peHUB Wire: Tuesday, November 3, 2009

Greylock Partners dominated yesterday’s venture capital landscape, raising $575 million for its thirteenth fund, hiring LinkedIn co-founder Reid Hoffman and deciding to move its East Coast office from Waltham to Harvard Square. In short: Greylock is growing while most other VC firms are shrinking (or planning to shrink).

Greylock originally set out to basically match the $500 million it raised for its twelfth fund in 2006, but raised the ceiling when existing LPs requested more than their pro rata allocations. Yes, you read that correctly, even though many of Greylock’s LPs are endowments and foundations that have been severely squeezed by liquidity constraints.

To me, it says two things:

1. If you return capital, they will still come. IPOs from its last two funds include Constant Contact, Data Domain and Ikanos – while there are lots of exit hopes expectations for Facebook, LinkedIn, ZipCar, etc.

2. Show consideration to your LPs, and they may return the favor. Greylock uses year-by-year budgets to determine management fees, rather than a predetermined percentage of committed capital (i.e., the industry standard). It’s a bit more work for both GP and LP, but makes far more sense for both sides than setting 2014 costs today. Moreover, Greylock has kept its fund sizes a bit below industry averages (for a firm of its age), which also engenders LP largesse.

*** New Buyout Firm Alert: Gotham Private Equity Partners has launched as a New York-based private equity firm focused on the middle and lower middle-markets. Equity checks of between $10 million and $50 million per investment, in exchange for a control position (with some growth equity exceptions).

The core quartet is one we last discussed in early 2007, when they bolted Trimaran Capital Partners to work for Columbus Nova. Before that, they had worked together in the leveraged finance group of CIBC.

I spoke yesterday with managing principal Steven Flyer, who didn’t really explain the departure from Columbus Nova, except to say that it was to take advantage of the opportunity to hang their own shingle in the midst of a market dislocation. The Gotham team will not continue to manage investments made while with Columbus Nova.

Gotham does not plan to raise a traditional fund. Instead, its deals will b! e financed by a group of high-net-worth individuals and families who helped launch Gotham by acquiring a minority ownership position. The firm is already looking hard at a couple of deals, and expects its first transaction to close in Q1 or Q2 of next year.

*** Where in the World? This Friday afternoon I’ll be the subject of a keynote interview, at the Private Equity Secondaries Conference in Boston. Then it’s off to Los Angeles later this month for Buyouts West, where I’ll be moderating an LP panel and an industry outlook panel. Hope to see some of you around the towns…

Top Three

TPG Capital has agreed to acquire a majority stake in Valerus Compression Services, a Houston-based provider of natural gas handling services. The deal is valued at $500 million, with TPG investing in the company’s debt and equity.

Graham Packaging Co., a plastic container maker owned by The Blackstone Group, has filed for a $350 million IPO.

Greylock Partners has closed its thirteenth fund with $575 million in capital commitments. It also has hired Reid Hoffman, co-founder of Greylock portfolio company LinkedIn, as a partner.

VC Deals

Probiodrug, a German drugmaker focused on Alzheimer’s disease, has raised over €36 million in second-round funding. BB Biotech and Edmond de Rothschild Investment Partners co-led the round, and were joined by LSP Life Science Partners, Biogen Idec New Ventures and return backers like HBM Bioventures and TVM Capital.

RecycleBank, a New York-based company that partners with cities and businesses to reward households that recycle, has raised $28.25 million in third-round funding, according to a regulatory filing. Backers include Generation Investment Management, Kleiner Perkins Caufield & Byers, RRE Ventures, Sigma Partners and The Westly Group. The company previously raised around $32 million.

The Motley Fool Holdings Inc., operator of a fina! ncial news and opinion website, has raised $25 million. BIA Digital Partners invested $15 million, while Patriot Capital provided the remainder. Proceeds will be used for shareholder liquidity, growth capital and for general corporate purposes.

Altruik, a New York-based provider of search engine optimization solutions, has raised $4.7 million in Series A funding. Backers include DFJ Gotham, First Round Capital, Greenhill SAVP, Javelin Partners and Zelkova Ventures.

10gen, a New York-based developer of an open-source, non-relational database called MongoDB, has raised $3.4 million in Series B funding. Flybridge Capital Partners led the round, and was joined by return backer Union Square Ventures.

The Daily Caller, a right-wing news and opinion website that has not yet launched, has secured $1.5 million of a $3 million funding round, according to a regulatory filing.PaidContent reports that all $3 million is coming from conservative businessman Foster Friess.

DataLogix (fka NextActionTM), a Westminster, Colo.-based provider of multi-channel marketing, data and analytics solutions, has raised an undisclosed amount of recap funding from General Catalyst Partners. The recap round will cash out e! xisting backer Wolf Ventures, while Sequel Ventures will roll over at least part of its equity.

