peHUB Wire: Tuesday, December 15, 2009

Early last month I requested that CalPERS release the most recent carrying values of its ownership positions in Apollo Global Management, The Carlyle Group and Silver Lake Partners. Not in the funds, but in the management companies. These were huge investments, and one of them is smeared with Al Villalobos’ fingerprints. The public should know how they’re doing.

CalPERS initially replied by saying that the information is released each year in CalPERS annual investment report (under the “expansion capital” section, for some reason). But here’s the problem: That information is absurdly out of date. Not just today, but as of the time of release.

The pension system puts out its annual investment report in late January or early February of each year, but only reports carrying values for Carlyle, et. all though June 30 of the previous year. This is reporting lag on steroids (or perhaps on dope), and means that the data is largely irrelevant by the time it’s rele! ased. Moreover, it means that the latest information currently available is more than 18 months old!

We’ve gone back and forth with CalPERS’ lawyers – who basically are doing the bidding of an embarrassed investment staff – and were most recently given two more detailed reasons for the lack of transparency:

(1) Trade secret. This is, of course, absurd on its face. How can the information be trade secret if CalPERS eventually plans to release it anyway? Moreover, CalPERS agreed years ago that the value of fund investments, for example, did not constitute trade secret, so long as the underlying portfolio company values were not disclosed. CalPERS should look at the actual hierarchy, in which Carlyle The Firm sits atop its funds, not the other way around.

(2) Secondary sales: CalPERS argues that regular disclosure would “significantly impact our ability to buy, sell, or consider strategic alternatives regarding our positions.” Two problems with this. Fir! st, sources tell me that CalPERS is not trying to buy or sell any of t he relevant securities. Second, and more important, CalPERS regularly releases the carrying values of fund investments that it actually has sold on the secondary market. How come such disclosure didn’t hamper those sales? Could it be because this argument is bunk?

(3) ROI damage: CalPERS argues that a more regular release of this data could damage its returns, and thus violate its fiduciary duty to pensioners. Once again, however, it gives no explanation for why disclosure would damage returns. Apparently their say-so is supposed to be good enough.

My goal is to once again appeal, but the reality is that CalPERS is trying to run out the clock until the next late January release. I’ll keep you updated…

*** Smart-grid tech company Silver Spring Networks today announced $100 million in new VC funding, bringing its total venture capitalization to around $267 million. This is certainly a company that expects to g! o public at some point, but my understanding is that 2011 is much more likely than 2010.

*** If you walked by Blackstone HQ this morning, you may have noticed Santa and a bunch of elves holding signs. They’re trying to give Steve Schwarzman a lump of coal, related to their investment in Sithe Global. Seems these are environmental activists opposed to Sithe’s plans to build new coal-fired plants.

I can’t speak to the validity — or invalidity — of their claims (haven’t done my homework), but it’s an amusing PR stunt.

*** Where in the World: My 2009 calendar is beginning to fill up, including a pair of conference moderation gigs in New York City. The first is on January 29, as part of the Columbia B-School PE/VC Conference, where I’ll be moderating a GP/LP panel. My panelists include Suzanne Donohoe of KKR, Iain Leigh of AlpInvest and Christopher Wolfe of Rockerfeller & Co.

The following Thursday (2/4), I’ll moderate a panel at the DeSilva & Phillips Dealmakers Summit, on the outlook of investing in traditional and digital media. Panelists will include Andy Ballard of Hellman & Friedman, Richard Zannino of CCMP Capital and Jeff Horing of Insight Venture Partners.

Top Three

Silver Spring Networks, a Redwood City, Calif.-basedsmart grid networking company, has raised $100 million in fifth-round funding. Return backers include Google Ventures, Foundation Capital, Kleiner Perkins Caufield & Byers and Northgate Capital.The company previously raised around $167 million.

Partners Group of Switzerland has closed its latest secondary fund with €2.5 billion in capital commitments, compared to an original target of €2 billion.

Stanford University has canceled a proposed sale of LP interests in private equity and venture capital funds, according to the W! all Street Journal. The school received bids of around 80-85 cents on the dollar for the portfolio, which would have been restructured as a joint venture with secondary buyers (Stanford remaining as majority holder). WSJ reports that the cancellation was partially prompted by rising public equity and debt portfolio values.

VC Deals

Molecular Partners AG, a Swiss developer of DARPins as protein therapeutics, has raised CHF40 million (US$45m) in Series B funding. Essex Woodlands Health Ventures led the round, and was joined by return backers Ventures, Johnson & Johnson DevelopmentCorp., BB Biotech Ventures and Endeavour. The company has now raised CHF64.5 million.

Ophthotech Corp., a Princeton, N.J.-based developer of ophthalmic therapies for both wet and dry age-related macular degeneration, has raised $30 million in Series B funding. Clarus Ventures led the round, and was joined by return backers SV Life Sciences, Novo A/S and HBM BioVentures. The company has now raised over $100 million.

Evolva SA, a Swiss biotech company that uses a genetic chemistry platform to developer small molecule drugs, has raised CHF16 million ($15.37m) in additional Series B funding. This brings the round total to CHF44 million ($42.27m), including an initial CHF28 million close in October. Backers include Wellington Partners, Aravis, Auriga Partners and Vinci Capital – Renaissance PME. The investmentwas part of Evolva’s reverse merger with Switzerland-listedArpida Ltd.In other Evolva news, the company’s Indian subsidiary secured a CHF5 million funding commitment from Ventureast Trustee Company Pte Ltd.

WideVine Technologies Inc., a Seattle-based provider of digital entertainment delivery solutions, has raised $15 million in new VC funding. New backers include Liberty Global and Samsung Ventures. The company previously raised over $52 million from firms like Constellation Ventures and VantagePoint Venture Partners.

