PE Week Wire — 1/9/06-2/3/06

Random Ramblings

I was working on a comprehensive column on M&A, but ran out of time (I’m sure you’re shocked, just shocked). So instead here are the salient points, followed by some unrelated notes:

*** The majority of M&A professional believe that M&A activity will continue to rise in 2006, according to the ACG/Thomson DealMakers’ Survey. A related survey found that 90% of investment bankers, private equity pros and corporate executives believe that the current environment for M&A and corporate growth is excellent or good, which represents a 5% rise over June 2005 results. Nearly 30% of 1,977 survey respondents expect the technology sector to experience the most merger activity in 2006, followed by manufacturing and distribution (19%), healthcare and life sciences (18%), business services (11%), financial services (9%) and retail (3%). The 355 private equity respondents, however, ranked healthcare and life sciences first with 33 percent. This was followed by tech (20%), business services (17%), financial services (9%), consumer products/services (8%), manufacturing and distribution (7%) and retail (2%).

*** All of this optimism – not to mention rising M&A tallies — is driven by four separate factors: (1) Sarbanes-Oxley costs have dampened private company enthusiasm for going public on U.S. exchanges. Some of this drop-off will be soaked up by alternative exchanges like London’s AIM, but most liquidity-seeking companies will try the M&A route. (2) Banks continue to lend out acquisition-related financing like its going out of style. Sure I think this has to slow down, but I thought that a year ago. (3) M&A valuations continue to rise, in large part due to the aforementioned lending environment. This turns possible sellers into probable sellers. (4) Finally, strategic buyers have come back in full force. The strategy of hiding cash under corporate mattresses is over.

*** There are two major categories of corporate acquirer: Strategic buyers and private equity firms. Traditionally, strategic buyers are viewed as the more preferable option. Sure you may lose control in both instances, but at least the strategic buyer theoretically is interested in how its new wicket can be utilized, rather than how its books can be recapped in prepatation of subsequent liquidity. Therefore, private equity has largely been viewed as the alternative – largely for companies too messed up to be a likely strategic acquisition target. I think that paradigm has flipped, however, with private equity firms becoming preferred buyers and strategics becoming the new alternative. This isn’t true for VC-backed companies with less than $30 million or $50 million in revenue, but certainly for the larger targets. Credit it to a massive escalation in fund sizes and private equity market publicity.

*** Not everyone is yet sold on the idea that NYSE or Nasdaq floatations are going away for VC-backed companies. The proof, skeptics say, will be in Q1 2006 IPO figures. More on this tomorrow.

*** Many VCs have a decidedly mixed reaction to this outpouring of M&A interest in their companies. And I’m not talking about their obvious preference for IPOs. Instead, there are some concerns that the advent of “reverse auctions” for VC-backed companies could depress M&A valuations in 2006. Charley Lax of Grandbanks Capital introduced me to this concept yesterday. This thesis is that VCs no longer have many public liquidity options, so they must instead tap the M&A market. At the same time, however, strategic buyers are no longer waiting for potential targets to come to them. Instead, they go into the M&A market looking for a specific type of technology that is offered by multiple VC-backed players (how many truly unique offerings do you have in your portfolio? Thought not). They then leverage’ the seller’s market to drive down prices. This gets alleviated if there are enough strategic buyers looking for the same thing at the same time, but the VC tendency to copycat has tipped the scales in the strategics’ favor.

*** I spoke yesterday with Richard Bressler, the former Viacom and Time Warner exec who recently joined Thomas H. Lee Partners as a managing director and head of its strategic resource group. The full skinny will be in the next issue of Buyouts, but a couple of interesting nuggets. First, Bressler believes that the old media/new media dichotomy is not a terribly useful concept for forward-looking investors. Instead, media companies will have to successfully merge elements of both into future product offerings (yes, you too new media). Speaking of such convergence, Bressler maintains that the strategic rationale for the AOL/Time Warner merger was sound. The mistakes, he says, related to terms and execution. Finally, he has become a seasoned private equity pro after just 10 hours on the job. When I asked about his role in Thomas H. Lee Partners’ reported bid for Knight Ridder, he provided “no comment.”

