In 2007, I reported extensively on the relationship between CalPERS and Pacific Corporate Group, a private equity advisory and investment firm based in La Jolla, California. PCG had just suffered a massive personnel shakeup, but still got two new mandates from CalPERS after agreeing to alter its organizational structure. It was a classic quid pro quo, and showed that CalPERS would go out of its way to give PCG the benefit of its doubts. Not illegal. Just old-boys cozy. All of this came rushing back yesterday, when reading an LA Times piece about possible conflicts of interest between CalPERS, PCG and placement agent Alfred Villalobos. I tried creating a graphical representation of the relationship, but it was simply too messy (triangle-shaped, with arrows going every which way). So let's try this:
3 min read · 22 December 2009
1 min read · 21 December 2009
Law firm Paul Weiss recently sent out a client alert about foreign-invested partnerships, which will become effective in China next March. Download it here.
1 min read · 21 December 2009
Lightspeed Venture Partners and Gemini Israel Funds have closed a joint incubator program that provided seed capital to early-stage Israeli Internet companies. No explanation was provided for the shutdown, in an announcement on the Lgilab blog (yes, this appears to be an old story, but I haven't seen it elsewhere): After more than 3 great years, the LightSpeed Gemini Internet Lab is ending its operations. The joint venture from LightSpeed Venture Partners and Gemini Israel funds has been a great opportunity to fund and support some of the most interesting web startups in Israel. Both funds are still actively looking for new opportunities for fund new internet projects at early stage. I've put in a call to Lightspeed's Silicon Valley office, to find out what will happen to the incubator's portfolio companies (Eyeview, OutBrain, StyleShake, Vahu.com, Vestopia, etc.). Also would be interested to know what this means for Lgilab general manager Ouriel Ohayon, Lgilab's only fulltime employee without a pre-existing connection to either Lightspeed or Gemini...
1 min read · 21 December 2009
Back in June, Twitter app store oneforty became the first TechStars Boston company to get seed funding (just two weeks after presenting). Now it has become the first one to get institutional VC funding, with a small round that was led by Flybridge Capital Partners. According to a regulatory filing, Oneforty has secured $1.62 million of a $2.37 financing with Flybridge's Jeff Bussgang joining the board of directors. This includes an equity conversion of around $372k from a debt bridge. Oneforty is run by Laura Fitton (@Pistachio), founder of a Twitter consultancy and author of Twitter for Dummies. The Brighton, Mass.-based company describes itself thusly on its website:
2 min read · 18 December 2009
What private equity firm is the fairest of them all? That's the ambitious question recently broached by Oliver Gottschalg, an associate professor of strategy and business policy at the HEC School of Management in Paris. Not the firm that has raised the most money or garnered the most headlines, but the one that has provided the best returns to limited partners over a 15-year period (which is, ultimately, how such firms are judged). Gottschalg, in partnership with Private Equity News, looked at PE firm performance between 1996 and 2005 (anything since then, he correctly argued, is too young to be accurately assessed). To qualify, a firm had to have raised at least two funds during the period, with at least $500 million in committed capital (the multiple fund requirement was to guard against one-hit wonders). The firm also could not have raised a fund during that period for which performance data was unavailable. Gottschalg's universe ultimately included 63 firms that raised around $232 billion for 182 funds. Not a complete accounting -- and we unfortunately don't get the full list, so as to learn what firms were excluded -- but a decent sampling.
2 min read · 17 December 2009
Law firm Nixon Peabody today released its 8th annual MAC Survey, which looks at material adverse change provisions in M&A deals worth $100 million or more. It found that while MAC provisions are more buyer-friendly today than they were five or six years ago, the current conditions are too "splintered" to accurately describe as buyer-friendly or seller-friendly. The results show relatively little change between 2008 and 2009, except in two areas: First, there was a 24% increase in the number of MAC exceptions for "changes in trading price or trading volume of a company's stock." There also was an unspecified rise in MAC exceptions for changes in exchange rates and/or interest rates. You can view the entire survey after the jump...
1 min read · 17 December 2009
When the SEC first brought charges in the Galleon case, it promised that many more insider trading suits would be forthcoming. We wondered how many would include private equity firm employees, given that the 2006-2008 boom in take-private deals often included spikes in trading volumes just before the formal acquisition announcements. We got our first taste early last month, when the SEC charged former Friedman Fleischer & Lowe CFO Chen Tang. Today we got some more, with SEC allegations that former TPG Capital associate Vinayak Gowrish schemed to illegally profit on deals for Sabre Holdings Corp., TXU Corp. and Alliance Data Systems Corp. Gowrish's alleged partner on the scam was Adnan Zaman, a former investment banker with Lazard Frères & Co. The way it worked was that Gowrish would get inside information about a pending deal, and then pass it on to Zaman who, in turn, would pass it onto a pair of options traders named Pascal Vaghar and Sameer Khoury (via yellow sticky notes, no less).
1 min read · 16 December 2009
We don't typically cover startups that have yet to secure venture capital, but an exception seems appropriate when the founding CEO was a venture capitalist himself. That ex-VC is Dan Gellert, who spent the past three years as an associate with Time Warner Investments. He quit back in September to launch GateGuru, an iPhone app that helps users find and rate restaurants, lounges and other amenities in 85 U.S. airports. The $2 app currently ranks #9 among paid travel apps in the iPhone store, although has climbed as high as #3. "While I was still at Time Warner, I was visiting a company down in Florida," says Gellert, explaining GateGuru's genesis. "It was a day trip, and on the way back saw an interesting looking pub just before security, which probably had decent sandwiches and beer. But I went through security, figuring there would be something similar on the other side, closer to my gate. But it turned out there was just a pizza place and a Burger King. I was amazed that with so many dollars spent in airports, there is very little information about things like that."
2 min read · 16 December 2009
Kohlberg Capital Corp., a publicly-traded business development company, has filed an 8-K that includes a major dig at accounting firm Deloitte & Touche LLP. Kohlberg reported that Deloitte gave an unqualified opinion on Kohlberg’s financial statements for the 2008 fiscal year, but that the accounting firm later conducted an internal inspection process “of the methodology and procedures used to prepare the valuations” under FAS 157. As a result, Deloitte requested supplemental information.
5 min read · 16 December 2009
