PE Week Wire — Friday, December 17

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Friday Feedback

The sun is shining, the trade deficit is at an all-time high and none of Trump’s fired apprentice candidates took their live TV opportunity to chide The Ego on his recent casino bankruptcy. In other words, it’s time for Friday Feedback.

First up are some comments about the Testa Hurwitz situation, which I said was being needlessly exacerbated by the law firm’s insistence that ten defecting partners stay until the end of March 2005. Regular respondent Zach writes: “You are naive in your analysis of the Testa situation. They are enforcing the time limit precisely to allow them to address client needs without competition from the departing people. That is the way the world works when you are in competition with people you previously worked with. You do whatever it takes to reduce their ability to compete. Don’t be so idealistic and silly. If Goldman Sachs were losing their top 5 M&A bankers [to a new firm]… but Goldman had a non-compete for 12 months, wouldn’t they enforce it?” James disagrees (with Zach, not with me): “You are spot-on about how shortsighted Testa is being. They might temporarily slow down their competitors, but the long-term effect could be chilling on Testa’s ability to recruit new ! attorneys or to keep their associates.”

Michael writes about my analysis of the asset reallocation at CalPERS: “A bit of a leap to go from ‘lowering our allocation to private equity by 1%’ to directly tying the reduction to future plans to get shut out of future funds as a result of transparency, don’t you think?If there is anything but assertion in your statement, which funds does that 1% assume that they are getting shut out of?Don’t get me wrong, I’m with you in the disclosure issue of more transparency leading to fewer funds willing to take your money, but to jump to a 1% reduction directly because of that issue is a stretch. Isn’t it just as likely that with as much invested in private equity as they have, they are getting worried about. concentrated risk because they are an LP in funds that jointly do a deal (i.e. if they had been an LP in the in TH Lee and Texas Pacific funds that purchased 25% of FNIS Equity).”

Lots of interesting points there Michael. If I implied a direct 1-to-1 correlation, then you are correct in saying that I overstated the case. I believe that the disclosure issue was a factor in the decision, but certainly not the only factor, or even perhaps the driving one. More of a compilation of issues, as you suggest. Particularly poignant with the TH Lee/TPG example, since CalPERS is, indeed, an LP with both firms.

Finally, the vast majority of email this week concerned the final section of Tuesday’s column, which discussed my disgust with President Bush’s awarding the Medal of Freedom to three utterly undeserving candidates. Most respondants agreed with me, but I’ll simply provide a point/counterpoint. John writes: “If I had earlier been awarded such a medal, now would be the time to give it back.This reminds me of the Politburo sitting around in Moscow awarding each other Orders of Lenin and Red Banner medals.” Joel, however, submits: “These kind of comments are offensive to me. You as a journalist (just like me as a VC) don’t really have any idea what these people have done for the Iraq effort. Maybe they are truly undeserving, maybe not. Glibly slamming them as undeserving is a gross misuse of the power of the pen.”

And with that, I wish you all a pleasant weekend.


Siebel Systems Inc. (Nasdaq: SEBL) has agreed to acquire Edocs Inc., a Natick, Mass.-based provider of e-billing and customer self-service software solutions. Under terms of the transaction, Siebel will make an initial cash payment of $115 million, with additional payments to be made based on certain revenue and contractual milestones. The deal is expected to close early next quarter. Edocs has raised over $85 million in VC funding since its 1997 inception, including a $45 million infusion in 2000 at a post-money valuation of approximately $285 million. Shareholders include Charles River Ventures, Focus Ventures, Globespan Capital Partners, Goldman Sachs and Sigma Partners.

The Blackstone Group has made several changes in its senior management structure: Stephen Swartzman will become firm chairman and maintain his CEO role, while turning over his president duties to Tony James, who previously served as vice chairman. Peter Peterson, also a co-founder and former firm chairman, has been named to the newly-created post of senior chairman. All of these changes take effect on January 1, 2005.

