PE Week Wire — Friday 6/20


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Cogent Communications Group Inc. (AMEX: COI), a Washington-based optical Internet services provider, has raised $41 million in cash equity to fund company operations and debt restructuring. Over the last six months, Cogent has reduced its total debt from a face amount of over $380 million to $27 million and extended repayment terms, with the company’s first principal payment due in 2006. The equity investors are all former venture backers from Cogent’s private market days, including Jerusalem Venture Partners, Oak Investment Partners, Worldview Technology Partners, Broadview Capital Partners, Boulder Ventures and Nassau Capital.

Thomas Middelhoff, the former high-profile CEO of Bertelsmann, has agreed to join Investcorp. Middlehoff will be based in London, and head up the private equity firm’s European corporate investment activities.

Burrill & Co., a San Francisco-based venture capital firm focused on life sciences investing, has launched a new $200 million effort aimed at the Australian biotech sector. Of this, $100 million will be invested directly in Australia via the Burrill Australia Fund, which will feature three local investment managers, the independent directors and an Australian scientific advisory board. The other $100 million will be invested globally via the Burrill Life Sciences Capital Fund.

Prestwick Pharmaceuticals Inc., a Washington-based biopharma company focused on central nervous systems diseases, has raised $15 million in first round funding at a post-money valuation of over $22 million. BioAsia Investments and Sofinnova Ventures led the deal, and were joined by Atlas Venture and BA Venture Partners. The company has several candidates in clinical trials, including a lead product to treat Huntington’s chorea, which already has been approved in Europe, Canada and Australia.

Partsearch Technologies Inc., a New York-based provider of replacement parts information, software and services, has raised $4.2 million in Series D funding led by Westbury Partners. Return backers included Enhanced Capital Partners, DCC Venture Partners, Silicon Alley Venture Partners and Idealab.

Nanosolar Inc., a Palo Alto, Calif.-based provider of solar electricity cell technologies, has raised $5 million in Series A funding, plus an additional $1.5 million in venture lease financing. The equity deal was led by U.S. Venture Partners and Benchmark Capital, and included participation from Stanford University. The lease backing was committed by Western Technology Investment.

Liu Tai-Ying has resigned as chairman of Taiwan-based China Development Financial Holding Corp., just two weeks after being charged with 12 counts of financial corruption. In a statement, Tai-Ying maintained his innocence, but said that the charges have caused “much confusion for the companies, colleagues and society.” Prosecutors are seeking a 16-year prison term for Tai-Ying.

Auna Operadores de Telecomunicaciones SA has agreed to sell its radio and television transmission unit Retevision Audiovisual to Abertis Telecom for €423 million (approx. $493 million). The Deal is reporting that losing bidders included Red Electrica, Abengoa SA and a private equity syndicate led by Apax Partners and The Carlyle Group. Total eMed has completed its $64 million cash acquisition of outsourced medical transcription company EdiX Corp. from IDX Systems Corp. (Nasdaq: IDXC). Total eMed is a Franklin, Tenn.-based company formed in 2001 via an acquisition by private equity firm Parthenon Capital.

U.S. Bankruptcy Judge Randall Newsome announced yesterday that a proposed settlement agreement has been reached by the staff of the California Public Utilities Commission and Pacific Gas and Electric Co. to end PG&E’s bankruptcy. The agreement has many parts, including the creation of a new $15 million venture capital fund to foster and promote new, clean energy technologies.

FutureSoft, an India-based provider of communications and embedded software solutions, has received a strategic investment from IL&FS Investment Managers Limited and Intel Capital. that will enable it to realize its business expansion plans.

Nina Siegler has joined National Capital Cos. as a managing director focused on biotech and life sciences. She has spent the past eight years as an institutional sell-side equity securities analyst with Paine Webber Mitchell Hutchins, Bradley and Co. and Prudential Bache Securities.

The News & Observer is reporting that XActional Inc. has raised $2.5 million from Intersouth Partners. The Durham, N.C.-based company focuses on online data exchange security. 
NEWS FROM THURSDAY 6/19
Mary Ann Gray, former executive director of the Mid-Atlantic Venture Capital Association (MAVA), has been indicted by a Baltimore grand jury for allegedly using $400,000 of MAVA funds for her own personal use. Gray resigned from her MAVA post last February, after group accountants noticed more than $100,000 was missing. She has since been paying $175,000 of restitution (most of which had been paid by last check in Sept. 2002), but the U.S. Attorney believes she committed 11 different counts of federal mail fraud related to the misappropriations.
Kodeos Communications Inc., a South Plainfield, N.J.-based provider of 10 Gbps optical subsystems, has raised $6 million in new funding from existing backers Highland Capital Partners and Jersusalem Venture Partners. The deal also includes some debt financing from Comerica, and was transacted under the same terms as the company’s $12 million Series A deal from early 2001. That means that the company is currently valued at $32 million.

