PE Week Wire — Friday 11/8

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David Wilhelm, co-founder of venture capital and political consultancy Wilhelm & Conlon, has been asked to put together a transition team for Illinois Governor-elect Rod Blagojevich. Wilhelm, who is not expected to stick around beyond the transition, had been a senior advisor during a campaign that included Blagojevich’s promise to launch a $200 million venture fund to support Illinois start-ups. A pair of venture-backed broadband software providers announced a merger today when Motive Communications Inc. and BroadJump Inc. signed a definitive agreement for Motive to acquire BroadJump in a stock-for-stock transaction. Both companies are based in Austin, Texas. Motive has received approximately $55 million in venture capital from such backers as Accel Partners, Austin Ventures, Dell Ventures, JPMorgan Partners and SSM Ventures. BroadJump has received nearly $50 million in funding from Accel Partners, Austin Ventures, Nortel Networks, SBC Communications, Techxas Ventures and Vortex Ventures. Motive was valued at $224 million after a January 2000 Series D funding, while BroadJump netted a $200 million post-money mark following an April 2001 third round funding.Fritz Bittenbender has resigned, effective Dec. 1, as Secretary of Administration in Pennsylvania to become president of the Pennsylvania Biotechnology Association (PABIOTECH). A federal judge in Denver denied a motion brought by Quest Communications shareholders to block the $7 billion sale of the telecom company’s yellow pages unit to Carlyle Group and Welsh, Carson, Anderson & Stowe. The complaint had argued that any profits from the sale should be distributed back to shareholders for losses they suffered due to a massive decrease in the company’s stock price. Vivendi Universal SA said yesterday that it will attempt to sell approximately 40% of its Vivendi Environnment subsidiary. It also said that it had reached a final agreement on the sale of its Houghton Mifflin publishing assets to Thomas H. Lee Partners and Bain Capital. Lennart Johansson has been appointed the new chief executive of Amsterdam-based venture shop B-business Partners effective March 31, 2003. Johansson is currently CEO of Emerging Technologies ET AB, an early-stage venture capital company. NEWS FROM THURSDAY 11/7The California Public Employees’ System (CalPERS) has asked the San Francisco Superior Court to give up jurisdiction in the $135 billion pension fund’s battle with the San Jose Mercury News and move the case to Sacramento. Judge James Robertson will hear the motion Thursday Nov. 14, thus indefinitely delaying any decision on whether or not CalPERS will have to disclose the value of its $7 billion private equity portfolio. PE Week subscribers can read more on this story in the protected Fund News section of .
TAZZ Networks Inc., a Providence, R.I.-based company building a breakthrough solution in subscriber and service enablement, today announced that it has closed a $7.7 million Series A investment round led by Lazard Technology Partners and Pilot House Ventures Group. Other participants included Zero Stage Capital, Point Judith Capital and the Slater Center for Interactive Technologies. Pfizer Inc. has agreed to sell its Tetra aquarium and pond supplies business for $238.5 million to The Triton Fund, an independent European private equity fund. Pfizer had announced in March that it would begin to explore strategic options for the Tetra business, after concluding that Tetra does not fit Pfizer’s current strategic focus. iMove Inc., a Portland, Ore.-based creator of spherical imaging systems, has received $7.5 million in equity financing. The deal was led by The Grosvenor Funds and SmartForest Ventures.Digital Harbor Inc., an Annandale, Va.-based enterprise software company, today announced the completion of a $10 million dollar round of financing with Insight Venture Partners. bR> Aelita Software Corp., a Columbus, Ohio-based provider of enterprise management solutions for Windows-centric networks, today announced the completion of a $10 million dollar funding deal with Insight Venture Partners.Allegis Capital announced today the addition of Frank J. Fanzilli Jr. as a new venture partner. Until his retirement in June 2002, Fanzilli was global chief information officer and managing director at Credit Suisse First Boston. DuringMichael W. Wölfle, former director of sales at ProSieben Media AG, has joined Wellington Partners as a venture partner. AdStar Inc. (Nasdaq: ADST, ADSTW), a Marina Del Rey, Calif.-based application service provider for the classified advertising industry, today announced that it has signed a letter of intent with >B?Tribune Co. (NYSE: TRB) for an additional investment by Tribune of $1.5 million. This agreement follows a strategic alliance the companies made in March that included $1.8 million in funding from Tribune..American Capital Strategies Ltd. has invested $12.5 million in Northwest Coatings Corp., a developer and manufacturer of customized specialty energy-curable and water-based coatings and adhesives. American Capital’s investment takes the form of senior subordinated debt and common and preferred equity and supports the acquisition of Northwest Coatings by Caltius Capital Management from a group of private investors. Antares Capital Corp. provided the senior financing and is investing in the common and preferred equity. Northwest Coatings management is also investing in the equity. The MONY Group Inc. (NYSE: MNY) today reported results for the third quarter and first nine months of 2002. The company accelerated the amortization of deferred policy acquisition costs and increased death benefit reserves. These actions resulted in a cost of $8.0 million or $0.17 per share and contributed to the company’s operating loss of $1.7 million or $0.04 per share for the quarter before venture capital losses. Venture capital losses amounted to $5.1 million or $0.11 per share for an operating loss of $6.8 million or $0.15 per share. These results reflect the poor performance of the equity markets over the third quarter. Vantage Oncology Inc., a Manhattan Beach, Calif.