peHUB Wire: Tuesday, August 4, 2009

Avago Technologies is set to price its IPO tomorrow night, in what will be the first test of KKR’s recent agreement with Fidelity Investments. For the uninitiated, here is how KKR described the program last month:

“Through the new relationship, Fidelity will have exclusive access to retail securities that are allocated to KKR in all U.S. public offerings in which KKR participates as an underwriter, including IPOs and follow-on offerings. Those retail securities will be made available to Fidelity’s retail brokerage customers as well as to accounts managed by Fidelity’s registered investment advisor (RIA), correspondent broker-dealer and other institutional clients. KKR will act as the underwriter of all retail securities that are distributed by Fidelity under the arrangement.”

I happen to be a Fidelity retail brokerage customer, so decided to ring up customer service in order to divine some more info about the offering. What I learned, however, was that this agreement is only for certain Fidelity brokerage customers. Specifically, you need to have at least $500k with Fidelity and/or have made at least 36 trades within the past year. In other words, it’s a reward for special clients, rather than a broader effort that could increase demand/price for KKR IPOs.

I asked why the distinction was made, and was given a lengthy treatise on IPO risk. I asked if Fidelity also would bar me from buying Avago stock at 9:15am on Thursday morning (you know, to protect me from myself), but was told it would not.

*** The SEC yesterday published its proposed “pay to play” rules, which would effectively bar private equity firms from using placement agents, when soliciting capital comm! itments from “government clients” (public pensions, etc.). The proposal also prohibits investment advisors from soliciting such commitments within two years of making a political contribution to a system official, and also requires that that investment advisors keep records of all political contributions made by its employees (contributions under $250 would be excluded, so long as the contributor is legally entitled to vote for the recipient).

The 60-day comment period begins now, and you can get the full proposal and a link to the comment form by going here.

*** Another new hire over at VC shop Andreessen Horowitz. This one is Amy Castronovo, who has joined as the firm’s controller. She previously was with 5AM Ventures and, before that, Mobius Venture Capital.

*** Jamie Hale has left Oak Hill Investment Mana! gement, where he was a partner who helped launch and run the firm’s se condaries practice. His final day was last Friday.

Hale joined Oak Hill nine years ago after doing M&A work for Lazard Freres. No word yet on his future plans.

*** One to watch: AIG announced that former MetLife boss Robert Benmosche will take over as CEO from Ed Liddy, effective at the end of next week. Question now is if Liddy will return to buyout shop Clayton Dubilier & Rice, which is where he worked before agreeing to take on the AIG mess. The assumption is affirmative, but a CD&R spokesman declined to comment.

*** Blackstone Group stock jumped 21% yesterday, for no discernable reason. Some explanations are that: (a) It was a good day for the market in general, and for financials in particular; (b) There was some shine coming off the KKR IPO prep article; (c) Blackstone is set to announce earnings this Thursday, and hope springs eternal.

That third one is probably closest to the truth, although I’m not so sure “hope”! is the driver. Call me overly-cynical, but I just don’t believe that a stock rises that much without some of the longs knowing something the rest of us don’t. Kind of like when a company’s stock would jump in 2007, and then a take-private buyout got announced a few days later…

Top Three

CCMP Capital and Bancroft Private Equity have agreed to sell Nowaco and Farutex to South Africa-based Bidvest, for a total of €250 million. Both companies are European delivered wholesalers for the foodservice and independent retail markets. Nowaco is focused on the Czech Republic and Slovakia while Farutex serves the Polish market., a Provo, Utah-based o! nline resource for family history, has filed for a $75 million IPO. It plans to trade on the Nasdaq or NYSE under ticker symbol ACOM, with Morgan Stanley and BoA Merrill Lynch serving as co-lead underwriters. Shareholders include Spectrum Equity Investors (67%), Crosslink Capital (6.2%)and W Capital Partners (6.1%).A predecessor company had raised around $50 million in VC funding between 1998 and 1999, but none of those backers are listed as existing

James Kim has quietly joined Khosla Ventures, after stepping down as a senior partner with CMEA Capital. Kim originally joined CMEA in 2007 from GE Commercial Finance, and was promoted in April 2008, and focused on energy technology companies like A123 Systems. News of his transition was first reported by Private Equity Insider, and later confirmed by peHUB. Kim is not yet listed on the Khosla Ventures website, although he has been removed from the CMEA website.

