peHUB Wire: Tuesday, July 21, 2009

Can you imagine Facebook investor Jim Breyer (Accel Partners) appearing in an advertisement for MySpace? How about Blackstone boss Steve Schwarzman, whose firm owns Hilton Hotels, promoting Marriott? Or George Steinbrenner calling to ask if you’d consider Red Sox season tickets?

Of course not, because it doesn’t make any sense (common or otherwise). So what are we to make of U2 frontman Bono — who moonlights with Elevation Partners, owner of around 40% of Palm’s outstanding stock — shilling for Palm rival BlackBerry in a new television advertisement?

Apologists would make a twofold argument: (1) Bono has smartly kept his many business interests separate, which means that U2 doesn’t pay attention to Elevation, and vice versa; (2) BlackBerry maker RIM stepped up in a tough economy to sponsor U2’s upcoming tour, and there is no indication that Palm made a similar offer.

All well and good ! for Bono and U2, but lousy for Elevation’s investors. This group backed Elevation, in part, after being told that Bono brought unparalleled expertise in the firm’s target markets of consumer, entertainment and media. Not a hard sell, but also not a private one. In other words, the general public also grants Bono that same credibility, and he’s now leveraging it to injure one of the firm’s portfolio companies. He might as well take out a fullpage ad in USA Today, saying: “If you’re going to switch to a smart phone, don’t bother with the Palm Pre.”

No idea if Elevation tried talking Bono out of the BlackBerry deal (firm isn’t commenting), or if it could impact Bono’s partnership position if/when Elevation tries raising a second fund. But the firm was already having problems (-16.7% IRR at year-end, according to WSIB), before its most prominent partner went out of his way to draw additional blood. Not sure ! any one-day-per-week partner is worth that type of counter-productivit y…

*** Venture capitalists invested $3.7 billion into 612 U.S.-based companies last quarter, according to data released today by the National Venture Capital Association, PwC and Thomson Reuters. This is higher than the Q1 totals, but well below what was disbursed in Q2 2009. Go here for more analysis and tons of downloadable charts.

*** Lots of attention paid to yesterday’s FT story about LPs blocking German buyout firm Nordwind Capital from doing a U.S. fertility clinic rollup (which was WAY off strategy). Three quick notes: (1) The actual block occurred back in February; (2) It occurred near the end of Nordwind’s investment period; and (3) The decision was made around the same time as the OctoMom brouhaha, and LPs were concerned about a severe regulatory crackdown on the U.S. market.

*** Finally, my sincerest condolences to the family of Robert Whiddon, a former colleague who has passed away at the tragically-young age of 35.

Robert was part of Thomson Financial when I first joined it, 10 years ago last month. We each were working on structured finance newsletters, which requiredextremely long Thursday nights (press night) and short Fridays that were occasionally punctuated by pickup basketball games.

He was kind, goofy and very good at his job. Robert also was the person who told me of a jobopening with PE Week, an opening that would eventuallylead to thecreation of this email and the peHUB website. After moving from NYC to Washington DC, Robert would become king of those pesky Form D filings, back when you actually had to sit in the SEC reference room and root! through piles of muck to find the gems.

Rest in peace Robert. You’ll be missed.

Top Three

Avaya Inc., a portfolio company of Silver Lake Partners and TPG Capital, has agreed to acquire the enterprise solutions business of bankrupt Nortel Networks. The “stalking horse” bid is valued at $475 million.

China Investment Corp. has agreed to acquire a 40% stake in private equity firm CITIC Capital, in a deal valued at HK$2 billion ($258m).

Philip Reilly and Gregory Verdine have joined Third Rock Ventures as venture partners, while Craig Greaves has joined as a recruiting partner. Reilly previously served as chairman and CEO Interleukin Genetics Inc.,Verdine is a Harvard University professor and director of the Chemical Biology Initiative and the Program in Cancer Chemical Biology at the Dana-Farber Cancer Institute. Greaves previously was HR director at Cubist Pharmaceuticals.

VC Deals

Intelligent Energy, a UK-based developer of fuel cell and hydrogen generation technologies,has raised $30 million in new VC funding. No additional information was disclosed.

BeneChill, a San Diego-based developer of medical devices for treating hypothermia, has raised $13.5 million in Series C funding. HealthCap was joined by return backers MedVenture Associates, NGN Capital, and the Solon Foundation.

Acquia Inc., a North Andover, Mass.-based commercial developer of an open-source content management system called Drupl, has raised $8 million in Series B funding, according to a regulatory filing. It previously raised$7 million from North Bridge Venture Partners, O’Reilly AlphaTech Ventures and Sigma Partners.

NewLink GeneticsCorp., an Ames, Iowa-based cancer therapeutics developer, has raised $7.5 million in Series D funding. No additional information was disclosed.

Akiba Technologies Inc., a Boston-based database virtualization startup, has raised $6.53 million in Series A funding, according to a regulatory filing. Backers include Foundation Capital and North Bridge Venture Partners. Steve Vassallo of Foundation and Michael Skok of North Bridge took board seats.

SlideRocket, a San Francisco-based provider of an online presentation solution, has raised $5 million in Series B funding. Azure Capital Par! tnersled the round, and was joined by return backer Hummer Wi nblad Venture Partners. In other company news, SlideRocket has named former executive Chuck Dietrich as its new CEO.

Buyouts Deals

Bain Capital and Chinatrust are in talks to launch a joint bid for AIG’s Taiwan insurance unit Nan Shan.

Harman International Industries Inc. (NYSE: HAR) said that it has not received a buyout offer, after several media outlets on Sunday received a fax that something called Arabian Peninsula Group had agreed to buy the company for $49.50 per share. Reports of the “offer” sent Harman stock up 33% in early trading yesterday. Harman had agreed to be taken private in 2007 by KKR and GS Capital Partners for $120 per share, but the deal ultimately fizzled.

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

PE-Backed M&A

Dresser Inc., a Dallas-basedprovider of products and services for energy industry and infrastructure applications, has acquired iMeter, a Dutch maker of rotary and turbine gas meters, meter instrumentation and meter calibration systems for the natural gas industry. No financial terms were disclosed. Dresser is majority-owned by Riverstone Holdings.

Vertellus Specialties, an Indianapolis-based specialty chemical maker,has acquired certain assets of Degen Oil &Chemical Co., a Jersey City, N.J.-based provider of blown vegetable oils and fish oils, derivatives and specialty alkyds for the coatings and inks industries. No financial terms were disclosed.Vertellus is a portfolio company of Wind Point Partners.

Firms & Funds

BlackRock (NYSE: BLK) today reported lower Q2 profit and revenue from a year ago, but improved over the first quarter and beat analyst estimates. The asset manager reported net income of $218 million, or $1.59 per share.

Human Resources

Milestone Partners has promoted Dan Ryan from associate to head of business development. He succeeds John Nowaczyk, who has been promoted to vice president and will focus on transaction execution and portfolio management.

Ian Fitzgerald has been named chairman of The Loan Market Association, a trade group representing syndicated lenders in Europe, the Middle East and Africa. Fitzgerald is managing director and head of loan syndication at Lloyds Bank.