PE Week Wire — Friday 11/1

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Leonard Green & Partners is nearing a final close on its fourth buyout fund. The vehicle was launched with a $1.5 billion target, but sources say it will close closer to $1.8 billion, with CalPERS as the lead institutional investor. Buyouts subscribers can read more on this story in the latest issue of Buyouts, which is now online.

Vivendi Universal (NYSE: V) has confirmed reports that it plans to sell its Houghton Mifflin publishing assets to a consortium formed by Thomas H. Lee Partners, Blackstone Group, Bain Capital and Apax Partners. The sale is expected to go ahead on the basis of an enterprise value of 1.75 billion Euros ($1.74 billion), representing 1.4X Houghton Mifflin’s 2001 revenue and 9.5X its 2001 EBITDA after bookplate amortization.

WebTone Technologies Inc., a leading provider of enterprise-wide customer interaction solutions for financial services institutions, announced today that it has secured $20 million in equity funding, led by Technology Crossover Ventures (TCV). The company plans to use this funding to expand its presence in the financial services industry.

NexCura Inc., a Seattle-based health-care information and education company, announced that it has raised $4 million in a Series C financing. The round was led by e.Lilly Ventures and included existing investors ARCH Venture Partners and Cardinal Partners.

Guy Hands, former buyout chief at Nomura International, is expected today to announce that his new firm (Terra Firma Capital Partners) has held a 1 billion Euros first close on its inaugural vehicle. The close was bolstered by a 100 million Euros investment by Netherlands-based ABP. No word yet on whether or not Hands will be able to get close to the 3 billion Euros target he set for the fund when it was originally launched, although it seems unlikely.

Dow Jones is reporting that London-based BC Partners has agreed to a management buyout of Switzerland-based hospital company The Hirslanden Group from UBS AG.
NEWS FROM THURSDAY 10/31
Sage Telecom Inc., an Allen, Texas-based competitive local exchange carrier (CLEC), announced it has raised a $30 million equity investment from Summit Partners. Thomas H. Jennings and Kevin P. Mohan of Summit Partners will join Sage’s Board of Directors. Stephens Inc. acted as placement agent for the transaction.

Coller Capital held a $2.5 billion final closing for Coller International Partners IV LP (CIP IV), a massive secondaries fund that was originally marketed with a $1 billion target. Like its three predecessors, CIP IV will purchase positions in private equity partnerships and also purchase portfolios of direct investments from sellers who wish to obtain liquidity prior to maturity. Returning investors include CalPERS, State of Michigan, General Motors and Barings (the original sponsor). First-time limited partners include Canadian Pension Plan and Barclays Pension Fund. Of the fund’s commitments, 47% have come from North America, 38% from Europe, and 15% from the rest of the world. The investors include nine US state pension funds, four sovereign investment authorities, and six universities. Six investors committed $100 million or more.

Health Language Inc., an Aurora, Colo.-based supplier of medical vocabulary and concept-based software server technology, has raised $7.8 million in its first round of institutional venture funding with a post-money valuation of $11.07 million. The lead investors for the round were Lehman Brothers Venture Capital and East River Ventures, both of New York City, New York. Other investors participating included Radius Ventures, Empire Capital and Saffron Hill Ventures.

ECI Telecom (NASDAQ: ECIL) has signed an agreement to combine the business of its subsidiary, ECI-NGTS Ltd., with that of NexVerse Networks, a private company backed by Kleiner Perkins Caufield & Byers, Norwest Venture Partners, Battery Ventures and Levensohn Capital Management. The resulting company will be called Chorale Networks. Under the terms of the agreement, ECI will invest $10 million and NexVerse’s current investors (as a group), will invest $14 million in the new company. Thereafter, an additional amount of up to $6 million will be sought from new investors.

JPMorgan Partners and Federated Department Stores Inc. today announced that JPMorgan Partners has acquired the assets of Arizona Mail Order and Figi’s catalog operations from Federated. Terms of the deal were not disclosed. These businesses, leaders in the direct marketing industry with more than 3.7 million active customers, will be combined into a new holding company named Crosstown Traders Inc.

