PE Week Wire — Friday, June 3

Random Ramblings

It is 9:53am, and I’ve just come to a horrifying conclusion: PE Week Wire columns should probably be written the previous evening, unless something particularly eventful happens in the morning. This realization is born of another two-plus hours of news gathering, as the private equity market – VC and LBO alike – is full of too much money completing too many deals (go back to the old paradigm, won’t you?). It’s not like I plan to sit at my desk late at night, since my ratty leather chair (my wife calls it the “Frazier chair”) in front of the television will do just fine, but it’s still quite disturbing. On the other hand, we do have some interns starting soon, and maybe I can persuade one of them to come into work early in exchange for coffee and bagel money. In the meantime, a few very quick notes:

*** If you’ve got some free time today, take a drive by the Waltham, Mass.-based office park that houses venerable VC firm Greylock Partners. Specifically, check out the giant billboard that says “Welcome to the Training Camp Home of IDG Ventures Boston.”

On Monday, IDG Ventures Boston will announce that David Aronoff is joining as its fourth general partner. Aronoff has spent the past nine years with Greylock, and hit some serious home runs with companies like SiTera (acquired by Vitesse Semiconductor in 2000 for $750 million in stock) and Xros Inc. (acquired by Nortel in 2000 for $3.35 billion in stock). He even made Forbes’ Midas List for the past two years at #73 (2004) and #99 (2005), although such lists always strike me as quantitative-tinted capriciousness. In short, he was being sought after by a number of firms, after making it clear that his entrepreneurial nature had caused him to become interested in joining a startup – or at least adolescent - venture firm.

Aronoff becomes the second IDG Ventures Boston partner to matriculate from Greylock U, following Chip Hazard in May 2002. Moreover, fellow IDG guy Jeff Bussgang co-founded Greylock portfolio company Upromise, and at one point was in talks to join the firm. Bill Helman, who has been with Greylock since 1984, says the parting with Aronoff is amicable, and that he isn’t surprised that certain partners leave to join younger firms. He is quick to point out, however, that Aronoff was Greylock’s fourth-oldest general partner, and that it has more than a few value-added qualities to keep other folks around (like legendary brand name, smart veteran VCs, etc.). Indeed, Aronoff will be a serious loss for Greylock, but so was Pedro Martinez for the Red Sox. In both cases, the former team will still manage to keep winning.

*** VCs often like to complain about the SEC, but maybe they’ll pipe down a bit now that industry ally Chris Cox has been nominated to replace the departing William Donaldson. Cox is a current Republican congressman from California, but began his career as a corporate attorney focused on venture capital in the Orange County office of Latham & Watkins. He authored 2003 legislation to make the ban on e-commerce taxes permanent, and has received $17,500 in campaign contributions from the National Venture Capital Association’s political action committee (VenturePAC) between 1998 and 2004.

No consensus yet on his chances. On its face, however, his biggest challenge will be in convincing Democrats that his pro-business background won’t preclude him from acting in the best interest of individual investors (his vote in favor of SarbOx will help in that effort). Republicans are almost certainly in his camp, as they are with every single one of President Bush’s nominations to everything. If I had to bet, expect a relatively smooth confirmation, particularly if Bush agrees to promote current SEC market-division director Annette Nazareth to replace the departing SEC Commissioner Harvey Goldschmid.

*** My colleague Lawrence Aragon passes on word that Champion Ventures (a.k.a. HRJ Capital) is raising its fourth fund-of-funds with a $150 million target. For those who don’t know, this is the group run by former San Francisco 49ers Harris Barton, Ronnie Lott and Joe Montana. I wonder if they’re pitching the fund via videotape?

Top Three

 

ExiqonAS, a Danish biotech company, has raised $20 million in new venture capital funding. Teknoinvest led the deal, and was joined by Scandinavian Life Science Venture, Nobel Group, LD Pensions, BioFund and Danske Bank. Egiqon has raised $37 million in total VC funding since its 1996 inception. www.exiqon.com

Activant Solutions Holdings Inc., an Austin, Texas-based provider of business management solutions in the hardware, home center, lumber/building materials and automotive parts aftermarket sectors, has filed to raise $200 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol ACVT, with JPMorgan and Deutsche Bank Securities serving as lead underwriters. Activant is owned by private equity firm Hicks, Muse, Tate & Furst. www.activant.com

John Mack has joined Pequot Capital Management as chairman, and will focus on helping to expand the firm’s platform of hedge funds and private equity funds. Mack most recently served as CEO of Credit Suisse First Boston. www.pequotcapital.com

VC Deals

Factory Logic Inc., an Austin, Texas-based provider of manufacturing management software, has raised $8 million in Series A-1 funding from Adams Capital Management, SAP Ventures and several unnamed individuals. www.factorylogic.com

Santur Corp., a Fremont, Calif.-based provider of source laser components for the telecom industry, has raised $16.6 million in Series C funding. Return backers include Menlo Ventures, Sequoia Capital, Thomas Weisel Venture Partners, VantagePoint Venture Partners and Lighthouse Capital. www.santurcorp.com

BlueArc Corp., a San Jose, Calif.-based provider of network storage systems, has raised $15 million in additional VC funding. Return backers Meritech Capital Partners and Crosslink Capital co-led the deal. BlueArc has raised $175 million in total private funding since its 1998 inception, from firms like Meritech, Crosslink, Apax Partners, Fort Washington Capital Partners, Dell Ventures, Weston Presidio and Interregnum PLC. www.bluearc.com

