peHUB Wire: Tuesday, June 22, 2010

I’ve written a lot about LP/GP power dynamics, and how LPs have (finally) begun to flex their little-used muscles. Now we have some actual data to back up the anecdotes.

Private equity research firm Preqin yesterday sent over results from a survey of 50 institutional investors, showing that fund terms have become more LP-friendly over the past two years. Here are some examples (verbatim from press release):

• The mean management fee for new buyout funds (those of a 2010 vintage or yet to hold an initial close) seeking $1 billion or more in commitments is 1.59%, down 32 basis points from its peak for vintage 2008 funds of 1.91%.

• The mean management fee for new real estate funds seeking $1 billion or more in total commitments is 50 basis points down from its peak for 2007 vintage funds, now standing at 1.25%.

• The mean management fee for the latest distressed private equity funds seeking less than $500 million in commitments is 1.82%, down 24 basis points from the average for 2008 vintage funds of 2.06%.

• (Not from release) Preqin did not report any specific carry terms, but did tell me via email that 25% of LPs said it was an area where they were still seeking “improvements” from GPs.

Equally important is the fact that LPs remain unsatisfied. Only 58% of respondents said that GP/LP interests are properly aligned, which is down from 69% two years ago.

It’s unclear if GPs will keep bending, but it’s almost certain that LPs will keep asking…

*** Speaking of LP/GP agreements: I keep hearing talk that certain funds have “legislation triggers,” whereby GPs have the option to alter terms due to the enactment of new legal regulations. The most obvious trigger would be a change to carried interest tax treatment, but it is not the only one. Maybe these would be considered MALs (material adverse laws).

I’m looking for some examples, so please drop me a (confidential) note if you know of any… Much thanks in advance.

*** Data Point: Venture capitalists have invested nearly $4.55 billion into 497 U.S.-based companies in the second quarter of 2010, according to preliminary Thomson Reuters data (very preliminary, since Q2 has! more than a week to go).

This already is above the $4.28 billion VCs invested in the second quarter of 2009, and is on pace to top the $4.81 billion invested last quarter (not only because of the time remaining, but also because the figures tend to rise as surveys are returned). It also represents a major increase the in number of dollars invested per deal: $9.13 million per round in Q2 2010, compared to an average of $6.86 million since the beginning of 2008.

Top Three

Booz Allen Hamilton Inc., a McLean, Va.-based provider of management and technology consulting services to the U.S. government, has filed for a $300 million IPO. Morgan Stanley and Barclays Capital are serving as co-lead underwriters. The company was formed two years ago, when Booz Allen separated its U.S. government businessfrom itsglobal commercial business, with The Carlyle Group buyinga majority stake in the former for $2.54 billion. It reports $5.12 billion in revenue for the year ending March 31, 2010.

Incline Therapeutics Inc., a hospital-focused specialty pharma startup, has raised $43 million in Series A fundin! g. Frazier Healthcare Ventures led the round, and was joined by 5AM Ventures, Technology Partners, Adams Street Partners, Saints Capital Partners and Emergent Medical Partners. Also receiving shares was Cadence Pharmaceuticals Inc. (Nasdaq: CADX), which signed an option to acquire Incline for up to $285 million. In related news, Incline agreed to acquire the global rights to IONSYS, patient-controlled analgesia for adult inpatients requiring opioids following surgery, from ALZA Corp.

John Swainson, former CEO of Computer Associates, has joined Silver Lake Partners as a senior advisor. In other Silver Lake news, John Hoffman has joined the firm’s mid-market investment group (Sumeru) as a principal. H! e previously was a vice president with GTCR.

VC Deals

Baxano Inc., a Mountain View, Calif.-based developer of minimally-invasive spinal devices, has raised $30 million in Series C funding. CMEA Capital led the round, and was joined by Kaiser Permanente Ventures, Affinity Capital Management and return backers Prospect Venture Partners, Three Arch Partners and Kearny Venture Partners. The company previously raised over $28 million.

Opscode Inc., a Seattle-based cloud infrastructure automation company, has raised $11 million in Series B funding. Battery Ventures led the round, and wa! s joined by return backer Draper Fisher Jurvetson. The company previously raised $2.5 million.