2PM Technologies, an Ireland-based wireless company, today announced it has secured 3.2 million Euros in its second round of venture capital funding. Dublin-based ICC Venture Capital led the deal and provided 2PM with a post-money valuation of 24 million Euros.

PIERIS Proteolab AG, a Freising, Germany-based protein engineering company, announced the completion of a 12 million Euros Series A financing. Global Life Science Ventures led the deal, alongside fellow backers Gilde Investment Management B.V. as co-lead, BayTech Venture Capital, ABN AMRO Capital, BioM Venture Capital, and existing shareholder TransConnect.

Vivendi Universal SA seems closer than ever to selling off its Houghton Mifflin publishing assets. The deal is expected to come in at around $1.6 billion, and include a consortium led the Blackstone Group, and including Apax Partners and Thomas H. Lee Partners.

The Asian Wall Street Journal is reporting that PCCW Inc., a Hong Kong-based telecom company, has decided to hold onto its yellow pages unit. There had been talk of a sale, with interested parties including Carlyle Group and CVC Asia Pacific.
NEWS FROM WEDNESDAY 10/30
Optillion, a Sweden-based company focused onfiber optic transceiver technology, announced today that it has concluded its Series C financing round, raising an additional $15 million. Led by Crescendo Ventures, Cisco Systems, ITACT, and Investor AB via Investor Growth Capital, its venture capital company, the latest round brings the total venture financing raised by Optillion to $70 million during the past two years. All four investors participated in Series B, and ITACT, a Swedish venture capital firm, provided Optillion’s seed funding.

The Riverside Co. has agreed to purchase four subsidiaries of automobile components producer Dana Corp. for an undisclosed price. The units, which employed a combined total of nearly 700 people and had 2001 sales of $81 million, are: Tekonsha Engineering Co., an aftermarket brake manufacturer based in Tekonsha, Mich.; SurePull Products, a producer of hitches and towing equipment based in Sheridan, Ark.; Theodore Bargman Co., a manufacturer of exterior illumination products located in Albion, Ind.; and American Electronic Components Inc., an Elkart, Ind.-based producer of sensors, switches and relays.

TA Associates recently reduced its holdings in Fargo Electronics Inc. from 21.3% to 13.3% by transferring one million shares of Fargo common stock to limited partners in TA/Advent VIII LP Fund. The move comes over three years after TA first invested in Eden Prairie, Minn.-based Fargo, a producer of desktop plastic card personalization systems that went public in early 2000.

Federation Inc., an Englewood, Colo.-based provider of global content repository solutions for engineered products, announced today that it has successfully closed $6.75 million in preferred series financing. Colorado-based Wolf Ventures led the round along with prior investors Paul Baan’s Stichting Noaber Beheer Foundation and Ovation Capital Partners. New investors participating in this round include Zon Capital Partners, Hyperion Israel Venture Partners, Rotch Group and Firtona Investments.

Leegur Oy, a Finland-based provider of real time adaptation software tools for mobile and fixed Internet services, has secured 1.5 million Euros of new funding from Nokia Early Stage Technology Fund and Alafi Capital. With the funding, Leegur Oy has also acquired the IPR portfolio of California-based Jaago Corp. and joined operations with the company.

eMotion Inc., a Vienna, Va.-based provider of digital media management software and services, has received $2.5 million of addition financing from existing investors Wasserstein & Co., Constellation Ventures, Chartwell Capital and Crossbow Ventures. eMotion is also in the process of raising additional capital from outside investors to further accelerate its growth.

Littlefeet Inc., a San Diego-based provider of distributed wireless coverage technology, announced today an additional investment of $3 million in its third-round of follow-on financing, bringing the total third-round capital raised to $25 million. Participating in the follow on round of financing is current Littlefeet investor ComVentures, specializing in early-stage investments in the communications market. Initial third round capital was led by Sevin Rosen Funds, which raised $22 million in financing. Neurogenetics Inc., a La Jolla, Calif.-based biopharmaceutical company, announced recently raised an additional $10 million through a placement of Series B preferred stock. Including the $9 million raised previously, the total amount raised in Series B financing totals $19 million. Participants in this extension included existing investors Alta Partners, Advent International, GIMV (Belgium), Novartis Venture Fund and S.R. One, Limited as well as a new investor Eisai, Co., Ltd (Japan).

