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    PE Week Wire - Friday, November 19

Breakfast Tales

Just a few quick notes as we wait for either Sequoia Capital or Kleiner Perkins so sell some of their "unlocked" Google shares.

1. David Hornick of August Capital has an interesting post on the VentureBlog site right now, which discusses some unexpected information that can be found by scouring SEC filings. For example, Tumbleweed Communications Corp. (Nasdaq: TMWD) recently registered some common stock in order to facilitate its acquisition of Sequoia Capital portfolio company Corvigo Inc. By doing so, however, Tumbleweed disclosed every limited partner in Sequoia Capital's tenth fund. Most of the usual suspects are there (Harvard, Yale, Duke, HarbourVest, Ford Foundation, etc.), but Hornick correctly asserts that no public pension systems are on the list, which he then uses to push a "Look at what disclosure has wrought" argument. It is worth noting, however, that the list actually does include public institutions, albeit of the endowment variety. According to the filing, Sequoia X includes limited partners like the University of California (UC) and what seems to be something affiliated with the University of Virginia.

It's too bad that Hornick missed the UC reference, because its very existence is fascinating (to me at least, but I get easily excited). Last year, UC got sued for refusing the disclosure performance data on its venture capital and private equity funds. It lost. In an appeal, however, UC included a letter sent from Sequoia Capital to the University of Michigan, which already had disclosed performance data in response to FOIA requests. The letter - penned by Mike Moritz - evicted University of Michigan from a new Sequoia fund (Fund XI), and requested that the school use its "best efforts to sell off all the University's positions in other Sequoia Capital Partnerships." You might notice that University of Michigan is not listed in the SEC filing, which means that it complied with the request (I asked the school about the sale, but did not get a response - under a new law, public institutions in Michigan don't have to answer such questions anymore). The letter didn't help, and UC was forced to publicly disclose fund-specific performance data, including that of Sequoia Capital.

I always assumed that Sequoia had sent an eviction letter to UC, like it had done with Michigan. After all, disclosure is disclosure. But it likely didn't happen, since UC is still listed as a limited partner. Huh? The most likely scenario is that the Michigan action was, at its core, a ploy to aid UC in its appeal. Once UC lost, the goal was moot. It also is possible that such a letter was, indeed, sent to UC, but the school declined to sell its Fund X position. Michigan was under no legal obligation to sell old stakes, although it did so anyway. Finally -- and this is the real cynical view -- the success of Google has eradicated Sequoia's fear of fund performance disclosure. Any way you slice it, it's a curious development. 

2. Jerry Borrell, our roving reporter in Asia, has two pieces of news to share: First, Dragon Capital of Vietnam has closed its third venture capital fund with $60 million. Second, he writes in to say that Korea will be implementing some major changes in its private equity regulations on December 6. On their face, the new regulations seem good for Korea-based investors (who have essentially been discriminated against for the benefit of foreign groups), but not everyone is happy. More on that in Monday's print edition of PE Week. On an unrelated note, that issue also will have details on what is believed to be the largest secondary sale of LP interests from a state pension system.

Have a great weekend...

 
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    Top Three

Apollo Management has agreed to acquire Goodman Global Holdings Inc., a Houston, Texas-based manufacturer of air conditioning and heating equipment, for approximately $1.43 billion. The deal is expected to close in Q1 2005, with debt being provided by J.P. Morgan Securities, UBS Securities and Credit Suisse First Boston. www.goodmanmfg.com

Accelerator Corp., a Seattle-based biotech investment and development company, has received $11.8 million in new funding from Amgen Ventures and OVP Venture Partners. In conjunction with the deal, Amgen and OVP also invested in Accelerator portfolio companies ViVax Corp. and VLST Corp. Existing Accelerator investors include MPM Capital, ARCH Venture Partners, Versant Ventures, Alexandria Real Estate Equities and the Institute for Systems Biology. The firm now has $21.8 million in committed capital, of which $15.35 million remains for future investments. www.accelartorcorp.com

PortalPlayer Inc., a Santa Clara, Calif.-based fabless semiconductor company for manufacturers of personal media players, will begin trading on the Nasdaq under ticker symbol PLAY. The company priced 6.25 million common shares at $17 per share, for a total IPO take of approximately $106.25 million. It had originally filed to price its shares at $11 to $13 per share, and later bumped the range up to $14 to $16 per share. PortalPlayer has raised $80 million in VC funding since its 1999 inception, including a $42 million recap round in 2002. Significant shareholders include JPMorgan Partners, Shamrock Holdings, Investcorp, CIBC World Markets and LSI Logic Corp. www.portalplayer.com

    VC Deals

Eliyon Technologies Corp., a Cambridge, Mass.-based provider of business search engine solutions, has received an undisclosed amount of first-round funding from Vulcan Capital. This is the second tranche of a deal first announced over the summer, which included $7 million from Venrock Associates. Eliyon was spun out of Corex Technologies Corp. in 1999, and still counts Corex VC backers Flagship Ventures, Commonwealth Capital and Ascent Venture Partners as shareholders. (Note: Eliyon is a content partner of Thomson Venture Economics, publisher of the PE Week Wire). www.eliyon.com

