peHUB Wire: Tuesday, June 29, 2010

Greetings from the home office, where soon I’ll be packing for a short vacation to Puerto Rico. Luisa will be taking care of peHUB Wire in my absence, so be sure to send her any press releases, news tips and Nigerian email scams. Her email addy is:

I’ve also lined up some guest columnists, who I hope will both entertain and inform. Anyway, some notes to kick off your Tuesday:

*** SV Life Sciences today announced that it has closed its fifth fund with over $523 million in capital commitments, busting through its original $400 million target. Looks like the largest fundraise of 2010 from a healthcare-focused VC firm, so I spent a few minutes on the phone with chairman and managing partner Jim Garvey.

I’ll post all of it to peHUB shortly, but a couple takeaways:

1. I asked if he envisioned healthcare venture getting “leaner,” kind of like IT venture has done. The reply was negative, with Garvey pointing saying: “Healthcare, unlike IT, is a regulated business and 50% of it is government-directed reimbursement.” He adds that they key is capital reserves, saying SV holds $2 for every $1 it invests in a Series A.

2. Speaking of Series A investments: He noted that many of these $30-$50m Series A rounds are really just an aggregation of “the old Series A through Series C rounds.” They just tranche them out ahead-of-time.

3. Over half of the portfolio companies in SV Life Science’s last fund were founded by entrepreneurs who previously had founded or worked at SV-backed companies. Garvey expects that percentage to top 75% this time around.

*** If I were a venture capitalist this morning, I’d just be shaking my head at the Tesla Motors IPO. No profits, declining quarter-over-quarter revenue, a bankrupt founder/CEO, proven manufacturing difficulties and all hopes resting on a $50k sedan that won’t begin production until 2012.

“Don’t we have unsuccessful companies like that in our portfolio,” I’d ask. “We even have some government loans for our cleantech companies. Is all we’re missing a better marketing department?”

*** Speaking of Tesla, the company lined up a bunch of its “product” outside the Nasdaq this morning. Here are some photos.

*** I’m told that The Blackstone Group is still on schedule to close its latest mega-fund tomorrow. No word yet on where it will end up, although we reported last month that the revised target was around $12 billion. According to public filings, it had been stuck at around $9 billion for the past year or so.

*** I just received new study on student-run venture capital funds at business schools (there are more than a dozen of them). Key point, to me, was that education is the primary goal, with ROI placing second.

*** Does the watered-down Volcker Rule prevent banks from providing leverage to transactions sponsored by their in-house private equity funds? That’s my gut reaction to the following language, which can be found in Title VI of the financial reform bill released yesterday:

‘‘(1) IN GENERAL.—No banking entity that serves, directly or indirectly, as the investment manager, investment adviser, or sponsor to a hedge fund or private equity fund, or that organizes and offers a hedge fund or private equity fund pursuant to paragraph (d)(1)(G), and no affiliate of such entity, may enter into a transaction with the fund, or with any other hedge fund or private equity fund that is controlled by such fund, that would be a covered transaction, as defined in section 23A of the Federal Reserve Act (12 U.S.C. 371c), with the hedge fund or private equity fund, as if such banking entity and the affiliate thereof were a member bank and the hedge fund or private equity fund were an affiliate thereof.

Wall Street caught some big breaks in this bill, but this leverage restriction could trump all of that. In fact, it could be a backdoor that effectively forces banks to divest of their in-house PE funds (if they have to choose to participate in equity or debt, they’ll choose debt). Unless I’m reading it wrong… Am I?

*** Adios. Talk to you again next Tuesday…

Top Three

Tesla Motors, a San Carlos, Calif.-based maker of electric vehicles, raised $226 million in its IPO. The company priced 13.3 million shares at $17 per share, compared to an upwardly-revised range of between $14 and $16 per share. Tesla has raised over $220 million in VC funding from firms like Draper Fisher Jurvetson, Daimler AG and VantagePoint Venture Partners.

Travelport, the travel services company majority owned by the Blackstone Group, is now looking to go public in New York, according to the Financial Times. Travelport had planned to launch an IPO in London but scrapped it after growing uncertainty in the European market.

SunRun, a San Francisco-based provider of residential solar electricity, has raised $55 million in Series C funding. Sequoia Capital led the round, and was joined by return backers Accel Partners and Foundation Capital.

VC Deals

BIND Biosciences said Tuesday that it had secured $12.4 million in Series C-1 financing. All of BIND’s current investors, including Polaris Venture Partners, Flagship Ventures, ARCH Venture Partners, NanoDimension and DHK Investments, as well as new investor EndeavoUr Vision, contributed to the financing. BIND, of Cambridge, Mass., is a biopharmaceutical company developing drugs to treat serious diseases.

