peHUB Wire: Tuesday, November 24, 2009

Last month, I speculated that New Jersey gubernatorial candidate Chris Christie might try to use the state’s private equity investments as a cudgel over the head of incumbent John Corzine. Specifically, sources told me that Christie considered raising the specter of state investments with firms that had gotten caught up in New York’s pay-to-play scandal.

It didn’t end up happening – except at a closed-door fundraiser or two – but Governor-elect Christie last week sent a letter to Corzine, outlining 14 “urgent action items” to begin addressing the state’s budget mess. Among them is the request that New Jersey “freeze the retention of all new outside professionals, manager selections, and new contracts for managing alternative investments with respect to New Jersey’s pension funds.”

Two things are important to note:

1. We do not know why Christie singled out alternative investments. His office did not respond to our call yesterday, and no other asset classes are mentioned among the other 13 action items.

2. While Christie has asked for the freeze, he has not yet gotten his wish. The NJ Investment Council is still reviewing the request, and has not yet adopted it. This isn’t to say that New Jersey will indeed make a new alternative commitment in the next six weeks, but just to say that it is not precluded from doing so.

Erin has the full story here, including a copy of Christie’s memo.

*** In a bit of irony, Christie has named Bob Grady as co-head of his Transition Task Force on Budget and Taxes. Grady, of course, spent years as a VC-focused managing director with The Carlyle Group, before leaving this past summer to join a Denver-based private equity firm.

*** NYPPEX Private Markets will release new research tomorrow, arguing that secondary market investors are overvaluing VC-backed Internet juggernauts Twitter a! nd Facebook. Specifically, the New York-based group believes that individual investors using private-market stock exchanges are paying VC-sized valuations without the corresponding benefits.

Take Twitter, which recently raised around $98.2 million of Series E funding at a $1.13 billion post-money valuation ($15.98 per share). NYPPEX says recent “odd lot” bids for the company have been at a $1.29 billion valuation, or $20 per share. A big different, of course, is that the Series E round consists of convertible preferred stock with a 1x liquidation preference. The “odd lot” shares, on the other hand, are plain vanilla common stock. In other words, folks buying on secondary exchanges are paying more for less.

Highlighting the discrepancy even further are institutional secondary bids for Twitter’s common stock! , which are far lower than either the “odd lot” common bids and the Se ries E price.

*** Apollo Management yesterday filed an amended S-1 with the SEC, as it prepares for an IPO that is expected to occur in the first half of 2010. It had been 15 months since Apollo’s last filing, so there was a bunch of updated information, including updated fund performance data through the end of Q3.

You can view the vitals here. One oddity: Apollo lists the net IRR for its sixth fund (2006) at zero percent. Not 0.15% or negative 0.34% — just a perfect donut.

It’s obviously possible that this number is accurate, and that Fund VI showed marked improvement from its -15.4% net IRR mark at the end of Q2 (according to CalPERS). After all, its fifth fund’s net IRR increased from 39.6% (CalPERS figure) to 46% (Apollo figure). But, still, it’s statistically odd. A colleague asked an Apollo spokesman about it, but he declined to comment.

Top Three

Informa (LSE: INF) is in talks to buy German academic publisher Springer Science and Business Media, which is currently owned by Candover and Cinven. The company has been for sale since early this year, with an initial asking price of approximately €1 billion.

Telegent Systems Inc., a Sunnyvale, Calif.-based provider of mobile TV solutions, has filed for a $250 million IPO. It plans to trade on the Nasdaq under ticker symbol TLG, with Goldman Sachs and J.P. Morgan serving as co-lead underwriters. The company reported $111 million in revenue for the six months end! ing Sept. 30, with a $39 million loss. Telegent has raised around $50 million in VC funding since 2000, from firms like New Enterprise Associates (24% pre-IPO stake), Walden International (24%), Index Ventures (12.8%) and Northern Light Venture Capital.

Callum McCarthy has joined J.C. Flowers & Co. as managing director for Europe and Asia-Pacific, while David Morgan has joined as European chairman. McCarthy previously was head of Britain’s main financial regulator (FSA), while Morgan was CEO of Australian bank Westpac. In related news, Ravi Sinha has stepped down as a London-based managing director.

VC Deals

Aravo Solutions Inc., a San Francisco-based provider of supplier management software, has secured $19 million of a $22 million fifth-round funding, according to a regulatory filing. The company previously raised around $13 million, from Chess Ventures,WilsonSonsini Ventures, Angels’ Forum and a long list of individual angels like Stephen Friedman (ex-chairman of Goldman Sachs) and Tony Mayer (ex-CEO of JPMorgan Capital).

