PE Week Wire — Friday, June 24

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Just a couple quick notes on my last day as substitute teacher:

* My two-week stint with this column reminded me how much rage is actually brimming at the surface in the private equity market. Despite all the deal activity and fundraising-not to mention exit opportunities that range from okay (if you’re a venture firm) to excellent (if you’re a buyout firm)-the feedback I received shows some of you are nonetheless frustrated. In many cases, the sadness has to do with exhaustive deal quests that end in lost transactions or, perhaps a worse fate, the acquisition of an incredibly expensive asset. In other cases, the madness stems from hedge fund encroachment into buyout territory, while on the venture side entrepreneurs and VCs alike still complain about the dearth of early stage funding-even though that seems to be on the rise. With the exception of entrepreneurs, few of you are lacking for money these days, so perhaps this phenomenon I’m sensing (and maybe it’s just me) can be likened to the mass exodus to! the Jersey Shore every Friday night on the Garden State Parkway: Everyone’s happy to be driving to the beach, but the minute someone cuts you off or is driving too slow-temporary roadblocks to your destination of choice-the road rage returns. (But now that I think about it, that’s like every time I drive on the Parkway…)

** Thanks to everyone who actually read this section and sent news items to me instead of Dan. It made my job much easier. Dan will be back on Monday, so if you have news items for next week, please send them his way.

    Top Three


Bermuda-based Celtic Pharmaceutical Holdings has launched a $300 million fund that will target late stage VC and buyout investments in biotech and pharma companies. The fund also announced its first investment, a 20 million British pound buyout of Xenova plc , a biotech company focused on fighting cancer and drug addiction. The fund’s management includes managing general partners Stephen Evans-Freke , a biotech entrepreneur and onetime managing director at Painewebber, and John Mayo , a former director at SG Warburg. Celtic Pharma also has offices in New York and London.

New Energy Capital Corp ., a clean energy company focused renewable energy and distributed generation projects, has raised $30 million of venture financing. The California State Teachers’ Retirement System and VantagePoint Venture Partners led the funding.

Richard Atterbury is leaving his job at Morgan Stanley to take the same position at Lehman Brothers , the Financial Times reported. Atterbury was global co-head of the financial sponsors group at Morgan Stanley. At Lehman, he’ll have the same position but will also chair Lehman’s European leveraged finance group. Atterbury will be replaced at Morgan Stanley by David Law , deputy head of UK investment banking.

    VC Deals


uShip Inc. , an Austin, Texas-based online marketplace for shipping and moving, has raised an undisclosed amount of venture capital from Benchmark Capital , in its first round of fundraising. Bob Kagel, a founding partner of Benchmark Capital, has joined the uShip board of directors.

eProject, a Seattle-based project management software company, will announce Monday that it has raised $8 million of venture financing, The Seattle Times reported. Led by Kennet Venture Partners, the deal will also include Genevest. Founded in 1997, the company suffered major layoffs a couple years ago but turned a profit in 2004 and is now growing at an annualized rate of 70 percent, the story said. eProject’s last round of financing was a $3.7 million deal in 2002 that included Vault Capital and Pinpoint Venture Group, according to Thomson Venture Economics.

    Buyout Deals


Charterhouse Group is considering a 260 million pound bid for private equity-backed Barracuda Group, a British pub and bar operator, according to published reports. Barracuda was founded in July 2000 with help from PPM Ventures.

3i Group has agreed to buy ABX Logistics, a unit of SNCB/NMBS, the Belgian railway company, according to published reports. The final offer could be as high as 50 million euros.

HgCapital -backed Clarion Events, a producer of trade shows, has purchased Amusement Trade Exhibitions Group for 13.5 million euros. HgCapital acquired Clarion in October 2004 in a 50 million euro MBO.

Permira and PAI have made a 1.44 billion euro bid for Spain ‘s Cortefiel, the country’s second-largest retailer, Retail Week is reporting. The bid is said to exceed an existing offer from CVC Capital Partners.

    PE-Backed IPOS

Kelso & Co. -backed Eagle Bulk Shipping, the dry bulk vessel company, raised $201.6 million in its IPO yesterday at $14 a share, down from the projected range of $16-$18.

JLL Partners – backed Builders FirstSource , a Dallas , Texas -based provider of building materials, raised $196 million in its Wednesday IPO. As of Thursday afternoon, the stock was trading at $15.45, representing a slight loss over the $16-a-share offer price.  Joint-bookrunners on the deal were UBS Securities and Deutsche Bank Securities Inc.  JLL first bought the company in 1997 and used it as a platform for additional acquisitions. In the past year JLL Partners re-capitalized Builders FirstSource, taking special cash dividends worth roughly $375 million. Additionally, of the $196 million raised, Builders FirstSource will receive $120 million, with the remainder going to pre-IPO shareholders.


Lion Capital (FKA Hicks Muse Europe) is in talks to divest the Barbara’s Bakery unit and the U.S. private label cereal business of its Weetabix portfolio company, The Times reported. The company hired NM Rothschild as advisor, and is said to be seeking roughly $110 million for the two companies. Lion Capital took Weetabix private in a $1.1 billion, November 2003 acquisition, which occurred prior to Lion’s split from the Texas-based Hicks Muse. At the time, the company held a 14.2% market share in the UK cereal market, controlling such brands as Alpen, Ready Brek and Weetos.

     Fund & Firm News

The European Regional Development Fund and Advantage West Midlands are launching a 20 million British pound fund that will provide capital to businesses in the United Kingdom ‘s West Midlands , according to published reports. The generalist fund will focus on investments of 500,000 pounds to 2 million pounds but can invest in projects as high as 10 million pounds as part of a syndicate. Nick Paul, chairman of Advantage West Midlands, and Clive Austin, a director with Catapult Venture Managers Ltd., will manage the fund.

Swicorp and Savola Group are teaming up to launch Intaj Capital , a private equity fund with initial funding of $60 million, Gulf News reported. The fund plans to raise $200 million in 2006.



SunGard shareholders are scheduled to vote on the company’s sale to private equity firms at SunGard’s annual meeting on July 28. Shareholders of record as of June 17 will be eligible to vote.

Ripplewood Holdings’ holding company, RHJ International, intends to invest up to 100 billion yen in struggling Japanese companies over the next few years, Reuters reported.


Today we bring you another guest column, this one from Monte Brem , president of PCG Asset Management , an operating unit of Pacific Corporate Group.

“The outlook is not optimistic say venture capital firms worldwide.” – Los Angeles Times

“Venture capital fund managers generally have braced themselves for the storms ahead. There will inevitably be more insolvencies and refinancing.” — The Times of London

“.Numbers indicate a median annual rate of return. [that] is nothing less than a disaster. Next year seems very scary to all but a few venture capitalists. [They] are about as welcome these days in the typical pension fund office as junk bond salesmen.” Forbes

Recent press makes it seem that the 2000 venture capital bubble drove a stake into the heart of the VC industry, that our venture brethren have been dying a slow death for the past five years and that the VC model is now on the verge of expiring for good as pension funds reduce their exposure to venture capital. So maybe the time has come to write a personal epitaph for the venture capital era that brought us the diverse entertainment of Segway, Google and eBay – not to mention all those great dotcom Super Bowl commercials.

Factors commonly cited as evidence of venture capital’s death include too much capital chasing too few deals, an absence of attractive exit opportunities, decreased enterprise budgets for technology and the ever-popular “over saturation of technology in our increasingly complex lifestyles.” These arguments have all been raised in prose much more elegant than anything I could hope to create. The problem is that they are all hogwash (pardon my sophisticated language).

Venture capital is the core of our capitalist, entrepreneurial-focused society. It is the fuel that runs the motor of growth for this country.

Of course, this investment activity involves volatility. However, to say that the venture capital business is broken ignores the current facts. Consider that wireless phones are starting to become the first truly ubiquitous communications and media technology devices (all in the palm of your hands), broadband penetration is now reaching audience levels that will make business models hum, and large pharmaceutical companies have product pipelines that can only be fully satisfied by independent biotech companies. Where will investors be able to access the returns that will be offered by new businesses embracing these developments? Venture capital funds.

The naysayers will reply that “enterprise sales are critical to venture returns and they are not going to invest in technology at the rates that they have in the past.” To see why this view is faulty, consider any modern workplace. U.S. companies continue to adopt technology to become more efficient as well as to create new business opportunities.

“What about the VC capital overhang?” Venture capital still consists of only 18% of all private equity and is typically 15 – 25% of large institutional investors’ private equity allocation. PCG Asset Management believes there are plenty of attractive investment opportunities to support these levels of capital commitments.

As corporate IT spending has rebounded along with increased pipelines and revenues in IT and life sciences companies, funds have renewed their interest in new company formations and early stage investing, which represented 32% of the rounds completed. Venture investment pace also jumped significantly in 2004 to $15.8 billion, a 50% increase over 2003. In addition, 67 venture-backed companies completed their IPOs in 2004, raising a total of approximately $5 billion – a significant improvement over the 22 IPOs that raised $1.4 billion in 2003.

“But what about the abysmal exit valuations?” We are certainly at a trough with respect to IPO and acquisition valuations, but if history holds, we will continue to see cycles of higher, and lower, exit multiples. And venture investors generally are quite good at timing their exits at the cycles of higher values.

“Aren’t things different this time?” This sounds strangely familiar, and seems to prove my point.

Our experience has shown that being thoughtfully contrarian pays off in private equity fund investing. The best performing vintages for private equity sub-classes are often the years when funding for the sector was at a trough in the cycle. It seems that an exceptional indicator of outsized investment returns for a vintage year is the amount of negative press surrounding the sector. Based on this negative sentiment, as well as our proprietary trend analysis, we believe that VC is about to enter another golden period, although we will likely not see the evidence of this in the form of returns for another 2 – 4 years.

Our focus will be on early stage IT companies where the new ideas for tomorrow’s economy will be fostered. In the healthcare VC sector, we believe that mid-stage (clinical trials) focused funds generate the most attractive returns within our investment horizon.

Shouldn’t we be concerned about those sage quotes at the beginning of this column? These quotes were all from 1990. Of course, we were then about to enter an unprecedented period of positive VC fund returns that spanned the remainder of the decade. I just may hold off on the epitaph.

