PE Week Wire — Friday 1/10

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Klocwork Inc., an Ottawa-based software intelligence company, has raised $9.1 million in a Series B venture funding. U.S. Venture Partners led the round, and was joined by fellow new investors Cisco Systems Inc. and Duke University. First round backer Pequot Ventures also participated.

Stereotaxis Inc., a St. Louis-based developer of surgical device technologies, has raised $20 million in new venture capital financing at a post-money valuation of $140 million. Investors include A.G. Edwards & Sons, Advantage Capital Partners, Alafi Capital, Ascension Health Ventures, Portage Venture Partners and Stifel Nicolaus & Co.

Castle Harlan Inc. has acquired Technifor SA, a France-based manufacturer of marking devices for permanent product identification and tracing. Terms of the transaction were not disclosed. Castle Harlan said it plans to merge and integrate Technifor into another company it owns, Gravograph New Hermes Holding LLC, a producer and distributor of engraving and laser-marking machines and accessories.

LNL Technologies, a Cambridge, Mass.-based developer of monolithically integrated photonic and optoelectronic chips, today announced that it has raised $7.1 million in seed funding. Investors include company management; Dr. Adam Chowaniec, chairman and founder of Tundra Semiconductor; Larry Mohr, founder of Mohr, Davidow Ventures; and Sandy Robertson, founder of Robertson Stephens and chairman of Francisco Partners.

Ardais Corp., a Lexington, Mass.-based provider of human tissue storage, recently raised $14 million in a Series C venture financing. Investors included Advanced Technology Ventures, Advent International, Bessemer Venture Partners, The Kaufmann Fund and Pequot Capital.

Nortek Holdings Inc., a manufacturer of building products, today announced that its acquisition by affiliates of Kelso & Co. LP and management has been completed. The transaction is valued at approximately $1.6 billion (including the assumption of outstanding indebtedness). As a result of the consummation of the closing of the transaction, Nortek Holdings has called for redemption of each publicly owned outstanding share at the redemption price of $46 per share. Nortek Holdings, which has approximately 11 million shares of common and special stock outstanding (excluding options), will continue to operate under its current name and structure.

The Philadelphia Inquirer is reporting that the U.S. Attorney’s Office yesterday unsealed a civil fraud lawsuit against Acorn Technology Fund, a New Hope, Pa.-based venture capital shop. The suit contends that Acorn management improperly obtained $32 million of Small Business Administration funds and then diverted $5 million of that to themselves.
News From Thursday 1/9

BridgeCo AG, a Switzerland-based producer of entertainment network adapters, has raised $13.3 million in second round funding. Investors included Benchmark Capital, Earlybird, Infineon Ventures and Intel Capital.

Callidus Software Inc., a San Jose, Calif.-based enterprise incentive management solutions, has raised $10.9 million from existing investors Crescendo Venture Management, Crosspoint Venture Partners, Goldman Sachs, Onset Ventures and Westbury Partners.

SEEC Inc. (Nasdaq:SEEC), a Pittsburgh-based enterprise software provider, has received an investment of approximately $1.3 million from Kleiner Perkins Caufield & Byers. Vinod Khosla, a general partner of Kleiner Perkins, has been named to the board. Kleiner Perkins received approximately 1.2 million shares of SEEC common stock for its investment. In related news, SEEC announced yesterday that it has acquired certain assets of Asera Inc., including the Asera name, intellectual property and customers.

ProVox Technologies, a Roanoke, Va.-based developer of voice-recognition software, has raised $5.8 million in a Series C financing round. ECentury Capital Partners led the deal, and was joined by new investors Mid-Atlantic Venture Funds and Tall Oaks Capital Partners, LLC, plus previous investors Southwest One, Monument Capital and MRW.

Cooley Godward, a technology and venture capital-focused law firm, has closed its Kirkland, Wash.-based office. The move had been rumored for months, but was confirmed just this week.

LuMend Inc., a Redwood City, Calif.-based provider of medical instruments used in the treatment of chronic total occlusion, has raised $23.2 million in a fourth round funding. Investors included ABS Ventures, Channel Medical Partners, De Novo Ventures and Morgenthaler Ventures.

GTESS Corp. a Richardson, Texas-based provider of outsourced claims processing for the health-care industry, has received an additional $1.4 million of capital in funding from existing investors SnowMark Corporation and Seed Capital Partners.

Thoma Cressey Equity Partners has made an investment in Van Wagner Communications to fund the acquisition of Viacom‘s telephone kiosk advertising business. Under the agreement, Van Wagner, already a major marketer of advertising on New York kiosks with 1,000 venues on the sidewalks of Manhattan, will add approximately 1,600 Manhattan locations and 700 other locations spread throughout New York.

