PE Week Wire — Friday 10/24


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Digital Insights Corp. (Nasdaq: DGIN) has agreed to acquire Magnet Communications Inc., an Atlanta-based provider of online cash management and business banking solutions. The purchase consideration includes $33.5 million in cash, plus 1.45 million shares of Digital Insight common stock, which closed trading yesterday at $19.50 per share (approx. $28.27 million value as of yesterday). Magnet has raised over $57 million of venture capital funding since its 1995 founding, and has been valued as high as $117.4 million (in 2000). Company investors have included Coral Ventures, Conning Capital Partners, Cordova Ventures, Dain Rauscher Corp., LiveOak Equity Partners, Long River Capital Partners, Saints Ventures, Total Technology Ventures and Village Ventures.

Raymedica Inc., a Minneapolis-based medical device maker, has raised $10 million in new venture funding. Viscogliosi Brothers led the deal with a $5 million investment, and was joined by fellow return backers Chartwell Capital, Stephens Group Inc., Pathfinder Venture Capital Funds and J.F. Shea Co. Raymedica has raised over $45 million in venture funding since its 1990 founding, including a $14.7 million round in 2000 at a post-money valuation of approximately $77 million.

Macromedia Inc. (Nasdaq: MACR) has agreed to acquire eHelp Corp., a San Diego-based provider of user assistance software for applications, Intranets and the Web. The transaction is valued at approximately $65 million, which will include an undisclosed amount of cash and Macromedia stock. EHelp has raised around $19 million in venture capital funding, including a $15 million infusion in 1999 at a post-money valuation of approximately $35 million. Company investors include GeoCapital Partners and HarbourVest Partners.

Carter Holdings Inc. (a.k.a. Carter’s) yesterday raised $89.1 million via an initial public offering of its common stock on the NYSE under ticker symbol CRI. The Atlanta-based maker of infant and children’s apparel sold 6.25 million shares of common stock at $19 per share. Carter was acquired by Berkshire Partners in 2001 for $450 million (approx. $130 million in equity) from previous owner Investcorp. Berkshire owned 90% of the company prior to the IPO, and will own 68.9% following the offering. This means Berkshire already has realized $29.4 million from its investment, and its remaining stake is worth approximately $357 million.

Baroness Retail – the private equity consortium made up of CVC Capital Partners, Texas Pacific Group and Merrill Lynch Global Private Equity – looks poised to win the protracted bidding war for UK retail giant Debenhams. The group upped its existing £1.66 billion bid to £1.72 billion, and rival bidder Laragrove – which includes Permira, Blackstone Group and Debenhams’ management – reportedly pulled out of the running. Keystone Ranger Holdings (a.k.a. Keystone Helicopter), a West Chester, Pa.-based provider of helicopter services, has received an undisclosed investment from Brown Brothers Harriman, Spring Capital Partners and Merion Investment Partners.

BulldogIT Corp., a Nashville, Tenn.-based provider of IT services to hospitals, has raised $1.4 million in startup funding from Gerdes Huff Investments, Sandhill Investments and Silcon Valley venture capitalist Donald Lucas Sr.

OneShield Inc., a Woburn, Mass.-based provider of technology and infrastructure applications to the insurance and financial services industries, has raised $2.5 million in Series D funding. Return backer Earlybird Ventures helped lead the deal, alongside an undisclosed new investor.

Saunders Karp & Megrue and Trimaran Capital Partners have completed their acquisition of Norcraft. The buyers paid approximately $315 million for the cabinetmaker. Pfingsten Partners and Goense Bounds & Partners originally acquired Norcraft in 1998. The Times of London is reporting that four 3i Group investors have left to launch their own firm. Gone are Tom Sweet-Escott (director), Richard Campin (head of French office), Chris Graham (head of media unit) and Hugh Richards (director). The quartet is reported to be planning to raise between EUR500 million and EUR1 billion for their first fund, which will focus on middle-market buyout opportunities in Europe.

The Saigon Daily Times is reporting that International Data Group (IDG) will establish a $80 million venture capital fund in Vietnam. The new fund – named IDG Vietnam – will be run by Le Thanh Tam.

