PE Week Wire — Friday, September 30

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Random Ramblings

A few notes for those not taking three-day weekends (or four-day weekends, for our German readers)…

Hand-In-Glove: That’s how Steve Meredith of Edwards & Angell LLP is describing his firm’s upcoming merger with Palmer & Dodge LLP. Specifically, Meredith is talking about the combined venture capital and private equity practice, which will feature around 75 attorneys (50 from E&A, 25 from P&D): “On the private equity and VC side, Palmer & Dodge’s strong suit is in life sciences, which is probably our weak suit. However, we are very strong in life sciences IP, and actually acquired a very high-end life sciences IP firm several years ago that we’ve been waiting to capitalize on. This is a true synergy in all of the ways people speak of that word.

No major defections are expected from either firm, although certain attorneys may need to leave due to unspecified conflicts of interests. Also, don’t expand any West Coast expansion yet, with Meredith and each firm’s managing partner saying no such plans are in the works (although they have, obviously, given it some thought).

LP Allocation: Buyouts Magazine on Monday will publish year-to-date/Q3 buyouts fundraising totals, plus a brilliant analysis written by your humble correspondent. One thing that I really didn’t get to in the piece, however, is a growing concern among LPs that participation in mega-buyout funds is having a devastating impact on their portfolio diversification goals. All LPs want “meaningful” stakes in their general partnerships, so a typical commitment to Blackstone completely dwarves single commitments to most VC or lower-market buyout firms. In fact, it could take nearly a dozen VC commitments to equal a single mega-fund commitment.

All LPs give at least lip service to market cycles and portfolio diversification, but some are beginning to openly question whether or not this dichotomy is viable. Some have simply said “no thanks” to the mega-funds, not wanting to rely so heavily on one or two decisions. Perhaps more importantly, many of the “no thanks’ managers are doing so because they need to outperform ROI benchmarks in order to get bonuses, and it is hard to outperform when you are in the same funds as everyone else. Conversely, some LPs are feeling that the way to go is big buyouts at the expense of VC/small-markets, because it makes no sense to spend 10x the due diligence on 10 VC funds, when you could spend 1x on a mega-buyout fund with a strong track record.

Everyone’s a Fan: My favorite Boston moment of the year came yesterday afternoon at around 3:30. I was supposed to walk a mile down the road to meet with a VC firm, whose managing partner was in from Europe. As I looked through some large windows at my office, however, I realized that the city was playing host to a violent wind and rain storm, which would leave me soaked and miserable. I muttered an obscenity under my breath, at which point a passerby tapped me on the shoulder and said: “Don’t worry, it’s supposed to end before game-time.

Go Sox.

Top Three

 

Wellspring Capital Management has agreed to sell JW Aluminum Holding Co. for $350 million to Superior Plus Inc., a U.S. subsidiary of Calgary, Canada-based Superior Plus Income Funds. JW Aluminum is a Mount Holly, S.C.-based manufacturer of specialty, flat-rolled aluminum products, and was acquired by Wellspring in December 2003 for $125 million. www.wellspringcapital.com www.jwaluminum.com

NetByTel Inc., a Boca Raton, Fla.-based provider of managed speech recognition solutions to call centers, has agreed to acquire Tuvox Inc., a Los Altos, Calif.-based provider of enterprise speech applications. No financial terms were disclosed for the deal, which is expected to close today. NetByTel has raised around $40 million in VC funding from firms like Noro-Moseley Partners, Lazard Technology Partners, Chrysalis Ventures and Time Warner Ventures. Tuvox has raised around $26.5 million in total VC funding, including a $15 million Series D infusion in late 2004 at a post-money valuation of approximately $55 million. Tuvox backers include Granite Ventures, Foundation Capital and Norwest Venture Partners. www.netbytel.com www.tuvox.com

WestView Capital Partners has closed its inaugural fund with $195 million in capital commitments. The Boston–based firm was formed in mid-2004 by Carlo von Schroeter, formerly a partner of Weston Presidio, and Richard Williams, formerly a partner of Tudor Ventures. It plans to use the fund to participate in buyouts, minority and majority recapitalizations and growth financings for lower-middle-market companies. www.wvcapital.com

VC Deals

 

Pervasis Therapeutics Inc., a Cambridge, Mass.-based developer of therapies that integrate biomaterials with cells and drugs, has raised $12 million in Series B funding. Highland Capital Partners led the deal, and was joined by return backers Polaris Venture Partners and Flagship Venture Partners. www.pervasistx.com

Sports Loyalty Systems, a Boston-based provider of customer loyalty programs for Major League Baseball franchises, has raised $5 million in Series A funding. IDG Ventures co-led the deal alongside LBO Enterprises, which is principally owned by Boston Red Sox vice-chairman Les Otten. www.sportsloyaltysystems.com

NEXX Systems Inc., a Billerica, Mass.-based provider of processing equipment for wafer-level packaging applications, has raised around $10 million in Series C funding. Sigma Partners led the deal with a $6.375 million commitment. The remainder involved certain NEXX shareholders converting outstanding bridge loans plus accrued interest into Series C preferred stock. www.nexxsystems.com

Buyout Deals

 

Fenway Partners has agreed to acquire Targus Group International Inc., an Anaheim, Calif.–based provider of mobile computer carrying cases. The deal is valued at $382.5 million, with Fenway acquiring Targus Group from Apax Partners. www.targus.com www.fenwaypartners.com

Colony Capital LLC has completed its $859 million acquisition of Raffles Holdings Ltd.’s hotels business. www.raffles.com www.colonyinc.com

KPS Special Situations Funds has agreed to acquire the North American automotive business (a.k.a. Blue Water) of Sarna Kunststoff Holding AG. No financial terms were disclosed. www.kpsfund.com

Goldner Hawn Johnson & Morrison has increased the terms of its proposed acquisition of Green Bay, Wis.-based retailer ShopKo Stores Inc. (NYSE: SKO) from $25 per share to $25.50 per share. This is the second deal amendment, with GHJM raising the ante from $24 to $25 per share earlier this month. The deal has been approved by the ShoKo board, with a shareholder meeting scheduled for October 17. www.shopko.com

Palamon Capital has agreed to acquire a 52.6% stake in discount card provider Payback from Deutsche Luftansa AG, in a deal valuing Payback at over 225 million euros. The news was first reported by The Financial Times, and confirmed by Deutsche Luftansa this morning.

News Corp. (NYSE: NWS) is closed to selling UK-based educational publisher TSL Education to Exponent Private Equity, according to The Wall Street Journal. The deal price is reported to the $450 million, which is in the middle of the Gbp250 million and Gbp280 million that News Corp. had been looking for, according to an earlier report in The Deal. Other bidders included Apax Partners, Candover and The Carlyle Group.

Legal & General Ventures has sold its minority stake in UK-based Haley Conference Centres to 3i Group. The Gbp41 million deal valued Haley at more than Gbp180 million. www.3i.com

PE-Backed IPOs

Avalon Pharmaceuticals Inc., a Germantown, Md.-based developer of small-molecule therapeutics for cancer, priced 2.75 million common shares at $10.50 per share, for an IPO take of approximately $28.87 million. It originally planned to sell 4.5 million shares at between $10 and $12 per share, but later lowered its expectations. WR Hambrecht & Co. served as lead underwriter, and utilized its OpenIPO process. Avalon had raised over $90 million in VC funding since its 1999 inception, with significant shareholders including AIG Global Investment Group, EuclidSR Partners, Forward Ventures, GIMV, OBP Management, CDP Capital, MDS Capital, H&Q Healthcare and Array Capital. www.avalonrx.com

VistaPrint Ltd., a Bermuda-based holding company for Lexington, Mass.-based graphic design and printing services provider VistaPrintUSA Inc., priced nearly 10.02 million common shares at $12 per share (above its $9-$11 range), for an IPO take of approximately $120 million. Goldman Sachs and Bear Stearns served as lead underwriters. VistaPrint had raised around $76 million in total VC funding since its 1995 inception, with significant shareholders including Highland Capital Partners, HarbourVest Partners, SPEF Ventures, Sofinnova Partners and Window to Wall Street Inc. www.vistaprint.com

Castle Brands Inc., a New York-based maker and marketer of premium branded spirits, has filed to raise over $31.62 million via an IPO of 2.5 million shares of common stock. It plans to trade on the AMEX under ticker symbol ROX, with Oppenheimer & Co. serving as lead underwriter. The company was formed via the 2003 merger of Great Spirits Co. and The Roaring Water Bay Spirits Group, and has raised over $50 million in private equity funding, with significant shareholders including Mellon HBV, Black River Global Credit Fund, Mass Mutual Insurance and CNF Investments.

International Coal Group Inc., an Ashland, Ky.-based coal producer controlled by W.L. Ross & Co., has set its proposed IPO terms to 20 million shares being offered at around $15 per share.

PE-Backed M&A

Siemens AG has agreed to acquire Garderos Software Innovations GmbH, a Germany-based provider of operational support systems software. No financial terms were disclosed. Garderos has raised VC funding from SAP Ventures, Wellington Partners and Techno Nord VC. www.siemens.com www.garderos.com

Firm & Fund News

Clarion Capital Partners, a New York-based middle-market private equity firm, has closed its latest funds (Trumpet Investors LP and Trumpet SBIC Partners LP) with $255.8 million in total capital commitments. Approximately one-third of the money already has been committed to four portfolio companies: The Oceanaire Inc., Great Northwest Insurance Co., Strategic Outsourcing Inc. and U.S. Nursing, Corp. Far Hills Group served as Clarion’s fund placement agent. www.clarion-capital.com

WR Hambrecht & Co. is bringing its OpenIPO process to Japan, via a new partnership with Monex Bean Holdings Inc. and ZenShin Capital Partners. www.wrhambrecht.com

Human Resources

Bill Repko and David Ying have joined Evercore Partners as senior managing directors and co-heads of the firm’s restructuring practice. Repko previously served as chairman and head of the restructuring group at J.P. Morgan Chase & Co., while Ying was managing director of Miller Buckfire Ying. www.evercore.com

Mooreland Partners, a Greenwich, Conn.–based communication and tech-focused I-banking firm, has added Stephen Schweich and Patrick Seely as London-based managing directors. Schweich is the former CEO of Robertson Stephens International Ltd., while Seely was co-head of the media and communications practice of Broadview International, where he also helped set up VC unit Kennet Capital. www.moorelandpartners.com

Bono Helps Elevate New Fund

It has been 15 months and 14 days since news broke that Elevation Partners had added U2 frontman Bono (a.k.a. Paul Hewson) as a managing director/general partner. It also has been 15 months and 14 days since I wrote the following:

It isn’t that I don’t think that Bono has the brains for a [managing director] role, but rather that I don’t think he has the time. U2 is in the midst of recording a new album, and new U2 albums generally are followed by tons of media appearances and an international stadium tour. Is Bono’s plan to perform on Sunday nights, and then attend Monday morning meetings via WebEx? Due diligence while the opening act is on stage? Or while Leno chats it up with The Edge?

I bring this up today because Elevation Partners recently closed its inaugural fund with $1.8 billion in limited partner commitments (above its $1.5b target). Kevin Albert, the former Merrill Lynch fund placement czar who joined Elevation earlier this year, says that the final close occurred in August, following a series of rolling closes that included approximately $900 million raised in 2004 and $900 million raised in 2005. He also says that the media/entertainment/consumer-focused firm likely will announce its first deal iwithin the next few months.

Albert also briefly discussed Bono’s role in the fund-raising process, which he described as a “double-edged sword.” On the one hand, there were many people drawn to the fund because of Bono’s celebrity, but there were others – particularly public pension fund managers – nervous about being perceived as celebrity worshippers. After all, the press would have a field day with: “Bono to invest state’s money” or, even worse “Rock star to collect management fees from public pensioners.” You know, perception becoming reality and all that nastiness.

Rather than slinking away from the challenge, however, Bono became a fund-raising force in his own right, participating in around 80 meetings with potential investors. Many of the meetings were one-on-one, in which his combination of industry knowledge and charm helped secure fund commitments.

Therefore, my sarcasm stands corrected. Bono has yet to help Elevation close a deal, but he has helped it close a fund… and that’s more than I ever expected of him.

Top Three

 

DynCorp International Inc., an Irving, Texas-based provider of aviation maintenance, personal security and law enforcement training solutions, has filed to raise $450 million via an IPO of common stock. It plans to trade on the NYSE under ticker symbol DCP, with CSFB and Goldman Sachs serving as lead under writers. Veritas Capital acquired DynCorp earlier this year in an $850 million buyout from Computer Services Corp. (NYSE: CSC). www.dyncorp.com

Novoste Corp. (Nasdaq: NOVT) has terminated its reverse merger agreement with ONI Medical Systems Inc., a Wilmington, Mass.-based MRI systems maker. The move came after Novoste shareholders failed to approve the issuance of Novoste common shares that would have been necessary to complete the merger. ONI, therefore, will remain private. It has raised around $15 million from such firms as Galen Associates and Sage Hill Partners. www.novoste.com www.onicorp.com

Edwards & Angell LLP and Palmer & Dodge LLP have agreed to merge, creating a law firm with 520 attorneys, nine offices and over 20 practices. The merger is expected to take effect on, or around, November 1, with the resulting firm named Edwards Angell Palmer & Dodge LLP. www.edwardsangell.com www.palmerdodge.com

VC Deals

 

InTouch Technologies Inc., a Santa Barbara, Calif.-based provider of remote presence technology for healthcare providers, has raised $12.1 million in Series C funding. Galen Partners led the deal, and was joined by Acacia Venture Partners and InvestCare Partners (managed by Beringea). www.intouchhealth.com

Identity Engines Inc., a Mountain View, Calif.-based provider of enterprise network security solutions, has raised $8.7 million in Series A funding from Horizon Ventures and Lightspeed Venture Partners. www.idengines.com

eBots Inc., a San Jose, Calif.-based provider of “lean manufacturing” applications, has raised $4 million in Series A funding, according to a regulatory filing. Backers include Labrador Ventures, Draper Richards and Draper Associates. www.ebotsinc.com

Pharmacy TV Network Inc. of Berkley, Calif. has raised $1.2 million in Series A funding, according to a regulatory filing. Backers include Nueva Ventures and the Saudi Venture Development Authority.

