PE Week Wire, Sept. 19, 2006

The Columbus Dispatch has reached de facto settlements with most of the private equity funds that had received limited partner commitments from the Ohio Bureau of Workers’ Compensation. The paper had been pushing for public disclosure of each fund’s top-line and bottom-line performance, which would have included portfolio company valuations and other sensitive information contained in documents like quarterly LP reports.

Under terms of the pending agreement (final paperwork not yet completed), the participating funds will disclose three basic pieces of information:

Overall fund carrying value

Portfolio company names

Type of securities received by portfolio companies (preferred, convertible, etc.).

The funds will not be required to disclose any portfolio company financials. If this top-line/bottom-line dichotomy sounds familiar, that’s because it is close to what was agreed-upon years ago in states like California, Texas, Colorado and Massachusetts. In fact, I’m a bit puzzled as to why it took the Ohio factions took so long to reach a deal, considering the readily-available road map.

I contacted each firm that counts OBWC as a limited partner, to ask if they were prepared to settle. Most didn’t respond or decline to comment (Carlyle, Meritage, etc.), while a few were willing to confirm their pending agreements (Behrman Capital, Reservoir Venture Partners, etc.). Expect that some holdouts will pursue this matter in court, although it seems like a self-defeating course of action. Not only will it cost lots of money, but it also could result in a ruling that all fund info – top-line and bottom-line –must become public record. If so, then the Dispatch could get reenergized, and next target institutions like Ohio PERS and Ohio Teachers.

Finally, it is important to note that this settlement is unlikely to affect Ohio BWC’s decision to sell its private equity fund portfolio on the secondary market. That horse has already left the barn…

*** Jack Gill has joined Maven Venture Partners, in order to help the startup firm fill the gap left by departed founding partner Marc Friend. The news was first reported here last month, but didn’t become official until Gill appeared on the Maven website yesterday. He is the co-founder of Vanguard Ventures, and father of Maven co-managing general partner Jennifer Gill Roberts.

*** PCG Update: Michael Russell has indeed become the latest PCG defection, bringing the number of resigned managing directors to four. Each of the managing directors has a six-month noncompete clause, and the quartet has not yet decided whether or not to form a new firm when that agreement expires next March.

The foursome does, however, have PR representation from Blicksilver Public Relations, which had worked for PCG until last week’s resignations: “The group will take time to consider their options,” says rep Owen Blicksilver. “Some of the rumors in the marketplace about the reason for their departure are wrong.” That last reference is to press reports – including mine – that the divisive issue was “compensation.” This may be splitting hairs, but the real problem child was firm economics, which are controlled by PCG founder and CEO Chris Bower. The managing directors didn’t want salary raises per se, but rather a bigger piece of the prospective pie.

For its part, PCG issued a statement that included the following from Bower. “While these departures are regrettable, we are very well situated to continue to implement our proven and successful investment strategy—a strategy that has enabled us to achieve outstanding returns on behalf of our clients for many years.”

*** Finally, let me just reiterate that my readers (i.e., y’all) are the best readers a writer could have. Yesterday, I mentioned that I was having trouble a hotel room in NYC for this evening. Within an hour, I had been introduced to half a dozen hotel managers (all of whom apparently hold rooms for friends) and even got an offer of an unused studio in Greenwich Village. I ended up grabbing a downtown room from a reader who had just canceled. So much thanks…

Top Three

Addex Pharmaceuticals SA, a Swiss drug company focused on CNS disorders, has raised CHF40 million ($32 million) in Series C funding. SR One led the deal, and was joined by Roche Venture Fund and return backers Sofinnova Partners, Index Ventures, TVM Capital, PolyTechnos Venture-Partners, Bio*One Capital, Renaissance PME and Varuma AG. Addex has raised over CHF106 million in total VC funding since its 2002 inception.

Hawkeye Holdings Inc., an Iowa Falls, Iowa-based ethanol producer, has postponed a $350 million IPO that had been scheduled to price this week. Company CEO Bruce Rastetter said: “We have decided to temporarily delay our IPO in light of current conditions in the equity markets, and the recent pullback in the energy segment in particular, which are not conducive at this time to achieving appropriate valuation.” Credit Suisse, Morgan Stanly and BofA are serving as co-lead underwriters, while Thomas H. Lee Partners holds a 79% pre-IPO position.

