peHUB Wire: Wednesday, June 23, 2010

Late last year, The Carlyle Group signed a 35-year public/private partnership with the State of Connecticut, whereby the firm agreed to redevelop, operate and maintain the state’s 23 highway service areas. Among the improvements, Carlyle said that it would supplement the McDonald’s drive-thrus at the I-95 rest stops with Subway and Dunkin’ Donuts drive-thrus (Subway’s parent company was a partner on the deal).

For those of us who drive regularly between Boston and New York City, this was very welcome news. Our arteries also applauded.

But here’s the thing: Nothing has happened yet. I made the I-95 drive four times (back-and-forth) over the past two months, and saw no repair work save for a janitor applying a wrench to a urinal.

So I asked Carlyle for an update. They tell me that “all 23 sites will be closed at some po! int over the next four years, per a redevelopment schedule approved by ConnDOT.” The first two to be shut down on I-95 will be in Milford, with work beginning this fall and the grand reopening next summer. Better late than never…

*** There’s some KKR buzz this morning, due to a Bloomberg story about how the firm may postpone its planned sale of $500 million worth of new shares after it transfers its listing from Amsterdam to New York. Makes sense, given overall market volatility and the particularly harsh treatment of Blackstone and Fortress shares (trading at around $10 and $3 per share, respectively).

It is important to note, however, that the exchange transfer itself is still expected to proceed as planned. How come? Well, largely because KKR doesn’t have much of a choice. When the firm merged with its Amsterdam-listed! affiliate last October, it agreed to list in Ne w York within one year, or else the Amsterdam unit-holders could basically force a transfer on their timetable. In other words, KKR only controls its exchange destiny for four more months.

*** Quiz Time: Can you name the much-hyped cleantech company in market to raise around $50m in new VC funding? Hint: The pitch is that this will be your last chance to invest before the IPO.

*** Thoma Bravo has been outbid in its efforts to buy publicly-traded SonicWall, but the company’s board still supports the Thoma Bravo bid. It’s amazing how many times this same scenario has played out with Thoma Bravo (first with Entrust, then with Amicas and now with SonicWall). I’m just sayin’…

*** Volcker Rule update: Banks may be getting a partial reprieve from proposals that would strip them of the right to invest in private “equity” (no such restrictions have been proposed o! n their leveraged financing or advisory roles).

The original Volcker framework would require: (A) Bank holding companies can no longer sponsor private equity funds; and (B) Bank holding companies can no longer invest in third-party funds with their own money.

Now there is talk that banks will receive an exemption on the second part, so long as the commitments are relatively small (no specifics yet on what that means). Wall Street has been pushing to keep such LP flexibility, in part to exhibit an alignment of interests with clients.

Also expect more specific information on how Congress expects banks to divest of existing private equity units (particularly in terms of timing).

Top Three

Playdom, a Mountain View, Calif.-based social gaming company, has raised $33 million in second-round funding funding. New backers include Bessemer Venture Partners, Steamboat Ventures, and New World Ventures. Playdom last fall raised a $43 million Series A round at around a $300 million post-money valuation, from New Enterprise Associates, Lightspeed Venture Partners and Norwest Venture Partners. It has since made several acquisitions.

Providence Equity Partners is considered the frontrunner to acquire Study Group, an Australian provider of preparatory education being sold by Champ Private Equity. The deal could be worth upwards of A$600 million.

Recurve, a San Francisco-based provider of software and services for the home pe! rformance industry, has raised $8 million in Series B funding. Lowe’s Companies Inc. (NYSE: LOW) was joined by return backers RockPort Capital Partners and Shasta Ventures.

VC Deals

Nereus Pharmaceuticals Inc., a San Diego-based drug developer that uses marine microbial sources, has raised $20 million in new VC funding. HBM BioVentures led the round, and was joined by Alta Partners, Forward Ventures, Gimv, Advent International, Pacific Venture Group, Roche Venture Fund and Astellas Venture Management. The company has raised over $145 million in total VC funding since 1998., a San Mateo, Calif.-based online display and video advertising platform, has raised $14 million in Series C funding. Focus Ventures led the round, and was joined by return backersNorwest Venture PartnersandInterWest Partners. The company has now raised $27 million.

