Private Equity Week Wire for Wednesday 2/13

NEW YORK — Venture-backed merger and acquisition activity saw a drop in volume during the fourth quarter of 2001 to 74 acquisitions with a combined, reported value of $1.66 billion, according to Venture Economics and the National Venture Capital Association.This compares with the prior quarter?s total of 78 deals with a combined, reported value of $2.985 billion.

Mergers and acquisitions continue to be the preferred exit strategy for venture capitalists despite the respectable showing of 14 U.S. venture-backed IPOs in the fourth quarter, which raised $1.45 billion. This trend existed throughout 2001, when 305 venture-backed M&A transactions?the highest number of venture-backed M&A deals ever?took place with a reported value of $14.75 billion. By comparison, U.S. venture-backed IPOs raised $3.23 billion for the year.
SANTA CLARA, CA — Atrica Inc., a leading provider of Optical Ethernet equipment for the $15billion Metro networking market, today announced completion of a $75 millionequity financing round — the company’s third and largest round to date. Thissignificant investment round indicates the continued, widespread support byboth the investment community and Atrica’s target customer base — the world’sservice providers — for Atrica’s Optical Ethernet System and its vision ofOptical Ethernet as the right foundation for next-generation Metro networks.

NEW YORK — Instinet (Nasdaq: INET), through affiliates, the largest global electronic agency securities broker, and StarMine, the leading provider of objective ratings of Wall Street securities analysts, today announced that Instinet has invested $2 million in StarMine. This closes the $5 million Series D round of financing for privately-held StarMine, in which previous investors American Century Ventures and Hummer Winblad Venture Partners also participated.

PALO ALTO, CA — Following its earlier announcement of an $8 million first-round investment, Sound ID, a start-up company and developer of advanced technology specifically designed to enhance users’ listening experiences, today announced that it has received an additional $4.5 million extension to its first-round from Essex Woodlands Health Ventures. The Company also announced that Immanuel Thangaraj, managing director at Essex, will join the Sound ID board of directors.

OCEANPORT, NJ — Tellium (Nasdaq: TELM), provider of the world’s first in-service intelligent core optical switch, announced today that Marc B. Weisberg has joined the company’s board of directors. Most recently, Weisberg worked for Qwest Communications International (NYSE: Q) where he was executive vice president of corporate development responsible for merger and acquisition activities, assisting in the development and implementation of the company’s European strategies, creating strategic alliances with industry leaders and emerging companies in both the Internet and the telecom space, and creating and managing Qwest’s venture capital entity.

MONTREAL — Octasic Inc., a fabless semiconductor vendor delivering innovative products for Voice over Packet (VoP) equipment to the world’s top communications equipment providers, has secured $11.5 million US in its second round of financing. Led by Novacap, the round also included investments from a series of private investors, Octasic executives and key employees, as well as long-term credit facilities through Invest Quebec, a government agency. This financing follows Octasic’s successful first round of $5 million US raised at the end of 2000.

BOSTON — Salesnet, a global Sales Force Automation (SFA) subscription service, announced today that it has raised an additional $7.8 million in private equity funding. The Boston-based company’s latest round of venture funding was led by Prism Venture Partners and joined by Phoenix Investment Partners and Juniper Venture Capital. The new capital will be used to help the company reach profitability by supporting improvements to Salesnet’s application and fueling the company’s continued growth.

PALO ALTO, CA & WALTHAM, MA — Advanced Technology Ventures (ATV), an early-stageventure capital firm, announced today that Prabakar Sundarrajan and Ken Noonanhave joined the firm’s exclusive team of technology partners. This move comeson the heels of ATV’s recent announcement of ATV VII, a new $800 million fund,the firm’s largest fund to date.

Prabakar Sundarrajan, has helped drive the product strategy and architecturefor several worldwide technology leaders brings nearly 20 years of experiencein the networking, Internet and eBusiness markets to ATV. Currently,Sundarrajan is CTO and executive vice president of strategic planning andcorporate development of NetScaler, a global leader in developing highperformance Internet traffic management products. He was formerly senior vicepresident of technology for Exodus Communications.

