PE Week Wire — Friday 8/9

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Partners Group has held an initial closing of EURO 160 million for Partners Group Europe LP, which it plans to commit to 15-20 small and mid-cap European buyout funds. The first closing exceeds expectations and brings Switzerland-based Partners Group more than halfway to its overall EURO 300 million target. Investors in Partners Group’s latest fund include UBS Group, as well as a number of leading European pension funds, insurance companies and banks. Partners Group will typically make commitments to funds in the EURO 100 to 400 million size range, which will generally target buyouts of middle market companies valued at EURO 50-300 million. Up to 15% of the total pool of capital can be invested in secondary deals. In addition, up to 15% can be invested in co-investment opportunities alongside general partners in the fund.

PictureIQ Corp., a dynamic multimedia optimization company, today announced it has secured $6 million in private equity in the initial close of its series C funding. The funding round was led by major existing investors in the company, including Adobe Ventures, Digital Partners and Granite Ventures. The company will use the new capital to accelerate product development, expand sales and marketing efforts in key geographies such as Asia and Europe, and fund ongoing business operations.

Sucampo Pharmaceuticals Inc. (SPI) (formerly R-Tech Ueno USA Inc.) today announced that Fujisawa Pharmaceutical Co., Ltd., Orix Corporation and UFJ Capital Co., Ltd. purchased or agreed to purchase $8 million, $5 million and $3 million of SPI’s Series A Convertible Preferred Stock, respectively. The Fujisawa and Orix deals closed on July 31, 2002. The UFJ deal is expected to close by the end of August, subject to certain conditions. The investments mark Sucampo’s first equity financing with third-party institutional investors. According to company officials, Sucampo intends to use the net proceeds from the sale for development activities relating to drug compounds in its clinical development pipeline, including agents with gastrointestinal, ophthalmic and liver disease indications.

Artech, a French software vendor, is being funded with EURO 3 million to expand its business activities in Europe. In addition to lead investor Wellington Partners, French-based venture capitalist Partcom and LCF Rothschild are also participating in this second round of funding.

The Venture Plus Law Firm LLC officially launches August 8, 2002. Alabama now has its only “boutique” law firm dedicated exclusively to the technology industry. Initially, Venture Plus will represent early-stage tech companies located primarily in the southeastern U.S., incorporating the law firm model of many successful firms in mature tech markets that have been instrumental in the formation, growth and exit strategies of some of the most successful tech companies in the world. The firm’s experience includes venture capital financing, formation and founders’ issues, corporate and strategic partnerships, initial public offerings, mergers and acquisitions, equity incentives, and general corporate and securities matters as related to the tech industry.

Karl Miller and Kevin McConville today confirmed that they are in discussions with several sources of private equity and leveraged capital to invest in the US and European power and gas sector. Miller started his career on Wall Street, joined Enron in the early 1990’s and went on to hold executive positions at El Paso Energy, Electricity de France and PG&E. McConville started his career at Panhandle Eastern and has held senior executive positions at the Williams Companies and served as a Managing Director for Enron’s industrial practice worldwide.

The United Nations Foundation announced today a major round of grant making totaling $29 million to support UN efforts around the world. An additional $13 million has been awarded since January 2002, bringing the total to $43 million to-date this year. $4.35 million was awarded to support sustainable energy and climate change initiatives in China including grants that will create China’s first clean energy venture capital facility, support the Kyoto Protocol and establish cost effective energy conservation programs.

BVK, a German venture capital association, reports that German VC investments are expected to total EURO 3.5 billion ($3.41B) in 2002, compared to EURO 4.4 billion ($4.29B) in 2001.

The Phoenix Cos. Inc. second quarter 2002 GAAP result including after-tax operating losses of $19.4 million from: venture capital; net realized investment losses of $10.7 million, primarily attributable to impairments of debt securities, notably WorldCom; and a reserve of $21.8 million, after income taxes, primarily in connection with organizational and employment-related costs. This reserve includes the reserve announced on July 1, 2002.

