PE Week Wire — Friday 2/28

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Daniel Akerson, former chairman of XO Communications and a former partner with Forstmann Little & Co., will join The Carlyle Group on March 3 as a Washington DC-based managing director. He will focus on venture and buyout deals in North America. Prior to joining XO in 1999, Akerson served as chief executive officer of Nextel Communications Inc. (1996-1999). Endurance Specialty Holdings Ltd., a Bermuda-based property and casualty reinsurance company created post-9/11, raised $220.8 million in an initial public offering yesterday. The company priced 9.6 million shares at $23 each, below the estimated offering range of $25 to $27 per share. The company was formed in December of 2001 by a $1.2 billion private equity investment from Aon Corp., CSFB Private Equity, Capital Z Investment Partners, GIC Special Investments, General Motors Investment Management, Golden Gate Capital, Lightyear Capital, Teachers Insurance & Annuity Association College Retirement, Reservoir Capital Group, Texas Pacific Group and Thomas H. Lee Partners. The IPO was lead-managed by Goldman Sachs and Merrill Lynch.Twinstrand Therapeutics Inc., a Vancouver-based biopharmaceutical company focused on cancer, has raised CA$10 million in venture capital funding. MDS Capital led the deal, and was joined by Ensis Growth Fund and return backers Growthworks and the Western Technology Seed Investment Fund.Andrew Schoenthal has been named a senior associate for the private equity team at Charlesbank Capital Partners. He will be based in the firm’s New York office, and comes to Charlesbank after a stint with Whitney & Co.Northland Cranberries Inc. last Friday made an offer to purchase Ocean Spray Cranberries Inc.‘s juice business, including the Ocean Spray brand. The equity and debt financing for the $800 million-plus deal would by arranged by Sun Capital Partners, which is Northland’s controlling shareholder.Select Comfort Corp. (Nasdaq:SCSS) has filed a registration statement in connection with a proposed underwritten secondary public offering of 4.4 million shares of its common stock, plus an over-allotment option of 660,000 shares. The shares are being sold by St. Paul Venture Capital and other selling shareholders. At the completion of the offering, St. Paul Venture Capital will continue to own approximately 70 percent of its stake in the company. NuTech Solutions Inc., a Charlotte, N.C.-based provider of predictive analytics and profit optimization software, announced today that it has completed the acquisition of the software development and consulting operations of BiosGroup Inc. Since 1996, BiosGroup has raised more than $20 million in venture capital financing from Ernst & Young, Procter & Gamble Co. and Ford Motor Co. Joe Mandato has been named a director at Menlo Park, Calif.-based De Novo Ventures. Mandato has served in senior management positions at a number of life sciences companies, including Ioptex Research, Origin MedSystems, A Company Orthodontics and Heart Rhythm Technologies. Mandato was also a co-founder and CEO of Gynecare. He serves or has served on the boards of Align Technology, Confer Software, EM3 Software, Novasys Medical and The Madrone Group. CSX Corp. and The Carlyle Group have completed the conveyance of CSX Lines LLC, from CSX to a venture formed with The Carlyle Group. CSX received $300 million, consisting of $240 million in cash and $60 million of securities issued by the venture. As part of the transaction, originally announced last December, former CSX Lines president and CEO Charles G. (Chuck) Raymond and his management team will lead the Charlotte, N.C.-based ocean carrier, now named Horizon Lines LLC. Raymond will also chair the board of directors of the company. The San Jose Mercury News is reporting that Phil Wickham has been named a Silicon Valley-based managing director of global venture firm Copan. He has previously worked at Profile Ventures and Jafco.The Deal is reporting that Red Herring is on the block, and that controlling shareholder Broadview Capital has hired investment bank DeSilva & Phillips to help find buyers. The article implies that the bank is essentially just pitching the brand name and subscriber lists (for a paltry $2 million!), which seems to mean that the magazine itself may be running out of shelf-life.NEWS FROM THURSDAY 2/27

