Multiples PE Secures $30 Million Commitment

CDC Group PLC has committed $30 million to the debut fund from Multiples Private Equity, an Indian private equity investor. The fund target is $450 million.

PRESS RELEASE

On the day that the UK Prime Minister begins a three day visit to India, CDC Group plc (“CDC”), the UK’s development finance institution, announces a commitment of US$30m for investment in Indian businesses in order to support economic development across the country.

CDC is backing Multiples Private Equity Fund I Limited (“Multiples”) which will focus on investing in businesses across a range of sectors, including financial services, healthcare, infrastructure, shipping and retail.

The fund aims to raise the Rupee equivalent of US$450 million from both international and Indian investors. Its investments will average US$20-30 million with the aim of building a portfolio of domestic companies which will benefit from strengthening economic growth and consumer demand.

Anubha Shrivastava, CDC’s Managing Director for Asia said:

“Despite improving economic conditions in India there is still a shortage of investment for promising businesses in many sectors of the economy. At CDC we strongly believe in the power of entrepreneurship as the key to economic development and our US$30 million commitment to the Multiples fund is a testament to this.

“The Multiples team has shown strengths as an investor and fund manager, as well as being a market leader, responsible for the first buy out of a company in India. Economic and political conditions continue to look good for private equity in India and the team’s experience and track record of adding value to portfolio companies should put it in a good position to strengthen India’s growing private sector.”

CDC’s first investment in India was in 1987 and it is now the largest international private equity fund investor in the country having committed over US$1.1bn to funds investing in Indian companies since 2004.

CDC will continue to support the Multiples fund by provide important guidance relating to the team’s structure and will ensure the fund’s procedures are in line with best international practice. CDC will advise the fund on setting environmental, social and governance policies, which over time will help ensure commercially, environmentally and socially sustainable development. This is the first fund to be raised by Multiples Alternate Asset Management Private Limited and is led by Renuka Ramnath, who led ICICI Ventures, in which CDC has previously invested.


New Firm Alert: MR Investment Partners

[Updated below] MR Investment Partners has launched as a technology-focused private equity firm, with a particular focus on growth equity financing. The principals are: Richard McGinn, the former Lucent CEO who most recently was a general partner with RRE Ventures; and Chris Roden, a former Citi banker who also served as CEO for both Seabridge Capital and Bristol Bank.

Not too many details yet, save for what’s on this website (kudos to VentureWire for finding it). It says that firm’s investment strategy calls for a “minimal use of debt in a company’s capital structure, and then only as a risk management tool.” It adds that the tech sub-sectors it plans to focus on include: Storage software payment systems, communications technology, SaaS, security software and mobile digital media.

I did reach someone named Elizabeth via the website’s contact number (it seemed to be a cell phone), who passed promised to pass on my message. If Richard or Chris ring back, I’ll be sure to update this post.

UPDATE: Ok, this is embarrassing. Seems my colleagues at Buyouts Magazine had this story more than a month ago, and I (and VentureWire) missed it. Moreover, they said that the fund target is $750 million, with a bunch already committed by some sovereign wealth funds. Apologies…


Blackstone (Finally) Reaches The Finish Line

During a media call earlier today, Blackstone Group president Tony James said that the firm has held a $13.5 billion final close on its latest buyout fund. Had I been making the announcement, the word “finally” probably would have been added.

This is the fund that Blackstone originally began raising with a $20 billion target in October 2007, long before most Americans had ever heard of credit default swaps or “President” Obama. It held a belated first close on just over $7 billion the following August (i.e., two years ago), cut the target to $15 billion and then hit a long dry patch. Somewhere along the way, James said that the fund would still reached “well into the teens.” 

Blackstone had around $9 billion as of earlier this year, set a June 30 deadline, missed the deadline and then persuaded a bunch of fence-sitters at the last moment. Some have speculated that the carrots were sweetened fees, but James said today that there were no substantial term changes made between the first and final close (perhaps because it would have introduced “most favored nation” complications?).

All of the above chronology is why I wrote in January that Blackstone would raise the year’s largest and most underwhelming fund. I mostly stand by that, considering that it basically took Blackstone two years to secure the final $6 billion. My hedge relates to the fact that LP sources told me in May that the final close probably wouldn’t top $12 billion (i.e., they surpassed my lowered expecations).

