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    PE Week Wire -- Wednesday, July 12

Random Ramblings

Today’s column fell apart at the last minute (kind of like the National League), so just a few quick notes:

*** When athletes say that it’s not about the money, it’s usually about the money. When multiple VCs give multiple reasons for leaving the same firm over a short period of time, it’s usually about the firm. This is the case an In-Q-Tel, the Central Intelligence Agency venture wing that has lost more managing general partners than in the past year than I’ve lost cell phones (I’ve lost two).

The latest such defection is Mark Frantz, who today formally announced that he’s now a general partner with Redshift Ventures (f.k.a. SpaceVest). This follows Gilman Louie, who left last year to launch a new firm with Stewart Alsop, and Amit Yoran, who left earlier this year to spend more time with his family.

Frantz and Louie have every reason to be jazzed about their latest endeavors, and I’m sure that Yoran’s family is a swell bunch. None of this, however, masks the unfortunate reality that there are some very real problems with In-Q-Tel’s public/private partnership model, which includes a variety of conflicting interests and expectations. I’ll be writing more on this soon, including what it could mean for the U.S. Army’s venture arm and the proposed effort by NASA.

*** Thomson is hosting a conference call about Trends in European Private Equity, which unfortunately began a few minutes ago (10am EST). But there will be a Q&A, so dial in at 800-322-5044, with participant passwode 94270331. International callers, please dial 617-614-4927.

*** Speaking of all things Thomson, today is the final day to submit Q2 2006 disbursement into for the MoneyTree Survey. If you still need to submit info, please email for instructions.

*** Last but certainly not least, our deepest condolences to the family and friends of Zeljka Matutinovic, a former general partner with Jerusalem Venture Partners who died in a moped accident over the weekend in Martha’s Vineyard. She was just 41 years old. A memorial service will be held next Tuesday evening at St. Cyril Catholic Church in New York City (502 West 41). Please email Mihaela Skobe at if you are planning to attend.


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    Top Three

MobiTV Inc., an Emeryville, Calif.–based provider of television and digital radio services for cellular, Wi-Fi and broadband-enabled devices, has held a $70 million first close on its Series C funding round. Oak Investment Partners led the deal. Certain return backers also participated, but MobiTV is not yet disclosing specifics. It previously raised around $18 million from firms like Menlo Ventures, Gefinor Ventures, Redpoint Ventures and Sorrento Ventures.

Secure Computing Corp. (Nasdaq: SCUR) has agreed to acquire CipherTrust Inc., an Alpharetta, Ga.–based provider of messaging security. The deal is valued at $273.6 million, including $185 million in cash, 10 million common shares of Secure Computing and a $10 million seller note subject to certain performance obligations. The deal is expected to close by September 8. CipherTrust has raised $48 million in total funding since its 2000 inception, from firms like Battery Ventures, Greylock, Noro-Moseley Partners, U.S. Venture Partners and SVB Capital.

MBK Partners reportedly has closed its inaugural fund with $1.56 billion in capital commitments, from limited partners like Temasek Holdings, the Ontario Teachers’ Pension Plan, Morgan Stanley, Bank of Tokyo and the National Agricultural Cooperatives Federation of South Korea. The Seoul-based firm was formed last year by Michael Kim, who previously was co-head of Asian buyouts for The Carlyle Group.

Senior Advertising Manager

Thomson Financial is seeking a senior advertising manager for its private equity publications, conferences and related products. Will manage a team of two people, and report directly to the private equity group publisher.

Experienced candidates should contact Tom Paisley at (646-822-2481).


    VC Deals

SkyPilot Networks Inc., a Santa Clara, Calif.-based provider of carrier-class broadband wireless mesh networks, has raised $21 million in fourth-round funding. August Capital led the deal, and was joined by return backers Mobius Venture Capital, Invesco Private Capital, Palo Alto Investors, Nexit Ventures and Selby Venture Partners. SkyPilot has now raised $68 million in total VC funding since its 2000 inception.