Fox Paine & Co. today announced that Robert Lowe Jr. has joined the firm as a Managing Director and Chief Operating Officer and that Herald Chen has joined the firm as a Director. Prior to joining Fox Paine, Lowe was Arthur Andersen’s global managing partner or expansions and alliances. Chen served as co-founder and CFO of Jamcracker Inc., prior to which he was an investment professional at Kohlberg Kravis Roberts & Co.
RBC Capital Partners, the private equity arm of RBC Financial Group, has added Sean Lance, chairman and CEO of Chiron Corp., to the RBC Life Sciences LP II Fund Advisory Council.

Michael Choo, an associate at WL Ross & Co., has been named to Stanford University’s board of trustees.
News From Wednesday 1/8
Intransa, a San Jose, Calif.-based IP storage company, today announced it has secured an additional $6 million in venture capital financing. Existing investors, Advanced Technology Ventures, Sofinnova Ventures, Sofinnova Partners, US Venture Partners and 3Com were joined by other smaller investors in Intransa’s third round of funding, which brings the company’s total funding to $33 million to date.

ICV Capital Partners has acquired Chung’s Foods Inc., a Houston, Texas-based provider of Asian appetizers and entrees. Chung’s, with $26 million in annual revenues and a 50% market share of all egg rolls sold in the self-service deli category, was sold by Yellowstone Capital Inc. and affiliates. Yellowstone, along with Heller, Fernandez, Atkinson, Hall, Dr. Gene Chung, the founder of the company, and other Chung’s employees will hold in aggregate a 25% equity interest in the company. Houlihan Lokey Howard & Zukin advised Yellowstone on the deal.

Aton Pharma Inc. has closed an equity financing of $13.7 million. Participants in the financing included new investors Perseus-Soros Biopharmaceutical Fund and The Wellcome Trust. The Tarrytown, N.Y.-based company plans to use these funds to continue the development of its lead clinical candidate, suberoylanilide hydroxamic acid (SAHA), a histone deacetylase inhibitor currently in Phase II trials in cancer patients.

PrivateEquityCentral.net is reporting that Paula Chester has resigned as director of private equity for the New York State Common Retirement Fund. She has served in the position since 1999, and is said to have been replaced by Dave Loglisci, a former vice president at Salomon Smith Barney. Among the fund’s general partners are Apax Partners, Blackstone Group, Horsley Bridge Partners, Forstmann Little & Co. and TA Associates.

Vested Health, a Charleston, West Va.-based consumer health-plan provider, today announced that it has secured financing from Adena Ventures, Mountaineer Capital and The West Virginia Jobs Investment Trust.

Saratoga Partners has signed a definitive agreement to acquire Sericol, a multinational specialty printing inks business of BP subsidiary Burmah Castrol PLC, in a transaction valued at approximately $115 million in cash and assumed debt. BP had acquired Sericol when it bought Burmah Castrol in 2000. Debt financing for the transaction was arranged and underwritten by Scotia Capital in London.

PHS MEMS, a France and U.S.-based micro-electro mechanical systems (MEMS) manufacturer, has received 10 million euros in new funding from AXA Private Equity, CDP Capital Technology Ventures, IDI Kairos, Thales Corporate Ventures, the Houston Group, ETF Group, private investors and management. The round will remain open to new investors through March.

Indosuez Capital, a division of Credit Agricole Indosuez, today announced that Mat Linett has re-joined the firm as a vice president in its Merchant Banking Group. Prior to re-joining Indosuez Capital, Mr. Linett spent three years at Sterling Partners LLC, a New York-based private equity and financial advisory services firm, where he structured and executed middle-market private equity transactions.

Biotica Technology Ltd., a Cambridge, UK-based biopharma company focused on targeted alteration of biosynthetic pathways producing natural products, announced today the completion of a $5 million Series A round of financing led by Biotechnology Value Fund with co-investor Nordic Biotech. Marc Schneidman and Florian Schonharting will join the Biotica board, representing BVF and Nordic Biotech respectively.

Sky Capital Holdings yesterday announced the creation of a new affiliate, Sky Venture Capital. The new venture fund intends to make equity investments in a range of public and private companies both in the U.S. and internationally. C. Thomas McMillen, the former Maryland Congressman and professional basketball player, will lead Sky Venture Capital as its Vice Chairman. McMillen also serves as chairman of Washington Capital Advisors, LLC, a merchant bank specializing in middle-market government contractors.

