Bank of America has decided to discontinue the fund placement business it acquired via the Merrill Lynch merger. A source familiar with the situation tells me that the Merrill team is currently helping to raise between 15 and 20 funds, and will continue full-service through at least the beginning of Q4 (and probably through year-end). It will not take on any new clients, but will work to transition existing ones to other placement agents if needed.
The group employs more than 30 professionals, and is led by Loren Boston (who previously ran Citi’s placement biz). No word yet on if there will be some sort of independent spinout, or if most folks will go their separate ways.
Bank of America’s decision effectively ends Wall Street’s oldest and most fertile fund placement business. The unit began back in 1981, and its veterans have spawned similar groups at banks like Credit Suisse/DLJ and Lazard.
So why kill off a trailblazer? Here are three factors:
1. The fund placement market has been painfully slow since BoA bought Merrill, with fewer commitments meaning fewer commissions.
2. The Merrill business had made its bones representing third-party GPs, but John Thain and his merry band of Goldmanites redirected a significant part of its attention toward marketing Merrill-branded products. As Merrill’s brand got tarnished, the Merrill placement group got tarnished by tightened association.
3. But at least Merrill had a brand. Bank of America didn’t have its own fund placement group, which further hurt business. No wonder there had been rumblings for a while that some of the Merrill folks might be looking to make a move.
*** Yes, we’re using a different font size in today’s edition. We’ve been having some formatting issues that we think may be caused by inserting our traditional “style,” and wanted to see if this might fix them. Entirely possible that we’ll revert back for tomorrow. Any and all font feedback is appreciated.
*** Chemical company Huntsman has now received more than $2 billion for NOT being acquired by Hexion, after yesterday’s settlement with Credit Suisse and Deutsche Bank (plus an earlier settlement with Hexion sponsor Apollo Management). In related news, Thomson Reuters is now accepting all leveraged buyout offers for peHUB, with the condition that no offer results in an actual acquisition.
*** Don’t worry, Erin’s just taking vacation. She’ll be back in the middle of next week.
*** Self-Promotion: A final reminder that tomorrow is Financing the Cleantech Vision, Silicon Valley’s only cleantech conference developed exclusively for venture capitalists. The agenda is really quite impressive, and I’m not just saying that because Drew Bledsoe will be there. You can get more info and/or register by going here.
Top Three
TPG Capital has agreed to sell Midwest Airlines to Republic Airways Holdings Inc. (Nasdaq: RJET). The deal includes $6 million in cash and a $25 million note that is convertible to Republic stock at $10 per share.
SynCardia Systems Inc., a Tuscan, Ariz.-based maker of artificial hearts that can serve as a birdge to human heart transplant for patients dying from end-stage biventricular failure, has raised $10.3 million in Series D funding. Highway 12 Ventures led the round, with managing partner Mark Solon taking a board seat.
Mount Kellett Capital, an Asia-focused private equity firm run by former Goldman Sachs partner Mark McGoldrick, has closed its debut fund with approximately $2.5 billion, according to Reuters. It had originally targeted $5 billion, but cut back expectations in light of last fall’s market troubles.
VC Deals
Ooma, a Palo Alto, Calif.-based provider of VoIP hardware and services, has raised $18.3 million in Series D funding at a valuation of approximately $30 million, according to GigaOm. The company reportedly is seeking an additional $5 million. Worldview Technology Partners led the round, and was joined by fellow return backer Founders Fund. Existing shareholder Draper fisher Jurvetson did not re-up. www.ooma.com
Intrexon Corp., a Blacksburg, Va.-based developer of biotherapeutic control systems, has raised $10 million in additional Series C-2 funding. The capital came from return backer New River Management, managed by Third Security LLC, which has now invested $66.5 million into Intrexon. The new infusion represents the final investment from NRM-V, but the firm will continue to support Intrexonout of NRM-VI.
AdMeld Inc., a New York-based provider of online advertising optimization and integration, has raised $8 million in Series B funding co-led by Foundry Group and Spark Capital. The two firms previously co-led AdMeld’s $7 million Series A round.
blueKiwi Software, a Paris, France-based provider of enterprise social software, has raised €4.7 million in second-round funding. Backers include Sofinnova Partners and Dassault Systèmes.
Cytox Ltd., a UK-based provider of biomarker services for Alzheimer’s disease clinical trials, has raised £600,000 in seed funding. Backers include MASA Life Sciences and Midven Ltd.
Buyouts Deals
Aircel, an Indian company majority owned by Malaysia’s Maxis, is in talks to sell its 12,000 mobile towers. The deal would be worth around $1.5 billion, with private equity firms reported to be among the interested suitors.
Citi Infrastructure Partners has gained control of Spanish toll road operator Itinere (MC: ITIE), in a cash deal valued at nearly $4 billion. Citi has already acquired approval for a 47% stake, and expected to receive an additional 11% within the next few days.
GTCR has agreed to invest $200 million into Ironshore Inc., a Bermuda-based insurance company founded in 2007. The investment is part of a $300 million round that includes other, undisclosed investors.
Relativity Capital has agreed to acquire certain waste transportation logistics assets of MHF Logistical Solutions Inc. No financial terms were disclosed. MHF is a portfolio company of Allied Capital.
PE-Backed M&A
Cerulean Pharma Inc. has signed a worldwide licensing agreementfor a drug delivery technology and clinical-stage oncology product candidate developed by Calando Pharmaceuticals Inc., a majority-owned subsidiary of Arrowhead Research Corp. (Nasdaq: ARWR). Cerulean will make an up-front cash payment, plus possible milestone and royalty payments. No dollar amounts were disclosed. Cambridge, Mass.-based Cerulean has raised over $20 million from Polaris Venture Partners, Venrock, Lux Capital, Bessemer Venture Partners, Alexandria Real Estate Equities and William Rastetter.
Fanzter Inc., a Collinsville, Conn.-based new media development firm, has acquired Mustache Inc., a Reston, Va.-based software developer. No financial terms were disclosed. Fantzer has raised around $1.87 million in Series A funding from Second Avenue Partners, Curious Office Partners and Rich Barton. Its first product is Coolspotters.com, which tracks celebrity trends.
Liberty Tire Services LLC, a Pittsburgh-based tire recycler owned by American Securities, has acquired Able Tire Co., which operates in Texas and Oklahoma. No financial terms were disclosed.
PE Exits
Catalyst Investors and Northwood Ventures have sold the remaining assets of Oneida Communications Group to Clearwire Corp. for an undisclosed amount. Catalyst had sold most of Oneida’s spectrum holdings to Sprint Nextel last year, but still had some wireless licenses remaining.
UTGR Inc., operator of Rhode Island casino Twin River, has filed for Chapter 11 bankruptcy protection. Owners include Starwood Capital Group.
Firms & Funds
Citigroup has three remaining bidders interested in its $90 billion Nikko Asset Management unit, according to the Nikkei business daily. They are: Sumitomo Trust & Banking Co., T&D Holdings Inc. and Bank of New York Mellon Corp.
MHT Partners, a Dallas-based investment bank focused on middle-market growth companies and PE sponsors, has formed a private equity secondary advisory practice. It will be headed up by James Lee, who previously was with Cogent Partners.
Human Resources
Duran Curis has joined Drum Capital Management as a managing director, focused on the firm’s special situation fund. He previously was a managing director with HRJ Capital and, before that, with LGT Capital Partners.
Mark Schmid has been named vice president and chief investment officer of The University of Chicago, which has an endowment valued at approximately $4.9 billion. He previously served in a similar position with Boeing Corp. www.uchicago.edu
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