PE Week Wire — Friday 2/14

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3i Group likes to talk about its global private equity presence, but it seems to have decided that it can do without Japan. According to various reports, the London-based firm will shutter its Tokyo office, thus ending the 3i Asia Pacific Japan program launched in 1999 with six employees. The group had only made one investment, a 2001 management buyout of Vantec Corp. from Nissan Motor Co. Any future Japan-based opportunities will be handled by the firm’s Hong Kong or Korea offices.

Pivotal Group, a Phoenix-based real estate investment firm, today announced the formation of Pivotal Private Equity, a wholly owned subsidiary and provider of equity for middle-market corporate acquisitions, recapitalizations of turnaround and under-performing companies as well as growth capital financings. Deal sizes will range from approximately $10 million to $100 million. Jahm Najafi has been named CEO of the new effort, while Keith Baum will join as vice president. Peter Woog also will be a member of the management team.

 

Plaxo, a Mountain View, Calif.-based software provider has received another $1.8 million from lead investor Sequoia Capital, bringing its total raised to $3.8 million. Former Amazon and Netscape executive Ram Shriram joined Plaxo’s board of directors. The company received $1.8 million from Sequoia along with $200,000 from individuals in February 2002. The company now has $3.8 million and has closed its Series A funding. It plans to begin raising a Series B round this spring.

Deploy Solutions, a Westwood, Mass.-based recruiting company, has raised $21 million in new venture funding. No investor details were disclosed. The company’s last round was a $15 million deal in 1999, but no investor info was available on that transaction either.

John Danhakl, a managing director with Leonard Green Partners, has been named to the board of directors of Rite Aid Corp. His term will expire at the company’s annual meeting in 2004.

Epicor Software Corp. (Nasdaq: EPICOR) has raised $5.7 million in a private placement of Series D participating preferred stock from Trident Capital.

Saratoga Partners has completed its acquisition of Sericol, the specialty printing inks business of British Petroleum subsidiary Burmah Castrol PLC. The transaction was valued at approximately $115 million in cash and assumed debt.

KPN, a Dutch telecom company, has completed the sale of its directories business to 3i and Veronis Suhler Stevenson. The deal is worth approximately €400 million, with KPN using the proceeds to reduce its debt load.

The South African Press Association is reporting that a new $12.6 million private equity fund has been launched to invest in women-owned or managed businesses. The new group is a joint venture between the Wendy Luhabe Consortium and Glenhove Fund Managers, and includes such investors as the Industrial Development Corp., the Eskom Pension Fund and the Development Bank of Southern Africa.

NEWS FROM THURSDAY 2/13
In a curious reversal, Austin Ventures and Marathon Partners have reportedly withdrawn their $8 per share ($133 million) offer to acquire Austin, Texas-based business information provider Hoover’s Inc. (Nasdaq: HOOV). This may been renewed hope for Dun & Bradstreet Corp. (DNB), which had previously offered $7 per share. A shareholder meeting is scheduled for March 3.

Healthcare Management Directions Inc., a Nashville-based medical facilities operator, has raised $8.1 million in venture capital. Investors include CB Health Ventures, SSM Ventures, Select Capital Ventures and Russell Carson of Welsh Carson Anderson & Stowe.

Phillips-Van Heusen Corp. (NYSE:PVH) announced today it has completed its acquisition of Calvin Klein Inc. for $430 million in cash and stock. There also is an ongoing agreement with Mr. Klein that will enable him to receive purchase price payments based on sales of all Calvin Klein products through 2018. Apax Partners provided financing for the transaction in the form of a $250 million equity investment in PVH convertible preferred stock, with respect to which Lehman Brothers acted as broker dealer. Apax Partners has also provided financing of up to $125 million, pursuant to a two-year secured note.

Bacterial BarCodes, a Houston, Texas-based molecular diagnostics company, has raised $6 million in additional Series C funding. Techxas Ventures led the financing, which included new investors Koch Ventures and Pacific Rim Ventures. Existing investors, Baylor College of Medicine and BioTex Finance, Ltd., provided additional funding.

Normal folks might have trouble finding work in today’s economy, but such is not the case for former attorneys of failed Silicon Valley law firm Bobeck, Phleger & Harrison. First came news that both Rod Howard, former head of National M&A with Brobeck, and Curtis Mo, a co-chair of Brobeck’s National Capital Markets practice, have been named partners with Weil, Gotshal & Manges LLP. Joining the pair will be six corporate associates. Down in San Diego, Heller Ehrman White & McAuliffe LLP announced that it has signed the bulk of Brobeck’s San Diego Business and Technology group. New Heller Ehrman shareholders include Craig Andrews, Michael Kagnoff, Martin Nichols, Hayden Trubitt. and Richard Parker. Approximately nine former Brobeck associates will also be joining the firm.

