peHUB Wire: Tuesday, August 11, 2009

A few quick hits, as attempts to write a longer column have been thwarted by repeated “thermal events” on the Dell desktop:

*** Domain Associates closed its eighth fund yesterday with $500 million, so I spent some time on the phone with firm partner Nicole Vitullo. She acknowledged that the raise fell far short of Domain’s original $700 million target (which is what it raised for Fund VII), but said that Domain recalibrated its target this past February.

“We still felt that $700 was potentially possible, but didn’t feel it was in anyone’s best interest to keep pursuing it after the economic meltdown became so severe,” she said. “We felt that $500 million could still let us execute our fundamental strategy, and be an efficient enough fundraising process that we could spend more time making investments and working with portfolio companies.”

She adds that the only fund size-related strategic changes could be fewer deals (low end of Domain’s typical 28-32 portfolio cos per fund) and fewer commercial-stage deals (which she says are costlier than dev-stage deals).

*** Vitullo also said that she and her partners were keeping a close eye on Cumberland Pharmaceuticals, which priced its IPO last night (we talked in the afternoon). This may well be a more important offering to the VC market than an OpenTable or Fortinet, given how many late-stage, privately-held pharmaceutical companies are gasping for liquidity. If a consensus emerges that there is an IPO market for these companies– Cumberland priced low, but pricing itself is eventful – I’d expect a flood of S-1 filings.

*** Quiz Time: Can you name the publicly-traded financial tech company that’s about to become part of a big PE firm’s portfolio?

*** Finally, a hearty welcome to Deborah Gage, who will be covering venture capital for peHUB, while Connie is out on maternity leave. Deborah previously was senior tech reporter for the San Francisco Chronicle and, before that, spent six years as senior writer for Ziff Davis’ Baseline magazine.

Top Three

VMWare Inc. (NYSE: VMW) has agreed to buy SpringSource Inc., a San Mateo, Calif.-based maker of software for building and managing the enterprise Java application lifecycle. The deal is valued at $420 million. SpringSource has raised around $46 million in VC funding since 2007, from firms like Accel Partners, Bay Partners, Benchmark Capital and DAG Ventures.

Allied Capital Corp. (NYSE: ALD) yesterday posted its sixth-straight quarterly loss, and said that it will continue to sell portfolio assets. It also announced that it has “agreed in principle” to restructure around $1.75 billion in outstanding debt.

Steven Bochner has been named CEO of law firm Wilson Sonsini Goodrich & Rosati, following the news that current CEO John Rooshas beenconfirmed as U.S. Ambassador to Japan. Bochner joined the firm in 1981, and was named a partner in 1988.

VC Deals

Enobia Pharma Inc., a Montreal-based developer of enzyme replacement therapies for the treatment of serious bone diseases, has raised US$50 million in Series C funding. Return backers include OrbiMed Advisors, CTI Life Sciences Fund, Fonds de solidarite FTQ, Desjardins Venture Capital and Lothian Partners. Enobia’s lead candidate focuses on hypophosphatasia, a severe genetic disorder that affects the ability to mineralize bone.

Chimerix Inc., a Durham, N.C.-based developer of orally-available antiviral therapeutics, has raised $16 million in Series E funding. Return backers included Canaan Partners, Alta Partners, Sanderling Ventures and Asset Management Company. Chimerix previously raised around $45 million.

VirtenSys Ltd., a Manchester, UK-based provider of I/O virtualization solutions, has raised $16 million in third-round funding. Return backers include Scottish Equity Partners, Celtic House Venture Partners and GIMV.

Simply Hired, a Mountain View, Calif.-based employment search engine, has raised $4.6 million in fourth-round funding. Return backers include IDG Ventures SF and Foundation Capital. The company previously raised around $20 million.

Cmosis NV, an Antwerp, Belgium-based maker of CMOS image sensors, has raised €3 million in new VC funding. ING Corporate Investments led the round, and was joined by ING Activator Fund and Vlaams Innovatiefonds.

ChessCube, a South African operator of an online chess site, has raised US $1.25 million in VC funding from InVenFin, the corporate VC arm of VenFin Ltd.

Masher Media Inc., a Calabasas, Calif.-based maker of a virtual world for children, has raised $300,000 in seed funding from Tech Coast Angels. The round could be expanded by another $200,000 within the next month.

Buyouts Deals

CapGen has agreed to acquire a 10% stake in Seacoast Banking Corp. of Florida (Nasdaq: SBCF), a commercial bank with approximately $2.1 billion in assets. The deal will be transacted via the purchase of six million common shares at up to $2.50 per share.

China Investment Corp. is in talks for a $1 billion-plus convertible bond investment into Fortescue Metals Group Ltd. (FMG.AX), an Australian mining group.