VC Deals

Advanced Electron Beams, a Wilmington, Mass.-based developer of electron beam technology for advanced manufacturing processes and environmental controls, has raised $14.2 million in Series C funding. Flagship Ventures led the round, and was joined by return backers Atlas Venture, General Catalyst Partners, GE Energy Financial Services, Agman Partnersand Rockport Capital Partners. The company previously raised over $31 million. Inc., a Palo Alto, Calif.-based provider of online bill management and payment for accounting firmsand SMEs, has raised $8.5 million in new VC funding. August Capital led the round, and was joined by return backers DCM and Emergence Capital. The company has now raised more than $17 million.

Probe Sc! ientific, a UK-based developer of blood glucose measurement devices, has raised in VC funding. Catapult Venture Managersled the round, and was joined by the National Endowment for Science Technology and the Arts.

Buyouts Deals

Infineon AG, a struggling German chipmaker, said that it raised at least €692 million through a rights issue. Apollo Management was among the buyers, but took up fewer shares than expected.

Lincolnshire Management has completed its $35 million investment in Wabash International Corp. (NYSE: WNC), a Lafayette, Ind.-based maker of semi-trailers for the North American market. Were Lincolnshire to exercise all the included warrants, the deal would give it a 44.2% ownership position.

PE-Backed M&A

Crossing Automation Inc., a Mountain View, Calif.-based wafer automation company, has agreed to acquire the the assets of Asyst Technologies’ atmospheric technologies and IP. No financial terms were disclosed. Crossing Automation has raised around$6 million in additional VC funding from firms like Tallwood Venture Capital and Intel Capital. Asyst is a bankrupt company that had a $324 million take-private buyoutoffer in early 2008 from The gores Group and Aquest Systems.

Intra-Op Monitoring Services, a provider of intra-operative neurophysiological monitoring capabilities, has acquired San Antonio, Texas-based Neuraxis Monitoring Group. No financial terms were disclosed. Intra-Op is a portfolio company of HealthEdge Investment Partners and Concentric Equity Partners.

WatchGuard Technologies, a Seattle-based provider of extensible network security and connectivity solutions, has agreed to acquire BorderWare Technologies, aToronto-based provider of an e-mail andonline security content and threat management platform. No financial terms were disclosed. WatchGuard is a portfolio company of Francisco Partners and Vector Capital.

WebTrends Inc., a Portland, Ore.-based provider of online analytics, has acquired WideMile, a Seattle-based provider of multivariate testing and digital content optimization for online marketers.WebTrends is a portfolio company of Francisco Partners, while WideMile had raised raised $4 million in convertible note financing.

PE Exits

Thomson Reuters has acquired Vhayu Technologies, a Los Gatos, Calif.-based provider of enterprise tick data solutions. No financial terms were disclosed. Vh! ayu had raised over $19 million in VC funding since 2001, from firms like Menlo Ventures, DB Capital Partners and SVB Capital. It was advised on the sale by Marlin & Associates.

Firms & Funds

IDG Venture Capital is considering the formation of a 4 billion yuan ($586m) fund focused on the Chinese market. The firm said that National Social Security Fund, a Chinese national pension fund, would be a potential limited partner.

Prospect Capital Corp. (Nasdaq: PSEC) has agreed to acquire Patriot Capital Funding Inc. (Nasdaq: PCAP)for $197 million.

Human Resources

Robert Benmosche, former chief executive of MetLife, reportedly has been picked to be the next CEO of AIG. He would succeed interim CEO Edward Liddy, the former Allstate boss who most recently served as a partner with Clayton Dubilier & Rice.

Michael DeNoma, former CEO of Standard Chartered Bank PLC’s Global Consumer Bank, has joined Kohlberg Kravis Roberts & Co. as a senior advisor.

Inghie Kwik has agreed to join Affinity Equity Partners, according to the Wall Street Journal. Kwik will lead Affnity’s push into In! donesia, and currently runs Morgan Stanley’s Indonesia unit.

David Scott has joined Lovell Minnick Partners as a senior associate. He will work out of the firm’s El Segundo, Calif. office, and previously was an associate with Berkshire Capital Securities.

Ryan Spoon has joined Polaris Venture Partners as a senior associate, with a focus on the firm’s Dog Patch Labs incubator in San Francisco. He previously was vice president of marketing and business development with Widgetbox. News of Spoon’s hire was first reported by TechCrunch.

Jonathan Tyler has joined Close Brothers Corporate Finance, as a London-based managing director in charge of the firm’s chemicals practice. He previously was with Houlihan Lokey.