PE Week Wire — Friday 1/31

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Illinois Governor Rod Blagojevich yesterday began making good on his promise to launch a $200 million venture capital program (named the Illinois Opportunity Fund) for small local businesses. The man running the show will be new state economic affairs director Jack Lavin, who previously worked under Lt. Gov. Pat Quinn when Quinn served as state treasurer.

Renovo Ltd., a Manchester, UK-based biopharmaceutical company engaged in scar prevention and tissue repair, has raised an additional £2 million ($3.2 million) from Temasek Holdings Ltd. and BioVeda Capital Ltd., both of Singapore. The investments are part of an oversubscribed Series B round which held a £21 million ($33 million) close in December. Investors on the initial tranche included HealthCap, Care Capital, Atlas Venture and JPMorgan Partners..

Close Brothers Private Equity has acquired 80% of Fosroc Mining, a chemicals mining division of British Petroleum, for £32 million ($52.8 million). Fosroc management also participated on the deal, while British Petroleum was advised by Credit Suisse First Boston.

The Carlyle Group has promoted 10 investment professionals, three to managing director and seven to principal/director. Ted Hobart was promoted from principal of Carlyle Asset Management Group to managing director and Robert Easton and Franck Falezan were both promoted from director of Carlyle Europe Partners to managing director (as mentioned here a few weeks back). The new principals/directors promoted from vice president are Kandasamy Chandrasekar and Sean He of Carlyle Asia Venture Partners; Marc Demumieux of Carlyle Europe Real Estate Partners; Shigeru Fukunaga of Carlyle Japan Partners; David Kupperman of Carlyle Asset Management Group; and Steve Owens of Carlyle Partners. Dennis Schulze of Carlyle Europe Partners was promoted from Associate Director to Director. (Principals and directors are the same level in Carlyle parlance; principal is the title used in the U.S. and director is the title used in Europe and Asia).

Silicon Valley Bank has named Larry Lopez, former managing director of SVB Securities, as president of its private banking group. Lopez has spent over 20 years with the firm, and at one point was managing director of its international venture capital group.

Houlihan Lokey Howard & Zukin today announced that Scott Beiser and Jeffrey Werbalowsky have been elected co-chief executive officers. Beiser is chief operating officer of the firm as well as head of its Los Angeles office. Werbalowsky is co-founder and national co-director of the firm’s Financial Restructuring Group.

Saunders Karp & Megrue has finished the recapitalization of MagnaCare Inc., a Garden City, N.Y.-based health-care claims processor.

Folha Online is reporting that Pactual, a Brazilian investment bank, will manage the first venture fund focused on Brazil’s underdeveloped northeast region. The fund is backed by 36 million reals ($10.15 million) from the International Development Bank of Brzil, Banco de Nordeste and Pactual.

Super Dimension Ltd., a Herzliya, Israel-based medical device maker focused on lung disease, has raised $13 million in new venture funding. Investors included Mi3 Venture Capital, Oxford Bioscience Partners, Pitango Venture Capital and Gemini Israel Funds.
NEWS FROM THURSDAY 1/30
Most venture capitalists may think that their market is saturated with available cash, but it seems that some Washington legislators disagree. A bill introduced by State Senator Joe Zarelli (R-Ridgefield) is intended to force the State Investment Board to create a $75 million side fund dedicated to investing in Washington-based technology startups. The purpose is apparently to attract new business to Washington, but a news report in The Columbian suggest that Investment Board members are down on the idea, saying that it would lower overall returns and that economic development is not their domain. Nonetheless, the bill is expected to make it out of committee and onto the larger State Senate floor.

There has been a lot of confusion regarding what’s going on over at JPMorgan Partners in terms of the parent bank’s commitment to the private equity asset class. For clarity’s sake: the bank is, indeed, looking to reduce its private equity exposure, but not by reducing its commitment to direct private equity investments. After all, the bank just committed a veritable fortune to JPMorgan Partners’ new mega-fund. Instead, the reduction efforts are focused on selling off its third-party fund commitments, most likely on the secondaries market.