Patni Computer Services, a Mumbai, India-based software services firm, has a agreed to a Rs 527 crore ($107M) private equity deal led by General Atlantic Partners. Other investors in the deal – worth 20.3% of the company – include Bank of New York and GE APC Technology Capital.
Eyetech Pharmaceuticals Inc., a private biotechnology company focused on the treatment of eye diseases, today announced the early completion of enrollment in two pivotal Phase III trials of Macugen™ for the treatment of exudative (wet) age-related macular degeneration (AMD), the leading cause of blindness among Americans over the age of 55. Eyetech enrolled 1,196 patients in the Company’s pivotal clinical trials for treating wet AMD, which constitute the largest clinical trial program for wet AMD enrolled to date. By reaching this milestone, the Company received $54.2 million from its Series C investors, representing the second installment of a total in excess of $108 million raised in July 2001.

Quorex Pharmaceuticals Inc. , a biopharmaceutical company using its proprietary drug discovery technologies to develop new classes of anti-infectives, today announced it raised an additional $10.6 million in an extension of its second round of financing. The new funds conclude the Series B round at a total of $30.6 million. All previous investors participated, including lead investor Prism Venture Partners, Johnson & Johnson Development Corporation, Tullis-Dickerson & Co., Inc., IngleWood Ventures, China Development Industrial Bank, and Pacific Growth Equities.

RFWaves ltd., a developer of short-range wireless solutions, announced today the completion of a funding round led by Sequoia Capital fund. RFWaves was founded in 1998 with a goal to provide low-cost, low-power solutions for consumer electronics markets. RFWaves’ technology enables wireless transfer rates of up to 1Mbps, providing solutions for wireless peripherals, headsets, earphones, toys, and many other consumer products as well as more complex applications of medicare and automation. RFWaves is offering a true alternative to other short-range wireless technologies at a significantly lower cost.

Orlando Sanchez is once again hoping to be mayor of Houston. After losing a runoff election in 2001, Sanchez joined up with venture firm Odessey Group.

Dow Jones Corporate Filings Alert reports that St. Paul Venture Capital IV LLC sold 667,454 shares of Lexar Media Inc.’s (LEXR) common stock in July, according to a Form 4 released Wednesday by the Securities and Exchange Commission. St. Paul Venture Capital sold the shares between July 24 and July 31 for prices from $3.92 to $4.34 a share. At the end of July, it directly owned 3,710,026 common shares. Lexar Media, Fremont, Calif., designs, develops and markets removable and reusable digital film in popular industry formats: CompactFlash, Memory Stick, SmartMedia and PC Cards. Shares of the company closed Wednesday at $3.30, down 14 cents.

Shareholders in Irish packaging company Jefferson Smurfit PLC yesterday approved a $3.7 billion takeover offer from Madison Dearborn Partners.

U.S. Bancorp Piper Jaffray served as exclusive financial advisor to NBC Acquisition Corp., parent company of Nebraska Book Company, in a sale of a minority interest in the company by Haas Wheat & Partners and other shareholders to Weston Presidio Capital. The transaction closed on August 2, 2002.



Thomson Venture Economics and the National Venture Capital Association (NVCA) announced the private equity performance results for Q1 2002, the latest data available. While short term results continue to be negative, they showed an increase for a second straight quarter, with a one-year return for venture capital partnerships of -24.4% as compared to -27.8% at the end of Q4 2001. This possibly indicates that the worst may have already passed and the slow climb to recovery has begun. For more on this story, pick up the most recent print edition of Private Equity Week.

BA Venture Partners today announced three new team members. Nicola Campbell, Ph.D, joins BA Venture Partners as a biotech principal, Grant Dollens joins as biotech associate, and John Cherniavsky joins as software associate. Prior to joining BA Venture Partners, Nicola served as Director at Burrill & Co., a life sciences merchant bank. Nicola brings both deep research and business experience from her time at Genentech where she was an Immunologist in the Research Department and later a business development manager. Grant Dollens served as a financial analyst with Deutsche Banc Alex Brown in the technology corporate finance group where he focused on the software and semiconductor industries. Grant earned a B.S.E in Biomedical Engineering from Duke University with a minor in Economics.