Of course, none of that much matters at this point. Blackstone is again one of the best-capitalized private equity firms in the world. In fact, it may be the best-capitalized, considering that it still has around $3 billion of dry powder left its $21.7 billion fifth fund. That last point is important, because it means Blackstone can delay tough decisions about staffing levels (considering that, eventually, fund management fee income will be slashed nearly in half)…

In terms of strategy, James said to expect two differences between Fund V and Fund VI. First up is geography: Fund V began with a strong push into Europe, then focused on North America with a late push into Asia and other emerging markets. Expect the reverse order this time around.

Second, James said to expect far fewer multi-billion dollar privatizations. This is part of Blackstone’s year-long effort to rebrand as a mid-market firm, which it keeps selling even though no one is buying (nor should they).

As an aside, this close does put a bit of pressure on rival firm KKR, which plans to begin marketing its new fund later this year. The situations aren’t identical — Blackstone raises global funds, whereas KKR also has European and Asian funds — but I’d think KKR needs to secure at least $8 billion or so to keep pace. Methinks they’re already trying to find out where Blackstone’s last few billion came from…


Highland Capital Partners Considers China Fund

Yesterday I asked email readers to name the latest U.S. venture firm to seriously consider raising a China fund. Their hint was that it already has some Chinese companies in its general portfolio.

The answer is Highland Capital Partners, which first broached the subject in an LP advisory call last week. The basic idea would be for the China fund to have a dedicated team and its own name (probably some Mandarin translation of “higher ground”) – with Highland serving as a cornerstone limited partner.

This is basically a reflection of two sentiments at Highland: (1) China may offer more attractive investment opportunities than are permitted by international caps in its general fund; (2) It’s difficult to have a U.S.-heavy investment committee perform timely due diligence on Chinese companies, particularly when other firms have such decision-making centered in Beijing.

Again, this is all very early in the process (so early that it still may not happen). No word yet on a potential target, although something between $100 million and $200 million is reasonable (dollar-denominated). No comment from Highland, natch.


Blackstone Not Bidding on AlpInvest

Quick hit: There’s a WSJ report this morning that The Blackstone Group is expected to bid for private equity giant AlpInvest, which is being shopped by its Dutch pension fund owners.

The second part is accurate (the part about being shopped), but multiple sources tell me that Blackstone has no plans to make an offer…


DFJ Raises $350 Million for Tenth Fund

Draper Fisher Jurvetson has wrapped up its tenth fund, with $350 million in capital commitments. The firm posted a related press release to its website late Friday, but didn’t submit it to the newswires.

“Raising a fund is no longer a newsworthy event from our perspective,” DFJ partner Josh Stein explained to me over the weekend. “We want to generate attention for our exits.”

It’s an interesting argument, and one worth further discussion. Maybe tomorrow. For now, however, let’s discuss the fundraise (because that is, for better or worse, what we do here)…

DFJ originally sent out books in late 2008 with a $600 million cover, which was a slight reduction from the $650 million raised in 2007 for Fund IX. But launching a venture fundraise in late 2008 was a lot like me trying to buy a Porsche. You can say you’re going to do it. You can go through the opening motions. But, eventually, some inescapable realities turn the entire thing into a farce.

Not only was the overall VC fundraising window shut, but DFJ experienced some messaging problems related to older deals done out of affiliate funds like ePlanet Ventures. So the firm slowed down the process, and later scaled back its capital ambitions to $400 million.

DFJ ultimately came up short of the revised target, but Stein says that the partners “feel pretty good.” He adds: “This has been a very unusual fund cycle. Our traditional investing model led us to believe that we’d be done with Fund IX in mid-2009, but we just made the last investment in that fund a couple of weeks ago.”

Don’t expect any major changes in terms of investment strategy, including a diversified sector focus that includes IT, mobile, cleantech and life sciences. The team remains mostly the same with ten investing partners, including one in China and one in India. The only partner cutting back for this vehicle is Warren Packard, who will continue to manage existing investments but will not make new ones.


A Boutique Life: 6Pacific Deals with Crowded Market

The recession was kind to banker John Barrymore. The recovery has been tougher.