Ken Noonan, a leading expert in developing business strategies for theglobal life-sciences industry, is partner at L.E.K. Consulting, a leadingglobal strategy consulting firm. He brings 20 years of healthcare consultingand management experience in the biotechnology, pharmaceutical and diagnosticsmarkets to ATV. Formerly, he was senior vice president of CorporateDevelopment for Applera Corporation, head of Booz-Allen & Hamilton’s EuropeanHealthcare practice, and founder of The Wilkerson Group’s entry into theEuropean biotechnology market.
SUNNYVALE, CA — Stratum8 Corp., a developerof internet security solutions, today announced it raised $10 million in anoversubscribed round of financing, co-led by BA Venture Partners and NewEnterprise Associates.

As hacking and malicious intrusion incidents at the enterprise application-level continue to escalate, the need for proactive security solutions aimed at solving this problem grows more critical. Designed to act as a first line of defense to prevent internet attacks from ever reaching a company’s servers and databases, Stratum8’s Application Protection System (APS) eliminates the biggest source of downtime, fraud, and data theft within the enterprise.

BOSTON — MPM Capital LP announced today that it led a $13 million dollar financing of Sention Inc., formerly known as Nemogen, with Burrill & Co. co-investing. MPM General Partner Nicholas Galakatos and Venture Partner Stephen Bergman have joined Sention’s board of directors. Sention Inc. is a pharmaceutical development company focused on the discovery and development of drugs to treat memory impairment and other central nervous disorders.

BOSTON — BDirect Capital Inc., the financial services firm focused on delivering alternative investment solutions for financial advisors and institutions, today announced the closing of Private Equity Access Fund II (“PEAF II”). With subscriptions coming through a diverse group of financial advisors, PEAF II represents another successful step in BDirect’s continuing efforts to bring high-quality, diversified alternative investment vehicles to new investor segments.

PEAF II is investing $2 million to $3 million into the funds of 12 experienced, top-performing private equity fund managers. These managers typically manage funds designed for institutions and extremely wealthy individuals as a result of their $5 – 10 million dollar minimum subscription levels. PEAF II accessed these funds as a single aggregated investor and consequently PEAF II investors were able to gain exposure for investments as low as $25,000.

SAN FRANCISCO, PARIS & LONDON — Tak’Asic, a fabless provider of still-image processing chipsets, today announced that it has secured 10.8 million euro in additional equity financing. Sofinnova Partners and Doughty Hanson Technology Ventures led the round. Initial investors Innovacom, Ventech and SPEF Venture also participated in the round, which was orchestrated by the NetsCapital investment bank. Tak’Asic provides chipsets based on its core expertise in image compression and processing, technologies that are at the heart of the new generation of digital office equipment such as printers, Multi Functional Peripherals, copiers, scanners and faxes, as well as digital cameras. The company’s solutions are incorporated in products from the world’s leading hardware, electronics, networking and peripherals manufacturers. Further details of the financing were not disclosed.

SAN MATEO, CA — BizGenics Inc, a leading provider of Active Customer Management (ACM) application software, today announced that it has closed $7.5 M in Series A financing and expanded its executive management team. Leading the financing were veteran investment firms Charles River Ventures(TM) and Pequot Ventures(TM) along with a number of individual software industry icons. Additions to the executive team include seasoned leaders with a proven track record of identifying and growing successful businesses in emerging software markets. These individuals include David Cope as president and Chief Executive Officer, Gary Messiana as vice president of Sales and Karen Randig as vice president of Finance

NEW YORK — Brown Brothers Harriman (BBH), one of the country’s oldest and largest private banking firms with global activities, announced today that Michael W. McConnell has been named as the new Managing Partner. McConnell, 59, succeeds Anthony T. Enders, 65, who served as Managing Partner for seven years and will remain a General Partner of the firm, founded in 1818.

McConnell has been with Brown Brothers Harriman since 1968, and in recent years has served as the firm’s Chief Financial Officer. He has also worked in BBH’s commercial banking, treasury, systems and foreign exchange operations. A graduate of Tufts University, he served in the US Army as a First Lieutenant prior to his business career. He resides in New York City.

NEW YORK — The formal business operations of Silvercrest Asset Management Group LLC, a new investment advisory firm, officially launched today. The firm has been created by G. Moffett Cochran and Martin Jaffe, the former President and Chief Financial Officer, respectively, of Credit Suisse Asset Management, LLC. Prior to that, Cochran and Jaffe served as Chairman & CEO and Chief Operating Officer, respectively, of DLJ Asset Management Group. At Silvercrest, Cochran will serve as Chairman and Chief Executive Officer while Jaffe will serve as Chief Operating Officer.

