PE Week Wire, Dec. 20, 2006

Elliot Katzman has left Kodiak Venture Partners for Commonwealth Capital Ventures, just as both firms are raising their fourth funds.

Katzman is a staple of the Boston tech/venture scene, with a long operating history that includes having co-founded VC-backed He joined Kodiak as a partner in early 2002, and focused on software and new media plays like Groove Mobile, Mindreef, Newforma, Spaceclaim and (f.k.a. Soflow). When Kodiak began pre-marketing its fourth fund near the beginning of November, both Kodiak and its LPs believed that Katzman would be on board.

Soon after, however, Kodiak began getting LP pushback on possible “team instability” issues. What happened next is a bit unclear (read: depends on who you talk to). In one version, Kodiak initiated a conversation with Katzman about whether or not he planned to leave. In another, Katzman was the first to inform Kodiak that he was seriously considering a new opportunity. Either way, the result was the same: Katzman decided that Commonwealth was a better fit, and that it was time to move on.

Kodiak immediately went to work informing LPs of the change, and Commonwealth held off on a formal announcement until such communications had been completed. Kodiak also pushed fundraising back a bit (still no formal PPM), with a first and final close expected to occur sometime early next year (targeting something similar to its $316 million Fund III). Katzman will continue to represent Kodiak on certain portfolio company boards, and the firm has quietly agreed to hire a new partner focused on IT-healthcare convergence opportunities. Two people have written me with the person’s identity (current VC-backed biotech CEO), but he just denied it via telephone (says he’s mulling various VC/PE offers, including one from Kodiak) – so I’ll post more info online when it becomes available.

Katzman says that the split is amicable, and that he could foresee co-investing with Kodiak in the future. He declined to discuss fundraising at Commonwealth, but multiple sources say that the firm held a first close last week, and will hold two more “rolling closes” before year-end.

*** Terry Garnett, half of tech “venture buyout” firm Garnett & Helfrich Capital, is planning to move (at least for a while) from Silicon Valley to London. The move has surprised limited partners, but it is not expected to put too much of a crimp in the San Mateo, Calif.-based firm’s plans to raise around $750 million for its second fund.

It also is one of the rare times when “family considerations” actually seems to be the legitimate driving force, even though G&H certainly will benefit from having someone on the ground in Europe.

A G&H spokeswoman declined to confirm Garnett’s decision, but did say: “As evidenced by our recent announcement of expanding into India, we are committed to looking for international expansion opportunities that would provide a good platform for investment and growth, and we continue to find compelling venture buyout opportunities outside of the U.S.” It is unclear if G&H plans to add an additional Silicon Valley partner…

*** If you haven’t yet viewed the Blueprint Ventures holiday card, it’s certainly worth doing. You also can check out last year’s installment.

*** Finally… We’ve made a small change to the Top Secret button, via which you can send me anonymous tips. The link will now bring you to a similar page at, because the old one used to send emails to my address, which was retired last night (and, amazingly, we can’t alter the code). The new format looks a bit different, but is just as effective and just as anonymous. So please feel encouraged to send me some juicy scoop before I head off for vacation on Friday…

New at

• George Middlemas of Apex Venture Partners makes his Vox Populi debut, with a piece about How New York is (Finally) Noticing London.

• A Document Dump that includes the recent NVCA 2007 prediction data, some Texas VC data, and discussion of go-shop provisions…

• Alastair Goldfisher wants to know if anyone has read Killer Code…

• And, as always, news and analysis updated throughout the day…

Top Three

Vantage Energy LLC, a Denver-based oil and gas company formed in October, has raised $470 million in private equity funding from Quantum Energy Partners, Carlyle/Riverstone and Lime Rock Partners. Vantage will focus on the acquisition, development and exploration of unconventional natural gas resources, primarily tight gas sands, gas shales and coalbed methane, onshore in North America. It also will acquire and develop properties with significant undeveloped potential and apply technical and business expertise to maximize the value of those resources.

