 2009 money.

From a sub-asset class perspective: 84 buyout funds raised $102 billion; 170 venture funds raised $27 billion and 96 real estate firms raised $41 billion. Go here to download Preqin’s 4-page release/factsheet.

*** Sun Capital Partners has cut the size of its fifth fund from $6 billion to $5 billion, as first reported by LBO Wire.

This represents the maximum that LPs were allowed to cut, but doesn’t necessarily mean that each investor exercised its reduction rights. As I wrote in October: “If not all LPs cut their stakes by 16.7% — such as Sun employees who might consider personal reductions to be bad form — then other LPs can reduce by up to around 33 percent.”

*** VC portfolio company lawsuits: (1) The Tennis Channel has filed a complaint against Comcast with regulators, arguing that the cable operator is unfairly favoring its own tennis programs. The Tennis Channel has raised nearly $100 million in VC funding from Bain Capital Ventures, Battery Ventures, Columbia Capital, JPMorgan Partners and WaterView Advisors.

(2) Loopt, maker of a mobil! e social mapping application backed by Sequoia Capital and NEA, is suing a recycled apparel maker called LooptWorks. The former claims that the latter has ripped off its trademarked logo, including usage on the type of social networks where Loopt makes its home. I’ve posted the suit in the peHUB FileRoom.

*** I wrote a brief peHUB post yesterday on a new partner at venture shop Rho Canada. Been told that the firm is pre-marketing a new fund with plans to hold a final close by year-end. No target info, but expect it to be similar to the US$100 million Rho Canada raised in 2006.

*** I also wrote about a new fundraising effort from Monomoy Capital Partners, and learned that firm co-founder Philip von Burg left last summer to hang his own shingle in San Francisco.

*** Deb wrote a bunch back in the fall about VC-backed geothermal project companies, including concerns that their drilling efforts could cause earthquakes or other losses of terra firma. She specifically focused on AltaRock, had been drilling in Northern California geysers due to “physical difficulties.”

AltaRock suspended and then abandoned drilling in the geysers due to “”physical difficulties,” but the Department of Energy nonetheless opted to complete its review (in part because it gave AltaRock and others grant money for alternate drilling projects). The result were several new requirements for any company engaged in geothermal drilling, with or without government funding. These include str! ess test and simulation requirements and an expert review of those tests by a DoE panel. (I posted the letter to peHUB FileRoom).

Not yet sure how much this will cost companies like AltaRock, or if it changes the VC ROI profiles for such deals. Also makes me wonder a bit about original due diligence by all involved (company, investors, DoE). I called both AltaRock and its board members on Tuesday, but haven’t yet heard back.

*** I messed up Monday with Connie’s email address. It’s:

*** It may be too short of notice, but I’m tempted to try a peHUB Shindig in NYC during the first week of February. But I’d need sponsors. And fast. Send me an email if your firm might be interested.

Top Three

Intergraph, a provider of enterprise engineering software to the process, power and marine industries, has acquired Coade Inc., a Houston, Texas-based provider of plant design and engineering software for the process industries. No financial terms were disclosed. Intergraph was taken private in 2006 by Hellman & Friedman and TPG Capital. Coade sold a majority stake in 2007 to Insight Venture Partners.

Coda Automotive, a Santa Monica, Calif.-based electric car and battery company, has raised $25 million in a first close for its Series C round. No investor information was disclosed. The company previously raised $49 million, fromthe Angeleno Group, company founder Miles Rubin, Mac Heller (Coda co-chair), Kevin Czinger (Coda president and CEO), Hank Paulsen (former U.S. Treasury Secretary), John Bryson ! (ex-Edison Int’l CEO), Mack McLarty (former chief of staff for President Clinton) and Thomas Steyer (founder of Farallon Capital Management).

Providence Equity Partners reportedly has teamed with Chinese search engine Baidu to create an online video channel in China, which would launch later this quarter. No financial terms were disclosed. Providence is an investor in U.S. video viewing site Hulu.

VC Deals

Lithium Technologies, an Emeryville, Calif.-based provider of on-demand solutions for enterprise communities, has raised $18 million in Series C funding. DAG Ventures and Tenaya Capital co-led the round, and was joined by return backers Benchmark Capital, Emergence Capital and Shasta Ventures. The company previously raised around $21 million.

Acton Pharmaceuticals Inc., a Marlborough, Mass.-based respiratory pharmaceutical startup, has raised $15 million in Series A funding led by Sequoia Capital. The company also announced that it has licensed the Aerospan inhalation aerosol from Forest Labs (NYSE: FRX).

iYogi Inc., an India-based provider of remote technical support services, has raised $15 million in third-round funding. Draper Fisher Jur! vetson led the round, and was joined by return backers Canaan Partners, SAP Ventures and SVB India Capital. The company previously raised $12.6 million.

