PE Week Wire — Thursday 5/8

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The U.S. Army is following the CIA’s lead in forming its own venture capital fund. The new $25 million effort will be called the Venture Capital Initiative, and will invest in companies focused on  building lighter and more efficient power sources for troop use in the field. An Army statement said that the new effort is modeled after In-Q-Tel, a non-profit venture capital outfit launched by the CIA in 1999.

U.S. Genomics, a Woburn, Mass.-based developer of single molecule analysis technologies, has raised $25 million in third round funding. Fidelity Biosciences Group led the deal alongside fellow new investors Zero Stage Capital and China Development Industrial Bank. Return backers HealthCare Ventures and CB Health Ventures also participated. The company has now raised around $45 million since its 1997 founding, including a second round deal in early 2001 with a post-money valuation of $50 million.

Werner Holding Co. Inc., a Greenville, Pa.-based scaffolding and ladder maker, has agreed to a recapitalization that values the company at around $625 million. As part of the deal, Leonard Green & Partners will purchase $65 million of new convertible preferred stock. Werner will use these proceeds, together with funds to be made available through a new $230 million senior secured credit facility, to redeem $150 million of common stock and options from existing holders, including Investcorp – a majority owner of Werner since its 1997 recapitalization – and Werner family shareholders and management. Upon completion of the transaction, Leonard Green will have a 22% ownership of Werner, while Investcorp’s 51% stake will be shaved down to 24 percent.   

Vocera Communications Inc., a Cupertino, Calif.-based provider of wireless voice communications services has raised $8 million in Series D funding. The round was led by Granite Global Ventures and included participation by return backers Venrock Associates, RRE Ventures, Vanguard Ventures and Avalon Ventures. The company has now raised around $28 million since being founded in early 2000. 

Wayne Cantwell has joined Crescendo Venture Partners as a venture partner focused on the semiconductor market. He most recently served as president and chief executive of inSilicon Corp., which was acquired last September by Synopsys Inc. (Nasdaq: SNPS).

MacDermid Inc. (NYSE: MRD) has entered into a definitive agreement with Citigroup Venture Capital (CVC) to acquire 1,350,000 MacDermid common shares owned by CVC immediately at $22.60 per share, and a further 851,720 shares before November 3 at the market price at the time of exercise subject to a collar of not lower than $22.60 and not higher than $25 per share. Once completed, this buyback will include all MacDermid shares owned by CVC.

Allied Capital Corp. (NYSE: ALD) has provided $10 million in subordinated debt to finance Insight Pharmaceuticals Corp.‘s acquisitions of over-the-counter brands Anacin (aspirin), Nix (lice treatment) and Bonine (motion sickness). Since being formed as a platform company in 2000 by Catteron Partners, Insight has built a portfolio of 17 brands, including Sucrets.   

KLM Capital, Ascendas and the Tsinghua Science Park Development Centre have teamed up to form a $50 million venture fund based in Beijing. Named the Global Synertech Fund, the new effort will invest in both China-based and foreign companies in the IT, materials, energy and environmental spaces. 

Arthur Rock, principal of venture capital firm Arthur Rock & Co., was reelected to the Nasdaq board of directors.

McCafferty’s Greyhound, a Brisbane, Australia-based bus company, has agreed to a corporate restructuring that includes a AU$50 million (approx. $31 million) investment from ANZ Private Equity and the Chapman Group. Each investor will receive a 40% stake in McCafferty’s.

The New York Post is reporting that apparel manufacturer Kellwood Co. is the leading bidder for Kasper ASL (OTC: KASPER), which makes such brands as Anne Klein and Albert Nippon. The bid is for around $140 million, which tops a $100 million bid from a management buyout-led syndicate of Kasper CEO John Idol and private equity firm Parthenon Capital.

