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Answer Key

My wife is in the midst of correcting final exams for a college course she’s teaching, which got me to thinking: “Gee, maybe it’s time for me to provide some answers to those quiz questions I’ve been asking.” So, without further ado…

Question: Can you name the latest U.S.-based VC firm to (quietly) open an Israeloffice? Hint: It has U.S.offices on both coasts.

Answer: Canaan Partners. Later today, Canaan will announce that it not only is opening shop in Israel, but in India as well. The move represents Canaan’s first substantial foray into international investing, as it has just three portfolio companies headquartered outside of the United States: DrugAbuse Sciences Inc. in France, Aztec Software in India and RAM Holdings in Bermuda. It also has a handful of companies with significant operations in Israel or India, including e4e, which may actually move its headquarters in India in the near future.

The Israel office will be run by Izhar Shay, a newly-hired venture partner who most recently served as chairman and CEO of venture-based network security company V-Secure Technologies. He also has served as co-founder and CEO of former Canaan portfolio company Business Layers Inc. (sold to Netegrity Inc. for $42.5 million in Dec. 2003) and, before that, was VP of business development with the BRM venture capital group. The India office is slated to open in early 2006, with Canaan already interviewing prospective India-based directors. In the meantime, India-based deals will be led by U.S.-based Deepak Kamra.

Canaan does not have any quotas for non-U.S. investments out of its current fund ($450m, closed earlier this year), but doesn’t expect them to comprise more than 10 percent. It also is taking a long hard look at China, but began its geographic expansion with Israel and India, because their current portfolio had more synergies in those two countries. More on this news in Monday’s print edition of PE Week.

Question: Can you name the placement agent who is leaving his in-house job with a Boston-based firm, in order to launch a new independent placement agency?

Answer: Steve Kahn of Advent International. I had told Steve that I’d hold this news until Jan. 1, but he’s already put up a website which VentureWire picked up on yesterday, so… Anyway, Steve’s new firm is called Prevail Capital, and his team includes former Advent colleague Grace Yang and former BTM Capital COO Yoji Anzai. The main reason for his Advent departure is that he was mostly involved in VC fund-raising, and Advent has gotten out of the VC game (just a few life sciences dollars left).

Question: Can you name the high-tech gadget maker that will have a major strategic/financial announcement? Hint: It won’t be on store shelves for [post-Thanksgiving] sales, but should nonetheless be available before the holiday shopping season is up.

Answer: OK, I told you yesterday that the answer was Amp’d Mobile. The new strategic investor is MTV, as you can read about in this press release. What the press release doesn’t tell you, however, is that the round is worth around $50 million. I’ve run out of time/space to get into all the Amp’d details today, so let’s do that tomorrow and in Monday’s print edition…

    Top Three

Cornice Inc., a Longmont, Colo.-based provider of high-capacity storage solutions for portable consumer devices, has raised $75 million in new VC funding. Caisse de depot et placement du Quebec led the deal, and was joined by return backers VantagePoint Venture Partners, BlueRun Ventures and BA Venture Partners. Simultaneously, Cornice received $22 million in structured mezzanine funding from Hercules Technology Growth Capital.

EarthLink Inc. (Nasdaq: ELNK) has agreed to acquire New Edge Networks Inc., a Vancouver, Canada–based provider of virtual private networks (VPNs) and secure multi-site managed data networks and dedicated access for businesses and communications carriers. The deal is valued at $144 million, including $114.3 million in cash and 2.6 million shares of EarthLink common stock. It is expected to close in Q1 2006. New Edge Networks has raised around US$232 million in VC funding since its 1999 inception, from firms like Accel Partners, Crosspoint Venture Partners, Greylock and Goldman Sachs.

The Carlyle Group has signed a letter of intent with Robert Johnson, founder of Black Entertainment Television (BET), to developer co-investment opportunities, share private equity deal flow and to executive private equity deals. Johnson’s holding company (RJR Cos.) will form a new private equity firm to work on this partnership, with a focus on expansion and buyout opportunities in the media, financial services and business services industries.

