peHUB Wire: Wednesday, November 4, 2009

Every time the peHUB Wire adds another thousand subscribers, I like to remind you that these morning missives are but grains of sand in our vast editorial hourglass. We’ve got more detailed news and views over at, plus in our print pubs: Buyouts, Venture Capital Journal, PE Week and European Venture Capital Journal.

You also can get a year of access to the peHUB search archives for just $195. It makes a lovely stocking stuffer. Just go here.

Finally, if you are interested in advertising on peHUB Wire or, please let me know… Ditto for sponsoring an upcoming peHUB Shindig (my plan is to do another tour very early next year — and maybe a Boston one before this year is out). Remember, you c! an always email me by just hitting reply. For better or worse, peHUB Wire comes from my primary email account…

*** One of this morning’s buyout news items is that BlackEagle Partners and Building Industry Partners have agreed to buy three northern-regional operations from Stock Building Supply, a Raleigh, N.C.-based supplier of building products to professional builders and contractors. The seller was Gores Group, which acquired SBS out of bankruptcy earlier this year.

What the item – and press release – doesn’t mention is that Gores is not done with its SBS divestitures. Multiple sources tell me that it is still speaking with strategic and financial buyers about some of SBS’ remaining markets, with a particular emphasis on the Mid-Atlantic and West Coast.

*** A couple months ago, we reported on how turnaround firm KPS Capital Partners had raised $800 million in “top-off” capital for a $1.2 billion third fund that originally closed in 2007. The new effort was oversubscribed, even though KPS retained its 2007-vintage 25% carried interest structure and 50/50 fee split.

Why would LPs pile back into a fund with such gaudy terms? Doesn’t this contradict what I wrote yesterday about Greylock’s success partially deriving from generous LP treatment? I would have thought so, until reading an item in this morning’s Private Equity Insider (which peHUB has since confirmed independently):

Alameda County Employees (not an existing Fund III investor) approved up to $30 million in commitments for the top-off fund, but ultimately got shut out because of existing LP demand. Alameda was displeased, and asked KPS to reimburse the pension system for legal costs related to due diligence. KPS agreed to do so, even though it had no contractual obligation to do so.

Stories like these have staying power, and could help make KPS even more popular next time around…

Top Three

Windstream Corp. (NYSE: WIN) has agreed to buy NuVox Inc., a Greenville, S.C.-based CLEC. The deal is valued at $643 million, including $280 million in cash, $183 million in stock and the assumption of $180 million in debt. NuVox had raised nearly $500 million in venture capital funding. Current shareholders include M/C Venture Partners, KKR, Columbia Capital and Wachovia Capital Partners.

Bain Capital and General Atlantic reportedly are eyeing Morgan Stanley’s stake in China International Capital Corp. (CICC), which is expected to fetch more than $1.2 billion.

PAI Partners has formally offered to cut the size of its €5.4 billion buyout fund by half, with LP responses due b! y December 3.

VC Deals

Cambrios Technologies Corp., a Mountain View, Calif.-based provider of bio-directed materials for the electronics industry, has held a $9 million first close on a guaranteed $14.5 million in a first close on its Series D round. Sumitomo Corp., Chisso Corp. and Nissha Printing Co. were joined by return backers included ARCH Venture Partners, Alloy Ventures, Oxford Bioscience Partners, Harris & Harris Group, Altitude Life Science Ventures, Presidio Ventures, Mitsubishi UFJ Capital, In-Q-Tel, Avalon Ventures, Lux Capital, Kidron LLC, Headland Ventures and Alexandria Real Estate Equities.

EmSense Corp., a San Francisco-based developer of physiological and brainwave measurement technology, has raised $9 million in Series C funding. Technology Partners led the round, and was joined by return backer Foundry Group. The company previously raised over $7 million.

Ampulse Corp., a Golden, Colo.-based maker of c-Si thin-film solar cells, has raised $8 million in Series A funding. Globespan Capital Partners and El Dorado Ventures c! o-led the round, and were joined by seed backer Battelle Ventures and its Innovation Valley Partners affiliate.

CubeTree, a Redwood City, Calif.-based developer of a freemium enterprise collaboration suite built on a social networking platform, has raised $8 million in Series B funding. InterWest Partners led the round, and was joined by return backer Trinity Ventures.

