PE Week Wire, Jan. 18, 2007

I mentioned yesterday at that a seed-stage fund called MentorTech Ventures just closed its inaugural fund. This was written in the context of today’s jaunt down to Philly (I should leave soon, since my plane does), because MentorTech focuses primarily on IT and medical device companies that originate within the University of Pennsylvania. But it also could have been within the larger context of new emerging managers, which continue to pop up like Peyton Manning after the first of what will be many sacks. Here’s two more:

Alumni Capital Network: A new private equity firm that plans to participate in leveraged transactions for companies with revenue of between $25 million and $500 million, across a wide range of industries. The “alumni” refers to both the firm’s team and its limited partners. The managing directors including six former Accenture partners – Thomas Fox, Richard Golden, James Honohan, William Kapler, Jeffrey Miller and Walter Nollman – plus Tom Donohue, a former managing director with Inter-Atlantic Group. Its limited partners are expected to be almost exclusively other Accenture alumni or those with one degree of Accenture separation (i.e., former Accenture clients, family, etc.).

The obvious downside is a lack of track-record, but that’s unlikely to matter to this particular group of LPs. The firm is expected to hold first close later this month on its inaugural fund, which is targeted at $25 million but which is expected to end up with closer to $35 million.

.406 Ventures: Baseball fans will correctly guess that this firm is based in Boston, since its name is derived from Ted Williams’ fabled 1941 batting average. It has had no press that I can find, but the buzz is palpable. A large part of that is due to the team, which includes Verisign co-founder Maria Cirino, former ThingMagic and CCBN CFO Larry Begley and Arcadia Partners co-founder Liam Donohue. It plans to focus on early-stage IT and services companies in the Northeast, including those in the IT security/infrastructure, tech-enabled business services and next-generation software spaces.

Donohue declined to comment on the advice of the firm’s attorneys at Proskauer Rose, which is code for: “We’re fund-raising, and our attorneys are worried about SEC marketing restrictions. I also tried someone at Proskauer Rose itself, but have no idea why I thought such a tact would be more successful. Market sources suggest that .406 Ventures likely will raise something in the range of between $100 million and $150 million.

They also say that this signals the swan song for Arcadia Partners, since Donohue is moving on and fellow general partner Andrew Hallowell recently was named CEO of Arcadia portfolio company KnowledgePlanet. The only general partner left is former Massachusetts Governor Jane Swift, who also did not return requests for comment.

Top Three

Vornado Realty Trust has led a $52 per share buyout offer for Equity Office Properties Trust, with Starwood Capital and Walton Street Capital also participating. This tops an existing $48 per share bid from The Blackstone Group, and would raise the overall transaction value to $38 billion from $36 billion. Either way, it would be the largest leveraged buyout in history. More deal details here.

Tribune Co. received two bids at yesterday’s deadline, but neither was from a private equity consortium. One is from Eli Broad and Ron Burkle, which essentially would act as a refinancing with Broad and Burkle becoming Tribune’s largest shareholders in exchange for $500 million. The other comes from the Chandler family, which currently is Tribune’s largest shareholder. The Chandler offer values the company at $7.6 billion – or $31.70 per share – and would include the spinoff of certain Tribune broadcasting assets.

Brightcove Inc., a Cambridge, Mass.-based Internet TV company, has raised $59.5 million in Series C funding. AllianceBernstein, Brookside Capital and Maverick Capital co-led the deal, alongside fellow new backers New York Times Co. and Transcosmos. Return backers include accel Partners, Allen & Co., General Catalyst Partners, The Hearst Corp. and IAC/Interactive Corp. Morgan Stanley and Allen & Co. served as placement agents. GigaOm reported last month that the deal was being shopped with a pre-money valuation of around $170 million.

VC Deals

Sparkplug Inc., a Chicago-based provider of wireless business broadband services, has raised $22.5 million in second-round funding. Ignition Partners led the deal, and was joined by The Greenspun Corp., Trilogy Equity Partners, Allen & Co. and Square 1 Bank.