ObjectVideo Inc., a Reston, Va.-based provider of video surveillance software, has raised $11 million in Series C funding. Novak Biddle Venture Partners led the deal, and was joined by fellow return backers ABS Ventures, Updata Venture Partners and CMGI @Ventures. New investors included several individuals from General Atlantic Partners, plus Washington-area businessmen Rick Kay, Ted Leonsis, Jeong Kim, Jim Kimsey and Mark Ein. In other company news, ObjectVideo added three new board members: Jack Kemp, former GOP vice presidential candidate; Mario Morino, special partner with General Atlantic Partners; and Scott Beattie, chairman and CEO of Elizabeth Arden Inc.

Escend Inc., a Mountain View, Calif.-based provider of tracking software for semiconductor and electronic component manufacturers, has raised $3 million in Series D funding from Novus Ventures and NIF Ventures.

Santhera Pharmaceuticals AG, a Liestal, Switzerland-based drug development company, has raised 7 million euros in additional first-round funding, bringing the deal total to 14 million euros. Investors on the second tranche included NGN Capital Altana Innovationsfond GmbH and Heidelberg Innovation. The company has raised a total of 27 million euros in 2004, including capital secured by predecessor organizations Graffinity Pharmaceuticals AG and MyoContract AG.

Virtual Expert Clinics Inc., a Fredericton, New Brunswick-based provider of Internet-based solutions for supporting therapeutic services, has raised Cdn$1.25 million in funding from The New Brunswick Innovation Foundation and the Business Development Bank of Canada.

JPMorgan Partners has agreed to acquire PQ Corp., a Valley Forge, Pa.-based chemicals and engineered glass materials company. No financial terms were disclosed for the deal, which is expected to close next quarter.

The Shansby Group has completed its $130 million sale of Irvine, Calif.-based Mauna Loa Macadamia Nut Corp. to Hershey Foods Corp. (NYSE: HSY). The deal was first announced last month.

Genstar Capital and Nautic Partners have launched a new population health management company named AXIA Health Management. The company is being formed in partnership with health management industry veteran Ben Lytle, and already has acquired HealthCare Dimensions.

Castanea Partners and Dorset Capital have teamed up to recapitalize Hanna Andersson, a Portland, Ore.-based provider of children’s apparel and accessories. No financial terms were disclosed.

The Riverside Co. has acquired FLA Orthopedics Inc., a Miramar, Fla.-based maker of orthopedic braces and supports. No pricing details were disclosed for the deal, which included senior debt financing from Fifth Third Bank and subordinated debt from CID Mezzanine Capital.

Ascend Media LLC, a Shawnee Mission, Kansas-based media acquisition platform, has agreed to acquire Medical World Communications, a Monroe Township, N.J.-based publisher of 50 healthcare and b-to-b magazines and journals. No financial terms were disclosed. Ascend Media is owned by JPMorgan Partners and Veronis Suhler Stevenson, while Medical World Communications is controlled by Great Hill Partners.

WageWorks Inc., a San Mateo, Calif.-based provider of tax-advantaged spending accounts, has acquired all of the outstanding shares of FlexBen Corp., a Troy, Mich.-based employee benefits administration firm. No financial terms were disclosed. WageWorks is a portfolio company of VantagePoint Venture Partners.

SYS Technologies Inc. (OTC BB: SYYS) has acquired the assets of Xsilogy Inc., a San Diego-based provider of low-cost wireless sensor modules, infrastructure products and software for creating, deploying and managing large machine-to-machine networks in industrial applications. No financial terms were disclosed. Xsilogy counts Kleiner Perkins Caufield & Byers and EarlyBird Venture Capital among its shareholders, following its 2003 acquisition of Graviton Inc. www.systechnologies

Vistar Corp. and Roma Food Enterprises Inc. have agreed to merge at the end of January 2005. The combined food-service distribution company will feature 25 facilities across America. No financial terms of the merger were disclosed. Vistar is owned by company management and Wellspring Capital Partners.