David Dorman has joined Warburg Pincus as a Menlo Park-based senior advisor, focused on media and telecom opportunities. He is the former chairman and CEO of AT&T.

VC Deals

Prism Pharmaceuticals Inc., a King of Prussia, Pa.-based developer of acute care cardiovascular products, has secured up to $60 million in Series B funding. The deal includes two $30 million equity tranches, including around $45 million in possible royalty-related payments from Paul Capital. Other backers include Essex Woodlands Health Ventures and Shah Investors. As reported here last week, Prism already has called down $15 million of the first tranche.

LDR Spine, an Austin, Texas-based developer of non-fusion and fusion spinal implants, has raised $14 million in Series B funding. Undisclosed new investors contributed $5 million, and were joined by return backers Austin Ventures, Rothschild Private Equity, PTV Sciences and Path4 Ventures.

KeyEye Communications Inc., a Sacramento, Calif.-based fabless semiconductor company focused on high-bandwidth connectivity solutions for networking equipment makers, has raised around $13 million in Series B-1 funding, according to a regulatory filing. Shareholders include Blueprint Ventures, Asahi Kasei Microsystems Co. Ltd., American River Ventures and Menlo Ventures.

Xinyuan Real Estate, a Chinese homebuilder based in Henan Province, has raised $10 million in private equity funding from Equity International, in exchange for a 14% ownership stake. Blue Ridge China Partners also participated.

NetStreams Inc., an Austin, Texas-based provider of IP-based audio and video distribution technologies, has secured a total of $7.8 million in venture funding commitments from Austin Ventures, according to a regulatory filing.

BEZ Systems Inc., a Boston-based provider of performance management software and analytics, has raised $7.5 million in Series C funding. Ascent Venture Partners led the deal, and was joined by return backers Brooke Private Equity Advisors, JMI Equity, the Massachusetts Technology Development Corporation and Velocity Equity Partners.

Eventful Inc., a San Diego-based operator of a global events website, has raised $7.5 million in Series B funding. Bay Partners led the deal, and was joined by return backers Draper Fisher Jurvetson, Omidyar Network and Esther Dyson.

M5 Networks Inc., a New York-based provider of outsourced IP phone systems, has raised $7.75 million in Series A funding. Edison Venture Fund led the deal with $5 million, and was joined by Greycroft LLC and Milestone Venture Partners.

Ekahau Inc., a provider of mobile positioning technology, has secured $7 million of a $10 million Series B round, according to a regulatory filing. Return backers include Nexit Ventures. The company was founded in Finland, and now has offices in Hong Kong, Saratoga, Calif. and Reston, Virginia.

Managed Object Solutions Inc., a McLean, Va.-based provider of business service management solutions, has raised $7 million in Series F funding. Intel Capital was joined by return backers like Lazard Technology Partners, JMI, FT Ventures and Horizon Technology Finance. Managed Objects has raised around $44 million in total VC funding since its 1997 inception.

Aztek Networks, a Boulder, Colo.-based provider of emergency stand-alone switching and IP gateway solutions, has raised $6.6 million in Series A funding co-led by Sequel Venture Partners and Grotech Capital Group.

Jacked Inc., a startup focused on media interactivity solutions, has raised $500,000 in seed funding from Provenance Ventures.

Buyout Deals

First Reserve Corp. has acquired a 50% stake in Blue Source LLC, a Salt Lake City–based aggregator of greenhouse gas emission reduction offsets. No financial terms were disclosed.

American Capital Strategies has acquired Axygen Inc., a Union City, Calif.–based and distributor of life sciences plastic consumables, liquid handling products and bench-top laboratory equipment. No financial terms were disclosed for the deal, which gives American Capital a 79% stake with management holding the remainder.

Grupo Televisa has decided against making another bid for Spanish-language broadcaster Univision Communications Inc. (NYSE: UVN), according to a filing with the SEC. Televisa had been teamed with Bain Capital and Cascade Inv*stments, and reportedly had been considering a $38 per share offer. Its decision clears the way for a shareholder vote on an agreed-upon $36.25 per share offer from Haim Saban, Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group and Thomas H. Lee Partners.

PE-Backed IPOs

BigBand Networks Inc., a Redwood City, Calif.-based provider of broadband multimedia service routers, is planning a $120 million IPO on the Nasdaq, according to TheMarker newspaper in Israel. The company had been entertaining acquisition offers earlier this year, and has raised around $100 million in VC funding from firms like Meritech Capital Partners, AOL Time Warner Ventures, Charles River Ventures, Evergreen Investments, Pilot House Ventures and Redpoint Ventures.

