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peHUB Wire -- Thursday, July 2 |
Escape from New York
Andrew Cuomo vexes me. For the third time since the New York pension fund scandal began, he has allowed a private equity player to buy its way out of trouble. I know the state has a fiscal crisis, but is this really the best way to move from red to black?
The latest insult to legal accountability came yesterday, when Cuomo announced that PE consultant Pacific Corporate Group had agreed to: (a) Pay $2 million, and (b) Sign Cuomo’s much-ballyhooed Code of Conduct. In exchange, PCG was promised that Cuomo would not pursue criminal or civil prosecution related to PCG’s past activities in New York or anywhere else (like, say, California – although sources say that Jerry Brown is beginning to look into that state's placement agent skeletons).
What had PCG done wrong? Well, officially nothing – since PCG was required to neither confirm nor deny any of the AG’s findings. Kind of like how The Carlyle Group didn’t do anything wrong, even though it cut a $20 million check. That Cuomo must be awfully persuasive. Maybe he actually could resolve the budget mess, by squeezing cash out of every other PE firm doing business in New York, given that no actual wrongdoing is needed as a prerequisite…
Unofficially, PCG was accused of helping enrich indicted “placement agent” Hank Morris. Specifically, Morris was given an undisclosed 5% ownership stake in a $750 million co-investment vehicle funded by New York State Common Retirement Fund, and formed/managed by PCG and hedge fund The Clinton Group. Basically a kickback, in that Morris’ involvement was required in order to secure the $750 million commitment.
This is where it gets a bit tricky. PCG and Cuomo say that former PCG executive Steve Moseley was aware of Morris’ involvement, and concealed it from both PCG and New York pension fund overseers (neither uses Moseley’s name, but we’re all friends here). Moseley declined to comment yesterday, but said last month that he had “been assured by the Attorney General of New York that I am not a target of the ongoing industry investigation.”
Moreover, a separate source tells me that he does not believe Moseley knew about Morris’ involvement. How could that be? The argument is that Morris’ stake was actually coming from Barrett Wissman, a Texas hedge fund manager who held a 10% position in the co-investment vehicle (and sat on its investment committee). As such, Moseley could have been aware of Wissman without being aware of Morris (I’m a bit agnostic toward the whole situation right now).
The irony here is that Wissman was supposedly brought into the co-investment fund as a sort of overseer, because of staffing instability at PCG. As the fund was being formed, Moseley and three other senior PCG execs all bailed (part of a long line) – although only Moseley was allowed out of his non-compete agreement (he went to Clinton Group, in order to keep working on the co-investment fund).
Wissman has since plead guilty to securities fraud, and is almost certainly the source of Cuomo’s belief that Moseley was aware of the situation. But, again, we have Moseley saying he’s not the target of an investigation. If Cuomo believes his own argument, then why no indictment against Moseley or PCG as a whole? Ditto for Steve Rattner and Quadrangle? Or David Leuschen and Riverstone? Or pick a name at Carlyle?
Could it be that Cuomo is being a bit too loose with some of his punches, because he needn’t prove them in a court of law? Or does he just want to use these “code of conduct” signees in his next political campaign?
Make no mistake: I’m thrilled that Cuomo is bringing a lot of dirty secrets out into the open. What I don’t understand is what he’s doing post-exposition. Again, vexing.
*** Read more on the PCG agreement and Cuomo's findings.
*** Publishing Note: peHUB Wire is off tomorrow for the July 4th holiday, and will return Monday. peHUB.com will continue to be updated.
NEW @peHUB
* First Read, including Bill Gross on the return of greed, new placement agent guidelines from the EVCA and photos of the Madoffs at play.
* Data Dump I: Thirty-six pages of Q2 private equity and M&A figures.
* Data Dump II: Global private equity fundraising grew in Q2, but the underlying data is anything but encouraging.
* Q&A with Navin Chaddha of Mayfield Fund.
* Kevin Skillern, managing director of GE's venture capital ops, last week spoke at VCJ's cleantech conference in Palo Alto. Here's a copy of his presentation.
* IPO Fun: First-day pop for LogMeIn, and PE pros begin to see some light.
* Get a job, post a job.
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Delphi Corp. yesterday was denied its request to pay Platinum Equity up to $30 million in expense reimbursements if Platinum’s buyout bid for Delphi is topped. In his ruling, U.S. Bankruptcy Court Judge Robert Drain said that $30 million was “not reasonable or appropriate.” He did say, however, that his ruling would not preclude Platinum from seeking some form of reimbursement at a later date. Read more…
ActiFio Inc., a Weston, Mass.-based stealth storage startup, has secured $4 million of an $8 million Series A round, according to a regulatory filing. No investors are listed, but the company’s only listed executive is Ash Ashutosh, a partner with VC firm Greylock and former StorageWorks chief technologist. Listed as a board member is James Goldstein, a partner with North Bridge Venture Partners. www.actfio.com
Kayne Anderson Capital Advisors has closed its fifth fund with $820 million in capital commitments. The Houston-based firm focuses on the North American oil and gas sector. Read more…
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Gilt Groupe, a New York-based private-sale ecommerce company, reportedly has agreed to raise $40 million from General Atlantic and Matrix Partners. According to Business Insider, the round comes with a $400 million valuation.
Novast Pharmaceuticals Ltd., a Chinese generic pharmaceutical maker, has raised $25 million in Series C funding, according to VentureWire. SAIF Partners led the round, and was joined by return backers New Enterprise Associates, Qiming Ventures, Eli Lilly & Co. and BioVeda Capital. Novast does not have a website.
