peHUB Wire: Thursday, June 18, 2009

*** A Modest Proposal: When private equity firms raise a fund, they typically pack their LP advisory board with the fund’s largest and most well-known investors. It’s completely understandable, but it also can leave many of a fund’s smaller LPs without a voice. After all, CalPERS or Yale may have very different concerns than a family office or a municipal transit workers’ pension fund. Not saying one group’s concerns are superior to the other’s, just different.

As such, perhaps private equity firms should include a couple “at large” seats on their LP advisory boards. Any LP could run for these seats, with other LPs to vote at each year’s annual meeting (or by proxy). This may be unworkable in a fund’s first year of operation, but certainly could be done in year two. Not only would it give smaller LPs a voice, but it also would help private equity firms understand what’s going on with the investors who often constitute the majority of their investors (if not the majority of their dollars).

*** Did you know that the National Association of Realtors has a venture capital arm called Second Century Ventures? Me neither, until I met managing director Constance Freeman (formerly of Cue Ball) at the Chicago Shindig on Monday night.

Apparently the 1.2 million member organization first dabbled in the asset class by making one-off investments in companies like Move Inc. (online real estate), SentriLock (a realtor lockbox) and ZipLogix (real estate forms software). It then formed SCV in 2007, and made an investment in commercial listings platform ePropertyData.

Unfortunately for SCV, the group’s initial head soon left to run ePropertyData, leaving the entire endeavor in a state of limbo. But it staffed back up last fall, and has $20 million with which to invest (plus another $30m implicitly promised if the right deals come along).

“The goal is to make investments in real estate-related technology companies that push forward innovation in the industry, and which can help our members,” Freeman explains.

*** Tangential side note: Am I the only one amused by how NAR radio ads emphasize the “o” in realtors (real-tours)? I just find it odd, and say so most every-time I hear such an ad while driving. J just rolls her eyes…

*** Monday’s peHUB Shindig in Chicago raised over $1,500 for local charities. Based on a voice vote of attendees, $1,000 will go to Off The Street Club, which provides after-school and summer camp programs. The remainder will go to Deborah’s Place, a provider of housing services for homeless women in Chicago.

Top Three

Eddie Bauer Holdings yesterday filed for Chapter 11 bankruptcy protection, and agreed to sell nearly all its assets to CCMP Capital for $202 million.

Oracle Corp. has acquired the IP assets of Conformia Software Inc., a Sunnyvale, Calif.-based provider of compliance management software for regulated process industries. No financial terms were disclosed. Conformia had raised around $36 million in VC funding from firms like Sequoia Capital, Jafco Ventures, Foundation Capital, Mentor Capital Group and SAP Ventures.

The Blackstone Group is in talks with Shanghai government officials to create a wholly-owned China subsidiary, as a precursor to launching a yuan-denominated private equity fund.

VC Deals

Animoto, a New York-based video creation platform, has raised $4.4 million in second-round VC funding. Madrona Venture Group led the round, and was joined by Jeff Clavier’s SoftTech VC and iStockphoto founder Bruce Livingstone. The company had previously raised around $600,000 in seed funding.

Music Networx GmbH (a.k.a. Concert Online), a Cologne, Germany-based live music portal, has raised €3.3 million in VC funding. Earlybird led the round, and was joined by return backers like DuMont Venture and Klaus Wecken.

I Love Rewards, a Toronto-based provider of employee reward, sales incentive and service award programs, has raised C$1.8 million in additional Series B funding from Ontario Venture Capital Fund. It had previously held a C$6.9 million first close led by GrandBanks Capital, with JLA Ventures and Laurence Capital also participating.

AVIcode Inc., a Baltimore-based provider of application monitoring solutions for the Microsoft .NET framework, has raised an undisclosed amount of VC funding from Southern Capitol Ventures.

DemDex, a Westhampton, N.H.-based online demographic data exchange, today came out of stealth mode today and said that it has raised VC funding from First Round Capital and Genacast Ventures.

Zephyr Technology Corp., an Annapolis, Md.-based provider of physiological and biomechanical monitoring solutions, has raised an undisclosed amount of equity funding from Motorola Ventures.

Buyout Deals

Delphi Corp.’s lenders are considering a bid for the bankrupt auto parts maker, according to The New York Post. The company had agreed to be acquired by Platinum Equity, but a judge ruled that the process must be opened up to other potential suitors.

Ready Mix Inc. (AMEX: RMX), a Los Vegas-based concrete maker, said that it has retained Lincoln International to evaluate strategic alternatives, including a possible sale of the company. The company’s current market cap is approximately $13.52 million.

WestView Capital Partners has sponsored a recapitalization of Wavelink Corp., a Midvale, Utah-based provider of enterprise mobility software focused on automatic identification and data capture. No financial terms were disclosed.

PE-Backed M&A

Adgregate Markets, a Sausalito, Calif.-based provider of transactional advertising technology, has acquired Gydget, a San Francisco-based social marketing platform. No financial terms were disclosed. Adgregate has raised around $2 million in VC funding from firms like Storm Ventures, while Gydget had raised around $1 million from SunBridge Partners and Felicis Ventures.

PE Exits

CCMP Capital and Bancroft Private Equity are seeking to sell frozen food distributor Nowaco Central Europe, which they bought from Denmark’s Nowaco A/S in 2005 for around €90 million. The asking price is €250 million, with JPMorgan managing the process.

Firms & Funds

Fortress Investment Group (NYSE: FIG) said that a group of banks led by Bank of America and Citigroup has amended a credit agreement, thus allowing Fortress to repurchase outstanding loans. The banks also amended terms under which Fortress can invest in its own funds.

Life Sciences Fund Amsterdam BV has held a €13 million first close on its debut fund, which is targeting €20 million, according to VentureWire. The vehicle will focus on early-stage life sciences opportunities in and around Amsterdam.

Merit Capital Partners is targeting $600 million for its sixth mezzanine debt fund, according to LBO Wire. The Chicago-based firm closed its fifth fund in 2004 with $455 million.

Oak Hill Capital Partners has closed its third fund with $3.8 billion in capital commitments, according to LBO Wire. The middle-market buyout firm began fundraising 18 months ago with a $4 billion target and $5.5 billion hard cap. Its second fund had closed in 2005 with $2.5 billion and had a 7.1% IRR as of year-end 2008, according to limited partner CalPERS.

Human Resources

Peter Lee has joined Los Angeles-based Baroda Ventures as a partner. He previously was an associate with Prism VentureWorks and, before that, was with Clearstone Venture Partners.

Richard Taylor has joined UK private equity firm Sovereign Capital as an assistant director. He previously ran the Leeds office for Octopus Private Equity.