peHUB Wire: Tuesday, March 24, 2009

Greetings from New York City, where I’ve got a bunch of meetings and conferences to attend this week. Apologies for any typos, but I didn’t begin driving here until around 10pm last night (pre-existing Restaurant Week “obligation” at Grotto in Boston — tasty). A bit bleary-eyed as a result…

*** Sequoia Capital is “pushing ahead” with its outsourced investment management platform for college endowments (a.k.a. Heritage Fund), despite the reported departure of team leader Eric Upin.

That’s the word from Dan Feder, who joined Sequoia last year after having run venture capital and private equity for the Princeton Investment Management Co. I reached Dan on his Sequoia line yesterday morning, probably because the receptionist wasn’t in yet to screen me out. He declined to get into specifics (per Sequoia’s MO), but did say that he had no plans to leave the Silicon Valley-based firm.

The obvious question, of course, is! how Feder and Sequoia would be able to move forward. There isn’t much of a team left anymore, particularly given the recent departure of hedge fund veteran Michael Beckwith. Moreover, Eric Upin left to join the very firm — Makena Capital — that Sequoia was hoping to emulate (albeit on a smaller scale). Whistling past the graveyard or old-fashioned determination?

*** NY Scandal I: Most of the tainted fund commitments come out of NY Common’s general fund. Several of them, however, come out of pools managed by outsourced managers like Aldus Equity and Hamilton Lane. I spoke to someone familiar with the set-up, who said that such pools are only quasi-discretionary. Aldus, Hamilton Lane and others do initial due diligence and make recommendations to NY Common, but do not have sole discretion. Moreover, the deal-flow can reverse, with NY Common asking the managers to research certain fund managers.

*** NY Scandal II: Aldus and GKM (another outsourced mana ger) are all over the SEC complaint. Hamilton Lane – which also happens to be NY Common’s primary PE consultant – isn’t mentioned once.

*** NY Scandal III: NY Common has a webpage devoted to its alternative investments, but it’s woefully out of date. The only listed contact left Common last fall, and the current holdings file is as of March 31, 2007 (you can find more recent info in the annual report, but still…).

*** NY Scandal IV: I’m sure it’s just coincidence, but a lot of PE pros seem to have donated to former NY Comptroller Alan Hevesi (whose political aides were Loglisci and Morris). Specifically, a lot of PE pros whose funds received commitments from NY Common via the alleged kickback scheme. Here’s a brief sampling (asterisks are for those who don’t live in NY State):

— David Lueschen (Riverst! one LLC)

$40,000, 12/4/04

— Lauren Leichtman* (Levine Leichtman Capital Partners)

$37,500, 12/10/04

— Daniel D’Aniello* (Carlyle Group)

$15,000, 1/11/05

— David Rubenstein* (Carlyle Group)

$15,000, 1/11/05

— Erica Bushner* (GKM)

$6,125, 5/27/05

$6,000, 10/26/06

— Jeff Scheinrock* (GKM)

$6,000 10/26/06

Top Three

Nycomed, a Swiss drugmaker, reportedly has hired Goldman Sachs to explore a possible sale of the company, in a deal that could be worth upwards of 10 billion euros. Nordic Capital holds a 51% stake in Nycomed, while other shareholders include AlpInvest, Blackstone Group and DLJ Merchant Banking Partners.

GTCR has formed Actient Pharmaceuticals LLC, a Deerfield, Ill.-based platform to acquire and operate specialty pharmaceutical companies and products. GTCR will invest up to $200 million in Ac! tient, which will be run by former Abbott Labs executive Ed Fiorentino.

Flat World Knowledge, a Nyack, N.Y.-based publisher of open-source commercial textbooks, has raised $8 million in Series A funding. Backers include Greenhill SAVP, High Peaks Venture Partners and Valhalla Partners.

VC Deals

Ardian Inc., a developer of a catheter-based medical device to treat hypertension, has raised $47 million in third-round funding. Medronic Inc. led the round, and was joined by Emergent Medical Partners and return backers Advanced Technology Ventures, Morgenthaler Ventures and Split Rock Partners. The company previously raised $17 million.

Ngmoco, a San Francisco-based publisher of iPhone and iPod touch games, has raised $10 million in Series B funding. Norwest Venture Partners led the round, and was joined by return backers Maples I! nvestments and Kleiner Perkins Caufield & Byers. Ngmoco had previously raised $5.6 million.

