PE Week Wire — Friday 9/27

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PE Week has learned that Boston-based TA Associates returned $38 million to investors in late August to avoid eventual clawback obligations. In addition, TA has chosen not to draw approximately $15 million worth of scheduled management fees from investors on three separate funds. For more on this story, PE Week subscribers can click here.

U.S. Airways has accepted a $240 million reorganization offer from the Retirement Systems of Alabama (RSA) to purchase a 37.5% stake in the bankrupt air carrier. The move comes as a bit of a surprise, since U.S. Airways had publicly shunned the RSA offer in favor of a lower bid from buyout shop Texas Pacific Group A bankruptcy judge approved the deal yesterday.. The Mid-Atlantic Venture Association (MAVA) Board of Directors has named Julia Spicer, formerly vice president and communications consultant at Columbia Capital, to be its executive director. When she assumes her new role on October 7, Spicer will be responsible for overseeing all operations of the Association and advancing the charter of the organization. She replaces Mary Ann Gray, who resigned earlier this year after misappropriating $175,000 of MAVA funds for her own personal use. Gray has already begun paying restitution.

The Canadian Venture Capital Association (CVCA) has appointed Bradley W. Ashley as president for a two-year term. Ashley, managing partner of Toronto-based PRIVEQ Capital Funds, replaces John Eckert, who was CVCA president until September and becomes chairman of the association.

Trados Inc. an Alexandria, Va.-based leader in language technology solutions, today announced that it has secured an unsolicited $2 million equity investment from Invision AG of Switzerland. The alliance will introduce TRADOS’ translation solutions to Invision’s ‘portfolio and related companies. Invision AG will also assist TRADOS in further penetrating the Swiss and German markets.

Warburg Pincus Private Equity VIII LP announced today that it is extending its $0.50 per share cash tender offer for up to 5,277,380 shares of common stock of Yodlee, Inc.

Cleantech Investment Monitor released today provides good news for the decimated venture capital industry and for those seeking a cleaner environment. Investments in “clean” technology companies – ranging from fuel cells to water purification systems – exceeded US$500 million in the first half of 2002, more than doubling from Q1 to Q2.
CTS (Cril Telecom Software), a provider of network business decision OSS (Operational Support System) software for the telecommunication industry, has raised 7.6 million Euros in second round venture capital financing. Two new investors – AGF Private Equity and GIMV – have led the round together with a large participation of the two earlier investors of the first round which occurred in June 2001 – Softbank Europe Ventures and Sofinnova.

Arescom Inc. a Fremont, Calif.-based provider of High Speed Internet Access (HSIA) equipment and related services for the hospitality, residential property, telecommunication and ISP markets, recently secured $20 million in funding from the issuance of private stock.

eFinancialNews is reporting that Jon Addis and Rob Freer have transferred out of Royal Bank Private Equity, the large buyout unit of Royal Bank of Scotland, moving to other roles within the bank’s equity finance division.

Laurie J. Thomsen, a co-founding general partner of Prism Venture Partners, a venture capital firm. Has been named to the board of Travelers Property Casualty Corp.

The Asian Wall Street Journal is reporting that Olympus Capital Holdings Asia is investing $80 million in Arysta LifeScience Corp., a Japanese agrochemicals company.

Dow Jones is reporting that Sleepmaster LLC‘s unsecured creditors’ committee have filed a complaint against Citicorp Venture Capital Ltd., arguing that entity’s claim in Sleepmaster’s bankruptcy case shouldn’t be granted higher priority than the claims of general unsecured creditors.

Tekron Inc. (OTCBB:TKRN) today announced that it will offer a $2 million dollar private placement offering of 10,000,000 units at a price of 20 cents per unit. Each unit consists of one common share and one warrant. The warrants expire on September 25, 2003 and entitle the holder to purchase one additional common share at a price of 75 cents per share. No finders fees will be associated with this placement. The shares and warrants were placed pursuant to regulations under the SEC Act of 1933, as amended.
News From Thursday 9/26
LVL7 Systems of Cary, N.C. has secured $12.5 million in its first round of institutional financing. The deal will close in two tranches: investors have already armed the company with $8.5 million in venture capital, but if the company runs short on cash before it breaks even, the company’s venture backers will pump an additional $4 million into its coffers. PE Week subscribers can read more on this story in the protected Deal News section of www.pewnews.com.

