Valeant shares reached their highest level since 2001 on the news and were up 15 percent at C$88.39 in afternoon trading in Toronto.

Last month Valeant tried to acquire generic drugmaker Actavis Inc in an all-stock deal that would have topped $13 billion, according to sources familiar with the matter. The talks broke down, and Actavis ended up with a deal to buy pharmaceutical company Warner Chilcott Plc.

“At first glance, it looks like (Valeant CEO) Mike Pearson has pulled yet another rabbit out of his hat,” said Gautam Dhingra, chief executive of High Pointe Capital Management, a small Valeant investor. “We are grateful for his magical acts but keeping a close eye on whether it is possible to keep pulling bigger and bigger rabbits out of the same hat.”

The source that spoke to Reuters on Friday requested anonymity because the matter is not public. Valeant could not be immediately reached for comment. Bausch & Lomb and Warburg Pincus declined to comment.

Valeant attempted to buy eye drugmaker ISTA Pharmaceuticals in late 2011 in a hostile bid. Bausch & Lomb ended up buying ISTA last March for $500 million.

“This deal would not be too surprising given that Valeant has said it wants to do a big, mega deal and there are not that many candidates,” said David Krempa, an analyst at Morningstar. “Still, I would not expect that they are done doing big deals.”

The Wall Street Journal, which earlier reported on the talks over Bausch & Lomb, said a deal might come as soon as next week.

Montreal-based Valeant has been on the acquisition trail since its 2010 takeover by Biovail Corp, which assumed the Valeant name. It has been pursuing deals with strong cash flow in high-growth areas where big pharmaceutical companies have little presence.

The company, known for prescription drugs such as anti-depressant Wellbutrin and over-the-counter remedies such as Cold-FX, has built up its dermatology and anesthetics portfolio in a dozen deals in the past year, most recently for Obagi Medical Products.

Bausch & Lomb would bring to Valeant its well-known contact lenses, drugs to treat eye conditions such as glaucoma, and instruments and devices used in eye surgery.

If the deal goes through, some analysts wonder if Valeant would spin off or sell Bausch & Lomb’s surgical instruments business. That area would be new to Valeant, and big players including Novartis AG and Abbott Laboratories are already entrenched there. About 17 percent of Bausch & Lomb’s $3 billion in revenues last year came from that business.

Valeant has become a stock market darling, jumping about 50 percent so far this year, in large part because of its success in cutting costs at the companies it acquires, particularly in research and development.

But Bausch & Lomb is run by a private equity firm, so cost-cutting opportunities may be below average, Dhingra said.

Bausch & Lomb filed with U.S. regulators for an initial public offering in March. At the same time, Warburg Pincus was exploring an outright sale of the company, a source told Reuters.

Photo courtesy of Shutterstock

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Google’s discussions with Waze, which one of the sources told Reuters remained fluid and could change in tenor at any time, come amid reports Facebook is willing to pay $1 billion for the crowd-sourced service, which relies on information provided by its 47 million members to craft its mobile-oriented maps.

By buying Waze, the Internet search giant would prevent the company from falling into the hands of Facebook, which is delving deeper into mobile technology as it tries to grow its user base.

Mapping services are among the five most-used applications on smartphones and are crucial to engaging and retaining mobile users. The key advantage of owning, rather than licensing, a mapping service is that it allows for the product to be tailored and personalized for users.

“Whoever holds the mapping data is going to be a hot commodity,” said Brian Proffitt, author of several books on mobile technology and an adjunct instructor of management in the University of Notre Dame. “As larger vendors acquire mapping data, businesses and consumers will discover that it’s more difficult to gain free access and correct errors.”

Waze’s real-time traffic information, generated continuously from data on users’ smartphones about traveling speed and direction, is considered a particularly valuable asset that poses a threat to the search giant’s existing offering, Google Maps.

“Sometimes the best offense is defense,” said a third source close to the situation, explaining Google’s motivation to acquire Waze.