Silvercrest, headquartered in New York City, will provide a combination of traditional and alternative asset management and focused family office services to a client base comprised of predominantly families and individuals with investable assets of over $25 million. Additionally, the firm will offer services to foundations, endowments and other select investors, including institutions.

CALGARY — Global Railway Industries Ltd. (“Global”), one of North America’s fastest growing suppliers of service and maintenance equipment to the railroad industry, is pleased to announce that the Company has received $1.0 million in additional equity from Priveq II LP.

TULSA, OK — Cemara Inc., a next-generation provider of health benefits solutions, announced today the completion of an $8 million, Series A-round of financing led by Council Ventures of Nashville, Tenn. Also participating in the round was Chisholm Private Capital, along with existing investor and Cemara CEO Philip Kurtz. The financing will enable Cemara to expand its leadership position in employee-directed health benefits by expansion to new markets and the growth of its marketing organization.

SANTA CLARA, CA & YOKNEAM, ISRAEL — Mellanox Technologies Ltd., the leading provider of InfiniBand silicon, announced today it has secured $56 million in its third round of funding. The round, led by Bessemer Venture Partners, includes both existing and new corporate and financial investors. In addition to Bessemer, new investors participating in the round include: Banc of America Securities, China Development Investment Bank, Dell Computer Corp, Gemini Israel Funds, Jerusalem Global Ventures, JNI Corporation, Quanta Computers, Sun Microsystems Inc., Walden Israel Venture Capital and additional corporate and private investors. Previous investors also participating in this round of funding include Intel Capital, Raza Venture Management, Sequoia Capital, US Venture Partners and Vitesse Semiconductor.
SUNNYVALE, CA — Virtual Silicon Technology Inc., a leader in semiconductor intellectual property (SIP), today announced it has closed $20M in Series C funding from several leading high-technology venture capital firms. Leading the Series C equity round was US Trust Private Equity. Also participating in the round were Gemini Investors, Pacific Venture Group and SCP Private Equity Partners. Previous investors participating in this round include Information Technology Ventures, Walden International, Hotung Group, Singapore EDB Ventures Pte Ltd, Sunrise Capital and Band of Angels Fund. Virtual Silicon will use these new funds to expand its product offering and its worldwide sales channels. Needham & Company served the company as exclusive investment bankers for the financing.

MOUNTAIN VIEW, CA — Solsoft Inc., a leading provider of visual security policy management solutions, today announced that it has received over $8 million in financing. This brings the total invested in the company to more than $23 million. CLAM Private Equity led this round of funding for Solsoft and was joined by new and existing financial investors including The Carlyle Group, Intel Capital and Rothschild.
SUNNYVALE, CA — Intransa, a privately-held company focused on developing an intelligent network storage solution, today announced it has secured an additional $10 million in venture capital financing from Sofinnova Ventures, Sofinnova Partners and US Venture Partners, bringing total funding for the company to $27 million. Intransa reopened its Series B round of funding, co-led by Advanced Technology Ventures and US Venture Partners, to include the additional capital. Intransa’s network storage architecture will enable a new generation of affordable, easily scalable and manageable, high-performance storage solutions for workgroup and enterprise markets.
ATLANTA — Servigistics Inc., a leading provider of supply chain planning, forecasting, and optimization software for service parts, announced today that it has raised $18 million in venture capital funding. The company will use the proceeds from the financing to capitalize on strong customer demand, to continue broadening its product suite, and to expand internationally to support its global clients.

Leading the round is new investor Bain Capital Ventures, the venture capital arm of Bain Capital, one of the most experienced and successful private equity firms in the world. Bain Capital Ventures is joined by new investor Symphony Technology Group, as well as previous investors SSM Ventures, Cordova Intellimedia Ventures, Robinson-Humphrey Netlanta Fund, UPS Strategic Enterprise Fund, and Encubate Technology Ventures.
BALTIMORE — New Enterprise Associates (NEA) today announced that it has invested $20 million in Inhibitex, Inc. Inhibitex, headquartered in Atlanta Georgia, is a biopharmaceutical company that is pursuing the development and commercialization of products for the infectious disease market. New Enterprise Associates joined Essex Woodlands Health Ventures as the co- lead investor in this issuance of Series D Convertible Preferred Stock, which closed with $41.4 million of an expected $45.4 million financing. The syndicate further included CDP Sofinov, Alliance Technology Ventures, William Blair Capital Partners and Pacific Horizon Partners. Upon completion, Inhibitex will have raised a total of $65 million.
BOSTON — BancBoston Capital, the private equity investment arm of FleetBoston Financial, and the São Paulo based team of ABN AMRO Capital, announced today a US$4.1 million investment in Cimcorp, a Brazilian network systems integrator. The investment provides Cimcorp with the necessary financial resources to continue to expand and enhance its infrastructure, systems and software technology.

