Apologies for the late arrival… Our mail servers had some issues that took a while to resolve. Moving on:
President Obama today will propose an overhaul of the financial regulatory system, and has released an 85-page white paper that lays out the specifics. The net result will be three new federal bureaucracies (four created, one erased). More important to most peHUB Wire readers is the following paragraph:
All advisers to hedge funds (and other private pools of capital, including private equity funds and venture capital funds) whose assets under management exceed some modest threshold should be required to register with the SEC under the Investment Advisers Act. All advisers should be required to report information on the funds they manage that is sufficient to address whether any fund poses a threat to financial stability.
This certainly seems more aimed at hedgies than at PE and VC funds, but is broadly inclusive to defend against firms altering their self-described classification in order to skirt the rules. A byproduct is that there are unlikely to be different “modest threshold” of assets under management between the sub-sectors, which probably means most VC funds will actually be left out of the mix (assuming the threshold is in excess of one billion dollars).
A National Venture Capital Association spokeswoman told me this morning that her group believes the Obama Administration and Congress recognize the difference between VC, PE and hedge, despite the white paper’s lumping of them all together. She adds: “Obama is focusing on funds that pose a threat to financial stability, we strongly assert that VC, as important as we believe it is to economy, does not pose a threat to financial stability in U.S. markets. We have no leverage, don’t trade in public securities and people don’t rely on VC-managed funds for liquidity.”
The Private Equity Council is expected to issue its own statement later today, which would represent the sentiments of mega-buyout shops like Blackstone Group, Carlyle Group and KKR. My educated guess is that it won’t bark too loud at the registration requirements, although that could change as the actual disclosure requirements get fleshed out.
*** Quiz Time: Can you name the private equity firm promising LPs that its new fund that it won’t invest more than 20% of the fund capital in any single year? Unsurprising hint: The firm went through its last fund very quickly, and both vehicles are well in excess of $1 billion.
*** Semi-Related: Is the aforementioned strategy actually a good one for LPs? It would seem they agitated for it, but the best and worst VC returns seem closely correlated to year of investment. Don’t you want to pick a manager that doubles down on a good year and backs off of a bad one? That was the argument ay Jordan gave me yesterday, when I asked about his firm not doing a primary transaction since last July (it’s done a few undisclosed add-ons).
Aquiline Capital Partners has acquired Conning & Co., a Hartford, Conn.-based provider of services and solutions to the insurance market, from Swiss Reinsurance Company Ltd. No financial terms were disclosed. Conning has approximately $70 billion of general account assets under management and $100 billion of total assets under contract.
Goldman Sachs reportedly is trying to dissuade private equity firms from bidding on Sara Lee Corp.’s household and personal care unit, because Sara Lee wants a strategic buyer rather than a financial one. The Blackstone Group and KKR have expressed interest.
Stephen Green has joined European private equity firm Bridgepoint as a partner. He will serve as head of the European private equity firm's financial services team, succeeding six-year vetJohn Davison who is leaving "to pursue other interests." Green previously led the global financial and business services team for Apax Partners.
Zoosk, a San Francisco-based social dating community, has raised $6 million in third-round funding led by return backer Canaan Partners.
ToaMee Inc., a Shanghai-based operator of a virtual community for Chinese children, has raised $5 million from Qiming Venture Partners. www.taomee.com
eRepublik Labs, a Madrid-based developer of an MMO game "set in a mirror vision of the real world" has raised €2 million in new VC funding from AGF Private Equity.
AdWhirl, a Menlo Park, Calif.-based developer of monetization solutions for mobile app makers, has raised $1 million in seed funding from Foundation Capital and individual angels. Foundation partner Charles Moldow will join the AdWhirl board of directors. www.adwhirl.com
Myers Motors, a Tallmadge, Ohio-based electric vehicle startup, has raised $250,000 in seed funding from JumpStart Ventures.
Armorize Technologies, a Santa Clara, Calif.-based provider of Web application security solutions, has raised an undisclosed amount of Series B funding. Backers include Ambient Sound Investments, Birch Venture Capital and unnamed Series A investors.
Certify Data Systems Inc., a San Jose, Calif.-based provider of healthcare information exchange solutions for hospitals and physicians' offices, has raised and undisclosed amount of Series B funding led by return backerZiegler HealthVest Partners.
Collections Marketing Center Inc., a Newark, Del.-based operator of a multi-channel collection and loss mitigation platform to help creditors engage borrowers, has raised an undisclosed amount of Series B funding. Milestone Venture Partners led the round, and was joined by the Delaware Economic Development Office.
Lucid Imagination, a San Mateo, Calif.-based commercial open-source company focused on the Apache Lucene/Solr search technology, has raised an undisclosed amount of funding from In-Q-Tel, the CIA's venture capital arm. The company previously raised $6 million in Series A funding from Granite Ventures and Walden International.
The Blackstone Group and The Carlyle Group have partnered to bid on First Republic Bank, a private banking unit of Bank of America (NYSE: BAC), according to Bloomberg. The consortium may include First Republic chairman James Herbert.
Canal Partners has acquired a control stake in NETtime Solutions, a Scottsdale, Ariz.-based provider of an online time and attendance SaaS suite. No financial terms were disclosed.
Jefferies Capital Partners has agreed to buy a 30.4% equity stake in Carrols Restaurant Group Inc. (Nasdaq: TAST) from Madison Dearborn Partners and a subsidiary of Bahrain International Bank. The deal includes the sale of approximately 6.56 million shares, which have a current market value of around $40 million.
KKR, CVC Capital Partners and TPG Capital are interested in buying part of Anheuser-Busch InBev’soperations in Central and Eastern Europe, according to The Wall Street Journal. Such a deal could be worth more than $2.5 billion.
Kona Grill Inc. (Nasdaq: KONA) has said that Mill Road Capital's $27.9 million buyout offer undervalues the company. The $4.60 per share offer was double the company's closing price on the final trading day before the offer was announced.
Harbinger Capital Partners is considering a sale or refinancing for home appliance company Salton, according to The New York Post. It has retained Lazard to help with a possible sale, which would be designed to garner upwards of $500 million.
3i Group will not pay out 2009 bonuses or provide 2009 raises to senior managers, except in the case of promotion, according to the firm’s annual report. www.3igroup.com
Andy Kaye has joined William Blair & Co. as head of its Asian operations, based out of the firm’s China office. He previously ran his own boutique and, before that, spent time with both CIBC World Markets and Robertson Stephens.
Jon Krogstad has joined MMV Financial as a Palo Alto-based senior vice president responsible for business development in the Western U.S. He previously opened the Silicon Valley office of Vencore Capital, which provides debt financing to early-stage companies.
Robert Sasson has joined Russia-based UFG Asset Management as senior managing partner of private equity. He previously worked for a U.S. hedge fund focused on Russia and Ukraine.
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