SkyWave Mobile Communications Inc., a global asset tracking company, has secured CAN$19.3 million ($12.3 million) in a second round of financing from McLean Watson Capital and Investissement Desjardins.

The senior management team of Fiduciary Management Associates (FMA) has announced that it has entered into an agreement to effect the management buyout of the investment management firm from its parent company, Old Mutual (US) Holdings Inc. FMA, which was formed in 1980, was a private company until it was acquired by United Asset Management in 1986, which was subsequently bought by Old Mutual in 2000. The firm currently manages in excess of $1.2 billion in assets for a wide variety of institutional clients, and specializes in small cap value equity, large cap value equity and fixed income investment management services.

Reuters is reporting that Nordic Capital has to sell European pharmaceutical company Nycomed to a private equity consortium led by CSFB Private Equity. Others in the group include s NIB Capital Private Equity and The Blackstone group. The report said none of the parties would confirm reports that the winning bid came in at approximately 1.1 billion Euros ($1.1 billion).

Al Rai is reporting that Deutsche Bank, the Government of Jordan and Jordan-based venture firm Foursan Group have formed a $50 million Jordanian venture capital fund.
NEWS FROM WEDNESDAY 10/29
Venture capital disbursement levels continued to fall in the third quarter, according to figures being released today by PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association (NVCA). This is the tenth straight quarter that less capital was committed to U.S.-based companies, and the ninth out of the last 10 in which fewer companies received funding. For more on this story, including charts, click here .

Leonard Green, a pioneer in the management-led leveraged buyout industry, died unexpectedly last Friday from complications related to a heart condition. Green, who would have turned 69 this week, had been vacationing in Venice, Italy. He and two partners founded Gibbons, Green, van Amerongen in 1969, and 30 years later founded the eponymous Leonard Green & Partners LP.

Kemia, a San Diego-based medicines company that utilizes novel chemistry to target protein-protein interactions, today announced it had secured $16.5 million in a milestone-based Series A round of financing led by Forward Ventures.

Anacor Pharmaceuticals of Palo Alto, Calif. emerged from stealth mode today by announcing that it has raised $7 million over two rounds of venture funding from Rho Ventures and Aberdare Ventures. The first round totaling $3 million was completed in April 2002 with the remaining $4 million completed today. Anacor is an early-stage pharmaceutical company engaged in the discovery and development of novel antimicrobials for the treatment of serious bacterial and fungal infections.

Silicon Valley Bancshares had to do some apologizing yesterday when it was revealed that the company had underestimated its venture capital exposure during a third quarter earnings call on October 17. During the call, Lauren Friedman, chief financial officer at the firm, put the company’s exposure at $18 million. In a subsequent 8-K filing with the SEC, however, that exposure leaped to $24.1 million, plus an additional $7.4 million in other private equity investments and $3.7 million in funds under management.

ExpertPlan, a East Windsor, N.J.-based provider of online retirement plan administration to financial institutions, today announced closing its Series B Preferred stock funding of $4.35 million, led by Liberty Venture Partners of Philadelphia.

Advent International has opened an advisory office in Madrid, led by Jaime Carvajal Urquijo, Juan Diaz-Laviada and Luis Camilleri. Mr. Carvajal will be chairman of the new office, while Laviada and Camilleri will become partners of Advent International. Laviada will assume the role of Managing Partner in Spain.

Niku Corp. (Nasdaq:NIKU), a Redwood City, Calif.-based provider of services relationship management (SRM) software, today announced that Joshua Pickus and Ravi Chiruvolu have been appointed to the company’s Board of Directors. Pickus is Niku’s chief financial officer and a former partner at Bowman Capital Management. Chiruvolu heads the software investment practice at Charter Venture Capital.

