PE Week Wire — Thursday 4/17


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ChipWrights Inc., a Newton, Mass.-based provider of digital signal processing technologies for digital imaging applications, has raised $18.2 million in third round funding at a post-money valuation of just over $33 million. Rock Maple Ventures led the round alongside fellow new investors SpaceVest, Axxon Capital, Axiom Venture Partners, Egan Managed Capital, Shiprock Capital and Adams Harkness & Hill Technology Ventures. Return backers included Techfarm Capital, BancBoston Ventures, New England Partners and Band of Angels.

Arzoon Inc., a San Mateo, Calif.-based provider of trade logistics and transportation management software, has raised $10 million. Redrock Ventures and InnoCal Venture Capital led the deal, and were joined by existing investors like Venrock Associates.

Hamilton Lane recently suffered some significant defections when six of its investment pros left to form a new private equity investment and portfolio advisory firm named Franklin Investment Advisors. The new firm is based in Conshohoken, Pa., which is right down the Main Line from Hamlton Lane’s Bala Cynwyd, Pa.-based headquarters. The group includes Bradley Atkins, Michael Bacine, Ryan Chowdhury, Karl Hartmann and Neil Mowery.

J.P. Morgan Chase yesterday reported that it suffered net private equity losses of $230 million in the first quarter of 2003. This included $136 million of direct private equity losses and $94 million of net losses related to limited partner interests in third party funds.

ManageStar Inc., a Walnut Creek, Calif.-based maker of corporate services automation software, recently raised $7 million in funding. Foundation Capital led the deal, and was joined by Charter Venture Capital and Dominion Ventures.

Ripplewood Holdings has agreed to acquire Lillian Vernon Corp. (AMEX:LVC), a Rye, N.Y.-based online and catalog retailer. The deal is worth a total of around $60.5 million with each outstanding share being purchased for $7.25, which represents around a 73% premium over Tuesday’s closing price of $4.20 per share. Ripplewood’s industrial partner, ZelnickMedia, will be responsible for the day-to-day management of the Lillian Vernon.

First American Payment Systems, a Ft. Worth, Texas-based merchant credit card processing company, has received an undisclosed amount of private equity funding from Lindsay Goldberg & Bessemer.

Ribozyme Pharmaceuticals Inc. (Nasdaq:RZYM) stockholders have approved a $48 million private equity infusion from the Sprout Group, Venrock Associates, Oxford Bioscience Partners, Techno Venture Management and Granite Global Ventures.

Franklin Electronic Publishers Inc. has acquired a stake in MobiPocket.com SA, a Paris, France-based provider of universal reader software for PDAs. Franklin purchased one-half of Viventures’ venture capital stake in MobiPocket. In the same transaction, Viventures sold its remaining shares of MobiPocket to the founders of that firm.
NEWS FROM WEDNESDAY 4/16

ESP Pharma Inc., an Edison, N.J.-based drug maker focused on therapeutics for the acute care market, has raised $20 million in Series B funding. Thoma Cressey Equity Partners led the deal, and was joined by return backers Domain Associates, Apax Partners and New Enterprise Associates. ESP raised $28.2 million in first round funding last May at a post-money valuation of $36.3 million.

Ipsum Networks, a Philadelphia-based developer of Internet protocol management solutions, has raised $6 million in Series B funding. Rho Ventures led the deal, and was joined by first round backer Sevin Rosen Funds.

Motorola Inc. has agreed to acquire Winphoria Networks Inc., a Tewksbury, Mass.-based provider of mobile network infrastructure. Details of the all-cash transaction were not disclosed. Winphoria has raised $53 million in venture capital since in 2000 founding, including a $42 million Series B deal last spring at a post-money valuation of $215 million. Investors included Amerindo Investment Advisors, BancBoston Capital, Matrix Partners, North Bridge Venture Partners and Norwest Venture Partners.

Castle Harlan Inc. has acquired Advanced Accessory Systems LLC (AAS) in a deal valued at approximately $260 million. The Sterling Heights, Mich.-based maker of automotive roof racks and towing systems was previously owned by JPMorgan Partners, which invested around $20 million in 1995 to launch what was then a platform company to make automotive acquisitions.

Pixim Inc., a Mountain View, Calif.-based maker of digital imaging systems, has reportedly raised $22 million in Series D funding led by China Development Industrial Bank. Other investors included Newbury Ventures and past backers Mohr Davidow Ventures, Mayfield, Synopsys and the Emerging Alliance Fund. The company has now raised $75.4 million since its late 1999 founding, including a $16.5 million third round in 2001 at a post-money valuation of $108 million.

Chris Hegele has joined Intersouth Partners as a part-time venture partner. He is currently a general partner with Kitty Hawk Capital.

Mangrove Systems, a Wallingford, Conn.-based network switch maker, has raised $20 million in new venture capital funding. Investors included Highland Capital Partners, Columbia Capital, Silicon Valley Bank and Bessemer Venture Partners. New directors on the Mangrove board include Bob Goodman of Bessemer, Sean Dalton of Highland Capital Partners and Phil Hergert of Columbia Capital.

