The California Public Employees’ Retirement System (CalPERS) yesterday hosted a workshop on private equity, following a series of related controversies and changes to the public pension giant’s investment strategy.
I watched a good deal of the webcast, and was struck by comments made by CalPERS counsel Marte Castanos, when discussing negotiations with prospective recipients of pension system investments.
First, Castanos said that certain GPs request that CalPERS provide its comment letter on the limited partnership agreement prior to discussing allocation -- with the implicit threat that too many comments will result either in CalPERS getting shut out or being provided far less space than desired.
Second, and more troubling, Castanos said that GP attorneys -- typically third-party -- sometimes cite terms that CalPERS accepted in partnerships with different general partners. In other words, GPs and their attorneys are saying: "Confidentiality for you but not for us."
One CalPERS board member was struck by the irony that LPs rarely compare notes on specific GPs due to the possibility of collusion lawsuits, but certain GPs seem perfectly willing to bend the law to improve their own negotiating position. Me too.
• From the filings: Yesterday came a pair of SEC filings for Eight Partners Fund 1, which is one of the spin-offs from Formation 8. That's a similar name to the coming vehicle led by Joe Lonsdale, but he isn't actually listed. My understanding is that these filings are for a previously-announced (and now rebranded) seed fund for which Lonsdale will be chairman of the advisory board. Listed partners are Drew Oetting, Jake Medwell and Kimmy Scotti.
• 800 lb gorillas: CalPERS also presented some interesting data during the workshop, in terms of its own standing in the global private equity space. The pension giant has long been one of the world’s largest private equity investors, representing 2.8% of all committed capital back in 2007. It has since scaled way back — its 1.4% mark for the first half of 2015 is actually a 5-year high — but still was the seventh-largest global investor in the asset class between 2010 and 2014.
The largest private equity investor during that time-frame, per the CalPERS data, was the Canada Pension Plan Investment Board. Go here for the full chart, excluding sovereign wealth funds for which there is not publicly-available data.
• Recommended reading: My colleague Daniel Roberts has a deep dive on the troubles at Rent the Runway, the women's clothing rental company that has been valued by its venture investors at $500 million. In the past 10 months, the New York-based company has lost its chief operating officer, chief financial officer, chief marketing officer, chief creative officer, chief technology officer, chief people officer and head of partnerships. Also notable that the company asked Fortune not to run the story because it could hinder future fundraising, and that co-founder and CEO Jen Hyman asked: "Substitute me with any male founder, and would this even be a story?” Yes. Yes it would. Read it here.
• 56k and counting: Every time I add another thousand Twitter followers, I like to ask you to join the others so we can chat/debate/joke throughout the day. Follow me @danprimack
THE BIG DEAL
• Earnest, a San Francisco-based “loan program for financially responsible graduating students and young professionals,” has raised $75 million in Series B funding. Battery Ventures led the round, and was joined by Maveron and Adams Street. It also secured $200 million in new institutional lending capital from such firms as New York Life. Read more at Fortune.
VENTURE CAPITAL DEALS
• Codiak BioSciences, a Cambridge, Mass.-based developer of exosomes for both therapeutics and diagnostics, has secured $80 million in first-round funding commitments from Arch Venture Partners and Flagship Ventures. The deal is structured with two tranches, the first of which has already been disbursed. The underlying technology is being licensed from the The University of Texas MD Anderson Cancer Center in Houston. www.codiakbio.com
• Datto, a Norwalk, Conn.-based provider of backup and disaster recovery services, has raised $75 million in Series B funding from Technology Crossover Ventures. Read more at Fortune.
• Craftsvilla, an India-based “marketplace for ethnic goods,” has raised $34 million in Series C funding. Sequoia Capital and Lightspeed Venture Partners co-led the round, and were joined by Apoletto Asia and return backers Nexus Venture Partners and Global Founders Capital. Read more.
• ProtectWise, a Denver-based provider of cloud-based network security services, has raised $20 million in Series B funding. Tola Capital led the round, and was joined by return backers Crosslink Capital, Trinity Ventures, Paladin Capital Group and Arsenal Venture Partners. www.protectwise.com
• Numecent, an Irvine, Calif.-based “cloudpaging” startup, has raised $15.5 million in Series B funding led by existing backer Deutsche Telekom. Read more.
• Taskbucks, a mobile task marketplace in India (i.e., TaskRabbit for India), has raised $15 million from Times Internet. Read more.
• Align Commerce Corp., a San Francisco-based provider of cross-border payment solutions for small business, has raised $12.5 million in Series A funding led by Kleiner Perkins Caufield & Byers. Other investors included SVB Ventures, Recruit Venture Partners and return backers Pantera Capital, Digital Currency Group and FS Venture Capital. The company uses bitcoin on its backend. Read more.
