peHUB Wire: Tuesday, June 2, 2009

A few assorted notes, after a morning spent mimicking John Hodgman in those Apple ads (the frustration part, not the endless optimism part).

*** As Wall Street melted down last fall, I publicly mused about the coming fortunes of private equity firms focused on the financial services sector. I even asked Connie to interview FTV Capital (then FT Ventures), but they declined to chat.

Eight months later, someone was kind enough to send me a confidential binder from a recent FTV advisory board meeting (feel encouraged to do something similar). I was expecting serious carnage, but things actually look fairly decent.

FTV reports that 24 of its 30 active portfolio companies increased year-over-year revenue in 2008, while just five experienced a dip (one is still pre-revenue). Some of this is, of course, a natural byproduct of investing in young companies, although FTV is still holding some oldies. Overall, median revenue growth was 15 percent.

Performance info for the firm’s three funds are as follows:

• FTV I (1999): 100% called, 7.2% IRR, 1.3x multiple

• FTV II $423.5m (2001): 96% called, 7% IRR, 1.3x multiple

• FTV III: $512.2m (2007): 40% called: -6.6% IRR, 0.9x multiple

*** GM this morning announced that it has agreed to sell its Hummer brand, but isn’t yet saying who the buyer is. Reuters reported last month that there were three bidders, including PE firms. None was an automaker. This comes just hours after Platinum Equity agreed to buy Delphi out of bankruptcy. Wonder how all this is playing in Detroit, where PE right now is synonymous with Cerberus. Saviors or just a new set of scoundrels?

*** Answer Key: Yesterday I asked you to name the enterprise software company that is quietly liquidating, after raising more than $70 million in VC funding. Your hint was that the company was based just a handful of miles from the Framingham, Mass. home office.

A bunch of you answered SiCortex, which is both folding and is within the correct geographical range. Unfortunately, that is not the correct answer for three reasons: (1) SiCortex is a hardware company; (2) It’s only raised around $40 million; and (3) It’s been reported elsewhere, which would be totally out of character for this space’s blind items.

Instead, the correct answer is Proficiency Inc., a Marlborough, Mass.-based provider of product knowledge integration and CAD interoperability solutions to manufacturers and their suppliers, appears to have ceased operations. A source familiar with the situation says the company has a small debt-load (sub-$1m), and is in talks to sell its assets to a strategic buyer in Ohio. I rang up Proficiency CEO Alex Shapira, but he declined to comment or to even confirm that the company was still in business (although picking up a home phone at 1pm on a Monday afternoon is a bit of a giveaway).

Most of the phone numbers listed on Proficiency’s website go to a generic voicemail system, while at least one (tech support) is out of service. I also called Gary Kuba, who has been the company’s in-house PR guy for several years, but he said he no longer works for the company. Get more details on the company’s funding history.

*** The LP Congress is one week from today, and we have just ten spots remaining. So, if you’ve received an invite but have been procrastinating, this would be the time to sign up. If you are interested in receiving an invite, please email me ASAP with your name, firm name and job title. Further event details, including registration for invitees, can be found here.

Special thanks to our gracious sponsors, Coller Capital and Parish Capital.

Top Three

Delphi Corp. has agreed to sell most of its global operations to Platinum Equity, as part of a $3.6 billion deal that would help Delphi emerge from Chapter 11 bankruptcy protection.

Yeong Guan Energy Technology Group, a Chinese supplier of casting components to the wind power generation market, has raised $30 million in private equity funding. STIC Investments led the round with a $20 million infusion, and was joined by MC Capital.

Concert Pharmaceuticals Inc., a Lexington, Mass.-based provider of small-molecule drugs for unmet medical needs, has signed a strategic partnership with GlaxoSmithKline that could be worth up to $1 billion. The deal includes a $35 million up-front payment, including a $16.7 million equity investment. Concert had previously raised around $95 million from firms like GSK affiliate SR One, Three Arch Partners, TVM Capital, Skyline Ventures, Brookside Capital Partners Fund, Flagship Ventures, Greylock Partners, New Leaf Venture Partners, QVT Fund, Adage Capital Management, Mediphase Venture Partners and Westfield Capital Management.

VC Deals

Sugar Inc., a San Francisco-based blog publisher, has raised $16 million in VC funding from return backer Sequoia Capital. The company also announced that it has bought back shares from past investor NBC Universal Digital Media, and has acquired video-powered fashion marketplace

Versartis Inc., a Redwood City, Calif.-based developer of therapeutic proteins for the treatment of metabolic diseases and endocrine disorders, has raised $11 million in Series A funding from Index Ventures. Under terms of the agreement, Index has the option to invest an additional $5 million. Versartis has been formed as a joint venture of Index and Amunix Inc., “to exploit the clinical potential of novel drugs using Amunix’s recombinant PEGylation (rPEG) technology.”

WiSpry Inc., an Irvine, Calif.-based provider of programmable RF semiconductor products for the wireless market, has held a $10 million second close on a $20 million Series C funding round. Chart Venture Partners and Acadia Woods Partners provided the new tranche. Prior backers include Paladin Capital Group, MuRata Manufacturing Co., L Capital Partners, Blueprint Ventures, American River Ventures, In-Q-Tel, Tech Coast Angels and Shepherd Ventures.

