| PE Week Wire -- Tuesday, May 24|
AIG Capital Partners (Again)
I promised an update on the AIG Capital Partners situation and, for a change, I'm delivering. For the uninitiated, read this and this before continuing.
Last Thursday, the limited partner advisory board of the $900 million, AIG-sponsored Global Emerging Managers II fund (GEM II) unanimously agreed to seek an amendment to the existing limited partnership agreement, whereby committed investors would have the opportunity to withdraw from the fund. The decision was communicated to all GEM II LPs via a conference call last Friday morning, and the actual amendment is expected to be drawn up and delivered as early as next week. At that point, LPs will have around three weeks to decide whether to continue in GEM II, or pull out without consequence (the fund has only had one capital call).
According to an AIG spokesman, the Thursday meeting included both AIG Global Investment Group CEO Win Neuger, plus David Yeung, who took over the GEM II effort after fund chief Peter Yu and managing director Bill Jarosz were fired late last month. Both men basically made the case that AIG is still committed to GEM II's mandate to buy into companies in Latin America, emerging Europe and Asia, and that the original GEM I fund has produced strong returns (plus a handful of recent exits like GOL Linhas Aereas Inteligentes SA and Orange Romania. LPs, however, are clever enough to remember that Yu and Jarosz were instrumental in those aforementioned returns, and that AIG Capital Partners has retained precious few senior executives from the time of GEM I's founding, let alone the fund-raising effort for GEM II.
I would be surprised if AIG is able to get enough LPs to stick around, particularly since most of the advisory board members are goners. It could go back out to market with its new management team, but it would have to offer extremely attractive terms.
As I wrote after the firings in late April, none of this had to happen. First, Yu and Jarosz's plan to spin AIG Capital Partners out into an independent entity made sense (which is why Hank Greenberg had OK'd it). LPs generally don't like sponsored funds, for the very reason that they don't have ultimate control over who is managing their money. Second, if the terminations had to happen, AIG should have given Yu and Jarosz a boatload of severance cash, in exchange for a wink-wink orderly transition and promise to soothe LP concerns. Maybe not the most ethical thing to do, but hardly unprecedented among private equity firms. Instead, of course, AIG fired both men and marched them out the front doors, in plain sight of lots of folks who then contacted people like me. AIG complained when I originally called this HR strategy short-sighted, but I'd guess that, privately, they're wondering how they could have made such a major mistake.
*** A quick update on another fund falling apart: VSP Capital III. Constance Loizos of PE Week reports that LPs yesterday received a letter from the firm, informing them not only that Matt Crisp and Vince Vannelli had resigned, but that a vote to suspend the fund and a vote to terminate the fund will take place within the next week. More on this tomorrow.
*** Finally, lots of you write in to ask how to break into the VC market. Seth Levine of Mobius Venture Capital has some answers
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Phenomix Corp., a San Diego-based drug company focused on immune disease and metabolic syndrome, has raised $40 million in Series B funding. JPMorgan Partners and Delphi Ventures co-led the deal, and were joined by fellow new backer Baker Brothers. Existing shareholders Alta Partners, Sofinnova Ventures, Bay City Capital, CMEA Ventures, GBS Venture Partners and Novartis BioVenture Fund also participated. Phenomix has raised $65.5 million in total VC funding since its 2001 inception. www.phenomix.com
Telenor ASA (Nasdaq: TELN) has agreed to acquire broadband companies Bredbandsbolaget AB and Cybercity for SEK 6 billion ($824 million) and DKK 1.4 billion ($237 million), respectively. Bredbandsbolaget of Sweden has received VC funding from The Carlyle Group, Access Industries, Investor AB and Continuum Group. Cybercity of Denmark is controlled by Advent International, with other shareholders including Merrill Lynch Capital Partners, Lehman Brothers, Four Seasons Venture Capital and Nordic Venture Partners. www.telenor.com www.bredband.com www.cybercity.dk
Wilber Ross Jr. and Masters Capital Management have formed a Chicago-based partnership that will provide private equity to early, mid and late-stage companies working on nanotechnology-enabled products and solutions. Michael Collett of Masters Capital and Mel Melsheimer, former president of Harris & Harris Group Inc., will serve as managing members and managing directors of the effort, while Ross and Masters Capital founder Michael Masters will serve on the investment committee. No financial terms have been disclosed for the partnership, which also plans to have offices in both Virginia and on the West Coast.