Cytochroma, a Markham, Ontario-based drug company focused on diseases and disorders related to vitamin D deficiency, has raised Cnd$21 million in third-round funding. Backers include The VenGrowth Advanced Life Sciences Fund, Novo A/S and GeneChem Technologies Venture Fund.

Kolis Scientific Inc., a Raleigh, N.C.-based developer of an office-based procedure for the treatment of a common ophthalmic condition, has raised around $15.07 million in Series B funding. Backers include De Novo Ventures and Spray Venture Partners.

Piczo, a San Francisco-based social networking company focused on teenagers, has raised $11 million in second-round funding. U.S. Venture Partners and Mangrove Capital Partners co-led the deal, and were joined by return backers Sierra Ventures and Catamount Ventures., a San Mateo, Calif.-based provider of on-demand 1-to-1 marketing solutions for sales and marketing professionals, has raised $10 million in second-round funding. Mohr Davidow Ventures led the deal, and was joined by return backers Emergence Capital Partners and Walden International.

Meebo Inc., a Mountain View, Calif.–based provider of Web-based instant messaging, has raised $9 million in Series B funding. Draper Fisher Jurvetson led the deal, and was joined by return backers Sequoia Capital.

Yeelion Inc., a Beijing , China-based company focused on personalized digital information, has raised $5.5 million in Series B funding, according to a regulatory filing. Shareholders include Ignition Partners, Qi Ming Venture Partners, QuiJia International and MingTech International.

Funambol Inc., a Redwood City, Calif.-based developer of open-source mobile application servers, has secured $5.35 million of a $10 million Series B round, according to a regulatory filing. Return backers include HIG Ventures and Walden Ventues.

ClickandBuy, a European digital payments platform and e-payments system, has raised an undisclosed amount of funding from Intel Capital.

TagWorld, a Santa Monica, Calif.-based social networking company, has raised an undisclosed amount of funding from Viacom unit MTV Networks, according to TagWorld previously had raised capital from Draper Fisher Jurvetson.

vAuto, an Oakbrook Terrace, Ill.-based provider of inventory management solutions for the retail automotive industry, has raised an undisclosed amount of VC funding from Bain Capital Ventures.

Buyout Deals

Francisco Partners has offered to buy Australia-based enterprise asset management software provider Mincom Ltd. for Au$315 million. Current Mincom shareholders include Colonial First State and Caterpillar.

Halder, a mid-market affiliate of GIMV, has agreed to sponsor a management buyout of BMC Group, a Dutch provider of professional services for the public sector (government and non-profit organizations). Halder will hold a 30% stake, with management holding the remainder. No financial terms were disclosed for the deal, which is expected to close by mid-March.

Truffle Venture of Paris has sponsored a leveraged buyout of MoMac, a Dutch provider of mobile platforms for media companies. No financial terms were disclosed for the deal, which results in MoMac management retaining a minority ownership position.

ABN Amro Capital and Carlson Restaurants Worldwide have partnered to acquire 45 T.G.I. Friday’s restaurants in the UK from Whitbread PLC. No financial terms were disclosed for the deal, which will result in ABN Amro holding a 60% stake and Carlson holding the remaining 40 percent.

Enterprise PLC (LSE: ETR), a UK-based provider of maintenance and support services to utilities, reportedly has rejected a Gbp462 million buyout offer led by 3i Group. Discussions are said to be continuing.

Gazette Communications has agreed to sell a controlling interest in Decisionmark Corp. to a consortium that includes Turnstone Capital, CBC New Media and an undisclosed “multi-billion dollar institutional investor.” No financial terms were disclosed. Decisionmark is a provider of online software and information to the broadcast industry, and will be renamed TitanTV Media.

Tinicum Capital Partners has agreed to acquire substantially all the assets of bankrupt gift and decorative accessories company Enesco Group.

The Riverside Company has acquired Anitox Corp., a Lawrenceville, Ga.–based manufacturer and marketer of mold and bacterial inhibitors for animal feed and feed ingredients. The deal comes out of riverside’s micro-cap fund, which is focused on companies with $3 million or less in EBITDA.