PE-Backed M&A

Asia Broadcast Satellite, a newly formed satellite operator controlled by Citigroup Venture Capital, has acquired Lockheed Martin Space Communications Ventures Ltd. (LMSCV) and Lockheed Martin Intersputnik Ltd. (LMI) from Lockheed Martin Global Telecommunications. No financial terms were disclosed. LMSCV owns and operates the LMI-1 satellite, which covers 4 continents and over 4 billion people. LMI has the exclusive right to market the capacity on LMI-1.

Global Petroleum of Stamford, Conn. has acquired two marketers of fuels and lubricants: Pecos Inc. of Rancho Dominguez, Calif., and Canyon State Oil Company Inc. of Phoenix. The former has annual sales of over $800 million, while the former records more than $225 million. No financial terms of the dale were disclosed. Global Petroleum is a portfolio company of Waud Capital Partners, Northwest Capital Appreciation, RBC Capital Partners and Cadent Energy Partners.

eInstruction Corp., a Denton, Texas–based provider of interactive response systems for the classroom, has acquired FSCreations Inc., a Cincinnati-based provider of educational software that assists teachers in test preparation and administration, lesson planning and student performance assessment. No financial terms were disclosed. EInstruction is a portfolio company of Chicago Growth Partners.

MedSynergies Inc., an Irving, Texas-based provider of healthcare revenue cycle services, has merged with Practice Performance Inc., a Dallas-based healthcare management company focused on orthopedics, cardiology and OB/GYN. No financial terms were disclosed. MedSynergies is a portfolio company of Financial Technology Ventures.

Fluencee Inc., an Englewood, Colo.-based provider of RFID-enabled asset management solutions, has acquired Mobitrac Inc., a Chicago–based provider of transportation execution systems. No financial terms were disclosed. Fluencee has raised VC funding from DFJ Mercury Venture Partners and Illinois Ventures, while Mobitrac backers include Frazier Technology Ventures, Arch Development Partners, Illinois Ventures, Illinois Finance Authority, Mentor Management and U.S. Venture Partners.

ICV Capital Partners has formed Entertainment Cruises Inc., by acquiring Norfolk, Va.-based Spirit Cruises LLC and merging it with existing portfolio company Premier Yachts Inc. The combined company will operate dining and entertainment cruises in the United States. No financial terms were disclosed.

PE Exits

Veronis Suhler Stevenson has agreed to sell stake in Solucient Inc. to Thomson Corp. (NYSE: TOC). No financial terms were disclosed. Solucient is an Evanston, Ill.-based provider of information products for the healthcare industry. Its predecessor company was acquired by VSS in 1999, and then merged with businesses owned by VNU Group and the VHA to form Solucient. (Note: The PE Week Wire is published by Thomson Financial, a unit of Thomson Corp.).

EMC Corp. confirmed earlier press reports that it will pay around $175 million to acquire Network Intelligence Inc., a Westwood, Mass.-based provider of software that converts enterprise data into compliance and security information. Network Intelligence has raised around $25 million in VC funding from firms like Ascent Venture Partners, Bain Capital Ventures, Egan Managed Capital, Castile Ventures and JMI Equity. In related news, EMC has completed its $2.1 billion buyout of RSA Security (Nasdaq: RSAS).

Firms & Funds

Lime Rock Partners has closed its fourth fund with $750 million in capital commitments. The Westport, Conn.-based private equity firm focuses on the energy sector.

Henderson Private Equity has held an €830 million first close for its second secondary fund.

Human Resources

Alan Kelley has joined SJF Ventures as a managing director in the firm’s New York office. He previously was with Milestone Venture Partners.

Paul Caliento has joined Clearview Capital as principal. Caliento previously was with accounting firm Flackman, Goodman and Potter, where he led the firm’s transaction due diligence practice.

Brian Kunz has joined Competitive Power Ventures as a vice president and regional executive of the firm’s new West Coast office. He previously was responsible for Californian wind power project development for PPM Energy.

David Brister has joined CNS drug company Evotec AG (Frankfurt: EVT) as chief business officer and a member of the company’s executive committee. He previously was a director with VC firm MVM, and previously worked at 3i Group.

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