Zymeworks Inc. said Tuesday that it had closed a financing round with $3.2 million. CTI Life Sciences Fund, L.P., which led the company’s previous financing in 2009, invested in the current round. Further terms were not disclosed. Zymeworks also said that Dr. Donald Drakeman,apartner with Advent Venture Partners, will be joining its board.

AqueSys Inc. said Tuesday that secured $35 million in Series C financing. Longitude Capital and Rho Ventures led the round, with participation from existing investors Accuitive Medical Ventures, The Carlyle Group and SV Life Sciences. AqueSys is a medical device company that develops and makes implants for glaucoma.

Abe’s Market has received seed funding from Index Ventures/Saul Klein, TAG, the former head of Yahoo Europe Toby Coppel, David Honig (Vison Ventures) and Mark Esiri (Venrek UK), according to TechCrunch. Abe’s Market, of Buffalo Grove, Ill., is an online marketplace where people go to sell natural products.

Geodelic has raised $7 million in Series B funding, according to press reports. MK Capital led the round, which included Clearstone Venture Partners and Shasta Ventures. Geodelic is a mobile applications company based in Santa Monica, Calif.

Buyouts Deals

HSBC Holdings PLC (HSBA.L) is in final price negotiations with a consortium of infrastructure funds on the sale of its rolling stock business, Eversholt, several people familiar with the matter said on Monday. Morgan Stanley Infrastructure, 3i Infrastructure (3IN.L) and Star Capital are in advanced talks to buy Eversholt, which owns one third of Britain’s rolling stock and for which HSBC expects to be paid some 2 billion pounds, sources told Reuters.

Thompson Street Capital Partners has acquired Express Oil Change from Carousel Capital for an undisclosed amount. Express Oil is a Birmingham, Ala.-based operator of quick lube and automotive service centers. It was acquired by Carousel in 2005.

Weston Presidio has invested an undisclosed amount in real estate franchisor RE/MAX LLC, as part of a larger leveraged transaction.

Kayne Anderson Energy Funds has committed up to $50 million equity into Alamo Resources II LLC, an oil and natural gas company based in Houston. At the same time, Alamo II completed an acquisition of primarily oil properties in Eddy County, N.M. from Doral Energy Corp. for $10 million. Kayne Anderson manages $2.7 billion of committed capital.

PE-Backed IPOs

Global Aviation Holdings Inc, an air transport services provider, filed Monday filed with U.S. regulators for an initial public offering of up to $100 million. The company said it would use proceeds from the offering mainly to repay debt. It did not say how many shares it plans to sell or provide an expected price range. The underwriters are led by Morgan Stanley and Jefferies. The company is expected to trade on Nasdaq under the sybmbol “GLAH.” The company posted revenue of $298.5 million in the three months ended March 31, up 10 percent from $270.6 million a year earlier. It posted a net loss of 447,000, compared with net income of $39.1 million a year ago. Global Aviation is a portfolio company of MatlinPatterson.

InvenSense Inc filed for an initial public offering worth up to $100 million on Monday. The Sunnyvale, Calif.-based company provides motion sensors and software for electronics gadgets such as video gaming devices and portable navigation devices. InvenSense raised around $38 million in VC funding from Artiman Ventures (22.7% pre-IPO stake), Partech International (22.6%), Sierra Ventures (8.9%), Qualcomm (7%), Foxconn, Inventec Appliances Corp., Skylake Ventures, DoCoMo Capital and VentureTech Alliance.

Firms & Funds

American Capital said Monday that it had restructured its loans and reduced its debt by $1.03 billion. At the close of the deal, American Capital said had $1.31 billion of secured debt, $11 million of unsecured debt and $1.61 billion of securitized debt and holds approximately $240 million of unrestricted cash and marketable securities on its balance sheet. American Capital is a publicly traded public equity firm.

JMI Equity is raising its seventh fund, according to a regulatory filing. No target capitalization was listed. The Baltimore-based firm closed its sixth fund in 2007 with $600 million, and makes growth-stage investments in software, internet, healthcare IT and business services companies.

SV Life Sciences said Tuesday that it has closed its fifth international life sciences fund, SV Life Sciences Fund V, with total commitments of more than $523 million. Its target had been $400 million. SV Life Sciences, a venture capital group focused on life sciences sector, has over $2 billion in funds under management.