AIG Capital Partners Update Running late per usual, but I’d be remiss in not quickly sharing some of the most recent happenings at AIG Capital Partners. For those who don’t remember, AIG CP is the emerging markets-focused wing of AIG’s private equity unit. It closed on a $900 million direct investment fund earlier this year (GEM II), but AIG subsequently – and surprisingly -- dismissed AIG CP CEO Peter Yu, and also managing director Bill Jarosz. Soon after, AIG CP vice president Anyway, the outstanding question to this upheaval was whether or not LPs would remain in the virtually uncommitted GEM II, or if whether they’ll pull the ripcord on certain key-man provision parachutes. After all, LPs claim to make commit to managers, not to brands (although we all know that it’s often a bit of both). To my knowledge, there has not yet been a consensus response to the above question. In fact, its resolution likely hinges on what happens this Thursday, when AIG holds a meeting of the LP advisory board for GEM II. An AIG spokesman says that the meeting is designed to introduce LPs to David Yeung – Peter Yu’s replacement – and to “provide an update on deals in the pipeline and to review the status of the fund.” What is most interesting about this situation, of course, is that AIG CP – under the leadership of both Yu and Jarosz – has experienced a number of recent exit successes, including an IPO for Brazilian discount airline company GOL. Yeung’s task on Thursday will be to convince LPs that he can do just as well, if not better. Certainly a tough sell (particularly given that AIG CP has confirmed many worst fears about institution-sponsored funds), but I hear that Yeung is not to be underestimated. I’ll let you know what the flies on the wall tell me…
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Morgan Stanley Venture Partners has agreed to spin out as an independent entity from parent bank Morgan Stanley (NYSE: MWD). The new firm will be named Crossmark Capital, and will be run by William Harding and five other principals from MSVP. It represents the second private equity group spinout from Morgan Stanley, as its Capital Partners unit became Metalmark Capital last August. www.morganstanley.com
Yellow Book USA Inc., the
Cbeyond Communications Inc., an Atlanta-based provider of managed IP-based communications services to small businesses in large metropolitan areas, has filed to raise $172.5 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol CBEY, with JPMorgan and Deutsche Bank Securities serving as lead underwriters. Cbeyond has raised over $150 million in VC funding since its 1999 inception, with significant shareholders including VantagePoint Venture Partners, Battery Ventures, Cisco Systems, Madison Dearborn Partners, Metalmark Capital and Adams Street Partners. www.cbeyond.com
Voltage Security Inc., a Palo Alto, Calif.-based provider of secure email and policy-based encryption, has raised $15 million in Series C funding. Jafco Ventures led the deal, and was joined by Siemens Venture Capital and return backers Hummer Winblad Venture Partners, Morgenthaler Ventures and Menlo Ventures. The company has raised around $30 million in total VC funding since its 2002 inception. www.voltage.com LifeCycle Pharma AS, a Danish developer of a drug delivery platform for drugs with low water solubility, has raised 15 million euros in Series C funding. Alta Partners led the deal, and was joined by G Lux Multimanager I Sicav Lacuna Apo BioTech Subfund. Return backers included H. Lundbeck AS, Androclus Therapeutics Inc., a San Diego-based biotech company focused on autoimmune and inflammatory diseases, has raised an undisclosed amount of first-institutional round funding from E. de Rothschild Inv*stment Partners and Matigon Technologies. www.androclus.com IPextreme Inc., a Campbell, Calif.-based provider of on-chip subsystems, has raised $6 million in Series A funding from Alloy Ventures and SmartForest Ventures. www.ipextreme.com
Konarka Technologies Inc., a Lowell, Mass.-based provider of polymer photovoltaic products, has secured up to $7 million in venture debt funding from Lighthouse Capital Partners. www.konarka.com Genomatix Corp., a Roanoke, Va.-based genomics tools company, has raised $500,000 in Series B funding from NewVa Capital Partners, which is named by Third Security LLC. www.genomatix.com
The Mustang Group, a Boston-based private equity firm, has agreed to sponsor a $6.50 per share going-private transaction for The Vermont Teddy Bear Co. ( Kohlberg Kravis Roberts & Co. (KKR) has formally offered to buy a 17.6% position in South Korea-based Samsung Life Insurance Co. for around 709.4 billion won (approx. $706.3 million). Advent International has retained I-bank Rothschild to sell German drug company Viatris GmbH & Co., according to The Financial Times. Likely bidders are reported to include Altana AG, Almirall Almirall Prodesfarma SA, Chiesi Farmaceutici SpA and Cinven. Advent acquired Viatris from Degussa AG in 2002. www.adventinternational.com www.viatris.com Cerberus Capital Management is reportedly considering a Cdn$1.3 billion (or Cdn$14 per share) bid for Canada-based Royal Group Technologies Ltd. The deal also would involve the assumption of more than $650 million in Royal Group d*bt, bringing the total transaction value just south of Cdn$2 billion.