IndX Software Corp., an Aliso Viejo, Calif.-based developer of an operations intelligence platform, has raised $7.5 million in venture capital funding. Siemens Venture Capital led the deal, and included participation from existing IndX backers Marwit Capital, Excalibur Partners, Sanders Morris Harris and First Analysis. The deal is still open, with a second closing planned accommodate additional strategic investors.

ACT Venture Capital has announced the final closing of its third venture capital fund with total commitments of €170 million ($182.6 million). The fund will focus on Ireland-based technology companies, and has already made five investments at a total cost of €15 million. Limited partners include JP Morgan Fleming, Merrill Lynch, Partners Group, Access Capital Partners, Extorel, VCM, the European Investment Fund and many of Ireland-based pension funds.

Automatic Data Processing has elected Leslie Brun, founder chairman of Hamilton Lane Advisors, as a director. In related (And probably more important) news, it seems that Hamilton Lane is closing in on a sale of a sizable stake in its fund-of-funds business. The leading group seems to be Switzerland-based Partners Group, although Lehman Brothers and Morgan Stanley have both been cited as interested parties.

Golden Gate Capital and Lexicon Marketing Corp. management announced today the acquisition of Lexicon Marketing Corp., a Los Angeles-based provider of multimedia English-language courses for Spanish speakers. Financial terms of the transaction were not disclosed.

Ulrich Schumacher, president and CEO of German semiconductor company Infineon Technologies, will join the advisory board of The Carlyle Group‘s European venture capital fund.

The Greater Philadelphia Venture Group has added eight members to its board of directors. They are: P. Sherrill Neff, managing partner of Quaker BioVentures; Richard Bendis, president and CEO of Innovation Philadelphia; Robert Blumenthal, founding partner of Heidrick & Struggles’ technology practice in Philly; Elizabeth Harper, senior vice president for Silicon Valley Bank’s Philadelphia technology regional office; Gary Arlen Smith, vice-chairman of the Mid Atlantic Venture Conference; Mike DiPiano, managing partner at NewSpring Ventures; Tom Drury, principal of BaseCamp Ventures; and Christine Jones, managing partner of Berwind’s Eureka Growth Capital.

QUMAS, a provider of enterprise compliance management solutions for the life sciences industry, today announced the appointment of Teddy Rosenberg to its board of directors. Rosenberg is a managing director of CIBC Capital Partners Venture Group.

Brownhills, a UK-based motor home provider, has been purchased for £32 million in a management buyout. NBGI Private Equity led the deal’s equity tranche, while Bank of Scotland provided the senior and mezzanine debt. KPMG Corporate finance advised the selling group on the deal.
NEWS FROM WEDNESDAY 1/29

WaterCove Networks, a Chelmsford, Mass.-based commercial provider of infrastructure for the deployment of next-generation mobile data services, today announced the successful closing of a $20 million third round of financing. Current investors Charles River Ventures, Sprout Group, Orange Ventures and Bessemer Venture Partners participated in this round. The company has now raised $70 million to date, including a $35 million Series B deal in late 2000 at a post-money valuation of $174.81 million.

Providence Equity Partners and The Carlyle Group and GMT Communications Partners have completed the acquisition of Casema, the third-largest cable television operator in the Netherlands, from France Telecom for EUR 665 million ($722 million) in cash. Providence Equity and Carlyle each acquired 46% ownership of Casema, with GMT owning the remaining 8%. Financing for the transaction was provided by a group of banks including ABN Amro, BNP Paribas, Credit Lyonnais, ING, Rabobank, Royal Bank of Scotland, Societe Generale and WestLB. Advisors to the investor group were NM Rothschild, Allen & Overy and Deloitte & Touche.

Topio, a Santa Clara, Calif.-based provider of next-generation data replication and disaster recovery solutions, today announced the completion of a $10 million second round of venture financing. Sigma Partners led the round as a new investor and was joined by Series A backer Sequoia Capital. Pete Solvik, managing director of Sigma Partners and the former CIO of Cisco Systems has joined Topio’s board of directors concurrent with the financing agreement.