 

NEWS FROM WEDNESDAY 5/7

Acterna Corp. , a Germantown, Md.-based maker of optical network testing equipment, has filed for Chapter 11 bankruptcy. The company has received around $520 million in funding from buyout shop Clayton, Dubilier & Rice, beginning with a $277 million infusion in 1998 at a post-money valuation of approximately $907 million. At the time, Acterna was still known as Dynatech Corp. As part of its Chapter 11 filing, Acterna said that it had arranged a $30 million debtor-in-possession financing led by J.P. Morgan Chase and General Electric Capital. The company also insisted that its filing only applied to U.S. subsidiaries, and would not impact operating subsidiaries in Europe, Latin America or Asia.

TranS1 Inc. , a Wilmington, N.C.-based biotech company focused on percutaneous products and procedures to treat lower back pain, has raised $12 million in Series B funding. Advanced Technology Ventures led the round, with Delphi Ventures, Cutlass Capital and Sapient Capital also participating. TranS1 Inc., formerly known as Axiamed, was founded in 2000.

Equator Technologies Inc. , a Campbell, Calif.-based  provider of system-on-a-chip (SoC) processors for video streaming and image processing applications, has secured $11 million in new venture financing. All of the investors were return backers, including CIBC World Markets, i-Hatch Ventures, Ironside Venture Partners, JAFCO America Ventures, MMC Capital, Orix USA Corp., Polycom Inc., Rogers Communications and Sojecci Ltd. According to a recent SEC filing, the company had been looking for upwards of $15 million.

Forstmann Little & Co. has said in an SEC filing that it will sell around half of its shares in Yankee Candle Co. Inc. (NYSE: YCC). The New York-based buyout shop acquired 90% ownership of Yankee Candle in an April 1998 recapitalization that involved around $180 million of Forstmann equity. The proposed sale will involve up to 12.5 million Yankee shares, which could bring in around $275 million based on yesterday’s closing price of $21.95 per share. This is the second time Forstmann has reduced its Yankee stake. Last year, the firm sold around one-third of its stake (12.6 million shares) for around $270 million. 

Xignal Technologies AG, a Munich, Germany-based intellectual property solutions provider for the semiconductor industry, has raised 10 million in second round funding. The deal was co-led by Baytech Venture Capital and Atila Ventures/ETV Beteiligungs, with return support from Series A backers Benchmark Capital and Star Ventures.

iRise Inc., an El Segundo, Calif.-based enterprise software developer, has raised $11 million in new venture funding. The investment round has been underway since late 2000, with the final tranche now completed..

DigitalNet Holdings Inc., a Herndon, Va.-based provider of IT services to military and government buyers, has postponed a planned IPO. The $93.75 million deal was supposed to debut on the New York Stock Exchange this week, but is now in limbo, according to various press reports. The company is backed by Chicago-based buyout firm GTCR Golder Rauner, which owns a 48.8% ownership stake.

Sonaptic Ltd., a UK-based producer of audio solutions for mobile devices, has raised £1 million in venture funding from Pentech Ventures.

OSA Technologies Inc., a San Jose, Calif.-based enterprise software company, has raised $9 million in Series B venture funding. New investors included AsiaVest, FAT Capital, Foxconn and Sycamore Ventures, while first round backer Intel Capital also participated.

Pascal Levensohn, founder and managing director of Levensohn Venture Partners, has joined the board of directors at Vertical Networks Inc., a Sunnyvale, Calif.-based developer of integrated computer platforms.

Léman Capital has acquired a participation in Swiss watch case manufacturer Guillod Gunther.

NEWS FROM TUESDAY 5/6

AccelChip Inc., a Milipitas, Calif.-based provider of high-level synthesis tools for DSP design,has raised $6.65 million in Series B funding. InterWest Partners led the deal, and was joined by Greylock, Xilinx and Arch Development Partners.

IGN Entertainment Inc. (Nasdaq: IGNX), a Brisbane, Calif.-based online gaming company, has agreed to be bought out and taken private by Great Hill Partners. The $26.4 million deal involves the sale of 2.2 million shares of outstanding IGN common stock at $12 per share, which is a 50% premium over Friday’s closing price. The company’s stock jumped up to $11.82 at market close yesterday thanks to the buyout news.