Xerium Technologies Inc., a Westborough, Mass.-based supplier of two categories of consumable products used in the production of paper, has priced over 13.39 million common shares at $12 per share (below $14-$16 offering range), for a total IPO take of approximately $160.8 million. Citigroup and Merrill Lynch served as co-lead underwriters, and the company finished its first day of trading on the NYSE at a flat $12 per share. The company remains majority-owned by an affiliate of Apax Partners. www.xerium.com Accentia BioPharmaceuticals Inc., a Tampa, Fla.-based drug company focused on respiratory disease and oncology, has set its proposed IPO terms to 6.25 million common shares being offered at between $11 and $13 per share. The company plans to trade the Nasdaq under ticker symbol ABPI, with Jefferies & Co. serving as lead underwriter. Significant shareholders include The Hopkins Capital Group, McKesson Corp. and Pharmaceutical Product Development Inc. www.accentia.net Micrus Corp., a Sunnyvale, Calif.-based medical device maker focused on cerebral vascular diseases, has set its proposed IPO terms to 3.25 million common shares being offered at between $12 and $14 per share. It plans to trade on the Nasdaq under ticker symbol COIL, with William Blair & Co. and A.G. Edwards serving as lead underwriters. Significant shareholders include UGS Capital, HBM BioVentures, International Life Science Partners, PolyTechnos Medical Devices Ltd. and Invision AG. www.micruscorp.com
QuatRx Pharmaceuticals Co., an Ann Arbor, Mich.-based drug company, has acquired Hormos Medical Corp., a Finland-based drug company focused on endocrine disorders related to aging. No financial terms were disclosed. QuatRx has raised over $50 million in VC funding since its 2000 inception, from firms like Frazier Healthcare Ventures, InterrWest Partners, TL Ventures, MPM Capital and Thomas Weisel Venture Partners and Twilight Ventures. Hormos has received funding from BankInv*st, Bio Fund Management Oy, Helmut Business Mentors Oy, GZ Group and Sitra. www.quatrx.com www.hormos-med.com Air2Web Inc., an Atlanta-based provider of wireless applications and content gateway services, has acquired Consult Mobile, a UK-based provider of mobile solutions and infrastructure. No financial terms were disclosed. Air2Web has raised over $50 million in VC funding since its 1999 inception, from firms like CDP Capital, Credit Lyonnais Private Equity, Mitsubishi Corp., Nextel Ventures, UPS Strategic Enterprise Fund and VeriSign. www.air2web.com www.consultmobile.com Magellan Biosciences of FFG Industries Inc., a portfolio company of Nautic Partners, has launched a $1.55 per share tender offer to acquire Technology Flavors & Fragrances Inc. (AMEX: TFF), pursuant to an earlier agreement between the two companies.
Credit Suisse First Boston has received around $2.4 billion in limited partner commitments for its third private equity secondaries fund family. The effort is named CSFB Strategic Partners III, and includes a $1.9 billion vehicle focused on LBOs, a $315 million real estate component and $210 million for venture capital. They begin their inv*stment period on July 1, with several transactions already is the works. www.csfb.com
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo has promoted 12 attorneys to partner status, including business and finance attorneys Ivan Blumenthal and Thomas Burton. www.mintz.com **********************
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May 17, 2005 
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