peHUB Wire: Wednesday, February 10, 2010

Top news story this morning is that Affiliated Managers Group (NYSE: AMG) has agreed to buy fund-of-funds manager Pantheon Ventures for around $775 million in cash from Russell Investments (a subsidiary of Northwestern Mutual Life). For the uninitiated, Pantheon currently has around $22 billion in assets under management, including a particularly high level of dry powder. AGM has done five acquisitions in the past seven months, but this is the largest.

I talked to a bunch of folks this morning about the deal, including AMG CEO Sean Healey and Pantheon managing director Susan McAndrews. A few notes:

• Northwestern Mutual received some unsolicited interest in Pantheon in the early fall of last year, and officially put it on the block on October 1. Credit Suisse ran the process.

• All of the $775 million goes to Northwestern Mutual, which will continue to be responsible for unfunded commitments to vehicles that have already closed. Any commitments to vehicles still being raised will be assumed by AMG.

• McAndrews says that Pantheon views this as the partnership “buying the business back.” Russell had originally purchased Pantheon in 2003, a deal McAndrews believes made a good deal of sense at the time. Since the financial crisis, however, most of the original folks on Russell’s side are gone, and McAndrews says some Pantheon clients were worried about stability at the top.

• AMG had been talking for a while about expanding into private equity, and looked at a bunch of different options. It ultimately settled on the idea of a fund-of-funds manager, because it would have a longer-term and stronger recurring revenue flow than would a single manager. AMG also wanted the diversified risk-managed approach that comes from a fund-of-funds.

*** On January 4, Peter Hebert of Lux Capital wrote a guest piece at peHUB titled Ten VC Predictions for 2010: Outrunning The Bear. Yesterday, venture capital icon Dixon Doll sent out an email on behalf of conference organizer IBF, for an upcoming event. Unfortunately, Doll’s letter included a pair of passages lifted verbatim from Hebert’s post without attribution.

For example, the following appeared in both (without any syllabic difference):

“After years of intrigue and speculation, not to mention tens to several hundred million dollars invested, several energy technology companies finally lift the curtain and introduce themselves to the world.”

I don’t know if Doll wrote this himself, or if someone at IBF wrote it and he just pulled out his rubber stamp. Doll didn’t return my call, and IBF said it is “looking into” the situation.

Either way, imitation in this case is not flattery. It’s plagiarism.

*** Inappropriate Request: Seems I’ve got some structural troubles with a large room in my house, to the extent that it might fall down someday (hopefully not too soon). But I’m looking for a second opinion/contractor who does good work and knows how to solve problems.

So for those in my neck of the woods — Metrowest Massachusetts — please email me info on anyone you know who fits the bill. Much thanks…

Top Three

Affiliated Managers Group (NYSE: AMG) has agreed to acquire private equity fund-of-funds manager Pantheon Ventures from Russell Investments. The deal is valued at $775 million in cash, plus the possibility of additional earn-outs over the next five years. Russell Investments had purchased Pantheon in 2003.

Bank of Communications, China’s fifth-largest lender, plans to raise between $250 million and $500 million for a China-focused private equity fund.

GameFly Inc., a subscription-based videogame rental company, has filed for a $50 million IPO. It plans to trade on the Nasdaq under ticker symbol GFLY, with BoA Merrill Lynch andPiper Jaffrayserving as co-lead und! erwriters. The company reports around $47 million in revenue for the second and third quarters of 2009, compared to $39 million over the same period in 2008. Its operating income for the 2009 period was nearly $6 million. GameFly has raised venture capital from Sequoia Capital (51.56% pre-IPO stake) and Tenaya Capital (5.9%).

VC Deals

DotNetNuke, a Seattle-based developer of an open-source application framework for the Microsoft tech platform, has raised $8 million in Series B funding. UV Partners led the round, and was joined by return backers August Capital and Sierra Ventures. The company previously raised $6 million.

Glide Pharma, a UK-based developer of solid-dose drug injectors, has raised £2.7 million in fourth-round funding. Backers include Hygea VCT and Oxford Technology VCTs. The company has now raised around £10 million in total VC funding.

Intamac Systems, a UK-based provider of networked and connected home services, has raised £2 million in VC funding. Seraphim Capital led the round, and was joined by Chandos Fund., a San Francisco-based provider of online video encoding services, has raised $1.25 million in Series A funding. Metamorphic Ventures led the round, and was joined by angels Patrick Condon, Fred Hamilton, Zelkova Ventures, Dave Morgan and Allen Morgan. Read more…

Buyouts Deals

3i Group CEO Michael Queen said that his firm may bid for assets being sold by the ?British government.

KKR and Premier Natural Resources LLC have formed a partnership to invest in North American oil and gas properties. No financial terms were disclosed.

Rockbridge Growth Equity has led an acquisition of Protect America, a provider of self-installed monitored alarm systems. No financial terms were disclosed. Equity co-investors included Falcon Investments and Protect America founder Thad Paschall.

PE-Backed M&A

Rowmark LLC, a Findlay, Ohio-based portfolio company of Clearview Capital, has acquired Triline Sign Systems, a Milan, Italy-based provider of sign systems and components to sign makers. No financial terms were disclosed.

PE Exits

Lone Star Funds said it plans to sell its majority stake in Korea Exchange Bank within the next six months.

Firms & Funds

Insight Equity, a Dallas-based private equity firm focused on the middle markets, announced that it has closed its second fund at $525 million, including $90 million for mezzanine investing. peHUB previously reported that the original target was $750 million.

Invision Capital is raising up to $50 million for its debut fund, according to a regulatory filing. The Chicago-based firm plans to focus on buyout investments in the lower middle-markets. Invision’s principals include: Robert Castillo, a founder partner of Valor Equity Partners; Thomas Harrison, a co-founder of Diamond Creek Capital; andJohn Devaney, also a co-founder of Diamond Creek Capital. The firm already has secured more than $15 million in commitments.

Merlin Nexus (fka Merlin BioMed) is raising its fourth fun! d with a $75 million target, according to VentureWire.The New York-based firm raised around $43 million in 2008 for its third fund, which invests in both public and late-stage private companies.

Temasek Holdings, a state-owned investment house in Singapore, said that it is selling up a new multi-billon dollar investment firm that will be led by chief strategist Charles Ong. Few additional details were disclosed.

Human Resources

Jeff Howe has joined Jefferies as a managing director in the firm’s financial sponsors group. He previously was co-head of leveraged finance origination and restructuring at Credit Suisse.

David Lam, a managing director with VC firm WI Harper Group, has been named president of the Asia America MultiTecnology Association (AAMA), a Silicon Valley business network.

Richard Leonard and Michael Koike have joined the private equity group of Angelo, Gordon & Co. as a managing director and vice president, respectively. Leonard previously was a managing director with Bruckmann, Rosser, Sherrill & Co., while Koike was a vice president with Ripplewood Holdings.

Mike McTighe has joined General Atlantic as a special advisor, with a particular focus on Europe. He is chairman of Pace, Volex Group and WYG Group.