peHUB Wire: Tuesday, August 3, 2010

Digital media companies like AOL and Yahoo get lots of flack for buying VC-backed startups at high valuations, and then later dumping them for just pennies on the dollar. Well, sometimes it also happens in the biotech world.

Take the case of Idun Pharmaceuticals, developer of drugs focused on a type of cell death known as apoptosis. Idun raised around $100 million in VC funding between 1993 and 2005, at which point it was sold to Pfizer for around $298 million. Solid double for the VCs, and part of Pfizer’s plan to use M&A to help supplant expiring patents.

The Idun management team left a few months later to form Conatus Pharmaceuticals, a drug startup focused on inflammation and liver disease. It raised around $30 million – all new investors, save for Aberdare Ventures — and yesterday announced that has bought Idun back from Pfizer.

Conatus CEO Steve Mento declined to say how much his company is paying, except that “we were able to acquire Idun without having to raise additional capital.” Now maybe Mento and friends put up some of their personal wealth, but it seems to me that the price-tag must be well under $30 million (plus future earn-outs).

Or, to put it another way, Conatus today paid less than 10% of what Pfizer paid for Idun five years ago…

*** Personnel note: Jordan Robinson has joined J.C. Flowers & Co. as managing director of business development. He previously was in a similar role with Pomona Capital.

*** One of today’s news items is that Ridgemont Equity Partners has formed as an independent private equity firm, staffed by the former Banc of America Capital Investors team. It plans to continue managing a $1.5 billion portfolio for BoA, while also raising its own fund. Typical deals will be mid-market buyout of growth equity transactions worth between $25 million and $100 million.

I spent some time on the phone this morning with Ridgemont partner Travis Hain, who previously served as managing partner of BACI. A few quick notes:

• The new firm has some legacy dry powder for between three to six new investments.

• The general investment strategy is similar to BACI, except no more mezzanine or co-investment deals.

• Fundraising has not yet begun, although Ridgemont is currently meeting with placement agents.

“We’ve been talking about raising outside capital with the bank for several years, and it got a new sense of urgency when financial regulation came to the forefront in D.C.”

Top Three

Freeman Spogli & Co. has acquired Brooks Equipment Co. from Behrman Capital for an undisclosed amount. Brooks is a Charlotte-based wholesale distributor of first response fire protection equipment and related parts.

eXelate, a New York-based open marketplace for audience targeting data, has raised $15 million in Series B funding. Menlo Ventures led the round, and was joined by existing backer Carmel Ventures.

StephenMcLean has joined Arsenal Capital Partners as a partner, with a focus on the healthcare sector. He was a founding partner of Merrill Lynch Capital Partners and its successor funds.

VC Deals

Accedian Networks, a Montreal-based provider of high-performance service assurance solutions for carrier Ethernet and IP networks, has raised US$19.5 million in growth equity financing. Summit Partners led the round, and was joined by return backers Rho Ventures and Skypoint Capital.

MobileIron Inc., a Mountain View, Calif.-based developer of a virtual smartphone platform, announced that it has raised $16 million in Series C funding. Foundation Capital led the round, and was joined by return backers Storm Ventures, Sequoia Capital, Norwest Venture Partners andBig Basin Ventures. peHUB previously reported on the deal, based on a regulatory filing.

YouSendIt Inc., a Campbell, Calif.-based provider of secure digital content delivery solutions, has raised $15 million in Series D funding. Adams Street Partners led the round, and was joined by return backers Emergence Capital, Sigma Partners and Alloy Ventures.

Xactly Corp., a San Jose, Calif.-based provider of on-demand sales performance management solutions, has raised $12 million in new VC funding. Bridgescale Partners led the round, and was joined by return backers Alloy Ventures, Bay Partners, Cheyenne Partners, Glynn Capital Management, Outlook Ventures and Rembrandt Ventures. The company has raised nearly $70 million in total equity funding.

Sangon Biotech and Bio Basic Inc., life science research affiliates based in Shanghai and Toronto, haveraised $10 million from Qiming Ventures.

