peHUB Wire: Thursday, July 9, 2009

The Treasury Department late yesterday named nine managers for the PPIP, which is designed to help banks escape the toxic messes of their own making. What it didn’t do was announce any private equity firms as part of the plan, even though “private equity” was the buzzword du jour when T Sec Tim first announced the plan earlier this year.

Now it is true that some of the managers have “connections” to private equity, as LBO Wire wrote this morning. Of course, so do I.

The reality is that none of the Chosen 9 are traditional private equity firms. The closest would be Invesco (which owns WL Ross) and RLJ Western Asset Management (JV between RJL Cos. and a Legg Mason affiliate). Then we begin moving a bit further away with Oaktree Capital Management, Blackrock, Angelo Gordon/GE Capital, Marathon Asset Management, AllianceBernstein, Trust Co. of the West a! nd Wellington Management.

No Carlyle Group. No J.C. Flowers. No Blackstone. No TA Associates (which was my unsubstantiated dark horse).

What I don’t yet know is if those firms – and dozens more – simply chose not to participate for a myriad of good reasons, or if they were intentionally excluded by Treasury. Apparently more than 100 firms applied, and I’m going to ask for that list once I hit “send” on this email (would have done it earlier, but it just occurred to me). Either way, private equity is not going to play the white knight role that many had penciled it in for…

*** Alex ran some preliminary Q2 venture capital investment data yesterday, and posted it to peHUB. Final numbers won’t be released for at least another week, but the short story so far is twofold: (a) Q2 2008 VC investment activity was way lower than in Q2 2008, and (b) Q2 2008 VC investment activity is! likely to top what we saw in Q1 2008 (data keeps being added as Money Tree surveys are submitted).

On that second point, I took a revised look in the database this morning, and found that Q2 VC investment is at $3.03 billion, compared to the $3.1 billion in Q1. That’s nearly a $500 million jump since last Thursday…

*** Event Promotion: One of the hottest issues in Massachusetts venture capital is the enforcability non-compete agreements, and pending legislation that could reverse the current rules. There will be a symposium on the subject in Boston on July 22, and you can get more info here.

Top Three

CCS Medical Inc., a medical supplies company owned by Warburg Pincus, has filed for Chapter 11 bankruptcy protection. It also said that it has reached a deal with some lenders to reduce its debt and improve its capital structure.

iZumi Bio Inc., a South San Francisco-based regenerative medicine company that uses induced pluripotent stem (iPS) cells, has merged with fellow stem cell company Pierian Inc. The merger is being financed by $11.5 million in new capital, including $10 million from existing Pierian backer MPM Capital. iZumi had previously raised $20 million from Highland Capital Partners and Kleiner Perkins Caufield & Byers. The combined company will be named iPierian Inc.

Jolicloud, a Paris-based maker of an Internet operating system for networks, has raised $4.2 million in Series A funding. Atomico Ventures led the round, and was joined by Mangrove Capital Partners.

VC Deals

Intellikine Inc., a La Jolla, Calif.-based developer of small molecule drugs for cancer, inflammation and autoimmune diseases, has raised $51 million in Series B funding. Novartis Bioventures led the round, and was joined by U.S. Venture Partners, Biogen Idec and FinTech Global Capital. Return backers included Abingworth, CMEA Capital and Sofinnova Ventures. The round includes a $28.5 million initial calldown, with the remainder dependent on the achievement of certain milestones. Intellikine previously raised $12.5 million.

Control4, a Draper, Utah-based maker of home control and entertainment system solutions, has raised $17.3 million in sixth-round funding. Best Buy Capital, Mercato Partners and University Venture Fund were joined on the deal by return backers Foundation Capital, Frazier Technology Ventures, Thomas Weisel Venture Partne! rs and vSpring Capital. Control4 has now raised over $97 million in total VC funding since 2003.

Allostera Pharma Inc., a Montreal-based biopharma startup, has raised C$17 million in Series A funding. Backers include iNovia Capital, Genesys Capital, BDC Venture Capital and GO Capital.

SolFocus Inc., a Palo Alto, Calif.-based developer of solar concentrator photovoltaic systems, today announced that it has expanded its Series C round to $77.6 million. The company had previously announced a $47 million first close, although peHUB reported in February that the round had expanded to around $67 million. Demeter Partners andaffiliates of Advanced Equities came in as new investors, while the round also include Apex Venture Partners, New Enterprise Associates, NGEN Partners a! nd Yellowstone Ventures. SolFocus has now raised over $177 million in total VC funding.

Clash-Media, a London-based provider of online lead generation, has raised £1.3 million in new VC funding from MMC Ventures.

PlanarMag Inc., a West Sacramento, Calif.-based maker of planar electromagnetic computer components, has raised an undisclosed amount of Series B funding. Tyco Electronics led the round, and was joined by return backers American River Venture. PlanarMag also secured a credit facility from Five Star Bank.

Buyouts Deals

Generation Growth Capital has sponsored a carve-out of Quality Assembly & Logistics LLC from DeCrane Aerospace Inc. No financial terms were disclosed. Quality Assembly is a Peshtigo, Wis.-based maker of assembler ofelectro-mechanical components for use in medical equipment and fire suppression devices.

Marlin Equity Partners has acquired Servigistics,an Atlanta-based provider of strategic service management software. No financial terms were disclosed. Servigistics had raised over $38 million in VC funding, from firms like Bain Capital Ventures, Symphony Technology Group and SSM Ventures.

PE Exits

Synovis Life Technologies Inc. (Nasdaq: SYNO) has agreed to acquire the assets of Pegasus Biologics Inc., an Irvine, Calif.-based developer of bioimplants for soft-tissue repair and wound care for diabetic ulcers. The deal is valued at $12.1 million in cash. Pegasus ceased operations earlier this year, after being unable to secure new financing. It had previously raised $32 million over three funding rounds, fromOnset Ventures, Affinity Capital Management, Three Arch Partners and Frazier Healthcare Ventures.

PE-Backed M&A

Health Club Media Network, a Los Angeles-based provider of advertising and marketing opportunities to national brands through US health clubs, has acquired Alloy Fitness Network from Alloy Media + Marketing. No pricing terms were disclosed for the deal, which includes an up-front cash payment and possible earn-outs. HCMN is a portfolio company of Parthenon Capital.

Firms & Funds

Bank of China and Temasek are in talks to launch a $1 billion to $2 billion fund, focused on infrastructure projects in China.

CapitalSpring LLC is raising a $200 million fund that would provide equity to prospective U.S. franchisees of established brands, according to LBO Wire.