*** Riya didn’t get bought by Google. It got funded by Bay Partners.

*** Yesterday, this space reported that former VSP Capital portfolio company Evil Twin Studios had raised new venture capital. Today, another ex-VSP company is making headlines, with AOL’s announcement that it has acquired video search company Truveo Inc. When VSP began its limited auction for Fund III companies last year, Vince Vannelli wanted both Evil Twin and Truveo, but ultimately agreed to a sealed bidding process whereby he won Evil Twin and VSP partner John Hamm won Truveo. No financial terms of AOL’s acquisition were disclosed.

    Top Three

GTech Holding Corp. (NYSE: GTK) reportedly will be bought for $4.2 billion by consortium that includes Italian publishing group De Agostini (lead), Carlyle Group, Goldman Sachs Capital Partners and Providence Equity Partners. GTech is a West Greenwich, R.I.-based gaming technology and services company.

Made2Manage Systems Inc., an Indianapolis-based provider of enterprise software for manufacturers and distributors, has raised $50 in new private funding that wqill support future acquisitions. The deal includes equity from Thoma Cressey Equity and debt from Harris Nesbitt. Made2Manage was acquired by Battery Ventures in 2003, with both Thoma Cressey and Battery now serving as company shareholders.

Zonare Medical Systems Inc., a Mountain View, Calif.–based manufacturer of ultrasound technologies, has raised $30 million in Series F funding led by 3i Group. The company also said that certain existing backers also participated, but did not identify them. Zonare now has raised over $140 million in VC funding since its 1999 inception, from firms like 3i, CB Health Ventures, Draper Fisher Jurvetson, Frazier Healthcare Ventures, Earlybird Venture Capital, Kaiser Permanente Ventures, Merrill Lynch, Mosaix Ventures, Montagu Newhall Associates, Sciens Capital Partners and Siemens Venture Capital.

    VC Deals

EraGen Biosciences Inc., a Madison, Wis.-based biotech company focused on automating molecular diagnostics, has raised $12 million in additional Series A funding. First Analysis Corp. and Prolog Ventures co-led the deal, and were joined by Stonehenge Capital, unnamed Midwestern backers and returning shareholder Novartis Venture Fund. The company raised a $9.08 million first tranche last October.

BazaarVoice Inc., an Austin, Texas–based provider of brand-building solutions, has raised $4 million in Series A funding. Austin Ventures led the deal, and was joined by entrepreneurs like Josh Kopelman (founder of, Julie Constantin (co-founder of Constantin Partners), Jamie Crouthamel (founder and former CEO of Performics), David Reibstein (co-founder of BizRate) and Eric Simone (founder of Compete, which was acquired by Perficient).

iBloks Inc., a San Francisco–based provider of personalized online media and entertainment solutions, has raised $500,000 in angel funding from: Michael Ostin, former Warner Music and Dreamworks executive; Freddy DeMann, founding partner of Maverick Recording Co.; and Maurice Marciano, founder of Guess?

Objectworld Communications Corp., an Ottowa-based provider of business communications software for the Microsoft-based IT environment, has raised Cdn$6.5 million in second-round funding. Growthworks Canadian Fund led the deal, and was joined by return backer Latitude Partners and company founders David Levy and David Schenkel.

QuIC Financial Technologies Inc., a Vancouver, Canada-based provider of enterprise risk management and financial analytics solutions, has raised US$10 million in Series B funding. JMI Equity led the deal, and was joined by Ventures West, GrowthWorks and Springbank.

MailFrontier Inc., a Palo Alto, Calif.-based provider of email security solutions, has raised $1.5 million in Series C-1 funding, according to a regulatory filing. Backers include New Enterprise Associates, Menlo Ventures and Draper Fisher Jurvetson. The company has raised $16.5 million in total VC funding since its 2002 inception.

Scalix Corp., a San Mateo, Calif.-based provider of an enterprise messaging platform for Linux, has secured $6 million of a $6.8 million Series B round, according to a regulatory filing. Return backers include Mayfield, Mohr, Davidow Ventures and New Enterprise Associates. The company now has raised over $25 million in total VC funding since its 2002 inception.

Code Green Networks Inc., a Sunnyvale, Calif.-based provider of content security systems, has raised $15 million in Series C funding, according to a regulatory filing. Sierra Ventures led the deal and was joined by return backer Bay Partners.

Nanocast Labs Inc., a San Mateo, Calif. startup, has secured $2.65 million of a $3.17 million Series A funding round led by ComVentures, according to a regulatory filing. ComVentures operating partner Keyur Patel is involved with the company.