Lifeways Community Care Ltd., UK-based provider of community care services, has received an undisclosed amount of funding from Nomura Private Equity Group. www.lifeways.co.uk

Corrigo Inc., a Wilsonville, Ore.-based provider of service management solutions for maintenance and repair organizations, has raised $10 million in fourth-round funding. Sierra Ventures led the deal, and was joined by return backers Asset Management Co. and Sycamore Ventures. www.corrigo.com

Klir Technologies Inc., a Seattle-based provider of on-demand, real-time IT analytics applications, has raised $8.7 million in Series A funding. Ignition Venture Partners and MK Capital co-led the deal. www.klir.com

Tatara Systems Inc., an Acton, Mass.-based provider of converged mobile solutions for communications service providers, has raised $6 million in third-round funding from return backers Highland Capital Partners and North Bridge Venture Partners. Tatara has raised $23 million in total VC funding since its 2001 inception. www.tatarasystems.com

OnPrompt, a UK-based company focused on supply chain issues caused by incompatible formats and systems, has raised Gbp5 million in Series A funding from 3i Group and Benchmark Capital Europe.

Followcap Inc., a UK-based provider of presence and instant messaging solutions to the telecom industry, has raised an undisclosed amount of Series C funding. Sequoia Capital led the deal, and was joined by return backers Carmel Ventures, Star Ventures, ICTech and Koor CVC.

TheraDoc Inc., a Salt Lake City-based medical informatics company focused on clinical decision support, is raising $10.5 million in Series B funding, according to a regulatory filing. The filing reports that it already has secured at least $7.4 million. www.theradoc.com

Connecture Inc., an Atlanta-based provider of sales automation solutions for health insurance providers, has raised approximately $3.5 million in Series D-1 convertible preferred funding, according to a regulatory filing. Backers include Live Oak Equity Partners, SSM Ventures and Chrysalis Ventures. www.connecture.com

PeerFlix Inc., a Menlo Park, Calif.-based peer-to-peer service that allows members to legally trade DVDs, announced in March that it had raised an undisclosed amount of Series A funding from 3i Group and BV Capital. According to a regulatory filing, the amount was $2.2 million. www.peerflix.com

Feedster Inc., a San Francisco-based online search engine and advertising network for blogs and RSS feeds, has raised an undisclosed amount of Series A funding. Selby Venture Partners led the deal, and was joined by return backer Omidyar Network, members of New York Angels and various other angels like Kevin Hartz, co-founder of Xoom, Joe Kraus, co-founder of Excite and Jotspot, Josh Kopelman, founder of Half.com, Scott Kurnit, founder of About.com, Mark Pincus, founder of Tribe.net and Support.com and Narendra Rocherolle, founder of Webshots. www.feedster.com

Buyout Deals

 

JPMorgan Partners has completed its sale of Crosstown Traders Inc. to Charming Shoppes Inc. (Nasdaq: CHRS). The deal is valued at approximately $218 million in cash, plus the assumption of Crosstown Traders’ debt. Crosstrown is a Tuscan, Ariz.-based direct marketer of women’s apparel, footwear and specialty gifts. www.charmingshoppes.com

HgCapital has agreed to sponsor a 78 million euros management buyout of Addison Software and Service GmbH, a Germany-based application software company focused on the tax accounting and SME markets. NIB Capital Bank will provide debt financing for the deal. www.hgcapital.com

The Carlyle Group is negotiating to join a consortium interested in the 6 billion euro privatization auction for Turkish telecom company Turk Telekomunikasyon, according to The Deal.

Hite Brewery Co. has signed a final contract to acquire South Korean distillery Jinro Ltd. for 3.41 trillion won (approx. $3.3 billion). Goldman Sachs led the auction, which reportedly included failed bids from JPMorgan Partners, CVC Capital Partners, Newbridge Capital and Affinity Capital. The Hite group also includes the Korean Teachers Mutual Fund, the Military Mutual Aid Association, the Korea Federation of Community Credit Cooperatives and Korea Development Bank’s private equity fund.

CVC Capital Partners is favored to win the auction for Ruhrgas Industries from German utility E.ON AG, according to Reuters. The offer is valued at approximately 1.3 billion euros, with Permira also interested in the company.

PE-Backed IPOs

XenoPort Inc., a Santa Clara, Calif.-based biopharmaceutical company focused on drug absorption, priced five million shares at $10.50 per share, for a total IPO take of approximately $52.5 million. It originally filed to raise $86.25 million, but reduced its offering price from $14-$16 to $10.50. XenoPort will trade on the Nasdaq under ticker symbol XNPT, and Morgan Stanley and Deutsche Bank Securities served as lead underwriters for the IPO. The company had raised over $152 million in total VC funding since its 1999 inception, including a $25 million Series D round late last year at a post-money valuation of approximately $200 million. Significant shareholders include Venrock Associates, Skyline Ventures, ARCH Venture Partners and OrbiMed Advisors. www.xenoport.com

Rackable Systems Inc., a Milpitas, Calif.-based provider of high-density computer servers and high-capacity storage systems, reportedly has delayed its IPO pricing until next week. The company plans to offer 6.25 million common shares at between $11 and $13 per share, with Thomas Weisel Partners serving as lead underwriter. No reason was given for the delay. Parthenon Capital holds a 61.2% pre-IPO stake in the company. www.rackable.com

