PE Week Wire — Friday 2/7

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The Phoenix Companies Inc. as agreed to sell off a $53.5 million portfolio of its venture capital limited partnership interests (approx. one quarter of its portfolio), along with unfounded commitments of $28.1 million. Half of the sale will go to unnamed third parties, while the rest will go to the Hartford, Conn.-based insurance company’s closed block. Net proceeds from the sale will total $26.8 million. Phoenix recognized an after-tax realized loss of $3.3 million in the fourth quarter related to the partnership interests included in this transaction. It is currently unknown exactly which LP interests were sold off, but the Phoenix portfolio includes such venture names as Austin Ventures, Battery Ventures, Foundation Capital and InterWest Partners.

Skerven Morrill, a San Jose, Calif.-based law firm in business for over 25 years, voted earlier this week to disband after failed attempts to find a merger partner. The move also follows attorney defections, including the decision of 15 Skerven Morrill lawyers (including eight partners) to join Pillsbury Winthrop, pending the resolution of conflict of interest and insurance issues. Overall, Skjerven Morrill employed 62 attorneys and 115 other staffers. This is the second tech law firm collapse in Silicon Valley this month, as Brobeck, Phleger & Harrison partners voted to go out of business late last Thursday.

TransTech Pharma Inc., a High Point, N.C.-based drug discovery company, has completed two new rounds of funding totaling $24.5 million. The investments came from its largest shareholder, MacAndrews & Forbes Holdings, as well as its research partners Novo Nordisk A/S and Cephalon Inc. Investors in the last round, including MacAndrews & Forbes, have also secured options to invest another $10 million during 2003.

A federal judge in Denver has dismissed a shareholder motion to set aside proceeds from Qwest Communications International‘s $7.05 billion leveraged buyout of its directories business (QwestDex) by private equity firms Carlyle Group and Welsh, Carson, Anderson & Stowe. The plaintiffs, represented by Milberg, Weiss, Bershad, Hynes & Lerach, had argued that Qwest had made misleading financial statements, and that proceeds from the QwestDex sale should be put into a trust until their case is settled.

Cable & Wireless has been approached with a £2.4 billion cash buyout bid from PCCW, a Hong Kong-based telephone company. News reports suggest that PCCW’s bid will include participation from a private equity group, although it is currently unknown whether or not such a partner has yet been chosen.

Anthony B. Davis has joined Cambridge Capital Partners as a partner. He previously worked at One Equity Partners and, before that, at Frontenac Co.

Octagon Research Solutions Inc., a King of Prussia, Pa.-based process-centric solutions provider to the life sciences industry, announced today that it has completed a $3.8 million first round of funding. Edison Venture Fund led the deal, and was joined by Milestone Venture Partners.

Survey Sampling International, a Fairfield, Conn.-based provider of respondent samples information for research surveys, has received new funding from Boston Ventures, Prairie Capital and individual investors. Terms were not disclosed.

Coapt Systems Inc., a Palo Alto, Calif.-based developer of bioabsorbable implants for the fixation of soft tissue in the plastic, reconstructive and sports medicine markets, announced today that it has closed on its $12.2 million Series C round of financing. Canaan Partners led the deal, which also included a new investment from Foundation Medical Partners, and additional investments from existing investors Alta Partners, Asset Management Company, Spring Ridge Ventures, Pacific Asset Partners and Trellis Health Ventures. Brent Ahrens, principal of Canaan Partners, has joined the Coapt board of directors as part of the deal.

Intuit Inc. (Nasdaq:INTU) today announced it has completed the sale of its wholly owned Japanese business software subsidiary, Intuit KK, to Advantage Partners Inc., a Tokyo-based private equity investment firm for 9.5 billion yen (approximately $79 million).
NEWS FROM THURSDAY 2/6
Key Research Inc., a Palo Alto, Calif.-based designer of 64-bit server computer systems optimized for Linux cluster use, has raised $12.5 million in Series B funding. Co-leading the round are Charles River Ventures and Enterprise Partners Venture Capital. ChevronTexaco Technology Ventures and the Dow Employees Pension Plan also participated as new investors, while Series A backers returning for more included CMEA Ventures and Skymoon Ventures.

BRECIS Communications Corp., a San Jose, Calif.-based provider of multi-service processors, has raised an additional $20 million in new venture funding. The round was led by new investor Crosslink Capital, and includes returning investors InterWest Partners, Focus Ventures, Norwest Venture Partners and Sequoia Capital. The company has now raised a total of $72.4 million. BRECIS’ previous round was a $23 million funding in the fourth quarter of 2000, when it received a post-money valuation of $185 million.