    Top Three


Today’s Los Angeles Times is reporting that Thomas H. Lee Partners and former Fidelity National Financial CEO William Foley II have made an all-cash, $1.2 billion bid for Callaway Golf Co. , the country’s biggest maker of golf clubs. The story says the board has unanimously endorsed the bid, but is split over the details of the $16-a-share offer. Based in Carlsbad , Calif. , Callaway has watched its sales drop in the past few years.

French telecom equipment company Alcatel is setting up a venture capital program in China to hasten the development of broadband technology there, according to published reports. The announcement came just a week after Intel Capital revealed that it will launch a $200 million fund focused on China . It was unclear how much money Alcatel plans to invest.

A global private equity consortium has purchased Koor Industries’ 39% stake in Rosh Ha’ayin-based Telrad Networks Ltd. , a telecom solutions company, for $16.75 million. Led by Fortissimo Capital Fund, the deal also included HarbourVest and Paolim Ventures. The investment comes after a reorganization at Telrad.

    VC Deals


DriveCam, Inc ., a San Diego, Calif.-based provider of systems that identify and improve unsafe driving behavior for commercial fleets, has secured $18 million in Series B funding. Menlo Ventures led the round with a $10.7 million investment, followed by JMI Equity with a $7 million investment.

Tandem Labs , a Salt Lake City, Utah-based biotech company focused on contract research organization, has raised $18.8 million from DW Healthcare Partners in its first round of funding.

Austin-Tetra , an Irving, Texas-based global data management company, has secured $3.5 million of venture financing. The Series B deal was led by Southwest Mezzanine , an affiliate of Growth Capital Partners, which led the second round of funding.

Blueline Services , a Salt Lake City, Utah-based company that provides drug testing and background screening, has raised $300,000 from UTFC Financing Solutions LLC, an SBIC fund. Blueline was founded in 2004.

Capital Group Inc. has purchased a 12% stake in Brazilian retailer Magazine Luiza SA for 119.5 million Brazilian reals, according to published reports. The retailer sells consumer goods including furniture, computers, toys and cell phones, and operates 333 stores. The company is expected to go public in Brazil at some point.

    Buyout Deals


Huron Capital Partners -backed Printegra Corp. has acquired National Imprint Corp., which imprints envelopes and other stationery products. Huron first invested in Printegra, a Peachtree City, Ga.-based business printing company, in December 2004.

    Human Resources

John Burns has joined Highland Capital Partners as a senior associate.  At Highland , Burns will concentrate on growth stage investments in technology, healthcare and services companies.  Prior to this job, Burns was a vice president at Summit Partners.


CCP Equity Partners
(formerly known as Conning Capital Partners) has agreed to sell Neovest Holdings Inc., an electronic trading company, to JPMorgan for an undisclosed amount. Under the new ownership, Neovest will operate as a wholly-owned subsidiary of JPMorgan, while Neovest CEO Bryce Byers will join the investment firm as a managing director, reporting to Emily Portney, managing director and COO of origination and distribution for the Americas. CCP has invested $9 million in Neovest since 2001, while the company also counts Total Technology Partners among its backers. The deal is expected to close next quarter.



South Australia ‘s biotech companies stand to benefit from a major venture capital investment that will come from a joint venture between an as-yet-unnamed investor and Bio Innovation SA, a government-backed initiative established in 2001, the Australian Biotechnology News is reporting.

The private equity-backed acquisition of Toys R Us has been approved by almost 98% of the shares that were voted. The price has not changed since the announcement in March, which means shareholders will earn $26.75 a share.


Not much time to write today (I’m starting to sound like Dan), but if you enjoyed reading Bart Schacter’s column last week on Silicon Valley—and for those of you who are indeed wishing for one more bubble—you might want to visit this link :

QUICK REMINDER: For the remainder of this week, please send all news items, feedback and criticism to

    Top Three


picoChip , a Bath , England-based wireless semiconductor company, has raised $20.5 million in its third round of venture financing. Led by first-time investor Scottish Equity Partners, the deal also included new backers Rothschild and Intel Capital and return backers Pond Venture Partners and Atlas Venture. Since its founding in 2000, picoChip has raised a total of $41.5 million.

RF Code Inc. , a Mesa, Ariz.-based RFID software company, has raised $20 million of venture financing. Led by QuestMark Partners, the company’s first insitutitonal round also includes Intel Capital and unnamed return backers. In connection with the deal, QuestMark’s Thomas Hitchner and Michael Leidesdorff will join RF Code’s board. Broadview advised RF Code on the funding.

ABN AMRO Capital has acquired Helsinki, Finland-based Loparex Group, which makes release liners for adhesive products, for 230 million euros in a management buyout. Sampo Bank provided debt for the transaction, which represents ABN AMRO’s third Nordic acquisition this year.

    VC Deals


Africa-focused EMP Global LLC yesterday announced investments in three companies totaling $76 million: a $21.6 million investment in Starcomms , a Lagos, Nigeria-based private telecommunications provider; $10.1 million (of a committed $40 million) in Veolia Water Maroc , a Moroccan subsidiary of Veolia Environment, which focuses on water distribution, wastewater treatment and electricity distribution; and $14.3 million in Societe Internationale de Plantations d’Heveas , a rubber exporter in the Ivory Coast and Ghana. With these deals, EMP’s AIG African Infrastructure Fund has invested $338 million into African companies and had a projected 37% return as of March 31.

Helio Volt Corp ., an Austin, Tex.-based new-age solar energy technology company, has raised $8 million in Series A funding. Menlo Park, Calif.-based New Enterprise Associates (NEA) led the round.

Sypherlink , a Dublin, Ohio-based data management software company, has raised $3.5 million of Series A financing. Led by Battelle Ventures, the deal also included participation by Reservoir Venture Partners and some angel investors.

Venture-backed Ikano Communications, a Salt Lake City, Utah-based provider of private-label Internet services, has secured a $16.5 million credit facility from Hercules Technology Growth Capital. Part of the financing will be used toward the recent acquisition of ISP Amerion’s subscriber base. Ikano is backed by Insight Venture Partners and Chicago Venture Partners.

    Buyout Deals


DLJ Merchant Banking Partners has agreed to buy Wastequip Inc., a Beachwood, Ohio-based waste transportation equipment maker, from CIVC Partners for an undisclosed amount. The company has over $300 million of annual sales.

Bridgepoint -backed production company ALL3MEDIA has agreed to buy Mersey Television Co., the Liverpool , England-based producer of TV programming, for an undisclosed amount. Mersey, which is backed by Lloyds Development Capital, focuses on the 16- to 24-year-old age group, capturing 11.6% of those viewers in the UK . Carolyn Reynolds, previously controller of drama at Granada ( Manchester )will be Mersey’s chief executive, while Sean Marley, Mersey ‘s current TV commercial director, has been promoted to managing director. Royal Bank of Scotland provided debt finance for the acquisition. Longacre advised ALL3MEDIA, while Deloitte & Touche and DLA advised Mersey TV.

Audax Group has teamed with management to purchase API Heat Transfer Technologies Corp . a Buffalo , N.Y.- based producer of industrial heat exchangers and heat transfer systems, from Madison Capital Partners. API Heat Transfer has more than $100 million in annual revenue and serves the HVAC and refrigeration markets, among others. Antares Capital Corp. led the senior debt portion, Apollo Investment Corp. led the mezzanine financing, and Goldsmith Agio Helms advised API on the sale.

American Capital is buying Potpourri Holdings Inc., a Chelmsford, Mass.-based director marketer of consumer products, from Linsalata Capital Partners for an undisclosed amount. Potpourri’s annual revenues are now $160 million. Linsalata acquired Potpourri in October 2002.



KKR has sold the majority of its 24% stake in British alternative telecom company Kingston Communications to UBS for about 70 million British pounds, according to published reports. KKR first got involved with Kingston after it sold Omnetica, a portfolio company, to Kingston for 169 million British pounds.

Venture-backed Airborne Entertainment Inc. , a Montreal-based developer of cellular content, has will be acquired by Cybird Co., a Japanese cellular services company, for $90 million, the Financial Post is reporting. Founded in 2000, Airborne had raised more than $33 million of venture financing to date.

    Human Resources

Rich Redefls has been hired as venture partner at Foundation Capital . Redelfs, who previously ran Atheros Communications, joined Foundation last year as an executive-in-residence.

Toys R Us Chief Executive John Eyler Jr . and COO Christopher Kay will step down if the private equity-backed buyout of the company is approved, The New York Times is reporting. If shareholders approve the deal tomorrow, Eyler would receive about $65.3 million and Kay would receive about $14.7 million, the story said. The toy giant is being acquired by KKR, Bain Capital and Vornado Realty Trust.

    Firm & Fund News

GE Capital’s David Spencer is leaving the company to form Emerald Hill Capital Partners , a fund-of-fund business focused on Asia . Spencer was most recently managing director and commercial leader of GE Commercial Finance Asia, and had been working for GE since 1997, founding its financial restructuring group and serving as head of M&A and business development for GE Company in Japan.

High Country Venture LLC will manage Colorado ‘s first-ever state-backed investment fund, a $25 million vehicle that will focus on seed and early-stage opportunities. At least half the fund will be invested in qualified businesses located in designated, economically disadvantaged rural and urban communities. From an industry perspective, the fund expects to invest 40% in software and other tech companies, 40% in life sciences and agribusiness companies and 20% in other sectors.

Sixteen private equity firms bowled for charity this past Monday night in Boston to raise money for the Joey Fund, whose goal is to find a cure for cystic fibrosis. For the second straight year, Battery Ventures won the bowl-a-thon, followed by second-place finisher Parthenon Group and third-place finisher Summit Partners , according to participants. For more information on the charity, go to


Today’s China-focused column is quite timely considering the news below about Chinese appliance maker Qingdao Haier making a private equity-backed bid for Maytag. Qingdao Haier certainly isn’t the first Chinese company to go after a U.S. target, but the deal is a poster child for the trends detailed below. The column is written by Thomas Forest Farb, Managing Director of New America Partners, which manages private equity and hedge funds that invest in companies, both in Asia and the U.S. , that can benefit from the growth and capabilities in China . In addition, he is Managing Director of Cappello Capital Corp. and CF Asia Capital, related investment banking firms which assist in cross-border transactions with China.