Apptera Inc., a San Bruno, Calif.-based voice and visual mobile advertising network, has raised $10 million in Series B funding. New World Ventures led the round, and was joined by return backers Alloy Ventures, Lightspeed Venture Partners and Walden International. The company had previously raised around $35 million over five rounds, including a 2008 recap.

uSamp, a Los Angeles-based provider of survey panelists and technology for use in market research, has raised $10 million in Series C funding led by OpenView Venture Partners.

Rocket Lawyer, a San Francisco-based legal lead generation startup that provides free legal information and forms to attract visitors, has raised $7 million in Series C funding led by Investor Growth Capital. The company previously raised money from Lexis-Nexis.

Tatara Systems, an Acton, Mass.-based provider of mobile convergence products for network operators, has raised $7 million in new VC funding from return backers North Bridge Venture Partners and Highland Capital Partners. The company previously raised around $36 million.

Lijit N! etworks Inc., a Boulder, Colo.-based provider of search tools and statistics for online publishers, has raised $6 million in fourth-round funding. Foundry Group led the deal, and was joined by fellow return backers Boulder Ventures and High Country Venture. Lijit previously raised over $10.4 million.

Snaptu (f.k.a. Moblica), an Israeli mobile application developer, has raised $6 million in Series B funding, according to TechCrunch. Carmel Ventures led the round, and was joined by return backer Sequoia Capital.

ATEME, a French provider of MPEG-4/H.264 video compression solutions, has raised €6.5 million in new funding. A Plus Finance was joined by undisclosed existing shareholders and company management.

Diet Chef, a UK-based company that delivers nutritionally-balanced meals to customers, has raised £3 million from Piper Private Equity.

Aeristech Ltd., a UK-based developer of turbocharger technology for enhancing fuel efficiency in vehicle engines, has raised £500,000 inseed funding. Midven led the round, and was joined by ! theMinerva Business Angels Network and members of the Oxford Investmen t Opportunity Network.

Buyouts Deals

TPG Capital has agreed to buy British fashion retailer Republic from Change Capital Partners, for approximately £300 million.

The Carlyle Group has agreed to purchase around 1.1 million common shares in Boston Private Financial Holdings Inc. (Nasdaq: BPFH), for approximately $6.3 million.

Dubai International Capital is in talks with lenders over investing up to £150 million of new cash into Alliance Medical, to help the company stop breaching its debt covenants.

Gala Coral creditors took control of the British gaming business yesterday, meaning that former PE owners Candover, Cinven and Permira have lost their equity investment. Me! zzanine lenders, led by Apollo Management, have converted their £558 million holding into equity, and invested another £200 million to pay down senior debt.

Phil’s Fresh Foods, a Boulder, Colo.-based maker of EVOL Burritos, has received its second private equity investment from Revelry Brands. No financial terms were disclosed.

PE-Backed IPOs

Aurora Diagnostics LLC, a Palm Beach Gardens, Fla.-based diagnostic lab and anatomic pathology company in registration for a $150 million IPO, has secured a $335 million credit facility from Barclays Bank. The company was formed in 2006 as an acquisition platform by Summit Partners and GSO Capital Partners. Last June, KRG Capital Partners acquired GSO’s interests in the company. Summit now holds a 51% ownership stake, with K! RG holding a 34% position.

PE Exits

3i Group has agreed to sell British commodities testing and inspection firm Inspectorate for £450 million to France’s Bureau Veritas (Paris: BVI).

Firms & Funds

Linden LLC, a Chicago-based private equity firm focused on healthcare and life sciences companies, has closed its second fund with $375 million in capital commitments, according to LBO Wire. The firm originally went out with a $300 million and $350 million hard cap, but raised the limit due to oversubscription.

Paul Capital is raising upwards of $400 million for a new VC-focused fund-of-funds, according to a regulatory filing. So far it has secured $61.25 million.

Human Resources

Jason Barg and Trevor Rich have joined Lovell Minnick Partners as senior associates. Barg will work in the firm’s Radnor, Penn. office, and previously was part of Goldman Sachs’ financial institutions group. Rich will be based in El Segundo, Calif., and was an alayst in Morgan Stanley’sstrategic acquisitions group.

Spence McClelland has joined Noro-Moseley Partners as a vice president. He previously was director of strategic and corporate development with Healthways Inc., and before that worked at Willis Stein & Partners.