Buyout Deals

 

Emmis Communications Corp. (Nasdaq: EMMS) has agreed to sell four broadcast television stations to Blackstone Group and SJL Broadcast Group for $259 million. The stations are: KOIN-TV, a CBS affiliate in Portland, Ore.; KHON-TV, a Fox affiliate in Honolulu; KSNW-TV, an NBC affiliate in Wichita, Kan.; and KSNT-TV, an NBC affiliate in Topeka, Kansas. www.emmis.com

Trimaran Capital Partners has agreed to acquire El Pollo Loco, an Irvine, Calif.–based quick-service restaurant chain, from American Securities Capital Partners. No financial terms were disclosed for the deal, which is expected to close next quarter. American Securities Capital Partners originally bought el Pollo Loco from Advantica Restaurant Group in December 1999. www.trimarancapital.com www.elpolloloco.com

CVC Capital reportedly has entered the bidding for Coral Eurobet Ltd., the UK-based bookmaker controlled by Charterhouse Capital Partners. Charterhouse already has been in talks with Gala Casinos, which is owned by Candover, Cinven and Permira. www.coral.co.uk

Parexa Corp. (f.k.a. Monan Inc.), a Santa Clara, Calif.-based provider of optical connectivity products, has raised over $5.35 million in Series A funding led by Crescendo Ventures, according to a regulatory filing. www.parexa.com

PE-Backed IPOs

Caribou Coffee Company Inc., a Brooklyn Center, Minn.-based operator of 322 gourmet coffeehouses, priced 5.36 million common shares at $14 per share (middle of $13-$15 range), for an IPO take of approximately $75.04 million. It plans to trade on the Nasdaq under ticker symbol CBOU, while Merrill Lynch & Co. and Thomas Weisel Partners served as lead underwriters. Caribou Coffee continues to be controlled by Arcapita. www.caribou-coffee.com

Genomic Health Inc., a Redwood City, Calif.-based provider of genomic-based oncology diagnostics, priced around 5.02 million common shares at $12 per share (low end of $12-$14 range), for an IPO take of approximately $60.2 million. It plans to trade on the Nasdaq under ticker symbol GHDX, while JPMorgan and Lehman Brothers served as lead underwriters. The company had raised approximately $100 million in total VC funding from groups like Kleiner Perkins Caufield & Byers, Versant Ventures, TPG Ventures, Baker Tisch Investments, Integral Capital Partners, Invesco Private Capital, Incyte Corp., J.P. Morgan Fleming, Pfizer and CHL Medical Partners. www.genomichealth.com

Taleo Corp., a San Francisco-based provider of Web-based applications for corporate recruiting, priced 6.7 million common shares at $14 per share (low end of $14-416 range), for a total IPO take of approximately $93.8 million. It plans to trade on the Nasdaq under ticker symbol TLEO, with Citigroup serving as lead underwriter. Taleo had raised nearly $37 million in venture capital funding since its 1999 inception, from firms like Bain Capital Ventures, General Catalyst Partners and Telesystem Ltd. Other significant shareholders (due to acquisitions) include Infinity Capital, EdgeStone Capital, RRE Ventures, Venrock Associates, Wachovia Capital Investments. www.taleo.com

A-Max Technology Ltd., a Hong Kong-based provider of portable digital audio players, has set its proposed IPO terms to 6.5 million American depository shares being offered at between $14.50 and $16.50 per ADS. It plans to trade on the Nasdaq under ticker symbol AMAX, with Merrill Lynch and UBS serving as lead underwriters. A-Max raised $60 million in Series A funding in June from General Atlantic. www.amaxhk.com

Legrand SA, a France-based maker of low-voltage electrical fittings and accessories, plans to float on the public markets in 2006. It currently is controlled by Kohlberg Kravis Roberts & Co. and Wendel Investissement, which led a 3.7 billion euros buyout in late 2002. Other shareholders include West LB, HSBC and Goldman Sachs Capital Partners. www.legrand.fr

Phoqus Group Ltd., a UK-based developer of oral drug delivery solutions, plans a Gbp10 million to Gbp12 million public flotation on London’s AIM at the end of next month. It has raised around Gbp32 million in VC funding from firms like 3i Group, Abingworth Management, Advent Venture Partners and The Wellcome Trust. www.phoqus.com

TransCore Holdings Inc., a Hummelstown, Pa.-based provider of transportation technology services, has withdrawn registration for its proposed $600 million IPO. The move was expected, following TransCore’s acquisition late last year by Roper Industries Inc. (NYSE: ROP). It previously had been controlled by a private equity group led by KRG Capital Partners. www.transcore.com

PE-Backed M&A

Cordis Corp., a subsidiary of Johnson & Johnson (NYSE: JNJ), has acquired LuMend Inc., a Redwood City, Calif.-based developer of chronic total occlusion devices to treat peripheral vascular disease. No financial terms were disclosed. LuMend has raised over $46 million in total VC funding, including a late 2002 infusion at a post-money valuation of approximately $50 million. Shareholders include ABS Ventures, Morgenthaler Ventures and De Novo Ventures. www.cordis.com www.lumend.com

Simple Star Inc., a San Francisco-based provider of consumer imaging products and services, has agreed to acquire OurPictures Inc., a Palo Alto, Calif.–based provider of photo print and share solutions. No financial terms were disclosed. Simple Star is backed by Venrock Associates. www.simplestar.com www.ourpictures.com

BEA Systems Inc. (Nasdaq: BEAS) has acquired M7 Inc., a Cupertino, Calif.-based provider of Web application development tools. No financial terms were disclosed. M7 has raised $9.5 million in Series A funding from Highland Capital Partners, Redpoint Ventures, Cypress Ventures and Genevest Consulting Group. www.bea.com www.m7.com

Firm & Fund News

Elevation Partners has closed its inaugural fund with $1.8 billion in limited partners commitments. www.elevationpartners.com

Human Resources

Lisa Peterson has joined Akin Gump Strauss Hauer & Feld LLP as a partner in its investment funds and private equity practice. She will divide her time between Dallas and Ft. Worth, Texas, and has spent the past 15 years with Kelly, Hart & Hallman. www.akingump.com

GE Commercial Finance Corporate Lending has named Dustin Weinberger as vice president of origination for the Central Region. He most recently served as vice president of strategic marketing for GE Corporate Lending. www.gelending.com

Just Linking Around

Major print deadlines fast approaching, so time for just a few quick links.

*** Merlin Biosciences, a UK-based venture capital firm, has confirmed that it is being investigated by the Serious Fraud Office (SFO). The Times of London broke the news on Saturday, while yesterday’s Guardian provides additional details. Merlin Biosciences says that it is cooperating with the SFO.

*** Jeff Bussgang of IDG Ventures on the Soul of a New Company.

*** If you liked Brad and Jason on Term Sheets, you’re going to love them on Letters of Intent.

*** The NY Times has taken a lot of blogger heat for its new columnist subscription service (TimesSelect), whereby readers must pay to access Friedman, Dowd, et. all. One common theme has been that the the Web holds so much commentary that readers will simply move on to other writers (i.e. Times hurting its own influence). Well, it hasn’t happened yet, according to Technorati. Take a look at the top searches (save for Nickelback and Demi Moore). This was the same way yesterday, except that it also included Bob Hebert. It is clearly true that most NYT columns will be posted for free online by bloggers, but it’s a mistake for bloggers to believe that readers stop wanting to read a columnist just because his/her column is a bit more expensive or harder to find… just like it was a mistake to believe that music aficionados wouldn’t pay for MP3s once the original Napster was shut down.

Top Three

 

Perlecan Pharma Private Ltd., an India-based integrated drug development company, has raised $52.5 million in first-round funding. The tranched deal includes an initial call-down of $26 million, with participants including Citigroup Venture Capital, ICICI Venture Funds Management and Dr. Reddy’s Laboratories Ltd. (NYSE: RDY). Perlecan ultimately will be majority-owned by Dr. Reddy’s, which is providing Perlecan with its first new chemical entities (NCEs). www.drreddys.com

NRG Energy Inc. (NYSE: NRG) is in advanced talks to acquire Houston-based wholesale electric power generation company Texas Genco Inc., according to The Wall Street Journal. The deal would be valued at $5 billion or more (plus more than $2 billion in assumed debt), and would represent an exit for the private equity consortium that acquired Texas Genco last year for $3.65 billion ($900 million in equity). Those firms are KKR, Texas Pacific Group, Blackstone Group and Hellman & Friedman. Texas Genco currently is in registration for a $600 million IPO, with each of the aforementioned private equity firms holding a 24.8% ownership position. www.txgenco.com

Tenaska Capital Management, an affiliate of Tenaska Energy Inc., has closed its Tenaska Power Fund with $838 million in limited partner commitments. The fund will acquire energy and power companies and assets in the United States, and already has acquired two power generation facilities. www.tenaska.com

VC Deals

 

Modulus Video Inc., a Sunnyvale, Calif.-based provider of MPEG-4 AVC video compression systems, has raised $10 million in Series B funding. Thomas Weisel Venture Partners led the deal, and was joined by return backer Trinity Ventures. www.modulusvideo.com

2BeQ Inc. of Menlo Park, Calif. has raised $2.84 million in Series A funding, according to a regulatory filing. Participants included Mayfield and Vanguard Ventures. Little information is available on the “communications and information services technology” company, except that it was founded by former Vertical Networks Inc. executives Greg Pounds and Tim Kusumi.

July Systems Inc., a Santa Clara, Calif.-based provider of smart mobile retailing technology, has raised $10 million in third-round funding. Motorola Ventures led the deal, and was joined by return backers Charles River Ventures, NeoCarta Ventures, WestBridge Capital Partners, Jumpstartup, SVB Capital and Acer Technology Ventures. www.julysystems.com

Bokee.com (f.k.a. BlogChina), a China-based blog service provider, has raised $10 million in second-round funding from Mobius Venture Capital, Bessemer Venture Partners, Granite Global Ventures and return backer Softbank Asia Infrastructure Fund. www.bokee.com

Avnera Inc., a Beaverton, Ore.-based semiconductor startup, has raised around $7.6 million in Series A-2 funding, according to a regulatory filing. Participants included Bessemer Venture Partners, JAFCO Technology Partners and Redpoint Ventures. www.avnera.com

Debitman Card Inc., a Chico, Calif.-based provider of an electronic payment network for retailer-branded debit cards, has raised $3.6 million in first-round funding. Cardinal Venture Capital led the deal, and was joined by Selby Venture Partners and unnamed individuals. www.debitman.com

Bioheart Inc., a Sunrise, Fla.-based provider of cell-based therapies for heart muscle repair, has raised $19 million in Series D funding. Participants included Advent-Morro Equity Partners, The ASTRI Group, Magellan Group, Presidential Capital Partners, Dan Marino Investments, Minnesota Biomed Partners, New World Angels, William Murphy (founder of Cordis Corp.) and David Gury (former CEO of NABI Biopharmaceuticals). www.bioheartinc.com

Buyout Deals

 

Celtic Pharmaceutical Holding LP, a private equity firm focused on the biotech and pharma markets, has acquired a 21.7% interest in IDEA AG, a Munich-based developer non-invasive drug delivery solutions, with a particular focus on pain relief and dermatology. No financial terms were disclosed for the deal, which includes shares all IDEA shares previously held by the German government, and a majority of shares held by MPM Capital. In conjunction with the transaction, MPM has sold the balance of its shares to Series D shareholders who had exercised their pro rata preemption rights. www.celticpharma.com www.idea-ag.de

W.L. Ross & Co. has agreed to acquire a 77.3% stake in Safety Components International Inc. (OTC BB: SAFY) from Zapata Corp. (NYSE: ZAPATA), in exchange for $51.2 million. Safety Components is a Greenville, S.C.-based supplier of automotive airbag fabric and cushions. www.wlross.com

TARGUSinfo, a Vienna, Va.-based provider of on-demand data to optimize customer interactions, has received $60 million in private equity funding from TA Associates, in exchange for a minority ownership position. www.targusinfo.com www.ta.com

Merit Capital Partners and Dorman Industries LLC have acquired Versatile Processing Group, an Indianapolis-based provider of metals recycling and other related services to the utilities industry. Merit provided $16.6 million of preferred equity, common equity subordinated notes, while other financial terms were not disclosed. Company management also participated on the deal. www.meritcapital.com www.versatileprocessing.com

Mortgagebot, a Cedarburg, Wisconsin-based provider of technology solutions to mortgage lenders, has completed an $84 million recapitalization that results in Spectrum Equity Investors holding a majority ownership stake. Leverage was provided by Comerica Bank, Technology Investment Capital Corp. and Associated Bank. Stephens Inc. advised Mortgagebot on the deal. www.mortgagebot.com

PAI Partners has received European Commission approval for its pending acquisition of Crown Holdings Inc.‘s Global Plastics Closures Group.