Surgient Inc., an Austin, Texas-based provider of virtual lab management applications, has raised $20 million in Series C funding. Crosslink Capital and Goldman Sachs co-led the deal, and were joined by return backers Austin Ventures, BlueStream Ventures and MFI Austin. Revolution Partners served as placement agent. The company now has raised over $108 million in total VC funding since its 1999 inception, including an $18 million infusion in late 2001 at a post-money valuation of approximately $235 million.

Enforsys Inc., a Roseland, N.J.-based provider of public safety software for first responders, has raised $12.5 million in private funding from HSH Nordsbank.

Yodlee Inc., a Redwood City, Calif.-based provider of an online financial services portal, has raised $6.05 million in Series AA recap funding, according to a regulatory filing. Return backers include Accel Partners, Institutional Venture Partners and Warburg Pincus.

Gear6 Inc., a Menlo Park, Calif.–based provider of computing solutions to accelerate storage and deliver real-time performance, has raised $10 million in Series C funding. InterWest Partners led the deal, and was joined by return backer U.S. Venture Partners.

NStructures Inc., a Saratoga, Calif.-based developer of photovoltaic cell technologies, has secured $3.15 million of a $6.3 million Series A round, according to a regulatory filing. Backers include Khosla Ventures and Braemar Energy Ventures., a San Francisco-based online relationship community, has raised $5 million in Series A funding. Advanced Technology Ventures led the deal, and was joined by seed backers Revolution Ventures, The Founders Fund and Josh Kopelman.

HiSoft Technology International, a China-based provider of outsourced IT services, has raised an undisclosed amount of Series B funding. Return backer Granite Global Ventures led the deal, and was joined by DFJ ePlanet Ventures, Mitsubishi UFJ Securities Capital and Sumitomo Corp. Equity Asia Ltd. The company raised $20 million in Series A funding back in October 2004.

Memphis Biofuels LLC has been formed with the help of an undisclosed amount of private equity funding from an affiliate of Cohen & Co. The company has begun construction on a 36 million gallon per year biodiesel production facility in Memphis, Tenn., which is designed to be expanded to 100 million gallons per year in the future.

    Buyout Deals

CarrAmerica Realty Corp. (NYSE: CRE) shareholders have approved a $44.75 per share buyout by The Blackstone Group. The total deal is valued at around $5.6 billion, with leverage being provided by Deutsche Bank, Bank of America and Citigroup.

H.I.G. Capital has acquired Easy Gardener Products Inc., a Waco, Texas-based manufacturer and marketer of branded landscape, lawn and garden products. No financial terms were disclosed. Easy Gardener had been publicly listed on the AMEX, but had filed for Chapter 11 bankruptcy protection. H.I.G. acquired its assets, after having acted as a stalking horse bidder.

Gresham Private Equity has sponsored a £45 million management buyout of Giles Insurance Brokers Ltd., a UK-based commercial insurance broker.

Welsh, Carson, Anderson & Stowe has agreed to buy Mobile Storage Group Inc. from Windward Capital Partners, according to The Deal. WCAS reportedly will pay around $500 million for Mobile Storage, a Burbank, Calif.–based provider of onsite portable storage facilities. Lehman Brothers had been retained earlier this year to manage the auction.

Gen Cap America has acquired Douglas Machines Corp., a Clearwater, Fla.-based provider of stainless steel washing and sanitizing equipment primarily for the baking, food processing and distribution markets. No financial terms were disclosed.

    PE-Backed IPOs

Allied World Assurance Holdings Ltd., a Bermuda-based insurance and reinsurance company, priced 8.8 million common shares at $34 per share ($34-$37 range), for an IPO take of approximately $299.2 million. It will trade on the NYSE under ticker symbol AWH, while Goldman Sachs served as lead underwriter. The company was formed in November 2001 by AIG, Goldman Sachs, The Chubb Corp., Securitas Capital Fund and Swiss Re.