BigFix Inc. announced today that it has closed $8 million in its latest round of financing. BigFix, Inc.’s innovative approach to strengthening cybersecurity in the enterprise and government sectors by automating patch management has attracted a new commitment from Levensohn Capital Management, which led the round, as well as reinvestments from its original partners St. Paul Venture Capital and Selby Venture Partners. Under terms of this financing, Levensohn’s Managing Director, Keith Benjamin, St. Paul’s General Partner Brian Jacobs, and Treehouse Capital’s Robert Majteles will join Selby’s General Partner Doug Barry as members of the BigFix, Inc. board of directors.

Atlas Venture today announced the appointment of Dr. Timothy Wilson as Principal in the firm’s life sciences investment practice. Prior to joining Atlas Venture, Dr. Wilson was a Senior Managing Director at Bear Stearns International where he was responsible for a team based in London and New York that covered the Global Biotechnology and European Healthcare sectors. In this role, he also remained as an equity research analyst covering both European and US companies.

The Carlyle Group and Target Partners have co-led a second round of financing for Cube Optics AG. Seed funded by STAR Ventures and Sevin Rosen Funds, Cube Optics raised this new 10 million Euros financing round to extend its product range and gain further market traction.

Imago Scientific Instruments, a Madison, Wis.-based -based manufacturer of analytical equipment, announced today that it has secured $7 million in financing for development of its innovative LEAP microscope. Investors include Draper Fisher Jurvetson (DFJ), a leader in information technology investments, Infineon Ventures, the venture capital group at leading semiconductor manufacturer Infineon Technologies, Draper Triangle, an affiliate of DFJ, and Stanford University.

Specialized Health Products International Inc. (OTCBB:SHPI), a company specializing in the design and development of medical safety needles, today announced that the Company has completed a private placement of preferred stock providing new funding of approximately $5 million to the Company. The private placement is related to the exercise of an option held by Galen Partners and other accredited investors pursuant to an earlier private placement of preferred stock completed on November 7, 2001.

Deutsche Bank Securities Inc. today announced the addition of Steve Abbott as a Director in the Semiconductor Investment Banking Group. Prior to joining Deutsche Bank, Abbott was a Principal at Robertson Stephens, where he worked in investment banking focusing on semiconductor clients. Before joining Robertson, he founded Venture Strategy Partners, a private equity fund. Abbott has previous experience in the mergers and acquisitions group of Donaldson, Lufkin & Jenrette and the leveraged transactions group of Skadden, Arps, Slate, Meagher & Flom.

The Bulgarian News Digest is reporting that the Bulgarian Government plans to set up a venture capital fund with up to 100 million Bulgarian levs ($50 millon/51 million Euros) from the state fiscal reserve and money from private sources. The venture capital fund will be run by a private company, which will be chosen on competitive basis. The government will not intervene in the operation of the fund and all decision-making will be entrusted to the private manager.
News From Wednesday 9/26
The IPO window stayed remained nailed shut this week as an anticipated $75 million offering from Raleigh, N.C.-based LipoScience Inc. was indefinitely pulled from the docket. The venture-backed medical technology company had hoped to price its IPO via lead underwriter Merrill Lynch last week or early this week, but has apparently decided that now is just not the time. The company has raised approximately $23 million over two rounds of venture funding from 3 Arch Capital (20% ownership), U.S. Bancorp Piper Jaffray (10%) and GE Capital (6.3%). LipoScience has not yet filed a withdrawal request with the SEC.

Aureon Biosciences, a Yonkers, N.Y.-based company dedicated to personalized patient care through predictive pathology, will emerge from stealth mode today by announcing $15 million of Series A funding from Sprout Group and Atlas Venture.

