PE Week Wire — Friday, January 14

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Goodbye Testa Hurwitz

About an hour ago, the hammer officially fell on legendary Boston law firm Testa, Hurwitz & Thibeault. After failed talks with several potential acquirers, the partners held an early morning meeting in which they voted to disband. The news was announced to associates and counsel at 9:30, and to general staff at 9:45. Several additional group meetings are planned throughout the day.

In a prepared statement, THT managing partner George Davitt said: “A law firm such as ours, although prominent, profitable and filled with talented lawyers is – like any professional services organization – knit of a fabric that, if stretched too thin, can unravel. The decision reached today and the steps we will take in the days and weeks ahead reflect our belief that it is in the best interests of our clients to dissolve the firm and wind up business in a responsible and orderly manner.”

The statement goes on to say that THT employees have been given 60-days notice, that they will receive outplacement assistance and that firm vendors will be paid.

Boston’s legal community has been buzzing about the likelihood of formal dissolution since yesterday afternoon, and every THT attorney I’ve spoken with either already has signed with a new firm, or is sorting through offers. As a non-THT attorney wrote me yesterday afternoon: “Everyone is toed up to the starting line, just waiting for the pistol to be fired.”

For new readers who need a backgrounder on why this is all happening, you can find last Friday’s column here. I really don’t have much to add yet, as the news is still fresh and I haven’t had a chance to make many calls or speak with George Davitt (both of which I’ll be doing as the day progresses). All I can do is tell you what comes next: A flurry of press releases from other area law firms, announcing the hiring of this partner or that. I know of at least two already scheduled for next week, and I’m sure that it will be a steady stream as the next 60 days progress. Beyond that, my sincerest sympathies to the many PE Week Wire readers at THT, and my hopes that you all soon land on your feet.

Publishing Note: The Wire will not be published on Monday (MLK holiday), unless events warrant it.

Testa, Hurwitz & Thibeault LLP has decided to disband its partnership. All firm employees have received 60-day notice.

Advent International is raising its fifth general private equity fund with a maximum capitalization of over $2.3 billion, according to regulatory filings. Committed limited partners include The University of Michigan, The Andrew W. Mellon Foundation, The University of Notre Dame, Citigroup Pension Plan, State of Michigan Treasury and SPF Private Equity.

Audax Group has completed its acquisition of Arnold Magnetic Technologies Corp. from SPS Technologies Inc., a subsidiary of Precision Castparts Corp. (NYSE: PCP). No pricing terms were disclosed for the deal, which included financing from Cerberus Capital Management. Arnold is a Rochester, N.Y.-based maker of permanent and soft magnetic products for a variety of industries.

Advanced BioNutrition Corp., a Columbia, Md.-based provider of functional ingredients and technologies to improve both human and animal health, has raised $7.5 million in Series B funding. SAM Equity Partners and BASF Venture Capital co-led the round, and were joined by fellow new investor Arancia Industrial SA de CV. Return backers included Sherbrooke Capital, Eastbourne Capital Management and the Maryland Department of Business and Economics Development.

CEYX Technologies Inc., a San Diego-based provider of software-enabled control systems for light emitting devices, has raised $4.5 million in Series A funding at a post-money valuation of approximately $7.1 million. Participants included Shepherd Ventures, Stone Canyon Venture Partners and Tech Coast Angels.

Revivio Inc., a Lexington, Mass.-based provider of data protection services, has raised $24.4 million in Series C funding.

ReaMetrix Inc., a San Carlos, Calif.-based biotech company, has raised $3.55 million in Series A-1 funding co-led by WestBridge Capital Partners and Mobius Venture Capital.

Informance International, a Northbrook, Ill.-based provider of manufacturing performance management solutions, has raised $6 million in Series B funding. Cargill Ventures led the deal, and was joined by return backers New Enterprise Associates and Mayfield.

Telesystem International Wireless Inc. (Nasdaq: TIWI) has acquired all of the equity and voting interests it did not already hold in Eastern European wireless telecom company Oskar Holdings NV, in exchange for approximately 46 million shares of TIW common stock (valued at around $500 million). Selling Oskar holding shareholders include JPMorgan Partners (17.4 million shares), EMP Europe (7 million shares), ABN AMRO Capital, AlpInvest Partners, Advent International, the European Bank for Reconstruction and Development, Mediatel Capital and Part’Com.

SKM Growth Investors has sold its interest in WG Energy Holdings Inc., a Midland, Texas-based oil and gas company, to an undisclosed buyer for approximately $83 million.

3i Group has agreed to acquire Spain-based kitchen furniture company Xey Corp. for 25 million euros, according to a Spanish news report. Xey has been owned by Masco Corp. (NYSE: MAS) since May 1999.

Icagen Inc., Durham, N.C.-based biopharmaceutical company focused on orally-administered small molecule drugs, has set its proposed IPO terms to five million shares being offered at between $10 and $12 per share. It has raised around $75 million in total VC funding since its 1992 inception, with significant shareholders including Alta Partners, Venrock Associates, Abbot Laboratories, JPMorgan Partners, HBM BioVentures, Medical Science Partners, QFinance and China Development Industrial Bank. Inc. and DryShips Inc. have filed for IPOs of $41.4 million and $146.97 million, respectively. Neither company has received significant private equity funding.

EBay Inc. (Nasdaq: EBAY) has agreed to acquire the technology assets of Kurant, a San Francisco-based provider of e-business software. EBay also expects to hire most of the existing Kurant management team, and continue supporting Kurant’s customers. No pricing details of the cash deal were disclosed. Kurant has raised venture funding from Deep River Ventures, Garage Technology Ventures, Group One Ventures, Empire Ventures and Cobalt Networks.

Imaginova Corp., a New York-based multimedia content and commerce company focused on space and science, has acquired Orion Telescopes & Binoculars (a.k.a. Optronic Technologies Inc.) for an undisclosed amount. Imaginova has raised over $60 million in total VC funding since its 199 inception, from groups like Venrock Associates, Greylock, NBC, Blue Chip Venture Co. and Ampersand Ventures.

Blue Point Capital Partners has promoted the following individuals to the position of partner: Julianne Marley (Charlotte), Sean Ward (Cleveland), Mark Morris (Seattle) and Charles Chaikin (Shanghai).

Michael Wellman has joined the New York office of executive recruiting firm Diversified Search Inc. as a managing director. He previously served as founder and senior managing partner of search firm Jefferson Partners.

Roberto Italia has left Henderson Private Capital, where he led the Italian team. He came to Henderson from Warburg Pincus in 2003, but his defection leaves Henderson with just one partner left in its European practice, according to Financial News Online.

Scottish Equity Partners has named Gary Le Sueur to the newly-created position of director of investment operations. He previously was a director in the firm’s IT investment group.