Wintegra Inc., an Austin, Texas-based provider of access processing semiconductors, has withdrawn its proposed IPO, due to “unfavorable market conditions.” The company had planned to sell five million common shares, although it recently lowered its offering price range from $14-$16 per share to $12-$14 per share. Goldman Sachs and JPMorgan had been listed as co-lead underwriters. Wintegra has raised around $26 million in VC funding from firms like Magnum Communications Fund, Concord Ventures, Texas Instruments, Genesis Partners and China Development Industrial Bank.

    PE Exits

EFJ Inc. (Nasdaq: RFJI) has acquired 3e Technologies International, a Rockville, Md.-based provider of security solutions for wireless platforms like WiFi, mesh networking and Bluetooth. The deal was valued at $36 million in cash, including around $5 million to satisfy certain 3eTI liabilities and $3.6 million being held in escrow for potential indemnification claims. 3eTI was an Intel Capital portfolio company, while 3e was advised on the deal by BB&T Capital Partners.

Opsware Inc. (Nasdaq: OPSW) has agreed to acquire Creekpath Systems Inc., a Boulder, Colo.-based provider of storage management software. The deal includes an initial $10 million cash payment and the possibility of a $5 million cash earn-out. Creekpath had raised $63.5 million in VC funding since its 1999 inception, from firms like Sequel Venture Partners, Telesoft Partners, New Enterprise Associates and Lehman Brothers.

Smith & Nephew (NYSE:SNN) has acquired OsteoBiologics Inc., a San Antonio, Texas-based provider of bio-absorbable bone graft substitutes in Europe to repair cartilage defects in the knee. It also offers a bone void filler in the U.S. The deal is valued at $72.3 million in cash, even though OBI only had 2005 sales revenue of $3.3 million. OsteoBiologics had raised around $35 million in total VC funding since its 1993 inception, from firms like The Woodside Fund, PTV Sciences, Thomas, McNerney & Partners and The Vertical Group.

    PE-Backed M&A

Wire Rope Corp. of America Inc., a portfolio company of KPS Special Situations Funds, has formed a joint venture with Wuhan Iron and Steel Corp. of China. The new effort will be 51%-owned by WRCA and 49% by WISCO, and will build a wire rope production facility in Wuhan, China, located west of Shanghai on the Yangtze River.Total investment in the venture will be approximately $100 million, with construction expected to be complete sometime next year.

Arsenal Capital Partners has merged two portfolio companies – Rutherford Chemicals and Reilly Industries – to form Vertellus Specialties Inc., a specialty chemicals company focused on the agricultural, nutritional, pharmaceutical, personal care and performance materials markets. No financial terms of the merger were disclosed.

    Firm & Fund News

Danske Private Equity has closed its third private equity fund-of-funds with €600 million in capital commitments.

Growth Capital Partners has held a final close in excess of $65 million for its second mezzanine fund. Limited partners include Amegy Holding Delaware, CUNA Mutual Life Insurance Co. and Sumitomo Mitsui Banking Corp.

Doubloon Corp., a Norwalk, Conn.-based blank check acquisition company focused on the financial services market, has filed to raise $100 million via an IPO. Company management includes president Carlton Klein, who served as managing director and chief risk officer for Citigroup Alternative Investments for four months in 2005.

    Human Resources

Mark Frantz has joined Redshift Ventures as a general partner focused on the software and media sectors. He previously was managing general partner of In-Q-Tel.

Richard Goldberg has joined Putnam Lovell NBF Securities as a managing director of I-banking in the company’s financial institutions group. He previously was a managing director with Sandler O’Neill & Partners.

Stephen Pierson has joined GE Commercial Finance as a senior vice president of aerospace and defense for the firm’s corporate lending business.

Riaz Karamali has joined Brown Raysman Millstein Felder & Steiner LLP as a Silicon Valley-based partner in the firm’s corporate and technology and media and communications practices. He previously was with Perkins Coie in Menlo Park.

Rolando Eisen and Paulette Eitan have resigned as independent directors of Koor Industries Inc., following possible affiliation with Koor’s new controlling shareholder Discount Investment Corp. Their replacements will be nominated at the company’s next general meeting.

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July 12, 2006

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