The News & Observer is reporting that Andrew Silton, chief investment advisor to North Carolina Treasurer Richard Moore, has decided to step down at year-end. He was hired two years ago as an independent consultant, and helped move the conservative North Carolina pension fund into riskier asset classes like venture capital, real estate and public stocks. PrivateEquityCentral.net is reporting that Terra Firma has lost yet another investor. The latest defection is Matthias Moser, who was focused on German investment opportunities. He has quit to join German mortgage bank and real estate investor Eurohypo. The move comes just one week after it was learned that Jennifer Dunstan had left the nascent group, and just months after Mark Tagliaferri resigned. Last year, Terra Firma (which was launched by former Nomura chief Guy Hands) lost operational managing director Peter Middleton.

NEWS FROM THURSDAY 10/23

Invensys PLC has agreed to sell its metering business for $650 million to an affiliate fund of New York-based private equity firm The Jordan Co.. The metering business reported sales of £329 million and operating profit of £44 million in the year ended March 31, 2003.

Capital H Group, a Chicago-based human capital consulting firm, has raised $25 million in private equity capital from PPM America Capital Partners.

FLIR Systems Inc. (Nasdaq:FLIR) has agreed to acquire Indigo Systems Corp., a Goleta, Calif.-based maker of infrared sensors and cameras. Indigo shareholders will receive cash consideration of approximately $165 million, and all outstanding Indigo stock options will be converted into options to purchase FLIR stock. The total transaction is valued at approximately $190 million. Indigo raised approximately $19.2 million in venture capital funding, from investors like Carlyle Venture Partners, Founders Capital Partners, Lago Partners and WK Associates.

Patrick Gage has been named a venture partner with Flagship Ventures, where he will focus on identifying investment opportunities in the drug discovery and drug development markets. Gage has a 30-year pharmaceutical career, and most recently served as chief scientific officer for Wyeth Research.

Eli Barkat will joined BRM Capital as a managing director, effective January 1, 2004. At that time, Barkat also will relinquish his current CEO position at BackWeb Technologies Ltd. (Nasdaq: BACKWEB).

Installs Inc., a Buffalo, N.Y.-based portfolio company of Genstar Capital, has completed its acquisition of AmeriLink Corp., formerly a wholly-owned subsidiary of RadioShack Corp. that operated under the name RadioShack Installation Services. AmeriLink is a national provider of DBS and cable in-home installation services. As part of the transaction, INSTALLS entered into a four-year services agreement to continue providing DBS installation services for RadioShack’s customers across the country. Terms of the acquisition and services agreement were not disclosed.

Recruitsoft Inc., a Lake success, N.Y.-based provider of staffing management services, has acquired White Amber Inc., a Lake success, N.Y.-based provider on non-workforce management solutions. Deal terms were not disclosed. Recruitsoft has raised approximately $36 million in venture funding since its 1999 founding, with investments coming from Bain Capital, General Catalyst Partners, Gestion Charles Sirois Inc., Omnicon Group Inc. and Telesystem Ltd. White Amber has raised around $40 million of venture capital funding since its 2000 inception, including a $9 million down-round in early 2002 at a post-money valuation of approximately $55 million. Investors include Infinity Capital, RRE Ventures, Venrock Associates and Wachovia Capital Associates.

The Akron Beacon Journal is reporting that Ron Clark (former president of Ohio Polymer Enterprise Development Corp.) and Robert Acri (principal of Kenilworth Asset Management) plan to launch a $100 million venture capital fund. The new vehicle – which has not yet been raised — will be called Lewis & Clark Ventures, and is expected to target early-stage companies based in Ohio and the Midwest.
NEWS FROM WEDNESDAY 10/22

RF Magic Inc., a San Diego-based fables semiconductor company focused on radio frequency integrated circuits (RFICs), has raised $24 million in Series C funding. New investors include Conexant Systems Inc., EchoStar Communications Corp., STMicroelectronics, HamiltonApex Technology Ventures, Finaventures and Waypoint Ventures. Return backers include Texas Instruments, CMEA Ventures, Granite Ventures, Anthem Venture Partners and Revolution Ventures. RF Magic now has raised over $35 million in venture funding since its July 2000 inception, including a small infusion earlier this year at a post-money valuation of approximately $67 million.

