PE Week Wire — Friday 1/23

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Private Equity Week is reporting that both Charles River Ventures and Essex Woodlands Health Partners have held first closes on new funds, with final closes expected within two weeks. The article also discusses personnel changes at the firms, and another recent fund close and personnel changes at Technology Crossover Ventures. Go to www.PrivateEquityWeek.com for more information.

 

Coriolis Networks Inc., a Boxborough, Mass.-based provider of metro-optical products, has gone out of business. Bill Kingsley, a managing director with Coriolis investor EnerTech Capital, confirmed the shutdown but declined to comment on its cause. Coriolis had raised over $78 million of venture funding since its 1999 inception, including $9.3 million in Series D and series E funding in the second half of last year. Company investors included Bessemer Venture Partners, Boston University Community Technology Fund, Columbia Capital, EnerTech, New Enterprise Associates and TL Ventures.

 

Gores Technology Group yesterday lost out on its bid to acquire the assets of Cable & Wireless USA Inc., when the bankrupt company instead chose a $167.5 million bid from Savvis Communications Corp., which offered $155 million of cash and $12.5 million of debt. Gores had originally offered $125 million, and also had been challenged by a bid from XO Communications Inc.

 

SelectX Pharmaceuticals Inc., a Worcester-based drug discovery company, has raised up to $8 million in Series B funding ($5 million in the bank, capital commitments for another $3 million).New investors Inventages Venture Capital and Techno Venture Management co-led the deal, and were joined by return backer Boston University Community Technology Fund.

 

ITS Services Inc. has acquired Science & Engineering Associates Inc. for approximately $100 million. ITS is a Springfield, Va.-based acquisition platform launched by Arlington Capital Partners last year to consolidate several federal IT services companies. Science & Engineering Associates is a New Orleans-based technology company that offers various services to governmental and commercial clients.

 

CINAR Corp. (OTC BB: CINRB) said yesterday that if a proposed buyout led by TD Capital Canadian Private Equity Partners be approved, the current board of directors would be replaced by representatives of the investor group. In addition, president and CEO Stewart Snyder will leave the company upon completion of the transaction.

 

Champlain Capital Partners has acquired Option One Home Medical Equipment Inc., a Corona, Calif.-based provider of home medical equipment. No deal terms were disclosed.

 

Blue Point Capital Partners has led a recapitalization of Nexcel Synthetics LLC, a Birmingham, Ala.-based maker of specialty yarns and fibers. Blue Point and Nexcel management provided an undisclosed amount of equity for the transaction, with debt financing provided by Bank One and Allied Capital.

 

Continental Community Holdings LLC, a manufactured home producer, has completed an $86 million recapitalization led by existing investor Lunn Partners and new investor GMAC Residential Equity.

 

Michael Ward has joined the London office of Apax Partners as a partner focused on investment opportunities in the retail and consumer spaces. He previously served as CEO of Celesio AG’s retail division.

 

Rob Stavis has been promoted to the position of general partner within Bessemer Venture Partners. He originally joined the firm’s Larchmont, N.Y. office three years ago as a venture partner, following a stint as co-head of global arbitrage trading at Salomon Smith Barney.

 

SI International Inc. (Nasdaq: SINT) has acquired Matcom International Corp., an Alexandria Va.-based provider of various technology services to the federal government. The all-cash transaction is valued at $65.8 million, and also includes an earnout provision of $7.9 million in the form of SI subordinated notes should Matcom achieve certain short-term goals. Matcom was sold by private equity firm DFW Capital Partners.

 

HydroCision Inc., an Andover, Mass.-based maker of surgical devices, has sold its VersaJet surgical debridement product to the Advanced Would management business of Smith & Nephew PLC (NYSE: SNN). The deal is worth $5 million in cash up front and additional considerations depending on future product development and sales milestones. HydraCision has raised over $22 million of venture funding from Newbury Ventures, Oxford BioScience Partners and Zero Stage Capital.

