PE Week Wire, Feb. 15, 2007

Greetings from post-storm Boston, where I’ve learned a valuable lesson: If you work from home for two straight months, someone will steal stuff from your office. Things like Ethernet cords and phones. On the upside, I got to open lots of holiday-related knick knacks that have been sitting here forever (but no new Lionel train car from Wellspring Capital, which makes me sad). Anyway, on to relevant business:

*** Mobile email company Visto Corp. is not on the edge of financial ruin, despite such insinuations yesterday from Valleywag. In fact, I’ve learned that the company raised an undisclosed $35 million venture round at the end of December, led by new investor Altitude Capital Partners. Valleywag has since updated its story with a link to mine at peHUB, and includes the following line: “It’s odd that the cash injection was kept secret. Seems like exactly the kind of news that would cheer up Visto’s investors, if they knew about it.”

I wholeheartedly agree that the secrecy is odd — at least one Visto VC I spoke with yesterday echoed the sentiment – and my brief email conversation with company CEO Brian Bogosian ended the moment I asked about the funding. As for the part about investors knowing, all I can say is that I spoke with multiple Visto investors yesterday, and they each knew about it. Not to say there are some that don’t, but… well, that’s just as odd as the non-announcement.

Negative speculation about Visto may be inaccurate, but it’s hardly surprising given the company’s high capital burn rate.Part of the accelerated spend is related to Visto’s seeming addiction to litigation, including courtroom tiffs with RIM and VC-backed Seven Networks. More generally, however, the money is used toaccommodate carrier clients whose SLA agreements enable them to demand Visto service on each new device they send to market.

But, to repeat the main point, Visto’s balance sheet is as strong as it’s been in some time. Not perfect, but strong. The latest infusion was an up-round from the $51 million round it received last September – which itself was an up-round, compared to a $70 million infusion in 2005 at a post-money valuation of approximately $155 million. Moreover, deal lead Altitude Capital Partners approached Visto, rather than the other way around. All told, Visto has raised just under $300 million in venture funding since its 1996 inception, from firms like Allegis Capital, Blueprint Ventures, Draper Fisher Jurvetson, ePlanet Ventures, GKM Ventures, Meritech Capital Partners, Oak Investment Partners and Rustic Canyon Partners.

One final note: Don’t feel out-of-the-loop if you haven’t heard of deal lead Altitude Capital Partners. I hadn’t either until yesterday. It’s a New York-based shop that has a late-stage investment thesis involving IP protection/litigation. In other words, they dug in on due diligence and apparently think the Visto technology is defensible…

*** A Wire reader last week toyed with me by giving me Quiz Time in reverse. And, after a few hundred guesses, I got it right: Sheila Ryan will be leaving her Boston-based gig with Intel Capital in order to take a job with Cambridge Associates. Her official title will be a mouthful: Non-marketable alternative assets specialist.

*** I don’t usually root for VC-backed companies (i.e., particularly care whether they succeed or fail), but I’m nonetheless glad to see that Insulet yesterday filed for an $86.25 million IPO. The Bedford, Mass.-based company makes wireless insulin infusion systems for diabetics, and was the first company I covered upon moving back to Boston in the summer of 2001.

One of their marketing execs demonstrated how “tethered” insulin pumps made it virtually impossible for users to do such things as swim or play sports. A wireless system, of course, doesn’t have such problems. At the time, it seemed a bit like a pipedream, but I sat on a harbor dock with my feet in the water, and wrote up a story on my laptop (which later turned into a cover package for VC Journal). Good day… good company.

Top Three

Index Ventures has closed its fourth fund with €350 million in capital commitments. The Geneva, Switzerland-based firm also promoted Michèle Ollier to partner and hired two new venture partners: Saul Klein, Video Island founder and former vice president of global marketing for Skype; and Mark De Boer, founder of PanGenetics.

Inogen Inc., a Goleta, Calif.-based developer of long-term oxygen therapy technologies, has raised $22 million in Series D funding. Novo AS led the deal, and was joined by Arboretum Ventures and return backers Versant Ventures, Avalon Ventures and Accuitive Medical Ventures.