Watch China

Surprisingly, many private equity firms are still making investment decisions without seriously considering the impact of China on their prospective investment. Including an analysis of the impact of China as part of due diligence is now a must. Surprisingly, some firms have not taken the global view, while others formally require that these issues be considered in due diligence.

One of the few mistakes to be made in analyzing China is to underestimate its capabilities. China is now the leading supplier in over 100 product categories. It has achieved the greatest and longest record of economic growth that has been recorded. China cannot be easily discounted – it is likely to succeed as a result of its well educated and disciplined labor force, its high savings rate, low production costs, stable and business-oriented government and massive infrastructure investments. In comparison, while the U.S. is patching its creaky infrastructure, China is boldly initiating major infrastructure projects, although often to the detriment of environmental practices found in other parts of the world. For instance, the Three Gorges Dam project is the largest engineering project in the world, far exceeding Boston’s Big Dig, and being brought in a lot closer to budget and schedule.

When conducting its due diligence, there are at least four impacts of China that a private equity firm should consider before making an investment:

  • The U.S. prospective investment’s own international sales may be at serious risk – China ‘s own expertise in Asia is winning Asian markets. There are 56 million ethnic Chinese dispersed in Asia who are not in residence on the mainland. This has given the Chinese the knowledge of each of the Asian markets that allow it to be ferocious competitors. And although the press in the U.S. has focused on the impact of Chinese sourced or manufactured goods in the U.S., one hears little discussion of a related problem – China is not only impacting the U.S. market, but is also competing with U.S. firms in foreign markets such as Europe, Latin Am eric a and Africa.
  • China ‘s ability to produce goods and services at a significantly lower cost is disrupting the current supply chains – An incredible 55% of the exports of China are related to foreign-owned entities, suggesting all of these products are part of a company’s supply chain. This exporting machine is having a significant impact on the structure of many U.S. industries. If ignored, this can devastate a company, if embraced these goods can create an opportunity for a U.S. company to be more competitive, allowing it to build value in other parts of the business. Wage differences can range easily from being 10 to 40 times higher in the U.S. in the manufacturing area. Even financial analysts have compensation approximately five times higher in the U.S.
  • China is having a significant impact on the input costs of many companies – Businesses with inputs that are also in demand in China are potentially vulnerable to not only higher prices but actual scarcity. China is negotiating for commodity after commodity exclusive supply contracts that are turning fungible products into ones that could be unavailable at even greatly higher costs in a shortage situation. China is no longer a marginal player. At the same time that the activity in China has driven up certain natural resource prices, China ‘s production capability has also put pressure on margins – a double whammy. Maytag, for instance, has suffered from increased cost of steel for its washing machines, while also seeing increased competitive pricing on its products from imports from Haier.
  • Chinese domestic companies are globalizing by developing their own export capability or establishing direct distribution in the U.S. , challenging domestic companies directly – Chinese companies often have very competitive, unconsolidated internal markets running at overcapacity of 20% to 40%. Chinese companies are attempting to achieve scale and operating leverage by exporting and by developing their brand. We already have some significant Chinese brands, including Lenovo, Huawei, Haier, Tsingtao , Giordano, and in the industrial arena, PetroChina and COSCO Shipping.
    There are many product areas where the Chinese supplier can go directly to the U.S. customer of a prospective investment. This will typically occur with products that are lower in technology, closer to commodities rather than brands, do not require much advanced engineering or training, service or ongoing maintenance. Product areas where there is a low end segment may be more vulnerable to a toe hold and then a movement upwards in quality and price. And having higher technology does not necessarily make for a defensible position. Like Japan , Taiwan and Korea , China is quickly climbing the value-added trail.

U.S. private equity firms have to learn to analyze China along at least these four dimensions. They have to be careful not to lose their markets entirely to Made in China . But protectionism won’t work, nor will ignoring it, only understanding the opportunity and embracing it will. Unfortunately, understanding how to do business in China is not an easy task for the smaller and mid-sized U.S. firm. It will require some significant expenditure of effort and funds.

    Top Three


Blackstone Group , Bain Capital and Chinese appliance company Qingdao Haier Ltd. are now teaming up to bid for Maytag Corp. , today’s Wall Street Journal is reporting. The offer is expected to be about 7% higher than the existing $1.1 billion offer from Ripplewood Holdings that Maytag already agreed to.

JPMorgan Partners – and Apollo Management -backed AMC Theatres and Loews Cineplex , controlled by a consortium consisting of Bain Capital , the Carlyle Group and Spectrum Equity Investors , have entered into a definitive merger agreement. Marquee Holdings, the holding company of AMC, will house the combined business, while stockholders of LCE Holdings (the holding company for Loews) will receive a 40% stake in the combined company. The companies intend to refinance the senior credit facilities in connection with the merger. The deal is seen closing within six to nine months.

General Atlantic LLC has invested $127 million (728 million DKr) for a minority stake in Saxo Bank , an investment bank that focuses on online trading. Saxo Bank is based in Copenhagen, Denmark.

    VC Deals


Energy Innovations, Inc ., a Pasadena, Calif.-based developer of solar power systems, has raised $16.5 million of venture financing. MDV-Mohr Davidow Ventures led the round with add-on funding provided by existing backer Idealab. The company is developing what it says is the first low-cost rooftop solar system.

Sanovia Corp. , a Philadelphia, Pa.-based provider of health plan solutions aimed at improving clinical outcomes and reducing costs, has raised $5 million of Series A funding. New-backers HLM Partners and Claritas Capital co-led the deal. HLM Managing Partner Peter Grua and Claritas Vice President Shad Weaver have joined Sanovia’s board.

TriMed Research Inc. , an Omaha, Neb.-based biotech company focused on treating intestinal infections, has raised 5 million euros of venture capital from inventages Inc. and Seroba Bioventures. In connection with the deal, inventages’ Eric Sieber and Seroba’s Alan O’Connell will join TriMed’s board. TriMed is a joint venture of the University of Nebraska Medical Center, UNeMed Corp. and Ireland-based Tridelta Development Ltd.

    Buyout Deals


Gresham Private Equityhas purchased Australian Pacific Paper Products from Castle Harlan Inc. ‘s Australian affiliate for A$75 million. Castle Harlan Australian Mezzanine Partners (CHAMP) bought APPP, Australia ‘s second-largest manufacturer of disposable diapers, in December 2002 for $53 million and recouped 80% of its original investment through a recap in May 2004. From all appearances, there was no leakage in this transaction for CHAMP, which earned a return of 2.6x and an IRR of 56% with the sale. Based in Melbourne , Australia , APPP is also a major distributor of adult incontinence products and had revenues in 2004 of A$104 million and EBITDA of A$13 million.

Nautic Partners has partnered with the management of HB Performance Systems Inc. , a non-automotive brakes manufacturer, to acquire the company. Based in Mequon , Wis. , with additional operations in Taiwan , HB makes custom braking systems used in motorcycles, bicycles, snowmobiles and ATVs.

Wynnchurch Capital Partners has acquired United Fixtures Company, a South Bend, Ind.-based manufacturer of retail and industrial storage systems. Terms of the deal were not disclosed.

    Firm & Fund News

Carlyle Group
and Extell Development Co. have agreed to buy a large tract of land and three apartment buildings on Manhattan ‘s Upper West Side from a group of Hong Kong investors and Donald Trump for $1.76 billion. Upon closing, Carlyle and Extell will sell the three apartment buildings to Equity Residential. The land, which spans an area between 59 th and 65 th Streets and between West End Avenue and Riverside Boulevard , can accommodate the future construction of more than 10 buildings, Carlyle said. The deal is slated to close next quarter or the fourth quarter. Carlyle made the investment through Carlyle Realty Partners IV.

The New Mexico State Investment Council has been advised to consider investments of up to $15 million in both Village Ventures II and ITU Ventures New Mexico . Its advisory committee has also recommended investments of $20 million apiece in St. Cloud Capital Partners II and Falcon Mezzanine Partners II . The council is scheduled to vote on these investments on June 28.

Semaphore , a Boston-based consultant, has been appointed to manage two New York City and State funds, the New York Community and Investment Company (NYCIC) and the New York State Business Venture Fund (NYSBVF) . The funds include two-dozen portfolio companies, with Semaphore managing both debt and equity for the funds’ life cycle.



3i Group has sold NNC, the British nuclear services company, to AMEC plc for 25.3 million British pounds. The deal represents a 3x return for 3i and an IRR of close to 30 percent. 3i acquired NNC in a management buyout in September 1999 for an undisclosed amount.

Gruner & Jahr is shopping magazines Fast Company and Inc. for about $35 million, the New York Times is reporting. The sale would represent a massive loss for the publishing giant, which bought the titles for more than 10 times that amount.

    Human Resources

Andrea Cipriani has been hired as CFO of Monomoy Capital Partners , a New York private equity firm. Cipriani was previously CFO for KPS Special Situations Funds. Monomoy also announced the hiring of Loren Roseman as senior associate.

John W. Kauffman has joined the private equity practice of Kirkpatrick & Lockhart Nicholson Graham LLP , working out of its New York office. He was previously a partner with Carter Ledyard & Millburn LLP.

Robert Kiesel has joined Fifth Street Capital LLC as principal/portfolio manager focusing on sourcing, analyzing and managing mezzanine investments. Prior to Fifth Street , Kiesel was a managing director and partner for Scius Capital Group, a New York private equity firm, and previously was principal at ORIX Merchant Banking LLC.


Let the cold calls continue.

According to today’s press release, which details the results of our recent DealMaker’s survey with the Association for Corporate Growth (thanks to all of you who filled it out—1590 in total), 37% of private equity firms are now cold calling potential acquisition targets as their primary method of deal sourcing—up from 32% the last time we asked this question. Not surprisingly, this trend is a direct result of the rise in auctioned deals, which not only remove proprietary advantages but, more often than not, drive up prices. So in many ways, the jump is only natural.