Infoglide Software Corp., an Austin, Texas-based provider of enterprise solutions for classification, analysis, and investigation of data stored in multiple, disparate, remote databases, today announced that they have closed their latest round of financing for $4.2 million.The funding came from the company’s previous investors: Conning Capital Partners, Intersouth Partners, MMC Capital, and Sanchez Capital Partners. The financing allowed all accredited stockholders to participate in the round on the same conditions as the preferred stockholders.

Hanover Partners Inc. announced the purchase of Bri-Mar Manufacturing LLC of Chambersburg, Pa., a manufacturer of light duty hydraulic dump trailers, equipment transport trailers, and utility trailers. Based in San Francisco and Portland, Oregon, Hanover Partners completed the transaction with financing provided by Tuckerman Capital LP, a New Hampshire-based group specializing in smaller middle-market acquisition funding. A significant investment was also made in the transaction by the Company’s president and founder, Brian Wise. Terms of the transaction were not disclosed.

Silicon Valley Bank today announced that Tim Bubnack has joined its Southern California Venture Capital and Emerging Technology division. Bubnack previously served in senior executive positions at Comerica Ventures Inc. and Comerica Capital Advisors and augments the Bank’s already considerable connections and experience in Southern California with more than 13 years of technology investment and financial expertise.

Saints, a San Francisco-based merchant bank, has created a new Saints Capital fund to manage a $130 million direct investment portfolio recently acquired from San Francisco-based mutual fund group Van Wagoner Funds.

Trinity Biosystems of Palo Alto, Calif., announced today the closing of its first round of venture funding. Sanderling Ventures and Tenex Greenhouse Ventures provided $1.5 million in the first tranche of an approximate $4.5 million Series A financing. It is expected that this round of funding will carry the company into clinical trials within 12-18 months.

Commerzbank Securities (ComSec) has announced that Michael Johnson has joined its Financial Sponsors Group, formed earlier this year. Johnson joins ComSec from Nomura Principal Finance Group where he was a Transaction Director, responsible for originating and executing private equity transactions. During his time at Nomura, Johnson led several transactions, including the purchase of the First Quench retail chain of 2,600 stores from Whitbread and Punch and the purchase of a portfolio of approximately 1000 pubs from Bass plc, which became the Voyager Pub Company. Previously, Johnson was Managing Director, Head of Leveraged Finance, for DLJ in Europe

3i Group PLC has deferred the issue of £300m of perpetual preferred securities, which would have been used for private equity investment purposes. Despite a slowed down rate of investment, the firm is still in the midst of raising a new fund.

USA Interactive (Nasdaq: USAI) announced today the completion of its acquisition of Interval International through its holding company, Interval Acquisition Corp., from Willis Stein & Partners, a Chicago-based private equity investment firm, and other investors. The consideration was paid on an all cash basis. Miami-based Interval is one of the world’s leading membership-services companies, providing timeshare exchange and other value-added programs to its timeshare-owner consumer members and resort developers. The combination of long-term relationships with developers and annual membership-based revenues provides Interval with strong recurring earnings.

The Saigon Daily Times is reporting that The Beta Vietnam Fund is planning to pull all investment out of Vietnam after Indochina Asset Management Ltd. (ICAM) terminated its contract to manage the assets of the investment fund late last month and has closed its representative office in HCMC. Beta Vietnam Fund has invested some US$35 million in 13 companies in Vietnam since it was established in 1993. They include Vinataxi, Saigon Water Park, the International Grammar School, RIM Technologies, Vietnam-Australia Steel Co. and Dalat Golf Course.

News From Tuesday 9/24
SpectraSwitch Inc., a Santa Rosa, Calif.-based manufacturer of integrated optical components announced today third round venture capital funding, raising $7.5 million in equity financing from original investment partners Advanced Technology Ventures and NIF Ventures.

MEMSIC Inc., a North Andover, Mass.-based provider of CMOS-based MEMS accelerometers/sensors, recently kicked off its third round of financing with $1.9 million in funding from Asian investors. In its continuing commitment to service large volume customers, MEMSIC will use the initial investment to expand its manufacturing capacity in anticipation of rapid expansion.

