PE Week Wire — Friday 10/10

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Neartek Inc., a Westborough, Mass.-based provider of tape storage software solutions for mixed computing environments, has raised $8 million in new venture capital funding. The deal is an extension of an earlier Series C round, which closed in early 2002 with $27 million at a post-money valuation of $45 million. Return backers include Benchmark Capital, Doughty Hanson Technology Ventures and Magnum Telecom. Neartek now has raised approximately $82 million in total venture capital since its 1994 inception.

DigitalNet Holdings Inc., a Herndon, Va.-based provider of IT services to military and government buyers, is expected to begin trading on the Nasdaq this morning under the ticker symbol DNET. Yesterday, the company priced five million common shares at $17 per share through its initial public offering. The $85 million IPO raise is lower than the $93.75 million DigitalNet was looking for earlier this year, before it postponed its offering in May. Chicago-based buyout firm GTCR Golder Rauner held a 77.1% ownership stake in DigitalNet prior to the IPO, and will own a 53% stake post-offering.

California Governor-elect Arnold Schwarzenegger has promised to put all of his investments and other business interests into a blind trust. This is expected to include his private equity partnership interests, although no firm details have been worked out.

Corel Corp. reportedly laid off approximately 18% of its employees, less than two months after being acquired by Vector Capital Group as part of a corporate restructuring. The move involves 125 total job losses, including 73 at Corel’s Ottawa headquarters.

PrivateEquityOnline is reporting that Dallas-based buyout firm Hicks, Muse, Tate & Furst will launch its second European fund next week with a €1 billion target capitalization. The firm’s first European offering was capped at €1.5 billion.
NEWS FROM THURSDAY 10/9

Hellman & Friedman LLC has agreed to acquire a 19.4% ownership stake of German newspaper publisher Axel Springer AG from Deutsche Bank AG. The total transaction is valued at €350 million (approx. $412 million), and Hellman & Friedman CEO Brian Powers will join Axel Springer’s supervisory board.

Key Principal Partners, a mezzanine capital group supported by KeyBank, has raised $78 million from outside limited partners. This is Key Principal’s second fund-raising trip outside of its corporate parent’s coffers, and brings its total capital under management to approximately $1 billion ($500 million of which is still available for investment). No word on the limited partners, except that they included pension funds, foundations and wealthy families.

Nuevolution A/S, a Copenhagen-based drug discovery company, has raised $15 million in the first close of a Series B round of funding. Scandinavian Life Science Venture led the round, and was joined by fellow new investor SEB Foretagsinvest, a division of Skandinaviska Enskilda Banken AB. Return backers include Novo A/S, Nordic Biotech K/S and The Danish Investment Fund. Nuevolution now has raised $24 million since its May 2001 inception.

Martin Halusa has been chosen to replace Ronald Cohen as chief executive of global private equity firm Apax Partners. Halusa has led the firm’s Munich office since 1990, and will relocate to London. Cohen, who founded the firm, will become executive chairman. The moves become effective on January 1.

Mark O’Connor has been named vice president of business development for the private equity services division of The BISYS Group Inc. (NYSE: BSG). O’Connor most recently served as executive director of CIBC Capital Partners.

 

MarketRx Inc., a Bridgewater, N.J.-based provider of sales force effectiveness and marketing effectiveness solutions to pharmaceutical companies, has raised $10.25 million in Series C funding. Investors include Andwel Partners, WestBridge Capital Partners, Robert Luciano (chairman emeritus of Schering-Plough), Charles Sanders (former chairman and CEO of Glaxo, Inc.), Rick Braddock (chairman of Priceline.com), William Shreyer (chairman emeritus of Merrill Lynch) and Dennis Turner (ex-CEO and chairman of PMSI Inc.).

TissueLink Medical Inc., a Dover, N.H.-based maker of medical devices for use in surgical procedures, earlier this year raised $30 million in Series D funding. QuestMark Partners led the deal, and was joined by fellow new investors Merlin BioMed and MB Ventures. Return backers included Medtronic, Vanguard Ventures, Braitec, RiverVest, Arnerich Massena & Associates Inc., Crown Advisors, Nikko Synergy Partners, The Rahn Group and Frantz Medical Ventures. The company now has raised nearly $70 million in total venture funding since its 1999 inception.

