PE Week Wire — Friday 8/22


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BioStratum Inc., a Research Triangle Park-based biopharmaceutical company focused on the treatment of diabetes, has raised $9.5 million in new venture funding, and expects to raise additional capital by the end of September. Investors on the closed deal include HealthCap, BankInvest, Liftaeknisjodurinn HF and Equity Resources Group Inc. The company has now raised approximately $70 million in venture funding since its 1994 inception. In related news, BioStratum promoted Robert Schotzinger to the positions of president and CEO. He originally joined the company in November 2000 as vice president and chief medical officer.

Ciena Corp. (Nasdaq: CIEN) has agreed to acquire Akara Corp., an Ontario-based provider of extended storage area networking solutions for both enterprises and carriers. The $45 million deal includes $31 million of cash, plus $14 million worth of Ciena common stock. Akara has raised over $48 million in venture capital funding from investors like Battery Ventures, Corning Innovation Ventures, Dain Rauscher Corp., Dominion Ventures, Greylock, Presidio Venture Partners, Sumitomo Corp. and VenGrowth Capital Funds.

Loïc Rentiers has joined Allianz Private Equity Partners as an associate. He previously worked as an associate with Dresdner Kleinwort Capital. International Surface Preparation Corp. (ISP), a newly formed company, has completed its acquisition of U.S. Filter‘s surface preparation group. Investors in ISP include Bard & Co., The GlenRock Group, Atlantic Equity Partners and Hunt Capital Group Fund. Deal terms were not released.

Dyad Partners has acquired Rich Maid Kabinetry, a Myerstown, Pa.-based maker of kitchen and bath cabinetry. No deal terms were disclosed, and Benchmark Group aided in the transaction.

Atomic Dog Publishing, a Cincinnati-based provider of hybrid media textbooks for college courses, has closed on the first $1 million of its $4 million Series C funding round. Return backers included s Blue Chip Venture Co. and River Cities Capital Funds. The company now has raised over $7 million in venture funding since its 2000 inception, including a $4 million Series A deal in 2000 at a post-money valuation of $11.5 million.

CTC Communications Group Inc. has received U.S. Bankruptcy Court approval of its previously announced investment agreement with Columbia Ventures Corp. and Columbia Venture Broadband LLC.

Pretium Packaging LLC, a St. Louis-based maker of blow-molded plastic bottles, has been recapitalized with $100 million to retire maturing term debt and increase financial flexibility. Dymas Capital Management led the senior debt, with participation from Congress Financial Corp. American International Group Inc. provided mezzanine funding, and Goldsmith Agio Helms represented Pretium on the deal.

The Deal is reporting that senior management of Brigade Corp., a San Francisco-based call center company, has purchased the company from General Atlantic Partners.

NEWS FROM THURSDAY 8/21

Biolex Inc., a Pittsboro, N.C.-based biopharma company focused on protein expression technology, has raised $24.4 million in new venture funding. Quaker BioVentures and Intersouth Partners co-led the deal, and were joined by new investors Johnson & Johnson Development Corp., Mitsui & Co. Venture Partners, The Dow Chemical Co., Dogwood Equity and Trelys Venture Partners. All existing investors participated, including The Wakefield Group, Kitty Hawk Capital, Franklin Street Partners, Tall Oaks Capital and Academy Centennial Fund.

MessageGate Inc., a Bellevue, Wash.-based provider of enterprise solutions for email security and compliance, has raised $5.1 million in Series A funding. Polaris Venture Partners led the deal, and was joined by Northwest Venture Associates and Boeing Ventures. MessageGate was created after Boeing’s recent decision to spin out its internally developed messaging security and compliance technology.

MidOcean Partners has agreed to sell its 50% interest in Center Parcs Europe, an operator of holiday parks in The Netherlands, France, Belgium and Germany, for €270 million. The business is being acquired by Pierre & Vacances (Paris: PVAC.PA), a France-based developer and operator of tourist residences and holiday parks. MidOcean maintains ownership of Center Parcs UK, which is comprised of four holiday parks in England.

Corel Corp. (Nasdaq: CORL) yesterday received shareholder approval (81.1%) for a proposed going-private transaction led by Vector Capital.

GTx Inc., a Memphis, Tenn.-based biopharma company focused on men’s health, has raised $20 million in Series E funding. Return backers include J.R. Hyde, III, Oracle Partners. and Memphis Biomed Ventures.

Dow Jones is reporting that UK-based venture firm Merlin Biosciences plans to open an office in Finland.

