PE Week Wire — Friday 6/27

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Rigel Pharmaceuticals Inc. (Nasdaq: RIGLD ) has received $46 million in a private placement of common stock and warrants from a quartet of life sciences-focused venture capital firms. The PIPE deal was led by MPM Capital, and also included Frazier Healthcare, Alta Partners and HBM BioVentures. As part of the deal, Nicholas Simon and Dennis Henner of MPM Capital have both joined Rigel’s board of directors. The move comes just days after the company announced a 1-for-9 reverse stock split. At market close yesterday, Rigel was trading at $8.59 per share.

Sorrento Networks Corp. (Nasdaq: FIBR) has agreed to acquire LuxN Inc., a Sunnyvale, Calif.-based maker of intelligent optical access solutions for the network edge. Price details were not disclosed. LuxN had once been valued at more than $550 million by its venture capital backers, but that amount fell during a $34.5 million Series A-1 recap last year. Only those Series A-1 investors will receive any return on their investment, which is good news for firms like New Enterprise Associates and Wheatley Partners. Other firms that helped invest another $120 million into LuxN will be left with nothing.

Hydro Med Sciences Inc., a Cranbury, N.J.-based specialty pharmaceuticals company, has raised $12 million in Series B funding. Corporate Opportunities Funds led the deal, and was joined by fellow return backer Wheatley Partners and strategic investor Paladin Labs Inc. The company now has raised a total of $19 million. In related news, Hydro Med Sciences announced that Phase III clinical trials of its new prostate cancer drug have been encouraging, and that it will likely file a New Dug Application with the FDA in the next few months.

PAI Partners has sold Michel Thierry to a consortium controlled by company management for an undisclosed amount. PAI originally acquired the European company – which produces fabrics for car seats and door panels – in March of 2000 in a public-to-private transaction. Michel Thierry reported 2002 revenue of €300 million, and had 750 employees.

Ketera Technologies, a Mountain View, Calif.-based provider of “on demand” spend management solutions, has raised $10 million in second-round funding from Kleiner, Perkins, Caufield & Byers, Foundation Capital and company founder American Express (NYSE: AMEX).

The Elder-Beerman Stores Corp. (Nasdaq: EBSC) has agreed to be acquired by Wright Holdings Inc., a company formed by Minneapolis private equity firm Goldner Hawn Johnson & Morrison Inc.. The merger agreement provides that the shareholders of Elder-Beerman will receive $6.00 per share in cash for their common shares, which represents a 104 % premium over the average closing price of the company’s common shares for the thirty days prior to May 16, 2003.

Pelago Networks Inc., a Malborough, Mass.-based telecom equipment and software maker, has gone out of business. The company received $49 million over two rounds of venture capital funding, from such firms as Advent International, Bessemer Ventures, Charles River Ventures, Brooktrout Technology, Columbia Capital and Dominion Ventures.

Omniva Policy Systems, a San Francisco-based provider of secure messaging policy solutions, has raised $4 million in new venture funding. The deal was led by Venture Strategy Partners, with participation by existing investors Kleiner Perkins Caufield & Byers and Red Rock Ventures.

Orative Corp., a Menlo Park, Calif.-based provider of mobile phone technology, has raised $6 million in Series A funding from Diamondhead Ventures and Mayfield, which has incubated Orative since late last year.

Richard Durham has been named a partner at Peterson Capital, a Salt Lake City-based middle-market buyout firm. Durham most recently served as chairman and CEO of Pliant Corp. In related news, Durham and Joel Peterson (Peterson Capital partner and founder) will provide a total of $30 million in new commitments to the firm’s second fund.

Michigan Governor Jennifer Granholm said yesterday that she supports the creation of a fund-of-funds that would invest in Michigan-based venture capital firms that focus on local early-stage and seed-stage companies. The plan would make tax credits available to assure repayment of investments by those who invest in the new fund-of-funds.

Winston “Win” Churchill, managing partner of SCP Private Equity Partners, has received the first-ever Citizen of the Year award from the Children’s Scholarship Fund in Philadelphia.