Ribozyme Pharmaceuticals Inc. (Nasdaq: RZYM), a Boulder, Colo.-based biotech company, has entered into a definitive agreement for the sale of $48 million in common stock and warrants to purchase common stock to The Sprout Group, Venrock Associates, Oxford Bioscience Partners, Techno Venture Management and Granite Global Ventures.

Lazard LLC has decided to launch a private equity fund-raising practice, and decided to raid some existing talent over at Merrill Lynch. According to various press reports, former Merrill managing directors Ben Sullivan and Bill Riddle have agreed to join Lazard, although it’s not yet clear if they’ll be charged with raising internal funds or third party funds, or both.

SCP Global Technologies, a Boise, Idaho-based semiconductor company, has signed an agreement to purchase the wet products division of Mattson Technology Inc. (Nasdaq:MTSN). Concurrent with the close of the acquisition, SCP will receive a $50 million venture capital investment and have access to a $20 million line of credit, leaving SCP well capitalized. Salomon Smith Barney Inc. served as financial advisor and placement agent for SCP in this transaction.

Worldzen Holdings Ltd., a firm that specializes in business process outsourcing in the financial services, insurance and health-care industries, has received a $4 million investment from The Carlyle Group. The funds will be used to expand Worldzen’s outsourcing capabilities in Bangalore, India.

Young Pecan Co., a Florence, S.C.-based pecan processor, has received a $10 million investment from Atlanta-based Peachtree Equity Partners. In conjunction with Peachtree’s investment, Young received a new $45 million senior debt facility.

Motorola Ventures has made an investment in Clarisay Inc., a Dallas-based provider of surface acoustic wave component technology. Details were not disclosed.

Wellman Inc. (NYSE: WLM), a Shrewsbury, N.J.-based fiber recycler, today announced that it has entered into an agreement to sell up to $125.4 million of perpetual convertible preferred stock to Warburg Pincus. With the signing of this agreement, Warburg Pincus is investing $20 million in Wellman in the form of a convertible subordinated note that will be exchanged into preferred stock upon shareholder approval, and receive warrants to purchase 1.25 million shares of Wellman common stock at an exercise price of $11.25 per share. In addition, Oliver Goldstein, a Warburg VP, has joined the Wellman board of directors. J.P. Morgan Securities Inc., Fleet Securities Inc. and Bear, Stearns & Co. Inc. are serving as Wellman’s advisors on this transaction.

Maxxim Medical Inc., a Clearwater, Fla.-based medical supplies companies, has filed for bankruptcy protection in Wilmington, Del. This is bad news for limited partners in buyout firm Fox Paine & Co., which recapped the company in 1999 and has since made investments alongside JPMorgan Partners and Norwest Equity Partners.

Palladium Equity Partners is preparing to raise its third private equity fund with a target capitalization of $300 million, according to a report in The Deal.
NEWS FROM WEDNESDAY 2/12
It looks like Austin Ventures and Marathon Partners have moved one giant step closer to acquiring online business information provider Hoover’s Inc. (Nasdaq: HOOV) for $133 million ($8 per share). The pair’s main competitor, D&B Corp. had considered upping its own $117 million bid ($7 per share), but said late Monday that it would not do so. Following the news, Marathon Partners agreed to drop a pending lawsuit designed to block the D&B bid. Hoover’s was originally scheduled to hold a shareholders meeting this Friday, but has now moved it back to March 3.

Kagoor Networks ,a San Mateo, Calif.-based provider of voice-over-IP border control solutions, has raised $7.5 million in its third round of financing. Previous backers VantagePoint Venture Partners and ComVentures co-led the round. The company has now raised a total of $41 million since being founded in early 2000.

Catalyst/Hall has formed a new $150 million fund devoted to investing mezzanine and equity capital into middle market companies located in the Southwest and Midwest. Catalyst/Hall is a partnership created by The Catalyst Group Inc. and Hall Brothers Holdings, with offices in Oklahoma City, Houston and Chicago.

Aradigm Corp. (Nasdaq: ARDM), a Hayward, Calif.-based developer of an aerosol-based drug delivery system, today announced that it has entered into a definitive agreement for a $15 million private placement of common stock and the concurrent issuance of warrants for the purchase of common stock. Investors include New Enterprise Associates, Special Situations Funds, and members of Aradigm’s senior management.

Synergia Pharma Inc. ,a South San Francisco-based biopharmaceutical company, has closed a $2 million placement of Series A preferred stock to MPM Capital.

Saratoga Partners has acquired a “substantial interest” in NAT Inc., a Des Plains, Ill.-based provider of software for administering warranty and service contracts on consumer products. Terms of the transaction were not disclosed.