VANCOUVER — Colligo Networks, Inc., formerlySynchroPoint Wireless, a provider of collaboration software for mobileworkers, today announced that it has closed its Series A funding totaling US$3.5 million.
PORTLAND, OR — The Board of Directors of Williams Controls, Inc. (OTC Bulletin Board: WMCO) has elected David S. Eberly to the board, effective January 24, 2002. Mr. Eberly is a managing Director and co-founder of GMA Capital, a private equity and investment-banking firm representing a variety of key suppliers in the automotive and truck markets. Mr. Eberly has a wide range of experience in corporate acquisitions, divestitures, joint ventures and private financings, and is a founding shareholder and was a member of the Board of Directors of European Gateway Acquisition Corp. Eberly, 38, graduated from Miami University (Ohio) in 1985 with a B.S. in Finance and Management.

NEW YORK — Argentina’s financial crisis aside, Latin America still offers good investment opportunities, especially in Mexico and Brazil, according to a recent poll by professional services firm KPMG LLP of fund managers at the Latin American Private Equity Investment Conference in Miami. According to the survey of more than 140 fund managers, more than 80 percent of respondents will focus their investments in Mexico and Brazil over the next two years. And, almost two-thirds will increase investing in Latin America by more than 25 percent between 2003 and 2005.

SAN FRANCISCO — Fox Paine & Company, LLC, the San Francisco-based private equity firm, announced the creation of Cradle Holdings, Inc., a new cosmetics business entity. Formed to acquire and nurture promising prestige beauty companies, Cradle Holdings will provide the expertise needed for high-quality, well-established brands to maximize growth and realize synergies of management and operations. Headquartered in New York City, the privately held company has to-date acquired, in separate transactions, Erno Laszlo and Penhaligon’s, based in New York and London, respectively, with other acquisitions slated for the future.

NEW YORK — Generation Partners, a $325 million private investment firm, today announced the acquisition of GE Capital IT Solution’s Disaster Recovery Services (DRS) unit. The business is a leading provider of end-user disaster recovery solutions, both directly and through channel partners, to more than 1,000 customers. The financial terms of the transaction were not disclosed.

AUSTIN, TX — Comerica Bank, a subsidiary of Comerica Incorporated (NYSE:CMA), announced today that Paul Gerling has joined the Austin Technology and Life Sciences Division as a vice president. In that capacity, he is responsible for generating new relationships with early- and late-stage technology companies.

Gerling brings to Comerica a strong institutional finance background and an understanding of capital markets as well as experience in financing technology companies. He most recently was a partner with Sagebrook Technology Partners, focusing on portfolio management and organizational development for the venture capitalist’s Austin office. Gerling previously opened the Texas office of Greyrock Capital, where he served as vice president and director, and he spent the first seven years of his career in banking, as a vice president of technology lending at Bank One, Texas and as an analyst at First City, Texas.

KANATA, CANADA — Potentia Power Systems announced today that it has closed a Series A US $2.2 million funding round. Led by Kodiak Venture Partners of Concord, Massachusetts, the round also included investment by VenGrowth Capital Partners of Toronto, Ontario. The investment will be used to fund the development of next-generation power system technology, based on Potentia’s unsurpassed domain knowledge of communications power design. Potentia’s product will enable communications OEMs to reduce the power design cycle and provide new functionality in smaller space requirements.

NEW YORK & WALTHAM, MA — Towers Perrin, one of the world’s largest management and human resource consulting firms, has led a strategic private financing round, taking an equity stake in Authoria, Inc., the world leader in personalized, Web-based communication, as part of a significant expansion of their existing and successful partner alliance. The partnership will now also include joint marketing and sales activities.

The relationship, which began in 2000, grew rapidly in 2001 as Towers Perrin emerged as Authoria’s top implementation partner, working on more implementations than any other Authoria partner. The new relationship is the logical next step for both firms in response to growing market demand for their respective expertise in dramatically improving the quality and delivery of HR data and services throughout the corporate enterprise. It also reflects Towers Perrin’s enhanced capability in this field as a result of its recent acquisition of Working Concepts, Inc., a leading implementer of HR technology.

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