peHUB Wire: Tuesday, February 2, 2010

Every private equity pro has been touched (perhaps punched?) by the financial crisis, but few spent more time at the intersection of Wall Street and Pennsylvania Avenue than did Seth Gardner, then a managing director and associate general counsel with onetime Chrysler owner Cerberus Capital Management.

As the slog thickened, Gardner realized two things: (1) The next generation of finance professional is in the academy; and (2) The next generation of finance professional is doomed to repeat past mistakes, unless the academy changes its lesson plan.

This was the message Gardner brought last summer to Duke University’s Fuqua School of Business, where he had received an MBA in 1994. The result is something Fuqua calls the Center for Financial Excellence, with Gardner serving as executive director.

“MBA debt finance education has become stale, and mediocrity is no longer acceptable, even if it’s tolerated, going forward,” Gardner says. “This isn’t just Was! hington and Wall Street. Education is the third leg of the stool. If educational institutions don’t realize that – whether its training people who will run banks or PE firms or hedge funds – then we’re falling down on the job.”

Gardner describes his program as “nascent,” and says that it is unlikely to become a core part of the Fuqua MBA program. Instead, it would be a supplemental program and certification for finance-oriented MBAs. He hopes to begin slowly rolling the effort out as soon as possible.

He currently is building a small staff, and regularly soliciting feedback from financial and regulatory professionals.

“What I hope we can provide is two things: First, more rigor in real-world applications of financial theory, so that students can act on it quicker. Second, I want them to understand the causes of the financial crisis, so that they can get their arms around the responsibility that comes with investment management… I want them to understand! that what they will do is consequential.”

*** Expect OrbiMed Advisors, a healthcare-focused VC firm, to close its new fund this week or next.

*** Apollo Management this morning filed an amended S-1, and we’ll post soon on any notable changes.

*** Also will be looking into the specifics — if any — of President Obama’s plan to eliminate capital gains taxes on small business investment. It was in the budget proposal he released yesterday. So was the change to carried interest tax treatment.

*** Finally, this afternoon I’m driving back to New York City. A few reasons for my visit. First and foremost is tomorrow night’s Shindig, which is beyond sold out at this point. Second is a moderation slot at an invite-only media dealmakers conference hosted by DeSilva & Phillips.

Third is a strategy meeting at Times Square HQ, where we’ll be batting around some ideas for the future of peHUB. I’ve got lots of my own, but would like your input. ! If there are things about the current site — or email — that you love, let me know. If there are things you wish we’d abandon, let me know that too. Finally, what should we be doing — content, functionality, etc. — that we aren’t.

Top Three

Bain Capital, KKR and TPG Capital have been short-listed to submit final bids for Morgan Stanley’s $1 billion-plus stake in China International Capital Corp. (CICC). Morgan Stanley bought the position for just $37 million in 1995, and has been trying to unload it for the past two years.

UStream, a Mountain View, Calif.-based provider of an interactive video broadcast platform, has raised $20 million in Series B funding from Softbank, at a post-money valuation of approximately $145 million. Softbank also has the option to invest another $55 million, while UStream says it plans to expand the round via “pen! ding” commitments from other investors in Asia and the U.S. Ustream previously raised over $11 million from DCM Capital and Band of Angels.

Vulcan Power Co., a Bend, Ore.-based developer of geothermal energy projects, has raised $108 million in private equity funding from Denham Capital.

VC Deals

SpiderCloud Wireless, a Santa Clara, Calif.-based developer of the enterprise radio access network (E-RAN) platform for mobile operators, has raised $25 million in Series B funding. Opus Capital led the round, and was joined by Shasta Ventures and return backers Charles River Ventures and Matrix Partners.

Valtech Cardio Ltd., an Israel-based developer of minimally-invasive surgical and transcatheter mitral valve repair and replacement technologies, has raised $17.8! million in Series B funding. Undisclosed new investors were joined by return backers OXO Capital Valve Ventures, NGN Biomed and Peregrine VC.

BlueKai, a Seattle-based online intent data exchange, has raised $21 million in Series C funding. GGV Capital led the round, and was joined by return backers Battery Ventures and Redpoint Ventures. The company previously raised just under $14 million.

Avvasi, an Waterloo, Ontario-based provider of mobile video monetization solutions, has raised C$15 million in Series B funding. Celtic House Venture Partners and Tech Capital Partners co-led the round, and were joined by the Ontario Emerging Technologies Fund.

BioBehavioral Diagnostics Co., a Westford, Mass.-based developer of a diagnostic system for measuring the core components of ADHD, has held a first close on a $10 million Series B round. Return backers include Sevin Rosen Funds and Tullis-Dickerson. The c! ompany previously raised $8.5 million.

Vivox Inc., a Framingham, Mass.-based provider of VoIP services for online games and virtual worlds, has raised $6.8 million in Series C funding. IDG Ventures San Francisco led the round, and was joined by return backers Benchmark Capital, Canaan Partners and GrandBanks Capital. Vivox previously raised around $13.8 million.