BioCrossroads, a life sciences initiative based in Central Indiana, has launched the Indiana Future Fund I, a $72 million capital pool that will invest in regional and national venture capital funds that are willing to invest in Indiana life sciences opportunities. Credit Suisse First Boston will manage the fund-of-funds, and investors include Indiana’s pension funds, Eli Lilly & Co., Anthem Blue Cross & Blue Shield, Indiana University, Indiana University Foundation, Ball State University, Purdue University, American United Life Insurance Co., Indiana State University Foundation and Guidant Corp.

Franz Pool and Jon Vanderploeg both resigned from the State of Wisconsin Investment Board last month, according to the Wisconsin State Journal. Pool was managing director of alternative investments, while Vanderploeg was one of the board’s private equity portfolio managers. The two submitted separate resignations, and came in the midst of a reorganization that would have merged the two men’s groups. Bob Severance, who had been managing director of real estate, was named to head the private markets group.

L-3 Communications Holdings Ltd. (NYSE: LLL) has agreed to acquire Vertex Aerospace LLC from private equity firm Veritas Capital. The deal is valued at $650 million in cash, and is expected to close in December. Vertex is a provider of aerospace and other technical services to the Department of Defense and other government agencies, including the U.S. Air Force, Army, Navy, Marine Corps, Dept. of Homeland Security, Drug Enforcement Administration and NASA.

Michael Kranda has joined the biotechnology investment team at Vulcan Inc., the investment and project management company of Paul Allen. Kranda most recently served as CEO of Oxford GlycoSciences, and previously worked as president, COO and director of Immunex.

WL Ross & Co. LLC, a New York-based private equity firm, announced that creditors voted in favor of its purchase of Burlington Industries upon its reemergence from Chapter 11 reorganization now targeted for November 10, subject to prior Bankruptcy Court approval. Ross & Co. named a new senior management team going forward, consisting of Wilbur L. Ross as chairman and Joseph L. Gorga as president and CEO. Gorga, 51, joined Burlington in 2002 as executive vice president North American Operations.

Network Physics Inc., a Mountain View, Calif.-based company that helps link network, server and application performance to business services delivery, has raised $8 million in new venture capital funding. New investor Palomar Ventures led the deal, and was joined by return backers Sofinnova Ventures, SunAmerica Ventures, Intel Communications Fund, Lucent Venture Partners, VantagePoint Venture Partners and InfoVista. The company now has raised around $40 million in venture capital since its 2000 inception.

Crescent Capital Investments has agreed to sell Medifax-EDISM Inc. to WebMD Corp. for $280 million in cash and assumed liabilities, after a spin-off of Medifax’s Pharmacy Services Division. Crescent Capital’s affiliate will continue to own the Pharmacy Services Division. The deal is expected to close at the end of November.

Mellon Bank reported that net gains from venture capital activities totaled $2 million in the third quarter of 2003, primarily resulting from realized gains on direct investments. Results from venture capital activity were a net loss of $13 million in the second quarter of 2003 and a net loss of $28 million in the third quarter of 2002. The Pennsylvania Biotechnology Association (PABIOTECH) has named David U’Prichard as the chairman-elect of its board of directors. U’Prichard is a venture partner with private equity firm Apax Partners, and will take over for outgoing chairman Dennis Flynn, president of Puresyn Inc.

Wade Massad has joined KeyBanc Capital Markets as managing director and co-head of the equity finance group. For the past six years, Massad has served as managing director and head of U.S. capital markets and syndicate at RBC Capital Markets. Prior to joining RBC, he served as general partner at Cleveland Capital Management, a private equity fund that he co-founded.

Mayne Group, an Australian health management group, has agreed to sell its 53-facility hospital division to a private equity consortium for Au$813 million (approx. $571 million). The buyers include CVC Asia Pacific and Ironbridge Capital.

