peHUB Wire: Tuesday, May 18, 2010

Lots of news this morning, so just a few very quick notes:

*** Last month I wrote about some Financial Reform Bill provisions that could negatively impact angel investors and early-stage startups. I also wrote about how legislators had heard practitioner outrage – including blog-based hyperbole about how the rules would “kill” angel investments – and were looking to reverse proposals originally borne by state regulators (seems they’re looking to justify their existence).

Anyway, last night the Senate adopted a bipartisan amendment that stripped out most of the offending language. There remain some outstanding issues, but the immediate danger appears to have passed.

peHUB has a full wrap-up and analysis here.

*** Speaking of financial reform: Morgan Stanley Investment Management yesterday announced that it has raised $585 millio! n for a new global secondaries fund. From what I understand, however, there is no LPA provision about what will happen if Congress passing the Volcker Rule.

Am I the only one who finds this odd? LPs and GPs plan for all sorts of contingencies when designing fund docs, from key-men triggers to LP default protocols to no-fault divorces. Wouldn’t it behoove both parties to know (officially) what happens if the federal government tells banks like Morgan Stanley that they no longer can house private equity funds?

I know most of this fund-raise occurred while Paul Volcker was still an old man being ignored on the sidelines, but the final close happened after his eponymous rule was included in the Financial Reform Bill’s working draft. I can’t believe anyone – everyone? – is so willing to just close their eyes and hope it doesn’t become law.

*** Buh-Bye: Daniel Gray has left Gores Group, where he had been a director of business development. No word yet! on his future plans.

*** Yesterday I cited a VentureWire report about how Venrock was losing three of its partners. Venrock still isn’t commenting, but here are two quick notes:

(1) Ray Rothrock is not leaving the firm, according to a source. He will continue to work there fulltime – including maintenance of his dozen board seats – but will not take on new board seats going forward; (2) Some of you noted that the VW story actually noted four departing partners, and that I didn’t include Mike Feinstein in my blurb. The reason I didn’t include Feinstein is that he actually left more than three years ago, founded a new PE firm (it didn’t really take) and now is VP of sales and marketing at Digital Lumens.

*** peHUB Shindig: Tickets will go on sale tomorrow for the next peHUB Shindig, which is taking place in Chicago. In the meantime, we’ve got space for one additional sponsor. Email me if interested…

Top Three

Fidelity National Information Services (NYSE: FIS) confirmed today that buyout talks have failed, and that the company now will pursue a leveraged recap with a substantial share buyback. Reports suggest that the deal mostly crumbled over price, which was rumored to have approached $15 billion. The PE consortium included Blackstone Group, THL Partners and TPG Capital.

Lookout, a San Francisco-based provider of smartphone security solutions, has raised $11 million in Series B funding. Accel Partners led the round, and was joined by Khosla Ventures and Trilogy Partnership.

Morgan Stanley Investment Management has closed a global secondaries fund with $585 million in capital commitments.

VC Deals

Spring Wireless Inc., a Sao Paulo, Brazil-based provider of enterprise mobility platforms and applications, has raised $12 million in Series D funding. SAP Ventures led the round, and was joined by return backers Goldman Sachs and New Enterprise Associates. The companyin 2008raised a $56 million Series C round at a $110 million pre-money valuation.

iRhythm Technologies Inc., a San Francisco-based maker ofcardiac diagnostic monitoring devices, has raised $10 million in new VC funding. St. Jude Medical led the round, as part of a strategic partnership. Return backers include Mohr Davidow Ventures and Synergy Life Science Partners. iRhythm previously raised just over $19 million.

North! Scale Inc., a Mountain View, Calif.-based provider of elastic data infrastructure software, has raised $10 million in Series B funding. Mayfield Fund led the round, and was joined by return backers Accel Partners and North Bridge Venture Partners.

InnoGames, a Hamburg, Germany-based developer of free-to-play online games, has raised “double-digit” VC funding from Fidelity Growth Partners Europe. This is FGPE’s first investment out of a £100 million fund raised after Fidelity Ventures split into two firms (FGPE and Volition Capital).