King & Spaulding LLP announced that 20 attorneys have been made partners, including Ellen Ray in the firm’s private equity practice group.

Apax Partners has received over 2.8 billion euros in commitments for its sixth European private equity fund, according to a regulatory filing. It is being marketed with a target capitalization of 4 billion euros.

Horsley Bridge Partners has raised $578.3 million for its third international fund-of-funds, according to a regulatory filing. Its previous international effort was capped at approximately $520 million.

Thursday, January 13


What About Jack?

After I send out the Wire each morning, my inbox gets temporarily bombarded with “out of office” and “please verify that you aren’t selling me vi*gra” emails. Yesterday, however, the first notes to arrive asked why I didn’t mention that Harvard Management Co. chief Jack Meyer was resigning to form his own investment management firm. The honest answer is that I forgot. It was written on my omnipresent notepad, but somehow never made it onto the computer.

To atone for such oversight, I interrupted my regular activities and read all the “Jack is leaving” articles I could find, and placed some calls to folks who were able to provide a bit of insight. In the end, however, this is a far more interesting story for The Boston Globe than it is for the PE Week Wire. HMC is obviously a giant in the private equity market, but Meyer’s departure is not expected to have much impact on the group’s limited partner activities (save for the top alternatives folks having to answer to a new boss).

Harvard said in a statement that it had created “a steering committee that will oversee aspects of HMC during the interim period, direct the search for a new HMC president, and consider more generally how best to ensure HMC’s future organizational strength and sound investment results.” Committee members include Harvard Treasurer James Rothernberg, Harvard President Larry Summers and former U.S. Treasury Secretary Robert Rubin. The popular rumor right now is that this group will conclude that Harvard should outsource some more of its money management activities. Don’t expect HMC, however, to begin hiring fund-of-funds managers. Not only doesn’t it make fiscal sense, but a good argument also could be made that LP investing in VC and PE funds already is, in essence, outsourcing money management activities (at least the direct investment side of things).

Finally, it’s worth noting that I find most criticism of the HMC compensation structure to be absurd. A small, but vocal, group of Harvard alums argue that HMC managers should not be paid millions of dollars (or tens of millions, in some cases) because it is antithetical to the purpose of a non-profit educational body. In short, they find it unseemly.

Sure, in a perfect world it would be great if Harvard alums quit Wall Street in their 40s, and returned to Cambridge in the pursuit of bettering the institution for those students who proceed them. In the real world, however, this ain’t happening. So long as the HMC investment managers make more net capital for their school than do investment managers at most other institutions, then everybody wins. Perhaps if the malcontents offered to make up the difference each year, then they’d have a complaint worth pursuing.

Cipio Partners and LGT Capital Partners have co-led an acquisition of Infineon Technologies AG‘s corporate venture capital portfolio (a.k.a. Infineon Ventures). No financial terms were disclosed. Among the assets are positions in companies like BridgeCo, Broadbus Technologies Inc. and MontaVista Software Inc. The portfolio also includes several partnership positions in other venture capital funds.

Clive Hollick has agreed to join Kohlberg Kravis Roberts & Co. as a London-based managing director. The move becomes effective on April 1, when Hollick leaves his CEO post with United Business Media PLC (Nasdaq: UNEWY), after 30 years on the job. It also increases market speculation that KKR could bid on media company ITV PLC.

XenSource Inc., a Palo Alto, Calif.-based provider of open source virtualization technology, has raised $6 million in Series A funding co-led by Kleiner Perkins Caufield & Byers and Sevin Rosen Funds.

Scout Media Inc., a Seattle-based online sports network operator, has raised $5 million in its first institutional round of VC funding. NLM Capital Partners co-led the deal with Scout Media founding investor, and former NFL quarterback, Bernie Kosar.

Allen Technologies Inc., a Burlingame, Calif.-based provider of entertainment and e-commerce services to hospital patients and their guests, has raised $5 million in venture funding from Fundamental Capital and Greyrock Capital Group.

Applied Identity Inc., a San Francisco-based, has raised $8.3 million in its first institutional round of VC funding. Bay Partners and Sigma Partners co-led the deal, with Bob Williams of Bay Partners and Pete Slovik of Sigma Partners joining the Applied Identity board of directors.

Bocada Inc., a Bellevue, Wash.-based provider of data protection services, has raised $9.5 million in Series C funding. Partech International led the deal, and was joined by return backers Catamount Ventures, Guide Ventures, Madrona Venture Group and Second Avenue Partners.

Zeligsoft Inc., a Quebec-based provider of component-based software design and deployment tools, has raised Cdn$2.5 million in Series A funding. Fonds Regional de Solidarite FTQ Outaouais led the round, and was joined by Societe Innovatech du Grand Montreal.

VoiceAge Networks Corp., a Montreal, Canada-based provider of multimedia content adaptation solutions, has raised US$10 million in Series A funding. BCE Capital led the deal, and was joined by Entrepia Ventures, BDC Venture Capital and VoiceAge Corp.

General Motors Corp. (NYSE: GM) has agreed to sell its Electro-Motive Division to an investor consortium led by Greenbriar Equity Group and Berkshire Partners. No financial terms were disclosed. The deal is expected to close later this quarter, contingent on successful negotiations with the United Auto Workers Union.

WestLB is nearing a 200 million euros sale of UK-based television rental company Boxclever to Fortress Investment Group and Cerberus Capital Management, according to multiple press reports.

AXA Private Equity has agreed to acquire a 37.7% stake in publicly-traded French clothing retailer Camaieu from certain members of company management and the Torck and Giraud-Verspieren families. AXA will pay 85 euros per share.

Syniverse Holdings Inc., a Tampa, Fla.-based provider of mission-critical technology services to wireless telecom companies, has set its proposed IPO terms to approximately 17.62 million common shares to be offered at between $20 and $22 per share. The company was founded in 1987 as a unit of GTE, which later merged with Bell Atlantic to form Verizon Communications. In February 2002, senior management of the unit participated in a management buyout sponsored by GTCR-Golder Rauner.

Valor Communications Group Inc., an Irving, Texas-based provider of telecom services, has set its proposed IPO terms to over 29.37 million common shares to be offered at between $16 and $18 per share. The company was formed in 2000 after the acquisition of select telephone assets from GTW Southwest Corp., which now is part of Verizon. Equity sponsors on the deal – and current significant shareholders in Valor – were Welsh, Carson, Anderson & Stowe, Citicorp Venture Capital and Vestar Capital Partners.

Hurray! Holding Co. Ltd., a Beijing, China-based provider of wireless services like ring-tones, entertainment and picture downloads to mobile phone users in China, has filed to raise around $91.78 million via an IPO of American depository shares (ADS) on the Nasdaq under ticker symbol HRAY. The company counts Granite Global Ventures among its significant shareholders.