-based operator of radiation oncology treatment centers, has raised $9 million in its first round of institutional funding. Conning Capital Partners, Salix Ventures and Versant Ventures all participated on the deal.NEWS FROM WEDNESDAY 11/6Reasoning Inc., a Mountain View, Calif.-based provider of automated software inspection services, announced today that it closed a $9 million round of Series B Preferred Stock funding. The deal was led by the New York technology investment bank C. E. Unterberg, Towbin in partnership with Novus Ventures, Aspen Ventures, Shea Ventures and Portage Ventures. This follows a Series A Preferred Stock funding of $9.2 million in September 2001.Nimble Technology a Seattle-based enterprise software developer, announced that it has raised $6 million in additional financing for the company. ARCH Venture Partners, Madrona Venture Group, and NeoCarta Ventures all previous investors in Nimble, participated in this latest funding round.BTG (LSE: BGC), a global technology commercialization company, today announced an investment in Iclectus Ltd. a new biotechnology company that will focus on developing intrabody and masked antisense molecules as therapies for the treatment of cancer, and as tools for validating new drug targets produced, for example, by the sequencing of the human genome.Cablevision Systems Corp. (NYSE: CVC) yesterday announced that Quadrangle Capital Partners LP, a private investment firm that invests in media and communications companies, has agreed to invest $75 million in the company. Quadrangle’s investment will be in the form of preferred stock convertible into CVC Class A shares. This transaction is subject to approval by the Cablevision board of directors and to the negotiation and execution of definitive documentation. SiRiFIC Wireless Corp. an Ontario-based developer of reconfigurable RF integrated circuits for innovative wireless products, today announced the successful completion of a $11.5 million (Cdn$18 million) equity financing round. All existing investors participated in this round as well as two new investors, BDC Venture Capital and Tech Capital Partners Inc., through its Waterloo Tech Capital LP fund. Existing investors include Celtic House Venture Partners, Solowave Investments, Waterloo Ventures Inc. and Working Ventures.Flarion Technologies, a developer of flash-OFDM(TM) mobile broadband system for licensed wireless operators, and SK Telecom (NYSE: SKM) today announced that SK Telecom is making a strategic investment in Flarion Technologies. Financial terms of the investment were not disclosed.TROY Group Inc. (Nasdaq:TROYE) confirmed that it has received a proposal from The Amara Group Inc. to purchase all of the outstanding equity of the company, including the majority interest held by the Dirk family, for $2.50 per share in cash.HFS Capital LLC has announced that Terry Handran has joined the firm as a Special Director. Handran will be based out of Portland, Ore. and, in addition to supporting the firm in his role as a Special Director, will be developing the firm’s presence in the economic development of Native America. Handran is a member of the Cherokee nation and is the founder and managing director of Native America LLC, an international investment and business management-consulting firm. He is currently responsible for working with the US department of Trade to have the Native nations included in NAFTA. XIOtech Corp. today announced that Oak Investment Partners has made a significant equity investment in the company, with the goal of accelerating the growth of XIOtech.ITC-DeltaCom Inc. (NASDAQ: ITCD), an integrated telecommunications and technology provider, announced that Welsh, Carson, Anderson & Stowe VIII, L.P., a private equity investment firm, has filed a statement with the Securities and Exchange Commission disclosing that it has become a major investor in the Company as part of a previously-announced reorganization. Welsh, Carson acquired, directly or indirectly, 22,107,085 shares of common stock. This position represents 49.4% of the Company’s outstanding common stock and approximately 44% of the Company’s outstanding equity after giving effect to the outstanding convertible preferred stock on an as-converted basis.Curative Health Services Inc. (Nasdaq: CURE), announced today the sale of its venture capital interest in Accordant Health Services Inc., resulting from the previously announced sale of Accordant to AdvancePCS (Nasdaq: ADVP). As a result of the transaction, Curative received initial proceeds of approximately $4 million and as previously announced will record a one-time gain of approximately $0.08 cents per share in the fourth quarter of 2002. Depending upon Accordant’s achievement of certain targets in calendar year 2003, the Company could also receive additional proceeds over the next 18 to 24 months.BioTrove Inc. announced today that it