 

eNucleus Inc. (OTC BB: ENCU) has agreed to acquire the assets of PrimeWire Inc., a Rockville, Md.-based software company focused on the insurance market. No terms of the cash and stock deal were disclosed. PrimeWire has raised over $17 million in venture funding since its 1997 inception, including investments from NextGen Capital, Osprey Ventures, SpaceVest and Walker Ventures.

 

MicroVest has held raised $10.3 million in equity and $4.7 million in debt for its inaugural fund. The Baltimore-based investment fund will provide debt and equity capital to profitable micro-finance institutions (or micro-banks) in developing countries. The fund will remain open for equity investments through year-end. Both Bowman Cutter and John Landry of Warburg Pincus sit on the MicroVest board, but Warburg itself is not formally affiliated with MicroVest.

 

NEWS FROM THURSDAY 1/22

Jonathan Nyce, former chairman and CEO of Epigenesis Pharmaceuticals Inc., pleaded not guilty to murdering his wife. Nyce entered his plea in a New Jersey courtroom Tuesday, and claimed that his wife’s death was accidental. It is unclear, however, if he plans to retract a statement to the police whereby he acknowledged having killed Michelle Nyce in the couple’s garage, and then staging a car accident nearby. Nyce served as chairman and CEO of Epigenesis until last year, when investors reportedly forced him out of the company. Epigenesis has not issued any statement on the murder charges, nor have company investors Boston Millennia Partners, Investor Growth Capital, Merrill Lynch VC, the New Jersey Technology Council, the north Carolina Technological Development Authority or Technology Partners.

 

Cellular Genomics Inc., a Branford, Conn.-based drug company specializing in chemical genetics, has held a $22.3 million first close on its Series C funding round. The deal is expected to close with a total of $30 million within the next few weeks. Lilly BioVentures led the deal, and was joined by fellow new investors Coastview Capital and Emerging Technology Partners. Return backers included Connecticut Innovations, Flagship Ventures, MPM Capital and Vector Fund Management. Cellular Genomics now has raised over 448 million in venture capital funding since its 1998 inception, including a $22 million Series B deal in early 2001 at a post-money valuation of approximately $44 million.

 

Jazz Semiconductor Inc., a Newport Beach, Calif.-based provider of wafer foundry services, has filed to raise $150 million via an IPO on the Nasdaq under proposed ticker symbol JAZZ. Company shareholders include The Carlyle Group (46.9% ownership), Conextant Systems Inc. (38.4%) and RF Micro Devices Inc. (11.1%).

 

ChannelAdvisor Corp., a Research Triangle Park, N.C.-based provider of marketplace management solutions, has raised $7 million in new venture capital funding at a post-money valuation of approximately $21.7 million. Investors included Kodiak Venture Partners, Blue Sky Ventures and eBay.

 

Orexigen Therapeutics Inc., a Princeton, N.J.-based drug company focused on the treatment of obesity, has raised $11 million in Series A funding. Investors included Domain Associates, Kleiner Perkins Caufield & Byers and Sofinnova Ventures. The company was founded last year by Eckard Weber, a venture partner at Domain Associates who also serves as chairman of the Orexigen board.

LMIC Inc. (OTC BB: LMII) has received a $4.95 million private equity placement led by Vertical Ventures.

 

Equinox Converged Solutions Ltd., a UK-based metropolitan area network operator, has raised £11 million (approx. $20.26 million) from Apax Partners.

 

GWS Photonics Inc., a Philadelphia-based provider of tunable components for optical systems, has raised $3 million in Series B funding. Apax Partners led the deal and was joined by Redwood Venture Partners and an undisclosed strategic investor.

 

The Lightyear Fund has completed a $20 million PIPE investment in Private Business, Inc. (Nasdaq: PBIZ), a provider of cash flow and retail inventory management for banks and small businesses. In related news, Private Business Inc. received an $11 million credit facility from Bank of America. 

 

The Financial Times is reporting that MBNA Corp. is nearing an agreement to buy Premium Credit from private equity firm Electra Partners Europe. The report puts the deal’s price tag at around £180 million (approx. $331.6 million).