HealthPoint LLC, a private equity firm exclusively focused on the orthopedic device industry, is nearing a final close on its $200 million inaugural fund. In preparation of the big day, the New York-based shop recently hired Carl McCall as vice chairman and managing director. McCall is the former comptroller of the State of New York (where he oversaw state pension fund investments), and most recently made news by losing the state’s gubernatorial race to incumbent George Pataki. Convio, an Austin, Texas-based developer of software for the nonprofit sector, has raised $5.6 million in third round funding. Investors include Granite Ventures, Austin Ventures, Silverton Partners and Neil Webber, co-founder and former CTO of Vignette Corp. The company has now raised $22.2 million since being founded in early 1999.AppIQ, a Burlington, Mass.-based provider of storage management software, today announced that it raised $12 million in its second round of venture capital financing. The deal was led by Series A backers Matrix Partners and North Bridge Venture Partners, and brings the company’s total venture capitalization to $20 million. CRC Health Corp. has acquired Comprehensive Addiction Programs Inc., an operator of 16 residential and outpatient addition treatment facilities. North Castle Partners led the deal’s $40 million equity syndicate, which also included Credit Suisse First Boston. The $70 million senior debt tranche was led by BNP Paribas and Madison Capital. Open Text Corp. (Nasdaq: OTEX) has agreed to acquire enterprise software developer Corechange Inc. for approximately $3.6 million in cash. Boston-based Corechange has raised over $68 million since its 1996 founding from such investors as ABN AMRO Private Equity, Exelon Capital Partners, HarbourVest Partners, Nortel Networks Corp., SG Cowen Private Equity, Samsung Securities Co., Sterling Partners and UBS Capital Corp. Following a $25 million Series C round in May 2001, the company was valued at approximately $75 million.Siemens Mobile Acceleration has opened its first office in the United States and is planning to close its first two U.S. deals within the next six months. Siemens Mobile Acceleration was founded in July 2001 and has offices in Oberhaching, Germany, Beijing, Stockholm, Shanghai and now San Jose, Calif. The wholly owned subsidiary of Siemens AG supports start-up companies developing innovative mobile voice and data applications, services and technologies.The Associação Brasileira de Capital de Risco (ABCR) and Thomson Venture Economics have just completed their first joint survey of the Brazilian venture capital market. For more information on the survey and its results, go to www.VentureEconomics.com.
Pure Networks Inc., a Seattle-based home networking software company, has secured $2 million in venture funding from Ignition Partners and individual investors.Reuters is reporting that Finland-based private equity group CapMan plans to double its Swedish workforce this year. The decision is part of the firm’s effort to become a pan-Nordic investment house.NEWS FROM WEDNESDAY 2/27As expected, Divine Inc. filed for Chapter 11 bankruptcy protection yesterday in Boston. In a bit of a twist, however, private equity firm GTCR Golder Rauner emerged with a bid — reported to be worth around $50 million — for Divine’s assets. Divine also said that other interested bidders exist for some of the company’s individual assets. Any sale would have to be approved by the bankruptcy court.Six hundred seventy-seven Canadian companies raised $2.5 billion in venture capital during 2002, according to a new report from the Canadian Venture Capital Association and Macdonald & Associates. This represents a 35% drop from the $3.8 billion raised in 2001, although the fourth-quarter showed some upside with a 51% bump over Q3. Fund-raising also was down, with Canada-based firms raising just $3.2 billion.Ardais Corp., a Lexington, Mass.-based clinical genomics company, has raised $13.4 million in Series C funding. The deal was an inside round with participation from The Kaufmann Fund, Advanced Technology Ventures, Advent Health Care and Life Sciences, EGS Healthcare Capital Partners, Bessemer Venture Partners, Pequot Private Equity Fund, BioVentures Investors and Silicon Valley Bancshares.Gilian Technologies, a Redwood City, Calif.-based provider of web applications and content security, today announced that it has raised $5 million in third round funding from repeat backers Steamboat Ventures LLC, Ascend Technology Ventures LP, Deutsche Bank AG, Evergreen Partners and Pitango Venture Capital.LivHOME Inc., a Los Angeles-based at-home assisted living services company, has closed an extension of its previously announced Series B funding round. Under the agreement, Kline Hawkes & Co. will make an initial investment of $3 million while previous investors BA Venture Partners and Tullis-Dickerson & Co. will each invest an additional $1 million. An additional investment of $850,000 by a small group of individual investors will be led by incoming LivHOME President Jay Greenberg.GTCR Golder Rauner LLC has partnered with the senior management of Morton Grove Pharmaceuticals Inc. to recapitalize the Morton Grove, Ill.