CEVEC Pharmaceuticals GmbH, a German developer of a technology platform for developing therapeutic proteins, has raised €4 million. Creathor Venture Fonds and NRW.BANK co-led the round, and were joined by return backers like Sparkasse KoelnBonn and ERP Startfonds.

MicroMedia Filtration Inc., a Lake Forrest, Calif.-based developer of wastewater treatment systems for municipalities, real e! state developers and the military, has raised $3 million in Series A funding from Sail Venture Partners.

Acumatica, a provider of on-premise SaaS solutions for ERP and CRM processes, has raised an undisclosed amount of funding from Almaz Capital Partners, whose debut fund included a cornerstone commitment from Cisco Systems.

DLT Solutions, a Herndon, Va.-based reseller of IT products and services to public and private sector clients, has raised an undisclosed amount of private equity funding from TZP Group.

Buyouts Deals

Bain Capital has won exclusive rights to negotiate the purchase of Japanese telemarketing company Bellsystem24 from Citigroup. The deal could be worth in excess of $1 billion.

BlackEagle Partners and Building Industry Partners have agreed to buy three regional operations from Stock Building Supply, a Raleigh, N.C.-based supplier of building products to professional builders and contractors. The seller was Gores Group, which acquired SBS out of bankruptcy earlier this year. No financial terms were disclosed for the deal, which includes operations in Central New York, Connecticut and Wisconsin.

HUB International Ltd., a Chicago-based insurance brokerage, has completed and funded a $200 million incremental senior secured term loan under its existing senior secured credit facility. Hub was taken private in 2007 for $1.8 billion by Apax Partners and Morgan Stanley Principal Investments.

PE-Backed M&A

GreatCall Inc., a Del Mar, Calif.-based provider of Jitterbug mobile phones and services for baby boomers and seniors, has acquired MobiWatch, a developer of mobile personal emergency response services. No financial terms were disclosed. GreatCall has raised over $78 million in VC funding, from firms like Court Square Ventures, Charles River Ventures, Nauta Capital, Steelpoint Capital PartnersandSumitomo Corp.

iPipeline, an Exton, Pa.-based provider of on-demand sales distribution software for insurers and financial services firms, has acquired AgencyWorks, a Salt Lake City-based provider of agency management systems for the brokerage industry. No financial terms were disclosed. iPipeline recently raised $18 million in Series A funding from NewSpring Capital, Fidelity Ventures and company managem! ent.

Sarnova, a distributor of health care products in the emergency medical services (EMS) and respiratory markets, has acquired Metropolitan Medical Inc., a medical products supplier serving the mid-Atlantic region. No financial terms were disclosed. Sarnova is a portfolio company of Water Street Healthcare Partners.

Zoom Media Corp., a New York-based provider of digital out-of-home media in health and fitness venues, has acquired Gym Screen Media, a rival company with 160 ! UK venues. No financial terms were disclosed. Zoom Media raised around $30 million earlier this year from ABS Capital Partners.

PE Exits

ClearOne (Nasdaq: CLRO) has acquired NetStreams, an Austin, Texas-based maker of networked entertainment systems based on IP technology. No financial terms were disclosed. NetStreams had raised over $27 million in VC funding led byAustin Ventures.

Goldman Sachs has agreed to sell half its holding in Chinese meat processor Shineway Group to CDH Investments, for approximately $150 million. Goldman acquired the stake in 2006 via its Asia Special Situations Group, and would earn around five times its original investment.

TA Associates is selling Triumph HealthCare, a long-term acute care hospitals operator, for around $570 million to RehabCare Group Inc. (NYSE: RHB). TA bought Triump! h in 2004in a leveraged deal that included $34.5 million in equity. It had already returned its investment several times over, via a pair of dividend recaps.

Firms & Funds

The City of London’s pension scheme is considering plans to take more control of investment decisions, including a possible increase to its alternative investment allocation.

Human Resources

BMO Capital Markets has named Dirk Leasure as head of the firm’s financial sponsors group. He joined the firm in 2002, before which he worked in the financial sponsors group of Goldman Sachs.

Hal Strong, former vice chairman of Russell Investments, has joined Genstar Capital as an operating executive. He will focus on the asset management and financial services sectors.

SV Life Sciences has hired two new venture partners: Patrick Ryan, former managing director of Clark Street Ventures, and Jim Wachtman, former president and COO of Laser ! Vision Centers.