PE Week Wire — Friday 10/18

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Apriso Corp., a Long Beach, Calif.-based enterprise software developer, announced the closing of its second round of financing at $16.1 million. SAP Ventures, contributed the final sum toward the investment announced initially in April of this year. Apriso will use the funds to accelerate product research and development, expand its global marketing activities and develop multiple sales channels in each of the vertical markets it serves.

The Blackstone Group has hired Hamilton James as a vice chairman, effective November 1. As part of the agreement, James has resigned as chairman of private equity and investment banking at Credit Suisse First Boston.

Korn/Ferry International (NYSE:KFY), an executive search firm used by many in the private equity industry, , has become the first foreign recruiter to be granted a joint-venture permit by the Beijing Personnel Bureau. The joint venture, which is in partnership with China International Economic Consultants Co. Ltd. (CIEC) of the CITIC Group, will become operational upon receiving approval from Beijing Commission of Foreign Economic Relations and Trade (COFERT) and Beijing Industrial and Commercial Bureau.

CMGI Inc. (Nasdaq: CMGI) today announced that it has sold its ownership interest in Equilibrium Technologies Inc., a provider of rich-media services for enterprise concerns, to a group led by current management of Equilibrium Technologies. Terms of the transaction were not released.

International Data Group (IDG) said earlier this week that in plans to invest approximately $1 billion in China over the next five years.

Polish News Bulletin is reporting that the Securities and Exchange Commission is investigating Private Equity Poland, previously known as BRE Private Equity, for trading their own shares and failing to meet certain information standards. The article says prosecutors sent an initial letter of possible criminal offense in June, and now a court will review the complaint next week.

The Nordic Business Report said today that 3i Group Plc has agreed to acquire the Swedish front loaders and farm tractor implements company Alo AB in cooperation with the Swedish holding company Balticgruppen AB.
News from Thursday 10/17

The San Jose Mercury News has filed a lawsuit against the California Public Employees’ Retirement System (CalPERS), arguing that the group should release fund-by-fund performance results of its private equity investments. CalPERS had previously put such information up on its Web site, although the information was eventually pulled. Some sources said that the initial CalPERS posting was an administrative blunder, while a CalPERS spokesman said the group wanted to wait until it had developed more meaningful fund performance metrics. The newspaper’s lawsuit follows the recent decision by the University of Texas Investment Management Co. (UTIMCO) to release similar information. Advocates of such disclosure believe that public pensioners have a right to know exactly how their investments are doing, while opponents argue that such disclosures both violate existing confidentiality agreements and could cause private equity firms to avoid groups like UTIMCO in future funds. For more on the transparency debate, pick up the latest print copy of Private Equity Week.

J.P. Morgan Chase & Co. reported another quarter of poor earnings marked by major losses in its JPMorgan Partners private equity portfolio. Total net private equity gains were negative $299 million, as compared to negative $125 million in Q2 2002 and negative $102 million in Q3 2001. Net mark-to-market losses on public securities of $120 million were partially offset by net realized gains of $111 million. Most of the losses were concentrated in telecom and technology investments. Book value as of Sept. 30 2002 of the telecom, media and tech public and private portfolios was $1.4 billion, including $386 million in telecom, $257 million in media and $769 million in tech. The bank also announced yesterday that it would lay off approximately 2,200 more employees, although a spokeswoman said that those cuts are not expected to affect the private equity group.

Ember Corp., a Boston-based provider of embedded wireless networking solutions, today announced the closing of its oversubscribed Series B financing round with total commitments of $20 million, bringing Ember’s total raised capital to $28 million. New investor RRE Ventures led the round, which attracted new investors DFJ ePlanet Ventures and included repeat participation from all Series A backers DFJ New England, GrandBanks Capital, Polaris Venture Partners and Stata Venture Partners.

Baring Private Equity Partners today announced that the Baring India Private Equity Fund (Baring India) has successfully sold its 10% stake in Jyothy Laboratories, a leading Indian consumer product company, to funds advised by CDC and Credit Lyonnais Securities.

Bryan Fairfield has been named the first-ever director of Invest Nebraska Corp., a group created last year to help Nebraska entrepreneurs secure venture capital funding. Fairfield was previously a vice president with private equity firm DreamField Partners.

