Windspeed Ventures last week announced it would manage and liquidate the investment portfolio of Comdisco Ventures.
Waltham, Mass.-based Comdisco emerged from bankruptcy protection in August 2002 with a mandate to sell all its remaining assets.
The question, then, was not whether the company would sell its investment portfolio – which included many Internet and optical networking startups – but when it would sell and for how much.
Comdisco invested $800 million over the years to create a portfolio of 250 companies, including those in communications, computer hardware and software, the Internet, semiconductors and biotech.
Comdisco saw 27 of its investments launch IPOs, but 50 of Comdisco’s portfolio companies had gone under by the time the venture firm filed for Chapter 11 bankruptcy protection, according to Thomson Venture Economics (publisher of PE Week). That portfolio’s fair market value is now $15 million, according to documents filed by Comdisco with the Securities and Exchange Commission.
In the end, though, Comdisco chose a convoluted management structure that amounts to something just short of a sale.
Windspeed will manage the portfolio for a fee of $1.53 million. The firm’s $10 million Acquisition Fund will provide 80% of the capital for any follow-on investment in Comdisco’s portfolio. Comdisco will pony up an additional $1.5 million, and the two will coinvest in all follow-on rounds.
Windspeed and Comdisco will share distributions in accordance with their respective interests.
“It’s a win for both sides,” says Daniel Balthon, a general partner and chairman of Lexington, Mass.-based Windspeed.
Comdisco’s portfolio has been on the market since August 2003. Although it initially sought to sell the entire portfolio on the secondary market, it eventually began a competitive bidding process for the portfolio’s management.
“After exploring various options, an ongoing management and liquidation agreement was the best way to liquidate the portfolio,” says Mary Moster, a Comdisco spokeswoman.
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