That said, if I’m an LP, I’m not entirely comfortable knowing that a portion of my management fees are being paid so that investment pros—up to the general partner level, at some firms—can do the job of a glorified telemarketer. Is it really the best use of their time? Sure, firms like TA Associates and Summit Partners have had great success with this strategy, but it’s important to remember that those guys have been doing it for years now, and presumably have the process down to a science. The hit rate for cold calls is incredibly low, and even your best warm call—to a CEO you’ve met at a conference, for example—is not going to prevent that executive from hiring an investment bank. Most sellers today, even the ‘unsophisticated ones’, are aware of the high prices being paid in the current market.

The real question, however, may be what the private equity firm’s objectives are. If cold calling and similar strategies are intended to avoid auctions altogether, failure is likely—at least here in the U.S. Very few firms can sustain this. But if the goal is to gain some type of advantage, perhaps to establish a brief dialogue with the target, in order to help your position at the auction, then it makes sense. I’ve heard countless stories of companies who have warmed up to a bidder because the GP seemed like a good guy, and countless more who rejected a bidder because the GP was constantly checking his Blackberry during the first face-to-face meeting.

But at the end of the day, being prepared at the auction, networking with intermediaries and paying attention to your branding as a whole are arguably better ways to differentiate yourself than cold calling. And having a full wallet doesn’t hurt.

To see the full release, go to

** Quick reminder: send all news items to for this week.

*** Quick hoops analysis: The NBA should induct Robert Horry into the Hall of Fame right now, for hitting so many clutch shots in big games. Tim Duncan can sponsor him.

    Top Three


Prism Venture Partners has closed its fifth venture capital fund at $250 million, bringing the firm’s total capital under management to $1.25 billion. With the closing of Prism Venture Partners V, co-founder and General Partner Duane Mason will retire, whiel Mark Canha was been promoted to principal. Canha joined Prism this past January as a Venture Partner. Prism also said that it made its first investment from the new fund in Everypoint Inc., a Boston-based provider of real-time content for mobile phones.

Therion Biologics Corp ., a Cambridge, Mass.-based biotech company focused on treating pancreatic and prostate cancer, has raised $30 million of venture financing. Ledby SAP AG co-founder Hans-Werner Hector, the deal also included Loeb Investors, Cheng Xin Venture Capital Group and SRK Management Co. In connecting with the deal,Therion announced the appointment of Kathryn Davis to the new position of vice president, clinical affairs.

After teaming with Constellation Brands in an unsuccessful bid for Allied Domecq, Blackstone Group is now interested in buying just the restaurants business of Allied Domecq from winning bidder Pernod Ricard, according to published reports. The restaurants are valued at 1.1 billion British pounds ($2 billion).

    VC Deals


Softricity , a Boston-based application virtualization company, has raised $15 million of venture financing. Led by Meritech Capital Partners, the deal also attracted return backers FA Technology Ventures, Hunt Ventures, Prism Venture Partners, TD Capital Ventures, Longworth Venture Partners and Technology Link Capital. The company’s platform transforms applications into centrally managed virtual services that are accessible on-demand by Windows desktops, laptops and servers throughout the enterprise. Founded in 1999, the company has raised $62 million since inception.

LogoWorks , a Lindon, Utah-based graphic design services company, has raised $9.3 million of venture financing from Benchmark Capital and Shasta Ventures. In conjunction with the deal, Benchmark General Partner Bob Kagle and Shasta Managing Director Tod Francis join the board.

ContextWeb , a New York-based online advertising company, has raised $9 million in a Series B deal led by Updata Partners. Since its founding in September 2004, the company has raised $12 million. Its Series A round was led by DFJ Gotham Ventures.

Nomis Solutions , a San Bruno, Calif.-based financial services software company, has raised $8 million of Series B financing. Led by Bain Capital Ventures, the deal also included return backers August Capital and Red Rock Ventures. With the deal, Bain Capital Managing Director Jeffrey Schwartz will joint he board.

Endotis Pharma , a French biotech company focused on treating cancer and inflammatory diseases, has raised 4 million euros from Soffinova Partners. The investment in Endotis, founded in February 2003, was led by Soffinova Investment Manager Rafaele Tordjman.

Cellumen , a Pittsburgh, Pa.-based company focused on cell biology, has raised an undisclosed amount of venture capital from PA Early Stage Partners.

    Buyout Deals


After its initial bid was rejected, Alchemy Partners is now joining forces with Sir Tom Farmer’s Morston Assets and the Duke of Buccleuch’s Buccleuch Group to make another run at UK Coal, the Financial Times is reporting. Farmer is the founder of Kwik-Fit, a car parts company that is mentioned in today’s Wire, while the Duke is one of Scotland ‘s richest landowners. Analysts have pegged the acquisition at more than 200 million British pounds ($366 million).

KKR and several other private equity firms are planning bids or have already made bids for car parts company Kwik-Fit, which is owned by CVC Capital Partners, The Sunday Telegraph is

    Firm & Fund News

F&C Asset Management is buying the fund-of-funds business of Edinburgh, Scotland-based Martin Currie, which currently manages about 70 million British pounds ($128 million). For Martin Currie, the move is part of its effort to focus on international equities. The plan is to merge the Martin Currie Capital Return Trust with F&C’s Discovery Trust by August, resulting in a new trust managing 123 million British pounds, according to published reports.

Martinson Trigon Venture Partners has raised a 30 million euro ($36.9 million) VC fund that will focus on Baltic and Russian telecom, media, IT and technology companies. The fund, which is backed by more than 20 Finnish and Baltic investors, will target investments of 500,000 to 3 million euros in growth companies that already have established management, products or market shares. The fund will “rarely enter into seed-stage companies,” the press release said. Martinson Trigon is a joint venture between entrepreneur Allan Martinson, the managing partner, and Trigon Capital, an investment bank focused on the Baltics.

Starting next year, Korean investors will be allowed to set up small private equity funds of up to 2 billion won ($1.98 million), the Korea Times reported. Under the new guidelines, announced by South Korea ‘s Ministry of Finance and Economy, individuals will be able to raise capital from a group of retail investors to set up the private equity funds. The funds will be invested in film and other culture industries, the story said.

Globes is reporting that Israel ‘s Tamar Technology Ventures has halted fundraising efforts for a $100 million follow-on venture capital fund. The venture firm aborted its capital-raising plans a few months ago based on a lack of demand from international investors, the story said. Tamar’s first fund raised $37 million and attracted investors including Thomas Unterberg, chairman of CE Unterberg Towbin.

Connecticut Gov. M. Jodi Rell last week signed an embryonic stem cell research bill that will establish a $20 million research fund for the state.


Deep River Ventures Partner Roy Mall and technology executive Bryon Axt plan to open a fast-food health-food chain in California focusing on Mexican food with a Hawaiian flare, starting in the Sacramento area, The Sacramento Bee reported.

Cedric Sellin and Andy Choi have joined the investment team at DN Capital, the pan-European VC firm. Sellin comes to DN from Aruba Wireless Networks, while Choi previously worked at Ensim Corp. DN Capital’s first fund, EDIF I, is 75% committed, and the company plans to raise its second fund in 2006.

    PE-Backed M&A

Handheld computer maker Psion Teklogix will acquire venture-backed Symagery Microsystems, an Ottawa-based digital imaging company, for 4.5 million Canadian dollars ($3.6 million), the Ottawa Citizen is reporting. Founded in 2000, the company had raised $18.4 million of venture capital from investors including Business Development Bank of Canada, CDP Capital, Canadian Science and Technology Fund and VenGrowth Capital.


It’s Friday, which means you and I have both survived a week without Dan. (I hope you’re better off than I am.) Special thanks to columnists Charley Lax and Bart Schacter for helping us fill this column, and to those of you who forwarded me news items. There will be more guest columns next week, as well as a few rants from me that don’t have anything to do with basketball. Have a good weekend, and remember to send feedback to  

    Top Three


New Jersey has awarded its first-ever private equity investments to Warburg Pincux, Oak Hill Capital Partners and Quadrangle Capital Partners , The Philadelphia Inquirer is reporting. The state’s investment council yesterday approved the allocations, which are part of New Jersey ‘s move to allow the state’s $70 billion of pension money to invest in alternative assets. Last November, the council approved placing up to $9 billion with alternative investments. Specifically, the council voted to give Warburg Pincus IX $200 million, Oak Hill Capital Partners II $75 million, and Quadrangle Capital Partners II $50 million. The state’s proposal calls for a 5% allocation to private equity, 4% to real estate and 4% to hedge funds and similar assets, the story said. Strategic Investment Solutions is the state pension system’s advisor.

The Blackstone Group and Lion Capital -backed consortium previously mulling a bid for Allied Domecq has pulled out, clearing the way for Pernod Ricard to buy the British drinks company for an expected 7.6 billion pounds, Reuters reported. The decision by Diageo, the world’s biggest spirits producer, to support Pernod Ricard instead of Constellation Brands, which had teamed up with Blackstone, Lion Capital and Brown-Ferman, was a key factor.

This week’s trio of venture-backed, medical device IPOs was disappointing, as two registered paltry gains and the other was postponed. Micrus Endovascular Corp . was trading this morning at $11.04, just 4 cents above its offer price of $11 a share, while Ev3 ‘s IPO went out at $14 a share, a couple dollars below is expected range of $16-$18, and was trading at just $14.24 as of this morning. Meanwhile, Hemosense ‘s IPO, with a planned range of $9-$13 a share, was postponed.

    VC Deals

Meru Networks , a Sunnyvale, Calif.-based voice-over IP infrastructure company, has raised $12 million of Series C financing. The deal was co-led by BlueStream Ventures, Clearstone Venture Partners and NeoCarta Ventures, and also included return backers Evercore Ventures, BrainHeart Capital, JumpStartUp Venture Fund, Monitor Ventures and Dot Edu Ventures. Since inception, Meru has now raised $42.7 million of venture capital.

MPI Packaging , a Mississauga, Ontario-based plastic bottle manufacturer, has raised $4.3 million of private equity financing from VenGrowth Private Equity Partners. The investment came in the form of a subordinated loan, which resulted in a minority equity position for VenGrowth.

    Buyout Deals

Apax Partners has been cleared by the European Commission to purchase a majority stake in Travelex, the currency exchange company, Reuters is reporting. Apax is buying the company for 1.055 billion pounds.