Digital Theater Systems Inc., a Westlake Village, Calif.-based digital sound company, has filed for a $51 million IPO. The company has raised around $15 million in venture capital since its 1993 founding, including a $3.75 million Series B deal in early 2000 at a post-money valuation of around $34 million. Private equity shareholders include Weston Presidio (33.45% ownership), Eos Partners (10.6%) and Scripps Ventures (6.37%).

Thomas Kellerman has joined the law firm of Morgan Lewis and will become managing partner of its Palo Alto, Calif. office. He was formerly the managing partner of Brobeck, Phleger & Harrison’s Palo Alto office and the former managing partner of the three-office European joint venture of Brobeck Hale and Dorr. Kellerman’s practice has focused on emerging growth company representations and securities matters, including public and private financings, mergers and acquisitions and corporate governance.

OneAccess Networks, a Paris-based developer of broadband access solutions for telecom carriers and corporate networks, has raised €4.5 million in second round funding. Investors included Viventures, AGF Private Equity and CIC Finance.

Skybox Security Inc., a Menlo Park, Calif.-based provider of corporate IT security risk assessment software, has raised $6 million in Series B funding. Lightspeed Venture Partners led the deal, and was joined by return backers Benchmark Capital, Carmel Ventures and the Mofet Technology Fund.

MICROS Systems Inc. (Nasdaq: MCRS ) has acquired Datavantage Corp., a Cleveland-based IT provider of information technology solutions for the specialty and general merchandise retail industry. The deal is worth $52 million in cash and stock for seller Saratoga Partners, which had acquired Datavantage in January 2000 in conjunction with company management.

VS&A Communications Partners and 3i Group have agreed to purchase six European directory operations of Verizon Information Services (VIS) for an undisclosed amount. The deal is a combination of stock and asset acquisitions and is expected to close upon completion of regulatory approvals. CIBC World Markets is the sole underwriter of the senior and mezzanine financing placed in conjunction with the transaction. The acquisitions consist of VIS operations in Austria, Czech Republic, Hungary, Poland, Slovakia and Gibraltar and will affect approximately 2,000 employees. A new holding company will be based in Austria, under which the operations will conduct business using their existing company names and directory brands.

Heritage Partners Inc. announced today that its portfolio company, RivienHealth, has acquired Aquatic Rehab Sports Med & Hand Center, an Anaheim, Calif.-based provider of aquatic and hand therapy. Terms of the deal were not disclosed.

Dirk Stuurop has joined Banc of America Securities as a senior executive director in its financial institutions group. He most recently served as founder of Stuurop & Co., a consultancy specializing in financial services advice and venture capital.

Power Management Partners and Big Pier Energy have formed ElectroVest LLC, a new joint venture that seeks to acquire a diversified portfolio of electric generating assets from distressed sellers.

Broadview Partners, an investment boutique focused on technology, has moved across the river from New Jersey to midtown Manhattan.

The Wall Street Journal is reporting that Thomas, McNerney & Partners has raised $216 million for its inaugural venture capital fund. The new life sciences-focused vehicle was marketed with a target capitalization of $250 million, and will invest between $10 million and $20 million over the life of each portfolio company. Thomas, McNerney & Partners has offices in New York, Minneapolis and San Francisco.

Dow Jones is reporting that Schroders PLC has launched its second private equity fund-of-funds, and will apply for a listing on the Dublin Stock Exchange. The vehicle already has committed $40 million to four funds.
NEWS FROM MONDAY 5/5
Venture capital firms raised just $996 million in new fund commitments during the first quarter, according to new data being released today by Venture Economics (publisher of PE Week) and the National Venture Capital Association. This is a 41% drop from the previous quarter, and the first time since Q3 1994 that venture capital firms have raised less than $1 billion.