First NLC Financial Services LLC, a Deerfield Beach, Fla.-based mortgage lender, has withdrawn registration papers for its proposed $57.5 million IPO, after agreeing to be acquired by Friedman, Billings, Ramsey Group Inc. (NYSE: FBR) for $88 million in cash and stock. First NLC currently is a portfolio company of Sun Capital Partners.

W&T Offshore Inc., a Houston, Texas-based oil and gas company, has set its proposed IPO terms to 11.45 million common shares to be offered at between $16.50 and $18.50 per share. The company counts Jefferies Capital Partners and ING Furman Selz Investors among its significant shareholders.

Sybari Software Inc., an East Northport, N.Y.-based provider of anti-virus, anti-spam and content filtering software, has set its proposed IPO terms to 3.35 million common shares to be offered at between $14 and $16 per share. The company raised $15 million in private equity funding from Summit Partners in March 2001. It also received $15 million in subordinated debt funding from Summit, which owns a 25% company stake pre-IPO.

American Reprographics Co., a Glendale, Calif.-based provider of B2B document management services to the architectural, engineering and construction industries, has set its proposed IPO terms to 13.35 million common shares to be offered at between $14 and $16 per share. Private equity firm Code Hennessy & Simmons owns a 47.7% pre-IPO stake in American Reprographics, due to its participation in a February 2000 recapitalization of the company.

Cisco Systems Inc. (Nasdaq: CSCO) has agreed to acquire Airespace Inc., a San Jose, Calif.-based provider of wireless local area networking (WLAN) systems, for approximately $450 million in stock and assumed options. The deal is expected to close by April 30. Airespace has raised over $50 million in VC funding since its 2001 inception, from firms like Battery Ventures, Norwest Venture Partners, Fidelity Ventures, Hotung International, KTB Ventures, Storm Ventures and Morgan Stanley Venture Partners.

Vivius Inc., a St. Louis Park, Minn.-based provider of healthcare insurance modeling solutions, has hired Brown Brothers Harriman to pursue a strategic sale of the company. Vivius has raised over $20 million in VC funding since its 1999 inception, from firms like Acadia Venture Partners, Affinity Capital Management, Delphi Ventures, Mellon Ventures, Rahn Group, Salix Ventures and Sapient Capital Management.

EFunds Corp. (NYSE: EFD) has agreed to acquire ClearCommerce Corp., an Austin, Texas-based provider of online payment processing systems software. The transaction is valued at $19.4 million in cash, and is expected to close later this quarter. ClearCommerce has raised over $60 million in total VC funding since its 1995 inception, including a 2000 deal at a post-money valuation of approximately $113 million, and a 2003 deal at a post-money valuation of around $70 million. Investors include Austin Ventures, FT Ventures, Intel Capital, Hewlett-Packard, Internet Capital Group, New Enterprise Associates, VeriSign and Voyager Capital.

Empirix Inc., a Bedford, Mass.-based provider of integrated test and management solutions for VoIP, Web and contact center environments, has acquired CT Labs, a Rocklin, Calif.-based center for testing and evaluating VoIP and other network equipment and services. No financial terms were disclosed. Empirix has raised over $84 million from groups like Lehman Brothers and Matrix Partners.

Jasper Design Automation, a Mountain View, Calif.-based provider of formal verification solutions, has acquired Safelogic AB, a Swedish provider of PSL-based formal verification. No financial terms were disclosed. Safelogic has raised venture funding from InnovationsKapital, NewMedia Spark, Northzone Ventures and Paradigm Capital Partners. Jasper is backed by Accel Partners, Cambrian Ventures and Foundation Capital.

C.R. Bard Inc. (NYSE: BCR) has acquired certain assets of Genyx Medical Inc., an Aliso Viejo, Calif.-based maker of implantable devices and delivery systems for the treatment of stress urinary incontinence. Bard originally received the right to purchase these assets back in December 2002. Genyx is backed by Brentwood Venture Capital and Pequot Capital Management.

Stratos Global Corp. (TSX: SGB) has agreed to acquire Plenexis Group, a German provider of satellite-based turnkey solutions for business communications, from 3i Group for an undisclosed amount. The deal is expected to close later this month.

Hinge Software Co. Ltd. reportedly is close to acquiring Shanghai Huateng Software Systems Co. Ltd., a portfolio company of Warburg Pincus.

Simon Lonergan has joined Behrman Capital as a partner, after having served as a senior managing director with The Blackstone Group.

TA Associates has promoted Michael Wilson to the position of managing director, and also promoted both Jeffrey Barber and Todd Crockett to the position of principal.

Steve Wilson has joined Tennenbaum Capital Partners as a managing partner. He recently retired from law firm Latham & Watkins, where he had served as co-chair of its M&A practice. Tennenbaum also announced that it has promoted both Steve Chang and Jose Feliciano from principal to partner, and David Adler from principal to director.

Stroock & Stroock & Lavan LLP has named four new special counsel. They are: Ayesha Barnett (corporate), Jonathan Blum (real estate), Eric Kay (financial restructuring), and Donald Liebman (real estate, tax certiorari).

Richard Thomson has joined ORIX Venture Finance as an associate. He previously served as an assistant vice president and relationship manager with U.S. Bank in Walnut Creek, Calif.

Archie Clemins has joined Boise, Idaho-based Highway 12 Ventures as a venture partner. He retired from the U.S. Navy as a four-star commander in 1999, and is founder and president of consulting firm Caribou Technologies Inc.

Ascent Venture Partners of Boston has closed its fourth SBIC fund with $140 million in total committed capital.

Ferd Private Equity, a Norwegian private equity firm 40% owned by Ferd AS, has closed its inaugural fund with approximately $324 million.

Man Group is reducing its ownership in Westport Private Equity, and will no longer hold a control position, according to

Nova Capital Management has acquired the partnership interests of Atlantic Medical Capital LP, and $80 million venture fund that has invested in companies like Quovadx and NotifyMD. In other Nova Capital news, the firm has hired Dennis Powers (formerly of McKinsey & Co.) and Samir Assaad (formerly of vivindi Universal) to manage the portfolio out of a newly-opened U.S. office. Caledonia Investments, a strategic shareholder in Nova, provided funding from the Atlantic Medical acquisition.

University Venture Fund, a Salt Lake City-based collaboration between University of Utah students and the UT David Eccles School of Business, has raised $5 million. Sorenson Media CEO James Lee Sorenson and his father, medical device entrepreneur James LeVoy Sorenson, provided a founding donation of $500,000. Other investors include UBS Bank USA, Morgan Stanley, Tim Draper, WSGR and WEGA Support.


Shakeout Significance?

