peHUB Wire: Thursday, June 10, 2010

The Carlyle Group has lots of different private equity fund strategies, but none would be described as turnaround or special situations. That may be about to change.

We’ve learned that the firm is in talks to hire Rodney Cohen, co-managing partner of Pegasus Capital Advisors. The two sides have not yet reached a final agreement, but sources say that they are relatively close.

Were Cohen to join, the most likely scenario would be that he’d help Carlyle launch a special situations fund later this year. The firm does have a pair of “Strategic Partners” vehicles, but both of them focus more on debt than on equity.

“I think the conversations are pretty broad, since Rodney has experience both with turnarounds and regular buyouts,” says a source familiar with the situation. “He could do one, both or even something slightly different.”

Cohen has spent the past 14 years with Pegasus, a middle-market turnaround shop, before which he was a practicing atto! rney. Pegasus currently is investing out of a $750 million fund raised in 2007, and has around $2 billion in assets under management. Neither he nor Carlyle returned requests for comment.

*** As the Chinese VC/PE markets continue to mature, one of the emerging trends is an inability of foreign firms to hold onto their China-based talent. Among those to have lost senior Chinese dealmakers are Sequoia Capital, Kleiner Perkins and TPG Capital.

The question, of course, is why? So I asked Ludvig Nilsson, managing director of China-focused fund-of-funds Jade Invest. Here was his reply:

“Normally I think it tends to be a question of pure economics. The Chinese guys have been creating all the value, finding the deals, closing the deals, adding value, exiting the deals — that whole process.

Most of the value is actually created by those individuals, whereas they may feel that they’re only capturing a very small part of the value. So most of the carried interests so that the upside sharing of those funds may stay, you know, some are from very away; be it the U.S. or other parts of the world. So the Chinese are willing to a lesser and lesser extent willing to just stay as employees and work for, you know, a foreign big brand. Most of them see it as a way of, you know, to train, to get good background and understanding of how this industry works, and then do it themselves. And that’s also one of our investment themes; to back some of these managers.”

*** Yesterday I reached out to Riverstone Holdings, to see if it would be possible to get an interview with partner — and former BP CEO — John Browne. Not to discuss the spill, per se, but how the spill will affect current and future oil & gas industry investments. He declined. Not surprising, but I figured you should know…

*** Venture capitalist Fred Wilson has a quick post up this morning on how entrepreneurs should pitch him when approaching after a conference panel (keep it to 60 seconds).

Got me to wondering: Have any of you ever done a deal in which the initial point of contact was made just after you finished speaking on a panel? If so, I’d be interested in hearing the story. If not, perhaps it’s time to let these folks walk off the stage in peace.

*** Private equity placement agent Triago yesterday published the! first edition of a new quarterly newsletter, which includesdata on fund valuations (through Q4 09) andsecondary pricing (through last month).

The most notable finding was that large buyouts are leading the NAV recovery, rising 10.4% in Q4 2009. It was followed by special situations (6.7%), mid-market buyouts (5.7%), energy (1.6%) and venture capital (.06%). If you go back and look at the five quarters ending in Q4 2009 — including negative results from Q4 08 and Q1 09 — large buyout NAV is up 12%, while venture capital trails the pack with a positive 3% mark.

On the secondary pricing side, Triago reports that large buyouts again were the big winners — with prices climbing to over 95% of NAV in April and May of this year (European large buyouts slightly outpaced U.S. counterparts). Venture capital was again the weakest sister, at 84 percent (and 80% YTD).

Top Three

Bresnan Communications, a cable television company majority-owned by Providence Equity Partners, has received seven acquisition bids in excess of $1 billion. Suitors include Cablevision, Suddenlink Communications and John Malone.

AutoNavi Holdings, a Beijing-based provider of digital mapping information for automobile navigation, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol AMAP, with Goldman Sachs (Asia) serving as lead underwriters. Shareholders include Sequoia Capital, Walden International and Kleiner, Perkins, Caufield & Byers.

Atlas Holdings has closed its debut fund with $365 million in! capital commitments. It had originally targeted $250 million, and used Capstone Partners as placement agent. The Greenwich, Conn.-based firm previously had used a fundless sponsor model, and focuses on mid-market special situations with an emphasis on the industrial sector.

VC Deals

Veracyte Inc., a South San Francisco-based developer of molecular cytology diagnostics, has raised $28 million in Series B funding. Domain Associates led the round, and was joined by return backers Kleiner Perkins Caufield & Byers, TPG Biotech and Versant Ventures. Veracyte previously raised around $22 million.