Parexa Corp. (f.k.a. Monan Inc.), a Santa Clara, Calif.-based provider of optical connectivity products, has raised over $5.35 million in Series A funding led by Crescendo Ventures, according to a regulatory filing. www.parexa.com

PE-Backed M&A

Pintail Technologies Inc., a Plano, Texas-based, has acquired The Boxer Group, an Austin, Texas-based software development company specializing in test productivity and factory automation solutions. No financial terms were disclosed for the deal, which results in Boxer Group president Keith Arnold being named chief technology officer of Pintail. Pintail has raised over $11 million in VC funding from Austin Ventures, StarTech, Duchossois Technology Partners and Agilent Ventures. www.pintail.com

Fair Isaac Corp. (NYSE: FIC) has acquired RulesPower Inc., a Burlington, Mass.-based provider of business rules management software. No financial terms were disclosed. RulesPower had raised over $10 million in VC funding from Kodiak Venture Partners, Core Capital Partners and Minotaur Capital Management. www.fairisaac.com www.rulespower.com

Siterra Corp., a Novato, Calif.-based provider of project, document and property management solutions, has acquired WorkplaceIQ Inc., a Waltham, Mass.-based provider of technology solutions to the corporate and commercial real estate markets. No financial terms were disclosed. Siterra has raised over $7 million in VC funding from Catamount Ventures and Ventennial Ventures, while WorkplaceIQ has raised around $26 million in total VC funding from firms like Genesis Partners, Israel Infinity Fund, Vertex Management, CLAL Ltd. and CB Richard Ellis. www.siterra.com www.workplaceiq.com

Firm & Fund News

Morgan Lewis & Bockius LLP and Japanese law firm TMI Associates have formed a joint venture to focus primarily on cross-border corporate transactions in Japan. www.morganlewis-tmi.jp

Human Resources

Neil King and Dougie Sutherland have joined 3i Group as partners on the firm’s infrastructure team. King previously worked at both Innisfree and WestLB, while Sutherland was a managing director with Amey Ventures. 3i also added Alistair Ray and Angela Roshier to its infrastructure team, as a director and associate, respectively. Ray has worked with British Linen Bank, Edison Capital and Noble Fund Managers, while Roshier has spent the past six years with Actis. www.3i.com

____________________

Correction: Party City Corp. will not be merged with Amscan, once its $360 million acquisition by Berkshire Partners and Weston Presidio is complete. Each company will operate independently.

Up and Down

Let’s take a look at two firms that have nothing in common, except that one is having a very good day, while the other is having (yet another) very bad day. Actually, that’s more of a difference than a commonality, but I digress..

On the upside is Greenwich, Conn.-based private equity shop General Atlantic:

• The New York Mercantile Exchange has twice reaffirmed last week’s agreement to sell a 10% stake to GA for $135 million. GA originally competed for the deal against the tandem of Blackstone Group and Battery Ventures, and won. Then came word that former NYMEX chairman Michael Marks was offering $140 million, but the exchange said yesterday that it would not consider the bid (i.e., reaffirmation #1). This morning, NYMEX indicated that it also would not accept a revised $75 million-for-5% bid from Battery Ventures, acting alone (i.e., reaffirmation #2). So far, GA has scored a three-peat victory.
• This morning’s NY Post leads with the all-important news that Donald Trump’s new wife is pregnant, but the biz section reports that Bain Capital and The Blackstone Group offered to buy 30% of the New York Stock Exchange in late June for either $3.3 million cash per seat, or $4.4 million in stock and cash. The deal was fairly similar to an existing agreement whereby Archipelago Holdings Inc. would pay $3.3 million cash per NYSE seat, in exchange for a 30% stake, except that the resulting NYSE would not include Archipelago’s electronic exchange solutions. According to the NY Post, NYSE honcho said no to Bain and Blackstone, thus keeping Archipelago in the game. More important for our purposes, it also kept GA in the game, since it still owns a significant piece of Archipelago.
• Finally, India-based business process outsourcing company Genpac (f.k.a. Gecis Global) said today that it has signed 12 new clients – totaling $160 million – since January 1, and that it expects $1 billion in annual revenue by 2007-2008. General Atlantic and Oak Hill Capital Partners each acquired a 30% stake in Genpac at the end of last year for a total of $500 million, including $375 million in equity split evenly. Original owner General Electric retained the other 40 percent.

Now to the down-side, which involves (who else) VSP Capital.

Remaining VSP partners Joanna Rees-Gallanter and John Hamm have filed suit against former partners Matt Crisp and Vince Vannelli, alleging breach of fiduciary duty, constructive fraud and misrepresentation and deceit (as first reported by VentureWire). I’ll get into a lot of the case specifics in the next print edition of PE Week, but here are a few quick points:

Joanna and John essentially believe that the downfall of their firm was caused by Crisp and Vannelli, rather than by their own actions. As Joanna wrote to me in an email yesterday: “The lawsuit was filed after an investigation had uncovered substantial evidence of misconduct by the defendants, including emails, agreements, competing business plans, concealed stock transfers, and so forth. The complaint alleges a substantial pattern of conspiracy and breach of fiduciary duty by the defendants. We will seek additional evidence through the discovery process regarding the course of conduct engaged in by the defendants Crisp and Vannelli.

In short, they believe that a court win would validate their “It was Matt and Vince’s fault” position, and help revive their professional reputations.

This sounds fine in the abstract, but not in the specifics (which is why I suggest that VSP is having a bad day). This filing will do two things that do nothing to help VSP or the reputations of its remaining partners: (1) It keeps the story going. I wrote last week that the VSP saga was over, but that is no longer the case. It will stay in the public – or at least trade – spotlight for some time to come. (2) It will almost certainly prompt a countersuit from Crisp and/or Vannelli. This is bad news for VSP, because any countersuit would almost have to include mention of sensitive goings-on at VSP prior to its collapse. From what I understand, such charges — if borne out – will do far more harm than help to Joanna and John’s professional reps.

Finally, one note of interest on the suit is that VSP is not being represented by longtime counsel Cooley Godward. Instead, they got an independent attorney named Michael Q. Eagan. I asked Hamm about the shift, which he said was caused by a conflict of interest (Cooley repping the actual funds) and the fact that Cooley didn’t have litigators, “so we got a litigator.” I can’t speak to the first point, but the first one makes no sense, given that Cooley has a giant litigation department, including a sub-practice focused on VC litigation. I’ll give him the benefit of the doubt, which would involve him saying that VSP’s specific Cooley attorneys aren’t litigators, which is why they hired someone else.

Top Three

 

Berkshire Partners and Weston Presidio have agreed to acquire party goods chain Party City Corp. (Nasdaq: PCTY) for $17.50 per share in cash. The total transaction is valued at approximately $360 million, which includes the cash-out of employee stock options and warrants. Once closed, Party City will be merged with Amscan, a company that Goldman Sachs took private for $290 million in 1997, before Berkshire, Weston Presidio and company management recapped it in April 2004. www.partycity.com

ViVotech Inc., a Santa Clara, Calif.-based supplier of “contactless” payment solutions, has raised $18.25 million in Series B funding. Draper Fisher Jurvetson led the round, and was joined by Nokia Growth Partners, DFJ Gotham and return backer Alloy Ventures. www.vivotech.com

Sunesis Pharmaceuticals Inc., a South San Francisco-based drug company focused on oncology and inflammatory diseases, priced six million common shares at $7 per share (below $9-$11 ranged as lead underwriters. Sunesis had raised over $93 million in total VC funding since its 1998 inception, from significant shareholders like Abingworth Management, CSFB Private Equity, Mayfield, Venrock Associates and Warburg Pincus. www.sunesis.com

VC Deals

 

ManiaTV Network Inc., a Denver-based provider of an Internet television network, has raised $12 million in Series B funding, according to a regulatory filing. Participants included Centennial Ventures, Intel Capital and return backer Benchmark Capital. www.maniatv.com

StrikeIron Inc., a Durham, N.C.-based provider of Web services commercialization, has raised $2 million in Series B funding. Participants include The Aurora Funds and NC IDEA. www.strikeiron.com

Aquantia Corp., a Milpitas, Calif.-based developer of physical-layer transceiver ICs, has raised over $12 million in Series A funding, according to a regulatory filing. Backers include Lightspeed Venture Partners and Greylock Partners. www.aquantia.com

Open-Silicon Inc., a Sunnyvale, Calif.-based fabless semiconductor company, has raised around $15.05 million in Series C funding, according to a regulatory filing. Return backers include InterWest Partners, Norwest Venture Partners and Sequoia Capital. www.open-silicon.com

eLite Optoelectronics Inc. of Sunnyvale, Calif. has raised $8.55 million in Series B funding, according to a regulatory filing. Backers include El Dorado Ventures, DCM-Doll Capital Management and Harris & Harris Group. The company makes high-power indium gallium nitride light emitting diodes for use in various solid-state lighting, mobile appliance, signage and automotive applications. www.eliteopto.net

Xfire Inc., a Menlo Park, Calif.-based gaming company, has raised $5 million in Series D funding, according to a regulatory filing. Participants included Granite Global Ventures, New Enterprise Associates and Draper fisher Jurvetson. www.xfire.com

Mojix Inc., a Los Angeles-based developer of digital signal processing products for sensory networks, has raised $2 million in Series A angel funding, according to a regulatory filing.

Mirage Innovations Inc., an Israel-based developer of personal display technologies, has raised $7.5 million in second-round funding. Gemini Israel Funds and Benchmark Capital Israel were joined on the deal by return backer Landa Ventures. www.mirageinnovations.com

VeraLight Inc., an Albuquerque, N.M.-based developer of a diabetes screening device named Scout, has raised $5 million in Series A funding. VSpring Capital led the deal, and was joined by Wasatch Venture Fund, Dow Chemical Co. and the Southern Ute Growth Fund. www.veralight.com

VidaLink, a Sao Paulo, Brazil-based pharmacy benefits manager, has raised $5 million in venture funding from CaremarkRx Inc. (NYSE: CMX). The deal also included an undisclosed amount of funding from Latin American wholesaler Grupo Martins and LatinTech Capital. www.vidalink.com

BlueNote Networks Inc., a Tewksbury, Mass.-based developer of an interactive communications platform, has raised $8.4 million in Series A funding. Fidelity Ventures and North Bridge Venture Partners co-led the deal. www.bluenotenetworks.com

Navitas Cancer Rehabilitation Centers of America Inc., a Denver-based provider of rehabilitation clinics for cancer patients, has raised $8 million in Series A funding. Psilos Group Partners led the deal, and was joined by Shoreline Venture Management. Navitas has one clinic operating in Denver, and will use the funding to open a second clinic in Salt Lake City.

MitralSolutions Inc., a Ft. Lauderdale, Fla.-based developer of cardiovascular medical devices, has raised around $7 million in Series B funding. Cardinal Capital Partners led the deal, and was joined by return backer Maverick Capital. www.mitralsolutions.com

Roamware Inc., a San Jose, Calif.-based provider of roaming solutions for mobile communications, has raised $14 million in Series C funding. Return backers included DCM-Doll Capital Management, Accretive Technology Partners and shelter Capital Partners. www.roamware.com

MediaWhiz Holdings LLC, a New York–based online performance marketing company, has raised an undisclosed amount of private equity funding from Lake Capital. www.mediawhiz.com www.lakecapital.com

SchoolNet Inc., a New York-based provider of instructional management solutions for K-12 school districts, has received $3 million in senior loans and other funding commitments from the New York Small Business Venture Fund II (managed by NYCIF). www.schoolnet.com

Buyout Deals

 

Golden Gate Capital has acquired the semiconductor equipment division of Lecia Microsystems AG, a subsidiary of Danaher Corp. (NYSE: DHR). No financial terms were disclosed. www.goldengatecap.com www.leica-microsystems.com

Wachovia Capital Partners and Peppertree Capital Management have agreed to acquire TMW Systems Inc., a Beachwood, Ohio–based provider of enterprise management software to the trucking industry. No financial terms were disclosed. Company founder and CEO Tom Wiesz will transition into the role of chairman, while COO Ken Thompson will assume the CEO post. TMW was advised on the deal by William Blair & Co. www.tmwsystems.com

Brantley Partners has sold Prime Office Products Inc. to Staples Inc. (Nasdaq: SPLS) for an undisclosed amount. Prime Office Products is a Nashville, Tenn.-based distributor of office supplies and furniture acquired by Brantley in April 1999. www.primeop.com www.brantleypartners.com

The New York Mercantile Exchange has rejected Battery Ventures’ $75 million bid for a 5% ownership position. www.nymex.com

Barclays Private Equity has received European Commission approval to buy Alstom SA’s power conversation unit (APC).

Advent International has received European Commission approval to buy Czech payment card company CCS.

Kongsberg Gruppen of Norway has agreed to sell part of its Simrad unit to private equity firm Altor for approximately $90.5 million. The proposed deal would include Simrad’s production of maritime electronics for use in yachts and commercial vessels, while Kongsberg Gruppen would continue to own the remaining part of Simrad that focuses on fisheries activities. www.kongsberg.com

PE-Backed IPOs

Horizon Lines Inc. a Charlotte, N.C. container shipping company, priced 12.5 million common shares at $10 per share (low end of revised $10-$12 range), for an IPO take of approximately $125 million. Goldman Sachs and UBS served as lead underwriters. Castle Harlan acquired Horizon Lines last July from The Carlyle Group, in a transaction valued at $663.3 million. Carlyle had taken control from CSX Corp. as part of a February 2003 recapitalization. www.horizon-lines.com

Global Logistics Acquisition Corp., a New York-based blank check acquisition company, has filed to raise $80 million via an IPO. It does not have any private equity backing or private equity-related management.