Pioneer Surgical Technology, a Marquette, Mich.-based maker of spinal and orthopedic implants, has raised $30.5 million in new VC funding. Pharos Capital Group led the deal, and was joined by Highlander Partners, Hopewell Ventures and River Cities Capital Funds.

Glu Mobile Inc., a San Mateo, Calif.-based mobile game publisher, has filed for a $92 million IPO. It plans to trade on the Nasdaq under ticker symbol GLUU, with Goldman Sachs and Lehman Brothers serving as co-lead underwriters. The company has raised around $57 million in VC funding since its 2001 inception as Sorrent, from firms like New Enterprise Associates, BA Venture Partners, Globespan Capital Partners, Granite Global Ventures and Sienna Ventures.

VC Deals

ProCure Treatment Centers Inc., a Bloomington, Ind.–based developer of a network of cancer treatment centers across the United States to deliver proton radiotherapy, has raised $35 million in private equity funding from McClendon Venture Company.

Intellon Corp., an Ocala, Fla.-based provider of ICs for powerline communications, has raised $18 million Series C funding. Samsung Ventures was joined by return backers Goldman Sachs (round lead), BCE Capital, Comcast Interactive Capital, Duchossois Technology Partners, EnerTech Capital, Fidelity Ventures, Intel Capital, Liberty Associated Partners, Motorola Ventures, TL Ventures and UMC Capital Corp. Intellon has raised over $150 million in total VC funding since its 1989 inception, including a 2003 recap round.

Aldagen Inc., a Durham, N.C.-based regenerative medicine company focused on vascular and degenerative diseases, has raised $14.3 million in Series C funding. Harbert Venture Partners and Intersouth Partners co-led the deal, and were joined by return backers Aurora Funds, Trelys Funds, Tall Oaks Capital, Village Ventures and the Piedmont Angel Network. The company also raised $3 million in debt financing from Square 1 Bank. The Company will use these funds to advance its pipeline of regenerative medicine clinical studies., a Seattle-based social music directory service, has raised $13.3 million in strategic funding from Ticketmaster, in exchange for a 25% ownership position. Existing iLike shareholders include Khosla Ventures and Bob Pittman.

Spock Networks Inc., a Menlo Park, Calif.-based people search engine operator, has raised $7 million in Series A funding from Clearstone Venture Partners and Opus Capital Ventures.

ExpoTV, a New York-based video provider of consumer-generated product reviews, has raised $6 million in Series A funding co-led by Masthead Venture Partners and Prism VentureWorks.

WaterHealth International Inc., a Lake Forrest, Calif.-based developer of safe water solutions, has raised $4 million in additional Series C funding from SAIL Venture Partners. This comes on top of a $7.25 million first close announced last month, led by Dow Venture Capital.

TutorVista Global, a Bangalore, India-based online educational tutoring company, has raised $3 million in additional funding from return backer Sequoia Capital India, according to The Economic Times.

BiancaMed, a Dublin, Ireland-based developer of software and sensors to monitor personal wellbeing in everyday life, has raised Euro 2.5 million in first-round funding. ePlanet Ventures led the deal, and was joined by existing corporate shareholder RedMed.

Buyout Deals

Harrah’s Entertainment confirmed that it has accepted a $90 per share buyout offer from Apollo Management and Texas Pacific Group. The two firms originally had offered $83.50 per share, and later sweetened the bid to $87 per share. The total deal would be worth around $16.7 billion.

International Paper (NYSE: IP) has agreed to sell its Arizona Chemical business to Rhone Capital for approximately $485 million. Arizona Chemical is a Jacksonville, Fla.-based pine chemistry company with 11 manufacturing facilities worldwide.

Palamon Capital Partners has completed its public-to-private acquisition of Retail Decisions PLC, a UK-based payment card and fraud prevention group. The deal was valued at approximately Gbp200 million.