Insight Energy Inc., a Chicago-based power generation project acquisition and development company, announced today that it has secured a $100 million equity program from affiliates of Warburg Pincus LLC. Insight Energy’s management will also invest in the program, with funding from all parties to be provided over time and subject to certain conditions. Insight Energy will use the capital to acquire and develop power generation assets primarily under 150 Megawatts (MW) in capacity in North America and Western Europe.

GE Equity has led an $11.24 million (AUD$20.5 million) capital raising for BEELINE Technologies Pty Ltd., an Australia-based provider of navigation technology for automatically steering farming equipment. Existing financial investors the Food & Agribusiness Investment Fund, ABN Amro Capital and Queensland Development Fund, as well as the Australian firm’s management, took part in the capital raising. This is the largest single private equity raising for BEELINE, which has now raised more than $19.19 million (AUD$35 million) since its inception in 1998. The company has also benefited from monies received under the Australian government’s R&D Start Grant and Export Market Development Grant initiatives. Grant Samuel and Dynamic Strategy Partners jointly advised BEELINE on the latest capital raising, which is one of the largest venture capital transactions in Australia this year.

Zinio Systems Inc., a Brisbane, Calif.-based producer and distributor of magazines in digital form for major publishing partners, today announced the closing of an $8.4 million round of financing led by global private equity investment firm Apax Partners Inc. Also joining the round were Intel Capital, and previous Zinio investors New Enterprise Associates, Odyssey Capital, IDEO Ventures and NetOyster. Proceeds will be used to fuel Zinio’s growth, and to help the company reach its goal of achieving profitability before Fall 2003.

The State of Connecticut is still in court over failed Forstmann Little investments, but it has finally claimed victory in an earlier private equity-related complaint against Dallas-based The Crossroads Group. Connecticut had argued that Crossroads had reinvested certain profits, instead of distributing them back to limited partners like the Connecticut State Pension Fund. As part of the settlement, Crossroads is paying the state $297 million. This is in addition to an earlier $49.5 million payment.

WaldenVC announced that Matt Miller has joined WaldenVC as a General Partner. Miller has worked closely with the firm for several years. For the last nine months, he was a WaldenVC Venture Partner and currently sits on the boards of Visto and Qiva. He also served as CEO of Moai, a WaldenVC I portfolio company.

Glen Holland has left BancBoston Capital‘s PEP (private equity portfolio) group. He is now a director with Boston-based Shott Capital Management.

MaXXan Systems Inc., a San Jose, Calif.-based developer of next-generation storage area networking infrastructure technology, today announced that it has closed on $25 million in additional equity financing. The new funding brings the total equity raised to date to more than $63 million. Including the previously announced $10 million equipment financing credit line, the total amount of financing secured to date exceeds $73 million. MaXXan’s current investors, U.S. Venture Partners, Venrock Associates, Lucent Venture Partners, Ironweed Capital, Trellis Partners, UMC, United Investment, The China Development Industrial Bank, and Premier Capital Management, all participated in this round. New investors include Askew International Corp., Global Strategic Investment Fund, Chiao Tung Bank, Prudence Capital, Infinity Global Investment, Ltd., and WQ Investments. The new funding was handled as an extension to MaXXan’s previous funding round announced in 2001.

The Nikkei Report today says that venture firm UFJ Capital Co. will invest 500 million yen in Nanotech Partners, an investment fund specializing in nanotechnology startups. The firm was set up by Mitsubishi Corp., Mitsubishi Chemical Corp. and Honjo Chemical Corp. The deal will boost Nanotech Partner’s funds to about 7 billion yen.

Advent International is said to be competing with a Turkish consortium for a 65% stake in Bulgaria’s BTC telecom group.

Reuters is reporting that the government of Dubai and Deutsche Bank have launched a $100 million fund to invest in the information technology, media and telecom sectors in Europe, the Middle East and the United States.
News From Monday 9/23

The final yellow pages buyout deal found a winner in R.H. Donnelley Corp., which beat out numerous private equity houses for Sprint’s Publishing and Advertising Group (SPA). The deal came in a $2.23 billion, which will be financed by $2.4 billion in committed debt from Bear Stearns, Salomon Smith Barney and Deutsche Bank. In addition, Goldman Sachs Capital Partners is making a $200 million equity investment in R.H. Donnelley, and will take two seats on the publishing company’s board. The deal was sold at a multiple of 8.6X estimated 2002 EBITDA, and is expected to close in Q1 2003. Among the private equity firms said to have been in the bidding were Clayton, Dubilier & Rice, Kohlberg Kravis Roberts & Co., Texas Pacific Group, Hicks, Muse, Tate & Furst and Apax Partners. There was also some talk that Thomas H. Lee-controlled TransWestern Publishing was making a run at the Sprint directories business, although R.H. Donnelley apparently had the inside track thanks an existing sales relationship with SPA.