Buyouts Deals

The Blackstone Group has agreed to buy stakes in two of Glimcher Realty Trust’s (NYSE: GRT) shopping malls for around $195 million in cash and debt. One of the malls is in Portland, Oregon, while the other is in Tampa, Florida.

EnCap Energy Infrastructure Fund and TPH Partners have formed Meritage Midstream Services, a Golden, Colo.-based provider of midstream services to oil and gas producers. No details of the equity commitments were disclosed.

Fireman Capital Partners has invested an undisclosed amount in Pilla Inc., a Ridgefield, Conn.-based maker of sports eyewear. Stacy Madison, an FCP strategic advisor and founder of Stacy’s Pita Chips, will join the Pilla board of directors.

Gas Natural (Madrid: GAS) reportedly has four to six bidders, including CVC Capital Partners, for assets worth approximately 1.5 billion.

Huron Capital Partners has invested $30 million into Maple Leaf Automotive Inc., an Ontario-based manufacturer of replacement parts for the automotive aftermarket.

Lightyear Capital has agreed to acquire three U.S. broker-dealer units of ING Groep, for an undisclosed amount. The broker-dealers have combined gross revenue of around $653 million, and are: Financial Network Investment Corp., Multi-Financial Securities Corp. and PrimeVest Financial Services Inc.

Shackleton Equity Partners has acquired SafeHarbor Technology Corp., a Seattle-based provider of Web self-service software solutions. No financial t! erms were disclosed.

CCS Medical Holdings Inc., a bankrupt medical supply management company, has challenged its creditors to “put their money where their mouth is” to reach an agreement to sell the company or reorganize it. CCS had been owned by Warburg Pincus, prior to its July bankruptcy filing.

PE-Backed IPOs

7 Days Group Holdings, a Chinese budget hotel chain, has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol SVN, with J.P. Morgan and Citi serving as co-lead underwriters. Shareholders include Warburg Pincus and Actis.

Rue21, a Warrendale, Penn.-based youth clothing retailer, has set its IPO terms to around 6.77 million common shares being offered at between $16 and $18 per share. It would have an initial market cap of approximately $435 million, were it to price at the high end of its range. The company plans to trade on the Nasdaq under ticker symbol RUE, with BoA Merrill Lynch, Goldman Sachs and JPMorgan are serving as co-lead underwriters. Rue21 says thatit plans touse some of the proceeds to pay down debt, which totaled $29.2 million as of August 1. Apax Partners holds a 62.2% ownership stake, while BNP Paribas holds a 23.2% stake.

PE-Backed M&A

ConvergEx, a New York-based provider of global agency brokerage and investment technology solutions, has completed its acquisition of the assets of Cogent Consulting LLC, a software development firm specializing in advanced commission management. No financial terms were disclosed. ConvergEx was formed in 2006 by GTCR Golder-Rauner, which combined Eze Castle Software and the institutional brokerage business of Bank of New York.

RMI, a Carlyle Group portfolio company that provides software to the transportation industry, has acquired ExpressYard, a Flint, Mich.-based provider of SaaS applications that support the billing of railcar repairs for contract shops and railroads in North America. No financial terms were disclosed. ExpressYard will move its Michigan operations to RMI’s Atlanta headquarters.

PE Exits

Bayer CropScience has completed its acquisition of Athenix Inc., a Research Triangle Park, N.C.-based developer of products and technologies for agricultural and industrial applications like biofuels. The deal is valued at $365 million, plus up to $35 million in additional earn-out payments. Athenix has raised more than $40 million in VC funding, from firms like Hunt Ventures, Intersouth Partners and Polaris Venture Partners.

One Equity Partners has agreed to sell a majority stake in Emcon Technologies, a Troy, Mich.-based auto parts maker, to French car parts group Faurecia. The all-stock deal is valued at around €295 million, with One Equity to hold around 19% of the combined company.

Firms & Funds

CVC Capital Partners has not yet held a close on its debut infrastructure fund, which it launched more than a year ago with a $2 billion target.

Portfolio Advisors LLC has closed its debut secondaries fund with $1.1 billion in capital commitments, according to VentureWire. The Darien, Conn.-based firm has invested in secondaries via its fund-of-funds vehicles, but this is its first dedicated secondaries vehicle.

Tiger Infrastructure Partners has launched as a new infrastructure private equity firm, with a focus on mid-market opportunities in North America and in Europe. It will be led by Emil Henry, formerAssistant Secretary of the U.S. Treasury who most recently ran Lehman Brothers’ infrastructure private equity business.

Human Resources

Bo Yaghmaie has joined the New York office of law firm Cooley Godward Kronish LLP as head of the office’s business and technology practice group. He previously headed the national venture capital practice for Pillsbury Winthrop Shaw Pittman.