PrivateEquityOnline.com is reporting that UK-based Standard Life Investments has hired John Guinee as a Boston-based investment director. He spent the past seven years as VP of business development and strategy with State Street.
NEWS FROM WEDNESDAY 8/20
Valere Power Inc., a Richardson, Texas-based provider of power supply solutions for communications providers, has raised $17 million in Series C funding. Investors included JPMorgan Partners and return backer Sierra Ventures, according to the upcoming print edition of PE Week.

Rinat Neuroscience Corp., a Palo Alto, Calif.-based maker of therapeutic antibodies for diseases and disorders of the nervous system, has raised $40 million in Series B funding. MPM Capital led the deal, and was joined by fellow new investors Schroder Ventures Life Sciences and Prospect Venture Partners. Return backers Technology Partners and Essex Woodlands Health Ventures also participated. Rinat has now raised a total of $57.5 million in venture capital funding since being spun out of Genentech Inc. (NYSE: DNA) in 2001. Its $17.5 million Series A deal closed in the fall of 2001 at a post-money valuation of approximately $33 million.

Triage Medical Inc., an Irvine, Calif.-based developer orthopedic trauma devices, has raised $10 million in Series B funding. Rock Creek Capital Group led the deal, and was joined by HBM Bioventures, The MedFocus group, Frantz Medical Ventures and the Japan Asia Investment Co.

CTI Molecular Imaging Inc. (Nasdaq:CTMI) has acquired all the capital stock of Mirada Solutions Ltd., an Oxford, UK-based provider of software and analytical tooks for medical imaging workstations. Mirada’s financial investors include Oxford University, Comvest Ltd., Technology Assessment Partners and Quester Capital Management. The total consideration paid in connection with this transaction was approximately $22 million in cash and notes, plus the potential for incentive payments that are contingent upon the future financial performance of Mirada.

Saratoga Partners has acquired 100% of the preferred equity and a minority interest in the common equity of Advanced Lighting Technologies (OTC BB: ADLTQ), a Solon, Ohio-based maker of metal halide lighting products. Pursuant to an amended joint plan of reorganization, Saratoga will make an additional $18 million equity investment in Advanced Lighting that will allow the company to emerge from Chapter 11 bankruptcy protection.

Corel Corp. (Nasdaq: CORL) shareholders are expected to vote today on a proposed $97.5 million going-private buyout led by Vector Capital. A group of dissident shareholders estimates that 10 million voting shares will go against the deal (out of 93 million total outstanding shares), citing concerns that the Ottowa-based software maker is being undervalued. Corel, for its part, told a Globe and Mail reporter that such concerns are “misguided and potentially misleading.”

NuGEN Technologies Inc., a San Carlos, Calif.-based life sciences company focused on nucleic acid amplification and detection, has raised $7.5 million in Series C funding. The round was co-led by William Rutter, George Rathmann and James Wilson. They were joined by Sutter Hill Ventures and return backers Radius Venture Partners, The Band of Angels Fund and MedCapital Ventures. The company now has raised over $20 million since its 2000 inception, including a $10.8 million Series B deal in 2001 at a post-money valuation of approximately $26 million.

The Fatburger Management Team, led by Fatburger Corp. President and CEO Keith Warlick, has completed the repurchase of a majority interest in Fatburger Holdings Inc., including shares held by Earvin “Magic” Johnson. Part of the total purchase price includes a $6 million investment and financing package by Fog Cutter Capital Group Inc. (Nasdaq: FCCG). Fog Cutter’s investment and financing package for Fatburger included the purchase of common stock and redeemable preferred stock. Johnson and his partners, who acquired a majority stake in Fatburger in August of 2001, will retain a minority, non-voting interest in the company, which is a Santa Monica, Calif.-based hamburger chain.

Erskine Bowles has joined the board of directors at Cousins Properties Inc. (NYSE: CUZ). Bowles served as chief of staff under President Clinton, co-founded merchant bank Carousel Capital Co. and was a partner with private equity firm Forstmann Little & Co.

American Capital Strategies Ltd. has invested an additional $9 million in portfolio company BC Natural Foods LLC, formerly Petaluma Holdings LLC, to support the acquisition of the Poultry Meat Division of Pennfield Corp. and Penn Valley Farms/Hans’ Sausage. American Capital’s additional investment takes the form of senior subordinated Debt. Booth Creek Management Corp. is the majority owner and equity sponsor of BC Natural Foods LLC. The company’s existing senior lender provided an expanded revolving credit facility and senior term loan to support the acquisitions.