Barrymore, former head of the food and beverage group at BMO Capital Markets, co-founded 6Pacific Partners just as Wall Street was imploding. The goal was to provide M&A advisory services and equity capital (between $1m-$5m) to companies in the food, beverage, nutrition and consumer space. And there was plenty of work.

“When we started there weren’t many other boutiques, because people were making so much money at big banks,” Barrymore explained. “[Plus], no one has an advisory business focused on large consumer companies combined with an equity vehicle focused on small companies.”

Notable 6Pacific deals included Overhill Farms inking a sales and distribution agreement with McDonald’s French fries supplier J.R. Simplot Co.

Unfortunately for Barrymore, other investment bankers had the same idea and launched their own boutiques. Now, 6Pacific is seeing more competition as the broad market has rebounded. There are many more rival boutiques to contend with — Intrepid Investment Banking, from ex-Barrington execs, just opened up just down the street from 6Pacific – and investment banks are taking back clients. “We’re almost sad to see the recession go. All of the banks came back so strong and they’re now formidable competitors again,” he says.

There also is increasing interest in food, restaurants and consumer deals. The Carlyle  just agreed to pay $3.8 billion for NBTY Inc., the maker of Solgar vitamins. In June, Oak Hill Capital completed its $570 million buy of Dave & Buster’s Inc. from Wellspring Captial. Lee Equity Partners also closed its $180 million buy of Papa Murphy’s International, a pizza restaurant chain, from Charlesbank Capital Partners in May.

The last few years have been tough for restaurants but those with value oriented concepts, like pizza or upscale burgers, are seeing growth. Still valuations are all over the place. The best companies, like Papa Murphy’s, may sell for as much as 10x EBITDA, while the underperformers may go for as low as 5x. Dave & Buster’s went for 7x EBITDA. However, Dave & Buster’s is more an entertainment company and the Oak Hill transaction was the restaurant chain’s second attempt to sell itself.

Despite all the activity, 6Pacific has yet to announce a transaction this year. This is in contrast to 2009 when 6Pacific advised on four deals, including Simplot. The environment for consumer products appeared to be picking up in first quarter but this was largely due to a one-time increase in retail inventory levels. Retailers, Barrymore says, carried more inventory earlier this year after cutting back too much in 2009. This created a false sense of momentum, he says.

6Pacific has also seen several private equity deals fall apart at the last minute, while the firm’s advisory assignments are taking much longer, Barrymore says. “The problem is the lack of clarity in the business outlook,” he says.

Barrymore doesn’t believe the rise in capital gains taxes in 2011 will spur business owners to sell this year. “We do, however, anticipate higher levels of M&A activity in the second half as large companies deploy their cash on hand and realize the substantial benefits of scale in this market,” he says.

As a sidenote, 6Pacific stands for 6:00 a.m. Pacific time, which Barrymore says is the best time of day in L.A. to conduct business globally.


With a Good Story, A Young Firm Targeting the Midwest and Texas Thrives

Blair Garrou is unassuming, but he’s as ambitious a venture capitalist as you’re likely to meet, as evidenced in part by his co-founding Houston-based DFJ Mercury at just 32 years of age. He was young, but having worked as a principal at the Houston-based private equity firm Genesis Park, and as the CEO of Intermat, a decades-old portfolio company of Genesis that Garrou helped sell to a public company, he decided he was ready anyway.

That Garrou helped convince investors of the same is more impressive. Indeed, the firm, formed in 2005, managed to collect $30 million to invest between $100,000 and $5 million into nascent companies — particularly those created out of tech transfer programs in Texas, Illinois, Colorado and Michigan. This spring, despite what’s long been an inhospitable fundraising climate and just one exit, DFJ Mercury closed on a second fund more than twice the size at $70 million.

Earlier this week, I asked Garrou how his team pulled it off.

Fundraising is way down. Alan Patricof recently detailed how arduous it was for Greycroft to close its newest fund. What was your experience like?

Greycroft’s name came up a lot on the fundraising trail. As our small fund size and approach was being looked at, it was almost in lockstep [with Greylock]. They had Patricof, of course, but other advantages they had is that their fund hails from area of country where there’s a lot of venture investing and that they are sector specific, focusing on software and digital media.

