peHUB Wire: Wednesday, February 18, 2009

Brave New Films yesterday released the latest video in its War on Greed series, which previously had focused most of its attention on Henry Kravis and KKR. The new target is federal bailout funds recipient Goldman Sachs, for shoddy treatment of Burger King employees. Goldman, you may remember, teamed up with Bain Capital and TPG Captial to buy the Whopper maker back in 2002.

“Wait a minute,” says rhetorical reader. “Didn’t Burger King IPO in 2006, with Goldman Sachs now holding less than 11% of the company’s outstanding shares?”

Of course it did, although you won’t hear anything about that in the Brave New Films video. Instead, you’d assume that the private equity consortium still owns Burger King lock, stock and frialator. In fact, the video’s narrator refers to Goldman as being “at the helm of the Burger King Corporation.”

It’s the type of blatant omission that needlessly discredits the entire video – and which was easily avoided. The SEIU, for example, has released a related white paper, in which it acknowledges the IPO (and the subsequent rise in profits), but argues Goldman still has major influence via its representation on the BK board of directors and executive committee. It then goes on to argue that Goldman should require BK to treat its employees better, including a wage increase that would take fulltimers over the federal poverty line.

“But Goldman Sachs still wouldn’t have the power to enact such changes unilaterally, even if it wanted to,” rhetorical reader chimes in.

True, which is one more reason that Burger King is an odd target for Brave New Films and SEIU to have picked. They probably are correct that Burger King should improve its treatment of employees (wages, benefits, etc.), but there would have been dozens of better examples where the targeted owner was actually… you know, the owner.

We’ve posted the video and SEIU white paper here, for your perusal.

*** One additional Twitter funding note: A lot has been made about how IVP and Benchmark bought in at a valuation of between $230m and $250m for a company without a dime in profit. Not nearly enough has been made of the fact that Twitter accepted that valuation, despite having previously been offered around $500m to be acquired by Facebook.

When’s the last time you heard of a venture deal in which the valuation was just half of what the company could get via a trade sale? Nope, I can’t think of one either.

Top Three

Forward Foods LLC, a Minden, Nev.-based maker of energy bars, has filed for Chapter 11 bankruptcy protection. The move came after the company was forced to recall many of its products, due to the tainted peanut recall by supplier Peanut Corp. of America. Forward Foods is a portfolio company of Emigrant Capital Corp.

SynthaSite, a San Francisco-based developer of a Web 2.0 publishing platform, has raised $20 million in Series B funding from Reinet Investments. The company previously raised $5 million from Columbus Venture Capital, a unit of Reinet.

Candover has entered into discussions with its limited partners, regarding capital and fee reductions to its latest buyout fund.

VC Deals

Opsona Therapeutics, a Dublin, Ireland-based developer of therapeutic and preventative approaches to autoimmune and inflammatory diseases, has raised €18 million in Series B funding. Participants included Novartis Venture Fund, Fountain Healthcare Partners, Inventages Venture Capital and Seroba Kernel Life Sciences.

Phreesia Inc., a New York-based provider of a free patient-intake solution for the physician waiting room, has raised $11.6 million in third-round funding. BlueCross BlueShield Venture Partners led the round, and was joined by return backers Polaris Venture Partners, HLM Venture Partners and Long River Ventures.

ViVOTech Inc., a Santa Clara, Calif.-based provider of wireless payment software and chips, has raised $8.6 million in additional Series C funding from existing shareholders. This brings the round total to more than $40 million. VIVOTech backers include Motorola Ventures, First Data Corp., NCR, Miven Venture Partners, Alloy Ventures, Draper Fisher Jurvetson and Nokia Growth Partners., a Beverly Hills, Calif.-based portal for online video discovery and search, has raised $5 million from Baroda Ventures.

RideCharge Inc., a Redmond, Wash.-based direct connect taxi booking and expense management engine, has raised $4.6 million in Series B funding led by Concur (Nasdaq: CNQR).