Pacific Golf Management KK, a Japan-based golf course operator, is planning to raise up to 50 billion yen (approx. $445 million) via an IPO later this year, according to Reuters. The company has retained Nomura Holdings and Nikko Citigroup to co-manage the IPO, and counts Lone Star Funds, Goldman Sachs and Ripplewood Holdings among its shareholders.

PE-Backed M&A

Compassoft Inc., a Scotts Valley, Calif.-based provider of SarBox regulatory compliance and enterprise risk management software, has acquired Spreadsheet Auditing Ltd., a UK-based provider of a spreadsheet auditing application called EXChecker. No financial terms were disclosed. Compassoft has raised around $6.5 million in VC funding from Advanced Technology Ventures and Leapfrog Ventures. www.compassoft.com www.spreadsheetauditing.com

The Active Network Inc., a San Diego-based provider of an online community for active lifestyles, has acquired Tee Time King Inc., a Morristown, N.J.-based provider of online tee time reservations and golf course management software. The selling party is Crystal Springs Acquisition LLC. Active Network has raised over $70 million in VC funding since its 1998 inception, from firms like ABS Ventures, Austin Ventures, Canaan Partners, Charles River Ventures, Dominion Ventures, Kettle Partners, Enterprise Partners VC, North Bridge Venture Partners and Ticketmaster. www.theactivenetwork.com

Openwave Systems Inc. (Nasdaq: OPWV) has agreed to acquire Musiwave SA, a France-based supplier of operator-focused music entertainment services, applications and content. The cash and stock deal is valued at approximately 99.5 million euros, with the possibility of an additional 15 million euros if certain financial milestones are met. Musiwave has raised VC funding from Ventech, Natexis Private Equity, Credit Lyonnais and BNP Private Equity. www.openwave.com www.musiwave.net

Human Resources

Douglas Kohrs has joined Split Rock Partners as an entrepreneur-in-residence. He will focus on new medical device opportunities, and is chairman and former CEO of American Medical Systems (Nasdaq: AMMD). www.splitrock.com

Monday Mouth-Off

The sky is gray, the Red Sox are tied for first and Bill First seems a bit unclear on the definition of a blind trust. In other words, it’s time for Monday Mouth-Off.

*** First up were responses to last Monday’s column on emerging VC fund managers. The majority of you felt that Formative Ventures and Brooks/Levine (former Mayfield guys) qualify as emerging managers, but that Panorama (JPMorgan Partners VC group) and Sequoia Capital China do not. Dave writes: “The distinction should come down to whether or not the manager has an existing institutional structure and culture to fall back on. The Formative team obviously started from scratch. The ex-Mayfield GPs have a common experience, but cannot rely on the Mayfield name to get them through the fund-raising process. Panorama has said that it doesn’t expect any real changes from when it was part of JPMP, and even will have J.P. Morgan [Chase] as an LP. Sequoia Capital China will have some new partners, but it’s still just a satellite office/fund of an existing firm.

K added that I was too harsh in my criticism of LPs whose “emerging manager programs” seemed to ignore firms like Formative. He wrote that spinouts, first institutional funds and first-time funds with experienced teams all make sense for an emerging manager program, but that a first-time fund with first-time investors deserves to be a tough sell:

;I’ve seen too many entrepreneurs who have founded a company or two, or even worse, a group of I-bankers, hang out a shingle and say “We’re a private equity firm.” Guess what? it ain’t so. Multi-tasking across several investments simultaneously, dealing politically with VC syndicates and serving on multiple boards, really knowing what to do when a company is in trouble, knowing how to run a fund by properly creating reserves for follow on rounds – all of this is apprenticeship work you learn by working at a private equity firm. As an LP, I’m taking enough risk on backing a new team with a new team dynamic without also providing a kindergarten for investment professionals. Almost no investor group I know of invests in this type of program. And in my opinion, a friends and family fund of $5m answers some questions (can the two GPs work together without killing each other?) but it doesn’t answer the question of whether or not they can effectively source and invest lar! ger amounts of money.

The dynamic of investing $100,000 into a deal are very different than $2.5 million — Do syndicates want you at a larger amount? Can you handle board seats? Also, critical mass – if you only have two GPs, what happens when one is hit by a bus? An entrepreneur as part of a team is fine. An entire team without private equity experience? No way.

*** Also a bunch of emails about my disgust with the greed of Gillette CEO James Kilts, who soon will receive over $165 million while many Gillette employees are laid off. Ben writes: “I am no supporter of overpaying management, but Kilts did take a $30 stock and turn it into a $55 stock, creating $25 billion in value for his shareholders, so giving him less than 1% of that doesn’t seem too unreasonable (particularly when compared to the typical fees private equity shops charge their shareholders). Efficiency is what drives this country, gives us cheap goods, allows us to pay for an army that can stomp around the world, etc, so railing against Kilts for driving efficiency through this transaction seems a little odd. I am sure some other CEO could have done what Kilts did for less money, but that is the board’s fault not Kilts’.

*** Finally, a lot of readers correctly answered Friday’s second quiz question, about the Boston-area VC firm raising an $800 million fund with a strategy of “First institutional money in, no matter the round.” Congrats to everyone who wrote: Highland Capital Partners.

Top Three

 

Shop.com, a Monterey, Calif.-based online marketplace operator, has raised $25 million in its first round of venture capital funding. Oak Investment Partners led the deal. www.shop.com

The New York Mercantile Exchange has told former chairman Michael Marks that it will not consider his $140 million bid for a 10% stake. The offer was being backed by Hellman & Friedman, and came after NYMEX recently signed a non-binding letter of intent to sell the stake for $135 million to General Atlantic. In related news, Battery Ventures reportedly has offered to pay $75 million for 5% of NYMEX. Battery previously had teamed with Blackstone Group to bid on the 10% position which now seems to be headed to General Atlantic. www.nymex.com

Corgentech Inc. (Nasdaq: CGTK) has agreed to merge with AlgoRx Pharmaceuticals Inc., in order to create a drug company focused on developing and commercializing products for pain management and inflammation. The stock-for-stock deal will result in AlgoRx shareholders owning approximately 62% of the combined company. AlgoRx has been in registration for an IPO, and has raised approximately $97 million in total VC funding from firms like InterWest Partners, JPMorgan Partners, Sofinnova Ventures, Advent International, Index Ventures and Pacific Rim Ventures. www.algorx.com www.corgentech.com

VC Deals

 

BioLineRx Ltd., an Israel-based drug development company, has raised $9 million in second-round funding. Return backers included Giza Venture Capital, Pitango Venture Capital and Teva Pharmaceuticals Industries Ltd. BioLineRx has now raised approximately $23 million in total VC funding, plus has received a $21 million Israeli National Biotech Initiative grant. Its lead drug candidate focuses on the treatment of schizophrenia. www.biolinerx.com

mPortal Inc. of Vienna, Va. has raised $4 million from Friedli Corporate Finance. The company enables mobile content and applications for mobile network operators (MNOs), mobile virtual network operators (MVNOs), content providers and enterprises. www.mportal.com

VidSys Inc., an Alexandria, Va.-based developer of mission-critical video management and distribution solutions, has spun out from parent company Dynamic Technology Services Inc. The move was supported by $3 million in Series A funding from IDG Ventures Boston, while Mike Mancuso, former president and COO of Aether Systems Inc., has joined VidSys as its founding CEO. www.vidsys.com www.dts-inc.com

Roundbox Inc., a Florham Park, N.J.-based provider of wireless software for both mobile operators and equipment manufacturers, has raised $8 million in Series A funding. Participants included Core Capital Partners and RRE Ventures. www.roundbox.com

Sensicast Systems Inc., a Needham, Mass.-based provider of wireless sensor networking products and solutions, has raised $13 million in Series B funding. GEF Clean Technology Fund led the deal, and was joined by return backer Ardesta LLC. www.sensicast.com

Virtual Iron Software Inc., an Acton, Mass.-based provider of data center virtualization and management software solutions, has raised $8.5 million in Series C funding. Intel Capital led the deal, and was joined by return backers Goldman Sachs, Highland Capital Partners and Matrix Partners. The transaction also includes a collaboration agreement between Virtual Iron and Intel, plus the option for Virtual Iron to raise an additional $2 million with a “strategic go-to-market partner.” www.virtualiron.com

Amtec LLC, a Boca Raton, Fla.-based provider of outsourced solutions to the cable television, telecom and broadband services industries, has raised $5 million in private equity funding from Palm Beach Capital Partners. www.amtecinc.net

Engana Pty Ltd., a Sydney, Australia-based provider of wavelength selective switch modules for use in ROADM applications, has raised Au$8 million in Series B funding. Starfish Ventures led the deal, and was joined by return backers Technology Venture Partners, DB Capital Partners (via its Ericsson-Deutsche Telecom Fund), Intel Capital and unnamed individuals. www.engana.com

Sennari Inc., a Los Angeles-based provider of mobile entertainment and loyalty applications, has raised $5 million in Series B funding. UV Partners led the deal, and was joined by return backers Novak Biddle Venture Partners and Blacksmith Capital. www.sennari.com

Buyout Deals

 

E.On, a German energy company, has agreed to acquire UK-based Caledonia Oil & Gas Ltd. for approximately 690 million euros (including debt). Private equity firm First Reserve Corp. and the former management team of Highland Energy formed Caledonia in Q1 2003 to acquire and develop natural gas reserves in the North Sea. www.eon.com

The Carlyle Group has agreed to buy AxleTech International from Wynnchurch Capital, Resilience Capital Partners and other minority shareholders. No financial terms were disclosed for the deal, which is expected to close next month. AxleTech is a Troy, Mich-based provider of axles, brakes and other drive-train components for off-highway and specialty vehicles in the commercial and military markets. www.carlyle.com www.axletech.com

General Atlantic reportedly has agreed to acquire a 7.95% stake in New Delhi Television Ltd. from Shyam Cellular Infrastructure Projects Ltd. www.generalatlantic.com

PE-Backed M&A

Intermix Media Inc. (AMEX: MIX) said that its board of directors has rejected a $13.50 per share buyout offer from former Intermix chairman and CEO Brad Greenspan. Instead, it continues to favor a $12 per share offer from News Corp. (NYSE: NWS), that also would include Intermix purchasing the 47% of MySpace.com that it doesn’t already own. VantagePoint Venture Partners holds a 22.4% stake in Intermix, while Redpoint Ventures holds a position in MySpace.com. Greenspan’s offer would have included the participation of several unnamed private equity firms. www.intermix.com

CyberSource Corp. (Nasdaq: CYBS) has agreed to acquire CardSystems Solutions Inc., an Atlanta-based provider of credit card-based merchant payment services. No financial terms were disclosed for the deal, which is expected to close sometime in the fourth quarter. CardSystems has raised over $80 million in private equity funding since its 1993 inception, from firms like Advent International, Camden Partners, The Edgewater Funds and Equity Dynamics. www.cybersource.com www.cardsystems.com

Schick Technologies Inc. (OTC BB: SCHK), a Long Island City, N.Y.–based provider of digital radiographic imaging systems for the dental industry, has agreed to merge with German dental equipment manufacturer Sirona Dental Systems Inc. The stock-for-stock transaction is valued at approximately $1.9 billion, with Sirona shareholders to hold a 67% stake in the combined company. Sirona recently completed a management buyout from former owner EQT Partners, with Madison Dearborn Partners and Beecken Petty O’Keefe and Co. participating. www.schicktech.com www.sirona.com

Scalable Software Inc., a Houston, Texas-based provider of It asset management software, has acquired META Security Group Inc., a Charlotte, N.C.–based provider of compliance management systems. No financial terms were disclosed. META Security has raised over $12 million in VC funding from firms like the Wakefield Group and JMI Equity. www.scalable.com www.metasecuritygroup.com

Firm & Fund News

Wolfgang Reichenberger is stepping down from his CFO post with Nestle SA, in order to create a corporate investment program focused on promising businesses in the areas of science and nutrition. The vehicle will be called the Nestle Growth Fund, and is being capitalized with 500 million euros from Nestle. Reichenberger will partner in the fund formation and management with Gunnar Weikert, founder and chairman of Inventages Venture Capital Investments Inc. www.nestle.com

The Venture Capital Office Managers Association (VCOMA), a nationwide organization for office managers in the VC and private equity industries, has launched. It was founded by Tracey Miles of Dali, Hook Partners, and is designed to “unify decision makers, increase purchasing power, and share resources, information and ideas.” www.vcoma.com

Random Ramblings

I forgot to set the alarm clock last night, which has caused all sorts of franticness this morning. One unfortunate byproduct is that Friday Feedback will have to be converted into Monday Mouth-Off. But so as not to leave you empty-handed headed into the weekend.

*** Om Malik heard a rumor last month that P2P digital content company BitTorrent had raised some venture dollars from DCM-Doll Capital Management. BitTorrent poobah Ashwin Navin, however, said that while his company would be “opportunistic,” it had not taken any outside money. Well, opportunity has now formally knocked, BitTorrent answered, invited it in and served it dinner. According to a regulatory filing dated September 12, the company has raised $8.75 million in a Series A funding round led by. yup, DCM-Doll Capital Management.