Esmertec AG, a Swiss provider of mobile telecom software, reportedly plans to go public in Switzerland in the next several weeks. Deutsche Bank AG and UBS Investment Bank will underwrite the IPO. Esmertec has raised VC funding from such firms as Sofinnova Partners, Partners Group, Invision, Earlybird Venture Capital and Credit Lyonnais. www.esmertec.com

PE-Backed M&A

McAfee Inc. (NYSE: MFE) has acquired Wireless Security Corp., a Redwood City, Calif.-based provider of Wi-Fi security solutions for home and small business networks. No financial terms were disclosed. Wireless Security Corp. has raised VC funding from Alloy Ventures. www.mcafee.com www.wirelesssecuritycorp.com

PertnerTechABof Sweden has agreed to acquire KSH-Productor Oy, a Finland-based medical technology contract provider, for approximately 7 million euros. Sellers include venture capital firm Bio Fund Management. www.kshproductor.fi

Ericsson has acquired NetSpira Networks SL, a Spain-based provider of mobile wireless technologies. No financial terms were disclosed. NetSpira had been backed by Bullnet Capital. www.ericsson.com www.netspira.com

Firm & Fund News

Global Vision AG Private Equity Partners of Germany is one month away from holding a final close on its sixth fund-of-funds, but already has made commitments to the following vehicles: Wellington Partners Ventures III, TVM Life Science Venture VI and Grainville Baird Capital Partners Fund VII. www.globalvision-ag.com

Human Resources

David Aronoff has joined IDG Ventures Boston as the firm’s fourth general partner. He previously was a general partner with Greylock. www.idgventures.com

Robert O’Connell has been fired as chairman and CEO of MassMutual Financial Group. He will be replaced in the CEO role by Stuart Reese, who has been the company’s executive vice president and chief investment officer since 1999. No reason was given for the termination. www.massmutual.com

Edmond de Rothschild Capital Partners has hired four new professionals. They are: Herve Fonta, investment manager, previously worked at Chequers Capital; Antonio Graca, investment manager, previously worked with CDC Equity Capital; Bertrand Demesse, associate, previously worked in the M&A division of Banque Lazard; and Sylvie Verges, CFO, previously was CFO of Neuf Telecom. www.lcf-rothschild.fr

Scott Livingston has joined Axiom Capital Management as a managing director, after previously having worked with Lehman Brothers. He also was formed the Livingston Group to finance and advise nanotechnology companies and investors. www.axoimcapital.com

Nexit Ventures, a VC with offices in both Finland and Saratoga, Calif., has hired both Patrice Peyret and Michael Mandhal as venture partners. Peyret is co-founder and former CEO of Mobile365 Inc., while Mandhal most recently served as a venture partner with Sweden-based BrainHeart Capital. www.nexitventures.com

Highland Capital Partners, a Lexington, Mass.-based venture capital firm, has promoted Corey Mulloy to the position of general partner. He originally joined Highland as an associate in 1997, and later was promoted to principal. He focuses on early- and growth-stage opportunities in the healthcare sector, and sits on the boards of AccentCare, Archemix, Fidelis and Whole Body. www.hcp.com

Paul Capital Partners has made the following promotions: Clarke Futch and Jean-Pierre Naegeli from principal to partner within the Royalty team; Brian Sullivan from principal to partner in the Secondary team; Dan Mulderry to principal in the Secondary team. Paul Capital recently closed its eighth fund-of-funds with $650 million. www.paulcapital.com

Michael Gottschalk has joined Rothschild as a managing director and head of its I-banking consumer products group for North America. He previously spent three years with Lazard as a managing director focused on M&A in the consumer products and retail sectors. www.rothschild.com

Patrick Maciariello has joined The Compass Group as a vice president located in the firm’s Laguna Hills, Calif. office. He previously worked for both Bain & Co. and Deutsche Banc Alex. Brown. In other Compass Group news, the firm has promoted David Swanson to the position of principal. He has been a vice president. www.compassequity.com

THURSDAY, JUNE 2

Too Much News…

Putting together the news section took nearly three hours this morning (ugh), so no time to write a planned column on the way that certain LBO firms share – or more importantly, don’t share – transaction and monitoring fees with their limited partners (the folks who actually fund the funds). Let’s save that for tomorrow or Monday, since it will dovetail nicely with a related piece I wrote for Buyouts Magazine.

But you know that I don’t like leaving you empty-handed, so here’s a quick piece of unreported personnel news from the Boston VC community: Duane Mason has decided to retire from Prism Venture Partners, which he co-founded in 1996. Mason told me this morning that the decision was mostly based on age, and that he will continue to sit on at least some of his current portfolio company boards. As reported in this space a few months back, Prism is in the midst of raising its fifth fund, with a final close expected within the next month or two. Mason will formally serve as a special limited partner on that vehicle, and plans to maintain at least some of his portfolio company board seats.

Top Three

 

Citrix Systems Inc. (Nasdaq: CTXS) has agreed to acquire NetScaler Inc., a San Jose, Calif.–based provider of application networking solutions. The deal is valued at approximately $300 million in cash and Citrix stock, plus the assumption of approximately $23 million in unvested stock options. It is expected to close in Q3. NetScaler has raised over $78 million in VC funding since its 1998 inception, including a $20 million Series F deal in early 2004 at a post-money valuation of approximately $135 million. Current shareholders include Gabriel Venture Partners, Focus Ventures, Bay Partners, Sequoia Capital, Goldman Sachs and Granite Global Ventures. www.citrix.com www.netscaler.com

Monster Worldwide Inc. (Nasdaq: MNST) has sold its Yellow Pages division to Audax Group. The deal is valued at $80 million, including $73 million in cash and a $7 million, seven-year promissory note with a 3% coupon. Monster’s Yellow Pages division was formerly known as TMP Worldwide Directional Marketing, and will now operate under the name Moving.com. It currently employs 790 people and produced 2004 revenue of approximately $88 million. www.monster.com www.audaxgroup.com

George Soros reportedly has joined one of the eight bids to acquire the Washington Nationals, a Major League Baseball club that formerly was known as the Montreal Expos (before moving to DC for the 2005 season). The consortium now includes Soros, private equity firm ABRY Partners, serial sports franchise owner Jonathan Ledecky and New York-based real estate developer Marc Cohen. Citigroup Private Bank and Game Plan LLC are serving as advisors to the group.

