peHUB Wire: Wednesday, April 8, 2009

Ever have one of those weeks where you look back and think: “I’ve put in a lot of hours. Why do I have so little to show for them?” That’s my status on this hump-day morn, which is really just another way of apologizing for the lack of real column. So just a couple real brief notes:

*** Terralliance: Being told that the company did conduct some small audits between 2004 and 2007, but no major audits (i.e., Big 4 Firm) until the one we discussed yesterday.

Also, thanks to a couple of readers who emailed me a working phone number for Terralliance. Unfortunately, there is no receptionist (permanently unavailable, it seems), and no dial-by-name directory. But another reader did send me an extension for Gordon Burke, who apparently is the company’s director of business development. We spoke late Friday afternoon, although it wasn’t a terribly collegial conversation.

Burke said that my original story had “many inaccuracies,” but wouldn’t identify any of them. In other words, he was blowing smoke. He also said: “I don’t see why you’re so interested in what we have to say today, when you didn’t care yesterday.” I pointed out to Gary that the company has an unlisted number and that I tried contacting each of its board members. He didn’t seem to much care. The call basically concluded with Burk stating: “When we have a story to tell, we’ll tell it.” Good. I look forward to it.

*** Last week, we reported that Levine Leichtman had sued Apollo Management, in relation to bankrupt retailer Linens ‘n Things. One interesting tidbit in the complaint was that Linens was obligated to pay Apollo $2 million per year in management fees.

The official rational for this fee was that Apollo would provide certain capital markets services that Linens would otherwise have to outsource. I know that such arrangements are commonplace, but it’s worth restating my wholesale objection to them. It’s little more than a shakedown, and helps bleed cash-flow from portfolio companies. PE firms often like to brag about the added value they bring to their investments, but that line doesn’t work when the value comes with a bill.

*** Correction: Yesterday I misstated the number of Sun Capital Partners portfolio companies to file for bankruptcy in 2008. The correct figure is five.

*** The LP Congress: If you are a limited partner interested in attending the LP Congress, please remember to email me for an invite. Please include your name, job title and place of work. Tickets are limited, so get them today.

Top Three

FleetCor, a Norcross, Ga.-based provider of branded fuel cards, has raised $100 million in Series F funding. The round was raised in conjunction with FleetCor’s recent acquisition of CLC Group Inc., a Wichita, Kansas-based provider of lodging management programs to businesses. Summit Partners led the round, and was joined by fellow return backers Advantage Capital and Advent International. New participants included Nautic Partners (prior owner of CLC), HarbourVest Partners and Performance Equity Management.

Fusion-io, a Salt Lake City-based developer of enterprise solid-state architecture and high performance I/O solutions, has $47.5 million in Series B funding. Lightspeed Venture Partners led the round, and was joined by return backers Dell Ventures, Sumitomo Ventures and New Enterprise Associates. The company previously raised $19 million.

Hank Struik, former president of Cardinal Health, has joined Water Street Healthcare Partners as a senior executive advisor. He will focus on investment opportunities in the medical products sector, with Water Street committing up to $100 million in equity.

VC Deals

Aerovance Inc., a Berkeley, Calif.-based drug company focused on respiratory and inflammatory diseases, has raised $38 million in Series C funding. The deal is tranched-out, with $20 million called down and Aerovance having the option to call the remainder beginning in six months. ProQuest Investments led the round, and was joined by BB Biotech Ventures and return backers Apax Partners, Clarus Ventures, Alta Partners, Lehman Brothers, NGN Capital and Burrill & Co. It had previously raised $92 million in equity and $10 million in debt.

Orthocon Inc., a North Brunswick, N.J.-based developer of intraoperative implant devices for the local delivery of therapeutics to bone, has raised $25 million in new VC funding. ProQuest Investments and return backer Canaan Partners co-led the round, and were joined by BB Biotech Ventures.

JiWire, a San Francisco-based WiFi advertising network, announced that it had raised $11 million in Series B funding. peHUB first reported on the round last December. Panorama Capital led the deal, and was joined by Cmcast Interactive Capital and DFJ Frontier.

KeyNeurotek Pharmaceuticals AG, a German drug developer focused on autoimmune diseases and degenerative CNS disorders, has raised €8.2 million in Series C funding. Return backers include DVC Deutsche Venture Capital, IBG Beteiligungsgesellschaft and KfW.