Exigen Group today announced that it has closed a $62 million round of financing led by Lightspeed Venture Partners. Focus Ventures, Investor Growth Capital Inc., a wholly owned subsidiary of Investor AB, and Exigen’s founders, Greg Shenkman and Alec Miloslavsky, also participated in the round. Funds will be used to develop and support Exigen’s continued growth and development efforts. San Francisco-based Exigen Group was founded in 1999 with personal backing from CEO Greg Shenkman and Chairman Alec Miloslavsky, co-founders of Genesys Telecommunication Laboratories, now a division of Alcatel (NYSE:ALA). It is a global business process solutions company that focuses on lowering the total cost of operations for financial services, insurance, communications and other service firms.

Alexza MDC, a Palo Alto, Calif.-based specialty pharmaceutical company developing products with faster onset of therapeutic effect, closed on its first round of institutional financing. This first institutional round of $45 million was co-led by Frazier Healthcare Ventures and Versant Ventures and included Alloy Ventures, Burrill & Co., CMEA Ventures, New Enterprise Associates, and Zesiger Capital Group.

EnvoyWorldWide, a Bedford, Mass.-based provider of real-time interaction management services, today announced that it recently secured $4.5 million in third round venture capital from existing investors, including Battery Ventures, Longworth Venture Partners and Sofinnova Partners, as well as one new investor. This round, which will fund the company’s operations and drive it to profitability, will be used to increase investments in its core focus areas, specifically catering to call center/CRM and business continuity efforts, as well as to invest in channel partnerships. The funding will also enable the company to investigate opportunities to grow through acquisitions

New Enterprise Associates (NEA) today announced that Christopher T. Shen, M.D., has been named Principal, effective September 1, 2002. Dr. Shen was most recently a Lecturer at the Stanford University School of Medicine, co-teaching a course on medical technology innovation. He has joined NEA’s Healthcare team, focusing on biotechnology and medical device investments and is based in the firm’s Baltimore, Maryland office.

MetaTV, a Mill Valley, Calif.-based provider of software that enables the automation and optimization of interactive TV (iTV) applications, services and content, announced today that it has received investments of $21 million in its Series D round of financing. Leading this round were Comcast Corp. and Cox Communications Inc.

Cardion AG closed its financing round with a private placement of 11.5 million euros, mainly contributed by the existing shareholders. The round was led by Techno Venture Management (TVM), Munich, the company’s largest shareholder. Other major participating shareholders include DVC Deutsche Venture Capital, IKB Private Equity, Mulligan BioCapital, BdW Beteiligungsgesellschaft fur die deutsche Wirtschaft, Gold-Zack Partners and New Medical Technology (NMT). ITX Corporation, Japan, CARDION’s private shareholder base as well as a new US based investor also contributed to the success of this financing.

CXN Media is reporting that the first Sino-foreign cooperative venture capital fund in Shandong Province has been set up recently by Shandong High-tech Investment Co. Ltd., United Overseas Bank Ltd. (UOB) from Singapore and Oxford-Cambridge Group from Britain. The Beijing-based fund has a preliminary scale of RMB300 million, of which RMB120 million was invested by Shandong High-tech Investment Co. Ltd., RMB60 million was invested by UOB and RMB120 million by Oxford-Cambridge Group.

Cranite Systems Inc., a San Jose, Calif.-based wireless security provider, has secured $12 million in venture capital from JK&B Capital, BV Capital and Diamondhead Ventures. Repeat investors Selby Venture Partners, Industry Ventures and Pacifica Fund also participated.

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