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    PE Week Wire -- Wednesday, April 5

Random Ramblings

Can social networking go mobile? The intuitive answer seems to be “duh”, particularly given that the most voracious social networkers are the same teenagers and techies who work the Best Buy gadget aisles like a heroin addict in LA’s skid row. The most notable effort so far has been the Helio-MySpace partnership, whereby Helio users can now access MySpace via their MVNO handhelds (and if Amp’d shareholder Viacom buys Facebook…), but a more interesting effort is being launched today by former MySpace backer VantagePoint Venture Partners.

VantagePoint is investing $20 million into 3GUpload, a Seattle-based company that allows its four million members to find, organize and store ringtones. Approximately half of the money will be used to transition 3G into a mobile community whereby users can share content (ringtones, photos, games, wallpapers, etc.), gift licensed content or recommend content in exchange for a kickback. The other half will be used to buy Vancouver-based ringtone startup MoPhone, which is primarily being done to bring on executives like MoPhone CEO Bill Bryant (QPass co-founder and former VC with Atlas Venture).

“We first noticed [3GUpload] last year when we were looking at the mobile content space, but they politely said they weren’t interested in venture financing, because they were cash-flow positive,” says Eric Ver Ploeg of VantagePoint. The uninterested parties were a trio of Purdue University and Indiana University grads who bootstrapped 3G while still in college, but Ver Ploeg eventually helped convince them that it was time to take the company to the next level.

The big selling points here are twofold: First, 3GUpload isn’t looking to be all things to all people. It has no interest in competing with MySpace-type offerings, and even views itself as a potential service partner to MVNOs like Helio. As both Ver Ploeg and Bryant say, the company won’t be hosting any virtual diaries, as that space is already filled. Second, and most important, 3G can afford to build its online community slowly, thanks to its strong ringtone-related ties to the record industry – an industry which is beginning to prefer releasing songs first via ringtone rather than via 99-cent iTunes.

As Ver Ploeg says: “There are only so many hours in a day, and the goal is to create a space where you can look for things you’re interested in, instead of just a profile.”

*** Speaking of the mobile space, I just noticed a regulatory filing confirming that Amp’d Mobile raised over $100 million in the first part of its Series D funding (as this space reported a few weeks ago). It’s $105.95 million to be exact, with more expected shortly.

*** Speaking of Bill Bryant, his former company QPass reportedly is in talks to be acquired for more than $250 million by Amdocs. An announcement could come this week during CTIA.

*** Some major personnel changes over at Spectrum Equity Investors, where senior managing director Steve Price and managing director Bob Nicholson have both left. No word on future plans for either of them, or on the status of Spectrum’s New York satellite office, which Price ran.

*** Finally, I spoke yesterday with Cliff Higgerson. He says that reports (specifically my report) of his possible return to ComVentures are unfounded, as it would be “pretty hard to go back.” Instead, Higgerson is continuing to work independently out of an office at Crescendo Ventures, with a focus on early-stage deals related to China and communications (one deal done, a few in the pipeline). He also is in talks with multiple firms about working part-time, and expects to affiliate with more than one of them.


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    Top Three

Liberty Global Inc. (Nasdaq: LBTYA) has agreed to sell its Swedish cable business (UPC Sverige AB) to The Carlyle Group and Providence Equity Partners for around $427 million, including $34 million of capital lease obligations. The price represents a 9.3x multiple on the unit’s 2005 operating cash flow, with the deal expected to close during the second half of 2006. Deutsche Bank advised Liberty Global on the deal.

PMC-Sierra Inc. (Nasdaq: PMCS) has agreed to acquire Passave Inc., a Santa Clara, Calif.-based fabless semiconductor company focused on system-on-a-chip solutions for fiber-to-home applications. The deal is valued at approximately $300 million in PMC-Sierra stock, and is expected to close this month. Passave is currently in registration for a $90 million IPO, and has raised VC funding from firms like Walden Israel Ventures, Blue Orange Ventures, Eurofund 2000, BRM Capital and Intel Atlantic Inc.

Lithos Capital Partners and Vestar Capital Partners have formed a partnership to pursue private equity opportunities in the financial services industry. The deal has $500 million in earmarked capital, with average investments of between $25 million and $200 million in both public and private companies. Lithos was recently founded by former Pacific Exchange chairman and CEO Phillip DeFeo and former Pacific exchange external strategy advisor David Chow.