Cloud9 Analytics, a Redwood City, Calif.-based provider of SaaS business analytics for line-of-business managers, has raised $8 million in Series C funding.Mayf! ield Fund led the round, and was joined by return backers Int erWest Partners and Leapfrog Ventures.

Huddle, a London-based company that creates online workspaces in the cloud, has raised $10.2 million in Series B funding. Matrix Partners led the round, and was joined by return backer Eden Ventures and company chairman Charles McGregor.

Tropical Smoothie Café, a chain of 270 quick casual restaurants in 34 states, has raised $4.4 million in growth equity funding from BIP Opportunities Fund.

SwiftTest Inc., a Santa Clara, Calif.-based developer of commercial IP network testing tools and solutions, has raised an undisclosed amount of seed funding from Benhamou Global Venturesand ! FloodGate. Eric Benhamou and Mike Maples have joined the SwiftTest board of directors, as part of the financing.

Buyouts Deals

Arborview Capital, SAIL Venture Partners and Huntington Capital have recapitalized Paragon Airheater Technologies Inc., a Corona, Calif.-based provider of products and services that reduce fuel consumption and carbon emissions in fossil fuel-fired power generation plants. No financial terms were disclosed.

Aurora Capital Group has agreed to acquire the assets of Parking Company America Airports, a bankruptoperator of 27off-airport parking facilities. No financial terms were disclosed.

H.I.G. Capital has acquired the assets of Excel Homes LLC, a Camp Hill, Penn.-based custom modular home manufacturer. No financial terms were disclosed.

Riverstone Holdings has agreed to invest more than $800 million into Pattern Energy Group, a developer of wind and renewable energy projects.

Terra Firma and Pacific Equity Partners reportedly are bidding to acquire the landfill-gas unit of Britain’s Biffa from Montagu Private Equity and Global Infrastructure Partners. 3i Infrastructure and CVC Capital Partners had considered bidding, but have dropped out of the process.

PE-Backed IPOs

Jupiter Asset Management reportedly is planning a London floatation that would value the company at up to £1 billion. TA Associates sponsored a management buyout of the UK asset manager in 2007.

PE-Backed M&A

Travelport, a provider of global distribution system, has acquired, a Singapore-basedhotel and travel search engine. No financial terms were disclosed. Travelport is a portfolio company of The Blackstone Group, while had raised VC funding from Sofinnova Partners and Walden International.

Vision Solutions Inc., a portfolio company of private equity firm Thoma Bravo, has agreed to buy recovery software provider Double-Take Software Inc. The deal is valued at $242 million in cash, or $10.55 per share (21% premium to closing price on last day of trading before Double-Take said it was considering alternatives).

PE Exits

Eurazeo is in talks to sell hotel chain B&B Hotels for between €600 million and €1 billion. Several PE firms reportedly have moved onto the second round of bidding.

Hain Pure Protein Corp. has! completed the previously-announced sale of its KosherValley brand to Empire Kosher Poultry for an undisclosed amount. HPPC is a joint venture between Pegasus Capital Advisors and The Hain Celestial Group Inc.

RJD Partners reportedly is in talks to sell UK teacher services company Teaching Personnel for up to £50 million. RJD acquired the company three years ago from Barclays Private Equity via a management buyout.

Tektronix Inc. has acquired Mixed Signals, a Los Angeles-based provider of digital content monitoring. Mixed Signals had raised around $7.3 million from Palomar Ventures and RRE Ventures.

Firms & Funds

Darby Private Equity and IL&FS Investment Managers are among six bidders for the private equity arm of India’s Axis Bank, according to the Economic Times.

Human Resources

Bob Curley has joined venture debt firm MMV Financial as a managing director and senior vice president in the firm’s Palo Alto, Calif. office. He previously was a general partner with Pinnacle Ventures.

Hervé Malausséna has agreed to join the London office of Moelis & Co. as a managing director, with a focus on telecom sector advisory work. He previously was with Citigroup as a managing director and head of EMEA telecom I-banking.

Morgenthaler has promoted Rebecca Lynn from principal to partner, according to VentureWire. She joined the firm’s Menlo Park office in 2007 from Procter and Gamble.