-based maker of prescription liquid generic drugs. Transaction terms were not disclosed. Kirkland & Ellis served as legal counsel to GTCR. H.I.G. Capital and HALO Industries Inc., a Northbrook, Ill.-based provider of promotional products, have signed a definitive agreement whereby a newly formed affiliate of H.I.G. Capital will acquire the U.S. and European operations of HALO, including Lee Wayne Corp., pending approval from the U.S. Bankruptcy Court in Chicago. The total purchase price is $22 million in cash and notes, including a $3 million earn-out based on future financial performance. Net proceeds received by HALO will be used to pay the first installment on the pre-petition debt remaining from HALO’s reorganization under Chapter 11 of the United States Bankruptcy Code, which the company filed in July 2001. This transaction is scheduled to close in April, and enables HALO’s emergence from Chapter 11 and its return to normal operating status. The Small Enterprise Assistance Fund is reported to be opening an India-based operation with $20 million to $35 million of initial investment capital. The fund will be fund out of offices in Chennai and Mumbai, but will source deals throughout the country. Klaus Esser, a Dusseldorf-based partner with General Atlantic Partners and former CEO of Mannesmann AG, has been charged by German prosecutors with conspiring to enrich himself by agreeing to Vodafone Group’s hostile takeover of Mannesmann in 2000. Also named were senior executives of Deutsche Bank. Esser, who received around $32 million in severance following the takeover, has repeatedly said that he is innocent of any wrongdoing.The Deal is reporting that Thomas Weisel Partners has boosted its private equity practice by hiring Jim Hoch, formerly with Morgan Stanley Capital Partners.NEWS FROM TUESDAY 2/25Arteris, a Paris, France-based semiconductor company, has secured $12 million in first round funding. Atlas Venture led the deal, with co-investments from Crescendo Ventures, Techno Venture Management and Ventech. Evercore Capital Partners, the controlling shareholder of American Media Inc. (AMI), has agreed to a $1.5 billion recapitalization of AMI in partnership with Thomas H. Lee Partners. Evercore and Tom Lee investors will each fund approximately one-half of the total equity of $508 million in the recapitalization. Following the transaction, Evercore and THL will jointly control AMI. The transaction will be structured as a recapitalization in which the original investors in the May 1999 purchase of AMI, led by Evercore, will sell their interests to the new investor group.Paul Laud and Colby Collier, founding managers of CIT Group Inc.‘s private equity group, today announced the creation of Laud Collier & Co. LLC, a Livingston, N.J.-based middle-market leveraged buyout firm. Initially, Laud Collier will manage a portfolio exceeding $200 million of invested capital that the principals originated while building the private equity unit at CIT, but it also is pursuing new middle-market leveraged buyout targets with annual revenues between $25 million and $250 million. Target markets include companies focused on basic materials, business services, consumer products and transportation. Also joining Laud Collier are Kenneth L. Walters, Jr., Edward R. Burns and Michael D. Horgan, all previously with CIT’s private equity group. Photuris Inc., a Piscataway, N.J.-based developer of metro regional optical transport systems, has closed the first part of its Series C funding with $40 million from Columbia Capital and Artiman Ventures. The company is still looking for additional investors, and hopes to buoy its effort with the recent CEO addition of Charles Childers, previously CEO of Bell Canada Enterprises Teleglobe. Keith Kerman, previously a healthcare-focused general partner with Morgenthaler, has joined Cleveland-based Primus Venture Partners.William Blair New World Ventures has cut the size of its $78 million third fund nearly in half. The tech-focused firm also reduced its management fee by approximately 70%.SiVerion, a Tempe, Ariz.-based provider of engineering data analysis software, has secured $2.25 million in additional financing from Gefinor Ventures, Grayhawk Ventures and Valley Ventures.Alan Patricof, co-founder and vice chairman of Apax Partners has been named to the board of The Trickle Up Program, an international non-profit organizations dedicated to alleviating poverty through micro-enterprise development. Jay Ward has joined the Oakland office of law firm Reed Smith Crosby Heafey LLP, where he will work in the high tech and venture capital practice. Ward’s most recent claim to fame was as the Silicon Valley manager of failed early-stage venture firm Yazam, which was backed by Texas Pacific Group and the Carlyle Group. Refco Group Ltd., a New York-based futures firm, will announce later today that it is launching an alternatives investment program to provide itself and other firms with a variety of structured and alternative investment solutions that incorporate hedge funds, futures, currency and derivative products. The Wall Street Journal is reporting today that Broadwing Inc. is preparing to sell most of its broadband unit to a new company formed by Corvis Corp. and Cequel III, a venture firm backed by Charter Communications founder Jerry Kent. Broadwing bought the unit (then known as IXC Communications Inc.) for $2.2 billion in 1999, but now seems willing to part with its devalued assets for just $130 million.The Financial Times is reporting that U.S.