Axcient Inc., a Mountain View, Calif.-based provider of data protection and business continuity solutions, has raised $9 million in Series B funding. Thomvest Ventures led the round, and was joined by return backers Allegis Capital and Peninsula Ventures.

UltiZen Games Ltd., a Shanghai-based game development and outsourcing company, has raised $8 million in third-round funding. Jafco Asia led the round, and was joined by Hotung Investment Holdings Ltd. and Tokio Marine Investment Services., a British online shopping site, has raised £7.5 million in new VC funding. Index Ventures led the round, and was joined by Greylock Partners.

Health Market Science, a King of Prussia, Penn.-based provider of data and analytics solutions for the healthcare market, has raised $6.1 million in Series B funding. Cross Atlantic Capital Partners led the round, and was joined by Edison Venture Fund.

WorkFlex Solutions LLC, a Cincinnati-based Web-based developer of software for managing call center staffing, has raised $1.5 million in VC funding led by CincyTech.

StatusNet Inc., a Montreal-based provider of anopen-source microblogging server, has raised an undisclosed amount of new VC funding. FirstMark Capital led the round, and was joined by BOLDstart Ventures, iNovia Capital and Montreal Start Up.

Buyouts Deals

The Blackstone Group has agreed to buy a Hawaiian shopping mall and stake in a warehouse venture for a combined $859 million, according to Bloomberg.

Forum Energy Technologies has formed via the merger of five companies, to provide manufactured and applied products to the global energy industry. SCF Partners provided $100 million in equity to create FET, which will be run byCris Gaut, a managing director with SCF Partners who previously was CFO and the head of thedrilling and evaluationat Halliburton. Eight banks have provided a $450 million credit facility, with an additional $150 million accordion feature.

J.C. Flowers is considering an investment of around £50 million into Kent Reliance, a UK building group.

PE-Backed M&A

Aspen Surgical Products, a portfolio company of RoundTable Healthcare Partners, has bought the Bard-Parker surgical blades and scalpels business from Becton, Dickinson and Co. No financial terms were disclosed.

Sonneborn, a portfolio company of Sun Capital Partners, has acquired the natural sodium sulfonate and oxidized petrolatum businesses of bankrupt Chemtura Corp.

VigLink, a San Francisco-based developer of technology to monetize hyperlinks, has acquired Driving Revenue Inc., a Chicago-based provider of outbound traffic monetization solutions. No financial terms were disclosed. VigLink has raised seed funding from Google Ventures, First Round Capital and angels like Reid Hoffman.

PE Exits

Baird Capital Partners Europe has sold Paddock Holdings Ltd., a British manufacturer of multipoint door locks,to Sweden’s Assa Abloy. No financial terms were disclosed, although BCPE reports a 2.7x return on its £8.9 million investment from four years ago.

Limelight Networks Inc. (Nasdaq: LLNW) has acquired Delve Networks, a provider ofcloud-based video publishing and analytics services. No financial terms were disclosed. Delve had raised over $6 million in VC funding from Band of Angels, DFJ Frontier, Labrador Ventures, Intel Capital and Middlefield Ventures.

Firms & Funds

Ridgemont Equity Partners has formed as an independent private equity firm, staffed by the former Banc of America Capital Investors team. Ridgemont will continue to manage the legacy BACI portfolio on behalf of Bank of America, while also seeking to raise its own fund.

Signal Hill Capital Group has merged with Updata Advisors, to form an investment bank focused on small and mid-cap growth companies. The combinedfirm will be called Signal Hill, with a headquarters in Baltimore.

Human Resources

John Cashwell and Eric Storch have joined GSO Capital Partners as managing directors and co-heads of institutional marketing for the group’s customized credit strategies unit. They previously were with Seix Investment Advisers.

John McCann has joined Jefferies as a managing director of leveraged finance origination. He previously spent 14 years with HSBC.

Jason Whitmire has joined Earlybird Venture Capital as a partner. He previously was general manager and vice president at Wind River Systems Inc. In other Earlybird news, Max Claussen has joined as an associate.