Five Star Technologies Inc., a Cleveland-based advanced materials and process development company focused on micro- and nano-materials solutions, has raised $4.5 million in Series C funding. Morgenthaler Ventures led the deal, and was joined by Chevron Technology Ventures, Early Stage Partners and Industrial Technology Ventures.

Advantage Capital Partners and Rand Capital have teamed up to acquire New Monarch Machine Tool Inc., a Cortland, N.Y.-based designer of CNC metalworking machinery. The deal is worth $3.5 million, and includes participation from Monarch management.

Alexander Castaldi has been named a managing director with buyout firm JLL Partners. He most recently served as executive vice president and CFO with Remington Products Co.

Wellspring Capital Management announced that it has partnered with Los Angeles-based Zuma Capital Partners to identify and initiate private equity investment opportunities in the middle-market.

SAS Inc. has agreed to acquire MarketMax Inc., a Wakefield, Mass.-based provider of retail planning and merchandise intelligence software. No deal terms were disclosed. MarketMax has raised around $33 million in venture capital funding, from investors like Axxon Capital, Insight Venture Partners, Palladin Capital Group, TH Lee Putnam Ventures and TSG Equity Partners.

John Braca, a partner with GlaxoSmithKline venture subsidiary S.R. One Ltd., has joined the board of directors at Senesco Technologies Inc. (AMEX:SNT). The move is effective immediately, and Braca also will serve on the company’s audit committee.

David Becker has left his chief operating officer post at FreeMarkets Inc. to launch a venture capital firm, according to today’s Pittsburgh Post-Gazette. Named Clearwater Capital Management, the new shop will offer both an early-stage tech fund for VC investment and a hedge fund offering bonds, equities and commodities. He claims to already have raised between $5 million to $10 million for the VC offering.

ESP Pharma Inc., an Edison, N.J.-based specialty pharma company, has received a $57 million senior credit facility co-arranged by GE Healthcare Financial Services and Fleet Securities. The credit facility was syndicated to three lenders, led by GE Healthcare Financial Services and including Fleet National Bank and Royal Bank of Canada. ESP Pharma is a venture-backed company that has raised over $48 million in private equity funding, including a $20 million Series B deal earlier this year at a post-money valuation of approximately $80 million.

Advent International has bid €165.7 million (approx. $196 million) for publicly traded Spanish amusement park and zoo operator Parques Reunidos SA.

NEWS FROM WEDNESDAY 10/8

OmniSonics Medical Technologies Inc., a Wilmington, Mass.-based medical device maker focused on vascular occlusive diseases, has raised $26 million in Series C funding. GE Pension Trust led the deal, and was joined by fellow new investor New England Partners, plus return backers Domain Associates, Prism Venture Partners, Canaan Partners and Hambrecht and Quist Capital Management. The company now has raised over $51 million in venture funding since its 1998 inception, including a $21 million Series D infusion in 2001 at a post-money valuation of approximately $45 million.

D2Audio Corp., an Austin, Texas-based supplier of digital amplifier modules to auto equipment manufacturers, has raised $15.5 million in Series B funding. Lightspeed Venture Partners led the deal, and was joined by return backers Austin Ventures and Sevin Rosen Funds. The company now has raised over $27.5 million since its 2002 inception.

Critical Therapeutics Inc. (CTI), a Cambridge, Mass.-based biopharma company focused on critical care medicines, has raised $56 million in Series B funding. Advanced Technology Ventures and Johnson & Johnson Development Corp. co-led the round, and were joined by fellow new investors MedImmune Ventures and Oxford Bioscience Partners. Return backers HealthCare Ventures and MPM Capital also participated.

Stage Stores Inc. (Nasdaq:STGS) has agreed to acquire Peebles Inc., a South Hill, Va.-based retailer owned by private equity firm Kelso & Co. The deal is valued at approximately $167 million in cash, with Stage also assuming the outstanding balance of Peebles’ revolving credit facility, which totaled $46.9 million as of October 4. Shortly after the acquisition is completed, Stage intends to sell Peebles’s private label credit card portfolio and use the proceeds to retire debt.