Telling people we focus on the middle of the country, it was hard to get a conversation started. Also, we’re not strictly IT focused but we also invest in advanced materials and biosciences. So we had to get potential LPs over the hump. To do that, we had to reach out early and let them see us over subsequent quarters and see our companies improving quarter to quarter. Basically, what we told them would happen came to fruition, but without that, because of where and how we invest and that we’re an emerging manager, things might not have worked out so well.

It also helped that we could talk about Phurnace [the one company in DFJ’s portfolio that exited, via a sale to BMC Software for an undisclosed amount]. That exit was just around a 6x for our fund and returned just 35 percent of our first fund, and in this environment, that gave a lot of people comfort.

I’ve seen a lot written about the commercialization gap that you’re targeting. Can you elaborate?

Sure, we’re kind of puzzled why more people haven’t picked up on this, but if you look at various states and R&D spend versus venture capital spend, you see very interesting activity. Obviously, Massachusetts and California cover their R&D opportunities with venture capital, but in the middle of the country, massive gaps exist.

We started with a hunch, but if you look at states’ individual R&D spend, both academic and commercial, and compare that to venture investment activity — we tend to analyze gaps with a lag of two to three years; for example, R&D spend in 2005 and venture investment in 2008 — the data is surprising, especially for states with $100 million or more of VC spend. In Michigan, for example, the ratio of R&D to VC spend is 72 to 1. In Illinois, it’s 26 to 1. In Texas, it’s 12 to 1. Meanwhile, in California, it’s 4 to 1.

To us, especially taking into account the active tech transfer programs at places like the University of Michigan and the University of Illinois at Urbana-Champaign, the Midwest stands out as a place with great opportunity.

Is it challenging to keep startups born in the Midwest to remain there?

We want to keep companies where innovation occurs, but we know if you don’t have a presence in Northern and Southern California [your potential is sometimes hampered]. In enterprise software, we don’t feel like our startups have to move; those investments have pretty much stayed put. But in consumer Web, it’s hard to find analogs of success in the Midwest or Southwest other than Feedburner or Groupon or HomeAway. In fact, to a T, every single one of our Web companies has a presence on West Coast. Thankfully, most don’t have issue with half of their workforce picking up and moving.


KKR Gets Into Growth Equity (in China)

Well, it’s official: KKR is listed on the New York Stock Exchange, and was up nearly 1% in early trading. Guess this means we’re in for a slew of Blackstone vs. KKR stories at the end of each quarter (and I’ll probably write half of them)…

Those who buy KKR shares expect to be taking indrect part of big-dollar leveraged buyouts, but now it seems they also might be getting a piece of smaller deals.

The firm recently sent out books for the KKR China Growth Fund, which will write equity checks of between $35 million and $75 million for companies in Mainland China, Hong Kong and Taiwan. This is different than the $4 billion KKR Asian Fund, raised in 2007 and primarily focused on big buyouts throughout Asia (China, Japan, India, Australia, Korea, etc.).

“Eighty percent of the transactions in China are companies that require between $50 million and 70 million, and the $100 million-plus deals are few and far between,” says a source familiar with the situation. “Plus, most private equity deals in China — even the big ones - are for minority stakes, so it makes growth equity more of a natural fit for KKR… The day will come when there are leveraged buyouts for control in China, but it’s not today.”

The China Growth Fund target is $800 million, and seems to be the first time KKR has raised a private equity fund that didn’t consider leveraged buyouts to be its primary investment strategy. KKR China chief David Liu will run the show, but peHUB has learned that the firm plans to hire a dozen fund-specific staffers.

Private Equity Insider first broke news of the fund last week…


Bain Capital Ventures Launches “Innovation Center” for Entrepreneurs

For a very long time, venture capitalists reveled in their exclusivity. They took meetings with those they knew, or those who came personally recommended. Then they went golfing, and let inexperienced entrepreneurs fend for themselves.

Over the past year, however, the venture capital market has undergone something of an accessibility revolution. Office hours, institutional incubators, socially-networked superangels, no-cost elevator pitch events and more.