Dubai International Capital and Oaktree Capital reportedly have abandoned plans to restructure the nearly $1 billion in debt held by German aluminum maker Almatis.

Friedman Fleischer & Lowe has completed its acquisition of quick-service restuarant chain Church’s Chicken from Arcapita. No financial terms were disclosed, but peHUB previously reported that the sale price was between $300 million and $390 million.

Fubon Financial (TW: 2881), the parent of Taiwan’s number two insurer, said that it plans to raise up to $900 million via an overseas stock sale. The capital would be used to help fund future operations. Fubon reportedly has partnered with The Carlyle Group to bid on AIG’s Taiwan insurance unit.

LS Power has agreed to buy eight power plants from Dynegy Inc. (NYSE: DYN), for approximately $1.5 billion.

PE-Backed IPOs

Cumberland Pharmaceuticals Inc., a Nashville, Tenn.-based specialty drug company that acquires and commercializes niche products, has raised $75 million via an IPO. The company priced five million common shares at $17 per share. It had originally filed to sell 6.25 million common shares at between $14 and $16 per share, but later amended the offering to five million shares at between $19 and $21 a piece. The company will trade on the Nasdaq under ticker symbol CPIX, while UBS, Jefferies & Co. and Wells Fargo served as co-lead underwriters. Shareholders include Scout Healthcare Fund.

Fortinet Inc., a Sunnyvale, Calif.-based network security provider, has filed for a $100 million IPO. Morgan Stanley is serving as lead underwriter. Fortinet has raised around $83 million in VC funding since 2002, from firms like Redpoint Ventures (15.5%) and Meritech Capital Partners (10.9%), Acorn Campus Ventures, DCM, Defta Partners and WI Harper Group. Last year the company earned $7.4 million on $211.8 million of revenue.

InfrastruX Group Inc., a Bellevue, Wash.-based provider of utility infrastructure construction and maintenance services, has filed for a $290 million IPO. It plans to trade on the NYSE under ticker symbol IFR, with Credit Suisse and UBS serving as co-lead underwriters. The company is owned by Tenaska Power Fund, and generated $827 million in 2008 revenue.

PE-Backed M&A

Alpha Broadcasting, a portfolio company of Endeavour Capital, has acquired four radio stations in Portland, Oregon from CBS Corp. The deal was valued at $40 million.

Facebook has acquired FriendFeed Inc., a Mountain View, Calif.-based social networking site focused on content sharing. No financial terms were disclosed, but various press reports put the sale price at around $50 million. FriendFeed raised a $5 million in Series A funding in Ferbruary 2008 led by Benchmark Capital. Facebook investors include Accel Partners, Greylock Partners, Meritech Capital Partners, Microsoft and Millennium Technology Ventures.

Intermedix Corp., provider of billing services to emergency medical service providers in Texas, has acquired HRA Medical Management Inc., aSan Diego-based provider of emergency physician and hospitalist billing services to medical practice groups. No financial terms were disclosed. Intermedix is a portfolio company of Parthenon Capital.

PE Exits

Merge Healthcare Inc. (Nasdaq: MRGE) has agreed to acquire Confirma Inc., a developer of computer assisted detection software for medical imaging. The all-cash deal is valued at around $22 million. Confirma has raised over $36 million in VC funding, from firms like Fluke Venture Partners, Northwest Venture Associates, Prism VentureWorks, Versant Ventures and Telegraph Hill Partners.

Versata Enterprises Inc., an enterprise software subsidiary of Trilogy Inc., has acquired Everest Software Inc., a Dulles, Va.-based provider of a business operating system for small and mid-sized businesses. No financial terms were disclosed. Everest Software has raised around $20 million in VC funding, from firms like Boulder Ventures, New Vantage Group, Updata Partners and Sierra Ventures.

Firms & Funds

Domain Associates, a healthcare-focused VC firm, has closed its eighth fund with $500 million in capital commitments. It reportedly had targeted $700 million, which is the same amount it raised for its seventh fund back in 2006.

Fortress Investment Group (NYSE: FIG) said that nearly $28 million in deferred management fees will be received later than expected, and warned that 2009 fee income will be muted.

Human Resources

Beringea has promoted Michael Gross from director to managing director. He leads the firm’s North American healthcare and life science VC practice, and serves on the boards of gloStream and Pioneer Surgical Technology.

Cantor Fitzgerald has added five U.S. staffers to its European leveraged finance team: Stuart Levett, James Franz, Robert Hartman, Jack Czarnota and Imran Khan.

Jay DeCoons hasbeen named chief operating officer of YogaWorks, a Santa Monica, Calif.-based chain of yoga studios,according to VentureWire. He previously was a Menlo Park-based principal with YogaWorks investor Highland Capital Partners.