Erin Griffith

In addition to the TPG Capital’s recent crowning as the largest buyout firm of 2008, the firm can now add “top fee-payer” to its trophy case as well. According to data from the investment bank Freeman & Co. and Thomson Reuters, TPG paid more fees to underwriters and financial advisors than any other buyout firm in the first quarter of 2009. The latest issue of Buyouts reports that the firm paid $35.9 million in fees in Q1; 80% of which went to syndicated loans and the rest to the debt capital markets. It’s a drop from a year prior, when TPG took home the top spot with $109.5 million in fee payments.

Traditional private equity and venture fundraising is icy cold these days, but secondaries are on fire. At the secondary conference I attended Friday, one manager even said, "We've got investors calling us asking if we're fundraising. They want to give us their money," he said. In early March I posted a list of the big secondary funds in the market. Since then, two large secondary funds have closed: Harbourvest Partners' $2.9 billion fund, Dover Street VII, and Goldman Sachs' $5.5 billion pool, which peHUB learned is already under water. That leaves more than 25 that I know of in the market. I've got the details on them after the jump:

Here's a look at the past week's scoops, opinions and analysis from the peHUB blogging team. We kicked off the week with some officially horrifying VC deal data. In better news, peHUB learned that Netscape co-founder Marc Andreessen and former Opsware exec Ben Horowitz are hoping to raise around $250 million for their debut venture capital fund. A VC-backed company filed a lawsuit against its backers, which includes Battery Ventures and Index Ventures. Further, the founders of Broadcom are being tried for fraud. In other lawsuit news, Pink Floyd is suing Terra Firma. Also, Marc Cuban backed an SMS messaging platform company, Kevin Macdonald has joined Morgenthaler, Kleiner Perkins is benefitting from Swine Flu, Evite continues its war against Socializr, startup Zango has closed shop, and a hemp startup called Living Harvest Foods is looking for money. Another new venture capital firm entered the world: Step5 Ventures. Call me old timey, but I prefer firms with surnames or real words in their titles. (Then again, the name "peHUB" doesn't exactly follow that sentiment.) Two VCs are interested in political office: Scott Murphy of Advantage Capital, and Joanna Rees of VSP Capital. Connie is ready to send Lou Dobbs to space, Alastair has some regional VC numbers on an unlikely VC state: Michigan, and Joanna has the scoop on SecondMarket, which officially launched its Private Company Marketplace last week. Alex reports that VC networking is back, and he's not talking about schmoozing over wine and swapping business cards. In honor of Earth Day, we looked at Cleantech numbers. On the buyouts side, the top story continued to be New York's state pension fund scandal. Dan wrote that it's time for public pension funds to track fund flow. We followed the ups and downs of the story, including Quadrangle's LP vote and New York's decision to ban placement agents. Here's a list of our posts from last week:

Torn: Tim Geithner's baptism of fire.(Economist) Cough Cough: Is the UK once again the economic sick man? (FT) Move It: Activist shareholders are encouraging companies (11 of them, to be exact) to move to North Dakota. (Footnoted) Your Fired--But Stay In Touch: More companies are creating Web sites where ex-employees can share leads and remain within reach. (BusinessWeek)

Ken Sawyer, Saints Capital, a venture capital blind pool fund: We have been feeding investors two drugs, one good and one bad. The good news is, given all the recaps we’ve been giving a lot of money to investors and that’s exciting. The bad is when you buy an LP state at a discount, you get an immediate write-up, and when you have an immediate writeup, IRR looks really good in a short period of time. What’s happened bit by bit, as FAS 157 kicks in more, is you get further and further away from your writeup and the find NAV approaches truer value, that IRR doesn’t look so good anymore. You’re going to see declines – it’s a great investment area but investor excitement about the secondary market will not be as long as we’d like it to be, as accounting issues start muddying waters in terms of how attractive the market is.

Jerry Newman of Willowridge Partners, a secondary buyer: This newfound popularity is great. I’d like to think it’s based on my looks, but really it’s a little ridiculous. Interest has been high on both distressed debt and secondaries. The performance of distressed debt has been awful. Things are often popular for the wrong reasons. Do I think we’re ahead of the curve? Yes. We’re now getting inbound calls of people saying, “Are you raising a fund?” People chase things for the wrong reasons. That being said, we’re all gearing up for when this flood’s going to come. Clearly we’re all expecting good things, but the only way to do that is to get liquidity for investors and that’s not happening yet.

Both on the venture and buyout side, fully invested funds face a widespread challenge: there are no exits in sight and the portfolio cannot access capital. Countless firms, including KKR, Bessemer Ventures and in a way, Bain Capital, have entered the market with annex funds to prop up their fully invested vehicles. Meanwhile, firms like KPS Capital and Leonard Green Partners have loosened recycling permissions on their funds, meaning they negotiated for more flexibility to re-invest proceeds on their portfolio companies back into the portfolio, rather than distribute it directly to investors. If those solutions aren’t an option, secondary funds can help. According to panelists at today’s Private Equity Secondaries Conference in New York, there are a few ways secondary buyers are easing mature fund pain.

The mid-2007 credit crunch brought about a bit of renaissance for several groups—distressed investors, mezzanine lenders and, more recently, secondary buyers of LP stakes. You might say secondaries are having a “moment.” For that reason, I half expected today’s Private Equity Secondaries Conference to be a bit like Drexel Burnham’s infamous “Predator’s Ball,” at the peak of the junk bond heyday. An exciting event for a specific group of professionals on the verge of a big, exciting seachange. Clearly, I got ahead of myself. The conference, while useful, doesn’t exactly have that frenzied, “new masters of our domains” feel. Secondaries are certainly gaining momentum, but they’re not there yet. The thing that’s been holding them back is the bid-ask spread, and judging by the comments I’ve heard today, it hasn’t really improved in the past month.

As usual, we have a week's worth of ratings actions from ratings agencies Standard & Poor's and Moody's. We excluded the ratings changes on the week's two bankruptcies, which were Odyssey Investment Partners' Dayton Superior Corp. and Bruckman Rosser Sherrill's Eurofresh. Company: Banc of America Capital Investors Sponsor: Cumulus Media Inc. Downgrade: Moody's downgraded the company's corporate family rating to Caa1 from B3 and its probability of default rating to Caa1 from B3. Highlights: "The downgrade of the PDR to Caa2 incorporates Moody's view that there is increasing probability that Cumulus will likely default under its tightening financial covenants over the near term, absent an amendment. Moody's considers that Cumulus' lenders will agree to loosen the level of the company's already- elevated financial maintenance tests only in exchange for significantly higher pricing, which in turn will serve to tighten the company's liquidity profile."

FYI: All has been quiet on the PE secondary front for a few weeks until today, with news of SecondMarket (literally a secondary market not unlike NYPPEX). It's perfect timing, as our coverage will be back in full force tomorrow: I'll be at the Private Equity Secondaries conference. Maybe I'll hear evidence that that market is actually alive again, post-year-end-results. Chooch Producer Stands By Quality Of Movie: Deal Journal interviews Tami Powers, one of the producers of the most unlikely star of this kickback scandal. We also learn the movie went straight to DVD, she never met Rattner, and she "really liked" the movie. (Deal Journal) Scary Stuff: Thanks to Epicurean Dealmaker and Clusterstock, we have a better understanding of the problems with banks repaying TARP money early. In fact, we have a better idea of how this screws taxpayers. (Epicurean Dealmaker) Infrastructure Madness: "As deplorable as our bridges may be, they're better than they were a generation ago." (Slate)