Bloomberg is reporting that Christopher Spencer has left his partnership post with New York-based buyout shop Clayton, Dubilier & Rice Inc.. No reason was given for the move. Spencer had been hired just seven months ago to help head up European deals out of Clayton Dubilier’s London office. He previously worked at Candover Investments.

NEWS FROM WEDNESDAY 6/25

John W. Childs and Robert Maginn Jr. recently admitted to having violated state campaign finance rules during last fall’s Massachusetts gubernatorial race. Childs, who is president of private equity firm J.W. Childs & Associates, and Maginn, a former partner at Bain & Co., each spent $25,000 on radio advertisements supporting the candidacy of eventual winner (and former Bain & Co. chief) Mitt Romney. The pair first claimed that the money came from a larger fund-raising organization, but eventually admitted that the cash actually came from their own pockets. Each man was fined $500. Romney has denied any knowledge of the situation, and the state Office of Campaign and Political Finance says that there is no evidence Romney or his campaign knew who paid for the ads.

CopperCom Inc., a Boca Raton, Fla.-based maker of telecom equipment, has filed for Chapter 11 bankruptcy protection. The move is part of a restructuring that will eventually end with its already-announced sale to Heico Co. for an undisclosed amount. As part of the Heico agreement, CopperCom replaced the venture capitalists on its board with Heico executives, and also received $7.5 million for working capital and creditor payment. CopperCom raised a total of $200 million in venture capital since its 1997 founding, including a $65 million round in mid-2001 at a post-money valuation of $317 million. Investors included Advanced Technology Ventures, Apax Partners, Cross Atlantic Capital Partners, Focus Ventures, Granite Ventures, Morgan Stanley Venture Partners, Pequot Capital and Technology Crossover Ventures.

Pantero Corp., a Waltham, Mass.-based provider of data semantic integration technology, has raised $4 million in Series A funding. Investors included Partech International, Draper Fisher Jurvetson and its affiliate fund, Draper Fisher Jurvetson Gotham Ventures.

System Detection Inc., a New York-based developer of IT security solutions that involve data mining and machine learning, has raised $4.5 million in Series B funding. Investors included Novak Biddle Venture Partners, Metropolitan Venture Partners and Columbia Science and Technology Ventures.

Richard Marin has been named chairman and CEO of Bear Stearns Asset Management. Marin spent 23 years with Bankers Trust, subsequently acquired by Deutsche Bank. After the merger, Marin ran the $325 billion Deutsche Asset Management Inc. as its chairman. Most recently, Marin left Deutsche to co-found and run an early-stage venture capital fund named Beehive Ventures, which was based in New York and focused on the financial services sector.

The Shansby Group has made an undisclosed investment into Harry’s Fresh Foods, a Portland, Ore.-based producer of refrigerated foods sold in bioth the grocery and foodservices markets.

Joseph Parzick has joined New York-based private equity shop The Cypress Group as a managing director and member of the firm’s investment committee. He most recently served as managing director in the financial sponsors group of Morgan Stanley’s investment banking division.

Cloakware Corp., an Ottawa-based producer of application security products, has raised $4.2 million in second round funding. TD Capital Technology Ventures led deal, and was joined by Covington Capital and Intel Capital.

The Hartford Courant is reporting that the State of Connecticut is considering a plan to remove a total of $15 million over the next two years from Connecticut Innovations, a quasi-public investment organization devoted to investing in local early-stage companies. The move is being considered for budgetary reasons.

Dow Jones is reporting that The Virginia Retirement System has decided to invest $1 billion into hedge funds. The rest of the $35 billion pension plan’s revised allocation strategy includes 46% to domestic equities, 7% to international equities, 22% to fixed income, 7% to private equity and 5% to real estate.