Still, Marcus Thielking, co-founder of rival mapping service, skobbler, said Facebook could easily develop a real-time traffic service similar to Waze’s, thanks to its massive social network of more than one billion users.

As a result, he said, it would be “shortsighted” for Google to acquire Waze strictly to keep it away from Facebook.

“I can’t really see much sense in a Google acquisition, especially not at a price that’s close to what we’re talking about,” said Thielking.

Indeed, deals are heating up in the tech-startup space. This week, Yahoo Inc announced a $1.1 billion acquisition of widely used blogging service Tumblr, in one of the largest purchases this year of an Internet company.

Due diligence between Waze and Facebook had been under way and a term sheet signed after six months of discussions, Israeli business daily Calcalist reported this month.

But talks stalled over Facebook’s demand that the Waze team, working in Israel, relocate to California, the publication reported days later.

Last year, Apple Inc began offering its own maps, in competition with Google’s more widely used application.

There had been media reports earlier this year that Apple was in talks to acquire Waze, but both companies declined to comment on Friday.

Google also declined to comment.

MAPPING CONUNDRUM
Waze has enjoyed years of spectacular growth. About 12 percent of its users hail from the United States, and it also has high penetration in Italy and Brazil. Its user base has skyrocketed to 47.5 million now, from about 7 million in 2011.

Four-year-old Waze was the brainchild of Ehud Shabtai, a software engineer with a degree in philosophy and computer science from Tel Aviv University, who hit upon the idea when he realized commercially available GPS software could not reflect real-time conditions speedily enough, or provide certain useful data – such as speed traps.

According to Waze’s website, Shabtai teamed up with entrepreneurs Uri Levine and Amir Shinar to found Waze in 2008. It has raised $67 million in funding to date from firms including Kleiner Perkins Caufield & Byers, Blue Run Ventures, Hong Kong media and real-estate mogul Li Ka-shing’s Horizon Ventures and semiconductor company Qualcomm Inc. According to Calcalist, Microsoft Corp owns 10.2 percent of the company, but Waze did not comment on that.

Waze Chief Executive Noam Bardin and a small staff now operate out of their U.S. headquarters in Palo Alto, California, while about 90 employees are based in home country Israel.

The startup partnered with Facebook in October 2012, when Waze released an updated version of its app that allowed users to share their drive with their Facebook friends.

Photo courtesy of Shutterstock

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peHUB has often tried to figure out what PE and VC execs do on vacations. Do they jet to glamorous places, like Monaco, the Hamptons or South Beach, and drink martini’s poolside? Are they spending the weekend deal-making? Or, like the rest of us mere mortals, will they be dusting off the grill and BBQing with the family?

Once again, this year it’s a mix. I did find one PE pro who is in Monaco and going to the Formula One Grand Prix. This is his first time at the race, he says. The exec, who is traveling with friends, says the Grand Prix is a great place to network, as well attend some good parties. “Fun, interesting and accomplished people from all over the world attend,” he says.

For other East Coast executives, the Hamptons, Cape Cod and Vermont are popular destinations this weekend, according to several sources. One PE exec said he couldn’t decide between attending Formula One in Monaco or the Indy 500. “I’m going to do both but from my couch in the Hamptons,” he says.

Execs on the West Coast, meanwhile, are travelling to Sonoma County or San Diego’s Sea World with their families. Graduations, BBQs and weddings are on tap this weekend for buyout and VC pros all over the country.

Interestingly, roughly a handful of executives — a mix of PE, VC and bankers — say they will be working this weekend. This makes us nervous. Last year, a similar phenomenon occurred when only a handful of buyout execs told peHUB they planned to work. The second half of 2012 turned out to be a dud for M&A.

Still, those who will be in the office this weekend say business is booming. “This is like 2002-2003,” one buyout pro says. “It’s a tremendous time to be doing stuff.”

“We’ve never been busier,” added a VC source. “There’s lots of activity.”

Who’s got the best Memorial Day weekend plans? That prize goes to the private equity executive who is traveling to Portugal from Estonia to attend a wedding of his coworker. “I bet that is different,” the PE source says.