The Connecticut Venture Group Invites You
To attend the 13th Annual Crossroads Venture Fair

The Connecticut Venture Group invites you to attend the 13th annual
Crossroads Venture Fair, the Northeast's largest venue for Venture Capital,
May 2-3 in Stamford CT. This year's event will feature 25 late stage and
75 early stage companies, encompassing diversified funding
requirements and industries. Over $2 billion has been invested
in prior Crossroads exhibitors.

Visit for more information.

    VC Deals

Atrica Inc., a Santa Clara, Calif.-based provider of carrier Ethernet transport solutions, has raised $28.2 million in combined equity and debt funding. Vesbridge Partners and GunnAllen Venture Partners co-led the equity tranche, and were joined by AT&T Corp. and return backers Innovacom, JK&B Capital and Investor Growth Capital. European Venture Partners supplied the debt. Atrica previously raised around $167 million over six rounds of VC funding.

Tengion Inc., a King of Prussia, Pa.-based developer of replacement bladders, is raising $35 million in Series B funding, according to Venturewire. The company raised around $39 million in 2004 Series A funding at a post-money valuation of around $61 million from firms like Healthcap Venture Capital, Johnson & Johnson Development, L Capital Partners, Oak Investment Partners and Scheer & Co.

Raza Microelectronics Inc., a Cupertino, Calif.-based developer of silicon solutions for next-gen information infrastructure, has raised $20 million in Series C funding. Advanced Equities Financial Corp. led the deal, and was joined by return backers Benchmark Capital, Warburg Pincus, Duff Ackerman & Goodrich and Kodiak Venture Partners.

Bridgestream Inc., a San Francisco-based provider of business roles automation software, has raised $6.5 million in second-round funding. ArrowPath Venture Partners led the deal, and was joined by return backers Hummer Winblad Venture Partners and Outlook Ventures.

Billeo Inc., a Cupertino, Calif.-based provider of online bill management services, has raised $4 million in Series A funding from Altos Ventures, Claremont Creek Ventures and Pacifica Fund.

Firepro Systems Pvt Ltd., an India-based provider of safety, security and building management solutions, has raised $12 million in VC funding from AIG.

Roundbox Inc., a Florham Park, N.J.-based provider of mobile broadcast software, has raised $15 million in Series B funding. Polaris Venture Partners led the deal, and was joined by return backers RRE Ventures and Core Capital Partners.

    Buyout Deals

Duke Street Capital has sold Paragon Healthcare Group Ltd. to HgCapital and company management for £322 million. Paragon is a UK-based provider of residential and community care for people with learning disabilities and other complex needs.

The Riverside Co. has acquired Monessen Hearth Systems, a Paris, Ky.–based manufacturer of gas, wood and electric hearth products and accessories for the home remodeling market. No pricing terms were disclosed for the deal, which included subordinated notes from Babson Capital Management.

Wedbush Capital Partners and Inverness Capital Partners have acquired Extrusioneering Inc., a Temecula, Calif.-based medical component manufacturer. No financial terms were disclosed. This is the second such acquisition for Wedbush and Inverness, which acquired ExtruMed LLC last August. Fifth Street Capital provided leverage for both deals.

Balmoral Advisors and Tara Capital have acquired the semiconductor components business of PerkinElmer (NYSE: PKI) for $26.5 million in cash and assumed liabilities.

Investcorp Technology Ventures has acquired the semiconductor package test business of Kulicke & Soffa Industries Inc., and renamed the group Antares conTech Inc. No financial terms were disclosed.

Gridiron Capital has agreed to buy the aviation services division of Praxair Surface Technologies Inc. from Praxair Inc. (NYSE: PX). No financial terms were disclosed for the deal, which is expected to close later this quarter. Skyview Capital is acting as a minority equity participant. Praxair Aviation Services repairs a variety of commercial and military aviation engine and airframe components, and applies protective coatings to the repaired parts.

CAI Capital Partners, AeroEquity and North Atlantic Capital have acquired a majority stake in AeroSat Corp., a Temple, N.H.-based supplier of technology for aircraft antennae and airborne communications. The deal was valued at $30.6 million.

Stone Point Capital is considering a takeover of France-based reinsurance company AXA Re, according to La Tribune. AXA Re is reportedly worth around 1.2 billion euros.