The latest step in the right direction comes tomorrow morning, when Bain Capital Ventures launches an online “Innovation Center” for early-stage entrepreneurs. [Update: Site now live here]

“Quite a number of us helped start companies before we became venture capitalists,” says Jeff Glass, a managing director with BCV and winner of E&Y’s “Entrepreneur of the Year” award in 2006 for his work with M-Qube (acquired by VeriSign). ”And when we talk to current entrepreneurs, particularly in the Northeast, we’ve gotten a lot of feedback saying that they wished there were some packaged resources that startup folks could take advantage of.”

The real jewel of BVC’s Innovation Center is an intermediated Rolodex of superangels, law firms, executive recruiters, accountants and venture-friendly banks. Users can select the investor or service provider whom they would like to contact, upload some information and BCV makes the connection. Kind of like its own little LinkedIn (which just happens to be a BCV portfolio company).

BCV also offers the ability to sign up for office hours at the firm’s Boston headquarters, which will begin taking place every Friday afternoon.

Finally, the site provides a variety of entrepreneur resources, including case studies, data and how-to information (hiring, creating a biz plan, etc.). This last part is where BCV’s Innovation Center — or at least the demo site I saw today — still seems to be a bit lacking. Hopefully they’ll add more info about sample term sheets, including VC traps that sometimes snare first-time CEOs.

“It’s a work in progress, and we hope it works as part of the larger startup ecosystem,” Glass says. “As VCs, we put people and resources together, so this is kind of just adding structure to what we already do.”


Florida Buying Piece of Lexington Partners

The Florida State Board of Administration has agreed to acquire a minority ownership stake in Lexington Partners, peHUB has learned. It is believed to be the first time that a state pension fund outside of California has bought into a private equity firm’s management company.

“Florida has had a multi-pronged relationship with Lexington for a long time, so from that perspective it’s not to surprising,” explained a source familiar with the deal. “But when you consider how poorly most other deals like this have performed, it’s got to make you wonder why Florida would want to double-down on a single firm.”

Neither Lexington nor Florida is commenting on the deal, but our understanding is that the deal is for a 9.9% ownership position at an enterprise value of around $1.8 billion (consider that last figure to be ballpark — a very spacious ballpark).

[Update: A spokesman for Florida State Board of Administration told me this afternoon that the deal closed on June 18, and involved a $41.25 million investment. He declined to say what percentage ownership stake that represents.]

The relationship between Florida and Lexington began in 1998, when the state funded a $1 billion co-investment program for Lexington to manage. It since has been one of the firm’s largest limited partners, including on a new fund that is in the final stages of being raised.

In other Lexington news, the firm today confirmed that it has acquired a large portfolio of co-invest, fund-of-funds, mezzanine and feeder assets from Citigroup. StepStone Group will manage the assets. peHUB first broke news of the deal last week.


Two Partners Out at Rustic Canyon; Firm’s Future Grows Less Clear

It’s no secret that dozens of venture capital firms are fighting for their lives. It may be time to add Rustic Canyon Partners to that list.

The Santa Monica, Calif.-based firm began life with a bang, raising $500 million for its debut fund in 1999. It would later raise small vehicles — including an SBIC fund and a joint fund with Fontis — and then secured just over $200 million for Rustic Canyon III. That vehicle officially closed in October 2008, though fundraising, and investing, began in early 2007.

By May of last year, Rustic Canyon had already committed around half of Rustic Canyon III, and it began premarketing a new vehicle, but it doesn’t appear to have gotten much traction.

Now, some new departures would seem to cast further doubt on Rustic Canyon’s staying power. Most notable is partner Mark Menell, who originally joined Rustic Canyon at its inception after co-leading Morgan Stanley’s tech M&A practice. peHUB has learned that Menell, who declined comment, is now working closely with Bay Area members of Seattle-based venture firm Maveron LLC.

Menell had led some of Rustic Canyon’s higher-profile deals in recent years, including its investment in MerchantCircle, an online business directory and social network connecting businesses and consumers. The profitable five-year-old company has raised $14.3 million so far over two rounds, including from Scale Venture Partners and Steamboat Ventures.