Elbion AG, a Germany-based drug company focused on CNS and inflammatory diseases, has raised 10 million euros in additional Series A funding, bringing the round total to 35 million euros. New backers include Techno Venture Management, Temasek Holdings and Mitsubishi Corp., while participants in the initial tranche included 3i Group, Burrill & Co., DVC Deutsche Venture Capital, AGF Private Equity, Quintiles PharmaBio Development, BayTech Venture Capital and the Marubeni Corp. www.elbion.de
Attenex Corp., a Seattle-based developer of document analysis and visualization tools for electronic discovery, has raised $5 million in Series B funding led by Voyager Capital. www.attenex.com
422 Inc., a Palm Beach, Fla.-based developer of directory assistance services for wireless phone users, has raised approximately $3 million in Series C funding. Motorola Ventures was joined on the deal by return backers Draper fisher Jurvetson and Draper Fisher Gotham. www.422.info
Infineon Technologies has spun out its Circuit Verification Environment (CVE) division into a new company called OneSpin Solutions GmbH. As part of the move, OneSpin has received 14 million euros in venture capital funding from Apax Partners. www.infineon.com
Brix Networks, a Chelmsford, Mass.-based provider of VoIP performance management solutions, has raised $1.5 million in funding from TELUS Ventures. Last month, the company announced that it had raised $5 million in fifth-round funding from Castile Ventures (lead), Charles River Ventures, ComVentures, Fidelity Ventures, Partech International and Star Ventures. The company has raised around $60 million in total VC funding since its1999 inception. www.brixnet.com
Odyssey Investment Partners has agreed to acquire Norcross Safety Products from an ownership group that includes Trimaran Capital Partners, John Hancock Life Insurance Co. and CIVC Partners. The deal is valued at $495 million, including the assumption of Norcross' outstanding debt and cash. Norcross is an Oak Brook, Ill.-based manufacturer and marketer of protective equipment for the industrial, utility/high voltage and fire service markets. It had 2004 revenue of approximately $440 million. www.nspusa.com
Golden Gate Capital has sponsored a recapitalization of Plant Equipment Inc., a Temecula, Calif.-based provider of mission-critical communications systems for 911 and other emergency call centers. The deal was done in partnership with Plat Equipment president and CEO Timothy Fuller, who will continue to lead the company. No financial terms were disclosed. www.peinc.com
The Blackstone Group has acquired Merlin Entertainments Group from Hermes Private Equity for Gbp102.5 million. Merlin is a UK-based operator of European visitor attractions like the London Dungeons and the Sea Life Centers. UBS served as sole financial advisor on the transaction. www.merlinentertainments.biz
Apax Partners, CVC and Cinven reportedly have pulled their consortium for Spanish telecom company Grupo Auna SA, which is expected to be sold for approximately 12 billion euros. Two remaining groups include: Providence Equity Partners (lead), Carlyle Group, Blackstone Group and Permira; and KKR, Goldman Sachs and BC Partners.