Photogen Technologies Inc. (Nasdaq: PHGN) has agreed to split off its photodynamic therapy and laser device business to five founding shareholders in exchange for all their common stock, which represents 52.9% of the company’s outstanding shares. Photogen will focus its resources on developing PH-50, its novel cardiovascular imaging agent designed to significantly improve images of the heart and vasculature obtained with computed tomography (CT) machines and N-1177 for use in lymphography.
The company has also signed a financing agreement to sell $16.25 million of common stock to a group of venture capital funds led by Mi3 LP of Wellesley MA and including Oxford Biosciences and New England Partners. The purchase price per share, expected to be $0.30, is based upon a $14 million technology valuation and fully diluted common stock. Under the terms of the agreement all of the company’s outstanding debt and the Series B preferred stock will be converted into common stock. In addition, Photogen plans to institute a 1 for 4 reverse split of its common stock.

Input/Output Inc.(NYSE: IO) announced that earlier today it repurchased all of the 40,000 outstanding shares of its Series B Convertible Preferred Stock and all of the 15,000 outstanding shares of its Series C Convertible Preferred Stock (the “Preferred Stock”) from the holder, SCF-IV LP, a Houston-based private equity fund specializing in oil service investments. In exchange for the Preferred Stock, IO has paid SCF $30 million in cash at closing, issued SCF a $31 million unsecured promissory note due May 7, 2004 (the “Note”) and granted SCF warrants to purchase 2,673,517 shares of IO common stock at $8.00 per share through August 5, 2005. The Note bears interest at 8 percent per annum until May 7, 2003, at which time the interest rate will increase to 13 percent. Immediately preceding the closing of this transaction, David C. Baldwin, the elected representative of the holder of the Preferred Stock, resigned from the company’s board of directors.

Inex Pharmaceuticals Corp. (TSX:”IEX”) and Protiva Biotherapeutics Inc. announced today that Protiva has closed the $5.6 million second tranche of a $14.5 million equity financing agreement with leading venture capitalists and other private investors. The first tranche of $8.9 million was COMPLETED in August of 2001. The funding proceeds have allowed Protiva to pursue its business objective of developing and commercializing novel products based on gene- delivered therapeutic proteins to fight cancer and inflammatory diseases.


CIBC World Markets, the investment and merchant banking arm of the Canadian Imperial Bank of Commerce (CIBC), announced today that it has reached an agreement with Accenture to acquire the company’s venture and investment portfolio. The portfolio consists of approximately 80 early and mid-stage technology companies, primarily in the software sector. The transaction is expected to close by the end of calendar year 2002 and is subject to transfer approvals from companies within the portfolio. Details of the transaction were not disclosed.

Accenture (NYSE: ACN) will retain a 5 percent stake in the portfolio. In addition, Accenture and CIBC World Markets plan to enter into an alliance intended to provide CIBC World Markets with access to Accenture’s expertise and knowledge of the technology sector while enabling Accenture to continue to build on its relationships with the portfolio companies.

CMGI Inc., which once boasted $3 billion in available VC funds, continued to see its brand name wiped off the map. The sinking Internet company yesterday acknowledged what everyone had known for over a year: that it could not afford a $114 million payout it had promised to the New England Patriots for a 14-year naming rights lease on the Super Bowl champs’ new stadium in Foxboro, Mass. Shaving giant Gillette Co. is now planning to pick up the tab.

MCA Solutions LLC, a Philadelphia-based provider of optimization solutions for the service supply chain, today announced they have received $4 million in first round funding from Longworth Venture Partners and Battery Ventures. The funding will enable MCA Solutions to expand its sales and marketing infrastructure, and accelerate expansion of the product suite. MCA Solutions also announced today that Longworth Venture Partners’ Paul Margolis and Battery Ventures’ Dave Tabors have joined the Company’s board of directors.