*** Speaking of expanding on the reporting of others, Matt Marshall reported earlier this week that New Enterprise Associates was launching a new China-based/China-focused venture capital fund. PE Week’s Constance Loizos has gotten more of the details  (including fund size and name), plus some additional info on Sequoia Capital’s China fund.

*** Quiz Time 1: Can you name the three Boston-area VCs who are in preliminary talks to form their own firm, focused on the communications sector? If it does come together, I’d be tempted to call it Shasta Ventures East, although there isn’t any formal connection. More a matter of common characteristics.

*** Quiz Time 2: Can you name the Boston-area VC firm in market with an $800 million fund whose basic strategy is “First institutional money in, no matter the round?”

*** A reader wrote in to ask if Phil Greer (co-founder of Weiss, Peck & Greer) was joining Gill Cogan, Carl Showalter and the other folks leaving Lightspeed Venture Partners to form their own firm. I put the question to Cogan yesterday (who kindly called in from a road trip), who said that Greer would serve in some sort of formal advisory role, but that it would be on a part-time basis without Greer taking any board seats. Lightspeed, you may remember, spun out of Weiss, Peck & Greer back in 2000.

*** My father was stuck in a boring meeting yesterday, so he had time to do the math on James Kilts’ obscene payout: “1,000 jobs for 3.25 years assuming average cost with benefits (including health insurance) of $50K/employee/year.”

*** Unrelated: Finally, another reader sent the following email, in preparation of Hurricane Rita. I’m sure there are hundreds of reasons why this wouldn’t work, but it is nonetheless intriguing: “Next time, offshore oil rigs should be shut down 5 days in advance and converted to water pumping stations that pump 35 degree water from the ocean floor to the surface with the objective of lowering ocean surface temperatures by 1 degree….this might mute the rapid acceleration from Cat 1 to Cat 5 in a 24 hour period. This idea is unburdened by all the logical questions about size/amount of water/impact etc….”

Top Three

 

Force10 Networks Inc., a Milpitas, Calif.-based provider of 10-Gigabit Ethernet switching and routing solutions, has raised $40.6 million in Series E funding, according to a regulatory filing (filing indicates an upper offering price of $44.5 million). Advanced Equities Late Stage Opportunity Fund was joined by return backers Crosslink Capital, U.S. Venture Partners, New Enterprise Associates and Worldview Technology Partners. Force10 has raised over $275 million in total VC funding since its 1999 inception. www.force10networks.com

Cinven has sold UK-based gym chain Fitness First PLC to BC Partners for Gbp835 million. This more than double’s Cinven’s original investment. UBS advised Cinven on the deal. www.fitnessfirst.com

PayDay One Holdings Inc., a Fort Worth, Texas-based provider of short-term consumer loans, has raised $5 million in Series A funding from Sequoia Capital, according to a regulatory filing. Sequoia made the deal through its new Sequoia Growth Capital III fund. www.paydayone.com

VC Deals

 

NewCross Technologies Inc., a San Mateo, Calif.-based provider of multi-service broadband solutions, has raised around $5.2 million in Series B funding, according to a regulatory filing. Participants included Columbia Ventures, Consor Capital and Sterling Payot Ventures. www.newxt.com

Invoq Systems Inc., a Pleasanton, Calif.-based provider of event resolution and interactive alerting applications, has raised $3.25 million in Series B funding from JMI Equity Fund. www.invoqsystems.com

Amity Entertainment has formed as an entertainment production, distribution and licensing company, with an undisclosed amount of private equity backing from Angelo, Gordon & Co. The company – founded by media and entertainment veterans Richard Seet and Stephen Elsky (onetime Carlyle Group principal) – also announced that it has acquired the assets to Tadpole Entertainment and two film libraries.

SeaMobile Inc., a based provider of communications services to cruise lines, yachts, ferries, container ships and offshore platforms, has launched with an undisclosed amount of VC funding from Ignition Partners. The company also has received funding from unnamed angels, and company founders William Markrs (DirectTV founder), Jack Donohue (former McCaw Cellular executive) and William Marks Sr. (cable television entrepreneur). www.seamobile.com

Buyout Deals

 

Citigroup Venture Capital International has acquired a controlling interest in Receivable Management Services (RMS) from PNC Equity for an undisclosed amount. RMS is a Bethlehem, Pa.-based global accounts receivable management company. www.rmsna.com

Hicks, Muse, Tate & Furst has agreed to acquire wholesale insurance brokerage Swett & Crawford from Aon Corp. (NYSE: AOC). No financial terms were disclosed. Joining Hicks Muse on the equity tranche are Banc of America Capital Investors and Emerald Capital Group, while CSFB is arranging the necessary debt financing. www.swett.com

Morgan Stanley Venture Partners and BA Venture Partners have acquired a majority ownership position in National Healing Corp., a Boca Raton, Fla.-based operator of managed wound healing centers. No financial terms were disclosed. First Albany Capital served as I-bank and advisor for the transaction. www.nationalhealing.com

CGS Management, a Swiss buyout firm, has sold Electronicpark Holding AG to Cicorel Holding SA for an undisclosed amount. www.cgs-management.com

The Carlyle Group has agreed to acquire a majority ownership stake in Universidad Latinoamericana SC, a private university with campuses in Mexico City and Cuernavaca, Mexico. No financial terms were disclosed. www.carlyle.com www.ula.edu.mx

Thales SA has agreed to sell its High Tech Optics unit to Candover for approximately 220 million euros. Royal Bank of Scotland will provide financing for the transaction. www.thalesgroup.com

Vista Equity Partners has completed its acquisition of MSDI Mobile Data Solutions Inc. (TSX: MMD; Nasdaq: MDSI), a British Columbia, Canada-based provider of mobile workforce management software. The total transaction was valued at approximately US$70 million, or $8 per share. www.vistaequitypartners.com www.mdsi.ca

Castle Harlan has completed its acquisition of The Restaurant Co., the operator and franchisor of 483 family restaurants under the Perkins Restaurant & Bakery brand. The deal was valued at approximately $245 million, with sellers including retired Restaurant Co. chairman CEO Don Smith (retains minority stake) and BancBoston Ventures. Smith has been succeeded as chairman and CEO by Joseph Trungale, who previously had served as president and COO. www.castleharlan.com

Aloha Airgroup Inc. has signed a letter of intent with The Yucaipa Cos. and Aloha Aviation Investment Group LLC (managed by IBS Capital Holdings) for a substantial equity infusion into Aloha Airlines, pursuant to a plan of reorganization. The Agreement is subject to U.S. Bankruptcy Court approval and other conditions. www.AlohaAirlines.com

Pacific Equity Partners has completed its acquisition of Worldwide Restaurant Concepts Inc. (NYSE: SZ), operator of hundreds of Sizzer and KFC restaurants, based primarily in Australia. The sale price was $6.92 per share. www.wrconcepts.com

Change Capital Partners, HgCapital and Graphite Capital are in the running to buy UK fashion company Republic for approximately Gbp100 million, according to The Evening Standard.

Volkswagon AG reportedly is considering the sale or spin-off of both its Eurocar rental subsidiary and auto consulting division Gedas. The Eurocar news comes shortly after Ford agreed to sell Hertz Corp. to a private equity consortium. www.vw.com

PE-Backed IPOs

 

National Waterworks Holdings Inc. has withdrawn registration for a $400 million IPO, pursuant to a pending acquisition by The Home Depot Inc. (NYSE: HD). The company currently is controlled by Thomas H. Lee Partners and JPMorgan Partners. www.nationalwaterworks.com

Horizon Lines Inc. a Charlotte, N.C. container shipping company, has reduced its proposed IPO terms to 12.5 million common shares being offered at between $10 and $12 per share. It previously filed to sell 15.63 million common shares being offered at between $15 and $17 per share. It plans to trade on the NYSE under proposed ticker symbol HRZ, with Goldman Sachs and UBS serving as lead underwriters. Castle Harlan acquired Horizon Lines last July from The Carlyle Group, in a transaction valued at $663.3 million. Carlyle had taken control from CSX Corp. as part of a February 2003 recapitalization. www.horizon-lines.com

Telenet, a Belgian cable television operator, is planning to raise up to 300 million euros vioa a public flotation next month, according to Reuters. Venture capital firm GIMV holds a 14.9% stake in Telenet. www.telenet.be

PE-Backed M&A

Symantec Corp. (Nasdaq: SYMC) has agreed to acquire WholeSecurity Inc., an Austin, Texas-based provider of behavior-based security and anti-phishing technology. No financial terms were disclosed for the deal, which is expected to close next month. WholeSecurity has raised around $18 million in VC funding since its 2000 inception, from firms like Venrock Associates, New Enterprise Associates and Parker Price Venture Capital. www.symantec.com www.wholesecurity.com

Astea International Inc. (Nasdaq: ATEA), has acquired FieldCentrix Inc., an Irvine, Calif.-based provider of mobile field force automation solutions. The deal is valued at around $3.34 million in Astea common stock. FieldCentrix has raised over $60 million in total private funding since its 1996 inception, from firms like Atrium Capital, Brentwood Venture Capital, Sigma Partners, Piper Jaffray Ventures, Rustic Canyon Partners and Forrest Binkley & Brown. www.fieldcentrix.com

Firm & Fund News

Genesis Partners, an Israel-based VC firm, has held a $150 million final close on its third fund, according to VentureWire. It had held a first close on more than $100 million earlier this year

First Albany Companies Inc. (Nasdaq: FACT), the parent bank of FA Technology Ventures, has retained JH McCann & Co. to search for its new CEO. www.firstalbany.com

Human Resources

Christopher Daniel has joined Praesidian Capital Investors as a managing director, and head of the middle-market mezzanine firm’s new office in Los Angeles. Daniel previously worked for a high-net-worth family office, and before that was a partner with Windjammer Capital. www.praesidian.com

Rick Nathan, managing director of Goodmans Venture Group, has been appointed president of Canada’s Venture Capital & Private Equity Association (CVCA). www.cvca.ca

Jay Turner has joined the partnership of GuideCap Partners, a merchant bank serving clients and investors in the southwestern United States. He previously was managing director with Banc One Mezzanine Corp. www.guidecappartners.com

Curt Launer has joined Sagent Advisors as a managing director in its I-banking group, where he will focus on the energy and power sector. He previously was a managing director at both CSFB and DLJ. www.sagentadvisors.com

Ilan Zipkin has joined Prospect Venture Partners as a general partner, according to Private Equity Insider. He previously was with MPM Capital, where he had been promoted to the general partnership just three months ago. www.prospectventures.com
_______________

Correction: Francois Joly has joined Probitas Partners as a director. Yesterday’s PE Week Wire misspelled his name.

Random Ramblings

*** I’ve wondered for a while if the direct secondaries movement would slow down once most of the bubble-era VC groups (i.e., Dell Ventures, Tyco Ventures, etc.) were flushed from the system. It seems that it will not.

Case in point: Lake Street Capital is about to begin raising its third fund with a target capitalization of $150 million. Lake Street is a San Francisco-based firm founded in 2003 to acquire portfolio company positions from venture capital, buyout and other private equity firms (a.k.a. direct secondaries). Its first fund was a $5 million single-acquisition vehicle, followed up by a $35 million second fund that made news late last year for scooping up nearly all of Dell Ventures’ portfolio companies. It also grabbed a handful of Intel Capital plays, and has had four exits: NetScaler Inc. (acquired by Citrix), RAINfinity (acquired by EMC), Gyration Inc. (acquired by Thomson) and PacketVideo Corp. (VC stake acquired by NextWave Wireless).

Lake Street declined comment due to those pesky and misunderstood SEC restrictions, but some LPs I spoke with are very interested in the space, and are looking forward to seeing the Lake Street book (it should be sent out next month). They say that direct secondaries be great portfolio additions, since they often can cherry-pick their deals from desperate sellers (i.e., discounted prices). The deciding factor appears not to be declining market opportunity – a supposition of mine that no one else seems to agree with – but rather track record. The question now will be if Lake Street has enough of one to get its fund done.

*** The VSP Capital saga appears to be over. Now it’s understandable if you thought it was over several months ago, when the VC firm disbanded its third fund. Or maybe you thought it was over when the small handful of Fund III portfolio companies were auctioned off. Or maybe when former VSP’ers finally began to join other firms? But all of that would skip over the blingering question of who gets to manage Fund II.

According to someone involved in the negotiations, the LP advisory board of VSP Capital has agreed to let Joanna Rees-Gallanter and John Hamm manage Fund II, and to pay them a total of $1 million per year for their trouble. Rumors that former VSP partners like Matt Crisp or Tony Conrad would make a play for the assets never materialized. More on this in Monday’s print edition of PE Week.

*** Eos Airlines has received its air carrier certification from the FAA. This means that, beginning Nov. 1, the startup will begin flying business travelers from JFK in New York to London. Eos has raised $85 million in private equity funding from Golden Gate Capital, Sutter Hill Ventures and Maveron.

*** Finally, I know I’m late to the bashing of Gillette chief Jim Kilts, but I’d be remiss in not joining the chorus of outrage (petty disclaimer: Gillette headquarters is near my office, and it commandeered my free dirt parking lot last year). For the uninitiated, Kilts oversaw the sale agreement of Gillette to P&G, which likely will result in thousands of local layoffs and a $165 million parachute for Kilts (plus lots of P&G options). In other words, he made a decision that made himself rich and others poor. Even worse, he’s had the gall to complain about media coverage of his greed (he called himself a piñata).