KMV Technologies Inc., an Austin, Texas-based videoconferencing startup, has secured $18 million in Series A funding. The round was co-led by Austin Ventures, Norwest Venture Partners and Redpoint Ventures. PE Week subscribers can read more on this story in the protected Deal News section of www.PrivateEquityWeek.com .

Crossbeam Systems Inc., a Concord, Mass.-based developer of network security solutions, has raised $18 million in Series C funding. The deal was co-led by return backers Matrix Partners, North Bridge Venture Partners and Commonwealth Capital Venture Partners. New investor Intel Capital also participated, as did existing buyer Charles River Ventures. The company now has raised $52 million since being founded in early 2000, including a $21.5 million second round deal in mid-2001 at a post-money valuation of just under $50 million.

Teros Inc., a Santa Clara, Calif.-based provider of application protection appliances, has raised $12 million in Series B funding. Institutional Venture Partners (IVP) led the deal, and was joined by return backers Bank of America Venture Partners, CMEA Ventures and New Enterprise Associates. Steve Harrick, a managing director of IVP, will take a Teros board seat as part of the financing. The company previously was known as Stratum8 Networks Inc.

Approva Corp., a Vienna, Va.-based developer of a software platform to monitor business processes, has raised $3.75 million in second round funding. Return backers Columbia Capital, New Enterprise Associates and Novak Biddle Venture Partners all participated.

SkyStream Networks, a Sunnyvale, Calif.-based provider of video networking solutions, has raised $25 million in new venture funding. The investment was led by 3i US, with other investors including IVP, Mayfield and Norwest Venture Partners. New SkyStream board members include Sandy Miller of 3i US (chairman of the board) and Matt Howard of Norwest.

Bellamax Inc., a Mountain View, Calif.-based provider of digital photo enhancement services, has raised $6.3 million in Series B funding at a post-money valuation of just under $12 million. BA Venture Partners and Apex Venture Partners co-led the deal, and were joined by Adobe Ventures.

Fast Track Systems, a San Mateo, Calif.-based clinical development optimization company, has raised $4 million in Series D funding. The round was led by e.Lilly Ventures and included existing investors ARCH Venture Partners, CW Ventures, The Dow Chemical Co., Frazier Healthcare Ventures, JPMorgan Partners, State Farm Insurance and W Capital Partners. As part of the financing, Charles E. Schalliol, a managing director of e.Lilly Ventures, has joined the Fast Track board of directors.

RxStrategies Inc., a West Pal Beach, Fla.-based pharmaceutical services company that serves community health centers, has raised $7.8 million in Series A funding. H.I.G. Ventures led the deal, and was joined by Lovett Miller & Co. and Select Capital Ventures.

Repligen Corp. (Nasdaq: RGEN ), a Waltham, Mass.-based biopharma company focused on pediatric developmental disorders, has raised $12.5 million from a private placement of common stock. The deal includes the sale of 2.5 million shares at $5 per share to The Riverview Group. As of end of trading last Friday, Repligen stock was trading at $6.22 per share.

Samsonite Corp., a Denver-based luggage maker, has entered into a recapitalization agreement with Ares Corporate Opportunities Fund, Bain Capital (Europe) and Teachers’ Merchant Bank, the private equity arm of Ontario Teachers’ Pension Plan. The new investors will purchase 106,000 shares of a new series of Samsonite’s convertible preferred stock with an initial dividend rate of 8% for $106 million. In addition, upon closing of the recapitalization, Samsonite’s existing senior credit facility will be replaced with a new $60 million revolving credit facility.

The Boston Globe is reporting that Ted Dintersmith, general partner with Charles River Ventures, has decided to move to South Carolina. The newspaper says that he will remain an active member of the firm, and return to Boston for CRV and portfolio company board meetings.

The San Jose Mercury News is reporting that Les Vadasz did more than simply announce his retirement from Intel Capital on April 17. The paper says that, on the same day, he exercised options to purchase 412,416 shares of Intel stock at between $2.81 and $4.20. Before market close, he sold all the shares at $18.12 per share for a net gain of $6.05 million.

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