The biggest laugh goes to the PE exec who admitted he wasn’t sad he won’t be going with his 11-year old daughter to a Taylor Swift concert this weekend. “I wasn’t invited,” the exec says. Instead, he says he’ll be hanging out with his sons playing soccer and baseball, and being a “child shuttle service.”

Photo courtesy of Reuters/Stefano Rellandini

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Oh, no, another techie reality show on Bravo.

Russia’s leading social network  get puts on an overnight ”black list” of sites barred from distributing content inside Russia.

WordPress’s parent Automattic has raised a fresh $50 million, at a valuation of a billion dollars(ish).

Yahoo makes another bid to buy a property: this time it’s Hulu.

Warburg Pincus is reportedly preparing to offload Bausch & Lomb for around $9 billion – twice what it paid for it in 2007.

Pent-up demand is driving auto sales.

Early Twitter adopter Ashton Kutcher now thinks the platform stinks.

Here are two big stories that punched markets in the gut this week.

Jason Sudekis, make up your mind, man.

Photo: A man looks at a computer screen showing logos of Russian social network VKontakte in an office in Moscow May 24, 2013. Russia’s leading online social network was briefly banned on Friday, in a move dismissed as a ”mistake” but which follows intensifying official pressure on the company as President Vladimir Putin consolidates his power. Credit: Reuters/Sergei Karpukhin

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Capital Dynamics, which manages investments through separate accounts, investment funds and structured private equity products, has been marketing the Clean Energy & Infrastructure Fund since late 2012, one of the persons said.  The fund will be structured for direct investments and ownership of clean energy projects such as wind farms, solar arrays, biomass plants, and hydropower.

David Scaysbrook, managing director of Capital Dynamics, will manage the fund, the source said. Scaysbrook, who founded U.K. power firm Novera Energy plc in 1997, has been investing in energy-related infrastructure projects for 20 years, according to his profile on the Capital Dynamics web site.

The fund also includes three other managing directors at Capital Dynamics: Karl Olsoni, Bob McClenachan and Rory Quinlan.

Last September, Capital Dynamics closed the $282 million Capital Dynamics U.S. Solar Energy LP fund.

In February of last year, Capital Dynamics closed its Capital Dynamics Champion Ventures VII, with $111 million, a US-based venture program targeting top-tier U.S. venture managers or international venture firms with U.S. ties.

Capital Dynamics has raised about 30 funds, according to data compiled by Thomson Reuters. Most of the vehicles are structured as funds of funds.

Its top co-investors include Khosla Ventures LLC, Oak Investment Partners and Genesis Venture Capital Group, according to data from Thomson Reuters.

It also served as an advisory shop to the Washington State Investment Board until 2010 after the pension ramped up its investment in private equity.
–Gregory Roth contributed to this report

Photo courtesy of Shutterstock.

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New York City Retirement Systems committed $400 million in December to Landmark Equity Partners XV LP, the firm’s latest flagship secondary fund. That commitment, which was spread among the city’s five municipal pensions, closed roughly five months before Miller announced that he was joining Landmark Partners.

Conversations between Miller and Landmark Partners about joining the firm “began in late January or early February,” according to Francisco Borges, Landmark Partners’s chairman and managing partner.

“I looked at a bunch of things and Landmark made the most sense to me. It’s a very established brand,” said Miller, 43, who has been with the New York City pension system since 2011 and before that worked in the secondary market.

Having the ability to join a money management firm so soon after being involved in a decision to back that firm does seem to invite temptation—the temptation to give the firm more consideration than it deserves based solely on the merits. Said Charles Elson, a professor of finance and corporate governance at the University of Delaware: “It certainly raises questions, and it’s the optics that create the questions.”

“This reeks of impropriety and inappropriateness,” said Daniel Dromm, a New York City councilman representing Queens. “Appearance-wise, it looks as though he got the job because he recommended the commitment.” He suggested a waiting period “of at least a year” before public officials began working for firms they conducted business with while in office.