Scientific Conservation Inc., a provider of energy efficiency solutions and system optimization for the commercial building market, has raised $9 million in Series A funding. Backers include Draper Fisher Jruvetson and The Westley Group.

Resonate Networks, a Reston, Va.-based developer of marketing solutions for reaching consumers based on their values and attitudes, has raised $5 million in Series A funding co-led by Greycroft Partners and iNovia Capital.

The Neat Company, a Philadelphia-based provider of scanning software and hardware solutions for small and medium-sized businesses, has raised $2.75 million in new VC funding from existing backers Edison Venture Fund and MentorTech Ventures. The company now has raised $15.5 million.

Molecular Detection Inc., a Wayne, Penn.-based developer of screening assays, has raised $1.4 million in new VC funding. MentorTech Ventures led the round, and was joined by Robin Hood Ventures, Elm Spring Holdings and the Mid-Atlantic Angel Group.

Buyouts Deals

BASF has agreed to buy Cognis, a German maker of additives for cosmetics and detergents from GS Capital Partners and Permira. The deal is valued at €3.1 billion, including debt.

Irving Place Capital has agreed to acquire Mold-Rite Plastics Inc., a Plattsburgh, NY.-based maker of caps and jars for the drug,nutraceuticalsand personal care markets. No financial terms were disclosed for the deal, which is expected to close within the next 60 days. Phil Yates, former CEO of Graham Packaging and an Irving Place senior advisor, will join Mold-Rite as executive chairman.

Saw Mill Capital Partners has acqu! ired Gateway Packaging, a Granite City, Ill.-based provider of flexible packaging for the pet food and human food markets. No financial terms were disclosed.

Thoma Bravo has been trumped in its bid to buy SonicWall Inc. (Nasdaq: SNWL). The IT security company said in a regulatory filing that an undisclosed bidder has offered $12 per share, compared to Thoma Bravo’s $11.50 per share (total equity value of $717 million). The company also said, however, that it was continuing to recommend Thoma Bravo’s offer.

PE-Backed M&A

Access Northeast, a data center and managed service provider, has acquired the hosting division of Waterbury, Conn.-based RezZiliant Inc. No financial terms were disclosed. Access Northeast is a portfolio company of Spring Capital Partners and BCA Mezzanine Fund.

Netsmart Technologies Inc., a Great River, N.Y.-basedmaker of SaaS solutions forhealth and human services providers, has raised an undisclosed amount of private equity funding from Genstar Capital. The deal represents an exit for Bessemer Venture Partners and Insight Venture Partners.

Trustwave Corp., an Annapolis, Md.–based provider of on-demand data security and payment card industry compliance management solutions, has Breach Security, a Carlsbad, Calif.-based provider of provider of web application firewall technology. No financial terms were disclosed. Trustwave raised $10 million from FTV Capital in 2004, while Breach Security raised over $48 million from firms like Evergreen Venture Partners, Enterprise Partners Venture Capital and Sid R. Bass Associates. VentureWire reports that Sid R. Bass Associates was the only remaining VC shareholder in Breach Security, having bought out both Evergreen and EPVC.

PE Exits

Huron Capital has sold Ross Education, a St. Clair, Mich.-based operator of career-oriented post-secondary education. No buyer was identified. Huron did not disclose pricing details, except to say it generated a 76% IRR and 18.7x ROI.

Firms & Funds

IGNIA Fund, a venture capital firm focused on Mexico and the rest of Latin America,has closed its debut vehicle with $102 million in capital commitments.

Human Resources

Shasta Ventures has promoted Sean Flynn to the position of principal. He joined the firm in 2008 as a senior associate, and has worked on such investments as Smule, Gowalla and Demdex.