raised $5.25 million in a second round of private equity financing to expand the company’s two core platforms that improve the efficiency and productivity of drug discovery. The round was led by Catalyst Health and Technology Partners, and includes investments from CB Health Ventures, Zero Stage Capital and BioFrontier Partners. In addition, the company appointed two new directors, Mr. Joshua S. Phillips, a managing director at Catalyst Health and Technology Partners, and Dr. Enrico Petrillo, a general partner at CB Health Ventures LLC.TransPacificTelecom announced today it has raised $600,000 in venture capital and private funding, beginning a first round of financing that also includes commitments for an additional half million dollars.Dow Jones is reporting that Swiss aircraft maintenance company SR Technics will be taken over by a consortium led by 3i Group PLC in a deal valued at 425 million Euros. The investors include STAR Capital Partners and SR Technics’ management and employees. Brocade Communications Systems Inc. (Nasdaq: BRCD) announced an agreement to acquire Rhapsody Networks, a privately held provider of next-generation intelligent switching platforms. Rhapsody has received over $62 million in venture funding from such firms as Accel Partners, Amerindo Investment Advisors, Morgan Stanley, Oracle Corp., Quantum Technology Partners and Sequoia Capital. Following its $50 million Series B deal in August of 2001, Rhapsody was valued at $129.85 million. The Brocade acquisition is tentatively valued at $175 million.


Echopass Corp., a Salt Lake City-based provider of hosted voice and e-media infrastructure for customer service and telesales centers, today announced it has secured $8 million in private equity funding. Outlook Ventures led the round, joined by previous investors Canaan Partners and New Enterprise Associates.DispenseSource Inc., a Rancho Santa Margarita, Calif.-based provider of automated Point-of-Use (POU) inventory systems for the industrial market, announced the successful completion of a $6.25 million Series B round of venture funding. InnoCal Venture Capital led the deal, with strong support from venture firms Mission Ventures and Forrest, Binkley & Brown, and from strategic partner Omnicell Inc.Integrex, a Bothell, Wash.-based electronics manufacturing services (EMS) company that provides outsourced manufacturing and supply chain solutions to medical instrumentation and technology companies, announced that it has closed a cumulative $8 million in financing through a round of equity, subordinated debt, and revolving line of credit with new and existing investors and Silicon Valley Bank. The participants in the equity financing included Benaroya Capital, Fluke Venture Partners, and Sunrise Capital.CreekPath Systems, a Longmont, Colo.-based storage resource management software developer, today announced the closing of its oversubscribed Series B financing with total commitments of more than $16 million, bringing the total raised funds to over $36 million. New Enterprise Associates led the deal, and was joined by A.G. Edwards Capital and original investors TeleSoft Partners and Sequel Partners.Investcorp has signed a definitive agreement under which it will purchase Aero Products International Inc. and related assets from an ownership group led by Trivest Partners LP. Terms of the transaction, which includes the equity participation of Aero Products management and is expected to close before year-end, were not disclosed. Wauconda, Ill.-based Aero Products competes in the alternative bedding, primary bedding, and sporting goods markets, and is expected to generate full-year 2002 revenue of approximately $115 million.Euromedic International NV, a provider of private dialysis and diagnostic medical services in Central and Eastern Europe, has raised $22.5 million to help buy out an early founding shareholder and for future expansion efforts. Dresdner Kleinwort Capital was among the investors.Mohomine Inc., a San Diego-based provider of text processing automation software, today announced it has been awarded an add-on contract from In-Q-Tel Inc., a private venture organization funded by the Central Intelligence Agency (CIA). The contract for further enhancements to the company’s mohoClassifier product is worth over $500,000 to Mohomine.Simpson Thacher & Bartlett announced today that Euan Gorrie will join the firm as a partner in its London office. Gorrie has practiced with Allen & Overy since 1989, specializing in acquisition finance and other leveraged finance transactions. His practice includes the representation of banks and mezzanine lenders as well as private equity funds and other borrowers. A graduate of Oxford University, Gorey will be the first English solicitor to join Simpson Thacher as a partner.Conor O’Connor, CEO of Enterprise Equity, has been re-elected chairman of the Irish Venture Capital Association (IVCA).Enamics Inc., a Stamford, Conn.-based provider of software platforms for business technology management, has raised $6.3 million in new funding led by The Grosvenor Funds. Other investors include prominent CIOs and business executives as well as international private investors and Enamics’ management team. The company is keeping this round open to raise an additional $2 to $4 million over the next few months.Bain Capital yesterday purchased the basic chemicals division of French manufacturer Rhodia SA. Terms of the deal were not disclosed, although some published reports put the final price tag at around $100 million.