Colibrys SA, a Neuchatel, Switzerland-based MEMS company, has acquired the Applied MEMS subsidiary of Input/Output Inc. (NYSE: IO) in an all-stock transaction. No price terms were disclosed. Colibrys has raised VC funding from firms like Banexi Ventures and Intel Capital.

Arbinet-thexchange Inc., a New Brunswick, N.J.-based operator of an electronic market for trading, routing and settling communications capacity, has priced over 6.53 million common shares at $17.50 per share ($above $14-$16 offering range), for a total IPO take of approximately $114 million. It will trade on the Nasdaq under ticker symbol ARBX. The company raised over $120 million in VC funding since its 1997 inception, from groups like ComVentures, JPMorgan Partners, EnerTech Capital Partners and BancBoston Ventures.

Rural Lec Acquisition LLC (a.k.a. Otelco), an Oneonta, Ala.-based wireline telephone services provider in several rural Alabama and Missouri communities, has priced over 8.65 million income deposit securities (IDS) at $15.20 per IDS (bottom of its $15.20-$16.80 offering range), for a total IPO take of approximately $131.6 million. It is the third successful IDS offering of the year. Otelco will trade on the AMEX under ticker symbol OTT, and had raised private equity funding from shareholders like Seaport Capital, CEA Capital and BancBoston Ventures.

Applied Materials Inc. (Nasdaq: AMAT) said in a regulatory filing that it has decided to shutter its venture capital unit, Applied Materials Ventures.

Advent Venture Partners has held a GBP 128 million (approx. $250 million) first close on its fourth fund. Limited partners include Access Capital Partners, the European Investment Fund, Pantheon Ventures clients, Westport Private Equity, Alpinvest Partners and Swiss Re. The overall fund target is GBP 155 million.

Scott Faris has joined Orlando, Fla.-based MetaTech Ventures as a managing director. He previously served as chairman and CEO of Waveguide Solutions Inc., a Charlotte, N.C.-based manufacturer planar light wave components and solid state lighting components.

Pacific Corporate Group has hired Craig White away from Callan Associates, according to White had been a vice president in the private markets consulting group of Callan.

David Park is leaving his partnership position with Paul Capital Partners, according to

David Levin has been named to succeed Clive Hollick as CEO of publicly-traded United Business Media PLC, effective April 5, 2005. Levin currently serves as CEO of Symbian Ltd., and once was an investor with the VC wing of Apax Partners.

Robert Dickey has joined Locus Pharmaceuticals Inc. as vice president of finance and CFO. He previously served as a managing director of corporate finance with Legg Mason Wood Walker.

Larry Bock has joined the board of FEI Company (Nasdaq: FEIC). Bock currently served a executive chairman of Nanosys Inc., and is a general partner with CW Group.

Rachel Selisker, a managing director of Thompson Clive & Partners, has joined the board of NPS Pharmaceuticals Inc. (Nasdaq: NPSP).

   Thursday, December 16

A Time to Shill

Greetings from the land of technical difficulties, where computer monitors fail and email templates are overridden with little red X’s where images should be. Anyway, the latest issue of Venture Capital Journal is now online, with a great cover story on the maturation of the Voice-over-IP market. Get a free preview here. I’ve also posted two complete articles: An viewpoint from regular contributors George Hoyem and Bart Schachter of Blueprint Ventures about outsourcing to Oregon, and a Q&A with once-and-not future SBIC fund manager Bob Marshall. To access the whole issue online (plus get the glossy print version), you’ll need to subscribe.

Also, please remember to submit your one-line 2005 predictions. We need them by the end of business today.


CVC Capital Partners has won the auction for CSM NV‘s confectionary business, with a provisional takeover price of 850 million euros (approx. $1.13 billion). The deal is expected to close next quarter. Other bidders are reported to have included Nordic Capital, PAI Partners and 3i Group (which pulled out late in the process).

Atlas Venture has sold its positions in six portfolio companies to Omega Fund, a newly-formed direct secondaries firm focused on the healthcare market. No financial terms were disclosed for the deal, which includes Atlas positions in Cropdesign NV, DeveloGen AG, Entomed SA, Micromet AG, Nitromed Inc. (Nasdaq: NTMD) and VascA Inc.