Everypath Inc. , a Santa Clara, Calif.-based provider of mobile task automation software and services for the enterprise, has raised $14.3 million in new venture funding. Trident Capital led the deal, and was joined by fellow new investors Bay Partners and Nippon Development Systems. Return backers included Sevin Rosen Funds, US Venture Partners, AsiaTech Management, Focus Ventures, ArrowPath Venture Capital, Redwood Ventures, Amerindo and Raza Foundries.

TA Associates has invested $95 million into Eagle Test Systems Inc., a Mundelein, Ill.-based supplier of automated test equipment to the semiconductor industry.

Euclid Inc., a San Jose, Calif.-based provider of integrated IT business management software, has raised $8 million in new venture funding. Existing investor Bay Partners led the deal, and was joined by new investor Pacesetter Capital. As part of the transaction, Bob Williams of Bay Partners and Rahul Vaid of Pacesetter will join the Euclid board of directors. The company now has raised nearly $30 million in venture funding, including a $15 million Series B round in 2001 at a post-money valuation of around $45 million.

Acusphere Inc., a Watertown, Mass.-based specialty pharmaceutical company focused on microparticle technology, plans to begin trading on the Nasdaq today after pricing 3.75 million shares at $14 a piece last night. The company initially had hoped to raise $69 million through its IPO, but ultimately had to settle for $52.5 million. Acusphere had raised over $130 million of venture capital since its 1993 founding, with investors including Thomas Weisel Group (29.8% ownership pre-IPO), Bank of America Venture Partners (14.5%), Burr, Egan, Deleage & Co. (8.5%), Polaris Venture Partners (6.6%), MVI Medical Ventures (6.1%) and Audax Group (5.5%). It originally filed to go public in 2001, but later pulled that request due to poor market conditions.

Eckard Weber, a venture partner with Domain Associates, has been elected chairman of the board at Domain portfolio company Peninsula Pharmaceuticals Inc. Weber has been a member of the Peninsula board since September 2002, and will be the Alamed, Calif.-based company’s first chairman.

John Bello, founder and former CEO of SoBe Beverages, has launched a new venture capital firm focused on early-stage health and wellness companies. Named Quest Capital, the Newton, Mass.-based firm is organized as a portfolio company of $100 million venture fund Sherbrooke Capital.

Altus Capital Partners has raised $17.1 million in limited partner commitments for an inaugural fund designed to acquire small to middle-market manufacturing businesses with annual EBITDA of between $5 million to $15 million. The Westport, Conn.-based fund also has been granted an SBIC license, and could qualify for an additional $35 million in Small Business Administration capital.

Oak Investment Partners has agreed to a plan whereby it will pay $1.78 for each outstanding share of Pivotal Corp. (Nasdaq: PVT), a provider of customer relationship management (CRM) software for mid-sized enterprises. Oak also may pay additional consideration of up to $0.03 per share depending on Pivotal’s financial performance to October 16. Concurrently, Pivotal’s business will be combined with Talisma Corp., a Kirkland, Wash.-based provider of Microsoft-based e-service solutions. Oak will be the controlling shareholder of the combined business. The transaction is subject to the approval of Pivotal’s shareholders and the Supreme Court of British Columbia, as well as customary closing conditions. Talisma is an Oak portfolio company, and has raised over $75 million in venture funding from investors like Oak, Madrona Venture Group and Seapoint Ventures.

Betsy Atkins, president and CEO of early-stage venture firm Baja LLC, has joined the advisory board of Newgistics Inc., an Austin, Texas-based provider of returns management solutions for direct retailers.

Dow Jones is reporting that the proposed sale of Michael Foods Inc. is attracting such bidders as Texas Pacific Group, Thomas H. Lee Co., Investcorp and Bain Capital. The company is majority-owned by Vestar Capital Partners, and the sale is expected to raise upwards of $1 billion.