PrivateEquityOnline.com is reporting that Deloitte & Touche will soon launch a private placement fund-raising unit for the private equity industry. Heading up the effort will be Chris Ward, head of D&T’s London corporate finance advisory team, and John Maxy, a London-based senior tax partner with D&T. The new unit will initially focus on Western Europe, but eventually plans to expand its geographic reach.

The Associated Press is reporting that presidential candidate John Edwards (D-NC), said during a presidential campaign stop in Virginia that he favors the creation of a national venture capital fund that would help keep existing factories in place. He also hopes that the fund would help open new plants in areas hardest hit by factory layoffs.
NEWS FROM TUESDAY 8/19
MailFrontier, a Palo Alto, Calif.-based provider of anti-spam solutions, has raised $10 million in Series B funding. Menlo Ventures led the deal, and was joined by return backers Draper Fisher Jurvetson and New Enterprise Associates. Sonja Hoel, a managing director at Menlo Ventures, has joined MailFrontier’s board of directors. The company now has raised $15 million in venture capital, including a $5 million Series A deal last summer at a post-money valuation of approximately $12 million.

John Montgomery and Daniel Hansen have launched Montgomery Law Group, a Menlo Park, Calif.-based corporate law firm focused on emerging companies. Both men were partners at Brobeck, Phleger & Harrison, where Montgomery served as co-chair of that firm’s venture capital practice. Most recently, the pair worked at Carr & Ferrell LLP, where Montgomery co-chaired the corporate & securities practice group.

Craig Milius has been promoted to the position of principal with Austin Ventures, where he will continue to focus on business services and technology-enabled outsourcing companies. Milius previously served as a senior associate, and has worked with portfolio companies like Credant Technologies, Prenova and FacilityPro. Prior to joining Austin Ventures in 2000, Milius was an associate with Primus Venture Partners.

Engim Inc., an Acton, Mass.-based maker of chipsets for wireless LAN infrastructure, has raised $18.5 million in Series B funding. Benchmark Capital led the round, and was joined by Adams Street Partners and return backers Matrix Partners and Bessemer Venture Partners. The company now has raised over $31 million of venture capital since its 2001 inception, including a $12.92 million Series A round.

Aspen Technology Inc., a Cambridge, Mass.-based supplier of integrated software and services to the chemical, petroleum and pharmaceutical industries, has received a $100 million convertible stock investment from Advent International.  Proceeds will be used to retire existing preferred stock, repurchase convertible subordinated debentures and fund working capital.

ESS Technology (Nasdaq: ESST ) has paid $27.1 million in cash to acquire Divio Inc., a Sunnyvale, Calif.-based provider of digital video and imaging semiconductor products. for $27.1 million in cash. Divio has raised over $33 million in venture capital since its 1995 founding, including a $13.16 million Series E round in late 2000 at a post-money valuation of approximately $52 million. Investors on that deal included Hakuto, Monet Capital, Newbury Ventures and SanDisk Corp.

Stir Crazy Inc., the Chicago-based owner and operator of Stir Crazy casual dining Asian restaurants, has raised $14 million in new funding. Rosewood Capital led the deal, and was joined by Northwood Capital and certain existing investors. Thomas Weisel Partners acted as Stir Crazy’s exclusive placement agent for the financing.  

John Chase, former CFO of Staenberg Venture Partners, has been named VP of finance and CFO with Power Measurement, a Canadian provider of enterprise energy management systems.

Sponsor Investments, a Dallas-based private equity firm, has named General Yong S. Goh to its board of directors and as VP of technology. Goh is a retired Commander of the Singapore Air Force, and was a board member of Singapore Airlines, the Civil Aviation Authority of Singapore, Singapore Technologies Aerospace and Singapore Technologies Marine.

Janet Kruzel has been named a new investment officer for private equity at the Washington State Investment Board, according to a report in the Seattle Times-Intelligencer.

Xtera Communications Inc., an Allen, Texas-based provider of long-haul networking solutions, has raised $30 million in new venture funding from existing investors like EDF Ventures and Sevin Rosen Funds.

John Mutch has been named president and CEO of Peregrine Systems Inc. Mutch, who was named to Peregrine’s board in March, served as CEO and president of HNC Software, which was acquired in August 2002. From 1994 to 1997, Mutch was the founder and general partner of MVenture Holdings Inc., a special situation private equity fund that invests in public and private technology companies.

IsoTruss Structures Inc., a Brigham City, Utah-based maker of lattice composite structures, has raised $400,000 in venture capital. The Utah Angels led the financing.