Asetek Inc., a San Jose, Calif.-based provider of liquid cooling and thermal management solutions, has raised $8 million in new VC funding. It previously raised $38 million! . No investors were disclosed by Asetek, although past backers have included D.E. Shaw Ventures, Danish Growth Fund and Northzone Ventures.

Nasuni, a Natick, Mass.-based developer of a gateway to cloud storage, has raised $8 million in Series A funding from North Bridge Venture Partners and Sigma Partners.

The American Academy, a Salt Lake City-based provider of Ponline high school and educational services , has raised $5.9 million in Series B funding. Austin Ventures led the round, and was joined by return backer vSpring Capital.

AlikeList, a Sunnyvale, Calif.-based social-local platformfor local businesses, has raised $5 million in Series A funding from Syncom Venture Partners.

My Health Direct, a Delafield, Wis.-based provider of an online access management platform for healthcare organizations, has raised $4 million in Series A funding led by Chrysalis Ventures.

Article One Partners, a New York-based global online community for legitimzing the validity of patents, has raised more than $3 million in Series A funding from firms like General Catalyst Partners. The company also named former Anaqua CEO Paul DiGiammarino as president and NineSigma exec Ray Felts as chief operating officer.

ZumoDrive, a Burlingame, Calif.-based developer of technology that connects consumers to their content on any mobile device, has raised $1.5 million in new VC funding. Sherpalo Ventures led the round, and was joined by return backers Tandem Entrepreneurs and VeriFone CEO Douglas Bergeron.

Relume Technologies, an Oxford, Mich.-based maker of LED products and smart-grid control systems for outdoor lights, has raised an undisclosed amount of VC funding from Beringea.

Hawaii Biotech Inc., an Aiea, Hawaii-based vaccine maker, has filed for Chapter 11 bankruptcy protection. The company plans to continue its human clinical trials, which include development of vaccines to protect against West Nile virus, dengue fever and tick-borne encephalitis. The company has raised over $16 million in VC funding, from firms like HMS Hawaii Management Partners, Technology Partners and Advantage Capital Partners.

Buyouts Deals

Kinderhook Industries has agreed to acquire International Absorbents Inc. (NYSE: IAX) for approximately $30.38 million, or $4.74 per share (18.2% premium to yesterday’s closing price.). International Absorbents is a maker of environmentally-friendly pet care and industrial products.

Oaktree Capital Management has acquired a minority equity position in DoubleLine LLC, a Los Angeles-based investment advisory recently formed by ex-TCW chief investment officer Jeffrey Gundlach.

Oaktree Capital Management has committed $500 million to help form Sky Holding Co.,a San Francisco-based airline leasing company formed by former executives of Pegasus Aviation.

Odyssey Investment Partners has agreed to buy One Call Medical from TA Associates for an undisclosed amount. One Call is a Parsippany, N.J.-based provider of medical cost containment solutions.

TorQuest Partners has agreed to acquire the refined wood rosin and natural wood terpines business of Hercules Inc., a subsidiary of Ashland Inc. (NYSE: ASH). The deal is valued at approximately $75 million. TorQuest will rename the company Pinova.

True Temper Sports Inc., a Memphis, Tenn.-based maker of golf shafts and performance sports equipment, has completed a financial restructuring plan that was approved by the U.S. Bankruptcy Court. A group of investors led by Newport Global Advisors and Providence Equity Partners now hold a majority stake in the company.

Vitruvian Partners has acquired a majority stake in Callcredit Information Group from Skipton Building Society. No financial terms were disclosed. Callcredit is a UK-based provider of credit reference service and direct marketing solutions to financial institutions. It has over 600 employees and annual turnover of approximately £50 million. Marks Baughan & Co. advised Vitruvian on the deal.

Moosejaw, a Madison Heights, Mich.-based multi-channel retailer of outdoor active apparel and equipment, has raised an undisclosed amount of growth equity from Glencoe Capital’s Michigan Opportunities Fund.

PE-Backed M&A

Real Estate Disposition LLC, a real estate auction company backed by Stone Point Capital, has agreed to acquire the retail title insurance agency platform of Pulte Homes Inc. (NYSE: PHM). No financial terms were disclosed.

PE Exits

Alcon (NYSE: ACL) has agreed to acquire Optonol Ltd., a maker of miniature surgical implants used to lower intraocular pressure (IOP) in patients with glaucoma. No financial terms were disclosed for the deal, which is expected to close in Q1 2010. Optonol had raised VC funding from Pitango Venture Capital.

Duke Street has sold Simple, a UK skincare brand, to Alberto Culver Co. for £240 million. Simple was formed in 2000 via a management buyout from Smith & Nephew, with ABN Amro Capital serving as sponsor. Duke Street bought the company four years later.

Firms & Funds

The California Public Employees’ Retirement System (CalPERS) has agreed to commit $120 million to SAIF Partners IV, a fund that will focus on growth equity opportunities buyouts in Greater China and India. It also will make opportunistic buyout and early-stage VC deals. Hong Kong-based SAIF Partners was formed in 2001 by Japan’s Softbank, with Cisco as the sole limited partner.

Human Resources

Joel Serface has joined CyberCity 3D, a developer of 3D/geospatial application service platforms, as a director and chief strategy officer. He previously was with Kleiner Perkins Caufield & Byers, where he served as the first entrepreneur-in-residence at the National Renewable Energy Laboratory. He also is a former partner with Eastman Ventures and a former managing director with Sierra Ventures.

Robert Purgason has been named chief operating officer of Chesapeake Midstream Partners, a recently-formed 50/50 partnership between Global Infrastructure Partners and Chesapeake Energy Corp. He previously was COO and executive vice president of Crosstex Energy Services.