NEWS FROM TUESDAY 6/24

Orqis Medical Corp., a Lake Forrest, Calif.-based developer of minimally-invasive cardiac recovery devices, has raised $25 million in Series C funding. HealthCare Ventures led the round, alongside fellow first-time investors Care Capital and Rho Ventures. Return backers included Domain Associates, Johnson & Johnson Development Corp. and Temasek Holdings,. The company now has raised around $35 million, including a $5.15 million Series B deal in 2001 at a post-money valuation of around $22.5 million.

OuterBay, a Campbell, Calif.-based provider of application data management software, has raised $8 million in new venture funding. Mayfield led the deal, and was joined by return backers BA Venture Partners, Leapfrog Ventures and Redpoint Ventures. OuterBay has received a total of $27 million in funding to date, including a $9 million second round deal last summer at a post-money valuation of around $45 million.

MobileSys Inc., a Mountain View, Calif.-based provider of short message services (SMS) to corporations, has raised $8 million in new venture funding led by existing investor Norwest Venture Partners. Other returning participants included Novus Ventures, Duff Ackerman Goodrich and BA Venture Partners. The company now has raised over $54 million since its 1999 founding, including a $36 million round in late 2000 at a post-money valuation of approximately $300 million. In related news, MobileSys has acquired mBlox Ltd., a London-based SMS services provider.

Nautic Partners has led a $90 million equity capital commitment to GCA Services Group Inc., a new West Conshohocken, Penn.-based company focused on janitorial and facilities management services. GCA is run by Graeme Crothall, who has successfully grown and sold three businesses in the facilities services industry since 1969. His most recent effort was Crothall Services Group, which was acquired by Compass Group last year.

Appilog Inc., a New York-based enterprise software developer, has raised $6.5 million in new venture funding led by Cedar Fund. Other participants included return backers Poalim Ventures and Delta Ventures. The company – which featured R&D facilities in Israel – raised $4 million in Series A funding back in 2001 at a post-money valuation of $10 million.

Schlumberger Ltd. (NYSE:SLB) has agreed to sell its NPTest unit for $220 million to a syndicate led by Francisco Partners and Shah Management. NPTest designs and manufactures advanced semiconductor test and diagnostic equipment.

Jim Maikranz has been named a special advisor to Bain Capital Ventures. He has previously served as senior vice president of sales for both SAP and J.D. Edwards.

Performaworks Inc., a Burlington, Mass.-based developer of performance management software, has raised $13 million in Series B funding. Investors included Deson Ventures and return backer Pequot Ventures. The company now has raised a total of $35 million.

Tera Systems Inc., a Campbell, Calif.-based provider of front-end RTL design synthesis for IC developers, has raised $11 million in new funding led by Sequoia Capital.
Ammasso Inc., a Boston-based developer of Ethernet-based networking products for clustered computing, has raised $10 million in Series A funding. Investors included Prism Venture Partners, CDP Capital – Technology Ventures, Inflection Point Ventures and Velocity Equity Partners.

NXTV Inc., a Los Angeles-based provider of digital interactive television services to the hotel market, has closed an undisclosed round of equity financing from the existing backer Pivotal Group. In addition, NXTV has secured a commitment from the Pivotal Group to provide follow-on capital investments to finance the company’s long-term business expansion strategy.

KaloBios, a Mountain View, Calif.-based developer of therapeutic antibodies, has raised $4 million in seed funding from Alloy Ventures and Sofinnova Ventures.

Vsecure Technologies (US) Inc., a New Orleans-based developer of network security products, has raised $3.4 million in new funding led by WestAM.

Infravio Inc., a Cupertino, Calif.-based provider of Web services integration software, has raised $6.2 million in second round funding from, Walden International and Crystal Ventures.
NEWS FROM MONDAY 6/23

Food.com (a.k.a. Geocomm Systems) will cease operations later this week, despite having raised over $120 million in venture capital. The San Francisco-based company’s last known funding round came in early 2000, when it secured $80 million at a whopping post-money valuation of $430 million. Investors in that deal included Accel Partners, Blockbuster, Clear Channel Communications, Focus Ventures, Kraft Foods, Liberty Media Group, Red Coat, McDonalds, TV Guide and Tribune Ventures.

