LPs Fight for Control of Viventures

Limited partners of Viventures Partners are in negotiations to take over its management from Vivendi Universal Net (VU Net), the Internet subsidiary of telecom and media company Vivendi Universal. So far VU Net has rejected separate takeover bids by individual investor Albert Frere of Belgium and California-based private equity firm Global Asset Capital.

The talks come after Vivendi’s decision to give up its 40% share of Viventures II. Viventures II was valued at $683 million until Vivendi missed a capital call in December, excusing the company from future financing commitments and excluding it from future returns. Vivendi’s bailing out cut the value of the fund by 20%, which leaves it with approximately $547 million in commitments. Though it no longer has a financial stake in Viventures Partners, Vivendi still controls the management company, leaving other LPs and portfolio companies in limbo.

The negotiations concern whether or not to reduce the fund further, which partner will manage the fund if it is continued and distribution of such assets to the different limited partners if the fund is cut or wound down. Both Frere and Vivendi want Viventures II to continue.

Limited partners in Viventures that reportedly support Frere’s effort to wrest control of the venture firm include Societe Generale Asset Management and firms from Singapore. Other Viventures limited partners include Cisco Systems, Donaldson Lufkin & Jenrette, SG Asset Management, Siemens Venture Capital, Singapore Press Holdings, SP Capital and TIF Ventures. Frere invested in the fund through his holding company, Compagnie Nationale a Portefeuille, and GBL Finance.

Viventures Partners has not made any new investments since it took part in WLAN’s $8.8 million round in September 2002. Other Viventures portfolio companies include Centerpoint Broadband Technologies, a developer of infrastructure equipment for optical fiber networks that folded last September; NetCentrex, which develops networking products and network-based applications for voice-over-IP (VoIP) and standard PSTN networks and announced 30% growth for 2002; and Mandrakesoft, which provides GNU Linux and Open-Source software and related services and went public in July 2001.

Viventures Partners was founded in1998 with an initial fund of $120 million. It has a staff of 20 and offices in Paris, San Francisco, Singapore, and Reading, U.K.

Email Matthew Sheahan