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Term Sheet — Friday, September 12

September 12, 2014, 1:40 PM UTC
Fortune

Random Ramblings

The State Employees Association of North Carolina (SEANC), the state’s largest public employees union, recently filed an SEC whistleblower complaint related to Charlotte-based private equity firm Carousel Capital. Specifically, SEANC suggests that SEC pay-to-play rules were violated when a fundraiser for state treasurer Janet Cowell was held in the home Carousel co-founder Erskine Bowles, shortly before the state pension system (controlled by Cowell) committed to invest in a new Carousel Capital fund.

The key mitigating factor here is that Bowles hasn’t been a general partner with Carousel for nearly a decade. For example, he isn’t listed on either the firm’s third fund (raised in 2007) nor on the fourth fund (raised in 2011) that is the subject of SEANC’s complaint. Bowles does, however, remain listed on the firm’s website as a senior advisor.

From my reading of SEC pay-to-play rules, there isn’t actually a violation here because Bowles would not be considered a “covered associate.” In other words, he isn’t in charge of investment decisions nor was he personally involved in fundraising. Bowles also has argued that the fundraiser actually was hosted by his wife – a JP Morgan board member who is a separate party to the complaint due to state business with the bank – although I’d think the SEC would see that as a distinction without a difference.

To be sure, I agree with SEANC about the ancillary matter of how the state should have an investment board rather than a single fiduciary. But, on this particular case, I think it was seeking headlines rather than regulatory reprimands.  

 Blue ribbon deal: The WSJ yesterday reported that TSG Consumer Partners is in advanced talks to buy the maker of Pabst Blue Ribbon from C. Dean Metropoulos & Co. for just under $1 billion. A source familiar with the situation confirms the WSJ story for me, and adds that TSG is working with at least one international partner (unclear if strategic or financial).

Three quick notes: (1) This deal is very large for TSG. The firm’s website says that it invests between $50 million and $300 million into companies with enterprise values of between $30 million and $1 billion, so this would be near its upper limit. For context, TSG currently is investing out of a $1.3 billion fund. (2) The international partner may be key not only in filling out the syndicate, but also in helping TSG find growth opportunities for Pabst. Metropoulos bought the company more than three years ago from a charitable trust for just $250 million, which means he’s likely stripped out the fat and added major valuation. New markets would be essential for TSG. (3) The other opportunity for TSG is added leverage, since Capital IQ suggests Pabst has just $100 million of current debt.

 Personnel scoop: Julia Monfrini Peev has stepped down as a vice president with Boston-based Monitor Clipper Partners, where she has focused on growth equity investments for the past five years. Next stop is a new firm called Blue Hill Capital Ventures, although I don’t yet have any additional details on what that is going to be.

 Recommended reading #1: Sabrina Lane is the 10 year-old daughter of my Fortune colleague Jennifer Reingold, and apparently is an avid Minecraft player. Like many, she is worried about reports that Microsoft is going to guy Minecraft’s Swedish developer, and then screw it all up. So she’s written a letter to Microsoft CEO Satya Nadella, which we’ve posted here.

 Recommended reading #2: Is Blackstone Group’s 2007 purchase of Hilton Hotels the most successful LBO in history? That’s the argument made by William Cohan, in the latest Businessweek cover story -- and it's remarkable given that it was the last mega-LBO to occur before Lehman Brothers went bust.Cohan writes: “The full story of the richest LBO in history is actually a story of private equity working as advertised. By persuading its lenders to exercise forbearance, restructuring its debt before it had to, and practicing smart management, as opposed to indiscriminate cost cuts and pink slips, Blackstone made Hilton perform better than most thought possible.” Read the full piece here.

 Electoral wrap-up: Several ex-VC/PE folks were on electoral ballots in New England earlier this week. Gina Raimondo, current Rhode Island treasurer and former partner with VC firm Point Judith Capital, won her Democratic primary for Rhode Island governor. Leland Cheung, a former VC with Masthead Venture Partners, lost his Democratgic primary for lieutenant governor in Massachusetts. And Charlie Baker, the former EIR with General Catalyst, handily won his GOP primary for Massachusetts governor. 

