PE Week Wire — Friday 1/4

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Four venture-backed companies went public during the fourth quarter of 2002, according to data released yesterday by Venture Economics and the National Venture Capital Association. As of 12/31/2002, three of these four venture-backed companies were trading above their initial offering price. For full year 2002, 22 venture-backed IPOs raised $1.9 billion. There were fewer venture backed IPOs in 2002 compared to 2001, when 35 US based venture-backed companies raised over $2.8 billion in the public markets. For more information, go to www.VentureEconomics.com. For in-depth analysis, pick up the next print edition of Private Equity Week.

Anystream, a Sterling, Va.-based provider of software that automates media encoding, today announced an $11 million third-round of funding led by Falcon Private Equity and existing investor SCP Private Equity Partners. The investment brings Anystream’s total venture capital funding to over $28 million.

Technology Investment Management Corp. (TIMCO) and Capital Alliance Management Inc. — both Labor-sponsored venture capital funds operating out of Ontario, Canada – have agreed to merge. The combined entity will operate under the TIMCO name, and will manage approximately CA$125 million (US$80 million) in assets.

Advent International has promoted Pascal Stefani to the position of partner in its Paris office. Stefani joined the firm in 1998 as a principal after spending eight years spent eight years with Financière Saint Dominique, the private equity arm of Natexis (formerly Crédit National).

Iomai Corp., a Gaithersburg, Md.-based developer of vaccine-delivery technology, is reported to have raised $54 million in Series C funding. Investors include New Enterprise Associates, Essex Woodlands Health Ventures and MedImmune Ventures Inc.

Resilience Capital Partners has joined Wynnchurch Capital in the acquisition of the off-highway manufacturing business of ArvinMeritor (NYSE: ARM), which includes manufacturing plants in Oshkosh, Wis., and St. Etienne, France. The new company will be known as AxleTech International Inc. Terms of the transaction were not disclosed.

InterWest Partners today announced the promotion of Chris Ehrlich to the position of venture partner. Ehrlich, 32, joined InterWest in August 2000 as an associate focused on life sciences, and was promoted to a senior associate in January 2001. Previously, Ehrlich was director of business development at Purdue Pharma.

Fleet Capital Corp. has provided a $135 million senior secured credit facility for Simplicity Manufacturing Inc., a Port Washington, Wis.-based manufacturer of lawn tractors. The loan will be used to finance the acquisition of lawnmower manufacturer Snapper Inc., as well as refinance existing debt and provide working capital. Simplicity is a portfolio company of private equity firm Kohlberg & Co.
News From Monday 1/3
CapMan, a Finland-based private equity firm, has raised approximately $264.1 million for its seventh investment fund. Two-thirds of the capital will be used for middle-market buyouts, while the rest will go toward venture capital investments in the IT and telecom sectors.

Idealab got a lump of coal this holiday season when a Los Angeles Superior Court judge ruled that a lawsuit brought against the Internet incubator by its investors may proceed to trial. The plaintiff roster, which includes both institutional buyers like Spectrum Equity Investors and individuals like Michael Dell and Internet pinup gal Cindy Margolis, are seeking the removal of Idealab directors and management due to fraud, self-dealing and breach of fiduciary duty. In addition, the plaintiffs have asked for the return of $725 million, although that figure seems unlikely as Idealab doesn’t have that much cash left in its coffers. Among those likely to be deposed in the case are Bill Gross (Idealab CEO), Benjamin Rosen (Idealab director and founder of Compaq) and Jack Welch (former Idealab director and former CEO of General Electric).

Jeffrey Sollender, a managing member of San Diego-based Forward Ventures, passed away last Friday after being involved in a traffic accident. Sollender, 42, had been driving his Ferrari in San Diego, when he apparently lost control and slid into oncoming traffic, striking another car. At the time of his death, Sollender was sitting on the boards of Gryphon Therapeutics Inc., Endonetics Inc., Acorda Therapeutics Inc., Genicon Sciences Corp., Camitro Corp. and Kemia Corp. Other investments made since joining Forward Ventures in 1993 included Arizeke Pharmaceuticals, CombiChem (now DuPont Pharmaceuticals), Triangle Pharmaceuticals, GenQuest (now Corixa) and Nereus Pharmaceuticals. Prior Sollender received his MBA from the University of Chicago and an undergraduate degree in life sciences from MIT. He is survived by his wife and two children.

Qpass Inc., a Seattle-based provider of activity management business system software for wireless carriers, has held a first closing of $10.7 million on its Series B funding round. RRE Ventures led the round with participation from new investor Westbury Partners, along with company management and existing investors Hook Partners, Oak Investment Partners, Seapoint Ventures and Venrock Associates. The company’s management also participated in the round.

Vivendi Universal late last year completed the previously announced sale of its Houghton Mifflin Co. unit to Thomas H. Lee Partners, Bain Capital and funds managed by The Blackstone Group. The boston-based publisher was acquired for $1.66 billion.

The Riverside Co. announced the closing of a management-led buyout of HCPro Corp., a health-care news and information publisher based in Marblehead, Mass. Riverside will count HCPro as a new platform company and plans to support the company’s continued growth through organic means as well as through potential add-on acquisitions.

The Cypress Group has completed its acquisition of Republic National Cabinet Corp., a Marshall, Texas-based provider of kitchen and bathroom cabinetry. In connection with this acquisition, RNCC’s management team, led by Gene Ponder, has maintained a significant ownership position in the company. Terms of the transaction were not disclosed.

Roadway Corp. (Nasdaq:ROAD) has entered into an agreement to sell its Arnold Transportation Services (ATS) subsidiary to a management group led by Michael S. Walters, the unit’s president and chief executive officer, and private equity firm Jefferies Capital Partners. The transaction is valued at $55 million and is expected to be completed in the first quarter of 2003, subject to regulatory approvals and satisfaction of customary closing conditions.

Primus Telecommunications Group Inc. (Nasdaq: PRTL), a McLean, Va.-based telecom services provider, has signed an agreement to sell newly-issued shares of its Series C Convertible Preferred Stock for an aggregate purchase price of $42 million in a private offering to two private equity funds sponsored by the American International Group Inc. and an additional institutional investor that is a limited partner of one of the funds. The first phase of the transaction closed on Dec. 31 with Primus receiving approximately $33 million from AIG and the additional investor, with AIG obtaining a 19.99% ownership interest in Primus’ issued and outstanding capital stock.

XM Satellite Radio Inc. (Nasdaq: XMSR) recently issued $200 million in 10% senior secured discount convertible notes due in 2009 and a small concurrent common stock sale as part of a set of financing agreements totaling $450 million. Purchasers of the notes include American Honda Motor Co. Inc., Hughes Electronics Corp., The Hearst Corp., Columbia Capital, AEA Investors Inc., Eastbourne Capital Management and BayStar Capital. The notes are convertible into common stock at a price of $3.18 per share. Proceeds will be used for general corporate purposes. The additional component of this financing package includes an agreement with General Motors – currently factory-installing XM radios in 25 different 2003 vehicle lines – in which GM has agreed to defer or finance up to $250 million of payments through 2006.

Resilience Capital Partners, a Cleveland-based private investment firm, has completed the acquisition of the operating assets of Beech Tool Co. and Beech Pattern Corp. of Mentor, Ohio. The new company will be known as Beech Aerospace Systems. Terms of the transaction were not disclosed.

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