Sweden ‘s Novax , the venture arm of retailer Axel Johnson AB , has purchased Filippa K, a Swedish fashion company, for an undisclosed amount, according to Swedish News Digest.

Lion Capital will buy Wagamama, a Japanese-style noodle bar chain, from Graphite Capital for 102.5 million pounds, AFX UK Focus is reporting. The deal is expected to close in July.

    PE-Backed IPOs

Private equity-backed Inmarsat , the satellite company, raised 355 million pounds today in an initial public offering, which priced at the top end of the expected range at 245 pence per share. Inmarsat is backed by Apax Partners and Permira. As of 10 a.m. EST today, the stock was trading at 286 pence per share.

Private equity-backed Opoczno , a Polish ceramic tile marker, today raised 456 million zlotys in its IPO, which priced at 55 zlotys per share, at the lower end of its expected range, according to published reports. Opoczno is backed by Enteprise Investors and Credit Suisse, but the private equity backers opted for different strategies. Enterprise kept its stake, while Credit Suisse sold all of its holdings in the IPO.

    Firm & Fund News

UK-based Shore Capital Group has raised 20 million pounds for venture capital trust Puma, Investment Adviser is reporting. The fund launched last January and has a life of five years, plus a target to double that investment in five years.

Mason Wells is looking to raise a second biomedical VC fund of up to $100 million, The Milwaukee Journal Sentinel is reporting. The company already has a $225 million buyout fund and a $50 million biomedical fund.

Blackstone Group senior chairman Peter Peterson told Bloomberg News that his private equity firm will focus on India as part of its strategy in Asia . He said in the article that India had several advantages over China , among them the belief that India is committed to economic reform.

Benchmark Capital and other private equity firms are considering bids for the broadcast television rights to UK Premier League soccer games, Dow Jones is reporting. The potential sale is made possible by the European Commission’s move to expand live match rights to more than just British Sky Broadcasting Group, which currently holds all the rights.


Sir David Cooksey, founder of Advent Venture Partners, has been named the new chairman of the European Venture Capital & Private Equity Association. Some of his objectives are to remove barriers for private equity investment in the European Union and the build on the self regulation and professional standards within the industry.

Bob Scott, the current chairman of Yell Group, has been named operating partner at Duke Street Capital.

Rez Vishkaj has been named managing director of alternatives at Insight, Investment Adviser is reporting. Vishkaj previously ran his own business, and before that worked for Schroder Investment Management.

Winslow Sargeant has joined Wisconsin ‘s Venture Investors, an early stage VC firm, as partner, according to The Capital Times & Wisconsin State Journal .

Wayne Mackie , formerly a managing director with Beacon Capital Partners, has been named CFO and vice president at CRA International Inc., a business consultancy, is reporting.



The European Venture Capital & Private EquityAssociation yesterday introduced new corporate governance guidelines for the management of privately held companies. To view the guidelines, go to this URL:

The Biotechnology Industry Organization yesterday gave its support for legislation to correct the Small Business Administration’s new interpretation of elgibility standards for Small Business Innovation Research grants. Jim Greenwood, BIO’s president, says the SBA rulings, which specify that companies which are 51% owned by VC firms are ineligible for the grants, “are actually squelching the very research that the law sought to stimulate when it was initially passed.


The following is a guest column from Bart Schacter, Founder and Managing Director of Blueprint Ventures (and a regular columnist for Venture Capital Journal):

Dan’s shoes are hard to fill, but there is great honor in trying. To better fit the part, I briefly considered trading my eco-friendly Prius for a trusty Pontiac, but decided against it at last minute. This is California , after all, and this honor doesn’t justify getting honked off the freeway. Speaking of California , how exciting to see that the New York Times has re-discovered Silicon Valley . Twice in the last month, we’ve been honored with major Sunday stories on VC and entrepreneurship. I guess even the NYT has to take a breather from the trials and tribulations of Morgan Stanley. At least they aren’t obsessing over Testa Hurwitz like other journalists, but I digress.

I’ll head right for the Sunday (June 5) Magazine story on Silicon Valley entrepreneurs ( ) and leave the earlier and more juicy story on VC firms for Dan’s next holiday. The premise of the Magazine story, for those of you lucky enough to have missed it, was that ” Silicon Valley is starting to feel like 1995.all over again.” Things are shaking, money is flowing, and more importantly, a cadre of still-young entrepreneurs are ready to do it again. The tourists have left (B2B – back to banking), and the real entrepreneurs are doubling down. New New Thing reissued, with a new foreword by Michael Lewis! What Should I Do With My Life by Po Bronson in the clearance rack. We’re back baby!!!

The story quotes a bumper sticker it claims is spotted frequently in the Valley: “Please God, Just One More Bubble.” I for one have never spotted said sticker, but maybe I’m just too busy staring at my blackberry while speeding on 101 to notice. The story features several well-known entrepreneurs who share the Silicon Valley ethos of hard work and re-invention (plus bad hairdos and outfits, but I’m not here to lend fashion advice). Mostly it paints a story of “Silicon Valley Society” and the moon race to enter it.

So here is my beef with the story. In case the memo didn’t make it to Arthur Sulzberger’s desk, Silicon Valley doesn’t HAVE a New York (or Boston , or Dallas ) -style Society. Sure, there is a race to have more zeros in the online brokerage account. Sure, people keep score and a house sold in Atherton can feed a small African nation for a year. But this is a far cry from the Society of Old Boston or the Upper East Side . News Alert: Silicon Valley “Society” meets for affairs with wine, beer and shrimp at the Computer History Museum to ogle at a rusty Wang computer or a 5MB, 30-pound Winchester Drive . They then hop back into their BMWs (or, as in the case of the Google Boys and other cool Valley types, their Priuses) and head back for the hills if not the office. Those who have really made it gather for fancy drag races at Laguna Seca, showing off to each other their extravagant NASCAR ways. Hey, not to knock it, that’s why we love it here. The race is about finishing first and changing the world, not about the Society.

There is another beef. The NYT appears fascinated with the survival of entrepreneurship in Silicon Valley post-bubble. The bubble burst, but entrepreneurs and their venture backers are still around! What a novel concept. Yes, the entrepreneurs featured in the story are trying to prove their bubble success was not a fluke. But they aren’t doing it to break into the board of trustees of SFMOMA. Meanwhile, the real story is about the entrepreneurs who have NOT yet made their money. They are racing past the fat cats of 1999 (who are touring houses in Atherton or Aspen ) on the way to making their own mark. They are all doing this to change the world and, hopefully along the way, make some money for themselves and their venture investors. Here is a short memo for Mr. Sulzberger: “They still grow tulips in Holland ! And welcome back to Silicon Valley , stick around this time.”

    Top Three


CVC Capital Partners will buy Essen, Germany-based Ruhrgas Industries GmbH for 1.5 billion euros, according to published reports. Ruhrgas, which produces gas, electricity, water meters and furnaces, is a unit of German utility E.On. The deal is expected to close in August.

Fox Paine will sell ACMI Corp., a urology and gynecology endoscopy company, to Gyrus Group plc, a London-based medical device company, for $500 million. Fox Paine will be paid 88% in cash and 12% in Gyrus shares, and will also receive the right to appoint a member to the Gyrus board. The deal, which represents a tripling of Fox Paine’s November 1999 investment in the company, is expected to close next month.

Heritage Partners today announced a first-of-its-kind, $420 million recap of Skilled Healthcare Group, an existing portfolio company which is now positioned for a potential IPO or sale. What makes the deal unique is that, through a debt product created by CSFB, qualified buyers can assume the new capital structure without any penalties or changes in terms, thus streamlining the sale process by eliminating the need for a buyer to raise debt financing. According to Heritage Partners General Partner Mark Jrolf, the structure “provides SHG shareholders with an attractive distribution today while preserving the option to pursue an IPO or sale of the Company.”

    VC Deals

Azure Solutions , a London-based telecom revenue-assurance company, has raised $15 million of venture financing. Led by Doughty Hanson Technology Ventures, the deal also included Intel Capital and return backers New Venture Partners and Hexagon Investments. As part of the deal, Doughty Hanson’s Jerry Ennis will join Azure’s board of directors.

Anam Mobile Ltd., a Basingstoke , England-based provider of messaging infrastructure to the mobile telecom industry, has raised an undisclosed amount of venture capital from Motorola Ventures. Anam already has backing from Enterprise England and Mayfair Venture Capital.

VoiceAge Networks Corp ., which focuses on rich media content adaptation, has raised $2 million from Innovacom, the venture capital subsidiary of France Telecom. The funding is an add-on to the $10 million Series A financing that VoiceAge Networks initially secured in November 2004. That deal included BCE Capital, Entrepia Ventures, BDC Venture Capital, and VoiceAge Corp. The company added Fredric Veyssire to the board.

Diabetica, a Northern Ireland-based biotech company focused on treating diabetes, has raised 1 million euros of venture capital from Seroba Bioventures and the University of Ulster ‘s technology transfer arm, the Irish Independent is reporting.

TimeSys Corp. , a Pittsburgh, Pa.-based company focused on embedded software for linux customization, has raised $6 million of venture financing. Led by Adams Capital Management, the deal also included The Hillman Company and Philips Electronics. In addition, the company has named Michel Genard executive vice president of marketing and business development.

Planitax Inc ., an Emeryville, Calif.-based corporate tax software company, has raised $5 million of Series B financing. Led by Mobius Venture Capital, the deal also included return backers Draper Fisher Jurvetson and Access Venture Partners. As part of the deal, Mobius Managing Director Rex Golding and Mobius Principal Rajeev Batra will join Planitax’s board.

Pharma giant Merck KGaA this week signed a contract with Tioga Pharmaceuticals , a Forward Ventures-backed startup, to sell asimadoline, a new medicine Merck developed for irritable bowel syndrome, according to published reports. As part of the deal, Merck gets an equity stake in Tioga and royalties on sales of Asimadoline.

Genoa Color Technologies , a Herzliya, Israel-based color chips company, has raised a $5 million round of financing. Led by Vertex Venture Capital, the round also included existing investors. Genoa supplies chips to major electronics companies that enhance image quality.