 Correction: Yesterday's item on TrueBridge Capital Partners incorrectly reported the size of its latest VC fund-of-funds. The correct size is $400 million. Apologies for the error.

 Have a great weekend... Go Pats!

THE BIG DEAL

 Alliance Data Systems (NYSE: ADS) has agreed to acquire Conversant Inc. (Nasdaq: CNVR), a Westlake Village, Calif.-based provider of digital marketing services, for approximately $2.3 billion in cash and stock. The $35 per share deal represents a 31.22% premium to yesterday’s closing price. Read more. 

 

 

 

VENTURE CAPITAL DEALS

 Ifbyphone, a Chicago-based provider of voice-based marketing automation solutions, has raised $30 million in new VC funding. NewSpring Capital was joined by return backers Apex Venture Partners, SSM Partners, Origin Ventures, River Cities Capital Funds, i2A Illinois Accelerator Fund and Spring Mill Venture Partners. Ifbyphone also announced that it has acquired Mongoose Metrics, a provider of call tracking, measurement and attribution. No financial terms of the acquisition were announced. www.ifbyphone.com

 AltspaceVR, a Redwood City, Calif.-based social platform for virtual reality has raised $5.2 million in seed funding. Backers include Dolby Family Ventures, Formation 8, Google Ventures, Lux Capital, Foundation Capital, Rothenberg Ventures, SV Angel, Haystack Fund, Tencent, Raine Ventures, Promus Ventures and Western Technology Investment. www.altvr.com 

 Mediamorph, a New York–based media and entertainment data management and analytics company, has raised $10 million in Series B funding led by Liberty Global Ventures. www.mediamorph.com

 Airway Therapeutics, a Cincinnati-based biotech startup focused on treating a lung condition in premature infants, has raised $4.6 million in Series A funding. CincyTech led the round, and was joined by the Cincinnati Children’s Hospital Medical Center, Queen City Angels and individual angels. www.airwaytherapeutics.com 

 6SensorLabs, a San Francisco-based maker of a food testing device for those with food allergies, has raised $4 million in seed funding. Upfront Ventures led the round, and was joined by  SoftTech VC, Lemnos Labs, Kapor Capital, SK Ventures and Xandex Investments. www.6sensorlabs.com

 Tink, a Swedish personal finance mobile app, has raised $4 million in Series A funding led by Sunstone Capital. Read more

 AssetAvenue Inc., a Los Angeles-based platform for connecting accredited investors to issuers of real estate securities, has raised $3 million in VC funding led by Matrix Partners and China’s NetEase Capital. www.assetavenue.com

PRIVATE EQUITY DEALS

 CCMP Capital Advisors has agreed to acquire a 47% stake in PQ Holdings Inc., a Malvern, Penn.-based specialty inorganic chemicals company, from The Carlyle Group. No financial terms were disclosed. The remaining 53% position will be held by Carlyle, INEOS and company management. Carlyle previously sought a buyer for the entire company with a $3 billion asking price. www.pqcorp.com

 GIC, PSP Investments and Ontario Teachers’ Pension Plan have agreed to invest a combined $700 million into XPO Logistics (NYSE: XPO), for approximately a 21% equity stake. The Greenwich, Conn.-based logistics company is expected to use the proceeds to fund acquisitions. www.xpocorporate.com

 LEHR LLC, a Los Angeles–based maker of environmentally-friendly propane-powered products and tools, has raised an undisclosed amount of private equity funding from Solis Capital Partners. www.golehr.com

 Nautic Partners has acquired All Metro Health Care Services Inc., a provider of provider of home and community-based healthcare services in New York, New Jersey and Florida. No financial terms were disclosed. Sellers include BBH Capital Partners. www.all-metro.com