I spent part of yesterday on the 36th floor of Citizens Bank’s Boston offices, as one of a handful of reporters invited to an M&A roundtable populated by a banker, an attorney and a few VCs. Good, wide-ranging conversation, although the view was better (they even had a nifty telescope in the lobby, which should prompt privacy concerns for anyone living in the North End). Anyway, one of the many non-M&A topics discussed was the notion of VC shakeout following the bubble years. Everyone kind of nodded their heads in agreement with the suggestion that a consequential number of VC firms closed shop once the New Economy went bust. I abstained from the head-nodding, however, due to both my disagreement and desire to finish my delicious roast beef sandwich.

It’s certainly true that some Internet-brand-name shops like CMGI @Ventures, Idealab and Safeguard Scientifics faded into relative obscurity (although each technically remained in existence). It’s also true, however, that some of these firms were little more than paper dragons. CMGI, for example, boasted three $1 billion+ funds operating at the same time (with a very skimpy staff). You could technically argue that its failure took $3 billion out of the market, but that money was never really there to begin with.

Instead, I’d argue that most of the so-called VC shakeout was more reorganization than retreat. In other words, the investment teams are still out there, but are just using different names, due to spinouts or management buyouts. Think Globespan Capital Partners (f.k.a. Jafco America Ventures) or Clearstone Venture Partners (f.k.a. Idealab Capital Partners). After all, does the macro level really notice if Vesbridge Partners or Split Rock Partners are receiving all their cash from St. Paul Travelers? Or if DLJ Merchant Banking Partners is under the CSFB umbrella?

The latest example of this reorganization is IDG Ventures. The group traditionally has been organized along geographic lines, with separate fund structures for the Boston, West Coast, European, China and Vietnam offices (no common investment committee, separate carry, etc.). The only common thread has been that all of the funds have been solely capitalized by International Data Group (IDG), a Boston-based technology media and research company. Going forward, however, IDG will only be one of many limited partners in new IDG Ventures funds (albeit a significant one). The Boston group, for example, is just a few months away from closing on a $150 million vehicle (still under the IDG Ventures brand), while the West Coast group is recruiting two new partners and is prepping its own fund. Each group is expected to remain, but will have a slightly different look.

The next issue of Venture Capital Journal will have a more analytical breakdown of the corporate VC landscape, and may reach an entirely different conclusion (perhaps using actual metrics). Until then, however, no nodding from me.

Unrelated: Among today’s many news blurbs is an item about Centre Partners agreeing to acquire Uno Restaurant Holding Corp., which operates the Pizzeria Uno’s chain. I’ve got nothing to add about this on a business level, but do have a pair of personal notes: First, I attended a private high school approximately 30 miles from my hometown of Westborough, Mass. This was only possible thanks to the generosity of my next-door neighbor, an executive with Uno who drove me to and from school every day for my freshman and sophomore years, as Uno’s West Roxbury headquarters were nearby. I am forever grateful. Second, I worked as a waiter with Uno’s throughout most of college (usually in the King of Prussia, Pa. location). The pay wasn’t great, but the hours were flexible, and it was nice to have cash in my pocket at the end of each day. Free food, too, which was like gold to a college student. Much thanks to my managers there (wherever they now may be).

Biolipox AB, a Stockholm, Sweden-based drug company focused on respiratory and inflammatory diseases, has raised $41 million in Series C funding. Scandinavian Life Science Venture led the deal, and was joined by return backers HealthCap, Apax Partners, Sofinnova Partners, Auriga Partners and Credit Lyonnais Private Equity.

John Connors, former CFO and CIO of Microsoft Corp., has agreed to join Seattle-based Ignition Partners as a partner. He will formally begin with Ignition once he completes his transition from Microsoft.

XTO Energy Inc. (NYSE: XTO) has agreed to acquire Antero Resources Corp., a Denver-based natural gas company, with operations in the Barnett Shale Play in North Texas and the Cotton Valley Play in East Texas. The deal is valued at approximately $685 million, including $337.5 million in cash, 10 million shares of XTO Energy common stock and warrants to purchase another 1.5 million common shares. Antero announced in early 2003 that it had secured a $260 million private equity funding program led by Warburg Pincus, and which also included Yorktown Energy Partners, Lehman Brothers Merchant Banking and company management.

RGB Networks Inc., a San Mateo, Calif.-based provider of network video processing solutions, has raised $12.25 million in Series B funding. Comcast Interactive Capital and Mitsui & Co. co-led the round, and were joined by return backers Accel Partners and Kleiner Perkins Caufield & Byers.

Straatum Processware Ltd., a Dublin, Ireland-based provider of fault detection and classification software for semiconductor manufacturing, has raised $5.65 million in third-round funding. Vision Capital led the deal, and was joined by fellow new investor Intel Capital and return backer ACT Venture Capital. The company was formerly known as Scientific Systems Ltd., and has raised a total of $16.75 million.

Wellpartner Inc., a Portland, Ore.-based provider of home delivery pharmacy solutions, has raised $14 million in a VC funding round led by Scorpion Capital Partners.

Retaligent Solutions Inc. has been launched by former ImageWare Technologies executives and venture capital firm Spencer Trask. The Atlanta-based startup plans to market a suite of mobile client software for retailers.

Innominate Security Technologies AG, a Berlin, Germany-based provider of embedded firewalls and VPN appliances, has raised 4 million euros in second-round funding. DVC Deutsche Venture Capital led the deal with a 3 million euro commitment, and was joined by return backer TecVenture Partners.

Chelsea Therapeutics Inc., a Charlotte, N.C.-based drug company, has raised $14.5 million in Series A funding. Paramount BioCapital served as placement agent, but no specific investor information was disclosed.

Accipiter Solutions Inc., a London-based provider of online advertising technology, has received $2 million in funding from Frontier Capital. It is the company’s first round of venture capital since management regained control of the company from Engage Inc. in November 2002.

Centre Partners has agreed to acquire a controlling interest in Uno Restaurant Holding Corp., a West Roxbury, Mass.-based operator of the Pizzeria Uno’s deep dish pizza restaurant chain. No financial terms were disclosed. In related news, current Au Bon Pain president and CEO Frank Guidara will join Uno as CEO once the deal closes. He has served in the Uno board since December 2001. Aaron Spencer, the company’s founder and chairman, plus senior members of Uno management team, will maintain significant ownership interest.

Hollywood Entertainment Corp. (Nasdaq: HLYW) has agreed to be acquired by Movie Gallery Inc. (Nasdaq: MOVI) for approximately $850 million, or $13.25 per share. Hollywood had agreed to be acquired by Leonard Green & Partners in October for $10.25 per share (down from an original $14 per share offer), but the deal had allowed for Hollywood to continue soliciting alternate transactions. There is no termination fee associated with the Leonard Green deal, although Hollywood is required to pay $4 million in transactional expenses. Blockbuster Inc. (NYSE: BBI) also had expressed interest in Hollywood, reportedly offering $11.50 per share.