Smurfit Kappa Group, a packaging company formed via the 2005 merger of Ireland-based Jefferson Smurfit and The Netherlands-based Kappa, is planning to raise €1.3 billion via an IPO on the Irish Stock Exchange and a secondary listing on the London Stock Exchange. Shareholders include Cinven, CVC Capital and Madison Dearborn Partners. The offerings are expected to take place next month.

VC Deals

Teradici Corp., a Vancouver-based fabless semiconductor company focused on solutions for next-generation computer form factors, has raised US$18 million in second-round funding. Alloy Ventures led the deal, and was joined by return backers Working Opportunity Fund, Skypoint Capital, BDC Venture Capital and Alta Berkeley Venture Partners.

Black Duck Software, a Waltham, Mass.-based provider of software compliance management solutions, has raised $12 million in Series C funding. Focus Ventures led the deal, and was joined by return backers Fidelity Ventures, Flagship Ventures, General Catalyst Partners, Intel Capital and SAP Ventures.

MINO Wireless, a Sunnyvale, Calif.-based provider of VoIP solutions for mobile and wireless communications, has raised $7 million in new venture funding from Canaan Partners.

Sendio Inc., a Newport Beach, Calif.-based provider of anti-spam solutions has raised $4 million in Series A funding from KH Growth Equity Fund. The deal technically closed last October, according to a regulatory filing.

SeaTab Software Inc., a Seattle-based provider of on-demand business intelligence solutions, has raised $3.5 million in new VC funding led by Trident Capital. VentureWire reports that the deal involves Trident buying an existing position from Novell.

Lixto Software GmbH, a Vienna, Austria-based Internet search company, has raised €2.5 million in VC funding from Pontis Venture Partners and Austria Wirtschaftsservice GmbH.

Cellix Ltd., an Ireland–based developer of technology platforms for drug discovery and diagnostics, has raised €800,000 in seed funding. NCB Ventures led the deal, and was joined by OTC and Enterprise Ireland.

Buyout Deals

Fortress Investment Group has completed its $16.35 per share buyout of RailAmerica Inc. (NYSE: RRA), a Boca Raton, Fla.-based short line and regional rail service provider with 42 railroads operating approximately 7,800 miles in the U.S. and Canada. As part of the deal close, RailAmerica will de-list from the NYSE.

Palm Beach Capital has sold its equity interest in Capri Engineering and its related subsidiaries to Stone Point Capital. No financial terms were disclosed. Capri Engineering is a Sunrise, Fla.-based engineering firm with 16 locations in Florida, south Carolina and Necada. Palm Beach Capital originally invested in April 2005.

Golden Gate Capital and JP Capital Partners have acquired Cydcor Inc., a Westlake Village, Calif.-based provider of outsourced face-to-face sales. No financial terms were disclosed.

CIVC Partners has acquired Guardian Warranty Corp., an Avoca, Pa.-based marketer, administrator and insurer of extended vehicle service contracts. No financial terms were disclosed for the deal, which was done in partnership with company management.

Duke Street Capital is the lead bidder for UK-based Burton’s Foods, according to The Times of London. The deal is expected to net Gbp200 million, with Irish snack food group Jacob Fruitfield as the only other remaining bidder. A final decision could come later today.

DaimlerChrysler AG said yesterday that it might be open to selling Chrysler Group, as part of an announcement that it would lay off 13,000 workers from the troubled U.S. automaker.

Wachovia Capital Partners has acquired a majority stake in Integrated Broadband Services LLC, a Kennesaw, Ga.-based provider of operational support software and back office services for cable and broadband operators. No financial terms were disclosed.

Reed Elsevier has retained UBS to help sell its Harcourt Education division by the second half of this year. It is not yet in talks with any specific buyers.