Key Principal Partners is sponsoring a management buyout of Imperial Bag & Paper Co. LLC, a Bayonne, N.J.-based distributor of consumable paper and plastic packaging sold primarily to the restaurant and retail industries in the greater New York City area. KPP has committed $12 million in equity and subordinated notes.

W. P. Carey & Co. has completed the acquisition of two manufacturing/distribution facilities in Flora, Miss. and Muskogee, Okla. for approximately $6 million. The transaction was part of the acquisition of Primos Inc. by Optronics’s parent, which is majority owned by Chicago-based private equity firm Svoboda, Collins.

PE-Backed IPOs

Allyes Information Technology Company Ltd., a Shanghai, China-based online advertising firm, is panning to file for a $100 million IPO on the Nasdaq in the first half of 2007, according to Reuters. Morgan Stanley will serve as lead underwriter. The company has raised $35 million in VC funding from firms like IDG Technology Ventures and Oak Investment Partners.

PE-Backed M&A

Ariston Global, a Rochester, N.Y.-based acquisition platform of Spire Capital Partners, has acquired The Strata Group, a St. Louis-based provider of software applications for Web-based self-care to both service providers and their customers. No financial terms were disclosed.

The Brock Group has agreed to acquire Baton Rouge, La.-based XServ Inc., in order to form a combined provider of coatings, scaffolding and insulation for U.S. industrial businesses. No financial terms were disclosed. The Brock Group is controlled by Lindsay Goldberg & Bessemer, while XServ is a portfolio company of Mezzanine Management.

Fortify Software Inc., a Palo Alto, Calif.-based provider of software security products, has agreed to acquire Secure Software Inc., a McLean, Va.-based provider of application security. No financial terms were disclosed. Fortify has raised over 419 million in VC funding from DAG Ventures, Sigma Partners and Kleiner Perkins Caufield & Byers. Secure Software had raised around $14.5 million from Charles River Ventures, Updata Partners and Valhalla Partners.

Xchanging, a London–based BPO company backed by General Atlantic, has completed its acquisition of BAE Systems’ 50% stake in jointly-owned company Xchanging HR Services. No financial terms were disclosed.

PE Exits

Cognos (Nasdaq: COGN) has acquired Celequest Corp., a Redwood City, Calif.-based provider of operational business intelligence solutions. No financial terms were disclosed for the deal, which closed on Monday. Celequest had raised around $17 million in VC funding from Bay Partners and Lightspeed Venture Partners.

M2 Media Group, a Stamford, Conn.-based magazine subscription agency, has acquired magazine e-commerce site from Zinio Systems Inc. of San Francisco. No financial terms were disclosed. Zinio shareholders include New Enterprise Associates, Intel Capital, Palisades Ventures, Apax Partners, North Bridge Venture Partners and Commonwealth Capital Ventures.

Firms & Funds

GB Merchant Partners, the private equity affiliate of Boston-based Gordon Brothers Group, has closed its inaugural third-party fund with $320 million in capital commitments. The vehicle will focus on control and minority opportunities in mid-market retail and consumer products companies.

Human Resources

Mike Scanlin has joined Battery Ventures as a partner in the Waltham, Mass.-based firm’s Silicon Valley office. He previously was a venture partner with Sierra Ventures, and will focus on mid-to-later-stage, revenue-generating technology companies.

Thierry Célestin has joined Activa Capital as a partner, after having previously been a France-based partner with Cinven. In other Activa Capital news, the firm promoted Christophe Parier from director to partner.

Dean Anderson has joined American Capital Strategies Ltd. as a managing director in the firm’s special situations group. He will be charged with building a Chicago-based team to complement an existing group in Bethesda, Maryland. Anderson previously was a managing director with Questor Management Co.

El Dorado Ventures has promoted Ray Schuder from senior associate to principal. He joined the firm in 2005, and has worked on such deals as DVDPlay, Luxury Link, RipCode and TowerCloud.

Daniel Lehman has joined ViaSpace Inc. (OTC BB: VSPC) as director of mergers and acquisitions. He previously worked in strategy and corporate development with Case Corp. and, before that, was a co-founder and general partner with Pacific Coast Ventures.