Trinity Convergence Inc., a developer of integrated VoIP (voice over IP) enabling software, today announced it has received $4.5 million in Series B Funding. Co-led by Core Capital Partners, Intersouth Partners and Mid-Atlantic Venture Funds, Trinity will use the capital to accelerate sales and marketing efforts. In addition, the company will continue technology development, including its flagship VeriCall(TM) software.

Stan Tims, who was laid off from his managing director and GP gig with TL Ventures last December, has turned back up as president and CEO of BetweenMarkets Inc., an enterprise software provider of value chain solutions. Tims will lead the organization as it focuses on developing the markets for its products that automate electronic trade agreements and manage orders and inventory between value chain participants, increasing customer revenue while reducing manufacturing and fulfillment costs.

Edgar Bronfman Jr. has been appointed to the board of directors of Fandango, the nation’s largest remote movie-ticketing company, it was announced today by Fandango, Inc. president and CEO Art Levitt. Bronfman is CEO of Lexa Partners LLC, a privately held management and venture capital group based in New York City. He also serves as Vivendi Universal’s vice chairman of the board of directors and co-chairman of the A&G Group Limited, the parent of Asprey and Garrard.

Digital Insurance Inc., an Atlanta-based national employee benefits brokerage company specifically focused on the small group market, announced today the completion of a $1.5 million funding with current investor Internet Healthcare Group.

Symblaze Inc., a Los Angeles-based provider of interactive marketing solutions, today announced that a private investor has made a sizeable equity investment in the company. Symblaze intends to use the additional capital to support its dynamic growth strategy and allow for further expansion of US and European operations. In conjunction with the investment deal, Symblaze has appointed Dario Fasciano, former senior vice president and managing director of Europe and Asia Pacific, to chief executive officer.

Blackboard Inc. has once again bucked private market trends by releasing quarterly earnings figures. In the second quarter ended June 30, 2002, Blackboard’s total revenues were $16.4 million, representing 45% growth from second quarter 2001 revenues of $11.3 million. The second quarter performance represents 12% growth over first quarter 2002 revenues of $14.7 million. Blackboard’s second quarter 2002 product revenue accounted for approximately $14.1 million or 86% of total revenue, while services revenue was $2.3 million, or 14% of total revenue. Blackboard ended the second quarter 2002 with $12.7 million of cash and cash equivalents.

Blackboard strategic investors include AOL-Time Warner (NYSE: AOL), Dell Computer Corp. (Nasdaq: DELL), Kaplan Ventures, Microsoft Corp. (Nasdaq: MSFT), and Pearson Education. Blackboard’s financial investors include The Aurora Funds, The Carlyle Group, Dain Rauscher, Edelson Technology Partners, Internet Capital Group (Nasdaq: ICGE), Merrill Lynch (NYSE: ML), Morgan Keegan, Novak Biddle and Oak Hill Capital Partners.

Attensity Corp., a provider of text extraction solutions, announced today a $3.4 million Series A round of financing that is being led by In-Q-Tel, Inc., a private not-for-profit venture group funded by the U.S. Central Intelligence Agency. Other institutional investors are participating in the round, including Germany-based Triangle Venture Capital Group. This round will bring the total amount of capital raised by Attensity to more than $6M.

Interactive Technology Holdings Ltd. today announced that Advent International has co-led a $10 million equity purchase and financing with DBS Private Equity, the direct investment arm of DBS Bank. Founded in 1992 and headquartered in Hong Kong, Interactive Technology provides unique and innovative telecom network software solutions for fixed line and wireless operators, and Contact Center software solutions for enterprises. Customers of Interactive Technology include prominent companies in Asia such as Hutchison Telecom, Smartone, PCCW, Singapore Telecom and M1.