Friedman, Billings, Ramsey Group Inc. (NYSE: FBR) has agreed to acquire Florida-based mortgage lender First NLC Financial Services LLC from Sun Capital Partners for $88 million in cash and stock. The deal is expected to close by the end of this quarter.

The Blackstone Group plans to make a bid to acquire 30% of Enel SpA telecom unit Wind-Infostrada SpA, according to Spanish press reports. The firm previously bid approximately 5 billion euros for a 70% stake, but was unable to consummate the deal.

CVC Capital Partners said that it has hired Merrill Lynch to assist in a strategic review of Belgium-based portfolio company Partners in Lighting International NV. The move could be the first step in a possible sale of the company, which CVC acquired in 2002.

A Polaroid Holding Co. shareholder has sued the company in Delaware Chancery Court, claiming that a pending $426 million cash acquisition offer from Petters Group Worldwide is unfair. One Equity Partners owns approximately 53% of Polaroid’s common stock, and has voted all its shares in favor of the deal.

Swiftsure Capital of Seattle is sponsoring a management buyout of AdMission Inc. from IPIX Corp. (Nasdaq: IPIX). No financial terms are being disclosed for the transaction, which is expected to close within 30 days. IPIX will retain an equity position and board representation with AdMission, which is a provider of directional advertising technology solutions for newspaper classifieds, yellow pages and online directories.

Accuride Corp., an Evansville, Ind.-based provider of trailer and heavy-duty truck wheels, has filed to raise $290 million via an IPO of common stock on the NYSE. Last month, Accuride agreed to acquire Transportation Technologies Inc. (TTI), a Chicago-based maker of truck components and subassemblies. TTI is controlled by Trimaran Capital Partners, while Accuride is controlled by Kohlberg, Kravis, Roberts & Co. When the acquisition closes on January 28, existing Accuride shareholders will own 65% of the combined entity’s common stock, while TTI shareholders will hold the remaining 35 percent.

FreightCar America Inc., a Chicago-based maker of railroad freight cars, has filed to raise $115 million via an IPO of common stock on the Nasdaq under proposed ticker symbol RAIL. The company traces its roots back to 1901, and was owned by Bethlehem Steep Corp. from 1923 to 1991. It then was purchased by Johnstown America Industries (now known as TTII), and resold in June 1999 to an investor group that included company management, Trimaran Capital Partners and John Hancock Life Insurance Co.

Capital H Group Inc., a Chicago-based human capital consultancy, has acquired Tiburon Group, a -based provider of recruitment outsourcing services. No financial terms were disclosed. Capital H Group is backed by PPM America.

Dana Settle has joined Venture Strategy Partners as a partner, where she will focus on deal opportunities in the consumer and enterprise technology spaces. She previously served as a venture partner with Mayfield.

Robert Palumbo has joined Accel-KKR as a managing director. He previously led the West coast enterprise software practice for Thomas Weisel Partners.

The Carlyle Group has promoted the following people from principal/director to managing director: Matthew Boyer (U.S. telecom buyouts), Jeffrey Ferguson (general counsel), Ian Fujiyama (U.S. consumer/retail buyouts), Ryan Schwarz (U.S. healthcare VC) and Kazuhiro Yamada (Japanese buyouts). The firm also has promoted the following people from vice president/associate to principal/director: Jay Bu, Allen Cashion, JP Gan, Vladmir Lasocki, James McGee, Georg Nolting-Hauff, Guido Funes Nova, Steve Rosengarten, Chris Ullman and Alex Ying.

Quadrangle Group has promoted Jeffrey Nordhaus and Josiah Rotenberg to principal, and Andrew Frey to vice president. Nordhaus joined as a vice president in June 2001, from the communications, media and entertainment group of Goldman Sachs. Rotenberg joined the quadrangle Debt Recovery Funds as a vice president in July 2002, after having as a vice president with Lazard. Frey began as a Quadrangle associate in July 2002, after having worked for both The Blackstone Group and Texas Pacific Group.

David Rubner, chairman and CEO of Rubner Technology Ventures and a partner with Hyperion Israel Advisors, has joined the board of Lipman Electronic Engineering Ltd. (Nasdaq: TASE).

Roger Kennedy has joined Cantor Fitzgerald as managing director responsible for European investment banking, while Scott Sommers has joined as managing director responsible for West Coast U.S. investment banking. Kenendy most recently served as executive director of Fredericks Michael & Co. Ltd., while Sommers was first vice president and global corporate client relationship manager for Mellon Financial Group.

Tuesday, January 11

To make up for yesterday’s ridiculously long column, today’s edition will be ridiculously short. Actually, I got overwhelmed with news gathering this morning, and had foolishly scheduled some early meetings. So….

Oh, the places I’ll go: I’ll be moderating a VC Exits panel at the Wharton Private Equity Conference in Philadelphia, and a Limited Partner panel at the Buyouts Symposium in New York. I hope to see you at both.

Social Security Logjam:My inbox still has lots of in-depth emails on social security privatization (including some critiques of yesterday’s Mouth-Off from Philip), so the best thing seems to be to put them online and let you sort through them at your leisure. Check out at around 4pm, by which point I should have had time to do it. And yes, I do realize that a blog would have preemptively solved this problem.

Link Up: Speaking of blogs, a reminder for those of you who run such things: The PE Week Wire can be included in your list of links. Just send me an email if you’d like the URL.

Inquiring minds want to know: If Gov. Arnold gets his way on public pension termination, will the below news item on CalSTRS launching an emerging managers program be moot? Just one of many private equity-related questions related to his proposal, which will get far greater coverage in this space during the upcoming weeks and months.

Verifone Holdings Inc., a San Jose, Calif.-based provider of electronic payment transaction services at the point-of-sale, has filed to raise $230 million via an IPO of common stock on the NYSE under proposed ticker symbol PAY. The company originally had gone public in 1990, but was acquired and taken private by Hewlett-Packard Co. in 1997. Four years later, Hewlett-Packard sold the company to Gores Technology Group. In 2002, GTCR Golder-Rauner led a recapitalization, and became Verifone’s majority shareholder.

The California State Teachers’ Retirement System (CalSTRS) has selected INVESCO Private Capital to manage its New and Next-Generation Manager Fund, which will invest an initial $100 million over the next five years. INVESCO will have full discretion to consider funds focused on buyouts, equity expansion, venture capital, clean technology and the environment.