Fynanaz Inc., a New York-based provider of private student lending platforms, has raised $6.5 million in Series A funding. Draper Fisher Jurvetson and DFJ Gotham co-led the round, and were joined by Brazos Group, Zelkova Ventures and JBR Media Ventures.

Buyouts Deals

Castanea Partnershasinvested in, and plans tomerge,two direct marketers of branded nutritional supplements: Hueytown, Ala-based Health Resources and Carson City, Nev.-based Vitamin Research Products. No financial terms were disclosed for either deal.

Odyssey Investment Partners has acquired Wencor Group LLC, a Springville, Utah-based provider of PMA parts to the commercial aircraft sector. No financial terms were disclosed for the deal, which includes a co-investment from Wencor founder Brent Wood.

The Ontario Teachers Pension Plan reportedly is planning a £1.7 billion take-pr! ivate offer for Northumbrian Water (LSE: NWG). OTPP is Northumbrian’s largest shareholder, with a 27% stake.

Providence Equity Partners has set next Monday as the deadline for indicative bids on German cable provider Kabel Deutschland, in an auction that could garner up to €5 billion. Likely suitors include Advent International, Carlyle Group, BC Partners and CVC Capital Partners. Providence holds an 88% stake in Kabel Deutschland, while Ontario Teachers’ Pension Plan holds an 8% stake. The remainder is held by company management.

South Korea’s national pension fund reportedly has agreed to acquire a 12% stake in London’s Gatwick Airport, which was bought last year by Global Infrastructure Partners. The deal would be worth just under £100 million.

PE-Backed IPOs

Champ Private Equity, the Australian affiliate of Castle Harlan, is considering underwriters for an IPO of Manassen Foods. The floatation reportedly could raised more than A$400 million.

New Look, a UK budget fashion retailer owned by Apax Partners and Permira, yesterday launched its London IPO with a £650 million target.

PE-Backed M&A

Action Carting Environmental, a green waste collection company, has agreed to acquire both East End Sanitation Inc. andselect New York City assets of Republic Services Inc. (NYSE: RSG). No pricing terms were disclosed.Comerica Bank provided leverage, while existing sponsor Ironwood Capital and new investor Summer Street Capital Partners provided equity funding.

PGP Corp., a Palo Alto, Calif.-based provider of enterprise data protection, has agreed to acquire Newton, Mass.-based ChosenSecurity and its German subsidiary TC TrustCen! ter. No financial terms were disclosed. PGP has raised around $45 million in VC funding from firms D.E. Shaw Group, Intel Capital, DCM and Venrock. ChosenSecurity has raised around $14.5 million from .406 Ventures, Castile Ventures, Prism VentureWorks and St. Paul Venture Capital.

Total Safety U.S.., a Houston, Texas-based portfolio company of DLJ Merchant Banking Partners, has acquired ICU Environmental, Health & Safety, a provider of environmental, health and safety services to public and private sector clients. No financial terms were disclosed.

PE Exits

Medco Health Solutions Inc. (NYSE: MHS) has acquired DNA Direct Inc., a San Francisco-based genomics utilization management company. No financial terms were disclosed. DNA Direct had raised VC funding from Firefly Investments and Lemhi Ventures.


Muzak has emerged from bankruptcy protection, with Silver Point Capital as its majority owner. Silver Point was the elevator music producer’s largest creditor at the time of its February 2009 bankruptcy. Muzak previously was owned by ABRY Partners.

Reader’s Digest Association Inc. will delay its emergence from bankruptcy, after Britain’s pension regulator said it would not approve the publisher’s agreement with pension fund trustees regarding a British pension fund deficit. The company was acquired by Ripplewood Holdings for $2.4 billion in 2007, and filed for Chapter 11 bankruptcy protection last August.

Firms & Funds

American Capital has amended an agreement with lenders to extend the deadline for restructuring its credit facility and other debt arrangements. The new deadline is March 15, but it can be extended by March 31.

Apollo Management has held a €1.4 billion final close on its European Principal Finance Fund, according to LBO Wire. The fund invests primarily in European non-performing loans.

PNC Financial Services Group (NYSE:! PNC) has agreed to sell its global investment servicing unit to BNY Mellon (NYSE: BK) for $2.3 billion in cash.

Southern Cross Group is raising its fourth Latin American private equity fund with a $1.25 billion target, according to LBO Wire. The firm raised around $750 million for its third fund in 2006.

Human Resources

Bessemer Venture Partners has made three promotions: Vishal Gupta (Mumbai) has been named managing director; Alex Ferrara (Larchmont, NY) has been named partner; and Umesh Padval (Menlo Park) has been named partner.

Seth Gardner, a former managing director in the private equity group of Cerberus Capital Management, has been named executive director of the new Center for Financial Excellence at Duke University’s Fuqua School of Business.

Jim Nussle has joined the advisory board of Avista Capital Partners. He is a former Iowa congressman who served as Director of the White House Office of Management and Budget from 2007 to 2009, and currently runs his own consultancy.