peHUB Wire: Thursday, October 8, 2009

Yesterday, I asked you to name the placement agent (not Aldus Equity) that has effectively shut down, largely due to the pay-to-play scandal. It seems that the answer is a bit more complicated than I had originally understood.

The firm I was thinking about was Wetherly Capital Group, the Los Angeles-based shop whose ex-employee Julio Ramirez is among those who have pled guilty for cavorting with Hank Morris. Various sources had told me that Wetherly was pulling down its shingle, but I’ve since learned that Wetherly is staying in business. Seems the confusion was caused by the fact that Wetherly’s business will no longer be private equity fund placement.

Wetherly is basically entering into a cooling-off period, in part due to pending SEC regulations banning placement agents from pitching funds to public pension systems. Even if that proposal gets scrapped, I’m told that Wetherly will refocus on fund advisory work rather than placement work. ! Apparently that means things like helping to prepare presentation decks and creating lists of possible funding sources. Everything short of making the actual introductions.

Less lucrative, but also less PR heat.

*** Sequoia Capital is holding its next annual meeting in China. The objective is to emphasize the Silicon Valley-based firm’s global reach, which is expected to include a consolidation of all its different funds into a single vehicle (i.e., no more Sequoia China fund, Sequoia Israel fund, Sequoia Growth fund, etc.). Basically the Blackstone model rather than the current Carlyle model.

Holding the meeting in China makes thematic sense, but it also seems a bit tone-deaf. Many o! f Sequoia’s investors are strapped for cash, and have been ordere d to cut back on expenses. Given that Sequoia hasn’t (yet) offered to pay LP freight, this seems like an unnecessary burden.

*** United BioSource today announced the deal we reported earlier this week, saying that Berkshire Partners’ investment will be $125 million.

*** The FDIC announced yesterday that the assets of failed Corus Bank will be sold to a private equity consortium that includes Starwood Capital Group, TPG Capital, WL Ross and Perry Capital. The firms will pay $554 million for a 40% stake, or around 60 cents on the dollar (FDIC retains a 60% equity stake). The bank’s deposits were sold separately in an earlier auction (TPG and Starwood began looking at Corus three or four months ago, before a decision was made to do the deposit/asset split).

I spent some time on the phone last night with TPG senior partner Kelvin Davis, whose re! al estate experience includes the co-founding of Colony Capital. Most interesting was his assessment of the assets that TPG now holds. A lot of them are luxury condo properties, in all stages of development. I referred to them as “ghost towns,” which Davis said was unfair:

“Most of these assets would almost always be at the very high end of the markets they are competing in, including Miami, New York City, LA, Atlanta or Washington DC… We were encouraged when we did property tours, and learned that there was sales velocity… There was interesting anecdotal evidence of building owners liquidating multiple units in the course of a weekend. Some of that could be driven by reduced sales prices – which isn’t our strategy – but it still showed that there ! is buyer interest.”

As for PE firms’ strategy, Davis says the operative word is “patience” — in part driven by the FDIC loan terms.

Top Three

The Blackstone Group has agreed to buy Anheuser-Busch InBev’s U.S. theme parks for up to $2.7 billion. Senior debt is being provided by BofA Merrill Lynch, Barclays Capital, Deutsche Bank Securities, Goldman Sachs Loan Partners and Mizuho Corporate Bank. The deal would add 10 parks – including three SeaWorlds and two Busch Gardens – to Blackstone’s existing amusement assets, which includes Madame Tussauds wax museums, Legoland and the London Eye Ferris wheel.

Clayton Dubilier & Rice has agreed to sponsor a recapitalization of JohnsonDiversey, a Racine, Wis.-based commercial cleaning company. Under terms of the agreement, CD&R would invest $477 million for a 46% stake. Unilever, which bought a 33% stake in JohnsonDiversey seven years ago, would retain a 4% interest.

Engine Yard, a San Francisco-based provider of Ruby on Rails automation and management technologies, has raised $19 million in Series C funding. New backers include DAG Ventures, Bay Partners and Presidio Ventures, while returning shareholders include Benchmark Capital, Amazon.com and New Enterprise Associates.

VC Deals

Epizyme Inc., a Cambridge, Mass.-based biopharma company focused on the application of epigenetics, has raised $32 million in Series B funding. Bay City Capital led the round, and was joined by Amgen Ventures, Astellas Venture Partners and return backers MPM Capital and Kleiner Perkins Caufield and Byers. The company previously raised $14 million.

Eka Software Solutions, a Bangalore-based provider of multi-commodity trade and risk management solutions, has raised $10 million in VC funding from Nexus Venture Partners. The company previously raised seed capital from GP Group.

Fresco Microchip Inc., a Toronto-based developer of RF, mixed-signal and digital signal processing chips, has raised C$10 million in new VC fundin! g co-led by Celtic House Venture Partners and Ventures West.

BMEYE BV, an Amsterdam-based provider ofnon-invasive cardiovascular monitoring solutions, has raised €6 million in Series B funding. Earlybird led the round, and was joined by 360 Capital Partners and return backers Life Sciences Partners and Techfund.

Reality Mobile, a Herndon, Va.-based provider of a real-time mobile collaboration platform, has raised $6.5 million in VC funding. Energy Ventures led the round, and was joined by CTTV Investments and the Dobson Partnership. The deal is expected to help Realty Mobile expand its product offering — currently used by the government and defense markets — into the energy sect! or.

