peHUB Wire: Thursday, March 26, 2009

A few quick notes, before heading over to The Grand Hyatt for Buyouts East…

*** Spent some time yesterday firing questions at Scott Sperling of THL Partners, as part of the Reuters Private Equity Summit. He kept most specifics close to his vest (IFLC auction, Q4 markdowns, etc.), but did offer a few tidbits

— He didn’t completely rule out participating in the toxic asset program, but he said it was highly unlikely. Not because the guarantees aren’t good enough, but because THL simply doesn’t like investing in assets without control. For example, it won’t do minority PIPE deals or minority debt purchases.

— Sperling still believes in the Clear Channel investment, even though the advertising downturn has been longer and deeper than THL had expected. He wouldn’t comment on valuation, but also didn’t flinch when I threw out a markdown of approximately 50% (ballpark figure that I’ve heard from multiple sources, re! lated to both THL and Bain). Then again, flinching is overrated. Then again (again), he did for some reason flinch a bit when I asked if THL was a member of the Private Equity Council (which it is, but I couldn’t remember at the time). Grains of salt…

— He pronounces the term EBITDA, by saying EBIT-D-A. I say EBIT-Da. You?

— No significant worries in terms of upcoming debt refinancings. Most of the near-term ones are small and/or have predetermined mechanisms. Warner Music Group has some debt coming due in 2011-2012, but Sperling says the company should have plenty of free cash-flow to cover it.

*** Talked briefly with Bijan Sabet of Spark Capital, about the firm’s new seed funding program for entrepreneurs in the Boston and New York areas. He said it’s as much about “Return on Region” (ROR) as it is about Return on Investment (ROI). I like that term.

*** NY Kickback Scan! dal: How long until someone in Comptroller DiNapoli’s office be gins agitating for a return of some fees from the fund managers who received tainted commitments? How long until other state AG’s begin trying to connect political contributions or other gifts with PE commitments from public pension funds? Not just gifts to Trustees/board members, but to their friends and families?

*** Later today I’ll be interviewing Peter Nolan of Leonard Green, as part of Buyouts East. My job last year was to interview Carl Icahn. Only mention this because I nearly bumped into Icahn while walking to dinner last night. You surely don’t care, but it amused me.

*** Seems we finally have a lawsuit related to LP defaults on private equity fund commitments: CapGen Capital Advisors, a New York-based PE firm focused on the financial services sector, is alleging that both Chalice Fund LP and WK CG Investment did the illiquid deed, according to a complaint filed on March 4 ! in Delaware (thanks to law firm Kirkland & Ellis for pointing it out). These are very small commitments, but CapGen wants them paid with interest. Will be worth keeping an eye on.

Top Three

Freescale Semiconductor has been sued by some of its senior lenders, over the chipmaker’s attempt to exchange around $4 billion in notes for up to $1 billion in a new term loan. Freescale was acquired in 2006 by Blackstone Group, Carlyle Group, Permira and TPG Capital.

Obopay, a Redwood City, Calif.-based mobile payment software company, has secured $35 million of a $70 million Series E round, according to a regulatory filing. Nokia is coming aboard as a new shareholder. Past backers include Essar Communications, Richmond Management, Qualcomm, Redpoint Ventures, AllianceBernstein, Citi, Promethean India and Societe Generale.

Dan Rosenweig has been named president and CEO of RedOctane, the Activision Publishing Inc. (Nasdaq: ATVI) unit responsible for Guitar Hero and the upcoming DJ Hero. He is a former COO of Yahoo and, most recently, served as an operating principal with The Quadrangle Group.

VC Deals

Neuraltus Pharmaceuticals Inc., a Menlo Park, Calif.-based developer of small-molecule drugs for neurodegenerative diseases, has raised $17 million in Series A funding. Backers include Latterell Venture Partners, VantagePoint Venture Partners and Adams Street Partners.

Visible Measures Corp., a Boston-based company that measures the behavior of online video audiences, has raised $10 million in Series C funding. Northgate Capital led the round, and was joined by return backers General Catalyst Partners and Mohr Davidow Ventures.

New Leaf Paper, an environmentally-friendly paper maker based in San Francisco, has raised $5 million, Series A, in VC funding led by Pacific Community Ventures.

Ripple TV, an El Segundo, Calif.-based operator of screens in specialty retail locations, has raised $4 million from Draper Fisher Jurvetson and Trinity Ventures.

UpSpring Baby, an Austin, Texas-based maker of products for the health, wellness and safety of infants, toddlers and parents, has raised $4 million in Series C funding. Small Ventures was joined by unnamed return backers, plus members of the Central Texas Angel Network.

ReGear Life Sciences, a Pittsburgh-based maker of a therapeutic warming system, has raised $2.5 million in Series A funding from Pittsburgh Life Sciences Greenhouse and Innovation Works. It had previously raised $1 million from Stonewood Capital Management.

VaxInnate Corp., a Cranbury, N.J.-based developer of vaccines for both pandemic and seasonal influenza, is almost done raising $30 million in new Series C funding,! according to VentureWire. The company held an initial $40 million clo se on the round back in 2006, led by New Leaf Venture Partners. Other backers include Canaan Partners and return backers HealthCare Ventures, Oxford Bioscience Partners, MedImmune Ventures and CHL Medical Ventures.

Buyout Deals

Gordon Brothers is among the expected bidder for the assets of bankrupt department store chain Gottschalks.

Marlow Capital has led a buyout of South African waste management company Wasteman Group Ltd., from shareholders includin! g Suez Environment. No financial terms were disclosed.

MatlinPatterson has agreed to acquire substantially all the assets of Foamex International Inc., a bankrupt maker of polyurethane foam for bedding and cushions. MatlinPatterson and Bank of America had been providing the company with DIP financing, to keep it operating through bankruptcy.

PE-Backed IPOs

Yoox Group, an online retailer of designer clothing, has named Goldman Sachs and Mediobanca as IPO advisors. No financial decisions yet on where the company plans to list, although Milan is a good possibility. Three venture capital firms – Balderton Capital, Kiwi and Net Partners – hold a 25% s! take in Yoox.

Firms & Funds

Apollo Management and The Blackstone Group reportedly have talked with Bank of America about acquiring its 25% stake in The Merrill Lynch Asia Real Estate Opportunity Fund.

Human Resources

Robert Grubbs, former CEO of Anixter International Inc., has joined Irving Place Capital as a senior advisor, with a focus on the distribution sector.

Kirk Wilson, former vice chairman of Morgan Stanley’s investment banking division, has joined Greenhill & Co. has a managing director.

John Paynter, former vice chairman of JPMorgan Cazenove, has joined Greenhill & Co. as a senior advisor.

Harris Williams & Co. has made four promotions: Jim Reinhart to director, and Matt White, David Allebach and Rich Crawford to vice presidents. Allabach and Craw ford work for Cobblestone Advisors, a Harris Williams affiliate focused on the lower middle-markets.