Baker Capital and Nordic Capital have completed the previously-announced acquisition of Canal+ Television AB from Vivendi Universal (NYSE: V). Canal+ Television AB is a premium pay television provider in the Nordic region, serving Sweden, Norway, Finland and Denmark. Funds managed by Baker Capital and Nordic Capital each own 50% of the company.

JB Hi-Fi, an Australian discount home entertainment retailer, has raised Au$148 million (approx. $104 million) through an oversubscribed initial public offering on the Australian Stock Exchange. The company has received private equity backing from Macquarie Direct Investment, Australian Ventures LLC and BancBoston Capital.

Caisse de dépôt et placement du Québec has decided to close its institutional investment management arm, as part of the pension fund’s ongoing restructuring. Caisse will, however, continue to provide asset management services to third parties via its private equity and real estate subsidiaries, according to The Globe & Mail.

Reuters is reporting that American Media Inc. wants to acquire New York Magazine, the flagship publication of Primedia Inc. American Media is the publisher of supermarket tabloids like the National Enquirer and Star, and is majority owned by private equity firms Evercore Partners and Thomas H. Lee Partners.
NEWS FROM TUESDAY 10/21
Baring Private Equity Partners (BPEP) has reached an agreement in principal with parent company ING Group for a management-led buyout of BPEP. The deal would be for the entire BPEP Group, which has offices in 17 countries and has invested a total of $1.86 billion into 237 companies based in 34 countries. The firm has recorded 82 exits, with around $700 million being returned to limited partners. ING Group will retain its existing investments in BPEP funds, but will not participate in any new fund-raisings. At present, ING Group’s capital commitments of $360 million represent around 18% of BPEP’s total assets under management of $2 billion.

Biospect Inc., a South San Francisco-based life sciences company launched last year to detect protein biomarker patterns, has raised over $27 million in Series B venture funding. Investors included Advent Venture Partners, Venrock Associates, Versant Ventures and some undisclosed European individuals. Prospect Street Venture Partners, which incubated Biospect and participated on a $4 million Series A round, also participated. In other Biospect news, the company named former BD Biosciences President Deborah Neff as its new president and CEO.

Xponent Photonics Inc., a Monrovia, Calif.-based provider of optical components for optical fiber optic communications systems, has raised $18 million in Series C funding. The down-round was announced last week, but actually closed back in August at a post-money valuation of approximately $33 million (previous valuation was $47.7 million after a $16 million Series B deal in mid-2001). Return backers on the new funding included El Dorado Ventures, Morgenthaler Ventures, U.S. Venture Partners and Walden International.

Ruby Lu has joined DCM-Doll Capital Management as a principal. Prior to joining the Menlo Park, Calif.-based venture shop, Lu served as a vice president of investment banking at Goldman Sachs.

FormFactor Inc. (Nasdaq: FORM) is hoping to squeeze $146.74 million more out of the public markets. The Livermore, Calif.-based maker of wafer probe cards that test semiconductor circuits completed an $84 million IPO this past summer, but now has filed for a secondary offering to raise nearly twice as much. According to an SEC filing, company shareholders still include Mohr, Davidow Ventures (15.6% pre-secondary offering, 10.6% post-offering), Institutional Venture Partners (6.8% pre, 6.5% post), Morgan Stanley Venture Partners (6.1% pre, 3.8% post) and Intel Corp. (5.2% pre, 5% post). FormFactor priced its IPO at $14 per share on July 11, and closed trading yesterday at $24.60 per share.

PLEG Inc., a Boston-based provider of payment and marketing software for affinity groups and retailers, has raised $2.5 million in Series A funding. Investors included Draper Fisher Jurvetson New England, Navigator Technology Fund and CommonAngels.

Cardiac Sciences Inc. (Nasdaq: DFIB) has acquired substantially all the assets of Complient Corp., a Cleveland-based provider of AED and CPR training and comprehensive program management. In lieu of cash, Cardiac Science issued Complient 10.25 million shares of its common stock, which ended yesterday’s trading at $4.63 per share. Complient has raised over $80 million in venture capital funding since its 1998 inception, from investors like BancBoston Capital, Beecken Petty & Co., Goldman Sachs, J&W Seligman & Co., JPMorgan Partners, Key Principal Partners, Medtronic Inc., National City Equity Partners, The Cleveland Clinic Foundation and Primus Equity Partners.