Julie Richardson has joined Providence Equity Partners as a managing director. She was most recently with J.P. Morgan Chase, where she served as vice chairman of the investment banking division and chairman of the telecom, media and technology group at She also was co-chair of the bank’s global client executive council.

Thomas Weisel Partners has completed its purchase of Electronic Data Systems‘ corporate venturing assets. Other participants in the transaction include Willowridge Inc. and Industry Ventures. Terms of the agreement were not disclosed. The portfolio, founded by EDS in 1999, includes investments in 16 companies in the information technology sector.

The Compass Group International has made an undisclosed investment into WorldBusiness Capital Inc., a lender to small to mid-sized businesses for the purpose of financing international trade and investments using programs of the Export-Import Bank of the United States, the Overseas Private Investment Corporation (“OPIC”) and other U.S. Government agencies. The target borrowers will be privately owned businesses based in the U.S. or in emerging markets with a borrowing need of between $100,000 and $10 million per transaction.

VantagePoint Venture Partners has agreed to invest $15 million into BakBone Software (OTCBB: BKBOF), a San Diego-based provider of data recovery software.

Mellon Bank said yesterday that results from Q1 2003 venture capital activity revenue from venture capital activities during Q1 2003 totaled $1 million, which was offset by negative valuation adjustments of third party indirect funds. Results from venture capital activity were a loss of $27 million in Q4 2002 and a gain of $5 million in Q1 2002.

American Capital Strategies has invested $49 million in FMI International Inc., a Carteret, N.J.-based third party logistics provider to the U.S. apparel industry. The infusion is part of a a recapitalization led by KRG Capital Partners LLC. In addition, Credit Agricole Indosuez is providing $20 million of financing and FMI management is investing in the transaction, retaining significant ownership in the company.

Intel Corp. has said it expects around $60 million in net losses on equity investments in the second quarter, primarily as a result of impairment charges on private equity investments.

The Austin-American Statesman is reporting that Infraworks Corp. recently filed for bankruptcy protection. The Austin-based security software company has raised $13 million in venture funding from Moore Capital Management and Akin Gump Investment Partners. The paper says that Frank Carlucci, who serves as chairman emeritus of The Carlyle Group has offered a $50,000 loan to help the company meet payroll.
NEWS FROM TUESDAY 4/15
Coller Capital
has hired Frank E. Morgan II to run its newly formed New York office. This represents the first time that the UK-based firm has had a permanent, dedicated staff presence in the United States. Morgan was most recently a partner with the law firm of Dewey Ballantine, and has advised Coller on various transactions since its inception in 1990.

Bain Capital has teamed up with independent power producer Tenaska Inc. on a $550 million investment partnership to acquire power generation assets in North America.

Neothermia Corp., a Natick, Mass.-based developer of a minimally invasive breast cancer biopsy system, has raised $13.1 million in Series D funding. The Wellcome Trust led the deal, and was joined by return backers ABS Ventures, MedVenture Associates, Morgenthaler Partners, Orgin Partners, Sapient Capital and Saratoga Ventures.

FilesX Inc., a Southborough, Mass.-based provider of next-generation data recovery solutions, has raised $7.5 million in new venture capital. Benchmark Capital led the deal, and was joined by Index Ventures and initial backer Genesis Partners.

Hong Chen, founder and chairman of GRIC Communications (Nasdaq:GRIC), has launched a new advisory and private equity firm named The Hina Group (pronounced High-Na). The Hina Group will focus on cross-border M&A advisory services and private equity investments in the communications and IT industries in China and the United States. It will have offices in both Palo Alto, Calif. and Beijing.

Optical Micro-Machines Inc., a San Diego-based optical switching company, has gone out of business and is selling off all of its remaining assets. The company had raised over $160 million of venture capital since being founded in 1997 from such investors as Atlas Venture, Bessemer Venture Partners, Rho Ventures, Seven Rosen Funds, Siemens Venture Capital and Westin Presidio. Its final round was a $25.8 million Series G round in late 2001 at a post-money valuation of over $130 million.

Behrman Capital has acquired a majority stake in ILC Industries Inc., a defense, aerospace and industrial products provider. Behrman Capital partnered with ILC CEO Clifford Lane in the transaction, which has a total value of $303 million.

AuthenTec Inc., a Melbourne, Fla.-based provider of biometric fingerprint sensors, has tacked an additional $2.9 million to its Series C deal, which now totals $15 million. The additional capital was raised with first time investors Newlight Associates and Firsthand Capital Management Inc. The company has now raised over $45 million, including a $20 million Series B deal in early 2001 that came with a $72 million post-money valuation.

Stephen Fraidin has left his M&A-focused partnership post at New York law firm Frank, Harris, Shriver & Jacobson for a new law gig with Kirkland & Ellis.

Interliant Inc., a bankrupt provider of managed infrastructure solutions, has agreed to be acquired by Pequot Ventures. The deal is expected to close in the first week of June. mm02 (NYSE:OOM), a UK-based mobile phone company, has sold its money-losing 02 Netherlands unit to Greenfield Capital Partners for €25 million in cash.