Hartcourt Education, a subsidiary of Reed Elsevier, is putting its global elementary library on the block, according to LBOWire. It has retained Berkery Noyes & Co. to run the auction, which is expected to end by June. The division generated around $40 million in 2005 revenue.

Dennis Publishing U.S. is on the auction block for approximately $250 million, according to The NY Post. Allen & Co. is running to auction for Dennis Publishing, whose titles include Maxim.

    PE-Backed IPOs

Corel Corp., an Ottawa, Canada-based maker of graphics and digital imaging software, has filed for an IPO of eight million common shares to be sold at between $18 and $20 per share. It plans to trade on both the Nasdaq and the TSX, with Morgan Stanley serving as lead underwriter. The company was acquired by Vector Capital in an August 2003 going-private transaction, with Vector’s ownership position expected to drop from 98% to 66% following the IPO. Vector plans to sell 2.95 million shares.

Complete Production Services Inc., a Houston, Texas-based provider of hydrocarbon reserves development services for oil and gas companies, has set its proposed IPO terms to 21.7 million common shares being offered at between $22 and $24 per share. It plans to trade on the NYSE under ticker symbol CPX, with Credit Suisse and UBS serving as lead underwriters. SCF Partners took a controlling stake last year.

Debenhams Retail PLC, a UK-based department store chain, reportedly could float its £3 billion IPO on the London Stock Exchange as early as next month. The company was bought in 2003 by a private equity group that included CVC Capital Partners, Texas Pacific Group and Merrill Lynch Global Private Equity.

    PE-Related M&A

KPS Special Situations Funds has agreed to sell Ashcroft Holdings Inc. to Nagano Keiki Co. Ltd. for $55 million plus retained cash. KPS will retain ownership of Ashcroft’s Ebro Electronics GmbH business unit headquartered in Germany. Ashcroft is a Stratford, Conn.-based of pressure gauges, transducers, transmitters, pressure and temperature switches. It was formed last November by KPS, in order to acquire the worldwide assets of the Dresser Instruments business from Dresser Inc. for $34 million.

Arcturus Biosceince of Mountain View, Calif. has sold its Laser Capture Microdissection business to Molecular Devices Corp. (Nasdaq: MDCC) for $10 million in cash. The deal includes most of Arcturus’ assets, including the company name. The company has raised over $33 million in VC funding since its 1996 inception, from firms like Onset Ventures, Summit Partners, DynaFund Ventures and ABS Capital Partners.

Mimex Broadband Inc., a Houston, Texas-based supplier of microwave and millimeter-wave gallium arsenide semiconductors, has agreed to sell its gallium arsenide foundry to Universal Semiconductor Technology Inc. for an undisclosed amount. Mimex has raised around $26 million in VC funding from firms like 3i Group, First Capital Group Management and Gefinor Ventures.

AFS Technologies Inc., a Phoenix–based provider of software solutions to the food industry, has completed its acquisition of Distribution Management Systems Inc., a Milford, Conn-based provider of software solutions to the food and beverage industries. AFS partially financed the deal via a $5 million equity and mezzanine debt infusion from Merion Investment Partners.

Kelly Capital has sold Atlantic Envelope Co. to National Envelope Co. for an undisclosed amount. The deal closed on March 31.

    Firm & Fund News

The Halo Fund has closed its third fund, which is designed to back later-round deals for existing portfolio companies. The Palo Alto-based group did not disclose the fund size.

Silver Lake Partners is contemplating the opening of an Asia office, according to comments Silver Lake’s Mike Bingle made during the Reuters Hedge Funds and Private Equity Summit.

    Human Resources

David Wood has joined CVC Capital Partners. He previously served as co-head of European leveraged finance with Deutsche Bank.

Steve Hall has joined The Trelys Funds as chief financial officer. He previously was president and CEO of Colonial Cos. until it was acquired by UNUM Corp.

Hunter Peterson has joined Trinity Hunt Partners as a principal. He previously was a vice president with Blue Sage Capital and, before that, was an associate with TA Associates.

Louis Dubuque has joined Advantage Capital Partners as a principal in the firm’s St. Louis office. He previously was a managing director in US Bank’s capital markets group. Advantage Capital also has promoted Michael Johnson, M. Scott Murphy and Damon Rawie to managing director.

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April 5, 2006

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