Tioga Pharmaceuticals Inc., a San Diego-based drug company focused on gastrointestinal diseases, has raised $24 million in Series A funding. Forward Ventures led the deal, and was joined by New Leaf Venture Partners and BB Biotech Ventures.

    Buyout Deals


Nautic Partners has sold CDRY Holdings Inc. to The Home Depot (NYSE: HD). No financial terms were disclosed. CDRY is a Logan, Utah–based franchisor of carpet and upholstery cleaning businesses, and was acquired by Nautic in 2002.

GFI Energy Ventures has acquired a majority interest in GT Equipment Technologies Inc., a Merrimack, N.H.–based provider of turnkey manufacturing lines for wafers, cells and solar modules. No financial terms were disclosed.

Westlake Hardware Inc., a Lenexa, Kansas-based Ace Hardware dealer, has received an undisclosed amount of private equity funding from Goldner Hawn Johnson & Morrison. Goldsmith Agio Helms advised Westlake on the deal.

Hellenic Casinos Co. has agreed to sell its 51.57% stake in Hyatt Regency Hotels & Tourism SA to BC Partners for approximately 476 million euros (or 11 euros per share). News reports suggest that BC Partners then will try to buy the remaining 48.43% stake via a public-to-private buyout.

    PE-Backed IPOs


Smart Modular Technologies (WWH) Inc., a Fremont, Calif.-based provider of memory modules, memory cards and communications products, has set its proposed IPO terms to around 20.45 million ordinary shares being offered at between $10 and $12 per share. It plans to trade on the Nasdaq under ticker symbol SMOD, with Citigroup, JPMorgan and Lehman Brothers serving as lead underwriters. Significant shareholders include Texas Pacific Group, Francisco Partners and Shah Capital Partners.

Iomai Corp., a Gaithersburg, Md.-based developer of vaccines and immuno-stimulants delivered to the skin, has set its proposed IPO terms to 6.25 million common shares being offered at between $11 and $13 per share. It plans to trade on the Nasdaq under ticker symbol IOMI, with UBS and SG Cowen serving as lead underwriters. Iomai has raised over $65 million in VC funding, from firms like New Enterprise Associates, Essex Woodlands Health Ventures, MedImmune Ventures, Domain Associates, Technology Partners and ProQuest.

    Firm & Fund News


Fifth Street Capital has closed its second mezzanine fund with $157 million in capital commitments. Approximately 7% came from firm principals, while outside limited partners include DuPont Capital Management, Sumitomo Mitsui Banking Corp., Bruce Toll, GKM Capital Inc., Diaco Investments, Sterling Stamos Capital Management and WP Global Partners Inc.

Mid Europa Partners (fka EMP Europe) has closed its second fund with 650 million euros in committed capital. The firm will continue its focus on opportunities in Central Europe.

Orchid Asia Group Management has closed its third fund with more than $180 million in capital commitments. The firm focuses on venture capital opportunities in China, and has offices in Hong Kong, Shanghai and San Francisco.

Lincoln Partners of Chicago and Peters Associates of Frankfurt, Germany have merged with a group of corporate finance professionals in France to form Lincoln International. The new firm will provide M&A and private capital-raising services to mid-market companies.

Genesis Partners, an Israel-based VC firm, has secured over $156 million in capital commitments for its third fund, according to a regulatory filing. Limited partners include AlpInvest and Caisse de Depot et Placement du Quebec.

Bison Capital Asset Management of Santa Monica, Calif. has opened a second office in Charlotte, North Carolina. It will be run by Louis Bissette, a partner who joined Bison last summer after 12 years with Brentwood Associates.

Gilde Investment Management is planning to raise 125 million euros for its second healthcare-focused venture fund, according to Dow Jones. The firm recently spun out of Rabobank, but says that its former parent will serve as the new fund’s largest limited partner. Telefonica SA’s pension fund also has made a commitment.

Evercore Asset Management has been formed by Evercore Partners and a quartet of former Sanford C. Bernstein & Co. colleagues (Greg Sawers, Andrew Moloff, Gail Landis and Margot Nones). The new institutional investment management firm will offer concentrated small- and mid-cap value equity products, pending SEC approval.

    Human Resources


Naser Partovi has joined SKY MobileMedia Inc., a San Diego-based wireless applications software platform provider, as president and CEO. He previously served as a managing director with Enterprise Partners Venture Capital. EPVC is SKY MobileMedia’s primary venture capital backer.

