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    PE Week Wire -- Thursday, June 9

Random Ramblings

*** In early April, this space reported that Summit Partners has launched simultaneous fund-raising efforts for both a late-stage/LBO fund (up to 50% control deals) and a venture capital fund (more downstream successor to the Summit Accelerator Fund). Specifically, I wrote that while the LBO fund would easily hit its $3 billion target, the VC one was “arguably a bit less certain.” It seems that I hit a bulls-eye in my first prediction, and missed the mark on the second.

Summit is going to easily raise both funds, and actually is more oversubscribed for its VC vehicle than for its LBO one, although the former is, admittedly, just one-tenth as large as the latter. The Boston-based firm held a first close in late May, and is expected to wrap everything up the week of June 20. It isn’t expected to accept more than the target capitalizations for either fund.

*** There are a couple of reports floating around the blogosphere that Mountain View, Calif.-based fuel cell company PolyFuel Inc. plans to price an IPO on London’s AIM exchange. Most of the attention to this deal so far focuses on the geography, but folks should be paying equal attention to the pricing (particularly those who don’t yet “believe” in the ROI potential of cleantech companies).

PolyFuel apparently is going to raise Gbp12 million, which would give it an enterprise value of around Gbp40 million, or approximately $73 million. It’s initial VC funding round provided a post-money valuation of just $13.2 million, while a $15.6 million infusion in 2002 was post-valued at $35 million (according to our VentureXpert database). That's big money for first-round backer Mayfield, and also not to shabby for later players like Intel Capital and Chrysalix Energy. Not amazing, but better than decent for a company in this unchartered line of work.

*** I got tons of response to Tuesday’s column on SBIR funding regulations, and will run a bunch of them tomorrow. In the meantime, you should know that the SBA is seeking public testimony on the majority-owned issue during several forums, including: Today in Atlanta, June 14 in Denver, June 16 in NYC, June 17 in Washington DC, June 20 in Chicago, June 22 in Dallas, June 28 in San Francisco and June 29 in Los Angeles. Such meetings already have occurred in Seattle, St. Louis and Portland, Maine. More info available at www.sba.gov/size.

*** Two days ago I had lunch with someone who spends a lot of time dealing with troubled private equity firms. Most interesting observation (his, not mine)? That the number one factor in destroying a general partnership is not poor returns, macro economic factors or generational issues. Instead, it’s when one partner gets divorced. Apparently, partner divorce can open up a large can of worms, as the spouse often requests all sorts of sensitive financial info, such as the carrying values of portfolio companies. I wonder how many PE firms inquire about the state of a perspective partners’ marriage? Can you even do that without the candidate walking out? Tricky stuff…

*** Tomorrow we’ll have Friday Feedback, but I’ll be on a two-week break after that. But don’t fret, because your PE Week Wire will continue uninterrupted. The news will be taken care of by our crack staff in New York, while the column will be sometimes written by regular pinch-hitter Adam Reinebach (my boss), and sometimes written by some guest columnists I lined up. For sp*m purposes, however, it will continue to look like it’s coming from my inbox.

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    Top Three

 

Versus Pharmaceuticals Inc., a San Diego-based pediatric drug company, has raised $78 million in Series A funding. Domain Associates and Prospect Venture Partners co-led the deal, and were joined by Paul Royalty Fund, MPM Capital, Montreaux Equity Partners, Athenian Venture Partners and Windamere Venture Partners. In addition, the company received $20 million in product-specific royalty funding from Paul Royalty Fund. www.versuspharm.com

 

The Neiman Marcus Group Inc. (NYSE: NMG.A, NMG.B) has agreed to sell its private-label credit card accounts and related assets to HSBC Retail Services for approximately $640 million (including approx. $113 million in Neiman Marcus securitization liabilities). Neiman Marcus recently agreed to be acquired for around $5.1 billion by Texas Pacific Group and Warburg Pincus. It is unclear at press-time how the credit card sale will affect the overall buyout price.

Fonds de Réserve pour les Retraites (a.k.a. The French Pensions Reserve Fund), a state-owned system with nearly 20 billion euros under management, has hired London-based Campbell Lutyens & Co.Ltd. to serve as financial consultant on its upcoming RFP to award several private equity management mandates. It would be the system’s first foray into the private equity market. www.fondsdereserve.fr

    VC Deals

Pixim Inc., a Mountain View, Calif.-based developer of digital imaging systems, has raised $12 million in Series A-1 recap funding. Honda Motor Co. Ltd. and Atrium Venture Partners were joined on the deal by return backers Mohr, Davidow Ventures, Mayfield, China Industrial Development Bank and Newbury Ventures. Pixim has raised over $85 million in total VC funding since its 1999 inception, including a $16.5 million Series C round in 2001 at a $108 million post-money valuation, and a $22 million Series D round in 2003. www.pixim.com

PeptImmune Inc., a Cambridge, Mass.-based drug company focused on the rare skin disease pemphigus vulgaris, has raised $18.66 million in Series C funding, according to a regulatory filing. Return backers include New Enterprise Associates, Prism Venture Partners, Vanguard Ventures, and MPM Capital. The company raised $41.2 million in a 2003 funding round at a post-money valuation of approximately $55 million. Genzyme Corp., which spun out PeptImmune in 2003 (after having bought it from Zero Stage Capital in 1999), remains a company shareholder. www.peptimmune.com