GIMV has acquired an ownership position in Westerlund Corp. NV, a Belgium-based provider of handling and logistics for the European forest products industry. The immediate family of Westerlund managing director Jean-Jacques Westerlund retained its shares, but GIMV took over shares held by other family members. No financial terms were disclosed. www.gimv.com www.westerlundgroup.com
Zurich Financial Services Group has agreed to sell its 94% stake in ZC Sterling Corp. to Trident III (f.k.a. MMC Capital). No financial terms were disclosed for the deal, which is expected to close in Q3 2005. ZC Sterling is an Atlanta-based provider of business process outsourcing, insurance, consumer marketing and technology services to the mortgage, insurance and homebuilding industries. www.zurich.com
BioXell SpA, an Italy-based biotech company focused on urology and inflammatory diseases, has moved closer to public market flotation, by signing a drug development agreement with Merck & Co. Inc. that could be worth up to $150 million. "This takes us a step forward towards an IPO," BioXell CEO Francesco Sinigaglia told Reuters. BioXell shareholders include AlpInvest, Index Ventures, MPM Capital, Life Science Partners and NIF Ventures. www.bioxell.com
Alien Technology Inc., a Morgan Hill, Calif.-based RFID company, has acquired Quatrotec, a specialty integration services and project management company focused on commercial aviation and other transportation markets. No financial terms were disclosed. Alien has raised over $150 million in VC funding since its 1999 inception, from firms like CMEA Ventures, Lago Partners, New Enterprise Associates, First analysis Corp., Advanced Equities Capital Partners, Adams Street Partners, Equitek Capital, Rho Ventures and Sevin Rosen Funds. www.alientechnology.com www.quatrotec.com
Consul Risk Management Inc., a Herndon, Va.-based provider of enterprise security and compliance solutions, has acquired NetMon2, an early-stage provider of real-time event information correlation from network and security devices, including firewalls and switches. No financial terms were disclosed. Consul has raised VC funding from Kennet Venture Partners, Nesbic Group, Dresdner Kleinwort Wasserstein and Softbank Corp. www.consul.com www.netmon2.com
AEP Networks, an Somerset, N.J.-based provider of network and application access security, has agreed to acquire V-One Corp. (OTC PK: VNECQ), a bankrupt commercial vendor of application-layer SSL VPN technology. No financial terms were disclosed for the deal, which is expected to close within the next 30 days. AEP has raised VC funding form ACT Venture Capital, Atlantic Venture Partners, B-business Partners NV, Masthead Venture Partners and the New Jersey Technology Council. www.aepnetworks.com
Talk America (Nasdaq: TALK) has agreed to acquire LDMI Telecommunications Inc., a Southfield, Mich.-based provider of communications services to business and residential customers, primarily in Michigan and Ohio. No financial terms were disclosed. LDMI has raised over $50 million in VC funding from firms like Alpha Capital Partners, Wind Point Partners, CID Equity Partners, Blue Chip Venture Co., PNC Equity Management and Primus Venture Partners. www.talkamerica.com www.ldmi.com
NGEN Partners, a Santa Barbara, Calif.-based VC firm focused on mid-to-late-stage companies in the materials science space, has held a first closing on its second fund, which is targeted at $150 million. Participating limited partners include CalPERS, CalSTRS, The Camille and Henry Dreyfus Foundation, Cycad Group, the Glenn Foundation, Siemens Venture Capital, Asahi Glass Co., Air Products, BASF, Bayer MaterialScience, DuPont, DSM and Henkel. www.ngenpartners.com
Mike Dolbec has joined The Ignite Group as a general partner, where he will focus on VC deals in the digital media, wire-free mobility, consumer electronics and data communications spaces. He previously was a general partner with Orange Ventures. www.ignitegroup.com
Meritage Private Equity Funds, a Denver-based private equity firm focused on the communications market, has promoted Derek Pilling to the position of vice president. He originally joined the firm in 2003, after receiving his MBA from the Kellogg School of Management at Northwestern University. www.meritagefunds.com
Raymond McGuire has resigned from his post as co-head of global M&A with Morgan Stanley, according to various press reports. The move is in anticipation of McGuire joining Citigroup as co-head of global I-banking. www.citigroup.com
Cliff Higgerson has transitioned from a general partner to a venture partner role with ComVentures, according to VentureWire. www.comventures.com
Jeff Miller, a venture partner with Redpoint Ventures and former CEO of Documentum, has joined the board of advisors of OuterBay Technologies, a Redpoint portfolio company focused on information lifecycle management solutions. www.outerbay.com
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May 24, 2005
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