 

The New York Post is reporting that Pegasus Capital Advisors has hired Financo to peddle its GM Design Group. No potential suitors have yet to be named, although the paper indicated the company could fetch a purchase price of approximately $80 million.

 

Illuminations Inc., a Petaluma, Calif.-based candle retailer, has filed for Chapter 11 bankruptcy protection, and has begun closing many of its stories. The company has raised around $45 million in venture capital funding since its 1996 inception, including a $9 million infusion in 2002 at a post-money valuation of approximately $62 million. Company investors include Halpern, Denny & Co., LF Venture Capital, Maveron LLC and Rosewood Capital.

 

Arzoon Inc., a San Mateo, Calif.-based provider of supply chain process management (SCPM) solutions, has acquired Vigilance Inc., a Sunnyvale, Calif.-based provider of business process management software. No deal terms were disclosed. Vigilance has raised over $14 million in venture capital funding since its 1998 founding, including an infusion in 2001 that netted a $52 million post-money valuation. Company investors included Lightspeed Venture Partners and Lighthouse Capital Partners. Arzoon has raised around $40 million in venture funding, from investors like InnoCal Venture Capital, J&W Seligman & Co., Red Rock Ventures and Venrock Associates.

 

CIT Group said it has agreed to sell its direct private equity portfolio to Protostar Equity Partners, which funded the acquisition with equity from Goldman Sachs’ GS Vintage Funds II. Terms of the deal were not disclosed.

 

NEWS FROM WEDNESDAY 1/22

Allianz Capital Partners and Goldman Sachs have agreed to exit their joint investment in Messer Griesheim GmbH, a Germany-based industrial gasses maker. The firms – which acquired a 67% stake in Messier via a 2001 buyout – will sell the U.S., German and UK assets to France’s Air Liquide SA, and then sell its remaining interests back to the Messer family. The sale to Air Liquide is worth €2.68 billion (approx. $3.37 billion) in combined debt and equity, although no terms were disclosed on the subsequent sale back to the Messer family.

 

Picolight Inc., a Boulder, Colo.-based provider of fiber-optic components, has raised $10 million in Series G funding. Return backers St. Paul Venture Capital and BA Venture Partners co-led the deal. Picolight now has raised over $90 million in venture capital funding since its 1996 inception.

 

Sun Microsystems Inc. has agreed to acquire Nauticus Networks Inc., a Framingham, Mass.-based provider of networking infrastructure products. No terms of the all-cash transaction were released, with the deal expected to close during the third quarter of Sun’s 2004 fiscal year. Nauticus has raised approximately $38 million in venture capital funding since its 2000 inception, from investors like Advent International, Charles River Ventures, Matrix Partners and North Bridge Partners.

 

M7 Networks Inc., a La Jolla, Calif.-based provider of data services for wireless carriers, has raised $3 million in new venture capital funding. Enterprise Partners Venture Capital led the deal, and was joined by Sienna Ventures, QualComm Inc. and IdeaEdge Ventures.

 

Huron Capital Partners has acquired Miami-Jacobs Career College, a Dayton, Ohio-based post-secondary vocational school. He deal closed in December, but terms have not been disclosed.

 

Ken Hanna, an operating partner with Compass Partners International, has been appointed CFO of Cadbury Schweppes PLC (OTC BB: CSGWF), effective March 1.

 

Glenn Hutchins, co-founder and managing director of Silver Lake Partners; and Mark Neporent, COO, general counsel and senior managing director of Cerberus Capital Management, have both joined the MCI board of directors.

 

Watchfire Corp., a Waltham, Mass.-based provider of software that manages online brand and risk issues, has acquired the intellectual property of Buystream Inc., an Ottawa-based provider of Web analytics and mobile Internet intelligence solutions. No deal terms were disclosed. WatchFire has raised over $38 million in venture capital funding from investors like Altamira Management, BancBoston Ventures, Dain Rauscher, Goldman Sachs, Kodiak Venture Partners, Polaris Venture Partners and Ventures West Management. Buystream has raised around $20 million in venture funding from Safeguard Scientifics and TechSpace Xchange LLC.