Blazent Inc., a San Mateo, Calif.-based provider of IT intelligence for IT outsourcers, has raised $! 10 million in new VC funding. HighBAR Ventures led the round, and was joined by KeyNote Ventures, Walden Venture Capital and Catamount Ventures. The company previously raised over $28 million from Keynote, Bain Capital Ventures, Benchmark Capital, FirstMark Capital, Brookside Management, SV Life Sciences and StarVest Partners.

Quark Pharmaceuticals Inc., a Fremont, Calif.-based developer of RNA interference-based therapeutics, has raised $10 million in new VC funding from existing backer SBI Holdings Group (Japan ).

Crowdcast, a San Francisco-based provider of social business intelligence solutions, has raised $6 million in Series A funding. Menlo Ventures led the round, and was joined by seed backer Alsop-Louie Partners.

Healthrageous Inc., a Boston-based maker of a personalized health technology platform that helps individuals shed unhealthy habits, has raised $6 million in Series A funding. North Bridge Venture Partners led the round, and was joined by Egan Managed Capital and Long River Ventures.

Coresonic AB, a Swedish provider of baseband processor technology, has raised €2 million in new VC funding. SEB Venture Capital led the round, and was joined by return backer Industrifonden.

Admissions Lab, an Atlanta-based provider of an SaaS solution for higher-education enrollment management, has raised $1 million in new funding led by Cutstone Ventures. The company also secured a $500,000 SBIR grant from the National Science Foundation.

Buyouts Deals

EduK Group, a portfolio company of Leeds Equity Partners,has completed a recapitalization that includes the sale of a minority equity stake and a refinancing of debt. Leeds will continue to be majority shareholder, and says the deal returns “multiples” on its original cash investment.

IL&FS Milestone Fund, an Indian private equity group, is investing around $122 million for a 74% stake in a property unit of Hindustan Construction Co.

LNR Property Corp., a portfolio company of Cerberus Capital Management, announced that it is launching a debt-for-equity swap.

Montezemolo! & Partners has sponsored a spinout of European telematics serviceprovider Octo Telematics from Italian Italian conglomerate MetaSystem. No financial terms were disclosed. MetaSystem will continue to supply components to Octo, while Montezemolo was joined on the deal by Amadeus Capital Partners and Rothschild Growth Capital.

PE Exits

Advent International has sold its majority stake in Scitum, a Mexican provider of IT security services, to Teléfonos de México. No financial terms were disclosed.

Aryzta, a listed Swiss bakery, has paid $900 million to acquire Fresh Start Bakeries from Linsday Goldberg and another $180 million to acquire Great Kitchens from Arbor Investments.

BASF has in principle ag! reed to acquire German additives maker Cognis from Permira and GS Capital Partners, according to Reuters. The deal could be announced as early as next week, with a price-tag in excess of €3 billion.

Check Point Software Technologies Ltd. (Nasdaq: CHKP) has acquired Liquid Machines Inc., a Waltham, Mass.-based provider of enterprise rights management solutions. No financial terms were disclosed. Liquid Machines had raised around $37 million in VC funding since 2002, from RRE Ventures, Goldman Sachs, Atlas Venture, Masthead Ventures and Draper Fisher Jurvetson.

Triton Digital Media has acquired StreamTheWorld, a Montreal-based content delivery network focused on the broadcast industry. No financial terms were disclosed. StreamTheWorld had raised VC funding from Propulsion Ventures.

Firms & Funds

Argosy Capital has closed its fourth fund with $180 million in capital commitments. The Wayne, Penn.-based firm focuses on lower middle-market operating companies and real estate.

The Pennsylvania State Employees’ Retirement System (PSERS) agreed to commit up to $20 million into Artiman Ventures III. The system had committed $25 million to Artiman’s prior fund.

Human Resources

Gil Dibner has joined Israeli venture firm Gemini Israel Funds as a principal, according to an email sent yesterday to friends and colleagues. He had spent the past five years with Genesis Partners.

Dietrich Hauptmeier has joined European private equity firm Palamon Capital Partners as an associate principal. He previously was finance director of PensionDCisions and, before that, was a principal with KKR.

Ron Laufer, co-founder of Lilly Ventures, has joined MedImmune Ventures as senior managing director.

Andrew Parker has agreed to join Spark Capital, according to a note on his blog. He previously was with Union Square Ventures.

RBS Capital Markets announced three new hires: Frank Napolitano to lead a new U.S. power and utilities group, Kevin Smith to lead U.S. industrials and Ron Eliasek to co-head U.S. technology investment banking. Napolitano previously was with Lehman Brothers, Smith was with Silverfern Group and Eliasek was at Sagent Advisors.