The Chicago Tribune is reporting that Ed Zander has received a feeler from executive searchers in the effort to replace Motorola CEO Christopher Galvin. Zander is the former president and COO of Sun Microsystems, and currently serves as a managing director with private equity firm Silverlake Partners.
NEWS FROM TUESDAY 10/7

SyChip Inc., a Plano, Texas-based provider of radio frequency chip scale modules (RF-CSM) for the wireless market, has raised $15 million in Series D funding. Sierra Ventures led the deal, and was joined by return backers 3i US, Alliance Technology Ventures, Genesis Park, Intel Communications Fund, K2 Development, Markpoint Venture Partners, Masthead Venture Partners, New Venture Partners and Pacesetter Capital. The company now has raised around $35 million in venture funding, including a $5 million infusion in early 2002 at a post-money valuation of approximately $32 million.

Internap Network Services Corp. (Nasdaq: INAP) has acquired a venture-backed company, and has agreed to acquire another. The completed deal is for NetVMG Inc., a Fremont, Calif.-based provider of Internet traffic management solutions. Internap issued to NetVmg shareholders approximately 345,000 unregistered shares of its Series A convertible preferred stock. As part of the acquisition agreement signed several months ago, netVmg shareholders infused approximately $3.9 million of new capital into netVmg to eliminate selected liabilities prior to the acquisition. Additionally, 1.5 million common stock warrants (priced at the date of the close) were issued to netVmg shareholders. The warrants are exercisable only if the netVmg shareholders invest an amount no less than $4.4 million in any future private placement. NetVMG had raised approximately $75 million in venture capital funding from investors like Accel Partners, BA Venture Partners, Cisco Systems, Comdisco Ventures, Duff Ackerman & Goodrich and Itochu Technology. The pending deal is for Waltham, Mass.-based Sockeye Networks. The Internet route control company has raised approximately $40 million in venture capital, but is being sold for just $1.75 million in stock. That deal is expected to close later this month, Sockeye investors included Baker Capital, Battery Ventures, CSFB Private Equity and Polaris Venture Partners.

The Ontario Municipal Employees’ Retirement System (OMERA) announced that Tom Gunn has retired as chief investment officer, effective immediately. Paul Haggis, president and CEO of OMERS, will take over the CIO post on an interim basis.

Scottish & Newcastle PLC, Europe’s larger brewer, has agreed to sell its pub business for approximately $4.2 billion in cash to a private equity consortium led the Blackstone Group and Texas Pacific Group. Other investors in the buying group include CVC Capital Partners and Merrrill Lynch Private Equity.

GlassHouse Technologies Inc., a Framingham, Mass.-based provider of storage services and consulting, has raised $7.1 million in Series C funding at a post-money valuation of approximately $26 million. Kodiak Venture Partners led the deal, and was joined by return backers Sigma Partners, GrandBanks Capital and Globespan Capital Partners. Glasshouse now has raised $15 million in venture capital since its August 2001 inception.

PicoChip Designs Ltd., a Bath, UK-based provider of hardware and software reference designs for wireless infrastructure, has raised $17 million in second-round venture capital funding. Existing investors Pond Venture Partners and Atlas Venture both participated, along with an undisclosed investor. The company now has raised a total $24 million, including a $7 million Series A deal in 2001 at a post-money valuation of $13 million.

NetScreen Technologies Inc. (Nasdaq: NSCN) has agreed to acquire Neoteris Inc., a Sunnyvale, Calif.-based provider of SSL virtual private network products. The deal includes approximately $245 million worth of NetScreen stock plus $20 million in cash, including the assumption of all Neoteris options. Upon the achievement of certain revenue-based milestones, NetScreen will pay Neoteris stockholders and optionholders up to an additional $30 million in cash. Neoteris originally was backed by a $5 million investment from Netscape luminaries Jim Clark and Jim Barksdale (through the latter’s ill-fated Barksdale Group). Since that time, the company has raised an additional $30.5 million in venture funding, a $17.5 million Series C deal earlier this year that valued the company at over $85 million. Investors included Jim Clark, Battery Ventures and New Enterprise Associates.

Techwell Inc., a San Jose, Calif.-based maker of digital video semiconductor solutions, has received a $20 million investment of Series E preferred stock from Technology Crossover Ventures (TCV). As part of the transaction, TCV’s Rick Kimball will assume a seat on the Techwell board of directors. The company now has raised $40 million since its 1997 founding, with past investors including Sanyo, Panasonic, Genesis Microchip, and Credit Suisse Asset Management.