Plethora Technology Inc., a Charles Town, West Va.-based provider of secure mobile computing platforms has raised $1 million in Series A funding. Participants include Mountaineer Capital ($500,000), West Virginia Jobs Fund Inv*stment Trust Board ($250,000) and The Calvert Social Inv*stment Funds ($250,000). Calvert had previously provided Plethora Technology with $400,000 in seed capital. www.plethoratech.com

Clear Shape Technologies Inc., a Sunnyvale, Calif.-based provider of semiconductor DFM software, has raised in excess of $5 million in its second round of VC funding. Intel Capital led the deal, and was joined by KT Venture Group and return backers Telos Ventures, US Venture Partners and AsiaTech Management. www.clearshape.com

Osiris Therapeutics Inc., a Baltimore-based biotech company focused on adult stem cell research, has raised $50 million in combined equity and convertible debt financing. According to VentureWire, the equity tranche consists of $10 million. www.osiristx.com

Sky Mobilemedia Inc., a San Diego-based maker of mobile application software platforms for wireless handsets, is raising $15 million in Series B funding, according to a regulatory filing. It already has secured $10.5 million from insiders like Enterprise Partners. www.skymobilemedia.com

Soma Networks Inc., a San Francisco-based provider of last-mile wireless solutions, has raised approximately $23.56 million in Series B preferred equity funding and $21.7 million in convertible note funding, according to a regulatory filing. No additional information was disclosed. www.somanetworks.com

NordNav Technologies, a Stockholm, Sweden-based developer of software GPS receivers for the mobile and automotive markets, has received an undisclosed amount of VC funding from 3i Group PLC, Innovationskapital and Siemens Acceleration. www.nordnav.com

    Buyout Deals

Mersey Docks & Harbour Co., a UK-based port operator, has confirmed that it will be acquired for Gbp771 million by Peel Ports Ltd. Mersey had previously been in negotiations with Cinven and CVC Capital Partners. www.merseydocks.co.uk

GIMV and Maple Finance Group have agreed to sell Omnister Accessories NV to Sweden-based Thule Group for an undisclosed amount. Omnister is a Belgium–based supplier of European aftermarket accessories for recreational vehicles, was acquired by GIMV and Maple in 2001. Thule is controlled by Candover Inv*stments. www.omnistor.com www.thule.com

Vedior NV has agreed to sell its minority ownership position in TriNet Group Inc. to General Atlantic for approximately $43 million. TriNet is a San Leandro, Calif.-based provider of business process outsourcing services for payroll, benefits and human resources. www.trinet.com www.vendior.com www.generatlantic.com

    PE-Backed IPOs

NeuStar Inc., a Sterling, Va.-based provider of clearinghouse services to the North American telecom market, has set its proposed IPO terms to 25 million common shares being offered at between $18 and $20 per share. It plans to trade on the Nasdaq under ticker symbol NSTR, with Morgan Stanley, CSFB and JPMorgan serving as co-lead underwriters. NeuStar was founded in 1996 as an operating division of Lockheed Martin Corp., and was acquired in 1999 in a management buyout lead sponsored by Warburg Pincus. Warburg holds a 71.59% pre-IPO stake, while other significant shareholders include MidOcean Partners (13.95%) and ABS Capital Partners (5.93%). www.neustar.biz

KKR Financial Corp., a San Francisco-based real estate inv*stment trust (REIT) managed by buyout firm Kohlberg Kravis Roberts & Co., has set its proposed IPO terms to around 29.17 common shares being offered at between $23 and $25 per share. The REIT had raised $780 million last year via a Rule 144A offering. www.kkr.com

    PE-Backed M&A

Raritan Computer Inc., a Somerset, N.J.-based provider of products for managing IT infrastructure, has acquired defunct Oculan Systems Inc., a Raleigh, N.C.-based provider of server, network and desktop system health and security monitoring and management solutions for mid-sized enterprises. Oculan had raised $43 million in venture capital funding from TowerBrook Capital Partners (f.k.a. Soros Private Equity), TA Associates and W.R. Hambrecht & Co. www.raritan.com www.oculan.com

    Firm & Fund News

The Pennsylvania Public School Employees’ Retirement System (PSERS) today reported alternative inv*stment returns of 10.68% percent for the nine-month period ending March 31, 2005 (fiscal year-to-date), and 26.97% for the 12-month period ending March 31, 2005. So far in 2005, PSERS has made commitments to KRG Capital Partners III (up to $100 million), Crestview Capital Partners (up to $150 million), Jefferies Capital Partners IV (up to $100 million), Bridgepoint Europe III (up to 200 million euros) and Barmoral Capital (up to 100 million euros). www.psers.state.pa.us

Birch Hill Equity Partners, a standalone successor to TD Capital Canadian Private Equity Partners, is planning to close its latest fund at the end of this month with Cdn$750 million, according to The National Post. The vehicle will target middle-market companies based in Canada.

    Human Resources

Michael Eisenberg has joined Benchmark Capital as a general partner in Israel, where he will help invest the $250 million Benchmark Israel II fund. He has spent the past eight years as a partner with Israel Seed Partners. www.benchmark.com

Marc Daniel has joined RBC Capital Markets as the senior New York-based managing director of mergers and acquisitions. He most recently served as a senior managing director with Bear Stearns & Co. www.rbccm.com

Larry Weeks has joined law firm Heller Ehrman White & McAuliffe as Of Counsel in the firm’s corporate securities, M&A and venture law group. He previously was a partner with Bingham McCutchen, and has brought with him clients like Redpoint Ventures, LoopNet Inc., Aprriso Corp. and Sabeus Inc. www.hellerehrman.com

 

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June 9, 2005

















 




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