CSMG , a Skokie , Ill.-based sports marketing and management firm, has raised $3.5 million from Hopewell Ventures. Founded in 1983, CSMG represents almost 250 professional athletes, managers, retired stars and broadcasters. Some of its better known clients are the Miami Heat’s Dwayne Wade and the Philadelphia Eagles’ Donovan McNabb.

    Buyout Deals


Allied Capital Corp. has paid $127 million to finance a management-led recapitalization of Meineke Car Care Centers. Allied Capital’s investment took the form of senior debt, second lien debt, subordinated notes and non-voting common equity, while management re-invested a significant portion of its equity in the transaction.

Sun European Partners and two equity sponsors have bought Lee Cooper Group Ltd., a London-based discount clothing retailer best known for its jeans. Sun European is an affiliate of Boca Raton, Fla.-based Sun Capital Partners. Financial terms of the transaction were not disclosed.

Amadeus Capital Partners has purchased a stake in End2end, a Danish information technology company, for 54 million Danish crowns, Danish News Digest is reporting. Amadeus bought the stake from U.S.-based TMS Partners. Founded in 2000, End2end provides content services for large mobile telecom companies.


William Haseltine, the founder and retired CEO of Human Genome Sciences, is lining up venture capital for a group of scientist-run companies that will focus on developing new drugs, according to an upcoming profile in Newsweek . Haseltine is expected to announce the first half-dozen projects in the coming months.

    PE-Backed IPOS

Venture-backed Micrus Endovascular Corp. raised $36 million in an IPO yesterday, pricing the deal at $11 a share-lower than the initial range of $12 to $14 a share.

Private equity-backed Focus Media Holdings , a Shanghai , China-based advertising network company, is planning a Nasdaq IPO that could raise $100 million, according to published reports. Investors include Goldman Sachs, 3i Group, Draper Fisher Jurvetson, Softbank and Victory Venture Capital. Focus Media installs television screens in ‘captive audience’ locations such as elevators and sells advertising. According to a story in the South China Morning Post , Focus Media made $29.2 million of revenue in 2004.

Doughty Hanson -backed RHM, a British food company best known for its cakes, is planning to raise 650 million pounds in a public offering, according to published reports. The IPO is expected to happen next month.


Four of 10 business owners in the United Kingdom would not start another company there if they had the opportunity, according to a recent survey from Sage, an accountancy software firm, The Times reported. Respondents cited their growing frustration with British regulations, including the extension of maternity leave and legislative red tape. However, the story countered that 453,000 entrepreneurs set up business in the UK last year, and the 2005 number is expected to exceed that.


Please remember that Dan is on vacation through June 24, which means you should send feedback, stories, criticism or, better yet, showers of praise to

Not much time to wax eloquently today, but here’s a few thoughts to chew on:

* You’ll notice there are several early-stage VC deals in today’s Wire, which is encouraging. We continue to hear complaints about the dearth of early stage funding, and while the die-hard early stage VCs are still active and angel groups are stepping in to fill the void, there’s no question that entrepreneurs face an uphill battle when it comes to Series A and Series B rounds. Some would argue that’s a good thing, since greater discretion would logically result in higher-quality transactions for the VC community. Others say it’s curtailing entrepreneurship and innovation.

**Charley Lax’s column yesterday touched a nerve on at least a few of you. David writes: “Having walked many small and medium sized companies through SOX compliance,  I can only tell you that Charley Lax is being far too kind in his description of the effects of SOX.  First of all, SOX as implemented has absolutely no chance of achieving it objectives.  (It would take far too long if I gave in to the temptation to discuss the wisdom of trying to legislate corporate morality.)  SOX was implemented in the wake of Enron & WorldCom, and little that happened at those companies would have been any better addressed in a SOX environment.” He goes on to say that all the extra audit work from SOX will hurt small and middle market companies: “As large companies suck up the remaining audit talent, small and medium sized companies are stuck with what is left….Take what you can get, pay too much for it, and feel lucky you can get any service at all…All of this to support a legal and regulatory tangle that will not achieve its objectives.  What a mess.”

*** Being a big basketball fan, I can’t resist making a quick comment on the Finals. Funny coincidence how the first time Tony Parker and Manu Ginobili get whacked around a bit, the Spurs lose. Both guards are great players, but until the Pistons made them think twice about driving the lane, they were scoring basically at will. If I’m Larry Brown, I tell Chauncey Billups to lean on Parker all of Game 4 and instruct my ‘bigs’ to foul Ginobili hard every time he drives the hoop with that left-handed hook shot. I’m sure Elden Campbell’s good for a few near-flagrants, and you know Rasheed is dying to hand out a few forearm shivers. If Detroit plays more physical, this will be a seven-game series.

    Top Three


Blackstone Group will acquire Wyndham International Inc. , the hotel and resort company, for $3.24 billion, a total that includes a $1.44 billion cash offer and the assumption of $1.8 billion in debt. Wyndham announced the agreement, which will pay Wyndham shareholders $1.15 per share, yesterday following the board of directors’ unanimous approval. This will be the latest hotel/resort acquisition for Blackstone, which recently purchased Extended Stay America , Prime Hospitality and Boca Resorts.

Just when you thought the Michael Jackson news was finally over, there’s a private equity angle to the pop star’s saga. Loans that the recently exonerated musician received from Bank of America Corp. were recently sold to Fortress Investment Group , a private equity fund, Reuters is reporting. The story said Fortress was renegotiating the loan terms beyond their December deadline. With Jackson owing so much debt, observers are wondering when he will sell his music catalog of Beatles songs, which is said to be worth $500 million.

It’s bad enough to go to the ATM and find out there’s no cash. According to the SEC, a pair of two unlicensed New York-based venture capital firms committed a far greater injustice when they sold stock in ATM companies that didn’t exist. The two men being charged— Victor Novosselov (aka David Markowitz) and George Falcone (aka Michael Safir) were from a firm called Blue Square Management , which from January 2001 to February 2004 solicited $3.7 million of investments from over 280 investors to invest in stock and warrants from Cash Money Lending Corp., a bogus ATM management company. After disconnecting their phone lines and vacating their offices, the two men conducted a similar scam under the name Westwood Holdings Inc ., raising $1.2 million from over 80 investors. The two men, who were arrested yesterday by the U.S. Attorney’s Office in Connecticut , are formally charged with securities fraud, mail fraud, money laundering and money laundering conspiracy violations.

    VC Deals

Ranier Technology , a Cambridge , UK-based medical device company whose products include on spinal disc implants, has raised 4 million British pounds of Series B money from existing investor FNI Capital. FNI is the UK VC arm of Germany ‘s Renate Nixdorf Vewaltungsgesellschaft GmbH.

Digital Railroad , a New York-based online photo management company, has raised $5.2 million of Series A financing from Morgenthaler Ventures and Venrock Associates.

Lamina Ceramics , a Westampton, N.J.-based manufacturer of LED light engines, has expanded its Series C financing to $9 million with a recent $2 million investment from SpaceVest. The initial C round was led by Granite Global, which invested $4 million, and also included Morgenthaler Ventures. Other investors in the company are Kemet Electronics Corp. and Sarnoff Corp. According to SpaceVest, LED light engines could eventually replace traditional light sources. , a New York-based financial trading platform, has raised an undisclosed amount of venture capital from Edison Venture Fund , the company’s sole institutional investor. Chris Sugden, a principal with Edison , will join the board. Edison ‘s Tom Vander Schaaf led the due diligence process. Edgetrade was founded in 1996.

CCI Industries Ltd. , a Canadian building materials manufacturer, has raised an undisclosed amount of venture capital from Vancouver-based Yellow Point Equity Partners and an unnamed investor. As part of the transaction, Yellow Point Managing Partner David Chapman will join CCI’s board.

SemiSouth Laboratories , a Starkville, Miss.-based maker of silicon carbide electronics, has raised an undisclosed amount of Series A money from Delta Capital, Southern Appalachian Management Company and accredited private investors. The deal expands on the $2 million round that SemiSouth raised this past April from Southern Appalachian.

Alfresco, a London-based provider of open source enterprise software, has raised $2 million of seed financing from Accel Partners. As part of the transaction, the managing general partner of Accel’s London office, Kevin Comolli, will join Alfresco’s board.

D’Arcy Laboratories , a Pompano Beach, Fla.-based maker of skin and hair care products, has raised an undisclosed amount of venture capital from Palm Beach Capital Partners. Founded in 1979, the company uses micro-manufacturing guidelines to create its products.

VeriWave Inc. , a Portland , Ore.-based wireless LAN testing company, has raised an undisclosed amount of Series B financing. Led by Woodside Fund, the deal also included existing backers U.S. Venture Partners and TL Ventures. Woodside Venture Partner Ashish Gupta will join the board.



California Sen. Barbara Boxer is an investor with VC firm Technology Funding Partners, the AP reported in a story about her financial disclosure forms. The investment is worth between $1,001 to $15,000.

Bain Capital Managing Director Stephen Pagliuca has resigned as a director with Instinet Group, where he had been on the board since 2002, Dow Jones reported. Instinet is being sold to Nasdaq, while Silver Lake Partners is buying the company’s brokerage unit. In resigning, Pagliuca cited business and travel commitments, the story said.

    Firm & Fund News

Intel Corp. has set up a $200 million VC fund to invest in Chinese technology companies. The fund is called Intel Capital China Technology Fund and will focus on sectors including cellular communications, chip design and broadband. The company has made investments in China for several years.

New York State Comptroller Alan Hevesi is trying to eliminate a law that prevents the $120 billion New York Common Retirement Fund from allocating more than 15% of its portfolio to alternative assets, The New York Sun is reporting. Critics say the change would give Hevesi too much discretion.

In a move to prevent conflicts of interest, the California Public Employees’ Retirement System has adopted a new policy requiring its advisors to disclose any circumstances that may create “actual, potential or perceived” conflicts. CALPERS consults with 28 advisors for its investments in real estate, private equity and other asset classes, as well as for corporate governance. The release states: “Under the new policy, a ‘conflict’ exists when a consultant knows or has reason to know that he or she, his or her spouse, or a close relative, domestic partner or other significant personal or business relationship, has a financial or other interest that is likely to bias the consultant’s advice to CalPERS.