Although nothing under New York City Retirement Systems’s rules currently forbids such a move, according to an executive there, other pensions, such as the California Public Employees Retirement System, do have rules against investment officers joining an investment firm they did business with while at the pension within a set period of time. CalPERS, which went through a pay-to-play scandal, in 2012 enacted a two-year ban on investment officers working for such firms.

Landmark Partners “started talking to him after the commitment closed,” said Lawrence Schloss, the chief investment officer for New York City Retirement Systems. “We have rules. He can’t be in a dialogue about a job while we’re doing business with them.” In addition, Schloss said, “you can’t call on the city (to solicit investments) for a year after you leave.”

Schloss added that the city has been an investor with Landmark Partners since 2002, “long before Barry came on board.” The city’s pensions invested in Landmark XI in 2002, Landmark XIII in 2006 and Landmark XIV in 2008, he said.

New York City doubled the size of its most recent commitment, up from the $200 million that it committed in 2008. Miller attributed the rise in part to the strong performance of the predecessor fund. According to New York City return data from September 2012, the fund has produced a net IRR of 20 percent, and a net investment multiple of 1.2x.

Landmark Partners’ Borges told Buyouts he wasn’t concerned about any appearance of a conflict of interest in hiring Miller. “It’s very clear that (hiring Miller) is entirely appropriate,” he said. New York City’s process for making its commitment to Landmark Partners’ latest fund was a “rigorous one” that was reviewed and signed off by Schloss, as well as the pension fund’s outside consultants, and by the individual pension boards, he said. “No single individual has the authority to commit,” said Borges.

“There are always going to be doubters,” said Miller of the potential for some to perceive a conflict of interest. “For some people, the glass is half full, and for others, it’s half empty,” he said. As head of private equity, he said, it has been his job to find firms that are “best in class.” Thus, “it’s natural that you’d want to work for a firm that you think is best in class too,” he said.

Miller is an experienced player in the secondary market. Prior to joining New York City’s Bureau of Asset Management, Miller worked for Pomona Capital and AXA Private Equity, both of which have large secondary businesses. In 2012, Miller engineered a $1 billion secondary sale of private equity assets, mainly to help reduce New York City’s large number of private equity relationships. In the sale, which involved 11 funds managed by nine different firms, the pensions reduced the number of relationships to 99 from 108.

New York City’s five municipal pensions have $142 billion in assets, according to Schloss, including $8.8 billion in invested private equity capital, roughly 6.8 percent of the overall portfolio. That compares to an average 7 percent private equity target across the five pension funds.

Gregory Roth is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @RothReuters. Follow Buyouts tweets @Buyouts.

Photo Credit: Shutterstock.com

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1. New Mountain Loses Managing Director Alok Singh – by Luisa Beltran
2. Moore Capital Founder To Anchor $750M Senior Loan Fund – by Steve Bills
3. Forget Midas; What We Really Need Is a Mygdon List – by Mahendra Ramsinghani
4. Jobs of the Week: Goldman, Strategic Investment Solutions, Microsoft and Thomvest Ventures Hiring – by Angela Sormani
5. LPs to VCs: Cut Fund Size, Show Us the Money and Stop Lying - by Joanna Glasner
6. Papazian, a Great Hill’s VP, Passes Away – by Luisa Beltran
7. Solamere Capital, Romneys’ PE Firm, Launches Fund II – by Gregory Roth
8. Top 10 Venture Exits In New York; Who’s No. 1? – by Mark Boslet
9. A Longtime TCV Partner Resurfaces with a New Fund: Iconiq Strategic Partners – by Connie Loizos
10. Union Square & Spark Capital: Venture’s New Power Couple? – by Joanna Glasner

Image credit: Photo courtesy of ShutterStock

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German brewers are worried that fracking could ruin the purity of beer there.

Lois Lerner, the IRS’ director of exempt organizations, has been placed on administrative leave.

Broken immigration laws stymies innovation says Brad Feld.

Anthony Weiner is running for NYC mayor but his website uses Pittsburgh’s skyline.