Cbeyond Communications LLC, an Atlanta-based managed services provider focused on small businesses, has raised $17 million in Series C funding. Black Diamond Capital and Ballast Point Venture Partners provided a combined $7 million, while return backers Madison Dearborn Capital Partners, Battery Ventures, and Vantage Point Venture Partners invested the remaining $10 million. The company has raised $138 million in total VC funding since its 1999 inception.

Riverbed Technology Inc., a San Francisco-based developer of wide-area network performance software, has raised $20 million in Series C funding. Goldman Sachs led the deal, and was joined by return backers Accel Partners, Lightspeed Venture Partners and UV Partners. The company has raised just under $37 million in total VC funding since its 2002 inception.

Elbion AG, a German drug discovery company focused on inflammatory and CNS diseases, has raised 25 million euros in Series A funding. 3i Group, DVC Deutsche Venture Capital and Burrill & Co. co-led the deal, and were joined by AGF Private Equity, Quintiles PharmaBio Development, BayTech Venture Capital and Marubeni Corp. Elbion was founded in 2002 as a management buyout from Degussa AG.

CoVi Technologies Inc., an Austin, Texas-based provider of video surveillance solutions, has raised $15 million in Series B funding. Return backers include Oak Investment Partners, TPG Ventures, Walden International and Polycom Inc. The company was launched in September 2003 with around $16 million in Series A funding.

Fulcrum Pharmaceuticals Inc., a Las Vegas-based drug design and development company, has raised $8.4 million in second-round funding (Series A). Return backer Third Point Management led the deal, and was joined by new investors New Science Ventures and Stark Investments. The company has raised over $16.5 million in total VC funding.

Vertical Circuits Inc., a Scotts Valley, Calif.-based die-level semiconductor stacking company, has raised $7 million in Series B funding. Battery Ventures and return backer Peter Friedli of Friedli Corporate Finance co-led the deal. As part of the deal, Battery Ventures acquired the Vertical Circuits equity position previously held by Northrup Grumman Corp. (NYSE: NOC).

Nations Healthcare Ltd., a London, UK-based operator of elective treatment and outpatient centers around the world, has received a GBP15 million investment from Nomura’s private equity group. It is the company’s first round of institutional funding.

Roving Planet Inc., a Westminster, Colo-based provider of wireless LAN security and management solutions, has raised $6 million in Series C funding. StarVest Partners led the deal, and was joined by return backers Appian Ventures, Cardinal Ventures, Draper fisher Jurvetson and Wolf Ventures.

Swe-Dish Satellite Systems, a Stokholm-based provider of satellite communications equipment, reportedly has raised approximately $6.7 million in new VC funding from return backers 3i Group, Litorina Kapital and Nordic Wireless.

North Castle Partners has acquired a controlling interest in Octane Fitness Holdings Inc., an Andover, Minn.-based provider of elliptical cross-training machines. No financial terms were disclosed. The deal is North Castle’s second investment in the fitness and weight loss market, following Equinox Fitness Clubs.

Warburg Pincus has agreed to acquire Camp Systems International LLC, a Ronkonkoma, N.Y.-based provider of maintenance and inspection management programs for business aircraft. No financial terms were disclosed. Camp Systems counts Boston Ventures among its current shareholders.

Centre Partners and aviation industry veterans Jeff Ross and Greg Ross have formed an acquisition platform called Ross Aviation LLC, which will acquire companies in the fixed-base operation (FBO) market. The platform’s first acquisition is Denver Air, although no specific deal terms were disclosed.

Welsh, Carson, Anderson & Stowe reportedly has agreed to invest $150 million into Global Pharmaceutical Development Inc., a Greenwich, Conn.-based drug testing and development company founded by former ChiRex Inc. executives.

EpiCept Corp., an Englewood Cliffs, N.J.-based drug company focused on pain management, has filed to raise $75 million via an IPO of common stock on the Nasdaq under proposed ticker symbol EPCT. The company has raised over $35 million in VC funding since its 1993 inception, with significant shareholders including TVM Techno Venture Management, Merlin Biosciences and GZ Paul Partners.

Dollar Financial Corp., a Berwyn, Pa.-based provider of financial services to lower-income customers, has amended its IPO terms to 7.5 million shares being offered at between $15 and $17 per share. The company was acquired in 1998 by a holding company controlled by Leonard Green & Partners, which still serves as majority shareholder, and Goldman Sachs Mezzanine Partners.

Threshold Pharmaceuticals Inc., a South San Francisco-based biotech company focused on small molecule therapeutics, has set its proposed IPO terms to over 5.33 million shares of common stock being offered at between $14 and $16 per share. The company has raised around $50 million in VC funding since its 2001 inception, including a $41 million Series B infusion in 2003 at a post-money valuation of approximately $68 million. Significant shareholders include Morgenthaler Partners, Pequot Capital Management, ProQuest Investments, Sofinnova Ventures, Three Arch Partners and Sutter Hill Ventures.

Concord Communications Inc. (Nasdaq: CCRD) has agreed to acquire Aprisma Management Technologies Inc., from Gores Technology Group, for approximately $93 million in cash.Aprisma is a Portsmouth, N.H.-based provider of software that manages network health and performance.

BMC Software Inc. (NYSE: BMC) has agreed to acquire Calendra, a French provider of Web-based enterprise identity management solutions. The deal is valued at approximately $33 million in cash, and is expected to close later this month. Calendra has raised around $10 million in total VC funding since its 1997 inception, from firms like 3i Group, ELAIA Partners, Natexis Private Equity, SPEF Development and Ventech.

Switch and Data, a Tampa, Fla.-based provider of Internet exchange infrastructure, has acquired LayerOne Inc., a Dallas-based operator of data centers in Dallas, Miami and Chicago. No financial terms were disclosed. Switch and Data has received VC funding from CapStreet Group, Seaport Capital Partners, Tudor Ventures, A.G. Edwards and BancBoston Capital, while LayerOne is backed by Crest Communications Holdings and Soros Fund Management.

Colorbok Inc., a Dexter, Mich.-based provider of stationary and gift products, has acquired Qincrafts Corp., a Braintree, Mass.-based provider of craft activities for children. No financial terms were disclosed. Colorbok entered into a recapitalization last May led by FdG Associates.

John Breaux, former U.S. Senator from Louisiana, has joined Clinton Group Inc. as a senior managing director and board member. He also will serve as senior counsel to Patton Boggs LLP, and as a senior advisor to private equity fund manager Riverstone Holdings LLC.

Joseph Pignato has joined Prism Venture Partners as chief financial officer. He previously served as CFO of Charles River Ventures.

Harvest Partners has made the following promotions: Colin Farmer from vice president to principal; Debra Kravetz from controller to chief financial officer; and Merrick Axel from senior associate to vice president. In addition, Harvest Partners announced that Emily Heimermann, a former associate with Goldman Sachs, has joined the firm as director of marketing.