Mike Ahearn, formerly a recruiting partner with Charles River Ventures’ CRVelocity program, has found a new home at Boston-based executive search firm Conley & Co. He will serve as a managing director.

VoiceRamp Technologies Inc., a Richardson, Texas-based provider of software for broadband access and optical switching, has closed its Series A round of venture funding with $7.8 million. The investment was co-led by CenterPoint and Star Ventures, with STARTech Early Ventures also participating.

ChoicePoint (NYSE: CPS) today announced the sale of its CP Commercial Specialists (CPCS) business to private equity firm New Mountain Capital. The transaction is for $87 million in cash, and is expected to close by the end of February. CPCS, based in Overland Park, Kansas, provides premium audits and property surveys to the insurance industry, as well as inspection services for government and other industries.

New Idea Center announced that it has secured $1 million in commitments for an angel investor fund focused on early-stage venture capital in South Florida. Over twenty individuals have committed at least $10,000 per year for five years to the first “pledge fund” of its type in the region. The nascent fund is looking for at least $2.5 million overall, plus local university support.

The Nikkei Report is saying that NIF Ventures Co. is looking to launch a new 10 billion yen ($83.4 million) venture capital fund by mid-June. The fund will mostly invest in early-stage, Japan-based companies, but will also do some middle-market acquisition work.

Private Equity Online is reporting that UK fund manager Martin Currie has begun marketing a €300 million ($324 million) fund-of-funds, and has hired Paul Murray, a co-founder of DB Capital Partners, as managing director of its private equity efforts. The article adds that the fund is looking for a €150 million first close this summer, and that it will have co-investment capabilities.

Dow Jones is reporting that The Carlyle Group has emerged as the leading bidder on Fiat SPA‘s aerospace unit (Fiat Avio). The bid is reportedly around €1.5 billion ($1.62 billion).
NEWS FROM WEDNESDAY 2/5

Timing is everything. Last April, Bresnan Broadband Holdings struck a deal whereby it would pay $735 million to acquire certain rural cable operations owned by AT&T Broadband. In the proceeding months, however, the cable industry continued to sink, while AT&T Broadband was acquired by Comcast Corp. in a $59 billion merger. Under revised terms announced yesterday, Bresnan will now acquire the same assets from Comcast for $525 million in cash plus preferred and common equity in Bresnan (a total value of around $675 million). The new deal does not feature the high-yield tranche of its predecessor. Bresnan’s equity owners include Providence Equity Partners as the lead investor, Quadrangle Group, TD Capital Communications Partners and Bresnan management. The deal, which includes 317,000 basic cable subscribers in Colorado, Montana, Utah and Wyoming, is expected to close by March 31.

Xora Inc., a Mountain View, Calif.-based provider of mobile solutions for enterprise applications, has raised $4 million in Series B funding from existing backer SoundView Ventures.

Avaki Corp., a Burlington, Mass.-based provider of commercial grid software, has raised $4.2 million in an extension to its Series A financing. Investments from Polaris Venture Partners, General Catalyst Partners and Sofinnova Partners bring Avaki’s total funding to over $20 million.

H5 Technologies, a San Francisco-based developer of information discovery, analytic and threat detection applications, today announced it has closed $6.5 million in Series B venture financing led by Draper Fisher Jurvetson. Andreas Stavropoulos of Draper Fisher has joined the H5 board of directors.

CashWorks Inc., a Dallas-based provider of technology solutions for the non-bank financial services industry, today announced that it completed its Series B round of funding, raising over $5 million. The lead investor is Capital Southwest.

NetWolves Corp. (NASDAQ: WOLV) has secured approximately $2.5 million in private placement of its Series B preferred stock as part of an overall effort to raise up to $4 million. IndiGo Ventures LLC is primarily responsible for securing these commitments.

Snapbridge Software, a Carlsbad, Calif.-based provider of software solutions that automate decision-intensive processes has raised $6 million in Series A funding. The investors are JPMorgan Partners and Mission Ventures.

Scott L. Kaufman, most recently in the business technology group of dearly departing Brobeck, Phleger & Harrison, has joined the law firm of Kronish Lieb Weiner & Hellman. He will be a partner in Kronish Lieb’s corporate group.