    VC Deals

Optimer Pharmaceuticals Inc., a San Diego-based drug company focused on life-threatening bacterial infections, has raised $22.2 million in Series D funding. Backers include ProQuest Inv*stments, Lurie Investments, BB Biotech Ventures, SB Life Science Ventures, UOB JAIC Venture Bio Inv*stments, China Development Industrial Bank, ESun Bank Group, Fubon Financial Holding Venture, Global Strategic Inv*stments, Oriental Union Chemical Corp. and Taiwan Global BioFund. The company raised $12 million earlier this year from Par Pharmaceutical Cos. Inc. (NYSE: PRX), as part of a joint development and collaboration deal that gave Par a 16% ownership stake in Optimer.

Light SciencesOncology Inc., a Snoqualmie, Wash.-based developer of light infusion technology for the treatment of cancer, has raised an additional $32 million in Series A funding, bringing the round total to $67 million. Second-tranche backers include Essex Woodlands Health Ventures, Scandinavian Life Science Venture, Novo A/S and New Science Ventures. Essex Woodlands had led the $35 million first tranche, which closed two months ago with additional participation from Adams Street Partners, Johnson and Johnson Development Corp., China Development Industrial Bank and Larkspur Capital Corp.

Donnerwood Media Inc., a San Francisco-based digital content and commerce startup, has raised $4.3 million in Series B funding, according to a regulatory filing. Backers include Battery Ventures.

Telsima Corp., a Santa Clara, Calif.-based provider of WiMAX solutions for densely-populated areas, has closed its Series C funding round with $20 million. NewPath Ventures was joined by return backers New Enterprise Associates, CMEA Ventures and JAFCO Asia.

MMIM Technologies Ltd., a China-based mobile multimedia instant messaging and information service provider, has raised an undisclosed amount of VC funding from BlueRun Ventures and IDG Venture Capital.

3am Labs Inc., a Woburn, Mass.-based provider of remote access and administration services, has raised $10 million in Series B funding. Polaris Venture Partners led the deal, and was joined by Prism Venture Partners, 3TS Capital Partners and Integral Capital Partners.

StepUp Commerce Inc., a San Francisco-based provider of local e-tailing services, has raised $6.6 million in Series B funding co-led by Allegis Capital and Granite Ventures.

ARKeX Ltd., a Cambridge, UK-based developer of gravity gradiometry technology, has raised Gbp5.5 million in second-round funding. Energy Ventures of Norway led the deal, and was joined by return backers Scottish Equity Partners, Dynamics and Eurovestech.

Cyrium Technologies Inc., an Ottawa, Canada-based solar cell developer, has raised Cdn3 million in second-round funding. Pangaea Ventures led the deal, and was joined by return backers Business Development Bank of Canada and Chrysalix Energy.

Commerciant LP, a Houston, Texas-based provider of wireless, handheld payment processing solutions, has raised $2.5 million in new VC funding. Backers include Aegis Texas Venture Fund, Accent Texas Fund and Advantage Capital Texas.

AxonX LLC, a Baltimore-based developer of vision-based fire and smoke detection systems, has raised $2 million in venture funding from Johnson Controls Inc. (NYSE: JCI).

SpineMark Corp., a San Diego-based operator of spine care centers, has held a $10 million first close of a $15 million Series A round. Upstream Partners participated in the deal. SpineMark was formed as a joint venture by TBI Holdings and Management Technology Resources.

    Buyout Deals

Avista Capital Partners has agreed to acquire WideOpenWest LLC from Oak Hill Capital Partners and Abry Partners. Northwestern Mutual and Standard Life Investments also will participate as minority equity holders. No financial terms were disclosed for the deal, which is expected to close in the first half of 2006. WideOpenWest is an Englewood, Colo.-based operator of cable systems in Illinois, Indiana, Michigan and Ohio.