American Securities Capital Partners, a New York-based buyout firm, has closed its fourth fund with $1 billion in limited partner commitments. Approximately half of the commitments came from wealthy families, individuals and related entities. The previous American Securities Capital Partners fund closed in July 2001 with $650 million.

Optasite Inc., a Worcester, Mass.-based owner, operator and developer of wireless communications tower sites, has raised $25 million in Series B funding. Return backers included Centennial Ventures, Columbia Capital and Highland Capital Partners. The company also announced that it has completed a $15 million credit facility with Comerica Bank.

Splunk Technology, a Palo Alto, Calif.-based developer of IT infrastructure management solutions, has raised $5 million venture capital funding from August Capital and Sevin Rosen Funds.

TenXc Wireless Inc., an Ottawa-based provider of radio frequency solutions for mobile wireless networks, has raised US$13.9 million in Series A funding. VenGrowth Capital Partners and JK&B Capital co-led the round , and were joined by seed-stage backers Venture Coaches/Skypoint Capital and BDC Venture Capital.

Renutra Natural Health Products, a Watertown, S.D.-based provider of natural health supplements, has received an undisclosed amount of VC funding from Bluestem Capital Co.

ZyStor Therapeutics Inc., a Milwaukee-based developer of enzyme replacement therapies for the treatment of lysosomal storage diseases, has held an $8.5 million first close on its first round of VC funding. Mason Wells and Venture Investors led the deal, and were joined by Prolog Ventures, State of Wisconsin Investment Board, Hexagon Investments, Apjohn Ventures and Stonehenge Capital. Concurrent with this financing, ZyStor acquired proprietary technology, known as “glycosylation independent lysosomal targeting”, from Symbiontics Inc.

Carlyle/Riverstone Global Energy & Power Fund II has agreed to invest $75 million in exchange for a 30% ownership interest in SemGroup LP, a Tulsa, Ok.-based provider of midstream services to the North American energy market. The deal is expected to close in the first quarter of 2005.

RoundTable Healthcare Partners has completed a leveraged recapitalization of portfolio company American Medical Instruments Holdings Inc. The deal consisted solely of new senior debt and enabled AMIH to prepay its higher cost subordinated debt. As a result of the recap, a substantial dividend was paid to AMIH’s shareholders.

The Riverside Co. has acquired Justrite Manufacturing Co., a Des Plaines, Ill.-based maker of storage products that help companies prevent catastrophic events caused by fire or the spillage of hazardous materials. The selling party was Federal Signal Corp. (NYSE: FSS), with financing provided by GE Capital, Madison Capital and David L. Babson & Co. No pricing details were disclosed.

The Carlyle Group and Prudential Financial Inc. are planning to invest a combined $400 million for a 25% stake in China Pacific Life Insurance, according to various press reports.

Dedicated Transport Inc. has completed a management buyout from former parent company Distribution Technologies Inc. The deal was sponsored by private equity firms Centerfield Capital Partners and Patriot Capital, although no pricing details were disclosed. Dedicated Transport is a Cleveland-based provider of contract carriage and logistics services to manufacturers, distributors and retailers.

CM Equity Partners has sold RCI Holding Corp., parent company of Vienna, Va.-based Resource Consultants Inc., to Serco Group PLC. Resource Consultants provides systems engineering, IT services, supply chain management and business process management services to the U.S. Department of Defense and other federal agencies. No financial terms of the acquisition were disclosed.

Thayer Capital Partners and Brockway Moran & Partners have completed their public offering of 4.4 million shares in joint portfolio company TTM Technologies Inc. (Nasdaq: TTMI), for approximately $270 million.