VC Deals

ONStor Inc., a Los Gatos, Calif.-based provider of enterprise network attached storage (NAS) gateway solutions, has raised $24 million in Series D funding. ComVentures led the deal, and was joined by return backers Mayfield, Foundation Capital and Worldview Technology Partners. ONStor has raised $79 million in total VC funding since its 2000 inception. www.onstor.com

SuperDimension Ltd., an Israel-based developer of minimally-invasive diagnosis and treatment solutions for lung disease, has raised $27 million in Series B funding. OrbiMed Advisors led the deal, and was joined by fellow new backers CIBC World Markets and Pfizer Inc. Existing shareholders Oxford Bioscience Partners, Pitango Venture Capital, Medica Venture Partners and Mi3 also participated. www.superdimension.com

Nanoradio AB, a Sweden-based semiconductor company, has raised 9 million euros in VC funding. Participants included Nordic Venture Partners, Innovacom, Teknoinvest and Industrifonden. www.nanoradio.se

Tachyon Networks Inc., a Vienna, Va.-based single-source provider of satellite technology solutions and services, has raised $7.07 million in additional venture capital funding. West River Capital led the deal, and was joined by return backers like BV-Cornerstone Ventures and CEA Capital Partners. Tachyon Networks has raised over $90 million in total VC funding since its 1997 inception. www.tachyon.com

Global Locate Inc., a San Jose, Calif.-based developer of assisted global positioning system (A-GPS) products and services for wireless devices and networks, has received a “multi-million” dollar strategic investment from Siemens Venture Capital. According to a regulatory filing, Global Locate is in the midst of raising $25 million in Series D funding, although it is unclear if the Siemens deal is part of that round, or separate. www.globallocate.com www.siemensventurecapital.com

Yodel Inc. of San Francisco has raised approximately $800,000 in Series A funding from firms like Radar Partners and Blacksmith Ventures, according to a regulatory filing.

Fidelis Security Systems Inc., a Bethesda, Md.-based provider of network security solutions, has raised $4.1 million in Series A funding. Participants included Inflection Point Ventures, Ascent Venture Partners, the Maryland Department of Business and Economic Development and WS Investment Co. www.fidelissecurity.com

Augmentix Corp., a Houston-based provider of commercial servers for mission-critical applications, has raised $8.59 million in second-round funding from Centennial Ventures and return backer Austin Ventures, according to a regulatory filing. www.augmentix.com

Oxlo Systems Inc., a Broomfield, Colo.-based provider of solutions for the automotive retail industry, has raised $5 million in VC funding. Participants included Wayport Ventures, Appian Ventures and Mobius Venture Capital. www.oxlo.com

Buyout Deals

 

International Paper Co. (NYSE: IP) has completed the sale of its Industrial Papers business to private equity firm Kohlberg & Co. for $180 million. www.internationalpaper.com

Welsh, Carson, Anderson & Stowe has completed its sale of Bellevue, Wash.-based software company Attachmate Corp. to Francisco Partners, Golden Gate Capital and Thoma Cressey Equity Partners. No financial terms were disclosed. Francisco, Golden Gate and Thoma Cressey acquired Attachmate competitor WRQ Inc. late last year, and is merging the two companies into a combined entity known as AttachmateWRQ. www.attachmate.com www.wrq.com

Carl Zeiss SMT AG has agreed to acquire Germany-based NaWoTec GmbH from an ownership consortium that includes Wellington Partners, Cipio Partners, Target Partners and Intel Capital. No financial terms were disclosed for the deal, which is expected to close during this quarter. NaWoTec was formed as a spinout from Deutsche Telekom in 2002, and focuses on nano-structuring technologies. www.nawotec.de www.smt.zeiss.com

Leeds Weld & Co. has acquired Miller Heiman Inc. from Gryphon Investors and Crosslink Capital. No financial terms were disclosed. Miller Heirman is a Reno, Nev.–based provider of sales-force effectiveness solutions. www.millerheiman.com

Repsol YPF, a Spain-based oil and gas company, said that b has joined its bid for Royal Dutch/Shell Group’s liquefied petroleum gas distribution and marketing business. The deal could be worth more than $2 billion.

CVC Capital Partners recently agreed to acquire Spanish clothing retailer Cortefiel SA for 1.4 billion euros, but may soon face competing bids from other private equity firms, according to published reports.

BC Partners has received EU approval for its proposed buyout of Sweden-based appliance maker Dometic International AB from EQT Partners. www.dometic.com

3i Group is sponsoring a Gbp40 million management buyout of UK-based luxury powerboat company Fairline, according to The Financial Times. www.fairline.com

PE-Backed IPOs

Penrice Soda Holdings, an Australia-based provider of soda ash, is planning to go public next month in an Au$87 million IPO on the Australia Stock Exchange. Company shareholders include Colonial First State Private Equity and Quadrant Capital.