DoubleTwist, a maker of software for downloading and sharing digital content, has raised $5 million in Series B funding. Return backers Index Ventures and NorthZone Ventures were joined by Horizon Ventures, Michael Ovitz (former president of Walt Disney Co.) and Alex Zubillage (former digital strategy chief at Warner Music).

EnergyHub, a Brooklyn, N.Y.-based provider of home energy management solutions, has raised an undisclosed amount of Series A funding co-led by .406 Ventures and Physic Ventures.

Scan & Target, a Paris-based provider of SaaS analysis and filtering of text user generated content, has raised €1 million in first-round funding from Crédit Agricole Private Equity and Scientipôle Capital.

Buyout Deals

The Blackstone Group has submitted a bid to acquire certain wireless assets being sold by Verizon Communications. Also submitting a joint bid were The Carlyle Group and KKR. Verizon is selling the assets in order to satisfy regulatory requirements of Alltel acquisition.

EQT Infrastructure Fund and Fortistar have agreed to buy Midland Cogeneration Venture from Rockland Capital and GSO Capital Partners. No financial terms were disclosed for the deal, which is expected to close within the next two months. MCV is a 1,500 MW natural gas-fired cogeneration facility located in Midland, Michigan. It was acquired by Rockland and GSO in 2006.

Savana Partners has acquired the assets of Epitome Systems, a Wayne, Penn.-based provider of business process automation solutions. No financial terms were disclosed. Michael Sanchez, managing partner of Savana, will serve as Epitome’s chairman and CEO.

Winona Capital Management has acquired a majority stake in Peter Millar, a maker of premium lifestyle apparel. No financial terms were disclosed.

PE-Backed M&A

Boundless Network Inc., an Austin, Texas-based promotional merchandising company, has acquired Venture Marketing, a Richmond, Va.-based distributor. No financial terms were disclosed. Boundless has raised VC funding from firms like Austin Ventures and Silverton Partners.

PE Exits

Rambus Inc. (Nasdaq: RMBS) has acquired several patents from Inapac Technology Inc., a San Jose, Calif.-based provider of mobile memory solutions. No financial terms were disclosed. Inapac has raised over $38 million in VC funding, from firms like AsiaVest Partners, Saints Ventures, Hotung Group, Itochu Technology Ventures, Novus Ventures, ProMOS Technologies, Third Point Ventures and United Test & Assembly Center Inc.

PE Busts

DiObex Inc., a San Francisco-based drug company focused on metabolic disorders like Type II diabetes, has laid off all its employees and is looking to sell its assets, according to VentureWire. The company had raised around $50 million in VC funding, from firms like Inventages Venture Capital, Mitsui & Co., Pac-Link BioVentures, Domain Associates, Pequot Ventures and Sofinnova Ventures.

Jane & Co., a cosmetics company with around $25 million in annual revenue, has filed for Chapter 11 bankruptcy protection. Shareholders include The Walnut Group and Stone Canyon Venture Partners.

Firms & Funds

Hellman & Friedman reported a 2% markdown on its $8.4 billion sixth fund for 2008, according to LBO Wire. In other firm news, Warren Hellman will step down as chairman, but retain the title of chairman. He will be succeeded by Brian Powers.

Human Resources

Sukhinder Singh Cassidy has joined Accel Partners as a CEO-in-residence. She previously was with Google, as president of Asia-Pacific and Latin American operations.

Stacy Kincaid has joined Vietnam-based VinaCapital Group as a managing director focused on capital-raising and fund structure efforts. She previously was with Probitas Partners.

Jack Norris has joined SK Capital Partners as a managing director. He previously was a principal with Arsenal Capital Partners.

Dawn Rinaldi has joined placement agent C.P. Eaton Partners as chief operating officer and chief financial officer. She previously was CFO of Platinum Grove Asset Management.

vSpring Capital has promoted Jon Walker to manager of marketing and investor relations. He originally joined the firm as an intern in 2006, spent time at a portfolio company and returned fulltime the following year.

Michael Coyne has joined Piper Jaffray & Co. as head of its transportation and logistics practice. He previously was an independent consultant to public logistics companies and, before that, was a managing director with Bear Stearns.

Michael Fawcett has joined Aequitas Capital Management as head of its private equity practice. He previously was with Congress Capital Partners.

James Jennings, former president and chairman of Hunt Oil Co., has joined Brown Brothers Harriman as a senior advisor.