Heritage Partners has made the following promotions: Mark Jrolf from partner to general partner; Peter Jeton from senior vice president to partner (he also will maintain his CFO designation); Erich Horsley from senior associate to vice president and Chris Parmentier from analyst to associate.

A.M. Pappas & Associates has added Charles Hsu as a venture partner and Geoffrey Barker as an executive-in-residence. Hsu will focus on life sciences investment opportunities from San Francisco, and served as a general partner with Walden Group/Walden International between 1996 and early 2003. He previously co-managed life science investments at Advent International. Barker is based in A.M. Pappas’ Research Triangle Park office, and most recently served as chief medical and scientific officer with Quintiles Transnational Corp.

Tim Haddock has been promoted to the position of managing director with Greenhill & Co. He originally joined the firm as a principal in 1999, having previously served in the M&A department of J.P. Morgan & Co.

Ryan Franco has been named senior vice president of origination of GE Commercial Finance Technology Lending. He has been with GE since March 2000, and previously has held positions in GE Equity’s technology group and GE Commercial Finance’s global sponsor finance group.

Piere Duhamel has been named executive vice president and chief financial officer of Teleglobe International Holdings Ltd. (Nasdaq: TLGB). He most recently served as managing director of VC group Cartier Capital.

Duncan Darrow has joined law firm Sidley Austin Brown & Wood LLP as a partner in the firm’s corporate practice. He also brings along associates Stephen Rutenberg and Sean Carmine.

Michael Palazzolo has joined Boulder Ventures as an entrepreneur-in-residence. He most recently served as a principal with Coastview Capital.

Thomas Stephenson, a partner with Sequoia Capital, has donated $250,000 of the $18 million raised so far, to help celebrate President Bush’s second inauguration. He is one of five Californian individuals to contribute the maximum, according to The San Francisco Chronicle.

FTN Financial, the capital market division of First Horizon National Corp. (NYSE: FHN) has acquired the fixed income business of Spear, Leeds & Kellogg, a division of Goldman Sachs & Co.


Monday Mouth-Off

The Boston sky is gray, Peyton Manning is scary and I’m officially expressing my interest in a $250,000 bribe from the White House (“Gee Dan, why did you suddenly reverse your position on stem cells?”). In other words, it’s time for a lot of Monday Mouth-Off.

First up is K, who feels that I wasted my time trying to figure out where the new Carlyle Group fund will rank in the pantheon of mega-funds (although I focused on the first close, rather than on the final one): “Not sure it is worth doing the research on whether Carlyle at $6.5 billion would be the largest fund ever, as I don’t think it would hold the crown very long. Apollo, Blackstone, Tommy Lee and Warburg Pincus will all shoot for bettering that total in 2005, and have good chances of doing just that. But, of course, it all depends upon definitions. Apollo, Blackstone and Lee all run global funds – without the separate European or Asian funds that firms like Carlyle and KKR run. And Warburg, of course, is planning to merge its US and international funds into a single vehicle this time out, with a target of $8 billion. So is the relevant comparison between Carlyle and Blackstone, for example, or the Carlyle buyout family vs. the others?”

Next we have someone who requested total anonymity (not even an initial), which I’ll grant because he/she is an attorney with Testa Hurwitz: “You’ve hit the nail on the head with what’s happening here. Everyone I know is either looking to get out, or is at least seriously considering other offers. It’s extremely sad, and I’ve lost most hope for a merger or other arrangement that could keep this office together.” By the way, the Boston Business Journal has added two more names to ranks of defecting partners — two folks who also were on my unconfirmed list — so it feels safe to report that life science practice co-heads Mitchell Bloom and Lawrence Whittenberg are on their way to Goodwin Proctor. Neither man has returned calls requesting comment.

Finally, the vast majority of email this week was related to two issues with just scant relevance to the private equity markets: blogging and social security privatization. Readers were divided on my concern over the lack of editorial checks and balances in journalistic blogging, while nearly all respondents felt that the Christian Science Monitor dropped the fall with its social security analysis (and that I, in turn, dropped the ball for providing the link).

Brian weighs in on blogging: “I think you have understated the checks and balances on blogs, while overstating the effectiveness of them on mainstream media. The entire blogosphere checks and balances blogs, while only those anointed editors have the opportunity to do so in MSM. This, of course, ignores the issue of bias and objectivity. Blogs are openly biased, opinion-driven publications. MSM is supposed to be objective. Do you believe it is?” Actually Brian, for the most part, I do believe it is (unpopular opinion, I know). For most every example of MSM liberal bias, there is one of conservative bias. In other words, it all equals itself out. The vast majority of news reporting is neither left nor right, but just the facts with adjectives.

Craig adds: “I agree with you Dan. Good recent examples include the NY Times‘ handling of the Jayson Blair affair (the in-depth review and admission of wrongdoing), plus the Times’ admission of being too soft on the White House in the lead-up to the Iraq War. Contrast this with Matt Drudge. Which route do we want our journalism to take? I would prefer good reporting and editing.”

Finally, the most in-depth email on social security privatization, vis-a-vis the CSM article. Philip writes: “Your comment on social security privatization is way off the mark. I know you didn’t do the analysis (CSM did) but your comment that he’s ‘done the math’ is a tacit endorsement of it, and their analysis is ridiculous.There are numerous glaring holes in the argument:

  • By “owning” his portfolio, he would have capitalized on the enormous stock run-up from ’94-’00, even though he was retired. It’s unclear why he stopped the analysis in ’94, except to bias his results. He would “own” his portfolio, and thus would benefit from a rising market even after he retired.
  • He’s comparing SS returns vs. the DJIA….under a privatized SS account, most people would invest in a much broader stock and bond portfolio (DJIA has only 20+ stocks). This would likely help reduce volatility yet keep returns high. Using only DJIA, for example, he missed out on the huge NASDAQ run up.
  • If he died, his heirs would be able to benefit from his accumulated wealth. Not so under the existing SS system, where he gets a return ONLY IF he lives long. And long life goes disproportionately to the wealthy (and women), not to the poor in the US.
  • The article says “timing matters” — it does, and in this situation they’ve happened to pick the very worst years for the stock market. EVEN SO, the difference amounts to only 2.2%. It’s not like this guy took a bath on his stock portfolio, and this is a worst-case scenario. A difference of $5k over 45 years is nearly negligible, and therefore shows that over a long time period, no one would be hurt by privatization.
  • None of this analysis even bothers to mention the fact that the existing system is going to go broke within my lifetime and that I do not count on $1 coming from social security. Even if we wanted to keep SS “as-is”, we couldn’t do it forever.
  • Fees on these types of accounts can be miniscule — look at Vanguard’s index funds, which should be a model for the types of assets that most privatized SS accounts should hold. Vanguard has incredibly low fees, and so could privatized SS accounts.