PE-Backed M&A

TDK Corp. has acquired Amperex Technology Ltd., a Hong Kong-based maker of polymer lithium batteries, for approximately $100 million. Amperex has raised VC funding from such firms as The Carlyle Group, 3i Group and H&Q Asia Pacific, including a $30 million Series B round in 2003. www.tdk.co.jp www.atlbattery.com

Hercules Offshore LLC, a Houston-based portfolio company of Lime Rock Partners and Greenhill Capital Partners, has acquired a fleet of 17 lift-boats from Superior Energy Services Inc. No financial terms were disclosed.

Ikano Communications Inc., a Salt Lake City-based provider of private-label Internet services, has acquired the subscriber bases of two Texas-based ISPs from Morgan Publishing. They are CookeNet Internet Services, serving the Gainesville market, and CompuWise Internet Solutions, serving the Decatur market. No financial terms were disclosed. Ikano is backed by Insight Venture Partners. www.ikano.com www.cooke.net www.compuwise.net

CVI Laser Inc., an Albuquerque-based manufacturer of optical components, has acquired Optical Components Inc. of Covina, Calif. No financial terms were disclosed. CVI Laser has been a portfolio company of Norwest Equity Partners since May 2003. www.cvilaser.com www.ocioptics.com

ION Trading Systems Inc., an Ireland-based provider of software solutions for trading on electronic fixed-income markets, has acquired Aurora Software Inc., a New York-based provider of systems for U.S. treasuries, mortgages and options trading desks. No financial terms were disclosed. ION Trading is a portfolio company of TA Associates and Kairos Partners. www.iontrading.com www.aurora-inc.com

Danippon Screen Manufacturing Co. Ltd. of Japan has acquired Inca Digital Printers Ltd., a UK-based maker of wide-format inkjet printers, for Gbp30 million. Inca Digital had received VC funding from Advent Venture Partners. www.incadigital.com www.screen.co.jp

Firm & Fund News

Escalate Capital’s first close on its inaugural fund was at $113 million, according to a regulatory filing. The Austin, Texas-based firm had not disclosed the amount in a recent statement. Limited partners include GM Pension Plan, The Meadows Foundation, Portfolio Advisors, Teachers’ Private Capital, UTIMCO and Verizon. www.escalatecapital.com

Human Resources

Jeffrey Stein has joined Sofinnova Ventures as a venture partner and Kauffman Fellow. He will work focus on life sciences opportunities in the San Diego area. He most recently served as founder and chief scientific officer of Quorex Pharmaceuticals Inc., which was acquired by Pfizer Inc. last year. www.sofinnova.com

Steve Frederick has joined Grotech Capital Group as a vice president, according to VentureWire. He previously served as a general partner with Novak Biddle Venture Partners. www.grotech.com

David Baum has left the general partnership of Prism Venture Partners, where he is no longer listed on the firm’s website. www.prismventures.com

James Gorman has been named executive vice president and head of corporate acquisitions, strategy and research with Merrill Lynch. He previously served as president of the bank’s global private client group. That job now goes to Robert McCann, vice chairman of wealth management. Both moves become effective on June 8. www.ml.com

WEDNESDAY, JUNE 2

Texas(Finally) Gets It Right

It has been approximately 1,584 hours since this space last discussed private equity and public disclosure in the State of Texas, so it seems entirely appropriate that we revisit the matter this morning.

As a quick refresher, former Texas AG John Cornyn opined several years back that public institutions in Texas must disclose certain information about private equity funds in which they had made capital commitments, if so requested under the state’s Open Records law. Among the included info were fund names, commitment amounts, fund strategy (i.e., VC, LBO, etc.) and, most importantly, internal rates of return (IRRs). Underlying asset data, including portfolio company names and valuations, would remain off-limits to Joe Public’s eyes. The whole thing initially looked a bit problematic for groups like the University of Texas Investment Management Co. (UTIMCO), but soon became less so after similar moves in states like California and Colorado. In other words, no big deal, and Conryn’s successor Greg Abbott continued to follow the top-line/b! ottom-line disclosure demarcation policy.

All of that calm was suddenly converted into a maelstrom last fall, however, when Abbott argued for even greater transparency during a speech before a FOIA-friendly audience. His office told me that Abbott even would support the disclosure of portfolio company revenue figures. Moreover, the Austin-American Statesman’s editorial board kept egging Abbott on, with pieces that baselessly argued that plenty of private equity firms would still accept public Texan institutions as limited partners. Certain general partners began to gently panic. Texas State Sen. Robert Duncan and State Rep. Dan Gattis drafted some legislation to diffuse the situation, but their first try didn’t make the cut. Specifically, it listed 13 types of disclose-able data points, but said that requests for all other types of information would be up to Abbott’s discretion. Given the AG’s official statements, this was not the man that private equity firms wanted making any final decisions.

The most notable critic was Austin Ventures, which said that it would not allow public Texan institutions into its $525 million ninth fund, unless better legislation was made law. In other words, longtime Austin Ventures LPs like UTIMCO, the Teachers’ Retirement System of Texas and the Houston Police Officers’ Pension System would be shut out. AV also said that it planned to close its fund by the end of Q1, so it seemed extremely unlikely that Texas legislators could resolve the matter in time. In the meantime, AV began taking commitments from public institutions in states like Washington, Massachusetts, Virginia and Michigan.

