PE Week Wire — Friday 8/15

James Hearty has been fired as executive director of the Massachusetts Pension Reserve Investment Management Board (MassPRIM). The surprise move was made yesterday by Mass. Treasurer Tim Cahill, who told a Boston Globe reporter that he was frustrated  by Hearty’s continuing reluctance to release private equity performance data despite being ordered to do so by the state’s attorney general. No replacement has been named, although Cahill is pushing Steven Weddle, who once  ran the $100 million Southern Africa Enterprise Development Fund.
 

Vapotherm Inc., an Annapolis, Md.-based manufacturer of respiratory care devices, has raised $5.25 million in Series C funding. New investor QuestMark Partners led the round with a $5 million commitment, and was joined by return backer Maryland Department of Business and Economic Development. 

Protarga Inc., a Norristown, Pa.-based biotech company, has filed for Chapter 11 bankruptcy protection, with the intention of selling its drug candidate portfolio to Spectrum Pharmaceuticals Inc. (Nasdaq: SPPI). The proposed sale involves an initial payment of $2 million and an additional $22 million to follow, depending on certain sales milestones. Protarga had raised over $30 million in venture capital since its 1991 founding, including a $24 million round in early 2002 at a post-money valuation of approximately $103 million.  

The Canada Pension Plan Investment Board announced that it has invested: $75 million into the Ares Corporate Opportunities Fund; $150 million into the CSFB Private Equity Customized Fund Investment Group; $75 million into Lehman Brothers Venture Partners 2003; an additional $100 million into Kensington Capital Partners Ltd. (total commitment of $200 million); and an additional $25 million into Lexington Capital Partners V (total commitment of $75 million).

Ronald Celmer has been named CEO of MediaBay Inc. (Nasdaq: MBAY), a New York-based provider of spoken audio content. Celmer served from 1997 to 2002 as a general partner of Constellation Ventures and a managing director at Bear Stearns. He previously worked as a managing director and general partner at private equity firm Ardshiel.

Mark Louie, managing member and CFO of TechFund Capital, has been named to the board of directors at K-Swiss Inc. (Nasdaq: KSWS).

Isonics Corp. (Nasdaq:ISON), a Golden, Colo.-based maker of semiconductor materials, has received $8 million in new funding from Quivira Venture Partners.

Paul Kim, founding and managing partner of Parakletos @Ventures, has been named chairman of the board at PicoNetics Inc., a Fremont, Calif.-based developer of power reduction technologies for integrated circuits.
NEWS FROM THURSDAY 8/14
CancerVax Corp., a Carlsbad, Calif.-based developer of immunotherapeutic products for the treatment of cancer, has raised $41 million in Series C financing. The company did not announce its investors, except to say that the syndicate was made up of new and return backers. CancerVax now has raised over $125 million in venture capital since its 1999 inception, including a $55.8 million Series B round in early 2002 at a post-money valuation of approximately $184 million. Investors on that deal included Athenian Ventures, Forward Ventures, GE Equity, JPMorgan Partners, Schroder Ventures Life Sciences, Vector Fund Management, WestLB and Windamere Venture Partners.

American Securities Capital Partners has signed a binding agreement to acquire Unifrax Holding Co. and its operating Unifrax Corp. subsidiary from Kirtland Capital Partners. Unifrax management will continue to have a meaningful ownership interest in the company. Terms of the transaction were not disclosed. Unifrax is a Niagara Falls, N.Y.-based manufacturer of high temperature insulation products used in a variety of industrial applications.

QuantomiX Ltd., an Israel-based maker of capsules that enable online analysis of wet cells and tissue biopsies in an electron microscope, has raised $3.5 million in second-round financing. Vitalife led the deal, and was joined by SFKT and return backer Pitango Venture Capital. The company now has raised $7.5 million since its 2001 inception.

Powerspan Corp., a New Durham, N.H.-based provider of clean energy technologies, has raised $20 million in convertible debt financing. The deal is the first tranche of a deal slated to raise upwards of $25 million, according to an SEC filing. Investors include The Beacon Group, FirstEnergy Corp., Zero Stage Capital, NGEN Partners LLC, Aquilex Services Corp. and Calvert World Values International Equity Fund. Powerspan has raised over $45 million since its 1994 inception, including a $20 million deal in 2000 at a post-money valuation of around $57 million.

Peter Levine has been named a general partner with Silicon Valley venture firm Mayfield. Levine originally joined Mayfield in 2002 as a venture partner, after having spent 12 years with Veritas Software. He focuses on the enterprise software and storage sectors.

GRIC Communications Inc. (Nasdaq: GRIC) agreed to acquire Axcelerant Inc., an Irvine, Calif.-based provider of managed broadband VPN services. Under terms of the stock-for-stock merger, Axcelerant shareholders will receive GRIC common stock and options representing approximately 22% of the combined company on a common equivalents basis. Axcelerant has raised $15 million in venture funding from such investors as Baird Venture Partners, Gemini Investors and Riordan, Lewis & Hayden.

The AfriCap Microfinance Fund has invested $1.6 million for a minority stake in Equity Building Society, a 20-year-old Kenya-based microfinance institution.. The common stock investment is accompanied by a technical assistance package jointly funded by AfriCap and the UK Department for International Business.