Stroock & Stroock & Lavan LLP has named 10 new special counsel, including: Robert Guazzo (Corporate, New York) and Harold Olsen (Financial Restructuring, New York).

Sergio Levi has joined Quester as an investment director. He previously was with ON Semiconductor Corp. as vice president of Europe, Middle East and Africa.

Stephanie Spong has joined Wasatch Venture Fund as a principal and head of the firm’s New Mexico office. She previously served as a principal for Greystone Management Consulting.

Battelle Ventures has promoted senior associates Ralph Taylor-Smith and Tracy Warren to the position of principal. They also now are principals in the firm’s Innovation Valley Partners affiliate.

Adveq, a Zurich-based fund-of-funds manager, has promoted Rainer Ender and Tom Eriksson to managing director and Nils Rode to executive director.

Wednesday Warblings

They sky is gray, Doc Rivers still deserves a firing and I’m just now realizing how packed my travel schedule is for the rest of January (North Carolina, Philly, Pittsburgh and London). In other words, it’s time for some Wednesday Warblings.

Let’s begin with the Ohio Bureau of Workers’ Compensation disclosure mess. Specifically, there were lots of emails related to last Friday’s discovery that OBWC had asked GPs for new copies of lost documentation like LP subscription agreements. I felt this type of disarray was further proof that OBWC was probably the dumbest of all dumb money, and that GPs would be reticent to send in such documents while the disclosure issue was still up in the air. Larry writes: “Whoa boy.You are getting a little carried away. Trust me, there are lots of LPs that couldn’t put their hands on original subscription docs, LP agreements let alone side letters. GPs have no right to refuse this information as it relates to the investment in their fund and I assume they intend to hold OBW to its commitment. I agree OBW is acting outrageously regarding disclosure — but this request is quite legitimate. I think you damage your credibility when you make mountains out of molehills.”

Regular respondent Philip chimes in: “Depending on the original agreement, they may have to grant the request whether they want to or not. I would suggest that even if the document does not require the document to be sent that the GP should at least send the portion of the document that covers confidentiality. As to the second part, yes I can imagine an institution losing documents affiliated with multi-million dollar investments. I worked for a large institution for almost 15 years. On more then one occasion, I had to get replacements because the original documents could not be found. Although the investments may be for millions of dollars, the people doing the filing were frequently paid only slightly above the minimum wage. I can only imagine what the files would have looked like after large-scale investigation of all the investments by an outside firm.”

Finally there is Declan, who asks: “Sure Monica really appreciates being quoted without her permission? If she had meant the email to you she would havesentit to you.” Indeed it would have been easier had Monica sent it to me, but governmental organizations rarely send reporters memos that explicitly declare their own incompetence. If you’d prefer no more reporting of confidential letters, this might be the wrong publication to read.

Adam writes more generally on OBWC: “An observation here is the obvious learning curve and access issues when starting a private equity program. I wonder if OBWC could have done better by committing to an established fund-of-funds manager earlier and who would have steered the pension dollars towards some stronger performing funds in early 2000. Second, it is not really fair that Lexington Partners (predominately a secondary FoF) gets compared to HarbourVest (true FoF with a secondary component). A secondary fund will have a higher IRR because the assets they acquire are more mature and do not suffer from the J-Curve like a HVP fund would.”

*** Moving on, a few comments on the concept of “reverse auctions.” S writes: “I don’t buy into the concept that strategics could develop a‘reverse auction’ market for VC-backed companies. In my experience (having served in a BizDev function for a Fortune5 company and in private practice representing VC/PE funds), the number of strategics looking for great technology always exceeds the number of VC-backed portfolio companies hawking same. Any price depression that results from the narrowingof the IPO window and the greater dependence on the M&A door probably results from the increased sophistication among the pool of purchasers.”

Ronald takes a more charitable view: “The idea of reverse auctions is completely industry-dependent. You’re not, for example, going to see it in retail or manufacturing. But it makes sense for VC-backed tech, which is what I assume Lax was talking about. I don’t think it’s there yet, but there have been a lot of second, third, fourth and even fifth movers in the tech space lately, particularly in terms of Web 2.0.”


    Top Three

CVC Capital Partners is leading a 1.4 billion euros buyout of Dutch waste management company AVR, according to multiple press reports. CVC would own 50% of AVR following the deal’s completion, with KKR and Oranje-Nassau Groep each owning 25 percent.