Castanea Partners and Boston Ventures have acquired Medley Global Advisors, a New York–based provider of policy information on monetary, fiscal, regulatory and political developments to financial institutions. No financial terms were disclosed.

ABN Amro Capital reportedly has sold UK puzzle magazine publisher Puzzler Media Group Ltd. to John Lang & Co., a subsidiary of comic book publisher DC Thompson & Co. Ltd., for Gbp85 million.

3i Group has agreed to acquire a 23% stake in Carmel Pharma from SLS Venture for an undisclosed amount. 3i also will participate in a new funding round for Carmel Pharma, a Sweden-based maker of products for handling toxic drugs, minimizing leakage and the spread of aerosols in the workplace.

Roark Capital Group of Atlanta has acquired a majority stake in Ace Mortgage Funding, an Indianapolis-based broker. No financial terms were disclosed.

Transportation Resource Partners, a private equity affiliate of Penske Corp., has acquired Bekins Worldwide Solutions Inc. (a.k.a. HomeDirect USA) from Bekins Holding Corp. No financial terms were disclosed. HomeDirect is a Hillside, Ill.-based provider of logistics services and solutions.

    PE-Backed IPOs


Scopus Video Networks Ltd., an Israel-based provider of digital video networking products, priced 4.5 million ordinary shares at $7 per share, for an IPO take of approximately $31.5 million. It originally planned to price at between $10 and $12 per share, before lowering the range to between $7 and $9 per share. It closed up 3.7% on its first day of trading on the Nasdaq, while Thomas Weisel Partners served as lead underwriter. Company shareholders include Koor Venture Capital, Pitango Venture Capital, Vertex Management Israel, Genesis Partners and Formula Ventures.

DealerTrack Holdings Inc. (Nasdaq: TRAK), a New York-based provider of software and data solutions for the auto retail industry, saw its stock price rise 12% in its first day of trading. Significant shareholders include J.P. Morgan Chase and GRP Partners.

    PE-Backed M&A

General Dynamics Corp. (NYSE: GD) has agreed to acquire Anteon International Corp. (NYSE: ANT) for approximately $2.2 billion, or $55.50 per share. The deal will represent an exit for Caxton-Iseman Capital, which acquired the business that was renamed Anteon in a 1996 leveraged buyout for $47.5 million ($10m of equity). Anteon is a supplier of systems integration software to the federal defense market.

National Healthcare Staffing LLC of Miami, Fla. has acquired substantially all the assets of Charlotte, N.C.-based MedStaff Carolinas LLC and VITA Medical Staffing LLC. No pricing terms were disclosed for the deal, which was completed with equity financing from NHS backer Goldman Sachs Urban Investment Group.

    Firm & Fund News

Atlas Venture has secured $252 million in capital commitments for its seventh fund, according to a regulatory filing. Limited partners include AlpInvest and GIC Special Inv*stments. The firm is planning to hold a $400 million final close in early 2006, with MVision serving as placement agent.

Safeguard Scientifics Inc. (NYSE: SFE) has sold most of its private equity fund interests for approximately $24 million to an undisclosed buyer. The buyer also assumed around $9 million of unfunded capital commitments.

Proskauer Rose LLP has reopened its New Orleans office, which had closed following Hurricane Katrina.

    Human Resources

Steven Schneider has been named a partner with both Texas Pacific Group and its Asian affiliate Newbridge Capital. He will be based in Hong Kong, and help lead Asian activities of the firms’ operations group, which helps portfolio companies achieve strategic and operational goals. He has spent the past 20 years with General Electric, and most recently served as president and CEO of GE Asia-Pacific and as a member of GE’s corporate executive committee.

Manu Bettegowda has been promoted to partner with Olympus Partners, a Stamford, Conn.-based private equity firm focused on middle-market MBOs and later-stage venture capital. He joined Olympus in 1998, and became a vice president in 2003.

George Dolatly has joined Fulbright& Jaworski LLP as a partner, where he will focus on private equity and VC transactions, M&A and corporate finance. He previously was with King & Spalding LLP.