    Buyout Deals

Onex -backed Cineplex Galaxy LP will purchase Viacom’s Famous Players, a movie theatre exhibition chain, for $500 million, according to published reports. Famous Players is Canada ‘s largest movie theatre chain and was rumored to attract other bidders in the private equity market.


Iowa Gov. Tom Vilsack has signed legislation that he says will help advance entrepreneurship in the state, Iowa State Daily is reporting. The law extends an available 20% tax credit to investors who fund qualifying Iowa businesses or seed funds, and eliminates a five-year redemption period for those tax credits, in order to keep Iowa ‘s law in line with other states’ VC programs. Additionally, the government has approved a $175,000 grant to help create the state’s eighth business accelerator. That grant will be matched by agencies within the state’s Department of Economic Development


Today’s guest column comes from Charley Lax , managing general partner of GrandBanks Capital ( ).

While sitting back enjoying two passions in my life-the Red Sox and smoking my favorite cigar (Montecristo Habana 2000)-I decided that my contribution to today’s PE Week Wire will take a look closer look comparing our most beloved of baseball teams, the Boston Red Sox, with what has become a personal vendetta to repeal (or revise): Sarbanes-Oxley (SOX).

Take one baseball team that is loved by millions and compare it with a governmental act that is costing our portfolio companies millions of wasted dollars. A team that painstakingly waited 86 years to win a World Series Championship and bring retribution to Red Sox Nation, with a compliance law that looks to keep investors and entrepreneurs in the private market waiting another 86 years before a venture-backed company can claim victory in the public market. A Red Sox team that defined itself as a “collection of idiots,” with a regulation that, in retrospect, was created by a bunch of idiots. well, maybe that term is a bit harsh, but let’s take a closer look at SOX, the regulation, before I continue with the name calling.

Some companies considered to be the greatest of all time have accessed the public markets and created an effective platform for financing innovation and job creation. Renowned companies that have affected millions such as Microsoft, Cisco, and Amgen can attest to the power of the IPO. These companies began their successful track as venture-backed companies and have now become market leaders in their sectors after raising millions by accessing the public markets through the IPO process.

Today’s stalled public market for our venture-backed companies can be attributed to SOX, according to Financial Executives International (FEI), and is costing smaller, private companies with aspirations of filing an IPO an average of $1.5 million to $4 million to comply with SOX. Establishing Section 404 compliance, a requirement of SOX, places sole responsibility on managers for internal control and creating structures for reporting financial results, has devastated their bottom lines. With a higher percentage of earnings diverted to 404 compliance and an 88% jump in auditing fees, smaller companies have no choice but to turn away from the public markets and seek alternate opportunities to raise capital and offer liquidity to their investors. The cost of compliance could result in the reduction of as much as a third of the market cap of our venture-backed companies. Value creation with our portfolio companies does not start with the hiring of more accountants but rather w! ith hiring of more engineering talent. If the Red Sox had kept Nomar, would they have been able to even get to the playoffs?

Many called the Internet Bubble and the resulting Nasdaq market “Irrational Exuberance”, but SOX is whacking any opportunity for creating more public market product, and this is highly irrational and very dangerous for our economy. Job creation is entirely the purview of small and medium size businesses, and the venture community continues to support new enterprises that enjoy rapid growth. Stalling that growth by limiting access to the American public markets is driving investors to pursue foreign markets for financing and exit opportunities. Taking our companies public in Hong Kong, London or even South Africa does not seem so far fetched any more. And instead of supporting local baseball teams it might be more financially prudent to buy into one in other baseball loving countries like Japan .

There is new hope. Just as Curt Schilling became the end of season warrior bringing us into the playoffs, the SEC has just drafted Christopher Cox, who appears to be the Nasdaq savior. Rolling back SOX for small to medium sized companies is now not as far fetched as it seemed. Basing term and breadth of compliance for 404 on a nascent company’s revenue rather than market cap may give the venture-backed community the relief it needs to access the American public markets again. Entrepreneurs and investors who laboriously work to build value only to see the ball dropped at first base to lose the series can have renewed hope. … Especially if they are down three games in a best-of-seven series.

These musings on a hot summer day remind me of a famous Horace Greely quote: “A cigar has … a fire at one end and a fool at the other.”

    Top Three

According to several reports, at least two more bidders are interested in household appliance company Maytag, potentially threatening the existing $2.1 billion offer from Ripplewood Holdings , which Maytag has already agreed to. The Financial Times is reporting that China ‘s Haier is one of the bidders, while multiple U.S. publications have named Blackstone Group as an interested party.

Meximerica Media, a San Antonio, Texas-based newspaper company, has raised $18 million of private equity financing from Pinto America Growth Fund LP and Rustic Canyon Partners. The deal will be used to complete the building of four daily Spanish-language newspapers in Texas and further expansion elsewhere. Meximerica management regained control of the company this past April when the original investor, Grupo Recoletos, sold the company back to management.

Daniel Varroney has been named as the first CEO of the Association for Corporate Growth. Varroney has been a longtime senior executive with the National Association of Manufacturers, most recently working as senior vice president for the field and national divisions. With 48 chapters, a membership approaching 10,000 and an active M&A market, Varroney will focus on sharing best practices throughout the ACG community and leading its continued global expansion.

    VC Deals

OneNeck IT Services Corp. , a Scottsdale, Ariz.-based provider of ERP outsourcing and hosting solutions, has raised $12.8 million of venture financing led by Westview Capital Partners. With the transaction, Westview adds three people to the OneNeck board: Managing Partner Rick Williams, Managing Partner Carlo von Schroeter and Principal Matt Carroll. OneNeck was advised on the deal by Triple Tree LLC.

Brainshark , a Waltham, Mass.-based software company focused on rich-media company communications, has raised $6.9 million of venture financing. The Series C deal included new investor Ticonderoga Capital and return backers 3i, SI Ventures, Flagship Ventures and Citizen Capital. As part of the transaction, Ticonderoga ‘s Tyler Wick joins the board of directors. Founded in 1999, the company has raised $22.5 million since inception.

Cierra Inc ., a Redwood City, Calif.-based medical device company focused on cardiology, has raised $21 million in funding, Dow Jones is reporting. The round included new investor Delphi Ventures, as well as return backers Morgenthaler Ventures, Split Rock Ventures and Frazier Healthcare Ventures. The company, which has raised about $28 million since its 2003 inception, will use the money to launch U.S. clinical trials.

Tharas Systems Inc. , a Santa Clara, Calif.-based verification solutions provider, has raised $5.5 million of venture financing. Led by El Dorado Ventures, the deal attracted return backers Neo Carta Ventures, Alliance Venture Management LLC, Sun Microsystems co-founder Andy Bechtolsheim, and Dr. Prabhu Goel, who sits on Tharas’ board. El Dorado Ventures Technology Partner Fred Buelow will join the board. Founded in 1998, Tharas has raised about $19 million since inception.

Netviewer GmbH , a Karlsruhe , Germany-based company focused web collaboration solutions, has raised 2.5 million euros from Swiss-based Invision AG.

    Buyout Deals


A buying group that includes Lion Capital and Blackstone Group has made an offer to buy Allied Domecq, a drinks company that produces Beefeater gin but also owns Dunkin’ Donuts and Baskin-Robbins, The Independent is reporting. The consortium is being led by Constellation Brands and also includes Brown-Forman, which makes Jack Daniel’s whiskey.

Bridgepoint has purchased Tunstall, a telephone-based alarm and monitoring company, for 225 million pounds from Hg Capital , according to published reports. Bridgepoint plans to combine Tunstall, which targets the elderly, with Attendo Group, which provides care homes for the elderly in the Nordic region. Bridgepoint bought Attendo a few months ago. Tunstall Managing Director James Buckley will become CEO of both companies.

CVC Asia Pacific -backed NZ Restaurant Holdings has offered to buy New Zealand ‘s Restaurant Brands for NZ$160 million, Reuters is reporting. Restaurant Brands runs Pizza Hut, Starbucks and KFC franchises in New Zealand and some Pizza Hut franchises in Australia.

ECI Partners has acquired Taylor Continental Holdings Ltd., a trade waste container company based in Kidderminster , UK . As part of the deal, ECI’s Chris Warren and Richard Chapman will join the board as non-executive directors. The service providers in this deal included PricewaterhouseCoopers (adviser), Burlington and Grant Thornton (due diligence), BDO (adviser to shareholders, brought deal to ECI), Burges Salmon (counsel for ECI) and Pinsent Manson (counsel for vendors and Bank of Ireland, the debt provider). Taylor employs around 200 people.

France ‘s Argos Soditic has purchased Buffet Crampon, a clarinet company, for 37 million euros from Rutland-backed The Music Group Limited. The Music Group was formed to acquire the music instrument manufacturing business of Boosey & Hawkes PLC for £33.2 million in February 2003. Rutland is based in the UK.

Warburg Pincus has purchased Mach, a Danish telecom clearing and billing services company, for around 600 million euros, Dow Jones is reporting. Mach was owned by Advent International and Provident Equity Partners, which bought the company in 2002 for 100 million euros. Advent was said to have the larger stake.

Abraaj Capital has purchased a 40% stake in, an Arab web portal, Middle East Daily Financial News is reporting. The deal was made through Abraaj’s $116 million fund, which is fully invested.

    PE-Backed M&A

Venture-backed Watchfire , a Waltham, Mass.-based software company that focuses on managing online risk, has acquired Ottawa, Ontario-based COAST, which produces online quality and quality compliance software. While financial terms of the deal were not disclosed, a source familiar with the deal said the company received funds from existing backers Polaris, BancBoston, Goldman Sachs, Altamira and Kodiak to complete the transaction. Founded in 1996, Watchfire had raised about $40 million of venture financing before this acquisition. Coast is also backed by VC firms, including Roynat Capital, Covington Capital, BMO Capital Corp. and Capital Alliance Ventures.


Larry Nathanson has been named as a managing director in the senior banking team at Silverfern Group Inc., a middle-market M&A boutique. Prior to Silverfern, Nathanson was a managing director with Prism Clairfield, a private international investment bank, and previously worked as global head of the branded consumer M&A group at Citicorp Securities.

