peHUB Wire: Wednesday, August 12, 2009

Kip Kirkpatrick, a co-founder of Water Street Healthcare Partners, this past weekend announced his candidacy for Illinois State Treasurer. He’s running as a Democrat, and will face off against primary challenger Robin Kelly, a former state lawmaker and chief of staff to current Treasurer Alexi Giannoulias (who is running for the U.S. Senate seat being vacated by Roland Burris).

Not surprisingly, the local private equity community has rallied around Kip’s candidacy. He’s already raised more than $35k from his former Water Street colleagues, while other contributors include Joe Nolan of GTCR ($10k), Avy Stein of Willis Stein ($5k) and Jacques Nasser of One Equity Partners ($1k).

But here’s a not-so-idle question: Could these contributors be shooting themselves in the foot? Not because of Kip’s politics or potential job performance, but rather because he is basically running to become the state’s chief invest! ment officer. If he wins, and if the SEC enacts those “pay-to-play” proposals regarding political contributions, then firms like Water Street and GTCR would be temporarily banned from raising money from public pension systems in Illinois… Are the contributions worth the risk?

*** Venture capital performance deteriorated in Q1, according to data released this morning by Cambridge Associates and the NVCA. It was the third-straight quarter of decline, although the rate slowed, and was seen over the quarterly, one-year, three-year, five-year and 10-year horizons (mild improvement for 15-year and 20-year). We’ve posted the full report here.

*** CalPERS has committed to Vinoid Khosla’s new seed-stage fund. For us voyeurs, that means we’ll soon get to see some of his pos! t-Kleiner performance. I’ve posted some more details over at First Read.

*** Deloitte LLP is in the process of shutting down its Fund Placement Advisory Group. The London-based effort employed 10 professionals, and focused on helping to secure fund capital for mid-market buyout firms in Europe.

No word yet on why the effort is folding, but some of its key members have already found new employment. Group head James Coleman has joined Probitas Partners, where he will lead the U.S.-based firm’s European efforts from London. Director Vincent le Hodey also will join Probitas, with a focus on European relationship management and secondary fund advisory. The pair will bring at least two of their Deloitte mandates with them over to Probitas, although both are said to be near completion.

Top Three

Emdeon Inc., a Nashville, Tenn.-based provider of healthcare billing services, has raised $365.7 million in its IPO. The company priced its shares at $15.50 (top of its range), and increased the number of shares offered by 10 percent. It will trade on the NYSE under ticker symbol EM. Shareholders include General Atlantic and Hellman & Friedman.

TPG Capital has agreed to acquire up to 20% of Armstrong World Industries Inc. (NYSE: AWI), a building products company. The deal would be worth upwards of $180 million.

Rosetta Stone Inc. (NYSE: RST), a maker of language-learning software, has filed to sell 4.085 million shares via a secondary public offering. Selling shareholders are ABS Capital Partners and Norwest Equity Partners. If the offering is successful, ABS would cut its ownership stake from 25.1% to 11.4%, while Norwest would cut from 16.4% to 7.4 percent. Rosetta Stone raised $112.5 million via an IPO this past April at $18 per share, and closed trading yesterday at $28.89 per share.

VC Deals

DriveCam Inc., a San Diego-based provider of driver risk management solutions, has raised $19 million in Series D funding. Triangle Peak Partners led the round, and was joined by return backers Menlo Ventures, JMI Equity, Insight Venture Partners and Integral Capital Partners. The company had previously raised over $46 million.

NiTi Surgical Solutions, a developer of wound healing and closure devices, has raised $18.5 million. Forbion Capital Partners led the round, and was joined by return backers Venture Partners, Israel Healthcare Ventures (IHCV), MBVC and Alice Lab and SCP Vitalife. NiTi Surgical has offices in Israel and the U.S.

iMedX Inc., a Shelton, Conn.-based provider of medical documentation services and software over the Internet, has raised $13 million in VC funding from RFE Investment Partners.

MyWebGrocer, a Colchester, Vermont-based provider of online commerce and digital media services for grocers, has raised $13 million in VC funding from Stripes Group.

Ubiquisys Ltd., a UK-based provider of 3G femtocell access points for the residential market, has raised $11 million in third-round funding. The company did not identify any new investors, and previously raised $42 million from Accel Partners, Advent Venture Partners, Atlas Venture, Google and T-Mobile Venture Fund.

iMemories, a Scottsdale, Ariz.-based online video s! haring site, has raised $6.2 million in Series B funding led by Cap ital Southwest. The company previously raised $4.8 million.

Buyouts Deals

Cinedigm Digital Cinema Corp. (Nasdaq: CIDM) has raised $75 million from Sageview Capital. The recapitalization includes five-year senior notes with warrants to purchase common stock. Imperial Capital advised Cinedigm, which digital and networked entertainment solutions for movie theaters.

Guaranty Bancorp (Nasdaq: GBNK) has raised $59.1 million via a PIPE from Patriot Financial Partners, Relational Investors and Castle Creek Capital Partners.

InterMedia Partners reportedly has agreed to acquire Vibe, a hip-hop magazine that shut down last month after being unable to restructure its debt. InterMedia will relaunch Vibe as an online-only publication, under its Uptown Media platform.! Wicks Group of Cos. was Vibe’s most recent owner, having bought it from Freeman Spogli in 2006.

TPG Capital and Hony Capital have agreed to acquire an 11% stake in Chinese retailer Wumart Stores Inc. (HK: 9277), for HK$1.65 billion (US$213m).

PE-Backed IPOs

Cumberland Pharmaceuticals Inc. (Nasdaq: CPIX) shares closed trading yesterday at $16.93 per share, after beginning its first day of trading at $17 per share.

PE-Backed M&A

QuinStreet Inc., a Foster City, Calif.-based provider of online vertical marketing solutions, has agreed to acquire the assets of WebMediaBrands Inc. (Nasdaq: WEBM), for $18 million. QuinStreet has raised nearly $60 million in VC funding, from firms like Granite Global Ventures, Focus Ventures, Rosewood Capital, Catterton Partners, Charter Growth Capital, VSP Capital, J&W Seligman, Stanford University, Split Rock Partners and Sutter Hill Ventures.

Zoopla, a UK-based provider of residential property value data, has acquired rival PropertyFinder from News International Ltd. and the REA Group. No financial terms were disclosed. Zoopla has raised VC funding from Octo! pus Ventures and Atlas Venture.

Firms & Funds

CIT Group shares sank 20% yesterday, after the firm delayed filing its Q2 report with regulators, and again warned that it may file for bankruptcy protection.

Starwood Property Trust Inc., a unit of Starwood Capital Group, raised $810 million via an IPO.

TA Associates has closed its ninth fund for U.S. limited partners, with $4 billion in capital commitments. Its predecessor fund secured $3.5 billion in March 2006.

Human Resources

Jiansheng Wang has joined Actis as a partner in the firm’s Beijing office. He previously was managing director of Chinese operations for Cerberus Capital Management.

Peter Elving has joined Nordic private equity firm Segulah AB as an industrial partner. He is the former CEO of Kraft Foods Nordic, and is non-executive chairman of Segulah portfolio companies Nilssons Gott and Almondy.

Brett Chenowethhas joined The Silverfern Group as a managing director and head of the firm’s new office in Sydney, Australia. He previously was head of M&A and business strategy for Telecom New Zealand.