Labcorp (NYSE: LH) has agreed to acquire US Pathology Labs Inc., an Irvine, Calif.-based provider of anatomic pathology and oncology testing services with a focus on the outpatient market. The deal is valued at $155 million in cash, and is expected to close next quarter. US Pathology Labs raised approximately $50 million in total VC funding since its 1998 inception, including a $13 million Series E down-round in 2002 at a post-money valuation of approximately $37 million. Company shareholders include ABS Capital Partners, Accel Partners, Apax Partners, Highland Capital Partners and Sage Venture Management.

Aphton Corp. (Nasdaq: APHT) has agreed to acquire Igeneon AG, a Vienna, Austria-based drug company focused on the treatment of cancer. The all-stock deal is valued at approximately $81 million. Igeneon has raised approximately $80 million in VC funding since its 1998 inception, from firms like 3i Group, Breslin Biotech AG, Burrill & Co., Capexit Private Equity, DB Investor and Novartis.

Avaya Inc. (NYSE: AV) has acquired substantially all of the assets of RouteScience Technologies Inc., a San Mateo, Calif.-based maker of adaptive networking software for enterprises and service providers. No financial terms were disclosed. RouteScience had raised over $60 million in VC funding since its 1999 inception, from firms like Benchmark Capital, Foundation Capital, Sevin Rosen Funds and Sequoia Capital.

TeraGo Networks Inc., a Toronto-based fixed wireless broadband company, has acquired WorldWithoutWire, a Waterloo, Ontario-based regional carrier. No pricing terms of the all-cash deal were disclosed. TeraGo has raised over US$22 million in VC funding from firms like Dolphin Equity Partners, the Ontario Municipal Employees Retirement System (OMERS), Oxcal Venture Fund and Tyco Capital.

Focus Wickes Group Ltd., a UK retailer controlled by Duke Street Capital and Apax Partners, has sold its Wickes division to Travis Perkins PLC for GBP 950 million in cash.

Interline Brands Inc., a Jacksonville, Fla.-based provider of specialty maintenance, repair and operations products, has priced 12.5 million common shares at $15 per share (low end of $15-$17 offering range), for a total IPO take of approximately $187.5 million. It will trade on the NYSE under ticker symbol IBI. Interline Brands shareholders include Parthenon Capital, JPMorgan Partners and Sterling Investment Partners.

Herbalife Ltd., a Cayman Islands-based seller of weight management and nutritional supplements, has priced 14.5 million common shares at $14 per share (below $14.50-$16.50 offering range), for a total IPO of approximately $203 million. The company formerly was known as WH Holdings Ltd., and will trade on the NYSE under ticker symbol HLF. Herbalife was formed in July 2002, following an acquisition of Herbalife International Inc. by Whitney & Co. and Golden Gate Capital.

Cambridge Display Technology Inc., a UK-based developer of light-emitting polymers for consumer electronics, priced 2.5 million common shares at $12 per share (below $13-$15 offering range), for a total IPO take of approximately $30 million. The company will trade on the Nasdaq under ticker symbol OLED. Cambridge Display was acquired in July 1999 by private equity firms Kelso & Co. and Hillman Capital.

AIG Global Investment Group has closed its third fund program with over $238.91 million in limited partner commitments. Named PEP III, the program consists of a domestic buyout fund, a non-U.S. buyout fund, a venture capital fund, a secondary fund and a direct investment fund. The previous PEP program was closed in mid-2002 at $135 million.

Wellspring Capital Management has promoted Jason Fortin to the position of partner. He originally joined as an associate in 1995, and later was promoted to principal. Prior to Wellspring, Fortin worked in the corporate finance department of Donaldson, Lufkin & Jenrette Securities Corp. In other Wellspring news, the firm also has promoted Alexander Carles from principal to vice president; Jared Bartok from associate to senior associate; and Steven Johnson from associate to senior associate.

Harold Brown, a partner with Warburg Pincus, has been elected to the board of Altria Group Inc. (NYSE: MO), on which he previously had served from 1983 until 2003.

   Wednesday, December 15

Prognostication, Disclosure, Medals and More

Remember when this space used to discuss just one issue per morning? Yeah, I miss it too.