Fast forward 1,584 hours, and the situation has changed dramatically. Duncan and Gattis reworked their bill to include a couple of extra disclose-able data points (there are now 16), but also made confidential any information not explicitly referred to in that list of 16. In other words, they removed the original clause about Abbott being able to determine confidentiality. Even better, they apparently did it in consultation with Abbott himself, who released a statement in support of the revised language. If passed, the new rule in Texas would be that anyone could get access to top-line data like IRRs, cash-in/cash-out and management fees (both dollar amounts and percentages), but not to sensitive underlying asset data.

The bill passed the Texas State Senate on April 29 by a vote of 30-0, and the Texas House of Representatives on May 18 by vote of 131-0. Because it was passed by more than a 2/3 majority of both chambers, the bill officially has become law even without the signature of Texas Gov. Rick Perry. Perry could, of course, veto the measure by a June 30 deadline, but it is hard to imagine any conceivable reason why he would do so.

In light of such developments, Austin Ventures is no longer banning public institutions like UTIMCO from participating as LPs on its new fund. The firm already has held interim closes on approximately $450 million for Fund IX, but has pushed back its final close date until September. The fund target remains at $525 million, with the cushion to be filled by a number of strategic LPs, existing LPs who want a larger position or by Texas institutions like UTIMCO, TRS and Houston Police (assuming they want to do so – none responded to calls inquiring about their level of interest).

“Austin Ventures would be open to working with all Texas pension funds that have private equity allocations and were interested in investing with us,” says Joe Aragona, general partner of AV.

Not that it will help my balance sheet one way or another, but I’m hoping that groups like UTIMCO do participate in Austin Ventures IX, and that the fund makes them money. Despite its many detours over the past year, Texas has finally gotten the issue of private equity disclosure right: Enough transparency to hold firms accountable to the public interest, but not so much that the public interest is ultimately harmed.

Top Three

 

Bain Capital has agreed to acquire School Specialty Inc. (Nasdaq: SHCS), a Greenville, Wis.-based provider of supplemental learning products to the pre K-12 market. The transaction is valued at approximately $1.5 billion (including assumed debt), with School Specialty common stockholders receiving $49 per share. www.schoolspecialty.com

Calypso Medical Technologies Inc., a Seattle-based, has raised $44 million in Series C funding round, according to multiple press reports. Arnerich Massena & Associates and BB Biotech Ventures co-led the deal, and were joined by Mitsui & Co. Venture Partners, Merlin BioMed Group and Rockport Ventures. Return backers Frazier Healthcare Ventures and Integra Ventures also participated. A regulatory filing from February suggests that the deal involved multiple closes, and that the final one might have been used to buy back some preferred shares from existing equity holders. www.calypsomedical.com

Marsh & McLennan Cos. (NYSE: MMC) has completed the previously-announced sale of its MMC Capital private equity arm to MMC Capital management. The spinout will be named Stone Point Capital LLC, and will continue to focus on private equity opportunities in the insurance and financial services sectors. It will continue to work out of the $1.1 billion Trident III fund formed in 2003. In other Stone Point news, the firm announced that Stephen Friedman has rejoined the group as a senior advisor and member of its investment committee. He is a former Goldman Sachs chairman who served as a senior advisor to MMC Capital from 1998 to 2002, before leaving to serve as Assistant to the President of the United States for Economic Policy and Director of the National Economic Council. www.mmc.com www.mmc! capital.com

VC Deals

Codon Devices Inc., a Cambridge, Mass.-based synthetic biology startup, has raised $13 million in first-round funding, according to The Boston Globe. Participants included Flagship Ventures, Alloy Ventures, Vinod Khosla and Kleiner Perkins Caufield & Byers. www.codondevices.com

TA Associates has made a $50 million investment in Creditex Inc., in exchange for a minority position. Creditex is a New York -based provider of electronic execution services in the credit derivatives market. www.ta.com www.creditex.com

Ygnition Inc., a Tukwila, Wash.-based broadband provider, reportedly has raised $13 million in Series D funding. Advanced Equities led the deal, and was joined by return backers ComVentures and Chrysalis Ventures. The company now has raised $34 million in total VC funding, and may add an additional $2 million to the round later this summer. www.ygnition.com

Rivermine Software Inc., a Fairfax, Va.-based provider of business applications for enterprise telecom management, has raised $10 million in Series B funding. Longworth Venture Partners led the deal, and was joined by return backers Columbia Capital and Valhalla Partners. Rivermine had raised $5 million in Series A funding in late 2003. www.rivermine.com

Sonaptic Ltd., a UK-based developer of audio technologies for the mobile device market, has received an undisclosed amount of second-round funding from Motorola Ventures, Pentech Ventures and ROHM Inc. www.sonaptic.com

CLK Energy Partners LLC, a New Orleans-based oil and gas exploration and development company focused on the Gulf of Mexico Basin, has received up to $19 million in equity funding commitments from Greenhill Capital Partners and Rock Creek Capital. www.clkenergy.com

Buyout Deals

 

Goldman Sachs Capital Partners reportedly has agreed to acquire the cable assets of Italy-based Pirelli & Co. SpA for approximately 1.3 billion euros (including debt). Pirelli stock – and that of its parent company Camfin – were suspended from trading on the Milan Stock Exchange, pending an announcement of the sale later today. www.pirelli.com