• Jobber, a Canadian provider of cloud software for improving efficiency and profitability at home and mobile service businesses, has raised C$8 million in Series A funding. OMERS Ventures led the round, and was joined by seed backers Version One Ventures and Point Nine Capital. www.getjobber.com
• Cogito, a Boston-based provider of voice recognition and behavioral analysis software for analyzing customer service reps, has raised $5.5 million in Series A funding. Romulus Capital led the round, and was joined by Salesforce Ventures. www.cogitocorp.com
• TruStar, an Arlington, Va.-based enterprise platform for anonymous cyber incident sharing and collaboration, has raised $2 million in seed funding led by Resolute Ventures. www.trustar.co
PRIVATE EQUITY DEALS
• Audax Group has acquired Justrite Manufacturing Co. LLC, a Des Plaines, Ill.-based provider of industrial safety products, from Baird Capital for an undisclosed amount. Lincoln International managed the process. www.justritemfg.com
• Avendus Capital, an Indian financial services firm focused on advisory and wealth management services, has secured an undisclosed amount of funding from KKR. Sellers include Eastgate Capital and Americorp Ventures. Proceeds will be used to fund the company’s move into credit solutions. www.avendus.com
• Fortress Solutions, a Plano, Texas-based portfolio company of Galatyn Private Equity and VSpeed Capital, has acquired Restor Telecom, a Leesburg, Fla.-based telecom equipment repair supplier. No financial terms were disclosed. w.fortresssolutions.com
• Goldman Sachs and Thomas H. Lee Partners confirmed an agreement to acquire Cleveland-based facility management company GCA Services Group Inc. from The Blackstone Group. No financial terms were disclosed, but Reuters previously reported that the deal would be worth around $1 billion. www.gcaservices.com
• H.I.G. Capital has acquired Ship Supply International, a Miami, Fla.-based provider of port logistics. No financial terms were disclosed. www.higcapital.com
• Hyprop Investments, Attacq Ltd. and South African Real Estate Investment Trust have acquired the Ikeja City Mall in Lagos, Nigeria from Actis, RMB Westport and Paragon Holdings. Hyprop is the largest buyer with a 75% stake, while the sellers were led by Actis with 60%. No financial terms were disclosed. www.act.is
• Keg Logistics, a Denver-based provider of keg financing to breweries and wineries, has secured a “significant investment” from Bregal Sagemount. www.keglogistics.com
• Kinderhook Industries has acquired CVCC, an Elizabeth, N.J.-based provider of hazardous and non-hazardous waste management services to commercial and government entities. No financial terms were disclosed. www.cleanventure.com
• Shore Capital Partners has sponsored a recapitalization of Specialdocs Consultants LLC, a Highland Park, Ill.-based provider of consulting services to physicians transitioning from traditional medical practices to membership or concierge models. No financial terms were disclosed. www.specialdocs.com
• Soundcore Capital Partners has acquired Alloy Wheel Repair Specialists, a Quincy, Mass.-based alloy wheel repair and replacement company. No financial terms were disclosed. www.awrswheelrepair.com
• Vector Capital has acquired and merged Freedom Scientific and Optelec into a single assistive technology provider for the visually impaired. Freedom Scientific is a St. Petersburg, Fla.-based company previously owned by BBH Capital Partners and Wafra Partners, while Optelec is a Dutch company whose shareholders include NPM Capital. No financial terms were disclosed. www.freedomscientific.com
• Warburg Pincus has committed up to $300 million in equity funding to launch Vertice Pharma LLC, a new branded and generics pharma acquisition platform led by CEO Don DeGolyer (ex-CEO of Endo Pharmaceuticals) and CFO Andrew Saik (ex-CFO of Auxilium Pharmaceuticals, acquired by Endo). In related news, Vertice has agreed to acquire VistaPharm, a Birmingham, Ala.-based generics manufacturer of liquid and unit dosage pain medications. No financial terms were disclosed. www.vistapharm.com
• Instructure, a Salt Lake City-based provider of a SaaS-based learning management system, raised $70 million in its IPO. The company priced 4.4 million shares at $16 per share (low end of range), for an initial market cap of around $425 million. It will trade on the NYSE under ticker symbol INST, while Morgan Stanley was listed as left lead underwriter. Shareholders include OpenView Venture Partners (22.4% pre-IPO stake), Epic Ventures (21.8%), Bessemer Venture Partners (12.3%), and Insight Venture Partners (11.7%). www.instructure.com
• Yirendai Ltd., a Chinese online lending platform (i.e., the LendingClub of China), has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol YRD, with Morgan Stanley, Credit Suisse and China Renaissance serving as lead underwriters. The company reports $17 million of net income on $79 million in revenue for the first half of 2015. www.yirendai.com
• Elizabeth Arden Red Door Spa has acquired Manicube, a New York-based provider of in-office manicures and pedicures. No financial terms were disclosed. Manicube had raised $5 million in VC funding from Bain Capital Ventures and F Cubed. www.manicube.com
• EnergySolutions Inc., a Salt Lake City-based portfolio company of Energy Capital Partners, has agreed to sell its Projects, Products and Technology business to WS Atkins PLC (LSE: ATK) for $318 million. www.energysolutions.com
• Pandora Media (NYSE: P) has agreed to acquire the IP and technology of Rdio, a San Franciasco-based online music streaming company that will shut down. The deal is valued at $75 million in cash. Rdio had raised around $125 million in VC funding, including a 2013 round led by Cumulus Media at around a $500 million post-money valuation. Other backers included Atomico, Skype and Mangrove Capital Partners. Read more at Fortune.