Plaxica, a London-based developer of renewable polymers, has raised £1 million in venture capital funding. Return backer Imperial Innovations Group was joined by new investors Carbon Trust Investments Ltd. and the National Endowment for Science, Technology and the Arts (NESTA).

BLI Messaging, a Providence, R.I.-based provider of email, voice, fax and text messaging marketing solutions, has raised its second round of private equity funding fromCatalyst Investors. It announced an initial investment back in July, but has not disclosed dollar details.

Buyouts Deals

EQT Partners has agreed to buy HTL Strefa, a publicly-traded Polish maker of medical equipment, for approximately $310 million.

Gala Coral, the UK’s largest bingo club operator, may end up in the hands of its lenders. The company has received a restructuring proposal from two bondholders, which would be designed to avoid default on Gala Coral’s £2.7 billion of bank debt. Gala Coral is currently owned by Candover, Cinven and Permira.

GSO Capital Partners, a unit of The Blackstone Group, has become majority shareholder of British soil testing company ALcontrol, following a restructuring. ALcontrol had been owned by Candover.

TPG Capital and the private equity arm of Russian state bank VTB have completed their acquisition of a 35.4% stake in Russian supermarket chainLenta, for $115 million.

PE-Backed IPOs

Mistras Group Inc., a Princeton Junction, N.J.-based provider of software that tests the structural integrity of infrastructure, raised $108.75 million in its IPO. It priced 8.7 million shares at $12.50 per share (below $14-$16 offering range), for an initial market cap of approximately $330 million. It will trade on the NYSE under ticker symbol MG, while JPMorgan, Credit Suisse and BoA Merrill Lynch served as co-lead underwriters. Backers include Thayer Hidden Creek and Altus Capital Partners.

Omeros Corp., a Seattle-based drug company focused on receptor and enzyme therapeutics, has raised $68.2 million in its IPO. The company priced 6.82 million shares at $10 per share (bottom of $10-$12 range), for an initial market cap of approximately $213 million. It will trade on the Nasdaq under ticker symbol OMER, while Deutsche Bank Securiti! es served as lead underwriter. Omeros had raised approximately $110 million in total VC funding, from firms like ARCH Venture Partners, Aravis Ventures, American Financial Group, Grosvenor Funds, Novartis Venture Fund, Southern Cross Capital, Stanley Medical Research Institute, Trevi Health Ventures and WRF Capital.

PE-Backed M&A

Caring.com, a San Mateo, Calif.-based provider of eldercare and end-of-life content, has acquired Gilbert Guide, an online provider of senior housing and homecare information. No financial terms were disclosed. Caring.com has raised around $6 million from DCM and Split Rock Partners.

Triad Guaranty Inc. (Nasdaq: TGIC) has agreed to sell its IT and operating platform to Essent Guaranty Inc., a mortgage insurer formed earlier this year via a $500 million investment from Pine Brook Road Partners, Goldman Sachs, J.P. Morgan, PartnerRe and Renaissance Re. The deal is valued at up to $30 million, including a $15 million up-front payment and $15 million in earnouts.

Viasystems Group Inc. has agreed to be! come publicly traded via a reverse merger with fellow printed circuit board maker Merix Corp. (Nasdaq: MERX). Viasystems shareholders HM Capital and GSC Partners will become the combined company’s majority owners.

Human Resources

Alvarez & Marsal has added nine senior professionals to its private equity performance improvement unit: Ron Bernard and Stephen Griffin as managing directors in New York and Boston, respectively; Joel Mostrom as a senior director in New York; Paul Kosturos as a director in San Francisco; and Fabiana Fakhoury, Simon Flax, Jeffrey Klein, Jennifer Kim and Daniel Schellenberg as directors in New York. Bernard previously was president of LWB Media Consulting, while Griffin was founder of G5 Capital.

Tom Bradley has joined London-based VC firm DN Capital as a principal, with a focus on software and digital media opportunities. He previously was a founding partner with DFJ Espirit. www.dncapital.com

Brad Edmister has joined Ropes & Gray as a private equity-focused partner in in the law firm’s Tokyo office. He previously was with Milbank, Tweed, Hadley & McCloy’s Tokyo office.

Angela Galbraith has joined UK-basedInflexion Private Equity as an origination executive. She previously was with KPMG.

Intersouth Partners has promoted Katrin Burt and Jimmy Rosen to partner. Burt joined Intersouth as an associate in 2007, and has worked with IT portfolio companies like HexaTech, siXis, Bright Hub and Ziptronix. Rosen also joined in 2007, and has worked with life sciences portfolio companies like ABT Molecular Imaging, Applied Geneti! c Technologies Corp., Cempra Pharmaceuticals and Viamet Pharmaceutical s.

George Mackie has joined VC firm Noro-Moseley Partners as a venture partner. He is the former president and CEO of Insource Contract Services, which was sold to Colville Capitallast year.

Madrona Venture Group has promoted Scott Jacobson and Tim Porter to the position of partner. Jacobson joined the Seattle-based firm in 2007, and serves on the boards of Jambool, Teachstreet and Yieldex. Porter joined in 2006, and is a director for PetraVM, Schemalogic and Zero260. www.madrona.com