Private Equity Week Wire for Tuesday 2-26

MINNEAPOLIS — In a planned transition to new leadership, St. Paul Venture Capital today named Zenas W. Hutcheson and David W. Stassen as the firm’s managing general partners, succeeding Patrick A. Hopf. The appointments are effective immediately. Hopf, 53, who founded St. Paul Venture Capital in 1988, will continue with the firm as a general partner and Board member. The firm also announced that it has formed investment teams under new leadership to pursue opportunities in specific industry sectors.

PALO ALTO, CA –AltoWeb, Inc., the leader in application production platforms, today announced $16 million in third-round funding led by Accenture Technology Ventures, the venture capital unit of Accenture (NYSE:ACN). Existing investors Norwest Venture Partners, Frank Caufield (principal at Kleiner Perkins Caufield & Byers) and Regis McKenna (chairman of the McKenna Group) also participated in the round.

Proceeds from this round of funding will fuel AltoWeb’s rapid growth plans with new investments to expand the company’s J2EE and Web services development technology, and support sales and marketing efforts. This financing will enable AltoWeb to aggressively pursue new Global 2000 customers for its J2EE applications and Web services, a market that Gartner Group estimates will represent $21 billion by 2005.

VANCOUVER — Venture capital investment in Canada dropped by 27 percent last year, but held up better than in the United States, where the amount of capital flowing to startup companies plunged by 65 per cent.

Most of that disparity occurred because Canadian venture capital firms had not invested as heavily in dot-com ventures, which failed in droves last year. Venture capital firms invested a total of $4.9-billion in Canadian companies last year, down 27 per cent from the record $6.6-billion invested in 2000.

A total of 1,077 deals were completed — down by 25 per cent from 2000 — and the average investment size was $4.5-million, up from $4.4-million in 2000. The figures were released yesterday by the CVCA and Macdonald & Associates Ltd., both based in Toronto.

MANILA — Philippine pension fund Government Service Insurance System (GSIS) is in talks with U.S. financial firms Cerberus Ltd and Lehman Brothers to set up an asset management company with initial capital of $600 million, a local newspaper said on Monday.

The Philippine Daily Inquirer newspaper quoted GSIS President Winston Garcia as saying in an interview that the two U.S. firms had expressed interest in investing in a start-up venture set up by GSIS called Philippine Growth and Recovery Fund Inc. Garcia said GSIS planned to put in $200 million of non-performing loans and assets as its contribution to the venture.

GREENWICH, CONN. and BUDAPEST — The Hungarian Innovative Technologies Fund (HITF) announced today that its portfolio company i-Cell has provided increased efficiency and substantial cost savings for domestic and international customers using its technologies. i-Cell is a Budapest-based mobile communication system integrator, software developer and wireless application service provider of innovative solutions integrating Internet, GSM, SMS, GPS, TETRA, GPRS and other advanced technologies.

PLYMOUTH, MINN. — Onvoy, a phone company based in Plymouth, said Monday it intends to upgrade its 2,000-mile fiber optic network across Minnesota, using an unspecified portion of $46 million in new financing it has received.

It will upgrade to an Internet Protocol platform, which will allow it to use its existing network to provide voice, video and data services more efficiently and with greater reliability. IP is the Internet’s most basic communication protocol (standard).

Soros Fund Management LLC and some of the 57 outstate phone companies that own 75 percent of Onvoy invested $25 million in Onvoy. In addition, Onvoy secured a new $21 million line of credit with CoBank, it senior lender.

For yesterday’s Wire, click here

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