NEWS FROM TUESDAY 2/4

Venture capital firms 3i, Mayfield and Worldview Technology Partners have formed the Telecom Venture Coalition (TVC), a group that will help facilitate closer working relationships between IBM and VC-led businesses operating in the global telecommunications market. TVC’s goal is to accelerate customer adoption of new, global communications technologies and next-generation Linux solutions by connecting emerging VC portfolio companies with IBM at an early stage in their growth. Two TVC member portfolio companies have already been introduced into the TVC process: Intelliden, backed by investors that include 3i, and Convedia, which is backed by Mayfield.

Calix, a Petaluma, Calif.-based supplier of advanced telecom platforms, has raised $50 million in Series E funding. The deal included new investors TeleSoft Partners and Kinetic Ventures and existing investors Azure Capital Partners, Redpoint Ventures, Integral Capital Partners and Meritech Capital Partners.

Candera Inc., a Milipitas, Calif.-based developer of network-based storage management platforms, today announced that it has received an additional $2.5 million of venture funding, bringing its total funding to date to more than $47 million. The investment, by AsiaTech Management LLC and Hotung Capital Management Inc., is an extension of a second round of capital funding originally closed in May 2002.

Tropic Networks Inc., an Ottawa-based optical networking company, has raised $20 million in third round funding. Celtic House Venture Partners led the deal, and was joined by fellow return backers Goldman Sachs, Kodiak Venture Partners, Crescendo Ventures and Teachers’ Merchant Bank, the private equity arm of the Ontario Teachers’ Pension Plan.

Art Rock, the veteran venture capitalist who backed such companies as Intel and Apple, has donated $25 million to the Harvard Business School to launch a center for budding entrepreneurs. It is the largest individual gift for a specific academic program in the school’s history, and Harvard has already said that it will rename its South Hall as the Arthur Rock Center for Entrepreneurship.

CashEdge Inc., a New York-based provider of online transactional services, has raised $5 million in fourth round funding. CIBC Capital Partners led the deal, with participation from other existing investors including RBC Financial Group.

NanoGram Devices Corp., a Fremont, Calif.-based nanomaterials company, has raised $9.2 million in new funding from Venrock Associates, Nth Power Technologies, Bay Partners, Rockport Capital Partners, SBV Venture Partners and Harris & Harris Group.

Qpass Inc., a Seattle-based provider of activity management business system software for wireless carriers, today announced it has secured $2 million from Granite Global Ventures, finalizing its Series B financing at a total of $12.7 million. In conjunction with the financing, Joel Kellman, managing director of Granite Global Ventures, will join the company’s board of directors.

The European Union Commission approved Blackstone Group’s planned purchase of Livonia, Mich.-based TRW Automotives Inc. from Northrop Grumman Corp. The $4.13 billion deal will give Blackstone a 59% stake in the auto components business. In related news, Reuters is reporting that TRW Automotive will launch a $1.4 billion junk bond offering on Thursday to help finance the deal.

Icera Semiconductor, a UK-based fables semiconductor developer, has raised $10 million in new funding from Atlas Venture and Benchmark Capital.

RSS Solutions Inc., an Ontario-based rovider of advanced workflow planning and scheduling software solutions, today announced the closing of a $1.6 million equity investment from EdgeStone Capital Partners.

Credit Suisse First Boston today announced that it has placed Frank Quattrone, head of CSFB’s Global Technology Group, on administrative leave pending completion of an investigation. The Firm said it took this action based on new information learned on Friday, January 31. Quattrone was placed on leave for two reasons. First, the information discovered Friday raised questions about his response to an inquiry last week by CSFB about whether he was aware of pending investigations in 2000 when he sent an e-mail to employees regarding document retention issues. Second, the new information raised questions about whether Quattrone acted appropriately in December 2000 when he sent that e-mail and permitted a subordinate to send a similar e-mail to employees.

eFinancialNews is reporting that 4D Global Energy has raised EURO 60 million ($64.8m) for a new private equity fund focused on European oil and gas companies. Investors participating on the initial close (total target is EURO 150 million) included Societe Generale Asset Management.

NEWS FROM MONDAY 2/3

FHP Wireless Inc., a San Mateo, Calif.-based producer of cellular Wi-Fi products, announced today that it has closed its Series C equity financing with a total amount of $8.3 million. The deal was led by Voyager Capital and included investments from all previous investors including Benchmark Capital, Boston Millennia Partners and Hanna Ventures. PE Week subscribers can read more in the protected Deal News section of www.PrivateEquityWeek.com.