BluePoint Energy Inc. (OTC BB: CPEU) has entered into a joint-venture financing agreement with Calim Private Equity for funding energy purchase agreements generated by BluePoint. The agreement calls for a funding commitment of up to $35 million to allow the partnership of Calim-BluePoint Energy Partners I to jointly install, own and operate 100 BluePoint Lean-One(TM) Cogeneration Systems on a first-right-of-refusal basis.

Stratasys Inc. (Nasdaq: SSYS), a Minneapolis-based provider of 3D printing and rapid prototyping solutions, has completed a $20.65 million private placement of common stock to two institutional investor funds. The Company sold a total of 700,000 shares and issued warrants to purchase additional 105,000 shares of common stock at $34.66 per share.

The Australian Associated Press is reporting that RMB Ventures has invested $22.86 million into a management-led buyout of decorative concrete product maker Decorative Technologies Group.

NEWS FROM MONDAY 8/18

FrontBridge Technologies Inc., a Marina Del Rey, Calif.-based provider of email security and message management services, has raised $8 million in Series C funding. BA Venture Partners led the deal, and was joined by return backer Sierra Ventures. The company now has raised over $17 million since its 1999 inception.

Scene7 Inc., a Novata, Calif.-based provider of imaging software, has acquired TrueSpectra Inc., an Ontario-based provider of network imaging services. Deal terms were not disclosed. TrueSpectra had raised over $50 million in venture capital, including a $41 million deal in early 2000 at a post-money valuation of approximately $56 million. Its $6.5 million follow-up round in 2001, however, was completed with a post-money valuation of just $13 million. Investors included Allegis Capital, Business Development Bank of Canada, CastleHill Ventures, GATX Ventures, Greenstone Venture Partners, NeoCarta Ventures, RBC Capital Partners and Trinity Ventures.  

Kemia Inc., a San Diego-based drug discovery company, has closed the third tranche of its previously announced Series A round. This brings the deal’s total to $19 million, and includes new investor Novartis BioVentures. Existing Series A backers include Alta Partners, Forward Ventures, and Texas Pacific Group. In other Kemia news, Lewis “Lew” Shuster has joined the company as president and CEO. The longtime life sciences executive has served as an advisor to Kemia since early this year, following the death of the company’s acting CEO, Forward Ventures Partner Jeffrey Sollender.

Ted Mocarski has been named a managing director with Key Venture Partners, which relocating to the Boston area from Cleveland. Mocarski most recently served as a managing director with AlphaCap Ventures. Before that, he was a founding partner of Nautic Partners (spun out of Fleet Financial in 1999), and an attorney with Edwards & Angell.

Patterson Dental Co. (Nasdaq: PDCO) has agreed to acquire AbilityOne Products Corp., a Bolingbrook, Ill.-based distributor of rehabilitative supplies and non-wheelchair products to the physical and occupational therapy markets. The acquisition is expected to close by Oct. 25, is valued at approximately $575 million and will be debt financed. AbilityOne is owned by One Equity Partners, Beecken Petty & Co. and Smith & Nephew PLC. 
 
Harrison Miller has been named a general partner of the Summit Accelerator Fund, the venture capital arm of Summit Partners. Miller had been an associate at Summit between 1988 and 1990, after which he worked at Lightspan Inc. and Amazon.com, where he most recently served as vice president and general manager of platform services. 

Genta Inc. (Nasdaq: GNTA) has agreed to acquire Salus Therapeutics Inc., a Salt Lake City-based drug development company. Upon closing, Genta will issue approximately $13 million in Genta stock to Salus shareholders as an upfront payment. Contingent upon the achievement of certain pre-clinical and clinical milestones, an additional $17 million dollars may be paid in stock or cash at Genta’s option. Salus has raised venture capital funding from UV Partners (aka Utah Ventures), vSpring Capital and WS Investments.

Dee Osborne and George Williams have been named executive advisors with Houston-based private equity firm Spinel Capital. Osborne is president of Crest Invest Co., while Williams is managing partner and CEO of Williams Partners Inc.

Primus Knowledge Solutions Inc. (Nasdaq: PKSI) has agreed to acquire Broad Daylight Inc., a Santa Clara, Calif.-based developer of enterprise self-service software. No deal terms were disclosed. Broad Daylight has raised approximately $36 million in venture capital since its 1997 inception, with its highest-known post-money valuation coming in at $19.6 million in 2000. company investors include 2M Technology Group, Angel Investors, Digital Investors, Hallador Venture Partners, JEGI Capital, Mobius Venture Capital, Nexus Group, Peninsula Equity Partners and Palladium Technology.

Bloomberg is reporting that Pearse Flynn has resigned as CEO of Damovo Group SA, a UK communications company controlled by Apax Partners.

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