1. The National Venture Capital Association just put out the unthinkable: A press release that is both insightful and worthy of being read end-to-end (find it at the NVCA website). It concerns VC predictions for 2005, including hot industry sectors and larger market issues like limited partner allocations. Wish you had been asked to participate? Well, most of you weren’t, but I’ll offer the next-best-thing: For the second straight year, the PE Week Wire and Venture Capital Journal are asking readers to submit one-line predictions for 2005 (actually, we asked for 2004 predictions last year, but you get the picture). This can be anything VC or private equity-related, including macro-economic issues. Please email me your predictions no later than end-of-business tomorrow, and include your name and firm (if applicable). Everyone is invited to participate, with the best one-liners being reprinted both here and in the prin! t edition of VCJ.

2. A pair of major – and positive — developments on the private equity disclosure front. First up is California, where state legislators are finally getting around to formally defining what organizations like CalPERS, CalSTRS and UC should, and shouldn’t, be forced to disclose from within their private equity investment portfolios. Details can be found at, which also includes a brief blog comment from yours truly. Upon further read, however, I may have been a bit unclear. Therefore:

A number of states already have PE disclosure laws on the books, but there is not yet a clear standard. The most stringent is in Michigan, which prevents disclosure of both top-line (i.e., fund IRRs) and bottom-line (i.e., portfolio company) data. Massachusetts also passed similar legislation earlier this year, but MassPRIM officials – prompted by State Treasurer Tim Cahill – have agreed to disclose IRRs of funds raised five or more years ago. It’s a worthy compromise that honors both transparency and J-curve legitimacy. Finally, there is the Colorado model, which only prevents disclosure of bottom-line data. My guess is that California will go this route, since adoption of the Michigan or Massachusetts statues would be severely regressive.

2a. Texas AG Greg Abbott is supporting a proposed law that would follow the Colorado approach, whereby top-line data could be released, but underlying asset info would stay private. This is the policy put in place by Abbott’s predecessor, but never formalized by legislation. The noteworthy part of this is that Abbott has reversed himself, given his office’s very recent statements that all private equity investment data – including portfolio company valuations and revenue streams – should be disclosed. Perhaps he read my Letter to Greg. This law still must be approved by the Texas legislature, but Abbott’s support should give it a strong leg upon which to stand. Good news for Texas pensioners, good news for advocates ! of transparency. Again, balance is the key.

3. You’ve asked, so: Yes, I am very unhappy about Pedro leaving town. A big reason why the Sox won last year was starting pitching, and now we’re down two of our top three starters, and only added an aging David Wells. Not good, although it certainly makes sense from Pedro’s perspective, given the added money, years and opportunity to pitch against lousy National League hitters. More importantly, I’ll miss watching him.

4. Finally, on an equally unrelated note (but it’s been bugging me), why on Earth did President Bush just give the Presidential Medal of Freedom to three folks who essentially botched the most important parts of their jobs: George Tenet, Tommy Franks and Paul Bremer. Respectively, they are the guys who said the Iraqi WMD case was a “slam-dunk,” prepared poorly for post-invasion Iraq and disbanded the Iraqi army. This is the nation’s highest civilian honor, but its stature has just been lowered immeasurably. Was Bernard Kerik unavailable?


Inphi Corp., a West Lake village, Calif.-based provider of precision timing devices and precision electronic components, has raised $18.69 million in Series C funding. New investor Cadence Design Systems was joined by return backers Tallwood Venture Capital, Mayfield Fund and Walden International. The company has raised over $55 million in total VC funding since its 2000 inception.

JH Partners, a San Francisco-based private equity firm, has closed its first institutional fund with $200 million in limited partner commitments from Harvard Management Co., MIT, Princeton University Investment Co., Stanford Management Co. and Yale University.

Arch Capital Group has sold The American Independent Insurance Holding Co. and The Personal Service Insurance Co. for $45 million in cash to Wand Partners and Inverness Management, in association with company management.