AlterPoint Inc., an Austin, Texas-based provider of network configuration management solutions, has completed a transaction with Palomar Ventures which provides AlterPoint with an additional $2.5 million in first round funding. The money is an extension of the original $5 million of Series A funding provided by Austin Ventures last year. AlterPoint also announced that Jim Gauer, a general partner with Palomar Ventures, has joined the company’s board of directors.

HelloSoft Inc., a San Jose, Calif.-based provider of wireless communications software IP, announced that it has raised over $11 million in Series A venture capital financing from Venrock Associates, Sofinnova Ventures, Acer Technology Ventures, and JumpStartUp Venture Fund.

AgIon Technologies Inc., a Wakefield, Mass.-based producer of antibacterial products, has received $10.5 million in funding from Paladin Capital Group. This represents Paladin’s third investment out of its new Homeland Security Fund.

CSFB Private Equity is considering a bid of around £1.25 billion ($2.04 billion) from two private equity firms for its 70% stake in Gala Group Ltd., a UK-based casino and bingo game operator. The original exit strategy was an IPO, but the bid from Cinven and Candover has apparently begun to change those plans. Other private equity firms originally reported to have been in the bidding included Permira, BC Partners and Kohlberg Kravis Roberts & Co. (KKR). If Candover and Cinven do seal the deal, it will likely come in the next 10 days, with Merrill Lynch putting up the debt financing.

MMC Capital, the private equity investment subsidiary of Marsh & McLennan Cos., today announced that Garrett Moran has been appointed president and senior principal of the company. Moran, 48, spent 19 years at Donaldson, Lufkin & Jenrette (DLJ), where he held several executive positions including co-head of the investment banking group. Following DLJ’s acquisition by Credit Suisse First Boston (CSFB) in 2000, he was co-head of the investment banking integration effort and was briefly the head of CSFB’s private equity division. For the past nine months, he has been working with MMC Capital as a Senior Advisor.

Redfern Broadband Networks, a Syndey, Australia-based optical networking company, has raised US$11 million in Series C venture funding. Existing investors Allen & Buckeridge, Macquarie Technology Ventures, the Optical Capital Group and Redfern Photonics all participated on the deal.

Emerald BioAgriculture Corp., a Lansing, Mich.-based biochemical producer, has received $6.2 million in new funding from Burrill & Co. and A. M. Pappas Associates.

Courion Corp., a Framingham, Mass.-based provider of identity management solutions, today announced it has raised $9 million in Series D financing, bringing total funding in the company to $27 million. QuestMark Partners, an existing Courion investor, led the new round of funding, which also included two new investors.

USDATA Corp. (Nasdaq:USDC), a Richardson, Texas-based supplier of industrial automation software solutions, announced today it has successfully completed an equity financing round of $1.5 million. The investment is being made by SCP Private Equity Partners II LP, the company’s largest stockholder. USDATA also announced that JPMorgan Chase Bank has committed to renew the company’s $3 million working capital revolver to be completed by Jan. 31.

La Financière du Québec, a subsidiary of Investissement Québec, is providing a loan of $500,000 as part of a $1 million round of financing in Dynapix Intelligence Imaging, a Montreal-based medical imaging software developer. The Fonds régional de solidarité FTQ Ile de Montréal and CDP Capital – Technology Ventures are also each investing $250,000.

Kiwi Partners Securities Inc., a middle-market M&A boutique has hired Dr. Itzhak Krinsky as a managing director. Itzhak has previously been a managing director in the M&A group at Deutsche Bank Alex. Brown. Most recently, he was an independent consultant, working closely with midsize technology and industrial firms, startups and private equity firms.
NEWS FROM TUESDAY 1/28
Venture capital disbursements in 2002 fell to their lowest level since 1997, according to data being released today by PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association. Overall, 3,016 U.S.-based companies raised $21.2 billion of venture capital last year, which represents barely half the $41.29 billion raised by 4,712 companies in 2001. The main culprit seemed to be declining deal sizes, with the average 2002 transaction coming in at a paltry $7.04. Moreover, only two companies managed to close $100 million-plus rounds last year, down from 15 such companies in 2001. For more on this story, go to www.PrivateEquityWeek.com. PE Week subscribers can get additional information (including two pages of 2002 data charts) in the latest print edition.