Akustica Inc., a Pittsburgh-based provider of acoustic System-on-Chip solutions for wireless communications and consumer electronics, announced yesterday that it has raised $2.25 million in Series A financing. The series was led by Chamberlain Investments, created and funded by Glen Meakem, founder, chairman and chief executive officer of FreeMarkets, Inc., and included other private investors.

eFinancialNews is reporting that 3i Group PLC has named Olivier Lesca, formerly an investment banker at UBS Warburg, as a director in its European buyout business. He will be responsible for identifying and executing French and cross-border buyouts, and will work from the London and Paris offices. The publication is also reporting that Claus Peter has left his post with Merrill Lynch to join the leveraged finance group at SG, where he will be responsible for the bank’s private equity sponsor clients in Germany.

The Deal is reporting that Apax Partners has decided to recapitalize Xerium Inc. with $700 million of loans, rather than sell it for approximately $1 billion to JPMorgan Partners and Warburg Pincus.

News from Wednesday 10/16

Pharmion Corp. announced that it completed a $40 million private equity placement from a syndicate of new and existing investors. Buyers in this round include New Enterprise Associates, General Electric Pension Trust, ProQuest Investments, Nomura International PLC, Bay City Capital and Versant Ventures, as well as members of Pharmion management and certain other investors from Pharmion’s first two rounds of financing. Pharmion has raised $130 million since it was initially funded in January 2000 and currently has approximately $75 million in cash.

Ecast Inc., a San Francisco-based interactive media network, today announced it had raised $14 million in a round co-led by Oak Investment Partners and previous investor DCM-Doll Capital Management. Other existing investors participating in the round include St. Paul Venture Capital and El Dorado Ventures. The deal also involves the merging of Ecast and Rioport Inc., a San Jose, Calif.-based digital music company that will now operate under the Ecast brand name. Rioport had previously raised over $60 million of venture capital from such firms as Oak, Mitsubishi Corp., Vulcan Ventures and Quantum Technology Ventures. Following its Series B round in June of 2000, Rioport investors valued the company at $183.5 million.

The California Public Employees’ Retirement System (CalPERS) Board of Administration voted today to adopt a new asset allocation model that sticks with equity investments for the long-term. The new asset allocation mix calls for a one percent increase in both the pension fund’s real estate and private equity programs. The two percent increase to equity type investments will be taken from the CalPERS global fixed income portfolio. CalPERS will raise its target asset allocation for real estate from 8 to 9 percent of the System’s assets. The pension fund’s private equity investments will get a boost to 7 percent, up from its previous target of 6 percent. CalPERS will decrease its global fixed income target from 28 percent to 26 percent of the Fund’s assets.

U.S. Steel (NYSE: X) announced today that it has signed a letter of intent to sell its Clairton, Pa., and Gary, Ind., coke operations, its Minnesota iron ore operations (Minntac), and its wholly owned transportation services subsidiary Transtar, Inc. (Transtar), to an entity formed by affiliates of Apollo Management LP. Under terms of the letter of intent, it is anticipated that U. S. Steel would receive approximately $500 million in cash and retain about a 20 percent interest in the new company, with the new company assuming all collective bargaining agreements, certain employee benefit obligations and certain other liabilities. U. S. Steel currently estimates the transaction could result in a pre-tax loss of up to $300 million. The parties plan to reach definitive agreements by year-end 2002 with closing expected to follow in the first quarter of 2003.

Dutchess Capital Management LLC today announced that Dutchess Private Equities Fund LP is re-opening to new investors effective October 15, 2002. The goal of the Fund is to raise an additional $50 million to continue its investments in the private placements of public-traded growth companies, commonly known as PIPEs (Private Investment in Public Equities).

Tira Wireless, a full service publisher of wireless Java applications for mobile phones, today announced that it has secured US$3 million in Series A financing from Cambridge, Mass.-based Flagship Ventures (OneLiberty, AGTC, NewcoGen) and Toronto-based Brightspark Ventures.

Sonim Technologies Inc., a leading provider of IP-based Instant Communications solutions for wireless data networks worldwide, today announced that it has secured a $3 million investment from BV Capital. This investment will add to the $18.6 million round of institutional funding by 3i and Apax Partners announced by Sonim in August. BV Capital manages $275 million of capital, funded by a group of international high-profile investors including AOL Time Warner and Bertelsmann AG. With this investment, Mathias Schilling, General Partner of BV Capital, joins the Sonim board of directors.

First Atlantic Capital Ltd. today announced that it has acquired a majority interest in Golfsmith International Inc., a leading supplier of golf equipment and related accessories. Golfsmith is one of the world’s largest multi-channel, specialty retailers of golf equipment. The purchase price was not disclosed.