Savage Beast Technologies Inc., an Oakland-based provider of music navigation and recommendation technology, has raised $7.7 million in new venture capital funding. WaldenVC led the deal, and was joined by Labrador Ventures, Selby Ventures and MediaWin Partners. In other company news, Savage Beast has named former E-Loan president and COO Joe Kennedy as its new president and CEO. Company founder and former CEO Tim Westergren will transition into a chief strategy officer position.

IP Unity, a Milpitas, Calif.-based provider of IP services for blended networks, has received an undisclosed amount of strategic funding from TELUS Ventures. The company has raised over $80 million in total VC funding, with existing shareholders including Battery Ventures, Siemens Venture Capital, Partech International, New Enterprise Associates and Kleiner Perkins Caufield & Byers.

Couer Metrics Inc., a Halifax, Canada-based maker of a medical device that measure’s the heart’s ability to pump blood, has raised Cdn$1.5 million in venture capital funding from InNOVAcorp and BDC Technology Seed Investments.

Rhytec Ltd., a UK-based company formed to commercialize cosmetic and dermatological surgical technologies, has received venture capital funding by Advent Venture Partners and Scottish Equity Partners. It also has acquired the plasma skin regeneration technology of Gyrus Group PLC, which owns a 19.7% interest in Rhytec.

The European Union has approved The Blackstone Group’s pending acquisition of has agreed to acquire Gerresheimer Glas AG, a German packaging company owned by Investcorp and JPMorgan Partners.

Shah Capital Partners has acquired a division of Thales Electronics, which it will rename Technology Electronic Solutions. No additional information was disclosed, except that CDC Enterprises Innovation and VPSA (fka Viventures) also participated on the deal, with former Matra Semiconductor CEO and current CDC partner Michel Desbard serving as the company’s new president.

Jarvis PLC has agreed to sell one-third of its Tubelines group for GBP 100 million to an investor consortium led by Star Capital, according to various press reports.

NEON Systems Inc. (Nasdaq: NEON) has acquired ClientSoft Inc., a Miami, Fla.-based provider of mainframe integration software. The deal includes $10.5 million in cash, and warrants for ClientSoft shareholders to purchase up to 1.125 million shares of NEON common stock at an exercise price of $4.80. ClientSoft had raised over $13 million in VC funding since its 1997 inception, from groups like CM Equity Partners, The Lambada Funds, New York State Science & Technology Foundation and Spencer Trask Ventures.

Zi Corp. (Nasdaq: ZICA) has agreed to acquire Sweden-based handwriting recognition software company Decuma AB for approximately $1 million in stock. Decuma had raised around $5 million in VC funding from groups like Olicom AS and the Swedish Industrial Development Fund.

Trestle Holdings Inc. (OTCBB: TLHO) has agreed to acquire the assets of Interscope Technologies Inc., a Wexford, Pa.-based developer of digital imaging systems for anatomic pathologists and toxicologists. No pricing details of the all-stock transaction were disclosed. Interscope has raised over $5 million in VC funding since its 1997 inception, from groups like Birchmere Ventures and Mid-Atlantic Venture funds.

Pelikan Technologies Inc., a Palo Alto, Calif.-based developer of hand-held health monitoring devices, has acquired Inventus BioTec GmbH & Co. KG, a German developer of electrochemical sensors, including a blood glucose sensor. No financial terms were disclosed. Pelikan has raised over $46 million in total VC funding since its 2001 spinout from Agilent, from groups like HBM Partners, Mannheim Holdings and Heidelberg Innovation.

Cascade Microtech Inc., a Beaverton, Ore.-based maker of silicon wafer testing tools, has priced 5.3 million common shares at $14 per share (above its $11-$13 range), for an IPO take of approximately $74.2 million. It will trade on the Nasdaq under ticker symbol CSCD. Cascade had raised over $19 million in VC funding from firms like Agilent Ventures and Maristeth Ventures.

Psychiatric Solutions Inc. (Nasdaq: PSYS) has filed to sell three million common shares at $33.70 per share. The deal includes 2.85 million shares being sold by the company itself, and another 150,000 shares being offered by members of company management. Existing shareholders like Oak Investment Partners and Salix Ventures are not selling shares as part of the deal.