NEWS FROM MONDAY 11/4The venture capital market’s fund-raising rebound landed with a thud last quarter, according to new data being released today by Venture Economics (publisher of PE Week) and the National Venture Capital Association. In all, just 34 VC firms raised a gross total of $1.68 billion during Q3, which represented a 19% drop from the previous quarter. For more, go here , or pick up the latest print edition of Private Equity Week.Novacea Inc., a South San Francisco-based biopharmaceutical company, announced today that it has raised $36 million through a Series B financing led by New Enterprise Associates (NEA) and Versant Ventures. Existing investors, Domain Associates, ProQuest Investments and Sofinnova Ventures, also participated in this financing round. The Company also announced that Camille Samuels Pearson of Versant Ventures and Michael Raab of NEA have joined the Company’s Board of Directors. Net proceeds from the financing will be used to advance Novacea’s lead investigational drug, DN-101, for the potential treatment of cancer.NewsStand Inc., an Austin, Texas-based provider of digital publishing and delivery solutions, today announced it has closed an $8 million round of venture financing from Adams Capital Management Inc. This funding round is in addition to $8 million Series B obtained in March 2002 from SSM Ventures, Noro-Moseley Partners and The New York Times Co.Sand Video Inc. announced its entry in the video compression market with the closing of $8 million of private equity financing led by Baker Capital, and including Navigator Technology Ventures and a number of private investors from the CommonAngels of Boston. Sand Video is an Andover, Mass.-based fabless semiconductor manufacturer building real-time video compression technology based on the emerging H.264/MPEG-4 part 10 video compression standard.Polaris Venture Partners LP today announced the appointments of an executive-in-residence, and three principals. All of the new team members are located in Boston. Jonathan Seelig joins Polaris as an Executive-in-Residence after being co-founder and vice president of strategy and corporate development for Akamai Technologies. Bob Geiman joins Polaris as a Principal from MCK Communications, where he was a member of the management team running business development. Simeon Simeonov, also joining as a principal, was formerly chief architect and vice president of emerging technologies at Macromedia. The final new principal hire is Bryce Youngren who served as a senior associate at Great Hill Partners.Goody’s Family Clothing Inc. (Nasdaq: GDYS) today announced that it has ended negotiations for the previously announced acquisition by a private equity group of 100% of its outstanding common stock. The letter of intent, announced September 30, 2002, provided for an exclusive initial due diligence period of up to 60 days at which time both parties would agree on a firm price and structure. Primarily as a result of differing views as to the effect of the current retail environment and its impact on Goody’s results, such an agreement was not reached and both parties have agreed to end negotiations.Katy Industries Inc. (NYSE: KT) today reported the divestiture of Hamilton Precision Metals LP to a company formed by Hamilton’s management and Cedar Creek Partners, LLC , a Milwaukee, WI-based private equity firm. Hamilton, located in Lancaster, Pennsylvania, is a reroller of a wide range of precision strip and foil for various industries, and represented approximately 3% of Katy’s revenues.ArcLight Capital Partners announced today that its affiliate, ArcLight Energy Partners Fund I LP, is now the owner of 100% of WHP Acquisition Co. with the exit of Aquila Inc. from the company. WHP Acquisition was an entity established by ArcLight and Aquila in 2001 to acquire the Lodi Gas Storage Facility in Lodi, Calif. from Western Hub Properties LLC. Under the revised structure, and upon receipt of approval from the California Public Utilities Commission, ArcLight and Western Hub Properties would each become 50% owners of the 12 billion cubic foot, high-performance depleted reservoir natural gas storage facility located approximately 35 miles south of Sacramento, which is connected to the PG&E backbone gas pipeline.eBenX Inc. (Nasdaq:EBNX), and SHPS Inc., a private company owned by Welsh, Carson, Anderson & Stowe, announced that they have entered into a definitive agreement to merge the companies. The combination will create a leading comprehensive HR/benefits administration and health management services company. The merged company will operate under the name SHPS, be headquartered in Louisville, Ky., and be led by David Garner, chief executive officer of SHPS.Financial News is reporting that French private equity shop Galileo Partners has reduced the size of its third investment vehicle from 250 million Euros to 158 million Euros. It also reduced its headcount from 19 down to 14.VitalStream Holdings Inc., a provider of digital broadcasting solutions, today announced that Dolphin Equity Partners has agreed to make a $1.1 million investment in VitalStream through the purchase of convertible notes and warrants to purchase common stock of VitalStreamFor last week’s complete PE Week Wire, click here

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