The Column Group LP is looking to raise upwards of $500 million for its inaugural healthcare/biotech VC fund, according to a regulatory filing. The Seattle Times reports that Column Group is formed by Richard Klausner, former executive director of the Bill & Melinda Gates Foundation’s global health program and onetime director of the National Cancer Institute. His partners are former Three Kings Capital managers Peter Svennilson and Harald Ekman.

Mywavez Corp., a Menlo Park, Calif.-based developer of mobile video-sharing solutions, has raised $3.04 million in Series A funding led by Menlo Ventures.


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    VC Deals

ESpot Runner Inc., a Los Angeles–based ad agency focused on enabling local businesses to advertise on television, has raised $10 million in Series A funding. Index Ventures and Battery Ventures co-led the deal, and were joined by Comerica Bank and others.

SilverStorm Technologies Inc., a King of Prussia, Pa.-based provider of interconnect solutions for clustered computing, has raised $13 million in new VC funding. Core Capital Partners led the deal, and was joined by Axiom Venture Partners and return backers Bay Partners and Castile Ventures Partners.

Pure Networks Inc., a Seattle-based provider of home networking software and services, has raised $12.5 million in new venture capital. Return backers include Bessemer Venture Partners, Ignition Partners and Mayfield. The company has raised $30.5 million in total VC funding.

Cybera Inc., a Nashville, Tenn.-based provider of broadband wide area network solutions to multi-location businesses, has raised $12.8 million in new VC funding. Adams Street Partners led the deal, and was joined by Chrysalis Ventures, Claritas Capital and several prior Cybera investors.

ThePlatform Inc., a Seattle-based provider of digital media publishing solutions, has raised $8 million in Series B funding, according to a regulatory filing. Backers include Spark Capital, Generation Capital Partners and Sun Microsystems.

Syntricity Inc., a San Diego-based provider of enterprise yield management software for the semiconductor industry, has raised $5.8 million in Series B funding. Windward Ventures led the deal, and was joined by GKM Ventures and Osprey Ventures.

Newmerix Corp., a Superior, Colo.-based provider of automated testing and change management software for packaged applications, has raised $5 million in additional Series B financing. Siemens Venture Capital led the deal, and was joined by return backers Mobius Venture Capital and IDG Ventures. The Series B round total now stands at $12 million.

Axela Biosensors Inc., a Toronto-based developer of biosensors, has completed an exclusive in-licensing agreement with Kimberly-Clark (NYSE: KMB). The agreement includes exclusive rights to approximately 150 world-wide patents and applications, as well as transfer of significant immunodiagnostics assay technology. As part of the agreement, Kimberly-Clark also will be acquiring an equity interest in Axela. Other Axela shareholders include Primaxis Technology Ventures and Vengrowth.

    Buyout Deals


J.W. Childs & Associates has acquired a majority interest in WS Packaging Group Inc. of Algoma, Wisconsin from shareholders like Brantley Partners. No financial terms were disclosed.

Dave & Buster’s Inc. (NYSE: DAB) will hold a special shareholders meeting on January 18, in order to vote on the proposed $18.05 per share buyout by Wellspring Capital Management.

Forming Technologies Inc. of Royal Oak, Mich. has agreed to acquire the North American forging operations of Metaldyne Corp. No financial terms were disclosed for the transaction, which is expected to close later this quarter. Forming Technologies was recently founded by GR Investment Group and Jacobson Partners, while Metaldyne is controlled by Heartland Industrial Partners.

Accel-KKR and Teachers’ Private Capital have completed their sale of Alias to Autodesk Inc. (Nasdaq: ADSK) for $197 million in cash.

    PE-Backed IPOs


Altus Pharmaceuticals Inc., a Cambridge, Mass.-based drug company focused on protein therapeutics for chronic gastrointestinal and metabolic disorders, has set its proposed IPO terms to six million common shares being offered at between $14 and $16 per share. It plans to trade on the Nasdaq under ticker symbol ALTU, with Merrill Lynch and Morgan Stanley serving as lead underwriters. It has raised over $100 million in total VC funding, including a $51 million Series C infusion in 2004 at a post-money valuation of approximately $121 million. Backers include Warburg Pincus, U.S. Venture Partners, Vertex Pharmaceuticals, Nomura, CMEA Ventures, China Industrial Bank and BankInvest.