F-star Biotech, a Vienna, Austria-based antibody engineering company, has raised €8 million in new Series A funding. MP Healthcare Venture Management and Merck Serono Ventures co-led the round, and were joined by return backers Atlas Venture, Aescap Venture, Novo Ventures and TVM Capital.

Clean Power Finance Inc., a San Francisco-based provider of software and financing solutions to the solar installation industry, has held a first close on a $6.9 million funding round. Claremont Creek Ventures and Clean Pacific co-led the deal, and were joined by return backers! Sand Hill Angels and Gary Kremen.

Rightware Oy, a Finnish provider of a 3D graphical user interface solution for mobile phones and automotive applications, has raised €3 million in VC funding from Inventure and Nexit Ventures. The company also announced that it has acquired Furturemark Corp.’s mobile and embedded business unit.

Morgan Solar Inc., a Toronto-based developer of concentrated solar photovoltaic panels, has raised US$3.5 million in additional Series A funding, bringing the round total to US$8.2 million. Backers include Iberdrola Group SA, Nypro Inc. and Turnstone Capital Management LLC.

The Echo Nest, a Somerville, Mass.-based online “music intelligence company! ,” has raised $1.3 million in third-round VC funding. New investors include Donald McLagan (former Compete CEO), Nicholas Negroponte (MIT Media Lab) and Jim Pallotta (Raptor Capital). Return backer Commonwealth Capital Partners also participated. The Echo Nest previously raised over $3 million.

Buyouts Deals

China Medicine Corp. (OTC BB: CHME), a medicine and neutraceutical distributor, has agreed to sell $69.6 million worth of common shares and redeemable convertible preferred shares to One Equity Partners. The PIPE represents OEP’s first investment in Greater China.

Global Equity Capital has agreed to buy Halifax Corp. of Virginia(Pink Sheets: HALX), a provider of enterprise logistics and maintenance solutions, for $1.20 per share.

Marlin Equity Partners has acquired Liquent Inc., a provider of software and services to support the regulatory activities of life sciences companies. The seller was Thomson Reuters (publisher of peHUB). No financial terms were disclosed.

Pfingsten Partners has acquired Motus3 Cos, an Overland Park, Kansas-based maker of food processing equipment under the brand names Marlen and Carruthers. No financial terms were disclosed for the deal, which closed on December 31.

PE-Backed IPOs

Symetra Financial Corp., a Bellevue, Wash.-based life insurance company, has set its IPO terms to 27 million common shares being offered at between $12 and $14 per share. The offering could net up to $435 million at the top of its range, which is lower than the $575 million target in its original filing (let alone the $750m target in an earlier S-1 that was later withdrawn). Berkshire Hathaway, which holds a 26.3% pre-IPO stake, will hold onto all of its shares. J.C. Flowers, which holds a 2.3% stake, will sell all of its shares. Other backers include Vestar Capital Partners, Och-Ziff Capital Management, Highfields Capital Management, Caxton Associates and White Mountains Insurance Group.

PE-Backed M&A

WireCo WorldGroup, a wire rope maker owned by Paine & Partners, has acquired Phillystran Inc., a Montgomeryville, Penn.-based high tenacity fiber ropes, strands, braids and strength members. No financial terms were disclosed.

PE Exits

Christie Digital Systems has acquired substantially all the assets of Luminetx Corp., a Memphis, Tenn-based maker of a vascular imaging system. No financial terms were disclosed. Luminetx had raised around $15 million in VC funding, from firms like Custer Capital, Capvest Venture Fund and Morgan Keegan.

Firms & Funds

Greyrock Capital Group has closed its second mezzanine and junior capital fund with $122 million in capital commitments.

Human Resources

Douglas Kramer has been named CEO of Horizon Asset Management. He stepped down late last year as a managing principal with Quadrangle Group, which he had joined in April 2008 as chief operating officer.

First Reserve Corp., a private equity firm focused on the energy sector, has promoted Anastasia Deulina to director. She joined the firm in 2007, after having served as a vice president with both Goldman Sachs and Merrill Lynch.

New Enterprise Associates has promoted Sara Nayeem from senior associate to principal. She joined the firm last year to focus on biopharmaceutical investments, after having been an associate with Merrill Lynch’s Global Healthcare Group.

Originate Ventures has promoted Matt Bieber to principal. He joined the firm in May 2007 as a senior associate, after having worked at Bear Stearns.

Clay Shumway has joined Dallas-based Highland Capital Management as a director of business development. He previously was VP of business development and investor relations for Newcastle Capital Management.