Hicks, Muse, Tate & Furst has completed its acquisition of Sturm Foods Inc. from a Mason Wells-sponsored ownership group. No financial terms were disclosed. Sturm is a Manawa, Wis.-based provider of nutritionally-focused drink mixes, hot cereals and other dry-mix products in the retail and foodservice markets. Mason Wells acquired a majority ownership position in Strum in March 1999, via the Mason Wells Buyout Fund I. www.sturmfoods.com

Shearer’s Foods Inc., a Brewster, Ohio-based snack foods company, has been acquired by a consortium that includes Winston Partners, Fenwick Capital and CMS Cos. No financial terms were disclosed. www.shearers.com

Lego Co., a Denmark-based toy maker, has put its four LegoLand amusement parks on the block. Today’s Wall Street Journal reported that a 375 million euros deal with Blackstone Group was imminent, but Lego responded by saying that it is still negotiating with several interested parties. www.lego.com

CVC Capital Partners and Gilde Investment Management have received EU regulatory approval for the proposed acquisition of Bekaert SA‘s wire-fencing unit.

PE-Backed IPOs

Marr SpA, an Italian food distributor, will be valued at between 391 million euros and 512 million euros via an IPO later this month. Shareholders include Cremonini SpA, Advent International, Barclays Private Equity, Efibanca, Arca Merchant SpA and Private Equity Partners SpA (f.k.a. Chase Gemina Italia). www.marr.it

PE-Backed M&A

Ensim Corp., a Sunnyvale, Calif.-based developer of hosting automation software, has agreed to acquire TeleGea Inc., a Waltham, Mass.-based provider of service delivery solutions for hosted VoIP services. No financial terms were disclosed. Ensim has raised over $90 million in VC funding since its 1998 inception, from firms like CMEA Ventures, New Enterprise Associates, Onset Ventures, Worldview Technology Partners and 3i Group. TeleGea has raised around $47 million in total VC funding from firms like New Enterprise Associates, Entrepia Ventures and Investor AB. www.ensim.com www.telegea.com

Affymetrix Inc. (Nasdaq: AFFX) has agreed to acquire ParAllele BioScience Inc., a south San Francisco-based provider of genetic discovery solutions to the life science research, pharmaceutical and diagnostic sectors. The deal is valued at approximately $120 million worth of Affymetrix stock, and is expected to close in the third quarter. ParAllele has raised just over $30 million in VC funding since its 2001 inception, from firms like Versant Ventures, Abingworth Management, Index Ventures and Mohr, Davidow Ventures. www.affymetrix.com www.parallelebio.com

Bay Microsystems Inc., a Santa Clara, Calif.-based provider of packet processing solutions, has raised $8.4 million in Series D funding. It also has agreed to acquire Parama Networks Inc., a Santa Clara, Calif.-based semiconductor company specializing in system-on-a-chip solutions for the telecom transport equipment market. Parama has raised over $40 million in VC funding since its 2000 inception, from firms like Menlo Ventures, Sprout Group, CrossBridge Venture Partners and Azure Capital Partners. The acquisition in expected to close within the next month. www.baymicrosystems.com www.paramanetworks.com

Quest Software Inc. (Nasdaq: QSFT) has agreed to acquire Vintela Inc., a Linden, Utah-based provider of platform integration solutions. The deal is valued at approximately $56.5 million. Vintela has raised VC funding from firms like Allen & Buckeridge and The Canopy Group. www.questsoftware.com www.vintela.com

Human Resources

Bill Kung has joined General Catalyst Partners as a principal. He previously served as an senior associate with Mission Ventures. www.generalcatalyst.com

Thomas Taylor has joined JLL Partners as a senior vice president. He most recently served as business strategy consultant to insurer The Hartford, and before that was president and CEO of EPIX Holdings Corp. www.jllpartners.com

Sharon Tetlow has joined Cell Genesys Inc. (Nasdaq: CEGE) as senior vice president and chief financial officer. She had joined Apax Partners as a venture partner last fall. www.cellgenesys.com

Clarence Schwab has joined TSG Consumer Partners (f.k.a. The Shansby Group) as a principal, and also will help open a New York office for the San Francisco-based firm. He most recently served as a principal with Golub Capital. www.tsgconsumer.com

Louis Giuliano has joined The Carlyle Group as a senior advisor. He is the former chairman, president and CEOP of ITT Industries, and will advise Carlyle on opportunities in the aerospace, defense, industrial and automotive sectors.

TUESDAY, MAY 31

Just Linking Around…

*** George Washington University’s Council on Entrepreneurial Tech Transfer and Commercialization has posted the results of its survey studying the relationship between angel investors and venture capitalists (if link fails, check out left-hand navigation tree). Nothing too surprising in the data (valuation is the key point of disagreement on both sides), but several of the comments are worth a glance.

*** Moses Joseph is in trouble. So is Alberto Vilar (free sub required).

*** If enterprise software is dead, does that mean that enterprise software VCs are now leaving their knitting for the bubbly pastures of consumer tech? Jeff Bussgang of IDG Ventures Boston thinks so.

*** Let’s assume Paul Kedrosky is correct in his assertion that journalists are using blogs, in large part, to build personal brands independent of institutional media (one could even argue that this space, to a certain extent, is a relevant example). Let’s also posit that the best – or at least most popular — of these efforts have the ability to generate decent ad and linkage revenue with almost no overhead (linkage monies would come from Paul’s idea that institutional media pay bloggers for RSS feed access from the institutional media sites). In those cases, are we nearing a point where VCs might begin looking at individual blogs as prospective portfolio “companies?” I know it sounds far-fetched, but so did so many social networking deals.