HO2 Partners, a Dallas-based venture capital firm, has obtained commitments for $1.7 million in additional funding to be used for future investments in its existing portfolio. Participation in the HO2 Annex Fund was restricted to HO2’s present limited partners. HO2 launched its first fund with $33.7 million in December 1999.

AirNet Communications Corp. (Nasdaq: ANCC) has issued $16 million of 12% senior secured convertible notes with voting rights to TECORE Wireless Systems, AirNet’s largest customer and an existing supplier, and SCP Private Equity Partners, an existing investor in AirNet. AirNet will use the proceeds from the investment, after payment of transaction expenses and repayment of its bridge loan from TECORE and SCP, to fund operations. AirNet also announced that existing Series B preferred stock was converted into common stock at the closing of the financing.

Auto Data Network Inc. (OTC BB: ADNW), a UK-based provider of software and data services to the automotive industry, has raised $4 million in a Series A preferred stock financing. Investors included Rho Ventures, BEV Capital, Investor AB, St. Pauls Venture Fund and Creed & Kellor.

The Brink’s Co. has completed the previously announced sale of its natural gas business to an affiliate of private equity firm First Reserve Corp. for approximately $81 million in cash.

PrivateEquityCentral.net is reporting that UBS has made several moves to build up its U.S. placement team. Richard Allsopp, managing director and head of UBS’ global private equity funds group, has relocated to the U.S., where he joins Jake Elmhirst, who has been Stateside since 2000. The two will work out of Stamford, Conn., while the firm’s new West Coast operations will be run by former Citigroup pro Ken Freeman. Other newcomers include Mark Schoeder (formerly of CSFB), Naren Srinivasen (formerly of Rothschild) and Marty Voelker (formerly of Citigroup).

The Financial Times is reporting that Ripplewood Holdings is close to finalizing the terms of its acquisition of Japan Telecom’s fixed-line business from Vodafone in a $2.18 billion deal. If completed, the transaction is believed to represent the largest leveraged buyout ever of a Japanese company. The $1.75 billion of leverage is reported to be coming from a syndicate of JP Morgan, Citibank, Mizuho, Sumitomo Mitsui and Bank of Tokyo-Mitsubishi.
NEWS FROM WEDNESDAY 8/13
Reactivity Inc., a Belmont, Calif.-based provider of network appliances that secure XML-based integration, has raised $10.3 million in third-round funding. Existing investors Accel Partners and Austin Ventures were joined on the deal by new backers Diamondhead Ventures and JK&B Capital. Reactivity now has raised over $25 million since its 1998 inception, including a $24 million round in 2000 at a post-money valuation of approximately $52 million.

Baird Venture Partners , a Milwaukee-based venture firm, has closed out its second venture fund with $90 million. The State of Wisconsin Investment Board made a $30 million commitment, and was joined by limited partners like the Wisconsin Alumni Research Foundation, Lurie Investments Inc., The Northwestern Mutual Life Insurance Co., Johnson Financial Group, the Helen Bader Trusts and Robert W. Baird & Co.

Endoscopic Technologies Inc., a Danville, Calif.-based medical device company focused on cardiovascular surgery, has raised $5 million in Series B funding. Telegraph Hill Partners, L.P and Psilos Group Managers, L.P. co-led the financing, which also included the company’s prior shareholders.

Systems Research & Development (a.k.a. SRD), a Las Vegas-based provider of data warehousing and security analysis software, has raised $11 million in first-round funding. Reed Elsevier Ventures led the Series A deal, and was joined by SAIC Venture Capital Corp.

The Mid-Atlantic Venture Association released survey results yesterday that show how Mid-Atlantic investors are beginning to see positive leading indicators that could signal a recovery in the region’s private equity market. Notwithstanding that the dollar indicators from Q2 2003 were down for venture capital investing in the Mid-Atlantic region, the MAVA Q2 2003 survey results show that the majority of survey respondents expect to be active investors, making new investments in the second half of 2003. For more, go to www.mava.org.

Physiome Sciences Inc. has agreed to acquire Predix Parmaceuticals Inc. in exchange for 30% of the two private companies’ combined equity. Predix is a drug discovery company founded in 2000 to identify and optimize drug candidates that bind to G- Protein Coupled Receptors. Physiome was founded in 1994 to provide computer-based modeling and simulation of cells and biological systems. It has raised approximately $60 million in venture capital, including a $50 million deal in 2000 at a post-money valuation of $140 million. Physiome investors include Churchill Investment Partners, INVESCO Private Capital, Dresdner Kleinwort Capital, New England Partners, Oxford Bioscience Partners and S.R. One Ltd.

Williams Energy Partners LP, a publicly traded partnership that owns, operates and acquires energy assets, will change its name to Magellan Midstream Partners as of September 1.

Howard Dean (D-VT), the former Vermont Governor and current presidential candidate, said in Iowa this week that he’d support venture capital investments and new tax credits for farm-based businesses.

The Wall Street Journal is reporting that The New York Stock Exchange imposed a censure and two-month bar on Kenneth B. Sawyer, a former registered representative with Prudential Securities Inc. The NYSE says Sawyer consented (without admitting or denying guilt) to a finding that he engaged in an outside business activity — a venture-capital fund — without making a written request and receiving prior written consent of his member-firm employer.
NEWS FROM TUESDAY 8/12