peHUB Wire: Wednesday, March 4, 2009

Greetings from Beaver Creek, where the sun is shining and the snow is glistening. Just time for a few very quick hits, as I’m supposed to be on a breakfast panel during today’s VC in the Rockies conference.

*** When people put bankruptcy and private equity in the same sentence, they’re usually discussing PE-backed portfolio companies going bust. But the next formulation may well involve private equity professionals filing for personal bankruptcy. Not the big wigs, mind you, but junior pros with lower salaries who over-leveraged themselves via co-investment programs. At some firms, this could be epidemic.

*** Ran into two more VCs last night whose firms don’t have cash to make new investments, although they can still support existing portfolio companies. I’ll call these zombie firms, which is actually distinct from “walking dead” firms. More on this semantic torture tomorrow.

*** Steve Rattner’s decision to leave Quadrangle Group has opened up a key-man situation for the firm’s second fund. Not much LPs can really do at this point — fund well over 50% committed — but they certainly don’t approve of Rattner’s decision to leave his fellow partners holding the bag. By the way, I first “reported” on this via Twitter the other day. No, I don’t know why.

*** On yesterday’s drive from Denver to Beaver Creek, I saw: (a) Grazing rams; (b) Herds of buffalo; (c) A high school whose sports teams are named the Gold Diggers.

Top Three

Reader’s Digest Association has hired law firm Kirkland & Ellis to advise on various restructuring options, including a possible bankruptcy. The company was acquired for $2.7 billion in 2007 by Ripplewood Holdings.

VeriVue, a Westwood, Mass.-based provider of IP video distribution and delivery solutions, has raised $40 million in Series B funding. Comcast Interactive Capital led the round, and was joined by Accel Partners, Arris Group, North Bridge Venture Partners and return backers Matrix Partners and Spark Capital. The company previously raised $25 million.

Nick Sturiale and Jeb Miller have joined JAFCO Ventures as general partners. They previously were with Carlyle Growth Capital, which closed its Silicon Valley office late last year. In other JAFCO Ventures news, general partner Aaron Cheatam has left. No word yet on his future plans.

VC Deals

GetWellNetwork Inc., a Bethesda, Md.-based provider of interactive patient care solutions, has raised $10 million in Series C funding. Johnson & Johnson Development Corp. was joined by return backers like Valhalla Partners, GrosvenorFunds, Point Judith Capital and Village Ventures.

RazorGator Interactive Group Inc., a Los Angeles-based online ticket agent for sold-out sporting and entertainment events worldwide, has raised $7.5 milli! on in new VC funding. No investor information was disclosed, although Dan Beldy of Steamboat Ventures is now listed as a board member. The company previously raised $26 million from Kleiner Perkins Caufield & Byers and Oak Investment Partners.

Conveneer AB, a Swedish provider of fixed-mobile convergence software, has raised SEK36 million ($3.9m) from Broken Arrow Capital and Industrifonden.

Buyout Deals

Delphi has agreed to sell its steering business to General Motors, and terminated an existing agreement to sell the unit to Platinum Equity Partners. The original Platinum deal was valued at around $450 million, including assumed liabilities and a $257 million contribution from GM.

Nogales Investors has acquired a controlling interest in DR Technologies from Huntington Capital, via a recapitalization. No financial terms were disclosed, but LBO Wire puts the equity! piece at approximately $20 million. DR Technologies is a San Diego-based maker of composite structural products for aerospace and defense applications.

North Castle Partners has formed Mineral Fusion Natural Brands LLC, a platform company focused on the all-natural cosmetics, hair-care and body care market.

Warburg Pincus reportedly is considering the acquisition of a 10% to 20% stake in Premier Foods, a UK group that is expected to announce a £400 million rights issue later this week. CCMP Capital has also been linked to Premier Foods.

PE-Backed M&A

Ports America, a portfolio company of Highstar Capital, has agreed to invest $150 million to update a section of Oakland, California’s port. The investment would be part of a 50-year deal that would allow Ports America to operate out of the Oakland site.

Sagem Communications, a portfolio company of Gores Group, has agreed to acquire the broadband and WiMax unit of Gigaset Communications, a subsidiary of Arques Industries AG and Siemens AG. No financi! al terms were disclosed.

SunGard Data Systems Inc. has acquired Performance Pathways Inc., a Mechanicsburg, Penn.-based provider of instructional management software for K-12 school districts. No financial terms were disclosed. SunGard was acquired for $11.4 billion in 2005 by Bain Capital, Blackstone Group, GS Capital Partners, KKR, Providence Equity Partners, Silver Lake Partners and TPG Capital.

Takett, a flooring and sports surfacing company that is 50% owned by KKR, has agreed to acquire Brazilian flooring company Fademac from Etex Group ! for an undisclosed amount.

PE Exits

Harris Stratex Networks Inc. (Nasdaq: HSTX) has acquired Telsima Corp., a Sunnyvale, Calif.-based provider of WiMax broadband networks. The deal was valued at $12 million in cash, payable over the next 12 months. Telsima had raised around $80 million in VC funding, from firms like NewPath Ventures, New Enterprise Associates, CMEA Ventures and JAFCO Asia.

Chrysler LLC, a portfolio company of Cerberus Capital Management, says that it is in discussions with two or three companies for the possible sale of its Dodge Viper sports car line.

Firms & Funds

Venrock has raised $194 million for a fund that will invest in late-stage private and publicly-held healthcare companies.

The Carlyle Group wrote down the value of investments in its Carlyle Partners IV fund by 13.8% in Q4 2008.

Broadpoint Securities Group (Nasdaq: BPSG) has agreed to acquire financial advisory boutique Gleacher Partners. No financial terms were disclosed.

Human Resources

Didier Bench, former CEO of Cartesis and iMediation, has joined Silver Lake Sumeru as a London-based advisor.

Geoff Entress has joined Voyager Capital as a venture partner, with a focus on Internet and digital media opportunities in the Pacific Northwest. He was previously a venture partner with Madrona Venture Group.

Alastair Dorward has joined Physic Ventures as an executive-in-residence. He is the founding CEO of Method Inc. and, before that, ofCovent Garden.