Top Three

 

NextMedia Group Inc. of Englewood, Colo. has agreed to sell eight radio stations to Wilks Broadcast Group LLC for $34 million in cash. The deal is expected to close in Q4 2005 (pending FCC approval), and includes four stations in Reno, Nevada and four stations in Lubbock, Texas. NextMedia has received private equity funding from Alta Communications, Goldman Sachs, Weston Presidio and Thomas Weisel Partners. Wilks is an affiliate of The Wicks Group of Cos. www.nextmediagroup.com www.wicksgroup.com

 

Insight Venture Partners, a New York-based venture capital firm focused on software and Internet services, has closed its fifth fund with $675 million. Limited partners include Goldman Sachs, HarbourVest Partners, CalPERS and Pantheon Ventures. Provident International Securities Corp. served as placement agent. In other firm news, Insight has promoted both Michael Triplett and Jeffrey Lieberman to the position of managing director. www.insightpartners.com

Paratek Microwave Inc., a Columbia, Md.-based developer of electronically-tunable miniaturized 3D RF devices, has raised $15 million in Series C funding. Return backers included Polaris Venture Partners, Morgenthaler Ventures, Novak Biddle Venture Partners, Investor AB and ABS Ventures. The company has raised approximately $90 million in total VC funding since its 1999 inception, including a recap deal in 2002. www.paratek.com

VC Deals

TensorComm Inc., a Denver-based provider of wireless technology that enabled CDMA and W-CDMA carriers to increase network capacity, has raised $7 million in new venture capital funding. Centennial Ventures led the deal, and was joined by return backers Access Venture Partners, Crawley Ventures and iSherpa Capital. In other company news, TensorComm has named Thomas Cullen as president and COO. www.tensorcomm.com

Become.com Inc., a Mountain View, Calif.-based operator of a retail product search engine, has raised $7.2 million in Series B funding. Trans Cosmos Inc. led the deal, and was joined by Ron Conway and Bob Bozeman. www.become.com

Esprit Pharma Inc., an East Brunswick, N.J.-based drug company, has raised approximately $5.14 million in Series A funding, according to a regulatory filing. Participants included Apax Partners, Domain Associates and New Enterprise Associates.

Buyout Deals

Sentinel Capital Partners has sold Falcon Holdings to company management. The deal included $27.3 million in sale-leaseback financing from Spirit Finance Corp., and $17.6 million in a senior note facility provided by existing Falcon lender Wells Fargo Commercial Commerce. Falcon is a Chicago-based franchisee of Church’s Chicken restaurants.

Investcorp has received European Commission approval for its proposed 440 million euros acquisition of Polyconcept from BC Partners. Polyconcept is a European developer and distributor of promotional, lifestyle and gift products. BC Partners and company management originally acquired the company from Hagemeyer in July 2000. www.bcpartners.com

Nordic Capital has received European Commission approval for its proposed 599 million euros acquisition of Finland-based Outokumpu Copper Products Oy from publicly-traded Outokumu OYJ. www.nordicvc.com

PE-Backed IPOs

HemoSense Inc., a San Jose, Calif.-based maker of blood coagulation monitoring systems for the management of warfarin medication, has increased its proposed IPO terms to 3.5 million common shares being offered at between $8 and $10 per share. It previously filed to sell 2.6 million shares at between $9 and $13 per share. The company plans to trade on the Nasdaq under ticker symbol HEMO, with W.R. Hambrecht & Co. and Lazard Capital Market serving as lead underwriters. Hemosense has raised around $40 million in VC funding since its 1997 inception, and lists significant shareholders like MPM Capital, Vanguard Ventures, W Capital Partners and GC Technology Fund. www.hemosense.com

PE-Backed M&A

Click Commerce Inc. (Nasdaq: CKCM) has acquired Xelus Inc., a Fairport, N.Y.-based provider of collaborative service partners management and reverse supply chain solutions to Global 1000 companies. No financial terms were disclosed. Xelus has raised over $34 million in VC funding from firms like Insight Venture Partners, Integral Capital Partners, MMC Capital, Mellon Ventures, Oak Investment Partners and UBS Capital. www.clickcommerce.com www.xelus.com

Boston Communications Group Inc. (Nasdaq: BCGI) has agreed to acquire PureSight Inc., a San Clemente, Calif.-based provider of content recognition solutions for mobile operators, ISPs and enterprises. The deal is valued at $5.8 million in cash, and is expected to close in June. PureSight has raised approximately $4.2 million in VC funding from Blumberg Capital Ventures, Garage Technology Ventures and Hitachi America. www.bcgi.net www.puresight.com

Firm & Fund News

Frazier Healthcare Ventures has closed its fifth fund with $475 million in limited partner commitments. www.frazierhealthcare.com

Silicon Valley Bank has formally changed its name to SVB Financial Group. www.svb.com

Human Resources

Per-Arne Sandstrom has joined Nordic Venture Partners as a senior advisor. He retired from Telefonaktiebolaget LM Ericsson in July 2004, before which he had served as that company’s executive vice president and deputy CEO. www.nordicvc.com

Sam Watkinson has joined Kleinwort Capital Ltd. as an investment director. He will be focused on deal origination and advisor relationships in the UK’s southern regions. He previously has worked with PwC Private Equity, NatWest Acquisition Finance and Coopers & Lybrand London. www.kleinwortcapital.com

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Correction: Friday’s edition mistakenly referred to GEOLO Investments as CEOLO Investments. The firm participated in a $3 million Series A deal for Dynamic Payment Ventures Inc.

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