WestAM has added three general partners. They are: Mike Cleary, former managing director at Thomas Capital Group and, before that, director of private equity funds for Frank Russell Co.; Pat Noonan, formerly a senior partner at two family offices and a corporate treasurer; and Ravi Vish, who previously served in a variety of roles with the International Finance Corp., an affiliate of the World Bank.

Rafaèle Tordjman has been promoted to the position of partner with Sofinnova Partners. She joined the group’s life sciences team as a research analyst in November 2001, and two years later was promoted to inv*stment manager.

BlueRun Ventures has promoted Sujit Banerjee, Yossi Hasson and Kwan Yoon to the position of partner. Banerjee runs the firm’s India activities, Hasson is in charge of Israeli activities and Yoon oversees Korean activities.


Random Ramblings

Amp’d Mobile is a tease. Shortly before Thanksgiving, I got word that the mobile virtual network operator would soon announce both a major strategic partnership and a second large round of VC funding (it raised $67 million earlier this year from Highland Capital, Columbia Capital, Redpoint Ventures and Universal Music). I even mentioned it as a quiz question on Nov. 23. But then nothing, save for a distribution logistics deal with Brightpoint Inc. and a content distribution deal with

Yesterday, however, the first shoe finally dropped with word that Amp’d had signed a content distribution deal with CBS and UPN, including exclusive rights to “America’s Next top Model.” A CBS spokeswoman told me that most of this deal’s content will be available when Amp’d handsets hit the market on Thursday, and that CBS was particularly interested in the Amp’d target market of youth and young adults (apparently as opposed to the target market for VCast, which also has a content deal with CBS). No word on why it took CBS so long to approve the release, which originally was scheduled to hit the wires on Monday, Nov. 28. No equity was involved.

The major financing announcement is tentatively scheduled for tomorrow, so we’ll discuss it in-depth then (as I still don’t know the players) – as well as unfounded blog rumors about personnel troubles at the company.

*** The Washington State Investment Board and the Oregon State Treasury each have committed $250 million to co-investment vehicles managed by Fisher Lynch Capital. I don’t know much about Fisher Lynch (couldn’t get in touch with them yesterday), except that one of its managing directors – Brett Fisher – used to do co-investments for GIC Special Investments. The big question is why would a pair of major pension systems need additional access to co-investments, when they already should have plenty of co-investment opportunities via relationships with major LBO firms like KKR and Providence Equity Partners. Jay Fewel of Oregon said it was a good financial opportunity, and I’m not second-guessing him – just trying to understand why they’d make such a big bet: (A) in dedicated co-investments and (B) with a relatively young firm like Fisher Lynch. Tom Ruggles of Washington did not return a call requesting comment.

*** I’ve updated my piece of the Siemens Acceleration in Communications shutdown, with more detailed info. You can read it here. I also just received the following statement from a Siemens Venture Capital spokeswoman in Germany: “Siemens Venture Capital iscommitted to contributing further to the ‘Siemens global network of innovation’ in 2005/06, and will continue to invest in interesting opportunities and to nurture our existing portfolio.”

*** My Dunkin’ Donuts iced French vanilla isn’t fresh this morning, but at least now I know who to call and complain. By the way, Mark Nunnelly helped lead the $2.4 billion deal for Bain Capital, which comes just months after he turned down the top spot at Harvard Management Co. All he now needs is some formal affiliation with the Red Sox, in order to have personal involvement with all three of Boston’s most beloved/ingrained institutions (sorry Mark, that NHL/Bruins foray doesn’t count).

*** IBM today announced a program whereby it will open up its patent portfolio library to select VC-backed companies. This is a bit like the Microsoft IP Ventures program, albeit far more broad and without the attached equity stakes. The IBM program first will launch as a pilot with the seven VC firm members of IBM’s Venture Advisory Board, before being opened up to other firms (agreements run through the firms, rather than directly through portfolio companies). The library licensing fee will be just $25,000, with IBM hoping to secure future partnerships, rather than just immediate revenue. More on this in Monday’s print edition of PE Week.