NEWS FROM TUESDAY 1/20

Broadbus Technologies Inc., a Boxborough, Mass.-based provider of video-on-demand (VOD) server systems for the cable television industry, has raised $25 million in Series B funding. Star Ventures led the deal, and was joined by return backers Battery Ventures, Charles River Ventures, Comcast Interactive Capital, Infineon Ventures and Wolf Ventures. As part of the transaction, Jeanne Bayless, a managing partner of Star Ventures, will join the Broadbus board of directors. The company now has raised approximately $37 million since its 1999 founding.

John DeFord has been joined C.R. Bard Inc. (NYSE: BCR) as VP of Science & Technology, effective immediately. He most recently served as a managing director with Cleveland-based Early Stage Partners.

Netrake Corp., a Plano, Texas-based provider of session controllers for VolIP interconnection, has raised $20 million in Series D funding. Prism Venture Partners led the deal, and was joined by return backers Austin Ventures, TL Ventures and Trinity Ventures. The company has raised more than $70 million in venture capital since its 2000 inception.

Trafficmac, a New York-based provider of advertising operations software, has raised $2 million in first-round funding from Aardvark Capital.

Prosero Inc. (f.k.a. FacilityPro.com), an Atlanta-based provider of procurement outsourcing services, has raised $4 million in new funding. New investor River Cities Capital funds split the round evenly with return backer Austin Ventures.

OptionsXpress Inc., a Chicago-based online brokerage for stock and equity options investors, has received a $90 million minority investment from Summit Partners. Goldman Sachs served as an advisor for OptionsXpress on the transaction. Pedestal Networks Inc., a Fremont, Calif.-based provider of universal broadband solutions, has raised $20 million in Series C funding. Duff Ackerman & Goodrich led the deal, and was joined by return backers Benchmark Capital, Doll Capital Management and Skymoon Ventures. The company now has raised $34 million in venture capital funding.

PRG-Schultz International Inc. (Nasdaq: PRGX) has sold its Communications Division to TSL (DE) Corp., a newly formed company whose principal investor is One Equity Partners, the private equity division of Bank One. The division was sold for approximately $19 million in cash, plus the assumption of certain liabilities. Avondale Partners served as exclusive financial advisor to PRG-Schultz in connection with the transaction, while Mooreland Partners advised One Equity Partners.

Acorda Therapeutics Inc. a Hawthorne, N.Y.-based biotech company focused on spinal cord injuries, has withdrawn its registration papers for a $75 million IPO. The deal was to have been lead managed by Bank of America Securities. Acorda has raised approximately $129 million in venture capital funding, including a $55.3 million Series J deal earlier this year at a post-money valuation of approximately $104 million. Investors include MPM Capital (13.3% pre-IPO ownership), Elan Corp. (7.9%), Forward Ventures (7.1%), Easton Hunt Capital Partners (5.5%), TVM Life Sciences (5.3%), ABN AMRO (5.3%), J.P. Morgan (5.3%) and Cross Atlantic Partners (5.3%).

Advanced Analogic Technologies Inc., a Sunnyvale, Calif.-based developer of power management solutions, has raised $15 million in new venture funding. Battery Ventures led the deal, and was joined by return backers Hotung Ventures, InveStar, Maton Venture, Mosel Vitelic and Sunsino Ventures Group. Ken Lawler, a general partner with Battery Ventures, will take a seat on the company’s board of directors.

Phytomedics Inc., a Dayton, N.J.-based biopharmaceutical company focused on plant biotech, has raised $7.5 million in Series A funding. Switzerland-based Inventages VC led the deal, and was joined by Burrill & Co.

Pivia Software Inc. (f.k.a. Assisto), a Cupertino, Calif.-based provider of Web application optimization solutions, has raised $9 million in new venture capital funding from return backers Sutter Hill Ventures and Thomas Weisel Venture Partners. As part of the transaction, Bill Younger, a managing director with Sutter Hill, will join the Pivia board of directors.