DragonWave Inc., an Ottowa-based supplier of next-generation wireless networks, announced that the company has secured $13.2 million (CDN) in financing. This third round of funding, led by Enterprise Partners, brings the total investment raised to date by DragonWave to more than $39 million (CDN) and will allow the company to ramp revenues and address new markets. Other investors included Celtic House International and Venture Coaches.

Daksh E-Services, a New Delhi, India-based customer care and transaction processing company, has secured $21 million in a minority stake investment from General Atlantic Partners.

Quanta Services Inc. (NYSE: PWR) announced today that a private equity fund managed by First Reserve Corp. has committed to invest up to $135 million in the Company. Quanta today agreed to First Reserve Fund IX LP’s purchase of 8,666,666 newly issued Quanta common shares at $3.00 per share. The First Reserve fund also purchased 3,303,100 Quanta common shares at $3.00 per share and 939,380 Quanta Series A preferred shares (convertible into 4,696,900 common shares) at $3.00 per common share equivalent from Aquila Inc. As a result, Aquila’s ownership is reduced to approximately 14 percent. The combined value of these transactions is approximately $49.9 million.

Lawrence S. Benjamin has been named CEO of The NutraSweet Co., the world’s largest producer and commercial marketer of aspartame and the developer of neotame, a new sweetener and flavor enhancer approved by the FDA this summer. For the last eight years, Benjamin has been a senior operating executive and advisor for Oak Hill Capital and Roark Capital Group

Saw Mill Capital LLC together with management, announced today the recapitalization of Turner Bros. LLC of Oklahoma City.

Dow Jones is reporting that Apax Partners Ltd. has made a 7.4 million Euros investment in Milan-based software company, HAL Knowledge Solutions.

News from Tuesday 10/15
Cord Blood Registry (CBR), the world’s largest accredited cord blood stem cell bank, today announced that both ABS Capital Partners and HLM Management have invested a total of $18 million into the San Bruno, Calif.-based company. John Stobo, a General Partner at ABS Capital Partners who led the investment, will join CBR’s board of directors.

Iteration Software Inc., a Mountain View, Calif.-based provider of real-time reporting and delivery solutions, has secured $10 million in Series B funding from Canaan Partners and Crosspoint Venture Partners, along with participation from private investors. This investment will support the Company’s product development, additional staffing, and go-to-market strategy. Iteration, which was founded in February 2002, will preview its new solution in the coming months with plans for general availability in Q1 of 2003.

AnAerobics, a Rochester, N.Y.-based developer of anaerobic wastewater treatment systems, has raised $15 million in a Series A round of venture capital funding. Sterling Venture Partners led the deal with a $4 million commitment, and was joined by Alliant Energy Resources Inc., Roser Ventures SBIC, LLC and certain individuals. AnAerobics will use the financing to build out its technology and expand its marketing efforts.

Legra Systems Inc., a Lexington, Mass.-based developer of networking systems for the enterprise wireless LAN market, announced today that it has closed a $2 million round of seed funding led by Kodiak Venture Partners. The $2 million infusion from Kodiak and Genesis Partners will be used for product development and to complete the company’s executive management team.

JAMDAT Mobile Inc., a leading publisher of entertainment applications and provider of enabling technologies for wireless, today announced the Company has closed an $8 million Series C round of financing. The investment, led by QUALCOMM Incorporated (Nasdaq: QCOM), included Apax Partners, Inc. (formerly Patricof & Co. Ventures), Intel Communications Fund and Sun Microsystems, Inc. (NASDAQ: SUNW).

Savvion Inc., a Santa Clara, Calif.-based that company that knows business process, today announced the closing of a $21.7 million second round. The final phase consisted of a $5 million investment by Walden International. Walden International joins VantagePoint Venture Partners, who led the round, along with first round investors D-Age Capital and HIG Ventures.

Ian Schrager Hotels announced today the appointment of Francesca Galante to the new position of Vice President of European Acquisitions and Business Development. Galante, 26, was hired from European based private equity fund Soros Real Estate Partners. Prior to that, she worked in investment banking at Merrill Lynch International in London.