Endoscopic Technologies Inc., a San Ramon, Calif.-based provider of cardiac surgery devices, has raised $8 million in new VC funding. This is the second tranche of a round that held an $11.2 million first close last year. NBGI Ventures led the tranche, and was joined by return backers Saints Capital Everest, Telegraph Hill Partners and Waveland Venture Partners.

Polatis Inc., a UK-based provider of all-optical switch technology, has raised $8 million in new VC funding. Return backers include 3i Ventures, Alta-Berkeley Ventures, DFJ Esprit, Flagship Ventures, Gainesborough & Peponi Investments, JK&B Partners and Massachusetts Technology Development Corp. The company had previously raised over $23 million in VC funding.

Cloudera, a Burlingame, Calif.-based provider of services and support for open-source software Hadoop, has raised $6 million in Series B funding. Greylock Partners led the round, and was joined by return backer Accel Partners. Cloudera previously raised $5 million.

miRagen Therapeutics Inc., a Boulder, Colo.-based developer of microRNA therapeutics for cardiovascular and muscle diseases, has raised $4 million in new Series A funding, bringing the round total to $12 million. Amgen Ventures, Broadview Ventures and The Peierls Foundation joined existing shareholders Atlas Venture and Boulder Ventures.

Hospitalists Now Inc., an Austin, Texas-based provider of hospitalist services, has raised $3.5 million in Series A funding from Santé Ventures.

Apieron Inc., a Menlo Calif.-based medical device developer, has raised an undisclosed amount of Series D funding. Reports last year indicated that the company had been seeking upwards of $25 million, while a regulatory filing put the target at $16 million. Return backers included Onset Ventures, Alliance Technology Ventures, Canaan Partners and Draper Fisher Jurvetson. The company had previously raised around $43 million.

Regulatory DataCorp, a Wilmington, Del.-based provider of compliance and risk mitigation solutions, has raised an undisclosed amount of second-round funding from Bain Capital Ventures.

UICO Inc., a Glendale Heights, Ill.-based maker of user interface and human machine interface solutions, has raised an undisclosed amount of second-round funding led by Hyde Park Angels.

Buyout Deals

Dollar General Corp., a discount retailer owned by KKR, reported $83 million in net revenue last quarter, compared to $5.9 million in Q1 2008. As of March 30, KKR was holding its Dollar General investment at around 30% above cost.

JLL Partners has extended its tender offer for contract drug maker Patheon Inc. (TSX: PTI), and said that it now holds around 39% of Patheon’s outstanding restricted voting shares. JLL Partners is offering to buy the remaining shares at $2 per share.

SK Capital Partners has completed its purchase of the nylon business of Solutia Inc. (NYSE: SOA). The deal included a $50 million up-front cash payment and $4 million in deferred cash payments. Solutia also received a 2% equity stake in the newly-independent company. HSBC Securities (USA) advised Solutia on the deal.

Veritas Capital has completed its acquisition of Kroll Government Services from Marsh & McLennan Cos., and renamed the company KeyPoint Government Solutions. No financial terms were disclosed.

PE-Backed M&A

Austin Ventures has committed up to $50 million to form Brazos Software Corp., an acquisition platform focused on the enterprise software sector. The company will be run by Tivoli Systems vets Scott Harmon and Sean Fallon.

TriNet Group Inc., a portfolio company of General Atlantic, has completed its take-private acquisition of human resource outsourcing services provider Gevity HR Inc. (Nasdaq: GVHR). The deal was valued at $98 million in cash, or $4 per share.

PE Exits

NetLogic Microsystems Inc. (Nasdaq: NETL) has agreed to acquire fabless semiconductor company RMI Corp. (Raza Microelectronics), for approximately $184 million (mostly in NetLogic stock). RMI has raised around $152 million in VC funding since 2004, from firms like Benchmark Capital, DAG Ventures, Kodiak Venture Partners, Raza Foundries, Advanced Equities and Warburg Pincus.

Firms & Funds

Candover Investments PLC (LSE: CDO) said today that it expects to stay within its financial covenants in 2009.

ICICI Bank plans to raise between $150 million and $200 million for a new fund that would focus on small and mid-sized companies in India.

Samena Capital, a UK-based manager of a $200 million special situations fund, has agreed to take over Vision Asia Pacific.

Human Resources

William Weld has joined Ivanhoe Capital Corp. as an international business adviser. He is the former Governor of Massachusetts, who currently serves as a partner with law firm McDermott Will & Emery. He also served as a partner with PE firm Leeds Weld & Co.

Ian MacLeod has joined Qatalyst Group as a partner and head of global software and services I-banking. He previously was global head of software I-banking for Goldman Sachs.

Jim Brennan has joined StoneCastle Partners as a director focused on the firm’s fund management and advisory business. He previously was a senior credit officer with Moody’s Investors Service. StoneCastle is a private equity firm that invests in the banking sector.

Anthony Miller has joined Asian alternative investment manager Pacific Alliance Group as president and CEO of a newly-formed Japanese unit. He previously was president of Ramius Japan Ltd., where he will remain a senior advisor. Before that, he was with The Carlyle Group as a managing director and head of the firm’s Hong Kong office.

Matthew Guiney has joined Flybridge Capital Partners as assistant controller. He previously spent six years with PricewaterhouseCoopers.

Michael Rupe has joined King & Spaulding as a New York-based partner in the law firm’s restructuring group. He previously was with Katten Muchin Rosenman LLP.