Savantis Systems Inc., a Lexington, Mass.-based provider of database server consolidation solutions, announced today that it has secured $12 million in Series B funding, led by a new investor Sigma Partners. Series A investors Highland Capital Partners and STAR Ventures also participated in the round. Bob Davoli, managing director with Sigma Partners, will join Savantis’ board of directors. To date, Savantis has raised a total of $17 million.PE Week subscribers can read more in the protected Deal News section of www.PrivateEquityWeek.com.

Cryptek, a Sterling, Va.-based network security provider, has raised $10.2 million in Series B funding. New investor Westbury Partners led the round, and together with Walden Capital Partners invested about $8 million. Previous investors Angelo Gordon & Co., VAL Investment Group and individual investors contributed the rest. Friedman Billings Ramsey & Co. acted as a placement agent. PE Week subscribers can read more in the protected Deal News section of www.PrivateEquityWeek.com.

Morgenthaler Partners has appointed Alfred Festa as a new operating partner on the buyouts side of the firm. Festa was last with ICG Commerce, where he served as president and chief executive officer.PE Week subscribers can read more in the protected Fund News section of www.PrivateEquityWeek.com.

Deutsche Bank has laid off the Chicago-based investment staff of the Scudder Venture Partnership Fund and will now run its operations from New York.PE Week subscribers can read more in the protected Fund News section of www.PrivateEquityWeek.com.

Danger Inc., a Palo Alto, Calif.-based provider of end-to-end solutions for wireless carriers, today announced it has secured $35 million in Series D financing. The round included SOFTBANK Capital Partners and Meritech Capital Partners, new investors to Danger whose combined contribution represented approximately half of the investment. Existing investors, including Mobius Venture Capital, Redpoint Ventures and Venture Strategy Partners, contributed the remainder. Danger has now raised in excess of $77 million.

Rackable Systems Inc., a San Jose, Calif.-based provider of rack mount high-density server and storage solutions, announced today that it has secured $21 million from Parthenon Capital. The company also announced Parthenon’s backing of two industry veterans who will be responsible for driving the company’s next stage of growth. The executive appointments include Tom Barton, new president and CEO, formerly a member of the senior management team at Red Hat and Cygnus Solutions; and Todd Ford, CFO, who has previously worked at such firms as FCC and Raster Graphics.

Wily Technology Inc., a Burlingame, Calif.-based developer of performance management software for enterprise Java applications, has raised $15 million in its fourth round of venture capital financing. Led by late-stage technology firm Focus Ventures, the round also included commitments from Accel Partners and Greylock.

British Telecom (BT) announced that BTexact Technologies, its advanced research and technology business, has teamed up with Coller Capital and New Venture Partners (NVP) to create a new, independent corporate venturing partnership to be known as NVP Brightstar. NVP Brightstar will have the exclusive rights to create new start-up businesses with BTexact using BT’s extensive and developing intellectual property portfolio. It is expected to begin activities in March 2003 and will initially purchase the majority of the existing portfolio of technology ventures developed by BTexact’s corporate incubator, Brightstar. An office will be located in Ipswich, UK. Coller Capital will purchase a majority stake with BT retaining approximately 23% of NVP Brightstar. New Venture Partners will oversee and manage investment decisions for NVP Brightstar and provide funding for further new ventures. The total capital commitments of the parties is approximately $100 million.

Frazier & Co., a Seattle-based venture firm, plans to open a Silicon Valley office within the next four months, according to The Seattle Post-Intelligencer. The new outpost will be manned by Patrick Heron, a partner at Frazier focused on life sciences investing. The article also says that the firm plans to add at least one venture partner to join Herron, and a new venture partner in its Seattle headquarters.

Key3Media Group, a trade show group known for its ComDex events, filed for bankruptcy protection in Wilmington, Del. today. According to a story in the New York Times, the reorganization plan includes Thomas Weisel Capital Partners taking control of the company and providing $30 million in debtor-in-possession financing. Weisel Capital Partners would also assume $50 million in debt. The bankruptcy plan was okayed by the Key3Media board last Wednesday, and is subject to U.S. Bankruptcy Court approval.

Lots of controversy brewing over at Viventures, where it seems that some limited partners in the group’s second fund are trying to wrest control away from Vivendi Universal SA. The news, first reported in French paper Les Echos is being spearheaded by Belgian businessman Albert Fre’re, who wants to manage the fund himself.

The Financial News is reporting that Legal & General Ventures has closed its German office.

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