Equity Office Properties Trust (NYSE: EOP) is willing to consider higher buyout offers than the $48.50 per share bid from The Blackstone Group, according to a proxy statement. If it were to accept such an offer, however, it would be required to pay Blackstone a $200 million breakup fee. The proxy statement also said that at least four different entities offered to buy all, or part, of Equity Office.

Investcorp has agreed to acquire Armacell International GmbH from Gilde Buyout Fund and CVC Capital Partners. No financial terms were disclosed for the deal, which is expected to close next month. Armacell is a Minster, Germany-based provider of flexible technical insulation.

Kinder Morgan Inc. (NYSE: KMI) shareholders have approved a $107.5 per share buyout offer from a consortium that includes chairman Richard Kinder, GS Capital Partners, AIG, The Carlyle Group and Riverstone Holdings. The total deal is valued at around $22 billion.

Endeavor Acquisition Corp. (AMEX: EDA) has agreed to acquire t-shirt wholesaler American Apparel for around $354 million (including assumed debt). Endeavor is a SPAC whose management team includes: Eric Watson, also chairman of Cullen Investments Ltd.; President Jonathan Ledecky, founder of U.S. Office Products; Director Edward Matthias, a partner and managing director of The Carlyle Group.

Permira has acquired Gbp68 million worth of additional shares in listed UK beverage company Britvic, sparking renewed speculation of an imminent takeover bid. Various reports suggest that AXA was the seller.

Bain Capital and Japan Industrial Partners have agreed to sponsor a proposed management buyout of listed Japanese telco SunTelephone. The deal could be worth upwards of $300 million.

Sagard and Ergon have co-sponsored a Euro 430 million management buyout of Aliplast Group from Cognetas (f.k.a. Electra Partners Europe). Aliplast is a Lokeren, Belgium-based supplier of aluminium profile systems, and was acquired by Cognetas in early 2004. It has over 1,000 employees and generated 2005 revenue of around Euro 180 million with 20% growth anticipated for 2006.

Gryphon Investors has recapitalized DLC Inc., a Los Angeles-based provider of high-end, project-based finance and accounting services to Fortune 1000 and middle-market companies. Senior DLC management will continue to run the company and remain significant shareholders. Gryphon and Ray Marcy, former Chairman and CEO of Spherion Corp., will support the company’s continued expansion through new office openings, further development of existing markets and selected add-on acquisitions. No financial terms were disclosed.

PE-Backed IPOs

Orexigen Therapeutics Inc., a San Diego-based drug company focused on central nervous systems disorders, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol OREX, with Merrill Lynch and JPMorgan serving as co-lead underwriters. Orexigen has raised around $76 million in total VC funding since its 2003 inception, from firms like Domain Associates, Kleiner Perkins Caufield & Byers, BA Venture Partners, MPM Capital, Duke University, Montreux Equity Partners, Morgenthaler Ventures, Sofinnova Ventures and Wasatch Venture Fund.

PE-Backed M&A

ALPS Advisors Inc., a portfolio company of Lovell Minnick Partners, has completed its acquisition of the Liberty All-Star Funds management business from Banc of America Investment Advisors. The fund family consists of two closed-end, NYSE-listed equity funds: Liberty All-Star Equity Fund (NYSE: USA), with net assets in excess of $1.3 billion as of Nov. 30, and the Liberty All-Star Growth Fund (NYSE: ASG), with net assets in excess of $156 million as of Nov. 30.

Ace Mortgage Funding, a portfolio company of Roark Capital Group, has acquired Millennium Funding Group, a Vancouver, Wash.–based wholesale loan originator. No financial terms were disclosed.

DriveSol Worldwide Inc., a Troy, Mich.-based portfolio company of Sun Capital Partners, has acquired the automotive steering business of The Timken Co. (NYSE TKR). No financial terms were disclosed, except that the unit had 2005 sales of around $110 million.