Teen who asked Kate Upton to be his prom date is going with another SI model

Yahoo buys PlayerScale

Chicago is the slowest growing big city.

Atari seeks a minimum of $22.2 million in bids.

Pinterest is driving more traffic to retail web site, according to Monetate.

Google is facing a new federal antitrust probe.

And, now Google is in talks to buy Waze

Photo courtesy of Shutterstock

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Yahoo makes its second acquisition this week.

For young analysts, it’s college to investment bank to buyout fund, in just a few months.

Why iPhone repair costs have soared.

When hedge fund managers advertise, performance dips.

Activist investor Carl Icahn is hustling to line up $7 billion in loans to back a proposed recap of Dell.

Sears looks into transforming its shuttered stores into datacenters.

12 disruptive technologies that are changing the world.

Anthony Weiner is staging a political comeback. How bad will the puns be this time?

Image: Investor Carl Icahn speaks at the Wall Street Journal Deals & Deal Makers conference, held at the New York Stock Exchange, in this June 27, 2007, file photo. Credit: Reuters/Chip East/Files

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With deep pockets, institutional investors – hedge funds, asset managers, pensions, endowments, and foundations – bring growth, stability, and legitimacy to these online loan marketplaces. Lending Club alone is expecting to fund $1.5 billion in loans in 2013 (see “Crowdfunding Will Make 2013 the Year of the Gold Rush”), largely due to the availability of capital from institutional investors.

Given their high current and historical risk-adjusted returns, online lending marketplaces are becoming extremely attractive for yield-starved investors. Several hedge funds are beginning to exploit the greater transparency and the ability to customize a portfolio that quantitative, cross-platform trading models bring.

Prosper’s head of global institutional sales Ron Suber notes that “maintaining a diversified inventory (quantity, term and quality) of loans for retail and institutional lenders is key.”

Some, like Lending Club through LC Advisors, are even creating their own hedge-fund-like vehicles.

From the “peer’s” perspective, however, this shift may not be as beneficial.

“Individual investors are going to be left with the scraps,” says Michael King, a former investment banker in the technology and asset management industries, now an MBA student at Cornell. “To a lesser extent, the loss of the social mission of peers helping out peers will also turn off some investors and borrowers.”

Still, it’s not like social-mission-driven investors won’t have an opportunity to lend. Sites like SoMoLend, Kiva Zip, and many more fulfill this objective.

In any case, these reservations are unlikely to stem the tide toward an institution-dominated lending marketplace.

“With new peer-lending sites being created weekly, and funded loans growing exponentially, the industry has passed the tipping point,” says King, who is also a senior associate at the Johnson Graduate School of Management’s student-run Big Red Venture Fund. “Institutions will go where the money is.”

This doesn’t mean that lending platforms don’t need to proceed with caution.

“The more reliant online lending marketplaces are on institutions, the more power institutions have to influence underwriting,” King says.

As institutions seek more and more loans to deploy capital, some believe there is a risk that lending platforms will loosen borrower standards and misprice loans. Some have even equated this to the credit conditions leading up to the subprime lending crisis, with negative implications for both investors and borrowers over the long run.

If this were to happen, the consequences could be dire.

There is also the possibility that investors will see these loans as low-risk, when they are anything but. Though sites like Lending Club and Prosper maintained low default rates during the financial crisis, the bulk of loans are still high-risk uncollateralized personal loans to pay off credit card debt, and are highly susceptible to changing economic conditions.

Mitigating these risks is increasingly drawing the attention of industry regulators.

“The regulators follow the institutions, which has both positive and negative consequences,” King says. “While regulators will impose reporting and governance burdens on online lending marketplaces, they also bring credibility to the sites, giving investors more comfort.”

For the time being, institutional investors are helping the industry grow as it operates in regulatory limbo. Because these investors are accredited, regulators give them more leeway as to how and where they invest. But there is still a great deal of uncertainty about the extent to which unaccredited investors can participate.

David Drake is founder and chairman of LDJ Capital, a New York City private equity firm, and The Soho Loft, a financial media company. He may be reached at David@LDJCapital.com.

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