PE Week Wire — Friday 8/15

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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.
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. 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.
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

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.

Thomson Venture Economics and the National Venture Capital Association have released new data that shows a slight increase in venture-backed M&A activity during Q2 2003. During the second quarter, 72 venture-backed companies were acquired for a total value of $1.84 billion, spread among the 27 targets that disclosed a deal value. These figures represent an average deal value of $68.22 million per disclosed deal.

Soligence Inc., a Palo Alto, Calif.-based developer of a task-planning solutions for imaging satellite operations, has raised $1.2 million in Series A funding from Labrador Ventures and other private investors.

Certagon Corp., a Palo Alto, Calif.-based provider of software that enables service-oriented architecture, has raised $5 million in Series A funding led by Jerusalem Global Ventures.

Donald Rainey has been promoted to the position of fulltime partner with Intersouth Partners. Rainey is based out of Reston, Va., and has been a venture partner with Intersouth for over three years. In 1998, Rainey founded Total SumParts, a Reston-based provider of flexible technical staffing solutions to organizations that need experienced technical professionals on demand.

Ron Elwell has joined Bessemer Venture Partners as an operating partner. He most recently served as CEO of Bessemer portfolio company Octave Communications, which was acquired earlier this year by Voyant Technologies Inc.

Medtronic Inc. (NYSE:MDT) has agreed to acquire TransVascular Inc., a Menlo Park, Calif.-based developer of a proprietary platform delivery technology for several current and potential intravascular procedures. Deal terms were not disclosed. TransVascular has raised over $45 million in venture capital since its 1996 inception, including a $10.8 million deal in early 2002 at a post-money valuation of $33 million. Investors included Bessemer Venture Partners, Johnson & Johnson Development Corp., New Enterprise Associates and Three Arch Partners.

Beth Hoffman has joined Berkshire Partners as a senior associate. Hoffman was placed by Harris McCall & Associates, and previously worked at Kodiak Venture Partners.

Alan Baratz has been named president and CEO of enterprise software development company Versata Inc. (Nasdaq: VATA). He most recently served as CEO of Zaplet Inc., before which he was an investor with Warburg Pincus.

Tim Eichenlaub has been named a managing director with Prometheus Partners, an Atlanta-based private equity firm. Eichenlaub was previously a managing director with Merchant Banking Group of GE Commercial Finance, which he joined in Oct. 2001 following GE’s acquisition of Heller Financial.

The Texas Growth Fund, through newly formed portfolio company Southern Star Concrete Inc., has acquired the Texas and Arkansas ready-mixed concrete business of Hanson PLC. The acquisition includes over 60 concrete plants and 600 mixer trucks. Deal terms were not disclosed.

Edward Garden has been named executive vice president of Triarc Companies Inc. (NYSE: TRY). He previously served as a managing director in the Financial Sponsors Group of Credit Suisse First Boston.

Global Payments Inc. (NYSE: GPN) has agreed to acquire Latin America Money Services LLC (LAMS) and an operating subsidiary, DolEx Dollar Express Inc.. The agreement is between Global Payments, certain private equity funds of Advent International (majority shareholder of LAMS), and other LAMS and DolEx shareholders. Global will pay approximately $200 million for 100% of the outstanding equity interests in DolEx. The transaction is expected to close before the end of 2003.
Renovis Inc., a South San Francisco-based biopharmaceuticals company focused on neurological diseases and disorders, has raised $45 million in new venture funding. Easton Hunt Capital Partners led the round, and was joined by fellow new investors HealthCap, MDS Capital, Invus Group and CDIB BioScience Ventures, and others. Return backers included Alta Partners, Venrock Associates, Flagship Ventures, Skyline Ventures and HBM BioVentures. Renovis now has raised over $91 million in venture capital since its 1999 inception.

JPMorgan Partners and C. Dean Metropouloshave agreed to acquire Pinnacle Foods Corp. from Hicks, Muse, Tate & Furst Inc. for approximately $485 million. The deal is expected to close sometime in the fourth quarter. Pinnacle is a Cherry Hill, N.J.-based food products maker formed in 2001 by Hicks Muse and Metropoulos to acquire Swanson frozen foods, Vlasic pickles and condiments and Open Pit barbeque sauce from Vlasic Foods International. In that transaction, JPMorgan Parners also acquired a minority stake (approximately 8%) in Pinnacle.

Resolution EBS Inc., an Austin, Texas-based maker of a software platform for decision processing, has raised $8.8 million in Series A funding at a post-money valuation of $15 million. CenterPoint Ventures and InterWest Partners co-led the deal, and were joined by STARTech Early Ventures.

iPhysicianNet Inc., a Scottsdale, Ariz.-based provider of videoconferencing services to pharmaceutical companies, has gone out of business. Company management recently informed all 115 employees of its decision, according to a report in Friday’s Arizona Republic. As of this morning, the iPhysicianNet website was down, and its main phone number was out of service. The company has raised over $75 million in venture funding since its 19996 inception, and once was valued as high as $200 million. Venture backers included Apax Partners, BioAsia Investments, Cardinal Partners, Cordova Ventures, Cross Atlantic Capital Partners, KBL Healthcare Ventures, MDS Health Ventures, Senmed Medical Ventures, Valley Ventures and Veron International.

Audrey Roth has joined Sullivan & Worcester LLP as a partner in the corporate law department, where she will lead the law firm’s private equity and emerging companies group. She was previously a partner in the private equity group of Goodwin Procter LLP.

Clarion Capital Partners LLC has acquired U.S. Nursing Corp., a Denver-based provider of travel nurse staffing, for $113.5 million. Clarion funded the acquisition through a combination of equity, senior bank debt and subordinated debt. Post-transaction, Clarion will own 80% of U.S Nursing, with management and former owners retaining the balance.

SkyStream Networks, a Sunnyvale, Calif.-based provider of video networking solutions, has secured $4 million in strategic funding from Comcast Interactive Capital, AOL Time Warner, Shaw Communications and Amerindo Investment Advisors Inc. The company had announced a $25 million round in May.

Keith Williams has been named president and CEO of Keller Manufacturing Company Inc. (ITC BB: KMFC), a Corydon, Ind.-based wood furniture maker. Williams most recently served as president and CEO of Louisville-based bCatalyst Inc. , which makes early-stage venture capital investments.

Made2Manage Systems Inc., an Indianapolis-based provider of enterprise software for manufacturers and distributors, has finalized its previously announced merger with a holding affiliate of Battery Ventures. The cash transaction aggregated $30 million and represents a final price per share outstanding of $5.73. With the close of this transaction, the company has completed its transformation to a private company after six years of being publicly traded on the NASDAQ stock exchange under the MTMS symbol.

Spinel Capital, a Houston-based private equity firm, is raising a $250 million buyout fund. The firm also announced today that it has entered into a strategic operating partnership with Brand Velocity, an Atlanta-based consulting and performance recruitment firm.

St. Paul Venture Capital has sold approximately 2.46 million shares of Select Comfort Corp. (Nasdaq:SCSS) in a Rule 144A private placement. St. Paul and its affiliates continue to own approximately 3.96 million shares of Select Comfort common stock.

The Financial Times is reporting that Silver Lake Capital has set a $4 billion target for its next buyout fund.

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