Perlegen Sciences Inc., a Santa Clara, Calif.-based genomics research company, has raised $30 million in Series C venture funding. Maverick Capital led the deal, and was joined by fellow new investors Unilever Technology Ventures, Eli Lilly & Co., Biofrontier Partners and CSK Venture Capital. Previous investors also participating in the financing included Vulcan Ventures, BioMedical Sciences Investment Fund, CMEA Ventures, SB Life Science Ventures and Dr. Alejandro Zaffaroni.

Deutsche Telekom has sold its remaining six regional cable TV networks. The purchase contract was signed today with an investor consortium made up of Apax Partners, Goldman Sachs Capital Partners and Providence Equity. The price for the deal is €1.725 billion ($1.86 billion) in cash. The purchase price may increase up to a further €375 million ($405.39 million) depending on the value of the cable business in the future. The transaction is expected to be completed by the end of March, and is subject to various conditions, including approval from the EU competition authority.

Acosta Sales and Marketing Co., a Jacksonville, Fla.-based agency, today announced that it has agreed to an equity investment by Berkshire Partners. Under the transaction, which will close in February, Acosta shareholders will maintain a majority interest in the company. Terms of the transaction were not disclosed.

St. Paul Venture Capital has added Sanjay Jhawar as an Entrepreneur-In-Residence. He will join the Minneapolis-based firm’s communications technology team, and spend most of his time focused on mobile wireless opportunities. Jhawar was previously vice president of wireless at what is now known as CIR Ventures.

NewWorld Communications Inc., a venture-backed mobile radio company, has been acquired by Nextel Communications Inc. for $276 million in cash. Bloomfield, N.J.-based NeoWorld has raised over $163 million in venture capital funding, including a $150 million June 2000 deal at a post-money valuation of $194.2 million. Company investors include Boston Millennia Partners, CenterPoint Venture Partners, Columbia Capital, Goldman Sachs, Hunt Private Equity, JPMorgan Partners, Madison Dearborn Partners, Noro-Moseley Partners, Northwood Ventures, Rho Ventures, Sevin Rosen Funds and Wachovia Capital Partners.

Grandis, a Silicon Valley-based maker of electronic devices, late last month raised $3 million in Series A funding. Investors on the deal included Applied Materials Ventures, Sevin Rosen Funds and Incubic.

Corning Inc. is looking for new secondary buyers interested in its $50 million Corning Innovation Ventures group, or it may simply unload the outfit all together, according to a report yesterday by Reuters. The group’s website lists seven employees and 13 active portfolio companies.

Rita Medical Systems Inc. (Nasdaq: RITA) has raised $9 million in a private equity placement led by BayStar Capital. The Mountain View, Calif.-based oncology company employed Wells Fargo Securities as a placement agent on the deal.

Wingstop Holdings Inc., a corporation newly formed by Hartz Restaurants International Inc. and Gemini Investors Inc., has purchased Wingstop Restaurants Inc., a chain of chicken wing eateries, from its owner and founder Antonio Swad. Gladstone Capital Corp. provided the senior debt financing to complete the transaction.

Cannondale Corp., a Bethel, Conn.-based bike maker, announced plans to file for Chapter 11 bankruptcy protection. Cannondale and its lenders, The CIT/Business Credit Inc. and Pegasus Partners II LP have reached an agreement in principle that will provide the company with interim financing to fund post-petition operating expenses and to meet supplier and employee commitments. Cannondale has also reached an agreement to sell substantially all of its assets to Pegasus Partners. Pegasus would operate the bicycle business as a going concern with the involvement of current management and would purchase separately the Company’s motorsports assets, including the intellectual property related to the design of Cannondale’s motorsports products. In the meantime, management continues to work with other potential interested buyers for either or both of these businesses.
NEWS FROM MONDAY 1/27
Centive, a Bedford, Mass.-based provider of enterprise incentive management software, today announced that it has secured $18 million in new venture funding. Venture Strategy Partners led the deal, and was joined by new investors DOW Chemical Co. and Infinity Capital. Previous backers returning for the deal included Thomas Weisel Capital Partners, Polaris Venture Partners and BancBoston Ventures. PE Week subscribers can read more on this story in the protected Deal News section.

