peHUB Wire: Wednesday, March 11, 2009

Tons of news this morning, which means I ran out of time to write a real column (it’s days like this that make me glad you don’t pay a subscription fee). But before moving on to all those blurbs, we’ve got updates on a pair of old stories:

*** Back in December, I basically wrote off HRJ Capital. At issue was its inability to repay a warehouse loan from Silicon Valley Bank, which had been used to partially “pre-commit” a buyout fund-of-funds. Moreover, HRJ had basically put itself up as collateral for the loan (plus some personal partner property) – and SVB threatened a takeover in an 8-K filing.

It’s now three months later, and HRJ is not yet part of SVB. How come? Well, basically because SVB doesn’t really want to assume the unfunded commitments if it doesn’t have to. Fee-based revenue streams are nice, but not quite meaty enough. Instead, it’s sitting back and hoping (nee, praying) that HRJ can repay the loan by selling the funded and unfunded commitments to secondary buyers.

Erin reported yesterday at peHUB that HRJ originally tried marketing the stakes itself (funded pieces at cost, unfunded for free), but couldn’t find takers. So now it’s hired Probitas Partners to help it out. Perhaps it’s best to describe HRJ’s current status as alive and flailing. Read more here…

*** The Ohio Bureau of Workers’ Compensation has finally sold off its private equity investment portfolio, according to minutes from its November 2008 board meeting (and first uncovered by Dow Jones). UBS had been running the process, which netted nearly $400 million for 67 funds. For anachronistic context, we reported in April 2007 that UBS had pitched the fund’s NAV at $685 million, including around $271 million in unfunded commitments. If this is all new to you, here’s a graph from that same 2007 piece:

Ok, I know what some of you are thinking: “Isn’t this a bad thing, given how private equity typically outperforms public equity and bond indices?” Well, that would be true in most cases — but OBWC is exceptionally inept. It favors short-term political expediency over long-term investment strategy (thank you Coingate). It seems unable to properly file away partnership subscription agreements. And then there was its willingness – no, make that its eagerness – to sell general partners down the river by disclosing portfolio company valuations. In short, OBWC is kind of like that annoying guy at the poker table. He’s got enough money to keep anteing up, but is unable to differentiate between a low pair and a straight flush. At least OBWC knows when to fold them…

Time To Schill: Buyouts Chicago is returning on June 16. Last year’s event sold out, so make sure to get your ticket for another packed day of keynotes, panels and networking. Plus, we’ve added a pre-event workshop on June 15. For more information — including to register — just go here (site is really slow, just give it a moment).

Top Three

NorSun, a Norwegian maker of monocrystalline silicon ingots and wafers, has raised around $72 million in new venture capital funding. led the round, and was joined by Scatec AS and Norsk Hydro ASA. NorSun also secured a $94 million, five-year bank loan from DnB NOR and Nordea Bank Norway AS.

Inverness Graham Investments and Wedbush Capital Partners have sold ExtruMed LLC to Vesta Inc., a portfolio company of RoundTable Healthcare Partners. ExtruMed is a Placentia, Calif.-based maker of thermoplastic tubing for diagnostic and therapeutic medical devices and procedures.

Pappas Ventures has closed its fourth fund with $102 million in capital commitments. The Durham, N.C.-based firm focuses on product-oriented biopharma companies and medical technologies. Pappas also announced that it promoted Rosina Maar Pavia and Sean McCarthy to partner and senior principal, respectively. Partner Arthur Klausner will leave the firm later this year.

VC Deals

CircuLite Inc., a Saddle Brook, N.J.-based developer of minimally-invasive devices for long-term partial circulatory support, has secured $23.5 million in Series C commitments from insiders, for a round designed to raise a minimum of $33 million. The remainder is expected to come from outsiders. Forbion Capital Partners led the tranche (or which $10.5 is called down), and was joined by Crédit Agricole Private Equity, Foundation Medical Partners and Oxford Bioscience Partners.

Stantum Technologies, a Bordeaux, France-based developer of multi-touch sensing technologies, has raised $13 million in Series B funding. CDC Innovation and Auriga Partners co-led the round, and were joined by return backer XAnge Private Equity.

Auditude, a Palo Alto, Calif.-based online video management and advertising platform, has raised $10.5 million in second-round funding. Redpoint Ventures led the round, and was joined by return backer Greylock Partners. The company previously raised $4.87 million.

SuperSecret Inc., a San Francisco-based developer of online social games for tweens, has raised $10 million in Series A funding. Opus Capital led the round, with partner Ken Elefant taking a board seat.

Relypsa Inc., a Santa Clara, Calif.-based developer of polymeric drugs has raised $10 million in additional Series A funding, according to VentureWire. The company held a $33 million first close in 2007. Backers include 5AM Ventures, New Leaf Partners, Sprout Group, Delphi Ventures, CMEA Ventures and Mediphase Venture Partners. Replypsa is a spinout of Ilypsa, which had raised venture capital from many of the same firms before being acquired by Amgen for $420 million.

Direct2Silicon, a San Jose, Calif.–based provider of software that enables direct write e-beam lithography for production of system-on-a-chip ICs, has secured $7.19 million of a $9.48 million round of VC funding, according to a regulatory filing. Return backers include Benchmark Capital.