Amperex Technology Ltd., a Hong Kong-based battery manufacturer, has raised $30 million in Series B funding. The Carlyle Group led the transaction with a $22.5 million investment, and was joined by 3i Group.

Exelon Corp. (NYSE: EXC ) has agreed to sell the electric construction and services, underground and telecom businesses of subsidiary InfraSource Inc. to GFI Energy Ventures and Oaktree Capital Management. The sale price is expected to be $250 million of cash and a $30 million subordinated note with an eight-year term. The InfraSource companies being divested are MJ Electric, InfraSource Underground, Electric Services Inc., Dashiell and Dacon, Blair Park Services/Sunesys and RJE Telecom.

Ted Schell has decided to leave his general partnership post at Apax Partners, although he will maintain some of his Apax-related board seats and still be a limited partner with the firm. Schell joined Apax’s New York office in 2000 after serving as a senior vice president of strategy and corporate development with Sprint Corp. No word yet on his future plans (save for some R&R), but the smart money is on Schell returning to the telecom industry in some sort of operating capacity.

Opnext Inc., an Eatontown, N.J.-based optical components maker, has acquired Pine Photonics Communications Inc., a Fremont, Calif.-based transceiver maker. Pine Photonics had raised around $20 million of venture capital from Acorn Campus and Hotung International.

Amphion, a Belfast-based provider of semiconductor intellectual property (SIP) for digital video and image coding system-on-chip design, has raised $5 million in Series C funding. ACT Venture Capital led the round, which also included new investor Invest Northern Ireland and return backer Apax Partners.

Robert Byczek and Patrick Winters have joined RSM EquiCo Markets LLC as a senior director and director, respectively. Together, they will help open the firm’s new Chicago office. Byczek is the founder and former president of Legacy Capital Advisors LLC, and former COO at Duff & Phelps. Winters also previously served at Legacy Capital advisors.

William Blair Capital Partners has invested in a new marketing startup named PRIMIS Marketing Group Inc., which used some of the capital to acquire Ft. Myers, Fla.-based Accudata America.

Acceptys Inc., a New York-based biopharma company focused on human antibody therapries for cancer and infectious diseases, has been awarded first prize at the 2003 Biotechnology Business Plan Competition. The event is organized by the GSAS Harvard Biotechnology Club, and the business plans are judged by venture capitalists.

Xenome Ltd., an Australia-based company focused on pain management solutions, has raised $4 million in funding from The BioCapital Fund, a new $66 million venture capital vehicle set up by the Queensland government to invest in new local biosciences companies.
NEWS FROM WEDNESDAY 6/18
Opus Medical Inc., a San Juan Capistrano, Calif.-based orthopedic medical device maker, has raised $13.6 million in Series C financing. Prospect Venture Partners led the deal, and was joined by return backer Three Arch Partners and a group of non-institutional investors. The company now has raised $23.7 million since its July 1999 founding, including a $6.5 million Series B round last spring at a post-money valuation of around $12.7 million.

CSFB Private Equity has agreed to acquire Josten’s Inc., a Minneapolis-based maker of school yearbooks, class rings and related school affinity products. The deal is valued at approximately $1.1 billion – which includes around $500 million of equity – and represents a strong return for private equity players like Investcorp and MidOcean Partners (then known as DB Capital Partners), who paid just over $210 million in equity for Josten’s during a leveraged buyout in early 2000.

Michael DeFlorio has joined New York-based private equity shop Harvest Partners as a managing director. DeFlorio most recently served as a partner with Whitney & Co.

Martin Murrer has been named a partner with Legacy Partners Group. a New York-based I-banking firm focused on the middle markets. Murrer most recently headed up the Middle Markets M&A practice at Merrill Lynch.

Activa Capital, a Paris, France-based private equity firm, has acquired Vivactis, the healthcare marketing and advertising subsidiary of SR Téléperformance. Activa Capital Fund FCPR will control 65% of the equity with Vivactis management owning the rest.

Williams (NYSE: WMB ) has completed its previously announced sale of its 54.6% ownership stake in Williams Energy Partners LP (NYSE: WEG). The buyers – Madison Dearborn Partners and the Carlyle/Riverstone Global Energy and Power Fund — paid approximately $510 million in cash at closing for Williams’ interests in the partnership. In addition, the transaction has the effect of removing $570 million of the partnership’s debt from Williams’ consolidated balance sheet.