Orhan Osmansoy has been named managing director of the merchant banking division at Abu Dhabi-based The National Investor, Middle East Company News is reporting. Prior to his current position, Osmansoy was a managing director at Dexter Capital Group, a London-based investment firm. He has also worked as a senior investment officer at Whitney & Co. focusing on late-stage VC investments and LBOs in Europe.

Gordon Russell , the former general partner at Sequoia Capital, has received an honorary degree from Dartmouth College , according to The Dartmouth



ValueClick Inc., an online marketing company, will buy private equity-backed Web Marketing Holdings Inc. for $141 million, The Deal is reporting. Web Marketing Holdings, an online marketing company better known as Webclients, is owned by Thoma Cressey and Apax Partners.

Centre Partners is looking to exit its investment in Garden Fresh Restaurant Corp. after buying the company for $134 million, The Deal is reporting. Centre bought the company last year with minority investor Fairmont Capital. Garden Fresh, based in San Diego , operates restaurants under the Souplantation and Sweet Tomatoes names.

South African venture-backed company Lazaron Technologies is looking to raise about 7 million Rand ($1.026 million) to set up a human cord blood stem-cell bank in Cape Town , South Africa , All Africa is reporting. The John Daniel-backed company will sell 14 million shares in Lazaron at 50 cents each.


Shareholders in Toys R Us Inc. have asked a Delaware court to block the $6.6 billion buyout of the toy giant, according to published reports. A suit was filed against the buying consortium-including KKR, Bain Capital and Vornado Realty Trust-last month. The minority shareholders who are suing have argued that the Toys R Us board rushed into the sale and asked for too little money.


In case you didn’t read about it last week, regular Wire columnist Dan Primack is out for two weeks of well-deserved vacation. As such, I’m again playing the role of pinch-hitter, and thankfully, Dan lined up a few guest columnists during his absence, which means one of two things: Either Dan wanted to lighten the load for me in his absence-a commendable goal that earns him a few points during his next review-or, more likely, he wanted to spare you the frustration of reading too many pedestrian columns from me. Whatever the reason, we both agreed that featuring a few guest writers would be good for the Wire. You’ll see the first such column in this space tomorrow.

In the meantime, please send me any press releases or news items that you normally would’ve sent Dan. My email is Thanks.

    Top Three


Soma Networks , a broadband wireless company based in San Francisco and Singapore , has raised $35 million of financing. Led by Temasek Holdings Pte. Ltd. and Morgan Stanley Venture Partners, the late stage round also included NeoCarta Ventures and Endeavour Investments Ltd. The deal follows a $15 million of funding that SOMA raised in 2004.

Mitsubishi Corp. and the Development Bank of Japan will manage Japan ‘s first private equity fund aimed at corporate carveout transactions, according to Nikkei Report . The Innovation Carve Out Fund is targeted at 15 billion yen, with Mitsubishi and DBJ contributing 4 billion yen each and the remaining 3 billion coming from domestic institutional investors. The fund expects to invest 300 million to 3 billion yen in each project, with Mitsubishi and DBJ sourcing investments and managing the fund.

Marketing its first-ever investments in private equity, Korean National Pension Corp. will invest $200 million with H&Q Asia Pacific and $150 million with Korea’s Shinhan Private Equity. The pension fund’s $200 million investment is intended to be an anchor investment for the new H&QAP Korea fund, which is targeted at $400 million. That fund will make all of the investments domestically and is expected to start doing deals in the second half of this year. H&Q Asia Pacific and Shinhan were selected by South Korea ‘s National Pension Corp.

    VC Deals


San Jose-based Miasole , a solar cell company, has raised $16 million of venture financing, according to published reports. The lead investor is Kleiner Perkins Caufield & Byers.

    Buyout Deals


Alchemy Partners ‘ outspoken founder Jon Moulton has accused UK Coal of refusing to speak to him about a potential takeover, The Times is reporting. Moulton said he had approached Britain ‘s largest coal-miner with two other investors, but the company would not discuss a deal. Moulton has been pitching UK Coal’s largest shareholders to pressure its board to open talks on the matter. UK Coal had said it was seeking clarification from a potential bidder (Alchemy), which before this weekend had not been identified.

Fenway Partners has acquired Panther II Transportation Inc., one of North America ‘s largest providers of expedited ground transportation services. Terms of the deal, which is the latest of six acquisitions for Fenway in the transportation and logistics space, were not disclosed.

Close Brothers has purchased Luminar Plc’s enterprise division for 28 million British pounds. The assets include 29 nightclubs and 20 high street bars across the UK . The new company will be called CanDu.

AB Segulah, the Swedish private equity firm, has purchased Hexagon Automation, an industrial and hydraulics automation company. The deal marks the first investment from Segulah III, a middle market fund that closed on 260 million euros last fall.

Alta Communications is one of the bidders for Gruner + Jahr USA ‘s Fast Company & Inc. publications, the Chicago Tribune is reporting. Other bidders named in the story include Morningstar Chairman Joe Mansueto, The Economist, Advance Publications’ City Business Journals and a Russell Denson-led team of Gruner + Jahr management. The sale is expected to land between $40 million to $50 million.

London ‘s Root Capital has bought Autocue, a teleprompter manufacturer with business in the U.K. and the U.S. , Primedia Insight is reporting. With the acquisition, Root Partner Simon Phillips will take over as chairman of Autocue.

3i Group is considering a bid for Virgin Radio, the cinema and outdoor advertising assets of Scotland-based SMG, and other assets of the company, the Financial Times is reporting. SMG rejected a prior bid for 3i last year.

    PE-Backed M&A


Private equity-backed Sit-up , a UK home shopping network, has been sold for 194 British pounds to cable company Telewest, The Independent is reporting. The company’s investors include Chrysalis VCT and Evolution Capital.

    PE-Backed IPOs

Three medical device companies are slated to go public this week:

* Ev3 , a Plymouth, Mass.-based company which makes catheter-based devices to treat vascular problems, is hoping to raise $200 million. Founded in 2000, the company is backed by Warburg Pincus, The Vertical Group and life sciences executive Dale Spencer. After the IPO, Ev3 plans to use $75 million of the proceeds to pay notes due to Warburg and Vertical.

* Sunnyvale, Calif.-based Micrus Endovascular Corp ., which focuses on treating neurovascular diseases, is slated to raise $42.25 million. Founded in 1996, the company has received a total of $59 million in venture financing from firms including Dresdner Kleinwort Capital, Invision AG, HBM Partners AG, William Harris Associates, Aventic Partners AG and others.

* HemoSense Inc ., a blood coagulation monitoring company based in San Jose , Calif. , is preparing a $31.5 million IPO following six rounds of venture capital totaling almost $40 million. Two of its biggest backers are MPM Capital Management and Vanguard Ventures. HemoSense was founded in 1997.

Venture-backed CryoCor , a heart device company, last Friday added 150,000 more shares to its planned IPO, bringing the total planned shares to 3 million shares. The San Diego-based company also changed its expected price range to $11-$13 from the previous range of $10-$14 a share.

Private equity-backed Deccan Aviation Pvt. Ltd. , which operates low-cost airline Air Deccan in India , has hired five investment banks to explore the possibility of raising as much as $300 million through an IPO in the next fiscal year, Dow Jones is reporting. Air Deccan is partly owned by ICICI Ventures ( India ) and Capital International.

KKR-backed Zumtobel , an Austrian lighting equipment company, may go public next year, APA Economic News Service is reporting. KKR currently holds a large minority stake in the company, with the Zumtobel family holding the majority stake.

Austrian private equity funds invested 141 million euros in 140 companies in 2004, representing a 25% jump over the prior year’s activity, according to published reports. The numbers were released by the Austrian Private Equity and Venture Capital Association.

    Firm & Fund News


According to published reports, the Gulf Region now has its first-ever venture capital bank, a Bahrain-based, Shariah-compliant financier that will focus on investments in Arab countries. Armed with $500 million of commitments, Venture Capital Bank plans to invest in small to medium-sized enterprises looking for capital, as well as real estate investment opportunities. The bank aims to raise money from several Arab countries, with a target of 40% from Saudi Arabia , 20% from Kuwait , 10% from the Kingdom of Bahrain and Qatar , 10% from Oman , 10% from VC Bank’s strategic partners and 10% from GCC financial institutions.

Winnepeg-based Crocus Investment Fund is expected to announce on Monday that the fund is being wound down and that its assets are to be sold, the Winnipeg Free Press is reporting. The Labour-Sponsored fund has already lost a reported 100 million Canadian dollars and cost the federal and provincial governments a similarly high amount in tax credits and rebates. The fund suffered a $C46 million write-down in April amid allegations of exorbitant travel expenses, overvaluation and poor cash management. The fund and its former board members are currently under investigation.

Blackstone Group has been hired by a Wendy’s International Inc. shareholder to help restructure the company. Pershing Square Capital Management LP said in its filing with the SEC that it wants to explore alternative transactions to boost shareholder value, including the possibility of a merger.

American Capital Strategies yesterday outlined plans for its 600 million euro European affiliate fund, formally known as European Capital . The company will invest from 5 million euros to 125 million euros per deal in equity, mezzanine debt and senior debt to fund growth, acquisitions and recaps. American Capital will provide the bulk of the initial capital for European Capital Ltd., with the balance raised privately from third party institutional investors.



Silicon Valley VC William Del Biaggio III is reportedly looking to sell his share of the NHL’s San Jose Sharks and become the lead investor with the same league’s Pittsburgh Penguins. Del Biaggio and a group of unnamed investors would buy the team from current owner Mario Lemieux. Under the agreement, Lemieux would hold onto a small share and remain involved with the team. Del Biaggio has said he would keep the team in Pittsburgh if the deal goes through.

Craig William Manners , a former director of Australian venture capital fund Adelong Capital Ltd., has been found guilty on three counts of making false or misleading statements, Ralph Wragg Australian Business is reporting. The Australian Securities and Investments Commission had been investigating Manners for making false and misleading statements about the VC company’s future share price to a German reporter in January 2000. Manners was acquitted on six counts of making false or misleading statements and nine counts of breaching his duties as a director. Manners, who faces up to five years in prison, is due to be sentenced on July4,

Buyout investor/investment banker Ronald Spogli has been tapped to replace Mel Sembler as the U.S. ambassador in Rome . The appointment still needs approval from the Senate.

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