New Jersey does not have a long history of investing in private equity, making its first fund commitments just four years ago. But that doesn't mean that private equity won't become an issue in next week's gubernatorial election, where incumbant John Corzine is struggling to fend off Republican challenger Chris Christie. Christie needs to land just a few more body blows, and sources say that he may try a last-minute attempt to link Corzine with the growing rash of pay-to-play scandals involving state pension systems and private equity.
2 min read · 26 October 2009
Roland Reynolds and Ken Wallace of secondary firm Industry Little Hawk recently produced a white paper, arguing that the best way for VC firms to produce outsized returns going forward is to raise funds of $250 million or less. They also believe that the shakeout of smaller fund managers will result in stronger returns for the survivors. You can download the entire white paper here (.pdf).
1 min read · 26 October 2009
Peter Shannon is the latest investor to leave Atlas Venture, announcing today that he will join Firelake Capital as a partner. He also will switch coasts, relocating to the Bay Area early next year. This move is of particular interest to me, because it seems that Firelake co-founder Marty Lagod originally met Shannon at the exact same moment I did: When Shannon was part of the University of Chicago team at the Venture Capital Investment Competition finals in Chapel HIll. Each year, there are a handful of participants that are a cut above the rest, and Shannon was in that crew (even though U Chicago came in 3rd). He soon signed on with Atlas as a principal focused on cleantech, and began returning to Chapel Hill each year as
1 min read · 23 October 2009
Apollo Management recently sent investors information on fund performance, through the end of Q3 2009. It shows marked improvements, in large part because of rising public equity markets (Apollo marks its funds to mark, per FAS 157). peHUB has obtained a copy, and posted it here.
1 min read · 23 October 2009
Apollo Management has spent much of 2009 recasting itself as a debt investor, and pounded home the point yesterday in a nine-page investor letter (as first reported by the WSJ). Signed by firm founder Leon Black, the dispatch says that Apollo's three investment themes are: Leveraged senior loans, distressed debt and portfolio company debt (you know, from when Apollo was primarily a mega-buyout shop). Here's a brief overview of Apollo's recent activities in each, based on the letter: Leveraged Senior Loans Apollo "selected credits totaling $24 billion of face value from the balance sheets of distressed financial institutions and secured long-term (7-9 year), low-cost (LIBOR+100bp) financing facilities... The vast majority of the margin that was posted has been returned and the investments are marked at or above cost as of September 30."
2 min read · 23 October 2009
We’ve discussed secondaries quite a bit this year, including how the massive increases in supply and demand have not been matched by transaction volume. The most common explanation has been a wide chasm in bid/ask prices, with buyers and sellers each blaming each other for being too greedy/stingy. Is this stalemate permanent? Not according to John Begg, a managing director with HarbourVest Partner. During a panel discussion in Quebec City, he said that for all the talk of seller liquidity troubles, the squeeze was loosened because general partners weren’t making many capital calls (particularly big GPs like mega-buyout funds). Now that deal volume is slowly beginning to pick up, Begg said he expects LPs to begin feeling more pressure to sell.
1 min read · 23 October 2009
[Updated] Earlier this year, VC-backed video processor startup Novafora Inc. acquired publicly-listed Transmeta Corp. for $255 million. Several months later, the combined company shut its doors and hired a trustee to sell Transmeta's intellectual property (designed, in part, by Linus Torvalds). peHUB has now learned details of the asset auction, which is scheduled to take place on October 30 and be run by Power Auctions LLC. According to an email, "We will sell the assets by using an ascending-clock auction process, rather than by a sealed-bid auction or an eBay-style auction." The minimum asking price is just $800,000, a figure that combines four different "items" being sold. For example, the minimum bid for Transmeta's technology -- "including its servers with all code and documentation, the source code for code-morphing and various prototype hardware" -- is just $225k. The licenses have a floor of $500k, while Novafora's "spika" and "video genome" technologies are at $50k and $25k, respectively.
1 min read · 22 October 2009
Kayne Anderson Capital Advisors this week held a $110 million second close on its debut mezzanine fund, which is being raised with a $500 million target. A source tells peHUB that the firm expects to hold a final close sometime in 2010, with Guggenheim Partners serving as placement agent. I didn't previously know that Kayne Anderson even had a mezzanine group, but apparently it was formed late last year, when Richard Kayne pulled Ed Cerny and Dave Petrucco out of The Blackstone Group. The pair had been managing directors on Blackstone's mezzanine funds, but saw their roles diminished after Blackstone's acquisition of GSO Capital Partners. Once Blackstone formally decided against raising a third mezz fund, it was time to jump.
1 min read · 22 October 2009
At some point, puppet impersonations on YouTube will become the next pretty young vampires (i.e., grow tiresome). But that time has not yet arrived...
1 min read · 22 October 2009
WSJ blogger Scott Austin is reporting that Sequoia Capital is a small part of the consortium that has agreed to buy private bank First Republic from Bank of America, for more than $1 billion. Don’t quite know what to say, except that it’s a bit unexpected. Not only because Sequoia doesn’t typically involve itself with buyout deals (save for the Aricent deal with KKR), but because it also isn’t known as much of a financial sector investor. I’m sure Sequoia is aware that the VC world’s track record with big buyout clubs is mixed (to be kind). The most egregious examples are Battery Ventures with Freescale Semiconductor and Highland Capital Partners with Harrah’s. More recently we had
1 min read · 22 October 2009