AdvisorPort announced that it has closed a $5 million private equity financing led by Newhouse Special Situations Fund I, a private equity affiliate of Nationwide Mutual Insurance Co.
TotalFinaElf, a French oil and gas company, has agreed to sell its SigmaKalon paint production business to Bain Capital. Terms of the deal were not disclosed, although some reports had Bain offering approximately 1 billion Euros for the paints unit.

The Communications Ministry of Israel said that Apax Partners has taken itself out of the bidding for 50.1% of Bezeq Israel Telecom, although the UK-based private equity house may reenter the process in the future.
NEWS FROM MONDAY 10/28
Kontiki, a Sunnyvale, Calif.-based enterprise software company, today announced that Adobe Ventures and VeriSign Inc. have invested in Kontiki’s Series B round of financing. Other investors in the $16 million round include Benchmark Capital and The Barksdale Group, both early investors in the company. PE Week subscribers can get more of this story in the protected Deal News section of www.PrivateEquityWeek.com.

Tullis-Dickerson & Co. Inc. today announced the close of Tullis-Dickerson Capital Focus III LP. The firm’s fourth and largest fund to date at $122 million, TD III will invest in seed through mid-stage companies in the areas of life sciences/biotechnology, healthcare information technology and informatics, medical device systems and healthcare services. PE Week subscribers can get more of this story in the protected Fund News section of www.PrivateEquityWeek.com.

Larry Sorrel is leaving Welsh, Carson, Anderson & Stowe to help head up the private equity practice at Thomas Weisel Partners Sorrel is filling a nine-month old vacancy at Weisel created by the departure of Alan Menkes, who left in January to launch his own LBO shop along with fellow Weisel defectors Dan Dross and Keith Oster. PE Week subscribers can read more about this transition, plus an analysis of hiring trends within the LBO industry, in the protected Weekly Headlines section of www.PrivateEquityWeek.com.

Peninsula Pharmaceuticals Inc., a Fremont, Calif.-based pharmaceutical development company, today announced that it has closed its Series B round of venture capital funding with $22.1 million. The investment was led by Domain Associates, and included Canaan Partners, A.M. Pappas, Montreux Equity Partners, Mitsubishi International Corp. and Sears Capital Management.

Authentica Inc., a Waltham, Mass.-based provider of content security software, today announced the closing of a $4 million series B round in additional financing. 3i US led the round with participation from other Series A investors including Greylock, Intel 64 Fund, North Bridge Venture Partners, Norwest Venture Partners, and Venrock as well as some individual investors.

Management Dynamics Inc., an East Rutherford, N.J.-based provider of tariff and contract management systems for the ocean transportation industry, has announced that a group of executives and investors have completed a buyout of Management Dynamics from Celarix Inc. In addition, Management Dynamics secured $6.7 million in financing, which will be used to expand product development and penetration into new markets. The financing was led by Cross Atlantic Capital Partners (XACP), and included the New Jersey Technology Council Venture Fund (NJTCVC), the Megunticook Fund and Jim and John Preuninger, Management Dynamics’ founders.

Aka Capital, the black empowerment private equity and investment group headed by Reuel Khoza, today announced that it has reached an agreement to acquire a controlling shareholding in South Africa-based BoE Asset Management from the Nedcor Group in a transaction valued at R100 million. The Nedcor Group will retain a minority stake and Old Mutual will be acquiring a minority stake in BoE Asset Management.

The Boston Globe today is reporting that the Massachusetts Pension Reserves Investment Trust (MassPRIT), said it would not follow a Sept. 16 order from the state supervisor of public records to turn over private equity fund performance information. The matter is now in the hands on Massachusetts Attorney general Thomas Reilly.

OCG Ventures LLC today announced the appointment of Scott Widham as partner. As part of his role with the specialized investment firm, which is focused on investing in data, cable and telephony communications equipment companies and service providers, Scott will divide his time between St. Louis and Columbia, MD. Prior to joining OCG, Widham was the Founder and Managing General Partner of Clayton Capital LLC, and Falcon/Capital Cable LP (acquired by Charter Communications in 2001).

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