ClickFox Inc., an Atlanta-based provider of software solutions for contact centers, has raised $4 million in Series A funding. Cedar Fund led the deal, and was joined by Delta Ventures and Veritas Venture Partners.

General Catalyst Partners has closed its third venture capital fund at approximately $300 million. The Cambridge, Mass.-based firm had marketed the fund with a $275 million target capitalization, and had held a $220 million first close last September. In related news, the company has promoted Larry Bohn from Venture Partner to Managing Director. The firm also is welcoming Ken Novak, recently-retired Vice Chairman of Time Inc., as a Special Advisor to the firm.

Bob Kondamoori, a Partner with Charter Ventures has joined the board of directors at InterWave Communications International Ltd.

Aligo Inc., a San Francisco-based provider of mobile software solutions, has raised $10.5 million in Series C funding. Return backers Thomas Weisel Venture Partners and RBC Capital Partners co-led the deal, and were joined by Dolphin Equity Partners and Motorola Ventures.

AlterPoint Inc., a Plano, Texas-based provider of enterprise network configuration management (NCM) solutions, has raised $6 million in new Series B funding from return backers Austin Ventures and Palomar Ventures. The company now has raised $14.8 million in venture funding since its 2002 inception.

Stepmind SA, a France-based provider of fabless microelectronics, has raised €20 million (approx. $25 million) in new venture funding. Investors include AGF Private Equity and Nam Taï Electronics Inc. (NYSE: NTE).

ZettaCore Inc., a Denver-based developer of molecular memory technology and services for the semiconductor market, has raised $17.5 million in Series B funding. Kleiner Perkins Caufield & Byers led the round, and was joined by previous investors Draper Fisher Jurvetson, Radius Ventures, Oxford Biosciences, Access Ventures, Garrett Capital and Stanford University. The company now has raised $23 million in venture capital since its 1999 inception.

Alpine Access Inc., a Golden, Colo.-based provider of outsourced call center solutions, has raised $4.8 million in new venture funding. Investors included Stolberg Equity Partners, Holden Capital and 5280 Partners.

StrataFLEX Corp., a Toronto-based maker of flexible printed circuit boards (PCB) for interconnect applications, has completed its corporate restructuring. The deal included Ca$3.2 million of new funding from RBC Capital Partners, RoyNat and Business Development Bank of Canada. The company also named Michael Fielding as its new CEO and Dean Mastantuono as its new CFO.

Tatara Systems Inc., an Acton, Mass.-based provider of service delivery platforms for public WLAN service providers, has raised $8 million in second-round funding. Investors included highland Capital Partners and North Bridge Venture Partners. The company now has raised $17 million in total venture capital funding.

United Pet Group Inc., a TA Associates and Friend Skoler portfolio company, has acquired Dingo Brands LLC, a Hawaii-based dog chew products maker. No deal terms were disclosed. Goodwin Procter served as legal counsel for UPG on the transaction.

Thor Technologies Inc., a New York-based provider of secure enterprise provisioning solutions, has raised $15 million in new venture funding. Trident Capital led the deal, and was joined by fellow new investor RBC Technology Ventures. Return backers included Bain Capital Ventures, Boston Capital Ventures and Longworth Venture Partners. The company now has raised over $33 million in venture funding since its 1999 inception.

PrivateEquityCentral.net is reporting that Hugo Maurstad, head of McKinsey & Co‘s Norwegian office, will join Altor as a Partner in March.

Sterling Capital Partners has acquired The Florida Coastal School of Law, according to The Florida Times-Union. No deal terms were disclosed. Florida Coastal is a for-profit law school accredited by the ABA.

Vestar Capital Partners has promoted Brian Ratzan to Principal and Brian Modesitt to Vice President.

Warner Fite has joined AEG Partners as a Managing Director. He will also launch and run the Chicago-based turnaround firm’s New York office. Fite most recently served as a Principal with Austerlitz Management.

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