Menell also led Rustic’s investment in Good Technology, so named last year after Motorola sold Good Technology to rival push email provider Visto, which rebranded itself as Good. Visto has raised more than $250 million from more than 20 venture firms in its roughly 15 years of operation.

Yet Menell isn’t alone is going his separate way. Longtime partner Michael Song, whose LinkedIn profile still lists him as a partner at the firm, also has left Rustic Canyon and now appears at the firm’s website under the heading “senior advisor.”

Michael Kim, who announced last December that he was leaving Rustic Canyon to launch a fund-of-funds firm called Cendana Capital, and Jon Staenberg, long a Seattle-based venture capitalist who merged his shop with Rustic Canyon in 2003 and left the combined firm two years ago, also are listed as “senior advisors.”

Even founder Tom Unterman, who did not respond to a request for comment earlier today, may be dividing his attention. At least, in February, joined by a long list of angel backers and Andreessen Horowitz, Unterman personally participated in the $1 million seed funding of Factual, a platform that invites anyone to contribute and “mash” open data on any subject.

Rustic Canyon is still investing from its 2008 fund, though the pace of new deals has slowed dramatically. This year, for example, it has disclosed its participation in just one new investment: the $10 million Series B round of Gaikai, a video game streaming service that had received earlier backing from Benchmark Capital. More common for the firm right now are follow-ons, such as its recent participation in the $6 million Series C round of Perfect Market, whose software helps publishers squeeze more money out of online content and that has raised nearly $40 million since 2005;

Rustic Canyon saw four of its portfolio companies go public in its 1999 fund; the firm also backed the online real estate exchange company LoopNet, which  attracted investment from 17 investment firms and went public in 2006.  

Far more of Rustic Canyon’s exits have come through mergers and acquisitions, and almost none for disclosed transaction amounts. Most recently, Rustic portfolio company InSync Software, which makes RFID and sensor-based application software, sold to an investment firm focused on RFID technology called RFID Invest. InSync had raised more than $12 million in venture funding; financial terms were not revealed.


WHI Capital Loses Only Remaining Managing Partner

Last month, we reported that Eric Cohen had stepped down as a managing partner of WHI Capital. The news was confirmed by Adam Schecter, the firm’s founder and remaining managing partner. Now we’ve learned that Schecter is also gone, effective June 30.

No explanation has been given for either departure by WHI, a Chicago-based buyout firm focused on niche manufacturing, distribution and specialty service companies. Schecter’s voicemail, however, indicates that he has joined Geneva Glen Capital, a new private equity firm formed by Jeff Gonyo (ex-Wind Point Partners). It’s unclear if Cohen also is joining Geneva Glen.

I’ve left messages for both Schecter and Gonyo, and will update this post if they reply.

As for the future of WHI, I spoke briefly via phone with Mike Schopin, one of three investment professionals still listed on the WHI firm’s website. He said that WHI Capital still has dry powder from its $170 million fund raised in 2006, plus some additional commitments from sole sponsor William Harris Investors (family-based asset management firm).

Schopin added that no decisions had been made on whether to add new staffers, but that the remaining team is able to leverage the 20 or so investment pros working on other efforts for WHI.


The Return of Jeff Rosenkranz

The last time I spoke with Jeff Rosenkranz was March 2008, just after he stepped down as head of mid-market banking with Piper Jaffray. Pretty good timing, and Rosenkranz enjoyed semi-retirement while the economy burned.

Now he’s back, launching a new mid-market investment bank called Metronome Partners.

“I loved the time I had with my family over the last couple of years, but I began to get an itch to get back into the business last winter,” Rosenkranz told me this afternoon. “I thought long and hard about whether to join a bigger firm or do something on my own, and ultimately decided to do it on my own. I think it’s the relationships that matter the most, and wanted to do it in a way that can really focus on the quality of advice, rather than the quantity.”

Metronome is based in Chicago, and will provide mid-market banking services to family-owned companies, entrepreneurs, private equity sponsors and corporate acquirers. The team currently stands at four professionals, including Rosenkranz and fellow managing directors Shane McDaniel and Scott Hales (co-founders of Marksman Venture Partners). Chris Larson is abvoard as a marketing director.

“I suspect we’ll grow, and at this point our first goal is to build a bigger Chicago hub,” Rosenkranz says. “I’ve had conversations with people outside of the area, but first we want to add some people here.”