ObjectStar International Ltd., a developer of business integration software, has received an undisclosed investment from the Investcorp Technology Ventures Fund.

The Wall Street Journal is reporting that the National Association of Securities Dealers (NASD) is close to a deal that would sell off its American Stock Exchange (AMEX) subsidiary for $100 million to buyout shop GTCR Golder Rauner LLC. Ha’aretz is reporting that Israeli Finance Minister Benjamin Netanyahu is unlikely to support a proposed $1.2 billion bailout plan for the country’s struggling venture capital firms. The paper says that he will only approve up to $30 million in aid.

The Asian Development Bank has invested $15 million into a new private equity fund being raised for investment into companies located in the Association of Southeast Asian Nations (ASEAN), and in the People’s Republic of China (PRC). The ASEAN China Investment Fund LP will be a limited partnership registered in the Cayman Islands, and is hoping to raise $125 million.
NEWS FROM MONDAY 4/14
U.S. Bancorp Piper Jaffray
is prepping a second and final close of its fourth fund, but it won’t meet its $150 million target. PE Week subscribers can read more in the protected Fund News section of www.PrivateEquityWeek.com, or in today’s print edition.

Alloptic Inc., a Livermore, Calif.-based developer of Ethernet-based fiber optic network access, has secured $35 million in Series D funding. The deal was led by existing investors GMG Capital Partners and Athenian Venture Partners. The company has now raised over $67 million since being founded in the summer of 1999.

Actona Technologies Inc., a Los Gatos, Calif.-based provider of enterprise storage solutions, has raised $11 million in Series B financing. This includes a previously-announced first close of $7 million, and investments from Sequoia Capital, Evergreen Partners and Fantine Group participated in the round of financing.

Vitalife, an Israeli venture capital firm focused on life sciences investing, has closed its first fund with $50 million. Investors included HarbourVest Partners, Discount Capital Markets and Investments, SCP Private Equity Partners, Boston Scientific and Evergreen. The fund had held a $30 million first close in the first quarter of 2002.

PoliVec Inc., a Mountain View, Calif.-based provider of security policy automation, has raise3d $3 million in third round funding led by returning investor Crimson Ventures.

One Equity Partners has agreed to acquire drug trial outsourcer Quintiles Transnational Corp. (Nasdaq:QTRN) for $1.75 billion. The deal is being done through a company named Pharma Services Holding Inc., which was set up by Quintiles founder Dennis Gillings. It includes a $14.50 per share buyout of existing investors financed by $415.7 million in equity from One Equity Partners, $875 million of debt provided by Citicorp North America and Citigroup Global Markets and $586 million of existing Quintiles cash reserves. There were two bids for the Research Triangle Park, N.C.-based company, with the losing one being offered by Warburg Pincus.

Invoke Solutions Inc., a Tenafly, N.J.-based [provider of online marketing research solutions, has raised $6 million in venture funding from Bain Capital Ventures and BRM Capital. The company also announced that it has changed its name from NetOnCourse.

Millennial Net Inc., a Cambridgte, Mass.-based developer of small sensor networking devices, has secured $6 million in Series A financing from Globespan Capital Partners (formerly JAFCO Ventures), Kodiak Venture Partners and General Catalyst Partners.

Kodiak Venture Partners today announced that Subhash Roy and Beth Hoffman have joined the firm as Entrepreneur-in-Residence and Principal, respectively. Roy is a serial entrepreneur co-founded companies like Onex Communications (later sold to TransSwitch Corp.), while Hoffman joins after a vice president stint at Sprout Group.

Promod Haque, managing partner at Norwest Venture Partners, has been added to the board of Norwest portfolio company Veraz Networks Inc.

Oxxon Pharmaccines Ltd., an Oxford, UK-based biotech company focused on immunotherapies, has raised £15 million ($23 million). Quester Capital Management led the deal, and was joined by Isis Capital, NIF Ventures, Gray Ghost and return backers MVM, Neomed Innovation ASA and The Isis College Fund.

Intellitactics Inc., a software security company that recently moved its headquarters from Ontario, Canada to Bethesda, Md., has raised $6.8 million in new venture capital funding. The deal was led by return backers Lazard Technology Partners and JMI Equity Fund.

Terraplay Systems, a Sweden-based gaming technology developer, has raised €3.5 million in new funding from Ericsson Business Innovation, IT Provider and Viventures.

The New York Times is reporting that CalPERS has agreed to invest $200 million into a $1 billion Japanese turnaround fund being raised by W.L. Ross & Co.

The Financial Times is reporting that German media group Bertelsmann has received seven cash offers for its scientific publishing arm (BertelsmannSpringer), but has now narrowed the list down to three. The deal is rumored to be worth just over $1 billion. Remaining bids include a joint offer from Blackstone Group and CVC, a joint offer from Cinven and Candover and another syndicate deal led by Apax Partners and UK publisher Taylor & Francis.

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