Oxagen Ltd., a UK-based drug company focused on inflammation, has raised £16 million in SeriesC funding. Novartis Venture Funds led the round, and was joined by return backers MPM Capital, SV Life Sciences, Advent Ventures, Bessemer Venture Partners, Omega, Abingworth, IBT, Red Abbey and The Wellcome Trust.

Siri Inc., a San Jose, Calif.-based developer a Web-based personal assistant, has raised $15.5 million in Series B funding, according to a regulatory filing. Return backers include Menlo Ventures and Morgenthaler Ventures. Siri previously raised $8.5 million, and lists INQ Mobile CEO Frank Meehan as a new board

New Dynamic Institute, a Wuhan, China-based educational training company, has raised $10 million insecond-round funding. Matrix Partners China led the round, and was joined by return backer WI

SupportSpace, an Israel-based provider of online IT support services, has raised $9 million in second-round funding, according to a regulatory filing. Returb backers include BRM Capital and Gemini Israel. T he company previously raised $4.25

Roam Data Inc., a Boston-based provider of mobile application services, has raised $6.5 million in VC funding from the investment arm of payments company Ingenico SAS.

Bizo Inc., a San Francisco-based online B2B marketing startup, has raised $6 million in new VC funding, according to a regulatory filing. Bessemer Venture Partners led the round, and was joined by Flagship Ventures and, a Palo Alto, Calif.-b! ased online shopping engine focused on local merchants, has raised $4 million in Series A funding. True Ventures led the round, and was joined by a group of individual angels that included Ron Conway, Chris Dixon, Jeff Clavier, Aaron Patzer and Aydin Senkut.

Fallbrook Technologies Inc., a San Diego-based provider of technology for improving the performance and flexibility of transmissions for vehicles and equipment, has raised $4 million in second-round VC funding, according to a regulatory filing. The company previously raised $25.4 million from NGEN Partners and

Reamtetrix, a San Carlos, Calif.-based provider assay solutions for applications in cellular biol! ogy, has raised $2.1 million innewVCfunding, according to a regulatory filing. The company previously raised over $8 million from Baring Private Equity Asia, Sequoia Capital India and Mobius Venture

Buyouts Deals

Brynwood Partners has acquired the Balance Bar Co. from Kraft Foods, for an undisclosed amount.

PE-Backed IPOs

China Nuokang Bio-Pharmaceutical Inc., a Chinese drug company focused on hematological and cardiovascular products, has filed for a $69 million IPO. The company plans to sell 5 million American depository shares at between $10 and $12 per ADS, with Jefferies & Co. serving as lead underwriter. It plans to trade on the Nasdaq under ticker symbol NKBP. China Nuokang shareholders include Anglo China Bio-technology Investment Holdings (70.48% pre-IPO stake),Sequoia Capital China 16.58%) and HBM Biomed (4.69%).

PE Exits

GE Aviation has acquired Naverus Inc., a Kent, Wash.-based developer of performance-based aircraft navigation. No financial terms were disclosed. Naverus had raisedaround $20 million in VC funding, from firms likeFoundation Capital and East Peak Partners.

GE Healthcare has agreed to acquire certain assets of ONI Medical Systems, a Wilmington, Mass.-based developer of MRI imaging technology. No financial terms were disclosed. ONI Medical has raised more than $31 million in VC funding since 2002, from firms like Ziegler Meditech Equity Partners, Galen Partners and Ivy Capital Partners.

KKR and Wendel Investissements will cut their stakes in French electronics company Legrand from 61% to 50%, via a private placement to institutional investors. The 11% stake is valued at €572 million.

Tata Motors reportedly is interested in acquiring Actis’ 7.74% stake in truck and bus maker Swaraj Mazda.

TDC, a Danish telecom operator, said that its private equity owners have begun a review of “strategic alternatives.” The company was acquired in 2006 for nearly $13.5 billion, by Apax Partners, Blackstone Group, KKR, Permira and Providence Equity Partners. The firms currently own around 88% of TDC’s stock, and Reuters reported earlier this month that they were considering a partial sale.

Firms & Funds

Abraaj Capital Group has agreed to acquire Riyada Ventures, a Jordan-based VC firm focused on the MENA region. No financial terms were disclosed.

Triton Partners, a UK-based buyout firm, has secured $472 million in LP commitments toward its third fund, according to a regulatory filing. The vehicle, called Triton Fund III LP, has a target of $2.97 billion (converted from Euros as of November 6, 2008, when the fund was created).