 SAI Global Ltd. (ASX: SAI), an Australian standards and compliance company, has extended its deadline for buyout offers until next Tuesday, according to Reuters. The company announced the auction process back in May, after receiving a A$1.1 billion indicative offer from Pacific Equity Partners. Read more

IPOs

 Atento SA, a provider of CRM and business process outsourcing solutions in Latin America and Spain, has set its IPO terms to 14.625 million shares being offered at between $19 and $22 per share. It would have an initial market cap of approximately $1.49 billion, were it to price in the middle of its range. The company plans to trade on the NYSE, with Morgan Stanley, Credit Suisse and Itaú BBA serving as lead underwriters. Attento reports a $4 million loss on $2.34 billion in revenue for 2013, and is owned by Bain Capital. www.atento.com

 Mevion Medical Systems Inc., a Littleton, Mass.-based provider of proton therapy systems for use in radiation treatment for cancer patients, has filed for a $69 million IPO. It plans to trade on the Nasdaq under ticker symbol MEVI, with Jefferies and Leerink Partners serving as co-lead underwriters. www.mevion.com

 Travelport, an Atlanta-based online travel commerce marketplace owned by The Blackstone Group, has set its IPO terms to 30 million shares being offered at between $14 and $16 per share. It would have an initial market cap of approximately $1.8 billion, were it to price in the middle of its range. The company reports $95 million in net income for 2013 on around $2.03 billion in revenue. In addition to Blackstone, Travelport shareholders include Technology Crossover Ventures, One Equity Partners and Morgan Stanley. www.travelport.com

EXITS

 Deluxe has acquired Mediapeers, a German provider of B2B cloud software that helps content owners market and sell their movie and television assets. No financial terms were disclosed. Mediapeers had raised VC funding from T-Venture, Fintage House and Telepool. www.bydeluxe.com

 Google (Nasdaq: GOOG) has acquired Polar, a photo-focused online polling company, for an undisclosed amount. Polar had raised just under $3 million in VC funding from Battery Ventures, AME Cloud Ventures, Greylock Israel, Morado Venture Partners and Webb Investment Network. www.polarb.com

 Hewlett-Packard (Nasdaq: HPQ) has agreed to acquire Eucalyptus Systems, a Goleta, Calif.–based provider of open-source software for building private and hybrid enterprise clouds. No financial terms were disclosed. Eucalyptus has raised around $55 million in VC funding from Benchmark, New Enterprise Associates, e.ventures and Institutional Venture Partners. www.eucalyptus.com

 

OTHER DEALS

 Eastman Chemical Co. (NYSE: EMN) has agreed to acquire Taminco Corp. (NYSE: TAM), an Allentown, Penn.–based specialty chemical company, for $2.8 billion in cash (including the assumption of $1 billion in debt). The $26 per share offer represents an 8.88% premium to yesterday’s opening price. www.taminco.com

FIRMS & FUNDS

 Brett Icahn has canceled plans to launch his own hedge fund, choosing instead to remain with his father Carl’s firm, Icahn Enterprises, according to the WSJ. Read more

 XL Group PLC (NYSE: XL) has acquired a minority stake in Ada Investment Management LP, a New York–based provider of alternative equities-based investment programs to institutional investors. No financial terms were disclosed. www.adainvestments.com

MOVING IN, UP, ON & OUT

 Barclays announced that John McFarlane, chairman of UK insurer Aviva PLC, will join the company’s board in January and become chairman later in the year once current chairman David Walker retires. McFarlane is a former Citigroup banker. www.barclays.com

 Bill Van Sant and Brent Bauer have joined Yukon Partners as special advisors. Van Sant previously was an operating partners with Stone Arch Capital and Norwest Equity Partners, and before that was CEO of Lukens Inc. and Blount Inc. He will assist with investments in the manufacturing, business services, and industrial sectors. Bauer will focus on healthcare, and is an internal medicine physician who has been with the Mayo Clinic for more than two decades. www.yukonpartners.com

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