-based private equity firm Ripplewood Holdings is talking with several Japanese banks about jointly providing $1.7 billion to acquire the fixed-line operations of Japan Telecom (owned by Vodafone). If completed, it would be the largest LBO to date of a Japanese company.NEWS FROM MONDAY 2/24Deutsche Bank on Friday joined the corporate divestiture bandwagon by selling off its late-stage private equity portfolio through a €4.502 billion ($4.84 billion) management buyout. Ted Virtue, chairman and CEO of DB Capital Partners (DBCP), and Graham Clempson, European Managing Partner of DBCP, are leading the management buy-out team. Their acquisition vehicle, MidOcean Partners, is being financed by a group of private equity investors including NIB Capital Private Equity, Ontario Teachers’ Merchant Bank (Ontario Teachers’ Pension Plan), CPP Investment Board, HarbourVest Partners, Paul Capital Partners, Bregal, Coller Capital, Northwestern Mutual, The Yucaipa Cos. and Presidential Life. Deutsche Bank will retain a 20% interest in the portfolio. The portfolio consists of late-stage private equity investments in the United States and Europe. In Europe the portfolio includes Center Parcs, United Biscuits, Lecta and Jefferson Smurfit. In the United States, principal investments include Jostens, Prestige Brands, Noveon and Jenny Craig.Nistevo Corp., a Minneapolis-based provider of collaborative logistics for the transportation industry, has secured $8 million in Series C funding from Bessemer Venture Partners, Insight Venture Partners and other private parties.Determine Software Inc., a San Francisco-based provider of buy-side contract management for leased assets and outsourced business services, has secured $12.25 million in third round funding. JPMorgan Partners led the round with additional investments from existing investors Mohr Davidow Ventures (MDV) and New Enterprise Associates.Senior Home Care Inc., a Clearwater, Fla.-based Medicare certified home health-care provider, announced today it has received an equity investment from Summit Partners. Terms of the deal were not disclosed. Sychron Inc., a San Mateo, Calif.-based provider of policy-based workload management software, today announced its first round of institutional funding totaling $7.8 million. The round was led by Sigma Partners, with Dot-EDU Ventures, First European American Ventures and a number of angel investors also participating.Nautic Partners LLC has led a recapitalization of Gaymar Holdings LLC, an Orchard Park, N.Y.-based medical device company focused on the treatment and prevention of pressure ulcers. The senior credit facility for the recapitalization was provided by Antares Leverage Finance. US Bancorp Piper Jaffray acted as financial advisor to Gaymar. Matrix Semiconductor, a Santa Clara, Calif.-based company focused on low-cost, high-density 3-D integrated circuits, has received a $15 million investment from Nintendo.Schroder Ventures U.S. announced today that C. Michael Armstrong, chairman of Comcast Corp. and former chairman and CEO of Hughes and the AT&T Corp., has joined its advisory board. Nominum, a Redwood City, Calif.-based provider of IP address infrastructure software, has raised $10 million in Series C funding. Globespan Capital Partners (formerly JAFCO Ventures) led the round, with participation from Nominum’s existing investors Bessemer Venture Partners and Morgenthaler Ventures, and new investor Silicon Valley BancVentures. The new funds bring the total equity investment in Nominum to $26 million. Yulex, a Carlsbad, Calif.-based specialty materials and chemical company, today announced that it has raised $2 million in Series B funding from Argonaut Private Equity. SomaLogic Inc., a Boulder, Colo.-based proteomics company, announced that it has completed a $19.5 million Series C financing. The primary new investor was Mitsui & Co. Ltd.Dow Jones is reporting that Kohlberg Kravis Roberts & Co. has removed itself from the bidding process for UK supermarket chain Safeway PLC. Sources told Dow Jones that the price (rumored to be over $6 billion) had simply gotten too high when weighed against the risk.

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