Wind Point Partners has acquired Vicorp Restaurants Inc., a Denver-based operator of “family-branded” restaurants throughout the Midwest and West Coast. Terms were not disclosed, save for $24 million in subordinated debt provided by Allied Capital Corp. Cerberus Capital Management has signed a tentative agreement to acquire bankrupt car rental company ANC Rental Corp. for $230 million – although various reports say that the deal may run into objections from various company creditors. ANC Rental, which operates such brands as Alamo Rent-A-Car and National Car Rental, originally filed for Chapter 11 protection in November of 2001.

Nobel Learning Communities Inc. (Nasdaq: NLCI ) has received $6 million in new funding from Camden Partners, in the form of preferred stock convertible to common stock at $4.50 per share.

Pelikon Ltd., a UK-based developer of electroluminescent (EL) display technology for consumer and industrial products, has raised GBP3.2 million ($5 million) in third round funding. Return backer Advent Venture Partners led the deal, and was joined by Cardiffbased Wales Fund Managers (acting on behalf of Finance Wales).

Robert Apatoff has been named president and CEO of Rand McNally & Co., a cartography company that is majority owned by Leonard Green & Partners. Apatoff most recently served as senior vice president and chief marketing officer at Allstate.

Software Spectrum Inc., a Dallas-based provider of business software services and a subsidiary of Level 3 Communications, has sold its call-center operations division to Miami-based Hi.I.G. Capital for an undisclosed amount.

Engage Inc. (OTC: ENGA), an Andover, Mass.-based provider of marketing software solutions, has filed for voluntary Chapter 11 bankruptcy protection.

Cable & Wireless PLC has sold parts of its German business to Arques (Schweiz) AG, a private equity firm focused on corporate turnarounds.

Bloomberg is reporting that Canadian pension fund manager Caisse de Depot et Placement du Quebec is looking to sell its CDP Capital Amerique operations. The private equity group invests in small, Quebec-based businesses, and is said to have lost an average of 7.7% over the past five years.

Dow Jones is reporting that PPM Ventures, the private equity arm of UK insurer Prudential PLC has made an undisclosed investment in German auto supplier Aksys Group.
NEWS FROM TUESDAY 6/17
Spatial Wireless, a Richardson, Texas-based provider of next-generation wireless networking systems for mobile networks, has raised $27 million in Series D funding. VantagePoint Venture Partners led the deal, and was joined by return backers Austin Ventures, Sequoia Capital, Genesis Campus, Qualcomm Ventures and Dali, Hook Partners. Spatial Wireless now has raised $58 million in venture capital, including a $12.5 million second round deal in late 2001 at a post-money valuation of around $43 million.

Imperito Networks Inc., a Foster City, Calif.-based provider of centralized virtual private networking (VPN) solutions, has gone out of business. As of yesterday, the company’s website was down and its phones were disconnected. Since its January 1998 founding, Imperito had raised around $28 million over four rounds of venture capital funding. Investors included BEV Capital, Charter Venture Capital, JPMorgan Partners, Mitsui & Co. and TechFund Capital.

SoloMio Corp., an Austin, Texas-based provider of voice services for mobile phone operators, has raised $6.5 million in the second part of its previously announced Series B funding round. New investors include Partech International and Koch Ventures, while existing backers like Austin Ventures and Techxas Ventures provided additional capital. The company now has raised $19.5 million, including a $10 million Series A deal in August 2001 at a post-money valuation of $20 million.

AuctionDrop, a San Carlos, Calif.-based eBay consignment service, has raised $2.5 million in new funding. Mobius Venture Capital and Draper Associates co-led the deal.

Siemens Mobile Acceleration has launched a venture capital program to invest in Finland-based wireless startup companies.

Unveil Technologies Inc., a Waltham, Mass.-based provider of enterprise speech self-service applications, has increased its previously announced Series A funding round from $4 million to $7.5 million. The new $3 million infusion comes courtesy of TD Capital Technology Ventures, and Elliot Swan, a managing director with TD Capital, will take an Unveil board seat.

Tom Meredith and Michael LaVigna have joined the board of Motive Communications Inc. Meredith is a veteran tech executive and currently CEO of MFI Capital, his family’s private investment arm. LaVigna serves as founding partner of Austin-based Techxas Ventures.