AIG Global Investment Group has closed its third fund program with over $238.91 million in limited partner commitments. Named PEP III, the program consists of a domestic buyout fund, a non-U.S. buyout fund, a venture capital fund, a secondary fund and a direct investment fund. The previous PEP program was closed in mid-2002 at $135 million.

David Johnson, a partner with Indianapolis law firm Baker & Daniels, has been named CEO of Indiana life sciences initiative BioCrossroads. He replaces Charles Schalliol, who recently was selected by Governor-elect Mitch Daniels to lead the Indiana Office of Management and Budget. Johnson already is familiar with the group, having served as chairman of its capital formation task force, and leading development of the $73 million Indiana Future Fund, a venture capital pool dedicated to local life sciences investments.

Peter van Cuylenburg has joined Crescendo Ventures as a general partner. He formerly served as president of Quantum Corp’s DSS Group, a data storage solutions business and also held the positions of executive vice president of Xerox Corp., running all of the company’s digital businesses; president of NeXT Computer; and CEO of Mercury Communications, a UK-based telecommunications service provider.

Doron Lipshitz has joined Stroock & Stroock & Lavan LLP as a partner in the firm’s financial restructuring group. He previously served as counsel in the New York office of Cleary Gottlieb.

Doug Wall has joined VentureAdvisors Inc. as partner and managing director of a new West Coast office. VentureAdvisors is an Austin, Texas.-based financial consultancy specializing in fund placement for VC and private equity funds. Wall is a San Diego native with extensive fund advisory experience, including with Mission Ventures and Altium Inc.

Tom Goodrich, co-founder of private equity firm Duff Ackerman & Goodrich, has joined the board of Matrix Semiconductor Inc., a Santa Clara, Calif.-based developer of 3-D integrated circuits.

The Shansby Group, a San Francisco-based private equity firm focused on consumer products, has promoted Alex Panos to the positions of managing director and Partner. He joined the firm in 1998, after previously having worked as an I-banker with both Merrill Lynch and Bear Stearns.

Richard Waters, a partner with JPMorgan Partners, has resigned from the board of portfolio company NuCO2 Inc. (Nasdaq: NUCO).

Philip Weymouth and Kris Salovaara both have joined Watch Hill Partners as managing directors and partners. Weymouth previously led Veronis Suhler Stevenson’s activities in the broadcast, outdoor, cable and entertainment segments, while Salovaara worked on corporate finance and M&A transactions at Goldman Sachs.

Jonathan Silverblatt and Craig Smith have been invited to join partnership of Dechert LLP, effective January 1, 2005.Both attorneys focus on private equity, venture capital, M&A,securities and general corporate representation.

Chad Gifford has decided to retire as chairman of Bank of America Corp. (NYSE: BAC). He previously served as CEO of FleetBoston Financial Corp., and took the chairmanship after Bank of America bought Fleet last year.  

   Tuesday, December 14

Asset Allocation and Administration

As I somberly contemplate the possibility of both Pedro and Manny playing for the Mets next year, a few quick notes:

1. The California Public Employees’ Retirement System (CalPERS) has reduced its target allocation to private equity from seven percent to six percent. For some context, CalPERS had $21.1 billion in 416 active private equity commitments as of June 30, 2004, which makes it the world’s largest investor in the asset class. Within that total are 74 fund commitments of over $100 million, including a $500 million promise to PCG Corporate Partners (of which nearly $200 million was called down as of June 30). Since launching its private equity program, fully-realized investments have returned 19.1%, or a 1.6x ROI. It is important to note, however, that the performance data will certainly be skewed downward once bubble-era funds mature.

CalPERS’ official statement on the reduction is that “investors should not misinterpret this action as a withdrawal from. private equity.” Instead, it is part of a larger asset reallocation that also includes a 1% decrease in real estate targets, and 1% increases in both domestic and international eq