My humble hope is that Kilts does not get hired to a plum private equity job once he formally leaves Gillette. I know that PE is the final refuge for many former CEOs, but hopefully some sense of morality will prevail.

Top Three

 

Investcorp has agreed to acquire CCC Information Services Group Inc. (Nasdaq: CCCG), a Chicago–based supplier of software, communications systems, Internet and wireless-enabled technology solutions to the automotive claims and collision repair industries. The total transaction is valued at approximately $495 million, with CCC shareholders receiving $26.50 per share in cash. CSFB served as financial advisor to CCC. www.cccis.com

SunRocket Inc., a Vienna, Va.-based Internet phone service provider, has raised $25 million in second-round funding. Mayfield led the deal, and was joined by DCM-Doll Capital Management and return backers BlueRun Ventures and anthem Capital Management. www.sunrocket.com

Ikanos Communications, a Fremont, Calif.-based semiconductor company focused on enabling broadband services over existing copper lines, priced 6.4 million common shares at $12 per share (high end of $10-$12 range), for an IPO take of approximately $76.8 million. Citigroup and Lehman Brothers served as lead underwriters, while Ikanos’s VC backers include Sequoia Capital, Walden International, Greylock Partners, Telesoft Partners and Ridgewood Ventures. www.ikanos.com

VC Deals

 

Cellerant Therapeutics Inc. of San Carlos, Calif. has raised $9 million in additional Series B funding, bringing the round total to $25 million. Second-tranche participants included Camelot Ventures, Amgen founder George Rathmann and Eminent Venture Capital Corp. Novel Bioventures led the initial tranche, and was joined by CX Venture Group, Rathmann and Series A shareholders MPM Capital, Allen & Co. and BD Ventures. Cellerant blood-forming stem cell-based therapies for cancer, genetic blood disorders and autoimmune diseases. www.cellerant.com

Blue Vector Systems Inc., a Mountain View, Calif.-based RFID company, has raised $3.63 million in Series B funding. Draper Richards and Onset Ventures co-led the deal, and were joined by Blacksmith Capital. www.bluevectorsystems.com

Digital5 Inc., a Lawrenceville, N.J.-based provider of software for streaming multimedia content, has raised an undisclosed amount of venture capital funding from Blue Chip Venture Co. www.digital5.com

Election Services Corp., a Garden City, N.Y.-based provider of global election software and services, has raised $5 million in VC funding from Trillium Group and North Atlantic Capital. www.electionservicescorp.com

Colibria AS, a Norway–based provider of instant messaging and presence service technology platforms, has raised 8.5 million euros in new VC funding. Ferd Ventures was joined on the deal by return backers Northzone Ventures and Four Seasons Venture. www.colibria.com

Kestrelink Corp., a Boise, Idaho-based provider of software platforms for integrating wireless networking into media-centric devices, has raised around $1.99 million in Series B funding, according to a regulatory filing. Backers include Highway 12 Ventures and Village Ventures. www.kestrelink.com

Buyout Deals

 

GTCR Golder-Rauner has agreed to acquire a majority ownership position in Sorenson Communications, a Salt Lake City–based provider of video relay services and equipment for the deaf and hard-of-hearing community. No financial terms have been disclosed for the deal, which is expected to close in November. Once the deal closes, Sorenson founder James Lee Sorenson will transition from CEO to director, while current COO Patrick Nola will become CEO. All other management and employees will be retained. www.sorenson.com www.gtcr.com

Tammac Holdings Corp., a Wilkes-Barre, Pa.–based specialty finance company focused on the manufactured housing industry, has raised $45 million in private equity funding. LLR Partners and Greenhill Capital Partners co-led the deal, and were joined by Austin Capital Group and SCP Private Equity. Tammax also secured a $300 million debt facility from lenders RBS Greenwich Capital and Textron Financial. www.tammaccorp.com

Tricor Pacific Capital has acquired Tharco Holdings Inc. and Tharco Containers Colorado Inc., makers of corrugated and engineered foam packaging solutions. No pricing terms were disclosed for the deal, which closed in July and was done in concert with company management. Senior financing was provided by GE Capital, while subordinated financing was provided by The Blackstone Group. www.tricorpacific.com www.tharco.com

Ampersand Ventures has become the majority shareholder of RadPharm Inc., a Princeton, N.J.-based provider of centralized oncology and medical imaging review services for global clinical trials. No financial terms were disclosed. www.radpharm.com

Pacific Brands Ltd. reportedly has acquired Australian bed linens company Sheridan from CHAMP Private Equity for Au$61.8 million.

PE-Backed IPOs

 

NxStage Medical Inc., a Lawrence, Mass.-based medical device company focused on renal disease and acute kidney failure, has set its proposed IPO offering to 5.5 million common shares being offered at between $13 and $15 per share. It plans to trade on the Nasdaq under ticker symbol NXTM, with Merrill Lynch & Co. serving as lead underwriter. NxStage has raised around $91 million in total VC funding since its 1998 inception, from firms like Sprout Group (36.5% pre-IPO stake), Atlas Venture (17.3%), Lightspeed Venture Partners (5.3%) and Adams Street Partners (5.3%). www.nxstage.com

Intarcia Therapeutics Inc., an Emeryville, Calif.-based drug company focused on cancer and infectious diseases, reportedly has withdrawn registration for a proposed $86.25 million IPO. CSFB was serving as lead underwriter for the offering, which was pulled due to “unfavorable market conditions.” This is the record IPO withdrawal for Intarcia, which filed for a $57.5 million offering in November 2000, but withdrew it in April 2001. Significant shareholders include New Enterprise Associates, Venrock Associates, Alta Partners, Granite Global Ventures and InterWest Partners. www.intarcia.com

IGN Entertainment Inc. has withdrawn registration for a proposed $200 million IPO, citing a pending $650 million acquisition by News Corp. (NYSE: NWS). IGN is a Brisbane, Calif.-based provider of community-based Internet media and services for video gaming. It was a public company until it was taken private in a 2003 buyout led by Great Hill Partners. www.ign.com

 

PE-Backed M&A

New Energy Capital, a portfolio company of VantagePoint Venture Partners, has acquired a majority interest in the Greenville Steam Co., a Greenville, Maine-based 16 megawatt biomass-fired operating power generation facility. The selling party is Hafslund USA Inc., a wholly-owned subsidiary of Norway-based Hafslund ASA. No financial terms were disclosed. www.newenergycapital.com

Infraworlds, a Paris, France-based maker of entertainment products for mobile phones and PDAs, has acquired Mobile Digital Media, publisher and distributor of packaged retail software for mobile devices, from Quickoffice Inc. No financial terms were disclosed. Infraworlds is a portfolio company of Sofinnova Partners, while Quickoffice raised $7 million in VC funding earlier this year, in a round led by Mayfield. www.infraworlds.com www.quickoffice.com www.gomdm.com

OXIS International Inc. (OTC BB: OXIS.OB) has agreed to pay up to $6 million in cash to acquire BioCheck Inc., a Foster City, Calif.-based maker of enzyme immunoassay test kits. According to VentureWire, BioCheck is a portfolio company of Vivo Ventures. www.oxis.com www.biocheckinc.com

Firm & Fund News

Wynnchurch Capital Partners of Lake Forrest, Ill. is raising up to $300 million for its second private equity fund, according to a regulatory filing. Bear Stearns & Co. is acting as placement agent. www.wynnchurch.com

Human Resources

Francois Joy has joined Probitas Partners as a director. He previously was a senior member of with Caisse de Depot et Placement du Quebec, where he was responsible for building and managing the group’s North American and European fund portfolios. www.probitaspartners.com

Jay Jordan and Ramon de Oliveira have joined the board of trustees of the Ewing Marion Kauffman Foundation. Jordan is founder of private equity firm The Jordan Co., while de Oliveira is managing partner of Logan Pass Partners. www.kauffman.org

Bruce Manchester has been named a senior managing director of RSM EquiCo Capital Markets LLC, the broker-dealer subsidiary of I-bank RSM EquiCo. He will be based in Costa Mesa, Calif., and will provide M&A and capital raising advisory services to the firm’s I-banking clients. He previously was a founding supervising principal of GFP Advisors in San Francisco. www.rsmequico.com
_______________

Correction: Molecular Imprints Inc.raised $17 million in Series C funding, not in Series A funding.

26,000 and Counting…

Every time the PE Week Wire adds another thousand subscribers, I like to remind you that these morning missives are just a distant star in our editorial universe. Yeah, it’s a free star, but paid subscribers to Private Equity Week, Venture Capital Journal and/or Buyouts Magazine get VC and LBO market news and analysis that can’t be found anywhere else. Deal news, fund news, market trend analysis, investor profiles, and more are just a few dollars away (this is what corporate credit cards were made for). So send sales guru Ingrid Olsen an email today. For those wanting to adv! ertise in any of those publications – or in the PE Week Wire – please contact Naz Bayazit. As always, thanks for reading.

Top Three

 

General Atlantic has signed a non-binding letter of intent to acquire a 10% stake in The New York Mercantile Exchange for $135 million. General Atlantic had been competing against the tandem of Blackstone Group and Battery Ventures, although both bidders originally had been looking for 20 percent. In related news, former NYMEX chairman Michael Marks said yesterday that he would team with private equity firm Hellman & Friedman for a last-minute bid.

Oanda Corp., a New York-based operator of a foreign currency exchange website, has raised $17 million in Series A funding from Index Ventures. www.oanda.com

Molecular Imprints Inc., an Austin, Texas-based provider of imprint lithography, has raised $17 million in Series A funding. The deal is considered a first close, with Molecular Imprints looking for a total of $25 million (although a regulatory filing suggests an upper limit of $35 million). Backers include Dai Nippon Printing Co., Alloy Ventures, Motorola Ventures, Harris & Harris, Draper Fisher Jurvetson, Hakuto Co. Ltd. and Asset Management Partners. Molecular Imprints has raised over $60 million in total VC funding since its 2001 inception. www.molecularimprints.com

VC Deals

 

Salamander Energy, an energy exploration and production company focused on Southeast Asia, has raised $50 million in private equity funding. The deal includes $11 million from 3i Group. www.3i.com

BlueRoads Corp., a San Mateo, Calif.-based channel management software-as-a-service company, has raised $9.12 million in Series C funding. Cardinal Venture Capital led the deal, and was joined by return backers ArrowPath Venture Capital and El Dorado Ventures. www.blueroads.com

Rearden Commerce Inc., a San Mateo, Calif.-based provider of a services on-demand commerce platform and application suite, has raised $25 million in Series C funding. Oak Investment Partners led the deal, and was joined by return backers Foundation Capital and Charter Ventures. Rearden has raised $67 million in private funding since its 2000 inception. www.reardencommerce.com

SharpCast Inc., a Palo Alto, Calif.-based developer of a wireless software platform, has raised over $3 million in Series A funding from Draper Fisher Jurvetson and Selby Ventures. www.sharpcast.com

Global MailExpress Inc., an Atlanta-based provider of expedited delivery and mail services for flats, small parcels and bound printed materials, has raised $11 million in Series A funding. Logispring and CMEA Ventures co-led the deal. www.mailexpress.biz

Capella Photonics Inc., a San Jose, Calif.-based provider of wavelength selective switch modules, has raised $10 million in Series B funding at a post-money valuation of approximately $30.5 million. Return backers included Bay Partners, BCE Capital and Vanguard Ventures. www.capellaphotonics.com

Sleep Innovations Inc., a West Long Beach, N.J.-based branded maker of Memory Foam mattresses and pillows, has received an undisclosed amount of private equity funding from Catterton Partners. www.sleepinnovations.com

HealthEquity Inc., a Tucson, Ariz.-based provider of health savings accounts to consumers, has raised $6.6 million in Series B funding from unnamed backers. www.healthequity.com

Offermatica Corp., a San Francisco-based provider of on-demand marketing services, has raised $7 million in funding led by return backer Baker Capital. The company has raised over $50 million in total VC funding since its 1996 inception, including a $30 million Series E round in 2000 at a post-money valuation of nearly $200 million. Existing shareholders include Accel Partners and Meritech Capital Partners. www.offermatica.com

Buyout Deals

 

Evans Analytical Group LLC has completed its $37.5 million management buyout, which was backed by company employees, Auriga Partners and American Capital Strategies. EAG is a Sunnyvale, Calif.-based provider of micro-analytical surface analysis and materials characterization services to identify the overall atomic and physical structure of materials, including chemical composition and chemical bonding, as well as level and type of trace impurities. www.eaglabs.com

Harron Communications LP, a Fraser, Pa.-based owner of multiple cable systems operating under the name MetroCast, has completed a recapitalization. The deal includes a $50 million investment from Boston Ventures, and was done in partnership with the Harron family and company management. Harron serves approximately 110,000 cable television customers in New Hampshire, Maine, Pennsylvania, Maryland and Virginia. www.metrocastcablevision.com www.bostonventures.com

Fundamental Capital, a San Francisco-based private equity firm, has acquired Betek Manufacturing Inc., a San Jose, Calif.-based provider of subsystems and assemblies to capital equipment and high-tech industrial customers. No financial terms were disclosed. Pacific Community Ventures and The Bay Area Equity Fund (managed by JP Morgan) are equity co-inv8stors. CapitalSource provided senior financing, while Medford Investments provided subordinated financing. www.fundamentalcapital.com