StarWind Software Inc., a provider of storage virtualization software, has raised its first round of VC funding led by ABRT Venture Fund. No financial terms were disclosed for the deal, which enabled StarWind to spin out from Rocket Division Inc.

Venture capitalists invested $13.4 billion outside of the U.S. in 2008, according to new data from Dow Jones VentureSource. This is nearly a 5% increase over 2007 figures.

Buyout Deals

ABS Capital Partners has sponsored a buyout of from MicroStrategy. No financial terms were disclosed for the deal, which was done in partnership with CEO Steve Trundle. is a McLean, Va.-based provider of wireless and web-enabled security and monitoring technology for residential and commercial customers.

Key Plastics LLC, a Northville, Mich.-based maker of plastic components for cars and trucks, has completed its prepackaged bankruptcy. Its reorganization plan included a $20 million equity investment from new controlling shareholder Wayzata Investment Partners.

Milestone Partners has formed Callidus Holdings LLC, an acquisition platform focused on the legal support services market. Its first transaction is the recapitalization of Black Letter Discovery Inc., a San Francisco-based provider of discovery and document review solutions to law firms and corporate legal departments. No financial terms were disclosed.

Shinsei Bank (T: 8303) plans to cut around one-quarter of its brokerage staff, which would work out to roughly 30 employees. J.C. Flowers & Co. holds around a one-third stake in the Japanese bank.

PE-Backed IPOs

O’Gara Group Inc., a Cincinnati –based homeland security specialist firm, has postponed a planned $120 million IPO, due to “market conditions.” Morgan Keegan is serving as lead underwriter, while The Walnut Group is a shareholder.

PE-Backed M&A

Delmar, a unit of Cengage Learning, has acquired Concept Media, a Florence, Ky.-based provider nurses education media for schools and hospitals. No financial terms were disclosed. Cengage, formerly known as Thomson Learning, is owned by Apax Partners and OMERS Capital Partners.

PE Exits

3i Group has cut its stake in IT consultancy Morse Group PLC (LSE: MOR) from around 15% to less than 3 percent, according to a regulatory filing.

Golden Gate Capital has sold its 22.3% stake in UK enterprise software company Micro Focus International (LSE: MCRO), for approximately £117.1 million. UBS handled the placement.

J.C. Flowers & Co. and Metalmark Capital have completed their sale of Direct Response Corp. to an affiliate of Unitrin Inc. (NYSE:UTR) for approximately $200 million. The original deal value had been around $220 million. Direct Response is a Meriden, Conn.-based seller of personal automobile insurance.

Microsoft is in talks to acquire video imaging software company 3DV Systems Inc. for around $35 million, according to Haaretz. 3DV has raised over $30 million in VC funding since 2000, from firms like Elron Ltd., Kleiner Perkins Caufield & Byers and Pitango Venture Capital.

Firms & Funds

Lone Star Funds reportedly is raising up to $20 billion to invest in troubled assets. Half of the capital would be earmarked for commercial real estate, while the remainder would be used for financial institutions and other distressed assets (including residential mortgages and corporate debt).

Lovell Minnick Partners, a mid-market buyout firm focused on the financial services sector, has secured $365 million for its third fund, according to Buyouts magazine. The El Segundo, Calif.-based firm was originally targeting $350 million, although it’s unclear if a final close has occurred.

Mercer has agreed to merge its investment consulting business with Callan Associates. No financial terms were disclosed for the deal, which is expected to close later this quarter.

Velocity Financial Group has opened an office in Santa Clara, Calif. It also hired Tony Huang as a vice president. Huang previously was a VP of tech banking at United Commercial Bank.

Human Resources

Jim Brady has joined Marlin Equity Partners as an operating partner, with a focus on the healthcare IT and services sector. He was founder and CEO of Payerpath (acquired by Misys Healthcare Systems in 2006), and later served on the board of Misys Healthcare Systems and the operating board of parent company Misys PLC.

Jerrell Jimerson has joined Sigma Partners as an executive-in-residence. He previously was vice president and general manager of the consumer division at PayPal.