Symetis SA, a Lausanne, Switzerland-based developer of percutaneous valve replacement solutions, has raised CHF 23 million ($21.2m) in new VC funding. Wellington Partners and Vinci Capital–Renaissance co-led the round, and were joined by Banexi Venture Partners and return backers Truffle Capital, Novartis Venture Fund, Aravis Venture and BiomedInvest. Read more…
Bling Nation, a Palo Alto, Calif.-based provider of mobile payment solutions, has raised $8 million in Series A funding. Lightspeed Venture Partners led the round with $6.3 million, and was joined by Meck Ltd. and CampVentures. Read more…
StyleCaster, a New York-based fashion-lifestyle website, has raised $4 million in Series A funding led by Dan Gilbert, founder of Quicken Loans and owner of the Cleveland Cavaliers basketball club. Read more…
Pro-Organico SAPI de CV, a Mexican grower and exporter of USDA-certified organic produce, has raised $3 million from IGNIA Fund I. Read more…
Vibrant Corp., an Albuquerque, N.M.-based provider of nondestructive testing services for the aerospace manufacturing and maintenance markets, has raised an undisclosed amount of new VC funding led by Verge Fund. Read more…
*** Venture Capital news updated all day at peHUB's VC Channel ***
ArcLight Capital Partners has agreed to acquire the majority of PPL Corp.'s (NYSE: PPL) hydroelectric generation businessin Maine. The deal is valued at approximately $95 million. Read more…
SandRidge Energy Inc. (NYSE: SD) has sold its gathering and compression assets in Pińon Field, located in Texas’ Pecos and Terrell counties, to TCW Asset Management for $200 million. Read more…
American Education Group, a Grand Rapids, Mich.-based for-profit private school operator, has raised $10 million from Glencoe Capital. AEG was formed in 2007 by Winona Capital Management and Chicago Growth Partners. Read more…
*** Buyouts news updated all day at peHUB's Buyouts Channel ***
Graceway Pharmaceuticals LLC, a portfolio company of GTCR Golder Rauner, has agreed to acquire the global commercial rights to three investigational dermatological molecules from Pfizer (NYSE: PFE).No financial terms were disclosed. Read more…
Hyland Software Inc., a Cleveland-based provider of enterprise content management software, has acquired Valco Data Systems, which focuses on the healthcare sector. No financial terms were disclosed. Hyland is a portfolio company of Thoma Bravo. Read more...
NeuroMed Pharmaceuticals Ltd., a Vancouver-based developer of pain drugs, has agreed to merge with CombinatoRx Inc. (Nasdaq: CRXX). Under terms of the all-stock deal, CombinatoRx would issue around 36 million new shares ($28.8m) to NeuroMed stockholders, with each side to hold a 50% ownership of the combined company. NeuroMed has raised around $142 million in VC funding, from firms like MPM Capital, James Richardson & Sons, Neuro Discovery, GrowthWorks Capital, BDC Venture Capital, CMDF and the Royal Bank of Canada. Read more…
The NewsMarket, a New York-based video platform for distribution to news organizations, has agreed to acquire Medialink Worldwide Inc. (Nasdaq: MDLK). The deal is valued at $1.28 million, or $0.20 per Medialink share. The NewsMarket has raised over $17 million in VC funding, from firms like Ascend Ventures, Atlantic Coastal Ventures, Apax Partners, Boldcap Ventures, CEI Ventures, Hearst Corp., High Peaks Venture Partners, NYCIC, Softbank Capital Partners and Village Ventures. Read more…
SkyCross Inc., a Viera, Fla.-based developer of wireless antenna solutions, has acquired Chinese antenna maker Shanghai Universe Communication Electronics Co. Ltd. No financial terms were disclosed. SkyCross has raised around $60 million in VC funding from firms like BEA Systems, Investor Growth Capital, Milcom Technologies, Gabriel Venture Partners, Intel Capital and TL Ventures. Read more…
Arsenal Capital Partners has sold Sermatech, a Pottstown, Penn.-based maker of protective coatings and processes used on industrial and aviation gas turbines, to Praxair Surface Technologies,a subsidiary of Praxair Inc. (NYSE:PX). No financial terms were disclosed. Sermatech last year generated$116 million in revenue, andhas 625 employees. Read more…
Boeing Co. is in talks to buy certain operations of supplier Vought Aircraft Industries, as first reported by Flightblogger.com. Vought is a portfolio company of The Carlyle Group.
Sensus has acquired the assets of Telemetric Corp., a Boise, Idaho-based provider of communication solutions for smart grid systems. No financial terms were disclosed. Telemetric had raised around $4 million in VC funding, from firms like Akers Capital, Highway 12 Ventures and Village Ventures. Read more…
Global Safety Textiles Holdings LLC, a Greensboro, N.C.-based unit of WL Ross & Co.'s International Textile Group Inc., has filed for Chapter 11 bankruptcy protection. Read more…
Singer Partners has launched as a new investment management firm. Its founder is Brian Singer, who previously oversaw the $200 billion global asset management multi-asset practice for UBS. Executives include chief compliance officer and general counsel Michael Jacobs, who previously was with Adams Street Partners. Read more…
Cory Eaves has joined General Atlantic as senior vice president in the firm's resources group, which provides tech and operational services to General Atlantic portfolio companies and investment pros. He previously was chief technology officer and chief information officer at Misys PLC. Read more...
David Langstaff, former CEO of Veridian, has joined General Atlantic as a special advisor, with a focus on the government services sector. Read more...
Hall Capital Partners has named John Buoymaster as firm president. He will maintain his role as director of portfolio management, and succeeds John Boneparth, who left to resume his former consulting business. Read more…
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