peHUB Wire: Wednesday, May 13, 2009

Another day, another development in the pension fund kickback scandal. This time it’s a guilty plea from Julio Ramirez, who committed securities fraud by scheming with Hank Morris to secure investments from New York State Common Retirement Fund. At the time, he was working for placement agency Weatherly Capital.

Ramirez, you might recall, was in this column just three weeks ago – when we reported that he had left placement agent Park Hill Group, which is owned by The Blackstone Group. A Blackstone spokesman told me at the time – and reiterated yesterday – that Ramirez voluntarily gave notice at the beginning of January, and his last day was March 31. Ramirez did not mention anything about the pending investigation, although Blackstone subsequently did its own review (including a sweep of Ramirez’ emails) to make sure he hadn’t been double-dealing while with Park Hill. The spokesman says that Blackstone found no such evidence.

Kind of kicking myself for not publicly tying Ramirez to the kickback scandal in that original item, but I didn’t feel like I had enough to go on – particularly because he had told Blackstone and others that he was leaving to hang his own shingle. So let me now double-back and trust my instinct on a couple of things:

1. Over the weekend, a source told me to expect formal charges to be filed against at least two more people, in relation to the kickback scandal. He didn’t provide names, but said one would be a placement agent (apparently Ramirez) and the other would be a hedge fund manager (in the mold of Barrett Wissman). Your move, Mr. Cuomo.

2. Ramirez’ guilty plea was in relation to NYSCERF, but the majority of his historical activity was with California-based pensions. In other words, this is not a regional story.

Also worth noting that Ramirez’s guilty plea includes helping Aldus Equity get its deal with NYSCRF. A few years back, I wrote the following:

“Today’s news involves Aldus Equity Partners, a Dallas-based shop founded in 1998. Sources tell me that Aldus’ partners have effectively ousted firm founder Saul Meyer, and now are in the process of informing clients. I’m getting muddled tales as to the specific backroom politics, so will hold off until there is something more concrete.”

I had that info on very good authority (read: from within Aldus), so was stunned when Meyer somehow managed to stick around as the firm’s top gun.

Today, PE Insider picked up the moldy ball, reporting that Aldus only agreed to reinstate Meyer at the behest of Deutsche Bank, which was in the process of acquiring a 45% ownership stake in the firm. Seems that an Aldus with Meyer could call its own shots, but one without him would have its team integrated into the Deutsche superstructure. Not sure who at Deutsche made that call, but would sure love to know…

*** The bi-annual Mid-Market DealMakers survey was released this morning by ACG and Thomson Reuters, although we got a head-start yesterday at peHUB. Nothing too surprising in the results, including that 56% of respondents expect M&A activity to increase in the second half of 2010. Thirty-three percent of those surveyed blamed the “credit crunch” for current deal woes, although that was down from 43% last December. Rising from 22% to 27% was seller expectations, while “weak economy” edged up from 16% to 17 percent.

Overall, 88% of respondents said that the current M&A environment is fair or poor, which was the most negative view expressed in the survey’s five-year history. Get the results here.

*** I’ve posted a slew of new photos from Monday’s Field of Dreams event, plus our team roster. Get it all here.

*** Hey PR people: Just a heads-up that I’ll be out for two weeks, beginning this coming Monday. Therefore, please make sure to copy on all press releases and other newsy items, since she’ll be putting together peHUB Wire.

Top Three

The Carlyle Group is trying to sell DHS Systems, a maker of high-tech shelter systems for the military, with final bids reportedly ranging from $200 million to $400 million. One of the bidders was Hunter Defense Technologies, which is owned by Metalmark Capital Partners.

Wood Mackenzie, a UK energy consultancy owned by Candover Investments PLC, has received indicative buyout bids from at least 10 parties. Goldman Sachs is running the process, which is expected to generate upwards of £650 million.

Prism VentureWorks has suspended efforts to raise its sixth fund, as first reported yesterday by peHUB. The Needham, Mass.-based firm sent out PPMs last August with a $275 million target capitalization.

VC Deals

Metabolic Solutions Development Co., a Kalamazoo, Mich.-based developer of drugs to treat Type II diabetes, has raised $9.25 million in new VC funding. According to VentureWire, investors include Hopen Therapeutics and Southwest Michigan First Life Science. The company also secured $1.36 million in grants from the National Institutes of Health.

BlogHer, a New York-based online community “for women who blog,” has raised $7 million in Series C funding, according to Kara Swisher. Azure Capital led the round, and was joined by return backers Peacock Equity and Venrock. The company has now raised around $15.5 million in total VC funding.

FUHU Inc., a provider of digital life applications like identity cards and widgets, has raised $6.25 million in Series B funding from Acer Inc.

Buyout Deals

KEMET Corp., a Greenville, S.C.-based maker of electronic components like capacitors, has obtained at $52.5 million credit facility from an affiliate of Platinum Equity. The deal is designed to help KEMET fund a tender offer for a buyback of $175 million of outstanding convertible senior notes.

National Amusements reportedly has received at least 10 first-round bids for its U.S. and UK theater chains. Seller Sumner Redstone is said to value the prop! erties at around $1 billion.

Primerica Financial Services, a unit of Citigroup, is looking to sell its marketing arm, according to Bloomberg. Primerica reportedly has approached several private equity firms, including Blackstone Group, J.C. Flowers & Co. and TPG Capital.

Telecom Italia is seeking to sell a 49% stake in its Sparkle business, which provides wholesale voice services. The company has hired Mediobanca and Banca IMI to run the process, which could generate over €1.2 billion. Possible suitors include Carlyle Group and Clessidra.

PE-Backed IPOs

Direct Edge, a Jersey City, N.J.-based electronic trading platform, said that it may try going public withi the next 12 to 18 months. Shareholders include Goldman Sachs, Citadel Derivatives Group, Knight Capital Group and the ISE.

Firms & Funds

E-Tech Capital and China’s Chongqing Yufu Assets Management Co. plan to form a private equity joint venture. The effort’s initial fundraising drive would target 5 billion yuan ($731m).

Electra Private Equity (LSE: ELTA) reported a 16% fall in the value of its investment portfolio, but said that it was prepared to reinvest in many of its companies.

Welsh Carson Anderson & Stowe was holding its $3.5 billion tenth fund at 11% below cost as of year-end 2008, according to LBO Wire. It 2006-vintage vehicle was 77.6% called down.

Human Resources

Michael Dybbs has joined New Leaf Venture Partners as an associate. He previously was with Boston Consulting, and has a PhD in molecular and cellular biology from UC Berkley.