The Massachusetts Institute of Technology (MIT) today announced the launch of the Deshpande Center for Technological Innovation (Deshpande Center) and the issuance of more than one million dollars in Ignition and Innovation Program Grants. The Deshpande Center is part of the MIT School of Engineering and was established in January of this year through a $20M gift from Jaishree Deshpande and Desh Deshpande, the co-founder and chairman of Sycamore Networks. The Deshpande Center was created to serve as a catalyst for innovation and entrepreneurship by supporting research of MIT faculty and students and facilitating collaboration among entrepreneurs, venture capitalists, innovative businesses and MIT faculty. The Deshpande Center supports a wide range of emerging technologies including biotechnology, information technology, new materials, tiny tech, energy, and environmental innovation.

Metrix Systems has reached an agreement to acquire the principal assets of Swan S.A. The acquisition is structured as a cash purchase for an undisclosed sum. Financing for the transaction was led by leading French venture capital firms ODYSSEE Venture and Finadvance Venture.

Castle Harlan Inc. has completed the previously-announced sale of Ion Track Inc., a manufacturer of devices that detect trace amounts of explosives and drugs, to GE Industrial Systems, a division of General Electric Co. (NYSE: GE).

The Moscow Times is reporting that Silicon Valley venture firm Draper Fisher Jurvetson is preparing to set aside $100 million of its $3 billion under management for a fund devoted to Russian high0tech start-ups.

Luis Nogales has pledged $1 million for the protection of immigrant rights in a bequest to MALDEF (Mexican American Legal Defense and Educational Fund), the largest gift by an individual in the organization’s history. Nogales is the founder of Nogales Investors, a private equity investment firm dedicated to investing in companies in minority and underserved communities.
News from Monday 10/14
Short-term private equity fund performance continued to deteriorate during the second quarter of 2002, according to a report released today by Thomson Venture Economics the National Venture Capital Association. For the period ending June 30, 2002, one-year returns for all private equity funds and venture capital funds were -16.5% and -27% respectively compared to -13.7% and -23.8% for the period ending March 31, 2002. While the previous two quarters had shown slight improvement, the recent drop in short term performance indicates that the private equity market continues to suffer from the poor economy, volatility in the public markets and limited liquidity options. Over the immediate term the market correction continues to lower three and five year returns, which remain strong as they include the residual upside effects of the robust period in the late 1990’s. For more on this data, go to www.VentureEconomics.com , or check out the latest print edition of Private Equity Week.

Chicken Out Rotisserie, a Maryland-based chain of 30 fast casual restaurants, today announced it has secured $21.25 million in one of this year’s largest private equity raises for a privately-owned restaurant company. Grotech Capital Group led the financing, with participation from Mercantile Capital Partners, Reicon Capital and William Blair & Co.

Tallwood Venture Capital announced today that it has closed a $180 million venture capital fund dedicated exclusively to semiconductors and related technologies. Limited partners in Tallwood Fund II include Stanford University; Harvard University; Credit Suisse First Boston; Grove Street Advisors for CalPERS, Oregon and NIB; Spur Capital; Vertex; VenCap International; The Investment Fund for Foundations and GIC Special Investments. For more on this story, go to www.PrivateEquityWeek.com.

IXI Mobile Inc., a Palo Alto, Calif.-based provider of wireless software solutions for network operators, manufacturers and consumers, today announced the completion of the company’s third-round of funding totaling $15 million. The round was led by TLcom Capital Partners, with additional participation from previous investors Draper Fisher Jurvetson ePlanet Ventures, Gemini Israel Funds and Texas Instruments Inc.

Seagate Technology Inc., which was taken private in 2000 via a leveraged buyout by Silver Lake Partners, seems ready to reenter the public markets. The Scotts Valley, Calif.-based computer data management company has filed for a $1 billion public offering with the Securities and Exchange Commission. The deal is being co-managed by Morgan Stanley and Salomon Smith Barney. Seagate previously had gone public in 1981 when it raised $30 million.

Zilliant, an Austin, Texas-based provider of price and revenue optimization software, today announced that it has closed its series B funding round with an additional investment from GE Equity. The $6 million in-total round was opened in May and now includes GE Equity, Trellis Partners, Austin Ventures, and DB Capital Venture Partners. GE Equity, based in Stamford, Connecticut, invests in businesses that are synergistic with other GE business units. GE Equity will have an observer seat on the Zilliant Board of Directors.

SoloMio Corp., an Austin, Texas-based mobile telecom software company, announced today the completion of a Series B round of venture financing from Austin Ventures and Techxas Ventures.

Clayton, Dubilier & Rice announced today the appointment of Bruno Deschamps, formerly president and chief operating officer of Ecolab (NYSE: ECL), as a partner. Deschamps, 51, will be based in the New York-based private equity firm¹s London office.

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