Quintana Energy Raising $650 Million for Second Fund

Quintana Energy Group, an affiliate of Quintana Capital Group, is raising upwards of $650 million for its second fund, according to a regulatory filing. So far it has secured around $271 million in capital commitments, with C.P. Eaton serving as placement agent.

The Houston-based firm makes control-oriented equity investments across the oil and natural gas, coal and power industries. www.qeplp.com


More Cash for Longwood Founders Fund

Longwood Founders Fund, a Boston-based VC firm focused on the life sciences market, has raised over $2s million in new commitments for its debut fund. That brings the total to nearly $73 million. No total target has been disclosed.

The firm’s three founding principals are all former executives of Sitris Pharmaceuticals (acquired by GlaxoSmithKline). This includes ex-Sitris CEO Christoph Westphal, who recently took a job running S.R. One Ltd., GSK’s corporate venturing arm (GSK is believed to be a Longwood Founders investor).


Gemini Investors Raises Fifth Fund

Gemini Investors has closed its fifth fund with $60 million in capital commitments, according to a regulatory filing. The Wellesley, Mass.-based firm focuses on middle-market companies in the technology, business services, consumer services, healthcare, education, manufacturing and distribution sectors.

Gemini raised $58 million for its fourth fund in 2005, which followed a $180 million third fund raised in 2000. www.gemini-investors.com


Yes, KKR Is Still “Going Public” in New York

Bloomberg reported this morning that KKR may postpone its planned $500 million flotation on the New York Stock Exchange, due to market volatility. Makes sense, given general market volatility and the particularly harsh treatment of Blackstone and Fortress shares (trading at around $10 and $3 per share, respectively).

What is worth noting, however, is that a share sale postponement has absolutely no impact on KKR’s larger plans to list itself on the New York Stock Exchange (Bloomberg got this correct in its story, but some emailers appear to have stopped after the headline).

Remember, KKR already is publicly-traded in Amsterdam. Moreover, it signed a deal last October with Amsterdam unit-holders, by which KKR promised to relist New York within one year. If it fails to do so, the Amsterdam unit-holders could basically force a transfer on their timetable. In other words, KKR only controls its own destiny through October.

The share sale plan is a relatively recent development, and was expected to happen concurrent with — or shortly after — the New York listing. They are related, but the latter is not dependent on the former.


IGNIA Fund Closes Debut Vehicle with $102 Million

IGNIA Fund, a venture capital firm focused on Mexico and the rest of Latin America, has closed its debut vehicle with $102 million in capital commitments.

PRESS RELEASE

IGNIA Fund I, LP Latin America’s first and largest impact investing fund, announced today that after seven rounds, it has concluded its fundraising process having reached US$102 million to serve businesses at the base of the socio-economic pyramid.  This last round was led by J.P. Morgan with a US$5 million commitment and by Corporacion Mexicana de Inversiones de Capital (Fondo de Fondos), who committed additional capital bringing its total commitment to US$7.5 million.  

Despite last year’s economic downturn, IGNIA surpassed its initial fundraising target of US$50-75 million.  IGNIA’s resources will be deployed to support projects in the areas of health, education, housing, and basic services, among others.  To date, IGNIA has already committed to invest US$22 million in six companies across the health, agriculture, housing and telecommunications sectors.  These investments reaffirm IGNIA’s pledge to offer products and services that improve the quality of life of those most in need.

“We are delighted to have J.P. Morgan join our Fund, and are grateful for their confidence in our ability to create positive social and economic value through our investments,” said Alvaro Rodriguez Arregui, Co-founder and Managing Partner of IGNIA. “By supporting IGNIA, our investors are helping to create a new industry – that of impact investing.”

“We are proud to support IGNIA in its efforts to encourage the growth of social enterprise at the base of the socio-economic pyramid in Latin America. Our investment in IGNIA Fund I demonstrates our belief that there is significant potential and need for market-based solutions to global poverty and inequality,” said John M. Buley, Jr., Managing Director of Social Finance at J.P. Morgan.  