Visto Corp., a Redwood City, Calif.-based provider of mobile access solutions, has extended its recent round of private equity funding with an additional $20.1 million. This brings the total amount raised in the last 90 days to $50.4 million. The deal was co-led by new investor VantagePoint Venture Partners, and joined by return backers Oak Investment Partners and the board of trustees of the Leland Stanford Junior University. Visto had closed the initial $30 million tranche back in March at a post-money valuation of just $30.1 million.

Vivato, a San Francisco-based Wi-Fi infrastructure company, has raised $44.5 million in Series C funding. Advanced Technology Ventures led the deal, and was joined by return backers Leapfrog Ventures, U.S. Venture Partners, Walden International and the Intel Communications Fund.

BigBand Networks Inc., a Redwood City, Calif.-based provider of broadband multimedia service routers, has raised $15 million in Series D funding. Meritech Capital Partners led the deal, and was joined by return backers AOL Time Warner Ventures, Charles River Ventures, Evergreen Investments, Pilot House Ventures and Redpoint Ventures. The company now has raised around $75 million since its 2001 founding.

Cradle Technologies Inc., a Mountain View, Calif.-based fabless semiconductor company, has raised $21.5 million in Series B-1 funding. New investors in the down-round included NeoCarta Ventures, Prodea, and East Gate Capital, while return backers included Smart Technology Ventures, Charter Ventures, Mingly Capital, and Winston Partners and others.

Stephen Skoczylas has been named a managing director with Geller & Co., a New York-based provider of administrative, finance, accounting and tax outsourcing solutions to the entire private equity community. He most recently served as CFO of both the Global and Latin American funds at JPMorgan Partners.

 

Bellwave Co. Ltd., a South Korean developer of mobile handset and data module designs, has raised $13 million from the Softbank Asia Infrastructure Fund and Softbank Ventures Korea. Softbank now holds a 16.64% equity stake in Bellwave, which also features minority owners like Texas Instruments and Citicorp.

Pantheon Ventures has held a $313 million final close on a fund-of-funds vehicle named Pantheon USA Fund V. It will invest pro rata alongside other Pantheon clients and funds-of-funds over a three-year investment period.

The Providence Service Corp., a Tucson, Ariz.-based provider of social and family counseling services, has filed for a $60 million initial public offering (IPO). Prior to the offering, Providence Service is 40.3% owned by Eos Partners, with other minority shareholders including Harbinger Mezzanine Partners (5.7%) and Petra Mezzanine Fund (4.2%).

Celartem Technology USA Inc. has agreed to pay $11.25 million in cash to acquire LizardTech Inc., a Seattle-based software developer focused on digital media. LizardTech had raised around $50 million in venture capital since its 1992 founding, including a deal in late 2000 that valued the company at nearly $120 million. Its most recent round came last year, and included a post-money mark of just around $18 million. Investors included Digital Partners, Encompass Ventures, Kirland Venture Capital, Maveron, Oak Investment Partners, Seapoint Ventures and Summit Partners.

Composite Software Inc. came out of stealth mode today, and announced that it has raised $5.2 million in venture capital from Palomar Ventures, Apax Partners, Clearstone Venture Partners and Dot Edu Ventures. The San Mateo, Calif.-based provider of enterprise information integration solutions received a pre-money valuation of around $4 million. In related news, Composite Software named former webMethods CTO Jim Green as its new CEO.

Reuters is reporting that Worth Magazine has been acquired out of bankruptcy for $2.4 million by CurtCo Media, a $100 million media acquisition platform launched earlier this year by Westin Presidio Capital Management and TD Capital Communications Partners.

PrivateEquityCentral.net is reporting that Benchmark Capital has agreed to take Irish electronics payment company Alphyra private in an €88.5 million deal. The €53.5 million debt tranche is being provided by Bank of Scotland Corporate Banking Group and IIB Bank.

eFinancialNews.com is reporting that Sofia Ericsson has joined A-P Fondon 1, a Swedish investment bank where she will be in charge of alternative investments. She most recently served as a vice president at Lazard.

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