Mobileway Inc., a London-based provider of mobile services, has raised $17 million in Series C funding. Return backer Mayfield led the round, and was joined by new investors CDP Capital Technology Ventures and Intel Capital. The company now has raised over $80 million in venture funding since its 2000 inception, including a $27 million Series B deal in late 2001 at a post-money valuation of approximately $48.2 million.

John Luongo has been named a venture partner with Lightspeed Venture Partners. He has more than 30 years of operating experience, including a stint with Oracle Corp. and his most recent position as chairman, president and chief executive of The Vantive Corp., a provider of customer relationship management (CRM) software.

Clessidra Capital, an Italian leveraged buyout firm recently launched by former Fininvest chief Claudio Sposito, reportedly has held a €560 million (approx. $650 million) first closing on its inaugural fund. The fund is said to be marketed with a €1 billion target.

American Securities Capital Partners, a New York-based private equity firm, and Private Power LLC, a privately-held developer of on-site energy projects, have acquired six operating subsidiaries of Primary Energy Inc., a subsidiary of NiSource Inc. (NYSE: NI). The deal is worth approximately $335 million in cash and assumed debt.

Symantec Corp. (Nasdaq: SYMC) has paid $26 million in cash to acquire SafeWeb Inc., an Emeryville, Calif.-based provider of SSL VPN appliances. SafeWeb has raised a total of $13 million in venture funding since its March 2000 inception. Investors included Kingdon Capital, Chilton Capital Management and In-Q-Tel.

Qovia Inc., a Frederick, Md.-based provider of products that monitor and manage enterprise voice-over-IP phone systems, has raised $5.5 million in Series A funding. Investors included Nokia Venture Partners, Anthem Capital Management and the Maryland Department of Business and Economic Development Fund.

Magma Design Automation Inc. (Nasdaq: LAVA) has acquired Silicon Metrics Corp., a Austin, Texas-based provider of electronic design automation software. Silicon Metrics has raised over $22 million in venture funding since its 1997 inception, including a $5.72 million infusion in 2001 at a post-money valuation of just over $41 million. Investors include Austin Ventures, Comdisco Ventures, KLM Capital Group and Needham Asset Management. In related news, Magma Design also announced the acquisition of Random Logic Corp.

Robert Rosenfeld has joined Triax Capital Advisors as a managing director. Most recently, Rosenfled served as managing director and head of the bankruptcy and turnaround practice at international risk consultancy Protiviti.

LVL7 Systems Inc., an Morrisville, N.C.-based provider of merchant IP software, has raised $15.8 million in an oversubscribed Series B funding. Carlyle Venture Partners led the deal, and was joined by return backers Gabriel Venture Partners, H.I.G. Ventures and Research Triangle Ventures. The company now has raised over $35 million since its 2000 inception, including $10 million in seed funding.

IQS Inc., a Cleveland-based provider of quality performance management software, has raised $2 million in venture funding from Apex Venture Partners.

Dow Jones is reporting that Chicago-based private equity firm GTCR Golder Rauner is reconsidering its pending decision to acquire the American Stock Exchange (AMEX). The news service says that GTCR is stepping back to review its original purchase agreement, which was worth approximately $110 million. A spokeswoman for the National Association of Securities Dealers (NASD), which currently owns AMEX, says that NASD will continue negotiating with GTCR, but also will explore other options.

The San Jose Mercury News is reporting that Jeffrey Miller, a venture partner with Redpoint Ventures, has been named to the board of advisors at Movaris Inc., a privately held provider of corporate compliance software. Movaris is a Redpoint Ventures portfolio company.

NEWS FROM MONDAY 10/20
Peribit Networks Inc.
, a Santa Clara, Calif.-based provider of WAN application performance solutions, has raised $10.04 million in Series D funding at a post-money valuation of $100 million. WK Technology Fund led the deal, alongside return backers Accel Partners, Mayfield and Foundation Capital. Peribit now has raised $42 million since its 2001 inception, including a $20.5 million third-round deal in 2002 at a post-money valuation of approximately $70.54 million.