“While today J.P. Morgan is pioneering the entry of commercial investors into impact investing, we believe this is a growing trend,” added Michael Chu, Co-founder and Managing Director of IGNIA. “We are deeply appreciative of the trust that all 34 of our investors have placed on us to simultaneously address important social issues while generating financial returns, thereby making possible a scale that until now was impossible.”  In addition to receiving capital from private investors, IGNIA Fund I is funded by public institutions, global foundations, family foundations, and individuals from Latin America, the United States, and Europe.  Such investors include Omidyar Network, Soros Economic Development Fund, Rockefeller Foundation, the Multilateral Investment Fund, the International Finance Corporation, the Inter-American Development Bank, and Corporacion Andina de Fomento.

IGNIA Fund I, LP is an impact investing venture capital fund that invests in high growth businesses that serve the base of the pyramid in Mexico and other regions of Latin America. For additional information, please visit www.ignia.com.mx


Volcker Rule Updates: Possible Exemption for Fund Investments

(Reuters) - Banks may be allowed to maintain small investments in private equity and hedge funds under a U.S. Senate revision of a new rule on bank trading that is otherwise being tightened, aides said on Tuesday.

In the continuing debate on Capitol Hill about Wall Street reform, banks face a turning point on Wednesday when Senate Democrats will spell out how they propose to curb risky trading by banks and their ties to private equity and hedge funds.

Billions of dollars in bank profits hang in the balance, with Democrats walking a political tightrope between cracking down hard on a deeply unpopular industry after a severe credit crisis, and heeding its warnings about taking changes too far.

Senator Christopher Dodd said on Tuesday that he will offer a tightened version of a White House proposal known as the “Volcker rule” that would limit “proprietary trading” by banks for their own accounts that is unrelated to customers.

He told reporters, during a break in negotiations over final regulatory overhaul legislation by a joint Senate-House of Representatives panel, that he would tighten the rule along lines suggested by senators Jeff Merkley and Carl Levin.

“There will be some version of Merkley-Levin I’ll try to offer … We haven’t decided how we’re going to do this yet, but there will be something on Merkley-Levin,” said Dodd, head of the Senate’s negotiating team to the joint panel.

Merkley and Levin want the Volcker rule, which is named after White House economic adviser and former Federal Reserve Chairman Paul Volcker, to be tightened by giving regulators clearer orders on implementing it.

Another provision important to banks — one from Democratic Senator Blanche Lincoln of Arkansas that would force them to spin off their lucrative swap-dealing desks — was expected to be included in the final bill, as well, in revised form, aides said.

EXEMPTION LIKELY, AIDES SAY

Congressional aides said the Volcker rule will likely be further changed to include an exemption that will let banks make small investments in private equity and hedge funds — a carve-out that banks have pushed hard for in recent weeks.

More than one-quarter of all private equity investments between 1983 and 2009 involved bank-affiliated private equity groups, said a recent study by professors at Harvard University and INSEAD, an international graduate business school.

Financial giants such as Goldman Sachs (GS.N), JPMorgan Chase (JPM.N), Credit Suisse (CSGN.VX) and Citigroup (C.N) have been deeply involved in private equity deals, the study said.

Banks want an exemption to let them continue to make small, or “de minimis,” investments in funds, which they say is key to their asset management business because it allows them to invest in funds alongside clients they steer into funds.

Lobbyists for Bank of New York Mellon (BK.N), State Street Corp (STT.N) and Northern Trust (NTRS.O) have been especially active in pursuing the issue, aides said.

Critics have questioned the exemption’s logic, however, saying it seems unlikely clients will be convinced that their interests are aligned with their bank’s if its co-investment with them is “de minimis,” or not very important to the bank.

Despite such questions, aides said, Congress is speeding toward the finish line on Wall Street reform and Senate negotiators are wheeling and dealing to make that happen.

“We’re in the fast and furious phase,” one aide said.

Dodd, speaking during a break in proceedings by the joint panel, added that he was “confident” that the final bill, expected to emerge within days from the joint panel, will be able to attract enough votes to win Senate passage.

He also said he would “prefer not” to amend the final bill on the Senate floor.

“If you get into that game, this could be a ping pong match that would last for weeks,” he said. (Reporting by Kevin Drawbaugh; Editing by Jan Paschal)