Alliant Partners, a Palo Alto, Calif.-based I-banking subsidiary of Silicon Valley Bancshares (Nasdaq: SIVB), has launched a new private capital group that will provide private placement advisory services to later-stage private and small public tech and life sciences companies. Jeffrey Berry, formerly a managing director and head of Banc of America Securities‘ private equity group, will lead the new business. Alliant also has hired fellow Banc of America Securities transfers Joseph Siletto and Bill Baker.

Edgard Taureau and Philippe Charquet both have joined Viventures Partners SA as managing directors. Taureau most recently served as president and CEO of Antexia, a funds management company jointly established by DEXIA Bank and Antipolis. Charquet previously served as founder and CEO of RQDI, a provider of financial and strategic advisory services for European investors and companies pursuing high-tech investments, IPOs, private placements and M&A transactions.

The Riverside Co. has acquired Stylin’ Concepts, a Cleveland-based maker of accessories for automobile and truck enthusiasts. No deal terms were disclosed, except that Stylin’ Concepts will be included in Riverside’s add-on to portfolio holding company called Automotive Specialty Accessories and Parts.

William Murphy and Patrick Shattenkirk have joined Cogent Partners as managing directors. The pair will help open and manage a New York office for the Dallas-based firm. Murphy joins Cogent from Salomon Smith Barney, where he held various senior positions in the firm’s private equity and real estate groups. Shattenkirk was formerly a director of Deutsche Bank‘s private equity group.

Diversified Natural Products Inc., an East Lansing, Mich.-based provider of commercialization of products from renewable resources, has received an undisclosed strategic investment from , a leading technology-based company engaged in the commercialization of products from TTC-RMA Venture Partners LLC, the technology investment and incubation company jointly owned by Toyota Tshusho Corp. and Roberts Mitani Aqua Partners LLC .

Sleep Solutions Inc., a Palo Alto, Calif.-based medical device maker focused on sufferers of obstructive sleep apnea (OSA), has raised the first $6.1 million of a new $11 million funding round. The remaining $4.9 million is expected to close within the next three months. Lava Ventures led the deal, and was joined by return backers Johnson & Johnson Development Corp., MedVenture Associates, Atherton Venture Partners and Thomas J. Fogarty MD. The company now has raised over $26 million in total venture funding, including a $7 million infusion in early 2002 at a post-money valuation of around $32 million.

John Janitz has been named co-managing principal of Questor Management Co.. He shares the post with Jay Alix, and most recently served as president and COO of Textron Inc. He became affiliated with Questor through his chairmanship of Teksid Aluminum, which was acquired by Questor from Fiat in September 2002.

Montagu Newhall Associates Inc., a Baltimore-based venture capital firm, has now closed on $31 million for Montagu Newhall Global Partners II. The fund has been marketed since July with a $50 million target capitalization. Investors include The Sheppard Pratt Health System, and a number of European family partnerships and founding partners of venture capital firms.

Boingo Wireless Inc., a Santa Monica, Calif.-based provider of wireless Internet solutions, has raised $10 million in Series B funding. Mitsui & Co. Venture Partners led the deal, and was joined by fellow new investors Infonet Services Corp. and clients of Amerindo Investment Advisors. Return participants included New Enterprise Associates, Sternhill Partners and Evercore Ventures. Boingo now has raised $30 million in venture capital since its 2001 founding.

The Carlyle Group has closed its fifth high-yield fund, Carlyle Loan Opportunity Fund (CLOF), at $300 million. The new vehicle will invest a minimum of 95% of its assets in liquid, non-investment grade bank loans. The fund has an initial core portfolio of 75 percent senior secured par loans, which will be supplemented with opportunistic acquisitions of performing loans trading at a 10-25 percent discount to par. Carlyle’s high-yield team now manages $2.6 billion of leveraged loans, high yield bonds, and special situation investments in five CDOs.

The Dallas Morning News is reporting that Grande Communications Inc. has raised $45 million to purchase a North Texas-based telecom company. The new cash comes from existing investors Whitney & Co., Centennial Funds and Prime New Ventures. No word on the acquisition target (the deal isn’t quite finalized), although the newspaper speculates that the most likely company is Cornith, Texas-based AdvanTex Communications.