The Great Atlantic & Pacific Tea Co. (NYSE: GAJ) has agreed to sell its Eight O’Clock coffee division to San Francisco-based private equity firm Gryphon Investors. Great Atlantic will realize cash proceeds of $107.5 million and receive a contingent note for up to $20 million, the value and payment of which is based on certain elements of the future performance of the business.

Alcatel (NYSE : ALA) has agreed to sell its SAFT battery division to private equity firm Doughty Hanson for €390 million (approx. $453 million). The deal is expected to close by year-end.

Renovis Inc., a San Francisco-based biopharma company focused on the central nervous system, has filed for a $75 million initial public offering. The company hopes to list on the Nasdaq under proposed ticker symbol RNVS. The company has raised over $91 million in venture capital funding since its 1999 inception, including a $45 million infusion earlier this year. Investors include: Alta Partners (12.09% ownership pre-IPO), Venrock Associates (10.07%), Skyline Ventures (7.15%), Easton Hunt Capital Partners, HealthCap, MDS Capital, Invus Group, CDIB BioScience Ventures, Flagship Ventures and HBM BioVentures.

TWI Holdings Inc., a Lexington, Ky.-based mattress and pillow producer, has filed for a $300 million initial public offering. The company hopes to list on the NYSE under a still-undetermined ticker symbol. TWI, formerly known as Tempur World Inc., was acquired earlier this year in a $350 million buyout led by private equity firms TA Associates and Friedman, Fleischer & Lowe.

Mental Images, a Berlin-based provider of 3D visualization software, has raised $6 million in its first outside institutional round of funding. ViewPoint Venture Partners led the deal.

Nanosys Inc., a Palo Alto, Calif.-based developer of nanotechnology-enabled systems, has signed a multi-million dollar strategic development deal with In-Q-Tel, the venture capital arm of the Central Intelligence Agency.

Dirig Software, a Nashua, N.H.-based developer of adaptive J2EE application performance management software, has received a $10 million Series E funding commitment from return backers Battery Ventures, Longworth Venture Partners and JMI Equity. The deal is structured is a series a business performance-related tranches, although no word on how much has been called down to date.

Peter Watkins has joined the Menlo Park, Calif.-based officer of Bessemer Venture Partners as an entrepreneur-in-residence. He most recently served as president and CEO of Resonate Inc., which was acquired for $54 million in March by Gores Technology Group.

Cambrex Corp. has agreed to amend the terms of its asset purchase agreement with Arsenal Capital Partners for the sale of its Rutherford Chemicals business. The revised agreement specifies proceeds from the sale of Rutherford Chemicals of up to $65 million to be paid to Cambrex consisting of $55 million in cash at closing, a $2 million subordinated 12% interest bearing note payable in full in 51/2 years, and an $8 million performance-based cash earn-out as certain future operating profit targets are achieved in each of the next three years. Arsenal Capital Partners, a New York-based private equity firm, will purchase the assets and certain liabilities of Rutherford Chemicals U.S. operations and the stock of Rutherford subsidiary Seal Sands Chemicals Ltd., located in the United Kingdom.

Globix Corp. (OTC BB:GBXX) has agreed to acquire Aptegrity Inc., a Fairfield, N.J.-based managed services provider focused on Web-based applications. No deal terms were disclosed. Aptegrity has raised around $37 million in venture funding since its 1999 inception, including a a $30 million round in 2000 at a post-money valuation of approximately $67.7 million. Investors included ABS Capital Partners, GE Equity and Trident Capital.

Bob Grady, managing partner of Carlyle Venture Capital is serving as part of Calif. Governor-elect Schwarzenegger’s 68-person transition team. In addition to his venture capital duties, Grady was a speechwriter for the 1988 Bush-Quayle campaign and associate director for the Office of Management & Budget under the first President Bush.

PrivateEquityOnline is reporting that Terra Firma Capital Partners has lost its second high-profile exit. The first defection was Mark Tagliaferri earlier this year, and now the Guy Hands-led group has lost financial managing director Jennifer Dunstan. Prior to joining Terra Firma, Dunstan has worked in the principal finance group of Nomura.

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