Psychiatric Solutions Inc. (Nasdaq: PSYS ) has raised $25 million in a Series A convertible preferred stock financing from Oak Investment Partners, Salix Ventures and Brown Brothers Harriman & Co.’s The 1818 Mezzanine Fund II LP. All are current investors in PSI, with Oak Investment Partners and Salix Ventures (or related entities) being among the co-founders of PSI. The $25 million private placement will consist of 4,545,454 shares of the preferred stock priced at $5.50 per share, convertible at the option of the holders into the same number of shares of PSI’s common stock. The preferred stock will have an initial annual dividend of 5%, increasing to 7% at the second anniversary of the initial funding.

Alacritude LLC, the Chicago-based publisher of eLibrary.com and Encyclopedia.com, announced late last year that it secured $3.1 million in Series A funding. Prism Opportunity Fund led the round, and was joined by 1to1 Venture Partners, LLC.

ViaLogy Corp., a Pasadena, Calif.-based computational biotechnology company, announced today that it has extended its first round of equity financing to $3.95 million. Lead investor BioProjects International PLC a London life sciences investment company increased its existing equity interest.

The Deal is reporting that Warburg Pincus has promoted three vice presidents to managing director and five associates to vice president. The new managing directors are Jorg Diedrich, Kevin Kruse, Jeff Leng and Thimo Sommerfeld. The article also says that the New York-based firm has hired a new London-based vice president in Simon Turton, who was previously a principal focused on life sciences deals for Index Ventures.
News From Tuesday 1/7

Spurred by a $19 billion fourth quarter, total buyout deal volume for 2002 reached $42 billion, according to Buyouts newsletter. This nearly doubled the 2001 tally of $23.1 billion, and was driven by a striking increase in corporate divestiture activity. Buyout fund-raising activity, on the other hand, suffered another down year with just $17 billion – the weakest market effort since 1994. For more numbers and analysis of the 2002 buyouts market, subscribers can check out the latest print or online edition of Buyouts.

In the 11 months since taking the lead of JPMorgan Partners‘ nanotechnology effort, Executive-in-Residence Alan Marty has looked at 180 deals and advised his firm to invest in just one. That company is South San Francisco-based Optiva Inc., which today announced that it has raised $21 million in a second closing on its Series C funding, bringing the total raised for the round to $30 million. JPMorgan Partners led the funding with participation in the second closing from Korea’s Daehong Corp., DSM NV, Eastman Chemical Co. and earlier investors Fidulex Management Inc., Harris & Harris Group, Merifin Capital NV and NextGen Partners LLC.

ClearCube Technology, an Austin, Texas-based provider of client blade desktop computing, today announced that it secured $20 million in fourth round funding. Paladin Capital Group’s Homeland Security and Partners’ Funds led the round and were joined by Liberty Mutual, Austin Ventures, Techno Venture Management, SAIC, Sternhill Partners and other private investors.

Fandango Inc., a Hollywood, Calif.-based remote movie ticketing company, announced today that it has secured $15.3 million in funding from Technology Crossover Ventures (TCV). Fandango also announced that Jay Hoag, founding general partner of TCV, has been named to Fandango’s board of directors.

Vascular Architects Inc., a San Jose, Calif.-based producer of devices to treat vascular disease and nonvascular obstructions, has raised $16 million in Series D funding. Foundation Medical Partners led the round, and was joined by Edwards Lifesciences LLC as new investors. Return backers included Domain Associates, Thomas Fogarty M.D., ARCH Venture Partners, Johnson & Johnson Development Corp., The Vertical Group, Atherton Venture Partners and Three Arch Partners.

Techno Venture Management today announced the appointment of Stephen J. Hoffman to the position of principal and investment manager for the Boston life science team, effective January 15th. Dr. Hoffman was the founding CEO of Allos Therapeutics Inc. in 1994, and served as president and CEO until December 2001, when he became Chairman of the Board. Prior to Allos, Hoffman received his medical training in dermatology and was a clinical fellow in oncology at the University of Colorado Health Sciences Center. He was also scientific founder of Somatogen Inc.

Remington Arms Company Inc., a wholly owned subsidiary of a Clayton, Dubilier & Rice Inc. portfolio company named RACI Holding Inc., today announced a recapitalization. The transaction includes a $30 million equity investment in RACI from a fund managed by Bruckmann, Rosser, Sherrill & Co. LLC, the refinancing by Remington of approximately $100 million of debt and the issuance by Remington of an expected $175 million in unsecured, interest-bearing senior notes. CD&R Fund IV purchased Remington in December 1993 for $75 million in equity and currently owns approximately 87% of RACI. As part of the transaction, CD&R Fund IV and other current shareholders, including Remington’s management, will retain a significant percentage of RACI’s common stock and receive a combination of cash and senior notes issued by RACI. Specific terms were not disclosed.