Pantheon Ventures is expected to announce today that it has held a final close on Pantheon Europe Fund III, its latest European fund-of-funds, with $505 million. PE Week subscribers can read more on this story in the protected Fund News section at www.PrivateEquityWeek.com.

Contivo Inc., a Mountain View, Calif.-based automated data integrator, announced today that it has raised $8 million in third round of financing. Previous investors Voyager Capital and BA Venture Partners, which split the round about 50/50. PE Week subscribers can read more on this story in the protected Deal News section.

Pronto Networks, a Pleasanton, Calif.based provider of end-to-end infrastructure for wireless hot spot operators, has secured $5 million in its initial round of venture financing. Draper Fisher Jurvetson (DFJ) led the round, while Intel Capital also participated alongside the company’s founders and management team. DFJ director Andreas Stravopoulos has taken a seat on the company’s board, while Intel Capital’s Sriram Viswanthan will have observer rights. PE Week subscribers can read more on this story in the protected Deal News section.
BladeLogic Inc., a Bedford, Mass.-based provider of server configuration management software, today announced that it has closed a $10 million second round of Series B financing led by new investor JAFCO Ventures (a.k.a. Globespan Capital Partners) with existing investors Battery Ventures and Bessemer Venture Partners also participating. In addition, the company announced the addition of Steve Walske, former chairman & chief executive officer of Parametric Technology Corp., Ullas Naik, managing director of JAFCO Ventures and Vijay Manwani, the company’s chief technology officer, to its board.

Atlas Venture today announced the appointment of Eric Hjerpe as a venture principal. Hjerpe has spent nearly 15 years experience in the software industry, most recently as senior director of implementation effectiveness at Siebel Systems. He will now be based in Atlas Venture’s Waltham, Mass. Office.

Greylock today announced the appointment of Moshe Mor as general partner, effective immediately. Mor, an Israeli entrepreneur and former CEO of SPL WorldGroup, was formerly a venture partner with Greylock and spearheaded the firm’s investment efforts in foreign early-stage technology companies in the past 18 months, resulting in three investments in Israel and one in Ireland. In his new role, Mor will lead a Greylock initiative to increase its focus on early-stage Israeli ventures, while continuing its partnerships with leading venture capital firms in the region.

Notal Vision Ltd., a Tel Aviv, Israel-based medical device company operating in the field of early detection of age-related macular deterioration, announced today the successful completion of a $4 million follow -on financing round by Elron Electronic Industries Ltd. (NASD:ELRN) and InnoMed (the life science fund of Jerusalem Global Ventures).

AirNet Communications Corp. (Nasdaq:ANCC) today announced that it has received an interim debt financing commitment of $6M. The interim financing is being provided by TECORE Wireless Systems, an existing customer, and SCP Private Equity Partners, an existing investor.

Cisco Systems has agreed to acquired Okena Inc., a venture-backed developer of computer network security systems, in a stock deal valued at $154 million. The Waltham, Mass.-based company has received over $17 million of private funding since its 1999 founding, from such investors as APV Technology Partners, GE Equity, Newbury Ventures, Solstice Capital and ThomVest International.

ViewAhead Technology Inc. ,a Redmond, Wash.-based producer of microchips for use in printers, has raised $1.5 million in Series A funding led by IXT International Equity.

Dow Jones is reporting that Flash Networks, a Holmdel, N.J.-based developer of mobile data access technology, has raised $6 million in fourth round funding. The report says that T-Mobile Venture Fund and Giza Venture Capital led the deal, while The Challenge Fund and Bell Mobility Investments of Canada also invested.

Reuters is reporting that Deutsche Telekom AG is close to selling its cable television assets to a private equity syndicate led by Goldman Sachs Capital Partners and Apax Partners.

The Financial News is reporting that Pricoa Capital, the European private investment arm of Prudential Financial, has stopped investing in private equity so that it can refocus on debt financing. The report goes on to say that much of the European team has left Pricoa altogether, including managing partner Bruno Wanske. This news follows up on a stateside shakeup at Prudential, which last year opted to close its fund-of-funds raising effort.

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