CyLex Systems Inc., a Boca Raton, Fla.-based provider of document management software, has agreed to be acquired by Ricoh Co. Ltd., a Japan-based maker of office automation equipment. CyLex has raised over $26 million of venture funding since its 1994 founding, with investors including H.I.G. Capital, Stonehenge Capital and Crossbow Ventures. Hyde Park Capital Partners advised CyLex on the sale.

Huron Capital Partners has forged a partnership with veteran chemicals executives and investors, Fred Quinn and Carol Bramson, to build a platform company in the specialty chemicals industry. Through their holding company, Quest Chemical Holdings LLC, the group plans to acquire companies that have developed unique solutions to the challenges of surface protection and the bonding of flexible and rigid substrates. These products include coatings, adhesives, polymers and thermoplastic films designed for a wide range of industrial markets.

BitArts Labs, a UK-based digital security company, has raised $10 million in new private funding.

Forward Ventures is backing a new program to accelerate the commercialization of new life sciences discoveries. The initiative is called the San Diego Translational Medicine program, and is being launched in concert with the University of California. The project’s immediate aim is the development of a potent new drug for pain management and inflammation and includes the foundation of a new startup company, AnalgesiX Inc. In total with the combined funding support, the AnalgesiX project could receive up to $1.5 million over three years.

Earth BioSciences Inc., a New Haven, Conn.-based life sciences company focused on plant health, has raised $4 million in new venture capital, and hopes to raise an additional $4 million.

Ed Ekstrom, managing director of vSpring Capital, has joined the board of Colorado software maker FrontRange Solutions.
NEWS FROM MONDAY 6/16
StarGen Technologies Inc.
, a Malborough, Mass.-based semiconductor company, has received $15 million in third round venture funding. All of the deal’s participants were existing investors, including Morgenthaler Ventures, St. Paul Venture Capital, Commonwealth Capital Ventures and The Boston University Community Technology Fund. The company now has received $41 million in venture funding since its 1999 founding, including a $20 million Series B deal in June 2000 at a post-money valuation of around $62.5 million.

Trusted Network Technologies Inc., an Atlanta-based provider of government and enterprise network security solutions, has raised $6 million in first round funding co-led by Flagship Ventures and Charles river Ventures. As part of the transaction, Jim Matheson of Flagship and Austin Westerling of Charles River, have joined TNT’s board of directors.

Arsenal Capital Partners, a New York-based private equity firm focused on middle-market manufacturing and services companies, has closed its first fund with capital commitments of $300 million. Limited partners include Adams Street Partners, LGT Capital Partners, National City Equity Partners, Northeast Utilities Pension Fund, Oklahoma Police Pension and Retirement System, PPM America Capital Partners and Wilshire Private Markets.

Acadient, a Boston-based developer of online education, has received new funding from CP Baker & Co. Ltd. and Anasazi Partners II. Terms were not disclosed.

EDO Corp. (NYSE:EDO) has acquired 100% of the Emblem Group Ltd., a Brighton, UK-based supplier of niche aerospace and defense products and services, for GBP15.25 million ($25.6 million). The Emblem Group was formed in 2000 through a management buyout from Morgan Crucible PLC backed by LDC, the private equity arm of Lloyds TSB. The management team, led by David Jones, will remain with the company following the acquisition.

Rock Mobile Corp., a Taiwan-based provider of mobile music services, has received first round venture funding from Siemens Mobile Acceleration and Acer Technology Ventures. Rock Mobile is a spin-off from Chinese-language music publisher Rock Music Group.

Actaris SA, a Belgian maker of utility meters, has been acquired for €420 million (approx. $490 million) by Montagu Private Equity. The seller is LBO France, which had purchased Actaris just 18 months ago for €340 million (approx. $244 million at the time). The deal includes senior debt from Mizuho Corporate Finance, and is subject to regulatory approvals before closing.

PrivateEquityCentral.net is reporting that The Carlyle Group has decided to exit its two-year-old hedge fund advisory business. The Washington-based firm will sell 100% of its $800 million Carlyle Asset Management group to a management team headed by current division CEO Afsaneh Mashayakhi Beschloss. The sale will occur over a one- or two-year period, with Carlyle’s stake dropping to 40% as part of the initial tranche.

The Deal is reporting that Timothy Mayhew has joined Fenway Partners as a managing director. He had previously been with Palladium Equity Partners, before resigning in May.

Il Sole 24 Ore is reporting that Fiat has agreed to sell its aviation unit to The Carlyle Group and Italian defense firm Finmeccanica. The price is said to be €1.55 billion (approx. $1.83 billion).

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