Does Pitango’s $330M signal more to come?

Pitango Venture Capital has raised $330 million for its fifth fund, outpacing the $300 million that the Israeli firm raised for its 2004 vintage fund, PE Week has learned.

The close of the new fund bodes well for other Israeli venture firms with funds in the pipeline. When Pitango closed fund IV three years ago, it preceded a fund-raising boom in Israel in 2005, when such firms as Benchmark Capital, Sequoia Capital, Genesis Partners and others collectively raised more than $600 million to invest in the region.

Since then, fund-raising has been somewhat slow for Israeli venture firms. Only three funds went to market and collectively raised $370 million in 2006. Through the first 10 months of 2007, four Israeli venture firms, not including Pitango, have collectively raised $273 million, according to Thomson Financial (publisher of PE Week).

It is not known if any other firms are preparing to raise Israel-focused funds. Sequoia Capital raised its last fund dedicated to the region in 2005. The $200 million vehicle could have accepted as much as $500 million because of the level of interest from LPs, Partner Shmil Levy told PE Week at the time.

Israeli fund-raising may appear in cycles, but firms there have been putting money to work at nearly a constant rate of $650 million a year since 2004, according to the Israel Venture Capital Resource Center.

So far this year, Pitango, a multi-stage venture firm, has invested $67 million in 38 information technology and health care companies, according to Thomson Financial. Historically, more than half of the firm’s investments are in Israeli companies, though the firm also invests in the United States.

The new Pitango fund comes as the firm saw two of its portfolio companies go public this year. Drug development company BioLineRX (TLV: BLRX) went public in Israel and is reportedly considering a Nasdaq debut. The company’s IPO in February raised $50 million, but shares have slipped to about $110 a share in recent trading, down from the opening price in February of about $170 a share. Grid computing company Voltaire (Nasdaq: VOLT) went public in July, raising nearly $52 million. The Billerica, Mass.-based company traded at $7.06 per share last week, below its offering price of $9 a share.

The LPs of Pitango’s new fund have not been disclosed. But the firm counts the California Public Employees’ Retirement System as one of the investors in its last two funds. So far, CalPERS has collected $300,000 of the $4.85 million it invested in Pitango Venture Capital Fund III, the firm’s vintage 2000 fund. CalPERS published its estimate of the remaining value of its stake in the fund at $3 million, as of June 2006. That’s works out to an IRR of negative 11 percent.

The firm’s fourth fund seems to be performing better. CalPERS committed $20 million to Pitango Venture Capital Fund IV, $10.8 million of which has been called down. CalPERS has received nearly $200,000 of that money back already and says that the IRR is not yet meaningful to measure.

Pitango split from Polaris Ventures in the early 1990s and derives its name from a semi-wild cherry that grows in Israel.