PE-Backed IPOs

Opnext Inc., an Eatontown, N.J.-based optical components maker, priced around 16.91 million common shares at $15 per share ($13-$15 range), for an IPO take of approximately $254 million. It will trade on the Nasdaq under ticker symbol OPXT, while Goldman Sachs served as lead underwriter. Hitachi was listed as the company’s primary shareholder, while others include Clarity Partners and Cross-Atlantic Capital Partners. The IPO gives Opnext an initial market cap of around $930 million.

PE-Backed M&A

The Audax Group announced it has acquired Dosicolor, a Buenos Aires, Argentina-based provider of colorants to the plastics industry. No financial terms were disclosed, except that GE Antares Capital and GSO Capital provided leverage. Audax said that it will use Dosicolor as an add-on acquisition for existing portfolio company ColorMatrix Corp., a Berea, Ohio-based manufacturer of liquid color and additive concentrates for thermoplastic products.

Towne Holdings Inc., a South Bend, Ind.-based logistics and freight services company, has acquired Complete Transport, a St. Louis-based regional provider of pick-up and delivery and airport-to-airport trucking for the air cargo industry. No financial terms were disclosed. Towne Holdings is a portfolio company of Charterhouse Group.

Regal Forest, a portfolio company of Actis, has acquired the Caribbean assets of Courts PLC, a retailer of consumer electronics, appliances and furniture. No financial terms were disclosed. Senior leverage was co-arranged by Scotia Capital and RBTT of Trinidad, while Citigroup financed a junior tier.

Alexander Gallo Holding LLC has acquired Legal Reprographics Inc., a San Diego-based legal services firm offering litigation photocopying, litigation imaging, electronic discovery/hosting and graphic design. No financial terms were disclosed, except that Alexander Gallo was aided by a capital infusion from Veronis Suhler Stevenson Structured Capital.

PE Exits

3M (NYSE: MMM) has acquired Acolyte Biomedica Ltd., a Salisbury, UK-based provider of an automated microbial detection platform for the detection, diagnosis and treatment of infectious diseases. The all-cash deal included various earnouts, although specific terms were not disclosed. Acolyte had raised VC funding from ANGLE Technology Group and Circus Capital.

Thomson Financial has agreed to acquire eXimius NV, a Belgium-based provider of private client investment management software, from Business Architects International. No financial terms were disclosed. Business Architects shareholders include AlpInvest, Capital-C Ventures, GIMV and P3 Technology Partners. (note: Thomson Financial is the publisher of PE Week Wire).

Key Communications, a private equity entity managed by PC Management, has sold West Virginia Wireless to Verizon Wireless for an undisclosed amount. The deal includes West Virginia Wireless’ spectrum licenses and related operations, which cover a population of 1.2 million people.

Firms & Funds

The Blackstone Group and Citigroup have committed a combined $250 million toward the formation of a new Indian infrastructure fund, which will focus on such projects like roads, power, airports, ports, and industrial and commercial infrastructure. The entire vehicle is targeted at $5 billion, which will include $2 billion in equity and $3 billion in long-term debt financing. India’s Infrastructure Development Finance Co. will manage the equity, while the debt will be managed by India’s Infrastructure Finance Co.

Coller Capital is raising its fifth secondary fund with a $4.5 billion target, according to a recent report from CalPERS. The pension system has committed $375 million.

Thoma Cressey Equity Partners has changed its name to Thoma Cressey Bravo. The firm says that the change “isin recognition of the substantial contributions of Orlando Bravo, a managing partner of the firm and head of its San Francisco office.”

Human Resources

Credit Suisse announced that CEO Oswald Grubel will retire in May, and that current I-banking chief Brady Dougan will be his successor.

Diana Taylor has agreed to join Wolfensohn & Co. as a managing director, effective March 15. She currently serves as New York State Superintendent of Banks.

Pantheon Ventures has hired Marcus Alexis as head of U.S. client services and Josephine Defty as vice president of client services in Europe. Alexis previously was with Wellington Management Co., while Defty worked in the implementation services department of Pantheon parent company Russell Investment Group.