The Vendare Group, a Sherman, Oaks, Calif.-based online media and marketing company, has raised an undisclosed amount of private equity funding from Insight Venture Partners. www.vendaregroup.com

G.I. Joe's Inc., a Wilsonville, Ore.-based sports and automotive retailer, has received an $11.5 million private equity investment from Los Angeles-based Nogales Investors. www.gijoes.com

    Buyout Deals

Texas Pacific Group has agreed to acquire Celerity Group Inc., a Milipitas, Calif.-based provider of gas and chemical deliver process modules used in the manufacturing of semiconductors, flat panel displays and related products. No pricing details were disclosed, but the deal includes an equity investment from TPG, assumed debt and the co-investment and rollover of existing equity held by existing investors like Ares Management, Gryphon Investors and Tennenbaum Capital Partners. The entire transaction is expected to close by year-end, at which point Celerity will withdraw its IPO registration papers from the SEC. www.celerity.net

ABN AMRO Capital has agreed to sponsor a management buyout of Borstlap Group, a Netherlands-based distributor of fasteners worldwide. Under terms of the transaction, ABN AMRO will acquire an 85% ownership position in Borstlap, with company management holding the remaining equity. Debt financing will be provided by ABN AMRO's leveraged finance group. No pricing details were disclosed.

Platinum Equity has agreed to purchase the IT Solutions unit of General Electric Co. (NYSE: GE) for an undisclosed amount. IT Solutions has 1,700 employees and is headquartered in Erlanger, Ky. Once the deal is closed, Platinum will combine IT Solutions with CompuCom Systems Inc., which Platinum acquired in October. www.ge.com

Hicks Muse (Europe) has agreed to acquire a majority position in London-based shoe company Jimmy Choo. The deal values Jimmy Choo at GBP 101 million. www.jimmychoo.com

Hispania Capital Partners has completed its sale of La Raza publisher PrensAmerica Holdings Corp. to ImpreMedia LLC. No financial terms were disclosed. www.hispaniapartners.com

The European Union Commission has approved Apax Partners and Cinven Group's proposed Euro 2.1 billion acquisition of VNU NV's directories unit.

    PE-Backed IPOs

Monolithic Power Systems Inc., a Los Gatos, Calif.-based analog and mixed-signal semiconductor company, will begin trading on the Nasdaq under ticker symbol MPWR. The company priced 5.5 million shares at $8.50 per share (upper part of $7-$9 range), for a total IPO take of approximately $46.8 million. Monolithic had raised around $26 million in VC funding since its 1997 inception, with investors including InveStar Capital, BA Venture Partners and Acer Technology Ventures. www.monolithicpower.com

Ninetowns Digital World Trade Holdings Ltd., a Beijing, China-based provider of software that streamlines the import and export process in China, has set its proposed IPO terms to 9.6 million American deposit shares (ADS) being offered at between $10 and $12 per ADS. The company hopes to price on the Nasdaq under ticker symbol NINE, and lists a group of significant shareholders that includes AIG Asian Opportunity Fund, CFM Investments Ltd., China Equity Associates, Huitung Investments Ltd., Titan Venture Capital, MMFI CAPI Venture Investments and UOB Venture (Shenzhen) Ltd. www.ninetowns.com

    PE-Backed M&A

KnowledgePlanet, a Reston, Va.-based provider of corporate training services, has acquired Knowledge Impact Inc., a Southborough, Mass.-based provider of application simulation solutions. No financial terms were disclosed. KnowledgePlanet has raised around $125 million in VC funding since its 1999 inception, from investors like HarbourVest Partners, AIG Capital Partners, Arcadia Management, GE Equity, Dain Rauscher and Wachovia. Knowledge Impact has raised over $55 million in VC funding from firms like Ironside Ventures, Tudor Ventures, Boston Millennia Partners and Massachusetts Capital Resource Co. www.kimpact.com www.knowledgeplanet.com

    Human Resources

Venture Strategy Partners has promoted Vince Vannelli to the position of general partner. He had been a venture partner with the San Francisco-based firm since 2002 and, before that, was with Inktomi Corp. as general manager of the network products division. www.venturestrategy.com

Simon Guenzl has joined Paul Capital Partners as a principal focused on secondary private equity transactions. He most recently served as a vice president with Sprout Group. In other Paul Capital news, Suzanne Rombeau has joined the firm's secondary private equity practice as an analyst. She received her MBA from Wharton this past June, and has worked with such firms as Morgan Stanley, Carey International and McCown de Leeuw. www.paulcap.com 

    Fund News

Darwin Venture Capital has held a first close on its inaugural fund-of-funds with $42.12 million in LP commitments from such groups as the San Diego County Employees' Retirement Association, the Rasmuson Foundation and the University of California. Darwin hopes to hold a final close on $100 million sometime next year. www.darwinvc.com

 

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November 19, 2004











 





 

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