PrivateEquityOnline is reporting that UK-based private equity firm Permira has closed its third pan-European fund with €5.1 billion (approx. $6 billion). This makes it the largest buyout fund ever raised by a European firm.
NEWS FROM MONDAY 10/6

FTD Inc. (Nasdaq: FTDI), a Downers Grove, Ill.-based provider of florist services, has agreed to be acquired by private equity firm Leonard Green & Partners. The deal is worth a total of $420 million, with FTD shareholders receiving $24.85 per common share. Credit Suisse First Boston and UBS AG have provided the deal’s debt financing, and Goldman Sachs advised FTD on the transaction.

Jeffrey Clay has been unanimously recommended to be the next executive director of the $44 billion Pennsylvania Public School Employees’ Retirement System (PSERS). The recommendation – which comes from the PSERS Personnel Committee – will be brought before PSERS’ Board for confirmation at an October 31st meeting. Clay has served as interim executive director since June, and previously served as deputy executive director of PSERS since January 1995.

Steven Weddle has withdrawn his name from consideration to be the next executive director of the $29 billion Massachusetts state pension system (MassPRIM). Weddle had been the handpicked choice of State Treasurer Tim Cahill, who fired previous executive director James Hearty earlier this year (in part because Hearty reportedly opposed disclosing private equity performance data to the public). This is viewed as a major political loss for Cahill, but a victory for Mass. Governor Mitt Romney, who had called for a national search process that had been absent in the Weddle selection.

Carrius Technologies Inc., a Richardson, Texas-based maker of switching platforms that enable voice and data to be deployed over both circuit-based and packet-based networks, has raised $4.5 million in a new round of Series A funding. This is being tacked on to an existing Series A deal, which had been announced this past January with $7.5 million at a post-money valuation of approximately $13.5 million. Chisholm Private Capital Partners led the latest infusion, and was joined by return backers Star Ventures, Centerpoint Ventures and STARTech Early Ventures. Carrius was known as VoiceRamp Technologies Inc. until earlier this year.

TA Associates has paid $82 million for a substantial minority interest in GlobeOp Financial Services Ltd., a London-based provider of automated middle- and back-office support services, fund administration and risk reporting for hedge funds, fund-of-funds and high-net-worth family wealth offices. The deal involved the purchase of shares from both the company and existing shareholders.

Philip Yau, Jefferson Stone and Nishant Saxena all have joined Probitas Partners, a San Francisco-based provider of alternative management solutions. Yau will serve as a New York-based principal, following a principal stint with Viventures. Stone has been named a vice president, after having managed Siebel Systems’ strategic alliance with PwC Consulting. Saxena has been named an associate, and most recently served in a similar position with Continuum Ventures.

Paul Friday has been named a senior technology investment banker with Marlin & Associates, a New York-based investment banking advisory and consulting firm. Friday most recently served as vice president at Appleby Capital.

Landmark Partners has promoted three of its investment professionals: Chad Alfeld, Scott Connors and Paul Mehlman to the position of partner, and Tina St. Pierre to the position of principal.

BioVex Ltd., a UK-based biopharma company focused on the prevention of cancer and other chronic infectious diseases, has raised £17 million (approx. $28 million) in Series C funding. Scottish Equity Partners led the deal, and was joined by fellow new investors ABN AMRO Capital, Avalon Ventures, Credit Lyonnais Private Equity and Sitka Health Fund VCT. Return backers included Merlin Biosciences Fund, West Deutsche Landesbank Girozentrale, GeneChem Management, Temasek Holdings, Lloyds Development Capital and Technomark Medical Ventures. BioVex now has raised nearly $50 million since its 1998 inception.

Critical Telecom Corp., am Ottawa-based developer of broadband solutions, has raised Cdn18 million (approx. $12.7 million) in new venture funding. VenGrowth Capital Partners Inc. led the deal, and was joined by TELUS Ventures, Business Development Bank of Canada and Crown Ventures Fund Inc.

The Boston Globe is reporting that Bedford, Mass.-based Reveal Imaging Technologies Inc. will announce this week that it has raised $10 million in new venture capital funding. The company also received a $2.3 million Transportation Security Agency grant to help it build and market its new baggage screening technology.

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