Axcient Inc., a Mountain View, Calif.-based provider of data protection SaaS solutions for small and mid-sized enterprises, has raised $6 million in Series A funding from Allegis Capital and Peninsula Ventures.

FirstBest Systems Inc., a Bedford, Mass.-based developer of insurance underwriting management systems, has raised $6 million in Series B funding. Return backers Flybridge Capital Partners and Brookstone Partners co-led the round. FirstBest previously raised $7 million.

Claros Diagnostics! Inc., a Woburn, Mass.-based developer of handheld urological c ancer diagnostic testing system for point-of-care use, has raised $4 million in second-round funding, according to a regulatory filing. Shareholders include Oxford Bioscience Partners, Bioventures Investors, Accelerated Technologies Partners and Commons Capital.

Buyout Deals

BI-Lo LLC, a Greenville, S.C.-based supermarket chain owned by Lone Star Funds, has filed for Chapter 11 bankruptcy protection. In a court filing, the company requested approval for $100 million in DIP financing from GE Capital.

The Carlyle Group has expressed interest in acquiring UK software company Innovation Group PLC for 15 pence per share (250% premium to yesterday’s closing stock price).

Carousel Capital ! has acquired Copac Inc., a Spartanburg, S.C.-based specialty packaging company, from its founder. No pricing terms were disclosed for the deal, which included leveraged financing from RBC Bank.

Essent this week is expected to shortlist bidders for its waste management unit (Essent Milieu). The Dutch utility is hoping the deal fetches more than €1 billion, with ING running the process.

Gemini Investors and Socius Capital have sponsored a recapitalization of Wazee Electric Inc., a provider of of products and services for industrial motors and cranes in the Rocky Mountain region. CapitalValue a! dvised Wazee on the deal.

Indalex Inc., a Lincolnshire, Ill.-based maker of soft alloy aluminum extrusion products, has filed for Chapter 11 bankruptcy protection. Sun Capital Partners bought Indalex in 2005 from Honeywell for $425 million.

MMC Precision Holdings (Morton Metalcraft), a maker of engineered metal products for customers like Deere & Co. and Caterpillar, has filed for Chapter 11 bankruptcy protection. In court papers, MMC said it was seeking a buyer for the business, and requested approval for $20 million in DIP financing from current lenders. Brazos Private Equity Partners acquired an 80% stake in MMC in 2006, for $60 million in equity.

Vector Capital has completed its $160 million take-private buyout of Aladdin Knowledge Systems, an Israeli maker of security software. Aladdin stockholders received $11.50 per share.

Wind Point Partners is in talks to acquire an equity stake in Grand Rapids, Mich.-based contract cereal and snack maker Roskam Baking Co., according to LBO Wire. The deal would include more than $100 million in leveraged financing from GE Capital and CIT Group.

PE-Backed M&A

AmWINS Group Inc., a Charlotte, N.C.-based wholesale distributor of specialty insurance products and services, has acquired National Insurance Wholesalers, an insurance wholesaler of medical stop-loss insurance for self-insured companies, from Clark & Wamberg LLC. No financial terms were disclosed. AmWINS is a portfolio company of Parthenon Capital.

Identec Solutions AG, an Austria-based supplier of industrial RFID-based tracking and tracing solutions, has acquired TunnelCom, a Norway-based provider of automatic tagging solu! tions for the tunnel, mining, oil and gas industries. No financial terms were disclosed. Identec has raised VC funding from firms like Hannover Finanz GmbH, RFID Invest AG, UBF Mittelstandsfinanzierungs AG and Gamma Capital Partners.

Firms & Funds

5AM Ventures has held a $119.25 million close on its third fund, according to a regulatory filing. The Menlo Park, Calif.-based firm focuses on life sciences opportunities, and is believed to be targeting at least $150 million – which was the size of its second fund.

Human Resources

Redpoint Ventures has made three hires: Satish Dharmaraj, co-founder of open-source email company Zimbra (acquired by Yahoo), as a partner; Nety Krishna, formerly of Applied Materials, as a venture partner and CTO of the firm’s energy, materials and environment practice; and Pueo Keffer, previously a senior associate with TA Associates, as a vice president with Redpoint’s growth equity fund.