Barker Capital LLC has formed a new private capital fund to purchase seller notes held by the former owners of media assets. The BC Liquidity Fund I has initial commitments of $35 million. The fund is focused primarily on the radio and television sectors, and may also include other media sectors including publishing and outdoor advertising.

William Crouse, a general partner with HealthCare Ventures, has joined the board of directors at Sacramento, Calif.-based Ventria Bioscience.

Berkshire Partners last month announced that it had acquired a majority interest in Acosta Sales and Marketing Co., a Jacksonville, Fla.-based agency. New information released yesterday, however, says that the deal actually represents a minority interest. Berkshire invested a total of $150 million into Acosta, which recorded 2002 sales of $620 million.

MEMX Inc., a designer of MEMS-based solutions for the communications and medical industries, has raised $8 million in Series B funding. Participating investors included Austin Ventures, Sequoia Capital and Agilent Ventures.

Steve Stavro has sold his controlling interest in the Toronto Maple Leafs hockey club to a group of existing investors that includes BCE Inc.’s Bell Globalmedia, the private equity arm of Ontario Teachers Pension Plan and TD Capital. Starvo’s decision to sell off his 55% stake in Maple Leaf Sports and Entertainment Ltd. will make Ontario Teachers the largest shareholder with 58%, followed by Bell Globalmedia with 15% and TD Capital with 14 percent.
NEWS FROM TUESDAY 2/11

3ware Inc., a Mountain View, Calif.-based provider of high-capacity, switched storage solutions, today announced that it has completed a $26 million round of financing. U.S. Venture Partners led the Series D funding, and was joined by repeat backers New Enterprise Associates, VantagePoint Venture Partners and Selby Venture Partners. The company has now raised around $83 million since being founded in early 1997.

Apollo Management signed a letter of intent in October to acquire four raw materials and transportation divisions of U.S. Steel Corp. for approximately $500 million in cash and a 20% equity stake in the new, unnamed company. But now the deal has been suspended pending the resolution of labor negotiations between U.S. Steel and the United Steelworkers of America. The talks revolve around the future of bankrupt National Steel, which is the subject of an intense bidding war.

Falconhead Capital has acquired Maritime Telecommunications Network (MTN) in a transaction valued at approximately $30 million. Miramar, Fla.-based MTN is a provider of satellite-based communications, networking and other services to the cruise ship and offshore oil and gas industries. Bank of America structured and provided senior debt financing for this transaction.

Accel-KKR has added Ben Bisconti as a managing director and Andy Hammann as a principal. Bisconti previously served as a managing director in the Credit Suisse First Boston Technology Group, where he was head of the Global Communications Equipment practice. Hammann comes to Accel-KKR from a vice president gig with JP Morgan H&Q, where he co-led the firm’s I-banking efforts in the enterprise applications industry.

Lombardi Software, an Austin, Texas-based developer of business process management software, that it has raised more than $13 million in its third round of funding. Led by Palomar Ventures, the round also included the company’s previous investors Austin Ventures and Sanders Morris Harris. As part of the funding, Jim Gauer, general partner with Palomar Ventures, joins John Thornton of Austin Ventures and Chip Davis of Sanders Morris Harris on Lombardi Software’s board of directors. The company has now raised $38 million to date, including a $20.5 million Series B round in the summer of 2000 at a $51 million post-money valuation.

Tullis-Dickerson & Co. Inc. has hired Dr. Curt LaBelle as a senior associate. LaBelle most recently worked for Convergent Ventures, where he identified biomedical companies stemming from universities and research institutes in Southern California.

AD PathLabs Corp., a Newport Beach, Calif.-based provider of technologies to the anatomic pathology community, has received nearly $8.9 million in Series C preferred stock financing, the first institutional investment in the 14-month old company. Investors include Blue Chip Venture Co., Forrest Binkley & Brown Capital Partners, Pacific Venture Group, existing angel investors and management.

Prism Venture Partners has promoted James Counihan from senior associate to principal. Counihan joined the firm as an associate in November of 2000, prior to which he served as legal counsel and director of business operations at Prism portfolio company EPiCON.

AxioMed Spine Corp., a Willoughby, Ohio-based spinal implant company, has raised $2.75 million in first round funding from CID Equity Partners, Early Stage Partners, Primus Venture Partners and Reservoir Venture Partners.

Sarantel, a UK-based developer of miniature antennas for the mobile wireless market, has raised GBP 3.5 million in a first closing in a new round of investment led by MTI Partners and VCF Partners, and supported by eTechnology VCT. Before the current funding round, Sarantel had raised GBP 8 million, including GBP 5.5 million from 3i and GBP 2.5 million from VCF, who bought out 3i in September 2002.