*** Panorama Capital, the independent VC group spinout from JPMorgan Partners, has graduated from pre-marketing to actual marketing. Prospective LPs recently received the inaugural fund PPM with a $500 million target capitalization. Probitas Partners is serving as placement agent.

*** Finally, congratulations to Alastair “Sandy” Christopher, a recent law school grad and new associate with Bingham McCutchen LLP. Sandy and I used to share an office in New York (along with current Buyouts editor Danielle Fugazy), so it’s good to see that at least one of us got a real job…

    Top Three

Stanford Management Co. president and chief executive Mike McCaffrey will leave the $14.3 billion endowment system at year-end, in order to form an independent investment firm. He will be joined by SMC chief investment officer Michael Ross and by David Burke, an SMC managing director of private equity. Both Ross and Burke will serve as SMC consultants for the next three months, in order to ease the transition.

Lancashire Holdings, a Bermuda-based reinsurance company sponsored by firms like Capital Z, Moore Capital and Cypress Group, has raised $910 million via an IPO on London’s AIM exchange. Approximately $560 million was raised via founder and existing investor subscriptions, while the remainder came from public buyers. Lancashire also secured an additional $125 million by selling trust-preferred securities and subordinated notes.

Cellartis AB, a Sweden-based biotech company focused on the development and manufacture of human embryonic stem cells, has raised 8 million euros in second-round funding. Bio Fund Management (Finland) led the deal, and was joined by return backers InnovationsKapital, Catella Healthcare Inv*stments, T-bolaget, Texcel and Barnwik AB.

    VC Deals

Thumbplay Inc., a New York-based provider of direct-to-consumer wireless entertainment services like ringtones and games, has raised $7.5 million in second-round funding. SoftBank Capital led the deal, and was joined by return backer i-Hatch Ventures.

Greenfuel Technologies Corp., a Cambridge, Mass.-based provider of emissions-to-biofuels conversion services to power plants and industrial facilities, has raised $11 million in Series B funding. Draper Fisher Jurvetson led the deal with a $6 million infusion, and was joined by return backers like Access Private Equity.

Facet Solutions Inc., a Logan, Utah-based maker of medical devices used in facet arthroplasty, has raised $16.5 million in Series B funding, according to a regulatory filing. Pequot Private Equity and De Novo Ventures joined return backer Spray Venture Partners on the deal.

AirTight Networks Inc., a Mountain View, Calif.-based provider of wireless perimeter security solutions, has raised $12 million in Series B funding. Trident Capital led the deal, and was joined by fellow return backers Walden International, Granite Ventures and Blueprint Ventures. New backer Siemens Venture Capital also participated.

Ulthera Inc., a Phoenix–based ultrasound medical device company targeting the cosmetic market, has raised $5.5 million in Series A funding from 3i Group.

Oakley Networks Inc., a Salt Lake City-based provider of data leakage detection and prevention in the federal market, announced that it has raised over $16 million in VC funding from Kleiner Perkins Caufield & Byers and Fidelity Ventures. The $16.8 million Series A deal formally closed in July 2004, according to a regulatory filing.

AngioChem Inc., a Laval, Quebec-based drug company focused on central nervous system diseases, has raised Cdn$6 million in new VC funding. BDC Venture Capital and VIMAC Milestone Medica Fund co-led the deal. It previously had raised Cdn$2.5 million over two seed funding rounds.

Fabric7 Systems Inc., a Mountain View, Calif.-based maker of enterprise servers, has raised $13.4 million in third-round funding at a pre-money valuation of approximately $51 million. Return backers include Sanmina-SCI, New Enterprise Associates, Goldman Sachs, Selby Ventures, Foundation Capital and Vanguard Ventures. It has now raised $45.4 million in total VC funding since its inception.