Intrawest Corp., a resort operator owned by Fortress Investment Group, has agreed to acquire Colorado-based Steamboat Sky & Resort from American Skiing Corp. for $265 million.

Navigon AG, a German mobile GPS company backed by General Atlantic, has agreed to acquire the navigation software business of Navteq Corp. (NYSE: NVT) for an undisclosed amount.

PE Exits

Xyratex Ltd. (Nasdaq: XRTX) has agreed to acquire the key assets of ARIO Data Networks Inc., a San Jose, Calif.-based provider of bladed storage solutions and RAID controllers. No financial terms were disclosed for the deal, which is expected to close by year-end. ARIO had raised over $35 million in total VC funding, including a recap round earlier this year. Backers include Anthem Venture Partners, Clearstone Venture Partners, Evercore Partners, Mellon Ventures, Partech International, Sunsino Ventures Group and Triton Management.

Check Point Software Technologies Ltd. (Nasdaq: CHKP) has agreed to acquire NFR Security, a Rockville, Md.-based provider of real-time network threat prevention solutions. The deal is valued at approximately $22 million, including acquisition expenses. NFR has raised around $43 million in VC funding since 2000, from firms like Lazard Technology Partners, Allen & Co., Blue ridge Capital, Edison Venture Fund and Intel Capital.

The Carlyle /Riverstone Renewable Energy Infrastructure Fund has sold part of its equity interest in Green Earth Fuels LLC, a Houston–based biodiesel company, to Goldman Sachs. No financial terms were disclosed. CRREIF remains the company’s majority shareholder.

DDJ Capital Management has sold its majority interest in Austin, Texas-based jewelry retailer Samuels Jewelers Inc. to Gitanjali Gems Ltd. No financial terms were disclosed.

Firms & Funds

SVB Capital is raising up to $50 million for its first India-focused venture capital fund, according to a regulatory filing. It already has secured over $33 million in capital commitments.

JT Partners has formed as a New York-based placement agent for private equity firms, with a focus on real estate. It is backed by Apollo Real Estate Advisors and Ramius Capital Group. The team includes: Mitchell Sikora, managing director, former executive director in the Real Estate, Leisure and Lodging Group at UBS; Peter Finley, managing director, former executive director in the Real Estate, Lodging & Leisure Group at UBS; Gena Cheng, director, former portfolio manager with ABP Investments US; and Larry Teitelbaum, director, former vice president for Real Estate Equities Institutional Sales with Deutsche Bank Securities.

Human Resources

GlaxoSmithKline (NYSE: GSK) has named Adrian Rawcliffe as senior vice president of worldwide business development and R&D, effective immediately. Rawcliffe most recently served as managing partner and president of SR One Ltd., the venture capital arm of GSK. No SR One successor has yet been named.

Standard Life Investments has tapped managing director David Currie to replace Jonny Maxwell as head of private equity.

Rachael Wexler has joined the Los Angeles office of Goodwin Procter LLP as a partner focused on private equity matters in the areas of nanotechnology, life sciences and renewable energy. She previously was a partner with Alschuler Grossman Stein & Kahan.

Michael Marquez has been named vice president of strategy and corporate development for CBS Interactive. He previously served as director of corporate development for Yahoo. CBS Interactive is a newly-formed division of CBS Corp., and is focused on new media strategies and partnerships involving interactive platforms.

Kip Hagopian, co-founder and former general partner with Brentwood Associates, has been named interim chairman of Maxim Integrated Products Inc. (Nasdaq: MXIM), where he had been an independent board member since 1997. The move comes following the health-related resignation of company founder and CEO Jack Gifford, and the subsequent naming of current Maxim chairman Tunc Doluca as Gifford’s successor.

Mark Kramer has joined the Chicago office of Duff & Phelps as a managing director in the firm’s transaction advisory services practice. He previously led the Milwaukee transaction services practice at PricewaterhouseCoopers.