Insurance deals may have provided some welcome M&A relief this year, but the same can’t be said for financial services transactions as a whole. This year, private equity investment in financial services plunged by nearly 47% in terms of deal value.

Sponsor-to-sponsor deals aren’t always popular, but they’re certainly in vogue right now.

The first quarter of this year saw a surge in sponsor-to-sponsor, or secondary buyouts, in which one private equity firm sells a portfolio company to another private equity firm (or group of firms). Data provider Preqin reports 24 such transactions last quarter worth $7 billion in deal value, compared to just $5.1 billion for 43 deals in all of 2009. And this doesn’t even include a rash of transactions announced today (see below).

What’s driving the activity? First, private equity pros are desperate to do deals. Despite everyone’s peacocking that ’08 and ’09 were “the best investing opportunities of our lives,” most buyout pros were all talk. The deal volume speaks for itself-PE pros were largely on the sidelines during

Late last week the private equity investment firm of Thomas H. Lee announced it acquired Papa Murphy’s, a chain of franchise-operated pizza stores. The deal value is approximately $180 million, according to Deal Journal. It represents a 10x Ebitda multiple, if you go with the $18 million Ebitda figure peHUB reported in January. To demonstrate [...]

Tom Lee made his legacy doing LBOs. Based on today’s news of his massive losses on bad hedge fund plays, he may not want to stray from the buyout world again. Lucky for him, he’s nearing a close on a new pool of capital dedicated to just that.

Lee Equity, the buyout fund Tom Lee launched in 2006, has raised more than $1 billion in commitments, a source familiar with the situation told peHUB. The fund plans to close with at least $1.5 billion in the coming months. According to a regulatory filing, limited partners include Teachers Retirements System of Texas. Bluff View Capital, Credit Suisse Securities, DAV/Weatherly Financial and Cambridge Financial Services provided advisory services.

Beyond its namesake, Lee Equity is entirely separate from Tom Lee’s

MidCap Financial LLC has launched as a Bethesda, Md.-based commercial finance company that will focus on middle-market lending to the healthcare industry. It has secured over $500 million in capital commitments from Lee Equity Partners, Genstar Capital and Moelis Capital Partners. It has also secured a long-term debt facility led by Wells Fargo Foothill. MidCap will be run by the former senior management team of Merrill Lynch Capital Healthcare Finance, including its founder Howard Widra.