Redern Integrated Optics, an Australia-based maker of optical transmitters for the telecom and data switch markets, has raised $2.2 million in additional third-round funding, bringing the round total to $8.4 million. The extra capital comes from GE Capital Equity Inv*stments and Jolimont Ventures, while an initial July close on $6.2 million came from Advent International, Tallwood Venture Capital, TMT Ventures and Redfern Photonics Pty Ltd.

    Buyout Deals

Clearview Capital has acquired Senior Care Centers of America Inc., a Trevose, Pa.–based operator of 20 adult day health centers. No financial terms were disclosed for the deal, which also included the equity participation of company management.

Sage Capital Partners, a Los Angeles-based private equity firm, has acquired a controlling interest in Corral West Ranchware Inc., a Cheyenne, Wyo.–based retailer of western-inspired apparel and footwear. No financial terms were disclosed. Financo advised Corral West on the transaction.

Shah Capital Partners has acquired Ingenient Technologies Inc., a Rolling Meadows, Ill.–based provider of embedded multimedia software solutions for delivering video, audio and data on a range of platforms. No financial terms were disclosed. Bear Stearns & Co. advised Ingenient on the transaction.

3i Group has agreed to acquire Spain-based frozen seafood company La Sirena from Agrolimen SA for an undisclosed amount.

Industri Kapital has agreed to sell VSM Group Holding AB to Kohlberg & Co. for an undisclosed amount. VSM is a Sweden–based supplier of consumer sewing machines under the Husqvarna Viking and Pfaff brands. Kohlberg will roll VSM into a holding company that already controls Singer-brand sewing machines.

    PE-Backed IPOs

DealerTrack Holdings Inc., a New York-based provider of software and data solutions for the auto retail industry, priced 10 million common shares at $17 per share (above $14-416 range), for an IPO take of approximately $170 million. It will trade on the Nasdaq under ticker symbol TRAK, with JPMorgan and Lehman Brothers having served as lead underwriters. Significant shareholders include J.P. Morgan Chase and GRP Partners.

Scopus Video Networks Ltd., an Israel-based provider of digital video networking products, has reduced its proposed IPO offering price from $10 to $12 per share to $7 to $9 per share. It still plans to offer 4.5 million ordinary shares, with Thomas Weisel Partners and CIBC World Markets serving as lead underwriters. Company shareholders include Koor Venture Capital, Pitango Venture Capital, Vertex Management Israel, Genesis Partners and Formula Ventures.

International has emerged as the favorite to acquire the water treatment chemicals business of Degussa AG, according to The Financial Times.

    PE-Backed M&A

L-3 Communications (NYSE: LLL) has acquired SAM Electronics GmbH, a German manufacturer of maritime electrical and electronic systems, from EquiVest Partners, a partner fund of MPC Global Equity I. No financial terms were disclosed.

    Bad News

Edge Medical Devices Ltd., an Israel-based developer of digital radiology detectors, has shut down. Globes Online reports that the company failed due to non-resolvable delays in product development. The company had raised over $18 million in VC funding from firms like CenterPoint Venture Partners, Star Ventures and Tamar Technology Fund.


    Human Resources

Bob Lockwood has joined Lane, Berry & Co. as a managing director focused on I-banking client development and deal execution. He has spent the past 11 years with DLJ and CSFB, including his most recent post in CSFB’s technology I-banking group.

Scott Requadt has joined Clarus Ventures as a principal. He previously served as director of business development for onetime MPM Capital portfolio company TransForm Pharmaceuticals Inc. (which was acquired by Johnson & Johnson earlier this year).

James Wilding has joined turnaround firm AlixPartners as a London-based managing director. He previously served as a principal with Nikko Principal Inv*stments Ltd.

Chris Buckle has joined Mezzanine Management as a managing director focused on Central Europe. He previously was with Erste Bank, where he led acquisition finance operations for Central and Eastern Europe.

Alex Krueger, a managing director of First Reserve Corp., has resigned as a director of Natural Resource Partners. He was originally nominated to the board by First Reserve in connection with FRC-WPP NRP Inv*stment’s ac