Random Ramblings

Private equity firm CFOs should stand up and demand some attention. That was the message of my keynote speech at yesterday’s Private Equity CFO Association conference, and was better received than would have been an alternate address entitled: “Sit Down, Shut Up and Take a Pay Cut.” This is known in the trade as knowing one’s audience.

I won’t get into too much detail – so as not to prompt refund requests – but I believe that private equity CFOs should serve as valued sounding boards within their firms. Why? Because they often are the epitome of informed objectivity within their firms, in that they can understand the financial aspects of a deal within getting enmeshed in the vision cocoon that so often suffocates actual investing partners (particularly VCs).

This isn’t to say that CFOs should be making final investment decisions, but rather that their opinions should be sought out and taken into account. The CFO doesn’t have as much personal credibility on the line for a deal gone good or bad, and also hasn’t formed many personal bonds with the entrepreneur. If the CFO doesn’t “get it,” then the partner should sell it to him or her just like to the rest of the partnership. Again, no veto power, but CFO opinions/advice should be seriously considered. Partners should request it and, if not, CFOs should demand it.

*** Coller Capital has released its latest Global Private Equity Barometer, which is compiled bi-annually by surveying a varied group of limited partners. The biggest finding is that respondents no longer believe European buyouts are the best area for GP investment over the next year (as had been the case in all previous Barometers). Instead, Asia-Pacific buyouts now top the list, followed by European buyouts, North American VC, North American buyouts, Asia-Pacific VC and European VC. This is particularly interesting given that many in China have yet to really embrace the notion of control investments (save for an example in today's Top Three). Other nuggets:

• 91% of respondents believe that current leverage multiples with reduce buyout returns. This is broken out with around 46% believing it will reduce them across the board, 45% believing it will reduce returns in some buyout funds and the remaining 9% expecting reduced returns in just a small number of portfolio companies (i.e. no significant fund-level impact).
• 75% expect in increase in “take-private” transactions. Only 4% expect a decrease.
• The percentage of LPs that didn’t re-up with an existing GP grew to 64%, from 56% six months ago and just 45% last summer.
• 65% expect an increase in secondary market sales.
• Over half of LPs say they are willing to invest in first-time funds. I wish Coller had asked how many had actually done so…

*** The European Venture Capital Association has released its 2005 disbursement and performance data.

*** NYT DealBook has the week's most salacious private equity news that doesn’t involve VSP Capital.

*** Finally, I attended the pre-ACG cocktail party at Fenway Park on Tuesday night, and enjoyed meeting a large number of readers. Unfortunately, I also drove to the event with my cell phone on top of the once-trusty Pontiac, so it is now drowning somewhere between Framingham and Boston. Yes, I know I'm not too bright. So please don’t call it or leave messages on it for the next few days. Thanks...

Qpixel Technology International Inc., a Cupertino, Calif.-based provider low-power digital video and audio encoder/decoder solutions, has raised $25 million in second-round funding. Oak Investment Partners led the deal, and was joined by Technology Associates Management Co., Acorn Campus and iD SoftCapital Group. www.qpixeltech.com

International Mining Machinery Ltd., a platform acquisition company formed earlier this year by The Jordan Co., has acquired both Jixi Coal Mining Machinery Co., and Jiamusi Coal Mining Machinery Co. from the Heilongjiang Coal Mining Machinery Group Co., a state-owned enterprise of the Heilongjiang State-Owned Assets Supervision and Administration Commission. Both acquired companies are suppliers of shearers, road-headers and other coal mining equipment in China. The deal is believed to be the first time a US company has acquired 100% of an SOE in China’s Heilongjiang Province.

Kleanthis Xanthopoulos has agreed to join Enterprise Partners Venture Capital as a managing director. The move will become effective by year-end, as Xanthopoulos first needs to transition out of his current CEO role with Anadys Pharmaceuticals (Nasdaq: ANDS). He co-founded Anadys in 2000, and will remain on its board of directors. www.epvc.com www.anadyspharma.com