Inmedius, a Pittsburgh-based provider of knowledge software solutions for distributed maintenance environments, has received a $5 million capital infusion from a group of private investors led by Stonewood Capital Management Inc.

Arbor Networks Inc., a leading provider of network availability solutions, today announced that it has raised $22 million in Series B financing from top-tier venture capital firms and strategic investors. Led by Thomas Weisel Venture Partners, the round includes Series A investors Battery Ventures and Cisco Systems, new strategic investors Comcast Interactive Capital and SAIC Venture Capital Corporation, and new venture investors Ironside Ventures and EDF Ventures. With this new round of funding, Arbor Networks has raised a total of $33 million. David Crowder, co-director of Thomas Weisel Venture Partners, will join Arbor’s Board of Directors. Subscribers of PE Week can read more on this funding and the network availability sector by clicking here.

CommVerge Solutions (Asia) Ltd., a Hong Kong-based integrator of technology and business solutions for Asian telecommunications service providers, recently announced the closing of its third round of venture financing for US$45 million. Along with the Company’s existing investors, Silicon Valley-based Oak Investment Partners, Worldview Technology Partners, Pacific Technology & Investment Group (P.T.I. Group) and Wireless Facilities Inc (WFI), five new investors are added to the list, namely: Meritech Capital, Walden International, Sumitomo Corporation, Newton Technology Partners, and Presidio Corporation. The Company was also successful in bringing in the Applied Research Council of the Hong Kong Government as a co-investor of the Walden Group.


Fieldglass Inc., has completed a $12-million third-round of funding, with two new investors participating in the round, as well as all three previous institutional investors. Fieldglass is a leading human capital management (HCM) software technology and services company offering InSite, an enterprise solution for services procurement, including contract labor and consulting firms. New investor StarVest Partners LP led the round. Also participating were newcomer HLM Management Co. of Boston, plus existing investors BlueStream Ventures, Prism Opportunity Fund and RBC Capital Markets.

Actuality Systems Inc., a pioneer in the development of spatial 3D visualization technology, has closed a Series B investment led by Navigator Technology Ventures.

U.S. Industries Inc. (NYSE:USI) announced today that it has signed an agreement relating to the sale of SiTeco, its European lighting division, to funds advised by JPMorgan Partners, the private equity arm of JPMorgan Chase & Co.. Total consideration is approximately EUR120 million in cash. The sale, which is subject to customary closing conditions, is expected to close by August 31, 2002. SiTeco, based in Traunreut, Germany, manufactures and distributes lighting systems in Germany, Austria, Slovenia and other countries.

GlassHouse Technology has joined the ranks of other data storage companies and collected $6.4 million in venture capital funding. The Series A deal brings the Framingham, Mass.-based company’s total capital to $8 million. It had completed a seed round of $1.5 million around this time last year when it was founded. Subscribers of PE Week can read more on this story by clicking here.

Flamenco Networks, a leading provider of Web services networking solutions, today announced that it has raised an additional $7.4 million in a Series B round of financing. Institutional investors include Flagship Ventures (OneLiberty, AGTC, NewcoGen), one of the country’s leading venture capital firms focused on life science, information and communication technology start-ups. Flagship Ventures is joined in this round by Atlanta-based Noro-Moseley Partners and Cordova Ventures, both of whom provided part of Flamenco’s initial funding of $6.4 million.

Questor Management Company LLC and JPMorgan Partners announced today that they have reached a definitive agreement under which a Questor Partners fund; JPMorgan Partners, the private equity arm of J.P. Morgan Chase & Co.; Private Equity Partners; and funds managed by a subsidiary of American International Group will acquire the aluminum automotive components business of Fiat S.p.A.’s Teksid unit. The transaction, which was announced simultaneously by Fiat in Turin, Italy, requires regulatory approval from the European Union, the U.S. and certain other countries and is expected to close by late September. Questor said that the buyers would use a combination of cash and bank loans to finance the deal.

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