In short, this analysis does not “turn conventional wisdom on its head”. It’s an incredibly sloppy piece of reporting that takes one very special-case example and tries to use that to prove a broad point. It is not representative of what would happen to the vast majority of people who would benefit greatly from the higher returns and wealth creation afforded by privatization.”

BC Partners and Cinven reportedly are nearing a deal to acquire Spain-based travel reservations company Amadeus Global Travel Distribution SA for around 4.3 billion euros (approx. $5.63 billion). Other interested bidders are said to have included The Carlyle Group and Citigroup Venture Capital. Amadeus currently is owned by airlines Air France, Iberia Lineas Aereas de Espana SA and Deutsche Lufthansa SA.

Petters Group Worldwide has agreed to acquire imaging company Polaroid Holding Co. (OTC BB: POHC) for $12.08 per share, or approximately $426 million in cash. One Equity Partners owns approximately 53% of Polaroid’s common stock, and has voted all its shares in favor of the deal.

Visage Mobile Inc., a San Francisco-based developer of mobile virtual network operators, has raised $22.8 million in Series C funding. Worldview Technology Partners led the deal, and was joined by return backers Mobius Venture Capital, Advanced Technology Ventures, Vesbridge Partners, Selby Venture Partners, Emergence Capital Partners and Palisades Ventures. Visage has raised over $50 million in total VC funding since its 2001 inception, including a $21.6 million Series B round last fall.

Netezza Corp., a Framingham, Mass.-based provider of enterprise-class data warehouse appliances, has raised $15 million in fourth-round VC funding. Meritech Capital Partners led the deal, and was joined by return backers Matrix Partners, Charles River Ventures, Battery Ventures, Orange Ventures, Sequoia Capital and Meritech Capital Partners. The company has raised over $68 million in total VC funding since its 2000 inception.

TA Associates has made a $50 million investment in Sacramento-based C&S Marketing, in exchange for a minority ownership position. C&S Marketing is a Sacramento-based provider of mortgage lending information and technology.

SofCheck Inc., a Burlington, Mass.-based provider of software analysis and verification technology, has raised $750,000 in its first outside round of VC funding. No further information was disclosed.

BeInSync Ltd., a Tel Aviv, Israel-based provider of P2P synchronization technology, has raised $3 million in Series A funding from Eurofund and Aviv Venture Capital. It expects to raise an additional $2 million.

Trellia Networks Inc., a Montreal, Canada-based developer of wireless roaming solutions for cellular data and Wi-Fi networks, has raised US$3.3 million in Series A funding from Skypoint Capital Corp.

Bulova Technologies LLC, a Lancaster, Pa.-based contract electronics manufacturing company, has raised $6 million in mezzanine funding from NewSpring Ventures and TRF Urban Growth Partners.

Argus Capital Partners has sold its 21% ownership position in Polish cable television and broadband provider Aster City Cable to existing Aster shareholder Hicks, Muse, Tate & Furst for an undisclosed amount. Argus first invested in Aster City Cable in March 2003, when it teamed with Hicks Muse and the AIG Emerging Europe Infrastructure Fund to acquire the business from Elektrim Telekomunikacja.

Citigroup Venture Capital has completed its acquisition of Network Communications Inc., a Lawrenceville, Ga.-based provider of real estate advertising solutions, from ABRY Partners. No financial terms were disclosed.

FTD Group Inc., a Downers Grove, Ill.-based provider of floral products, has set its proposed IPO terms to over 15.38 million common shares being offered at between $12 and $14 per share. It hopes to trade on the NYSE under a still-undetermined ticker symbol. Leonard Green & Partners acquired FTD in February 2004 in a public-to-private transaction worth approximately $420 million.

Favrille Inc., a San Diego-based drug company focused on immunotherapies for cancer and other immune system diseases, has set its IPO terms to six million common shares being offered at between $12 and $14 per share. The company has raised over $75 million in total VC funding since its 2000 inception, from shareholders like Alloy Corp., De Novo Ventures, Forward Ventures, Sanderling Venture Partners and William Blair Capital Partners.

Morningstar Inc., a Chicago-based financial information provider, plans to use a Dutch auction format for its proposed IPO. WR Hambrecht & Co. will manage the deal, which is designed to raise upwards of $100 million. Softbank Finance Corp. owns a 19.8% pre-IPO ownership position in Morningstar.

Carter & Carter Group Ltd., a UK-based provider of consulting services to the automotive manufacturing industry, plans to raise up to GBP 50 million next month via a public flotation on the London Stock Exchange. The company was acquired in 2001 by private equity firm Bridgepoint.

IBM (NYSE: IBM) has acquired SRD, a Las Vegas-based provider of identity resolution software. No financial terms were disclosed. SRD has received VC funding from In-Q-Tel, Reed Elsevier Ventures and SAIC Venture Capital Corp.

Paradigm Therapeutics Ltd., a UK-based drug discovery company that uses an in vivo genetics platform, has acquired Amedis Pharmaceutical Ltd., a UK-based medicinal chemistry and drug discovery company. As part of the deal, Paradigm received approximately GBP 5.5 million in new funding from return backers Bio*1Capital, Merlin Biosciences and Avlar BioVentures.

Acxiom Corp. (Nasdaq: ACXM) has agreed to acquire SmartDM, a Nashville, Tenn.-based direct marketing agency. No financial terms were disclosed. SmartDM has received VC funding from Pharos Capital Partners, Clayton Associates, Krikland Investors and MyPoints/UAL Ventures.

Ynon Kreiz has joined Benchmark Capital as a general partner of its European funds. He previously served as chairman, president and CEO of entertainment company Fox Kids Europe NV, which he founded in November 1999.

Brooke Seawell has joined New Enterprise Associates as a Menlo Park, Calif.-based venture partner. He has spent the past five years as a venture partner with Technology Crossover Ventures.

Ulrich Schumacher has joined Francisco Partners as an operating partner. He most recently served as president and CEO of Infineon Technologies AG (NYSE: IFX), and before that was president and CEO of Siemens AG‘s semiconductor group.

Peter Hodson has joined Northern Venture Managers as an investment manager for the London market. He most recently worked on the mid-market deal team for 3i Group.

Frazier Healthcare Ventures of Seattle has received over $267 million in limited partner commitments for its fifth fund, which is being marketed with a maximum capitalization of $450 million, according to a regulatory filing. The only participating LP listed was the California State Teachers’ Retirement System (CalSTRS).

Littlejohn & Co., a Greenwich, Conn.-based private equity firm, has held a $380 million first close on its third fund. The vehicle is being marketed with a $600 million target capitalization, and a $650 million maximum cap.

Click here for last week’s complete PE Week Wire.