Corautus Genetics Inc. (AMEX:CAQ) announced that it will be seeking financing in a private equity placement or similar type financing. The terms of the potential investment have not been determined. The San Diego-based company also said that its board of directors have authorized a reverse stock split at a ratio of 1-for-7.

Columbitech, a Sweden-based software developer, has received a new investment from Japanese venture capital company Mobile Internet Capital.
NEWS FROM MONDAY 2/10
Starent Networks Corp., a Tewksbury, Mass.-based developer of intelligent mobile infrastructure solutions, today announced it has closed its third round of funding, raising $23 million. New investor Samsung Electronics Co. Ltd. joined previous Starent backers Matrix Partners, North Bridge Venture Partners and Highland Capital Partners. The company was last in the venture market in the summer of 2001, when it raised $22 million at a post-money valuation of $65 million. It has now secured a total of just over $55 million.

Elematics, a Beaverton, Ore.-based provider of multi-carrier, multi-vendor control plane software, today announced that it has secured $10 million in Series B financing. This round of funding was led by Warburg Pincus, Elematics’ largest investor, and includes contributions from the management team. The total financing raised by the company to date is more than $25 million.

Peregrine Semiconductor, a San Diego-based supplier of integrated circuits for wireless communications, today announced that it has raised $7.5 million in the third and final tranche of its $23 million Series A1 round. The recap was led by Technology Venture Partners and Australasian Media and Communications Fund, both from Sydney, Australia. They joined returning investors Morgenthaler Ventures, Wasserstein Ventures, APAX Partners, Newlight Associates, CSK Ventures, CDIB Ventures, H&Q Global Alliance, Intel Capital, Needham Capital Partners and Roser Ventures.

VirtualScopics, a Pittsford, N.Y.-based provider of advanced medical image analysis technology, announced today that it has raised $3.8 million in Series C round financing. Investors include GE Medical Systems and affiliates of Trillium Group LLC.

Sistina Software, a Minneapolis-based storage infrastructure software developer, today announced that it secured $10 million in Series B funding. Led by Crescendo Ventures, the round includes investments from Validus Partners and Series A lead St. Paul Venture Capital.

Pedestal Software Inc., a Newton, Mass.-based provider of system security management software, today announced the successful completion of $5.28 million in venture equity financing from Venrock Associates. In addition, the company announced a new management team, which includes SHYM Technology co-founder Jim Geary as president and CEO.

AgraQuest Inc., a Davis, Calif.-based biotech company, has raised $9.4 million in new private financing. Existing investors Otter Capital and Switzerland-based SAM Sustainability Private Equity LP, Sustainable Performance Group NV, and Swiss Re Investors led the financing. Several other existing AgraQuest investors also participated, including Rockefeller & Co.’s Odyssey Fund, BioAsia Investments LLC, JSS Management, and King Ranch Inc.

Morgan, Lewis and Bockius, the Philadelphia-based law firm that backed out of a merger that would have saved Brobeck, Phleger & Harrison, has now begun picking up the pieces from the soon-to-be defunct San Francisco firm. The Associated Press is reporting that Morgan Lewis has now hired 100 Brobeck attorneys (including 50 partners), and hopes to move into Brobeck’s San Francisco, Palo Alto and Irvine, Calif. office space.

AVChem Inc., a St. Louis-based provider of chemical management services, has raised $2.5 million new venture capital financing led by Gateway Associates. Bush O’Donnell Capital Partners LLC also participated in the Series B funding for AVChem, which was originally launched in 2001 as part of the Boeing Ventures incubator program.

Venture Technologies, a Minneapolis-based venture scouting firm, has added consultant Wayne Jenkins as a Rhode Island-based partner.

Peggy Wallace, a state representative in Utah (R-West Jordan), is pushing a bill that would create a $100 million fund-of-funds to invest in venture capital firms willing to target Utah-based technology companies. The fund capital would come from the private sector, not from taxpayers.

It appears that PCCW‘s courtship of Cable & Wireless is over, as the Hong Kong-based telecom firm has backed away from what was reported to be a $3.26 billion takeover offer. The cash buyout bid would have likely included Texas Pacific Group, which told Reuters that it would maintain its right to participate in C&W takeover talks, if invited.

Liu Tai-Ying, chairman of Taiwan-based China Development Financial Holdings, is in some legal hot water, according to the Associated Press. A report this morning says that a Taipei court has ruled that Tai-Ying should be detained while he is investigated for corruption charges related to a failed real estate deal. Tai-Ling maintains his innocence, and says he will appeal the ruling.

Quadrangle Capital Partners will announce today that it has acquired infomercial producer GoodTimes Entertainment, according to a report in this morning’s Wall Street Journal. The story cites sources who say that the final purchase price was around $250 million.

 

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