NBT Technology Inc., a San Francisco-based provider of network performance solutions, announced today that the company has closed a $6.6 million Series A round of financing from Accel Partners and Lightspeed Venture Partners. Jim Swartz of Accel and Christopher Schaepe of Lightspeed will take seats on NBT’s board.

SkinMedica Inc., a Carlsbad, Calif.-based specialty pharmaceutical company focused on dermatology products, today announced that it has completed a $5 million Series C venture capital financing led by Apax Partners Inc. The deal follows close on the heels of a $9 million second round deal announced last month.

RedDot Solutions, a New York-based provider of enterprise content management solutions, announced today that it has secured a second round of funding from ViewPoint Capital Partners and previous investor 3i Group.

Nanosphere Inc., a Northbrook, Ill.-based nanotech-based life sciences company, today announced it has received an additional $5 million in third round financing, bringing the total third round financing to $15 million. Third round investors include Lurie Investments, NextGen Partners and Takara Bio Inc. of Kyoto, Japan.

FENA Design Inc., a Plymouth, Minn.-based maker of a power standing mobility device for people with mobility impairments, recently closed on the first portion of an equity offering expected to total $3.6 million. AAVIN Venture Capital and Virchow Krause Capital LLC participated on the deal.

American Capital Strategies Ltd. announced that it invested $28 million to sponsor the combination of its portfolio company Dixie Trucking Co. Inc. with Service Transport Inc., under a new holding company, STACAS Holdings Inc. American Capital’s investment takes the form of a bridge senior facility, senior and junior secured subordinated notes and preferred equity. American Capital’s senior loan is anticipated to be repaid from a third party lender shortly. American Capital will be the majority shareholder in the combined entity.

The Financial Times is reporting that Daman Asset Management has launched something called the Daman Iraq Daman Iraq Opportunity Fund – a $50 million discretionary private equity initiative designed to provide investors with the opportunity to participate in the international reintegration and reconstruction of Iraq.
News From Monday 1/6
S2io Inc., a San Jose, Calif.-based developer 10 Gigabit per second Ethernet connectivity technology, today said it raised $18 million in a Series B round of funding led by Menlo Ventures. Existing investors VenGrowth Capital Partners Inc. and the Business Development Bank of Canada also participated.

Everdream Corp., a Fremont, Calif.-based provider of desktop management services, has secured $12 million in Series D venture funding. New World Ventures led the deal, and was joined by fellow new investor Elon Musk, co-founder of PayPal and Zip2, and currently chairman and CEO of SpaceX. Previous investors also participated, including Draper Fisher Jurvetson, Canaan Partners, Greenfield Capital, Portage Ventures and RW Baird Venture Partners.

TolerRx Inc., a Cambridge, Mass.-based biopharma company focused on therapies that induce and maintain immunological tolerance, today announced the completion of its Series C financing. Skyline Ventures led the $35 million financing round, which included other current investors HealthCare Ventures, Rho Ventures and Vertex Management, as well as new investors Sprout Group, Artal Services, Genentech, Lehman Brothers Healthcare Fund, Yasuda Enterprise Development, Mizuho Capital, Aozora Investment and Duke University.

Raven Biotechnologies Inc. recently raised $40.8 million for its Series C financing. Bear Stearns Health Innoventures, L.P. (BSHI) led the round. Also participating in the round as new investors were Pequot Ventures, GE’s Life Science and Technology Finance Group, Singapore’s BioMedical Sciences Investment Fund Pte Ltd, and Integra Ventures. Existing investors, U.S. Venture Partners (USVP), CMEA Ventures, Hambrecht & Quist Capital Management, LLC and Milepost Ventures also participated.

Phoenix Equity Partners has acquired toy manufacturer Vivid Imaginations from private equity firm The Jordan Group, according to various press reports. The deal is said to be worth £65 million (approx. $105 million), with a £40 million debt facility coming from the Royal Bank of Scotland.

The Boston Globe is reporting that Norwest Venture Partners has decided to close its Wellesley, Mass.-based office, which was first opened in 1989. Ernest Parizeau, a Norwest partner who runs the office, will now work from home. Norwest will maintain its Palo Alto and Minneapolis shops. Not all is lost for the Wellesley landlord, however, as Pequot Ventures has decided to rent out the old Norwest space. Currently, Pequot has offices in New York, London, Menlo Park and Westport, Conn.

eFinancialNews is reporting that the Yale University Endowment has decided to cut its allocation to private equity investment by 33 percent. To make up the difference, the group is upping its hedge fund and real estate investment allocations.

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