Monomoy Capital Partners has completed its acquisition of capital equipment company Hess Industries Inc. from family founders. No financial terms were disclosed for the deal, which included financing provided by Comerica Bank and Basso Capital Management. www.mcpfunds.com www.hessindustries.com

Lehman Brothers Merchant Banking has agreed to acquire the Spumador Group, an Italy-based soft drink and mineral water bottling business, from family founders who will retain a 24% position. No financial terms were disclosed. Lehman Brothers also said that it will install Jose Arozamena, CEO of Cambium USA, as Spumador’s new CEO. www.lehman.com

Newbridge Capital reportedly will pay $100 million for a 49% stake in India-based used-truck financing company Shriram Holdings Pty Ltd. Industri Kapital has received European Commission approval for its proposed buyout of French pre-cast concrete products company Bonna Sabla from AXA Private Equity and BS Private Equity SpA. www.bonnasabla.com

Advent International has received European Commission approval for its proposed buyout of Herlitz AG, a German maker of stationary and paper products. The deal is expected to close in early October. www.adventinternational.com

Amplico Kapital AB reportedly has acquired a 62.5% stake in Swedish design company R.O.O.M. for an undisclosed amount. www.amplico.se

PE-Backed IPOs

 

Cbeyond Communications Inc., an Atlanta-based provider of managed IP-based communications services to small businesses in large metropolitan areas, has set its proposed IPO terms to approximately 6.06 million common shares offered at between $16 and $18 per share. It plans to trade on the Nasdaq under ticker symbol CBEY, with Deutsche Bank Securities serving as lead underwriter (JPMorgan had been listed on the original S-1, but is not listed in the amended S-1a). Cbeyond has raised over $200 million in VC funding since its 1999 inception, with significant shareholders including VantagePoint Venture Partners, Battery Ventures, Cisco Systems, Madison Dearborn Partners, Metalmark Capital and Adams Street Partners. www.cbeyond.com

TAL International Group Inc., a Purchase, N.Y.-based provider of inter-modal freight containers, has set its proposed IPO terms to 11.5 million common shares offered at between $18 and $20 per share. It plans to trade on the NYSE under ticker symbol TAL, with Credit Suisse First Boston, Deutsche Bank Securities and Jefferies & Co. serving as lead underwriters. TAL International is controlled by The Jordan Co., with other significant shareholders including Fairholme Partners, Seacon Holdings Ltd., Edgewater Private Equity and JZ Equity Partners. www.talinternational.com

Endeavor Acquisition Corp., a New York-based special purpose acquisition company (SPAC), has filed to raise $200 million via an IPO. The company plans to trade on the OTC BB, with Broadband Capital Management and Ladenburg Thalmann serving as lead underwriters. Management includes: Chairman Eric Watson, also chairman of Cullen Investments Ltd.; President Jonathan Ledecky, founder of U.S. Office Products; Director Edward Matthias, a partner and managing director of The Carlyle Group.

CoTherix Inc. (Nasdaq: CTRX), a South San Francisco-based drug company focused on cardio-pulmonary and other chronic diseases, has filed to sell 4.5 million common shares in a secondary offering. The company will sell 4 million shares, while the remainder will be offered by shareholders MPM Capital and Alta Partners. www.cotherix.com

PE-Backed M&A

One Network Enterprises Inc., a Dallas, Texas-based provider of supply network solutions, has acquired Valdero Corp., a Palo Alto, Calif.-based provider of supply chain performance management and analytical collaboration applications. No financial terms were disclosed. One Network is a portfolio company of Fenway Partners, while Valdero has raised $23 million in VC funding from firms like Kleiner Perkins Caufield & Byers, Mohr, Davidow Ventures, Trinity Ventures and Integral Capital Partners. www.onenetwork.com www.valdero.com

Oracle (Nasdaq: ORCL) has agreed to acquire Global Logistics Technologies (G-Log), a Norristown, Pa.-based provider of logistics and transportation management software. No financial terms were disclosed. G-Log has raised approximately $60 million in VC funding since its 1999 inception, from firms like Mayfield, Focus Ventures, FBR Venture Capital, Liberty Ridge Capital, New Meadows Capital and Stanford University. www.oracle.com www.glog.com

SAP AG (NYSE: SAP) has agreed to acquire Triversity Inc., a Toronto-based provider of point-of-sale software solutions. No financial terms were disclosed for the deal, which is expected to close next month. Triversity raised $15 million in VC funding from Technology Crossover Ventures in 2002. www.sap.com www.triversity.com

Firm & Fund News

Key Bridge Partners has spun out of Laurelwood Ventures as a new operating entity that will acquire $10 million to $150 million manufacturing companies in partnership with private equity firms. The new group was founded by Laurelwood managing directors Bob Maruszewski and Andrew Wert, in order “to separate Laurelwood Ventures’ purely financial investment activities from Key Bridge’s value-added acquisition activities.” www.keybridgepartners.com

Lehman Brothers has raised $3.5 billion for a pair of real estate private equity funds: $2.4 billion for Lehman Brothers Real Estate Partners II and $1.1 billion for Lehman Brothers Real Estate Mezzanine Partners. www.lehman.com

Court Square Ventures has secured approximately $100 million in commitments for its second fund, according to VentureWire. It is looking for a total of $125 million, compared to its first fund size of $35 million. www.courtsquareventures.com

Human Resources

Thomas Taapken has joined German drug company Elbion AG as chief financial officer. He has spent the past three years as a partner with Elbion shareholder Deutsche Venture Capital. www.elbion.com

Ben Cukiar has been promoted to the position of partner with FT Ventures, where has focuses on opportunities in the business services sector. He has been with the firm since April 1999, and will relocate from San Francisco to New York. www.ftventures.com

Art Marks, a general partner of VC firm Valhalla Partners, has resigned from the board of Mobius Management Systems Inc. (Nasdaq: MOBI), in order to devote more time to Valhalla. www.mobius.com

Tony Zappala has joined Index Ventures as an associate. www.indexventures.com

Random Ramblings

*** A reader asks: “Is Dave Mazza leaving Grove Street Advisors?” The short answer is no, but the question is understandable. Mazza is a former VC industry headhunter who co-founded Grove Street in 1998. Since then, he has helped the Wellesley, Mass.-based firm grow from a one-account VC advisory (it places CalPERS’ VC fund investments) to an emerging powerhouse that could survive if CalPERS ultimately decides to pull the plug after its upcoming strategic review. He also has been sending out some “Got any interesting deal-flow?” inquiries on his own letterhead and is listed on GSA’s website as an operating partner. So what’s up?

Mazza says that he’s reduced his responsibilities at GSA down to two days per week, during which he’ll continue to manage 8-10 relationships with such firms as North Bridge Venture Partners and Summit Partners. He won’t be involved in new relationships, unless they are somehow related to his existing ones, such as a follow-on fund or spinout firm. The rest of his time will be spent doing a few direct, early-stage deals (he’s done some in the past), working with non-profit Do Something (where he is a director) and serving as co-founder of Brown University’s Entrepreneurship Department. He also emphasizes that his current arrangement with GSA lasts six years, at which point he’ll be 60. “I have lots of things I want to do with my life, so this provides me with a lot of flexibility,” he says.

*** Speaking of that CalPERS strategic review, it was not on the agenda during yesterday’s Investment Committee meeting. Mike Moy of Pension Consulting Alliance had said back in July to expect a presentation in early fall, which I had assumed meant yesterday. It seems, however, that Moy is quite precise with his words. In a recent email he wrote: “Fall does not begin until September 22.”

*** If anyone could loan out a chimpanzee, I’d sure like to test Mike Moritz’ theory.

*** A small number of you wrote in yesterday to complain that we’ve sold our subscriber list to third-party advertisers. Don’t worry, we’ve done no such thing. All third-party emails are sent through our servers, without the actual list being revealed, sold, shared, etc. But yes, we do provide the service as one way to keep your morning missives free of charge.

*** I’ll be spending some time tonight at ACG Boston’s Fall Networking Event at the Newton Marriott, just outside of Boston. Hope to see some of you there.

Top Three

Everdream Corp., a Fremont, Calif.-based provider of desktop management services, has raised $20 million in Series F funding. Rho Ventures and Canaan Partners co-led the deal, and were joined by return backers Draper Fisher Jurvetson, Portage Ventures and New World Ventures. The company has raised over $95 million in total VC funding since its 1998 inception, including a $12 million Series D infusion in 2003 at a post-money valuation of approximately $38 million. www.everdream.com

Bain Capital has agreed to acquire FCI, the connector subsidiary of Areva. The deal valued FCI at approximately 1.067 billion euros, and is expected to close by the end of October. www.baincapital.com www.areva.com

Kereos Inc., a St. Louis-based biotech company focused on the detection and treatment of cancer and cardiovascular diseases, has raised $19.5 million in Series B funding. Prolog Ventures, Triathlon Medical Ventures and Charter Life Sciences co-led the round along with return backer RiverVest Venture Partners. Other new buyers included Alafi Capital, Apjohn Ventures, Harris and Harris Group, Lux Capital, MB Venture Partners, Sigvion Capital and Vectis Life Science, Genentech and Royal Philips Electronics, while existing shareholder Barnes-Jewish Hospital also participated. www.kereos.com

VC Deals

 

Mirapoint Inc., a Sunnyvale, Calif.-based provider of secure messaging solutions, has raised $10.3 million in Series II funding. Worldview Technology Partners led the deal, and was joined by fellow return backers Franklin Templeton and Goldman Sachs. Mirapoint has raised over $82 million in total VC funding since its 1997 inception. www.mirapoint.com

Bit9 Inc., a Cambridge, Mass.-based provider of endpoint security solutions, said that it raised $6 million in Series A funding in December 2004. Participants included Atlas Venture and Highland Capital Partners. www.bit9.com

Tropos Networks Inc., a Sunnyvale, Calif.-based mesh networking company, has raised an undisclosed amount of strategic funding from Siemens Venture Capital. The company already has raised more than $45 million in VC funding, including a $15 million Series E infusion earlier this year. Shareholders include Benchmark Capital, Intel Capital and Boston Millennia Partners. www.troposnetworks.com

Silver Peak Systems Inc., a Mountain View, Calif.-based developer of enterprise-class network acceleration appliances, has raised $12.5 million in first-round funding. Backers include Benchmark Capital and Greylock Partners. www.silver-peak.com

Carbon Design Systems Inc., a Waltham, Mass.-based provider of electronic design automation software, has raised around $5.35 million in Series C funding, according to a regulatory filing. Return backers include Matrix Partners, Flagship Ventures and Commonwealth Capital Partners. Carbon Design Systems has raised around $25 million in total VC funding since its 2002 inception. www.carbondesignsystems.com

QueueCard Inc., a Palo Alto, Calif.-based provider of credit card authentication solutions, has raised $7 million in Series A funding. Backers include Worldview Technology Partners, Media Technology Ventures and Societe Generale Investment Corp. www.queuecard.com

Bandwidth.com, a Cary, N.C.-based provider of business communications services, has raised $4.75 million of venture capital from unnamed backers. www.bandwidth.com

Buyout Deals

 

Apax Partners has received European Commission approval for its proposed acquisition of a majority stake in Spanish baked goods company Panrico SA from the Costafreda Family, La Caixa and other minority shareholders. No financial terms have been disclosed, but earlier press reports placed Apax’s bid at around 900 million euros. Leverage will be provided by a syndicate of Goldman Sachs, ING, Caja Madrid, Royal Bank of Scotland and La Caixa. www.apax.com www.panrico.com

Wachovia Capital Partners has acquired the George E. Fern Co., a Cincinnati-based provider of regional convention and tradeshow services. No financial terms were disclosed. In related news, Wachovia has made a growth equity investment in Champion Exposition Services Inc., a Middleboro, Mass.-based provider of equipment and services to the tradeshow industry. www.wachoviacapitalpartners.com www.geofern.com www.championexpo.com

American Capital Strategies has acquired a 79% ownership stake in Soil Safe Holdings Inc. from The Halifax Group. Soil Safe is a Columbia, Md.-based provider of environmental services that include the treatment, disposal and re-use of lightly contaminated soil for real estate, infrastructure development and industrial customers in the Mid-Atlantic region. American Capital’s investment is valued at $147 million, consisting of senior term loans, senior and junior subordinated debt and convertible preferred equity. Soil Safe management also provided equity as part of the deal, which also included the purchase of real estate in Brandywine, Md. and the acquisition of TPS Technology Inc.’s California assets. www.americancapital.com www.soilsafe.com

AXA Private Equity said that it may sell its position in Souriau, a France-based connectors manufacturer for the industrial, military and aerospace markets. AXA sponsored a leveraged management buyout of Souriau in April 2003, and says it has received several unsolicited approaches. www.axaprivateequity.com www.souriau.com

Apax Partners will participate in the auction for BSN Medical, according to The Financial Times Deutschland. BSN is a medical subsidiary of German cosmetics company Beiersdorf, and is expected to go for up to 740 million euros.

PE-Backed IPOs

Williams Scotsman Inc., a Baltimore-based maker of mobile and modular buildings, priced over 15.32 million common shares at $16 per share (low end of $16-$18 range), for an IPO take of approximately $243.2 million. Citigroup, Lehman Brothers and CIBC World Markets served as lead underwriters, while The Cypress Group held more than a 41% pre-IPO position. www.willscot.com

 

PE-Backed M&A

Hewlett-Packard Co. (NYSE: HPQ) has agreed to acquire AppIQ Inc., a Burlington, Mass.-based provider of open storage area network management and storage resource management technologies. No financial terms were disclosed. AppIQ has raised over $30 million in VC funding since its 2001 inception, from firms like Matrix Partners, North Bridge Venture Partners, Intel Capital and Advanced Technology Ventures. In unrelated HP news, the company also has agreed to acquire Peregrine Systems Inc. (OTC BB: PRGN) for approximately $424 million in cash. www.hp.com www.appiq.com

CommPartners, a Las Vegas-based provider of IP-based network operator and telephony services, has acquired TxLink LLC, a Red Oak, Texas-based seller of wholesale VoIP services to SME customers, resellers, ISPs, PBX Integrators and carriers. No financial terms were disclosed. CommPartners has raised VC funding from Fleming Securities, Gallagher Equity Management and Circle F Funds. www.commpartners.us www.txlink.net

Firm & Fund News

Canterbury Park Capitalhas launched as a Winnipeg, Canada-based buyout firm, according to The Winnipeg Press. Firm founders include Marty Weinberg (former CEO of Assante Corp.), Leonard Asper (CEO of CanWest Global Communications), David Asper (executive VP of CanWest) and Bob Silver (president Western Glove Works Ltd. and part owner of the Winnipeg Free Press). The quartet has put up Cdn$70 million of the Cdn$200 million to Cdn$300 million that Canterburyhopes to raise. Canterburyalso soon plans to announce the hiring of a “Toronto-based private equity manager and his team.”

Paul Capital Partnershas closed its third VC fund-of-funds with $620 million in commitments from limited partners like the Ohio Public Employees Retirement System, the Coal Staff Private Equity Trust and the BP Pension Fund. The Process Management Group helped place the fund, which will take both primary and secondary stakes in venture capital funds. www.paulcap.com

Human Resources

Hunter Reisner has joined ACI Capital Co. of New York as a managing director. He previously served as head of private equity for Citigroup Investments and its predecessor entity Travelers Investment Group. He also had served for several years on ACI Capital’s advisory board. www.acicapital.com

SVG Advisors has hired Natalie Bangay as an investment executive and Rebecca Hartley as an investor relations manager. Bangay previously worked with Corven, while Hartley was head of client services for Global IR. www.svgcapital.com

Douglas Glucroft has joined Nixon Peabody as a New York-based partner in the law firm’s private equity and M&A practice. He previously served as a partner with Paris-based Kahn & Associes. www.nixonpeabody.com

John Hershey has joined Hercules Technology Growth Capital as a managing director for the firm’s late-stage technology group. He previously served as a managing director of Palo Alto, Calif.-based VC firm Infinity Capital. www.herculestech.com

Juilan Sandt has been named CEO of Orchid Capital. He had been serving as non-executive director of Orchid since 2003, and was managing partner of TFG Venture Capital in Singapore between 2000 and 2004.

Edward LaPuma has been elected president of W.P. Carey International LLC, an affiliate of W.P. Carey & Co. www.wpcarey.com

Mo Bawa has joined ACON Investments as a principal. He most recently worked at Constellation Commodities Group, and also has held positions with Banc of America, Enron Capital & Trade, and Houlihan Lokey Howard & Zukin. www.aconinvestments.com

Manager Emergence

I spent some long-distance minutes last week with Brian Connors and Clint Chao, co-founders of Formative Ventures. The official purpose was to discuss the closing of Formative’s first institutional fund, but the more interesting part was a meandering tangent about what it means to be an emerging manager. Connors and Chao certainly feel their partnership fits the bill, given that they were sales and marketing executives whose initial foray into venture capital was a $5 million “friends and family” fund raised back in 2000. While raising their institutional fund, however, almost all institutions with so-called emerging manager programs passed, saying that Formative wasn’t the right type of emerging manager.

“Except for Erica Bushner [managing director of GKM Newport Generation Funds], they were looking for people they already had a history with, like people who were spinning out of VC firms that they had already invested in,” Connors explained.

All of this leaves me a bit perplexed, and continuing to wonder about the actual purpose of emerging manager programs. Maybe it was just to offset the bad PR associated with certain non-emerging managers who got hit hard by the bubble burst. Kind of reminiscent of those relatively inactive programs dedicated to backing clean-tech or greed funds.

Anyway, here is a quartet of new VC funds. Judge for yourself if they deserve to be called emerging managers:

Panorama Capital: This is the name chosen by the VC team of JPMorgan Partners, which will begin raising its first independent fund next month. For those who don’t remember, JPMorgan Partners announced earlier this year that it would spin out from its parent bank, with the VC team and later-stage/buyout team forming independent firms. Don’t expect any significant changes for Panorama, which will continue backing early-stage and expansion-stage IT and life sciences companies.

No formal – or informal – word yet on the fund-raising target, although Shahan Soghikian suggested $400 million during an interview back in March. Books will be sent out next month by an independent placement agency, with a final close expected for the first half of 2006. The only hold-up right now seems to be a bit of red tape related to both J.P. Morgan Chase and JPMP, but it is almost all worked out.

In case you’re wondering, the late-stage/buyout team’s firm/fund is expected to launch sometime next year. It is coming a bit later because that team has a bit more dry powder remaining from the current JPMP fund.

Brooks/Levine Fund: Former Mayfield general partners Todd Brooks and Peter Levine are looking to raise $200 million for their first fund as an independent duo. If you’re thinking: “Hey, is this the answer to a blind item from a few weeks ago?” the answer is yes. Constance Loizos has all the scoopy details at www.pewnews.com.

Sequoia Capital China: Asian Private Equity News (a sister pub to your beloved Wire) reported in August that Sequoia Capital had put two investors on the ground in China. Now, SiliconBeat.com is reporting that the venerable Valley firm has raised a $200 million China fund. It also has named one of the two vets (it’s a name that makes a lot of sense, but the info comes from a blog comment so no confirmation is yet available).

This would be Sequoia’s second stab at a regional fund – it previously raised an Israel-focused fund – and possibly could be considered as an “emerging manager” by certain LPs. After all, it’s basically a new team, new focus, etc. Yeah, I don’t buy it either, but don’t be surprised to find emerging manager programs among the limited partners.

Formative Ventures: The Palo Alto, Calif.-based firm raised $77.5 million for its first institutional fund, which will continue to back early-stage IT companies in areas like communications, wireless and Internet solutions. Most notable fund-raising nugget is that around 90% of Formative’s capital came from endowments and foundations, which is virtually unheard of for a first-time effort. Harvard served as the anchor, while other LPs include The University of Virginia Investment Management Co. and the University of Pittsburgh. Fund-of-funds GKM Newport Generation Funds also participated.

Connors and Chao said that they considered taking $100 million, but ultimately concluded that the extra $22.5 million would require a third general partner. It’s not that they’re unfriendly or play poorly with others, so much as it is that they know the current partnership works, and are still a bit skittish about messing with the formula. Companies backed by Formative’s friends and family fund include Marketocracy Inc., IP Infusion Inc., Zyray Wireless Inc. (acquired by Broadcom), InnoCOMM Wireless (acquired by National Semiconductor) and defunct Fast-Chip Inc.

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Top Three

 

Vivox Inc., an embedded communications service provider, has raised $6 million in Series A funding co-led by GrandBanks Capital and CanaanPartners. The company was founded by Vonage co-founder Jeff Pulver, and for the past two years as provided the platform behind VoIP service FreeWorld Dialup. www.vivox.com

Paetec Corp., a Fairport, N.Y.-based communications services provider, has withdrawn its proposed IPO due to “unfavorable market conditions.” It has planned to price approximately 11.54 million common shares at between $12 and $14 per share, with Morgan Stanley and Merrill Lynch serving as lead underwriters. Significant shareholders include Madison Dearborn Partners, The Blackstone Group and Kline Hawkes & Co. www.paetec.com

Chip Meakem has joined Kodiak Venture Partners as a general partner, where he will focus on such industry sectors as digital media and Internet advertising. He previously was a managing director with DFJ Gotham. www.kodiakvp.com

VC Deals

Axerra Networks Inc., a provider of circuit emulation and service emulation solutions over packet access networks, has raised $16.25 million in Series C funding. Carmel Ventures led the deal, and was joined by return backers TLcom Capital Partners, HarbourVest Partners and the Zisapel brothers. The company has offices in both Tel Aviv, Israel and Boca Raton, Florida. www.axerra.com

PrimeRevenue Inc., an Atlanta-based provider of supply chain finance solutions, has raised $10 million in Series B funding from RRE Ventures and return backer BatteryVentures. James Robinson III, a general partner with RRE Ventures and former CEO of American Express, will join the PrimeRevenue board of directors. www.primerevenue.com

Ruckus Wireless Inc. (f.k.a. video54), a Mountain View, Calif.-based developer of multimedia 801.11 wireless systems, has raised $9 million in Series C funding. Sutter Hill Ventures and Investor Growth Capital co-led the deal, and were joined by return backers Sequoia Capital and WK Technology Fund. The company has now raised over $14 million in total VC funding since its June 2004 inception. www.ruckuswireless.com

Alert Logic Inc., a Houston-based provider of enterprise network security solutions, has raised $2.3 million in Series A funding. DFJ Mercury and OCA Ventures co-led the deal, and were joined by Access Venture Partners. www.alertlogic.com

Fortiva Inc., a Toronto-based provider of email archiving solutions, has raised Cdn$8 million in Series A funding. Participants included Cargill Ventures, Ventures West and Mclean Watson Capital. www.fortiva.com

Buyout Deals

Bally Total Fitness (NYSE: BFT) has agreed to sell its Crunch Fitness division for $45 million in cash to health-club entrepreneur Marc Tascher and the private equity group of Angelo, Gordon & Co. The deal is expected to close by year-end. www.ballyfitness.com

Macquarie Bank and Orica Ltd. are in talks to acquire Norway-based commercial explosives maker Dyno Nobel, according to multiple press reports. The main selling party in Industri Kapital, which teamed with Nordic Mezzanine to acquire Dyno Nobel in 2000. It retained Citigroup earlier this year to advise on strategic options. www.dynonobel.com

Gresham Private Equity has sponsored a Gbp31 million growth capital package for Jackson Lloyd, a UK-based provider of maintenance services to local authorities and housing associations. Lloyds TSB Acquisition Finance provided a debt package to support the transaction. www.gresham.vc

ABN Amro Capital has acquired two Australian transpt companies – McColl’s Transport and Scott’s Refrigerated Freightways – for approximately Au$180 million from their founding families. www.capital.abnamro.com

PE-Backed IPOs

Linn Energy LLC, a Pittsburgh, Pa.-based natural gas company, has set its proposed IPO terms to 8.7 million units being offered at between $19 and $21 per unit. It plans to trade on the Nasdaq under ticker symbol LINE, with RBC Capital Markets and Lehman Brothers serving as lead underwriters. Quantum Energy Partners is a significant shareholder.

Interhyp Ag, a Germany-based online mortgage brokerage, said that its public flotation could begin later this month. Earlybird VC and 3i Group are significant shareholders. www.interhyp.de

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PE-Backed M&A

CareMedic Systems Inc. of St. Petersburg, Fla. has agreed to acquire Third Millennium Healthcare Systems Inc. of Atlanta for an undisclosed amount. CareMedic provides of revenue management, regulatory compliance solutions and billing office services to hospitals and ancillary healthcare facilities. It has raised around $25 million in VC funding from Oak Investment Partners, CB Health Ventures, Wellmark and Pappajohn Capital Resources. Third Millennium provides revenue cycle solutions, and has raised over $10 million in VC funding from Morgenthaler Ventures. www.caremedic.com www.tmhsi.com

Avaya Inc. (NYSE:AV) has acquired Nimcat Networks , an Ottawa-based developer of embedded, P2P IP communications applications software, for approximately Cdn$46 million in cash. Nimcat has raised VC funding from Innovatech Grand Montreal, Siemens Venture Capital and Skypoint Capital. www.avaya.com www.nimcatnetworks.com

PIPE DEALS (NEW CATEGORY)

Startech Environmental Corp. (OTC BB: STHK) has received up to $20 million in PIPE funding from Cornell Capital Partners. The commitment is in the form of a standby equity distribution agreement to be drawn down incrementally over a 24-month period at Startech’s sole discretion. www.startech.net www.cornellcapital.com

Firm & Fund

China Vision SME has secured $20 million in capital commitments for its inaugural private equity fund, which is targeted at $100 million. Limited partners include MiddleLand Capital (advised by Pillsbury Winthrop), Empower Investment Ltd. of Hong Kong and Charter Asset Management International Ltd.

D.A. Davidson & Co. has acquired Capital Run LLC, a Seattle-based boutique I-bank focused on raising institutional private equity and debt, and on executing middle-market M&A transactions. No financial terms were disclosed. www.davidsoncompanies.com

Human Resources

Michael Cardito has agreed to join Harvest Partners, after having spent the past four years with Nautic Partners. www.harvpart.com

John Connors, a partner with Ignition Partners and former CFO of Microsoft Corp., has joined the board of Certus Software Inc., an Ignition portfolio company focused on financial compliance and governance software. www.certus.com

Marcos Gonzalez has agreed to joined Darby Overseas Investments Ltd. as a senior vice president in its corporate private equity group. He will focus on the Mexican activities of the Darby-BBVA Latin American Private Equity Fund, which is centered mainly on Mexico , Brazil and the US Hispanic market. He most recently served as director of product strategy and development for Health Net Inc. www.franklintempleton.com