Cotendo, a San Carlos, Calif.-based content delivery network, has raised $7 million in Series B funding from Benchmark Capital and return backer Sequoia Capital.

Agnitio, a Madrid, Spain-based provider of voice biometrics, has raised €5.5 million in new VC funding. Elaia Partners led the round, and was joined by return backer Nauta Capital and strategic partner Neotec Capital Riesgo.

Llesiant Inc., an Austin, Texas-based provider of vertical search solutions for the enterprise, has raised around $4.34 million in Series A funding, according to a regulatory filing. The only listed shareholder is The Bureau of National Affairs Inc.

OMGPOP (f.k.a. I’minlikewithyou), a New York-based social gaming studio, has raised $5 million in Series B funding. Bessemer Venture Partners led the round, and was joined by return backers Baseline Ventures and Spark Capital.

SmartZip, a Pleasanton, Calif.-based operator of a real estate intelligence website (currently in alpha), has raised $2.05 million in Series A funding, according to a regulatory filing. Backers include Claremont Creek Ventures, Step5 Venture Partners and Northpoint Financial Group.

Sports Composite DE, a Los Angeles-based provider of online fantasy sports games, has raised $2 million in new funding co-led by return backers Mission Ventures and DFJ Dragon. The company had previously raised over $6 million.

GridPoint Inc., an Arlington, Va.-based smart-grid company, has raised an undisclosed amount of funding from Craton Equity Partners. The company previously raised around $220 million from backers like Goldman Sachs, New Enterprise Associates, Susquehanna Private Equity, Perella Weinberg Partners and Robeco.

Royal Dutch Shell has increased its equity stake in Codexis Inc., a developer of industrial biocatalysts, including enzymes and microbes. No financial terms were disclosed for the deal, which was part of a larger strategic arrangement. Codexis last year canceled plans for a $100 million IPO. At the time, it had raised over $80 million from CCTV Investments, CMEA Ventures, Pequot Capital, Pfizer, Maxygen and Bio*One Capital.

Buyout Deals

Friends Provident has ended talks regarding a sale of its 52% stake in F&C Asset Management, after being unable to find a suitable offer. It will now redistribute the stake to its shareholders.

Olympus Partners has acquired Holopack International Corp. from The Hanson Corporate Group. No financial terms were disclosed. Holopack is a Columbia, S.C.-based contract manufacturer of blow-fill-seal, and will change its name to The Ritedose Corp.

Safilo SpA, a listed Italian eyewear maker, is in talks with several private equity firms for a capital recap that would dilute the current position of primary shareholder 3T. Possible buyers include Bain Capital, CVC and PAI Partners.

Sunrise Telecom Inc. (OTC BB: SRTI), a San Jose, Calif.–based provider of test and measurement solutions for telecom, cable and wireless networks, is exploring strategic options that could include a sale to private equity firms. It has retained Cabrillo Advisors as a strategic advisor.

PE-Backed Bankruptcy

Fleetwood Enterprises Inc., a Riverside, Calif.-based maker of motor homes and military barracks, has filed for Chapter 11 bankruptcy protection. The company’s international operations are not included in the filing. Major shareholders include Tennenbaum Capital Partners and Marathon Asset Management.

Milacron Inc., a Batavia, Ohio-based plastics processing and industrial fluidics company, has filed for Chapter 11 bankruptcy protection. Avenue Capital Group and DDJ Capital Management will provide an $80 million DIP term loan facility, and acquire the company’s assets. Bayside Capital had acquired a 29% stake in Milacron in 2007.

Firms & Funds

Hedge fund-of-funds lost roughly one-third of their asset value last year, according to new data from trade publication InvestHedge.

Freeman Spogli & Co., a Los Angeles-based middle-market buyout firm, is raising up to $1.75 billion for its sixth fund, according to a regulatory filing. It already has secured around $250 million in commitments.

Louis Friedman, onetime Bear Stearns M&A chief, has formed a private equity firm called Flexis Capital, according to Private Equity Insider. The report says that Flexis plans to raise between $800 million and $1 billion for its debut fund, which will be structured as a pledge fund.

Human Resources

Stephen Johnson has joined US Airways (NYSE: LCC) as executive vice president, corporate and general council. He previously was a partner with Indigo Partners, a Phoenix-based private equity firm.

Jean Manas has stepped down as head of Americas M&A at Deutsche Bank, to “pursue entrepreneurial opportunities.” He will be succeeded by Bruce Evans.

Edward Napoli has joined NewOak Capital as managing director of business development. He previously was with law firm Dechert LLP.

Eric Pathé has joined UK secondaries firm Greenpark Capital as an investment director. He previously was with mid-market buyout firm Langholm Capital.

Rohit Sharma has left Mohr Davidow Ventures, where he had been a principal since 2006. No word yet on his future plans. VentureWire first reported the departure.

François Wohrer has joined Close Brothers as a France-based managing director, with a focus on the advanced manufacturing, water and waste management markets. He previously was with UBS.

Quadrangle Group has hired three new members of its asset management group: Howard Margolis (director of real assets), Tushar Shah (director of public markets) and Sigurd Strack (director of private markets). Margolis previously was managing director of Black Creek Capital, Shah was a principal with Perella Weinberg Partners and Strack co-founded Headlands Capital Management.