    PE-Related M&A


GeoTrust Inc., a Wellesley Hills, Mass.–based provider of identity verification solutions for e-businesses, has acquired TC TrustCenter, a Germany-based provider of smartcard solutions. No financial terms were disclosed. GeoTrust has raised around $45 million in VC funding since its 1998 inception, from firms like Castile Ventures, St. Paul Venture Capital, Prism Venture Partners and WI Harper Group.

CancerVax Corp. (Nasdaq: CNVX) has agreed to merge with Micromet AG, a Germany-based antibody developer. The total deal is valued at around $126.7 million, with Micromet shareholders to own approximately 67.5% of the combined company. Micromet shareholders include 3i Group, Abingworth, Advent Venture Partners, DG Lux Lacuna Apo Biotech, HBM BioVentures, IBT, Omega Fund, Permira, SV Life Sciences and The Wellcome Trust.

Bayer AG said that its Bayer Innovation GmbH subsidiary has acquired Icon Genetics AG, a Munich, Germany-based agricultural biotech company. No financial terms were disclosed. Icon Genetics has raised a small amount of VC funding from firms like Audax Group.

    Firm & Fund News


RCP Advisors has closed its third leveraged buyout fund-of-funds with $225 million in capital commitments.

Conor Venture Partners Oy of Finland has held a 16 million euros for its inaugural fund. The firm will focus on early-stage IT opportunities.

Stata Venture Partners of Dover, Mass. has received $101 million in capital commitments for its second fund, according to a regulatory filing.

Brantley Partners of Beachwood, Ohio is planning to raise upwards of $250 million for its fifth middle-market buyout fund.

    Human Resources


Black Diamond Capital Management has promoted Mounir Nahas to senior managing director and chief operating officer. Prior to joining Black Diamond in March 2004, Nahas was a managing director with JPMorgan Partners.

CapitalSource Inc. (NYSE: CSE) has promoted Dean Graham to president and chief operating officer. Former president and CapitalSource co-founder Jason Fish will become vice chairman and CIO, while Keith Rubin and James Pieczynski have been named co-presidents of its healthcare and specialty finance business.

David Lazar has joined Ryan Beck & Co. as a managing director of I-banking. He previously served as senior executive vice president and head of I-banking with Boenning & Scattergood Inc.

Peter Barris, a managing general partner of New Enterprise Associates, has joined the board of InnerWorkings, a Chicago-based enterprise print management and business process outsourcing company.

Scott Cantini has joined Morgan Joseph & Co. as a managing director of I-banking. He most recently was a partner with America’s Growth Capital, and has served as a senior member of the private equity groups within both SG Cowen and Smith Barney.

Correction: The Carlyle Group is not involved in the deal for GTech Holding Corp.

Think Locally, Act Globally

Ohio used to insist that its publicly-sponsored pension and insurance systems only make private equity commitments to funds located in-state. It was called the Ohio Only program, and was designed not only to stimulate local economic development, but also to make sure that state resources were not used to stimulate someone else’s economic development (read: California or Massachusetts). But it was a failure, due to its intentional disregard for portfolio diversification. So the program was disbanded in 1997, at which point publicly-sponsored systems were instead told to give preference to Ohio-based funds only if all other things were equal (note: all other things are never equal).

One year later, the Ohio Bureau of Workers’ Compensation began making private equity fund investments. It backed firms from coast to coast (albeit not outside U.S. borders), but nonetheless showed a proclivity to believe all things were equal. Of its 68 general partnerships, 21 were based in-state. Now, part of this artificial allocation is understandable, since local GPs would have an easier time getting that first meeting than would an out-of-state fund (perhaps a local official even made a few introductory calls, but we wouldn’t know that from what Ennis Knupp asked). But 30% is a very high in-state figure for a place like Ohio — which, let’s face it, isn’t a private equity hub like California, Massachusetts or New York.

The reason I bring this up is that OBWC’s in-state investments severely depressed the value of its overall portfolio. What follows are some numbers from the statistically-challenged Ennis Knupp report, but bear with me as I’ll assume that the positive and negative mistakes sort of balanced each other out. The overall portfolio on March 31, 2005 featured a net annualized IRR of 3.18 percent. This is actually pretty decent for the 1998-2005 timeframe, which probably explains why so many secondary firms are eagerly anticipating their chance to bid. What is disappointing, however, is how much better the returns could have been if OBWC had not given such weight to in-state commitments.

The report shows that 19 of the 21 in-state funds had called down capital as of Marc