• Peak Rock Capital has sold Atlas Paper Holdings Inc., a Miami, Fla.-based maker of tissue products (using both virgin and recycled fiber) to a subsidiary of Resolute Forest Products Inc. (NYSE: RFP). No financial terms were disclosed. www.resolutefp.com
• Angie's List (Nasdaq: ANGI) has rejected a $512 million cash takeover offer from IAC/Interactive Corp. (Nasdaq: IACI). The $8.75 per share offer represented a 10.5% premium to where Angie’s List shares were trading prior to the offer. Read more.
• Constellation Brands (NYSE: STZ) has agreed to acquire Ballast Point Brewing & Spirits, a San Diego-based craft brewer, for around $1 billion. Read more.
• Protiviti, a Menlo Park, Calif.-based consulting firm subsidiary of Robert Half International (NYSE: RHI), has acquired Decision First Technologies, an Atlanta-based provider of business intelligence and SAP solutions. No financial terms were disclosed. www.decisionfirst.com
FIRMS & FUNDS
• Aethon Energy Management has closed its second energy-focused private equity fund with $240 million in total capital commitments (including co-invest capacity). www.AethonEnergy.com
• Audax Group, a Boston-based investment firm focused on the North American middle markets, has closed its fifth private equity fund with $2.25 billion in capital commitments. www.audaxgroup.com
• Piper Jaffray Cos (NYSE: PJC) has agreed to acquire Simmons & Company International, a Houston-based investment banking boutique focused on the energy sector. The deal is valued at around $139 million, including $91 million in cash and $48 million in restricted stock (plus another $21m in cash and stock for retention purposes). www.piperjaffray.com
• Sankaty Advisors has agreed to acquire the management contracts for a quartet of collateralized loan obligation (CLO) portfolios from Regiment Capital Advisors (totaling $1.6 billion in assets). No financial terms were disclosed. www.regimentcapital.com
MOVING IN, UP, ON & OUT
• Jared Barlow has joined Kline Hill Partners, a new private equity secondaries firm, as a partner. He previously was a managing director with Sweetwater Capital.
• Andrew Cosslett has joined Advent International as an operating partner. He is the former CEO of InterContinental Hotels Group who recently transitioned from the CEO to chairman role at British health club chain Fitness First. www.adventinternational.com
• Steve Ellis has joined TPG as managing partner of the firm’s global operations group and its “portfolio building” unit. He is the former CEO of Asurion and worldwide managing director of Bain & Co. www.tpg.com
• Todd Forrest and Bryan Biniak have joined Nokia Growth Partners as an operating partner and entrepreneur-in-residence, respectively. Forrest previously was a partner and CFO of private equity firm JH Partners, and before that was CFO of Hummer Winblad Venture Partners. Biniak is a onetime Nokia executive who most recently was with Microsoft as GM of its worldwide developer ecosystem and smartphone app marketplace. www.nokiagrowthpartners.com
• Geoffrey Porges has joined Leerink Partners as a managing director, senior biotech analyst and director of therapeutics research. He previously was a senior VP with AllianceBernstein. www.leerink.com
• Marcus Ralling has joined KKR as a director, with responsibility for the asset management of its European real estate portfolio. He previously was a managing director and head of UK and European asset management with Pramerica. www.kkr.com
• Alex Saporito has joined Flexpoint Ford as a New York-based managing director, overseeing the firm’s Special Assets Fund. He previously was with Morgan Stanley as a managing director and global head of structuring for securitized products. www.flexpointford.com
• UBS has poached four technology bankers from Jefferies, per a memo: Paul Crisci (global head of tech banking for UBS), Jason Auerbach (global head of tech M&A), Jasson Cohen (cio-head of software) and Chris Montgomery (executive director). A UBS spokesman confirmed the hires. www.ubs.com
Share today's Term Sheet: