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    PE Week Wire -- Friday, September 23

Random Ramblings

I forgot to set the alarm clock last night, which has caused all sorts of franticness this morning. One unfortunate byproduct is that Friday Feedback will have to be converted into Monday Mouth-Off. But so as not to leave you empty-handed headed into the weekend…

*** Om Malik heard a rumor last month that P2P digital content company BitTorrent had raised some venture dollars from DCM-Doll Capital Management. BitTorrent poobah Ashwin Navin, however, said that while his company would be “opportunistic," it had not taken any outside money. Well, opportunity has now formally knocked, BitTorrent answered, invited it in and served it dinner. According to a regulatory filing dated September 12, the company has raised $8.75 million in a Series A funding round led by… yup, DCM-Doll Capital Management.

*** Speaking of expanding on the reporting of others, Matt Marshall reported earlier this week that New Enterprise Associates was launching a new China-based/China-focused venture capital fund. PE Week’s Constance Loizos has gotten more of the details  (including fund size and name), plus some additional info on Sequoia Capital’s China fund.

*** Quiz Time 1: Can you name the three Boston-area VCs who are in preliminary talks to form their own firm, focused on the communications sector? If it does come together, I’d be tempted to call it Shasta Ventures East, although there isn’t any formal connection… More a matter of common characteristics.

*** Quiz Time 2: Can you name the Boston-area VC firm in market with an $800 million fund whose basic strategy is “First institutional money in, no matter the round?”

*** A reader wrote in to ask if Phil Greer (co-founder of Weiss, Peck & Greer) was joining Gill Cogan, Carl Showalter and the other folks leaving Lightspeed Venture Partners to form their own firm. I put the question to Cogan yesterday (who kindly called in from a road trip), who said that Greer would serve in some sort of formal advisory role, but that it would be on a part-time basis without Greer taking any board seats. Lightspeed, you may remember, spun out of Weiss, Peck & Greer back in 2000.

*** My father was stuck in a boring meeting yesterday, so he had time to do the math on James Kilts’ obscene payout: “1,000 jobs for 3.25 years assuming average cost with benefits (including health insurance) of $50K/employee/year."

*** Unrelated: Finally, another reader sent the following email, in preparation of Hurricane Rita. I’m sure there are hundreds of reasons why this wouldn’t work, but it is nonetheless intriguing: “Next time, offshore oil rigs should be shut down 5 days in advance and converted to water pumping stations that pump 35 degree water from the ocean floor to the surface with the objective of lowering ocean surface temperatures by 1 degree....this might mute the rapid acceleration from Cat 1 to Cat 5 in a 24 hour period. This idea is unburdened by all the logical questions about size/amount of water/impact etc....”

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    Top Three

Force10 Networks Inc., a Milpitas, Calif.-based provider of 10-Gigabit Ethernet switching and routing solutions, has raised $40.6 million in Series E funding, according to a regulatory filing (filing indicates an upper offering price of $44.5 million). Advanced Equities Late Stage Opportunity Fund was joined by return backers Crosslink Capital, U.S. Venture Partners, New Enterprise Associates and Worldview Technology Partners. Force10 has raised over $275 million in total VC funding since its 1999 inception.

Cinven has sold UK-based gym chain Fitness First PLC to BC Partners for Gbp835 million. This more than double’s Cinven’s original inv*stment. UBS advised Cinven on the deal.

PayDay One Holdings Inc., a Fort Worth, Texas-based provider of short-term consumer loans, has raised $5 million in Series A funding from Sequoia Capital, according to a regulatory filing. Sequoia made the deal through its new Sequoia Growth Capital III fund.

    VC Deals

NewCross Technologies Inc., a San Mateo, Calif.-based provider of multi-service broadband solutions, has raised around $5.2 million in Series B funding, according to a regulatory filing. Participants included Columbia Ventures, Consor Capital and Sterling Payot Ventures.

Invoq Systems Inc., a Pleasanton, Calif.-based provider of event resolution and interactive alerting applications, has raised $3.25 million in Series B funding from JMI Equity Fund.

Amity Entertainment has formed as an entertainment production, distribution and licensing company, with an undisclosed amount of private equity backing from Angelo, Gordon & Co. The company – founded by media and entertainment veterans Richard Seet and Stephen Elsky (onetime Carlyle Group principal) – also announced that it has acquired the assets to Tadpole Entertainment and two film libraries.

SeaMobile Inc., a based provider of communications services to cruise lines, yachts, ferries, container ships and offshore platforms, has launched with an undisclosed amount of VC funding from Ignition Partners. The company also has received funding from unnamed angels, and company founders William Markrs (DirectTV founder), Jack Donohue (former McCaw Cellular executive) and William Marks Sr. (cable television entrepreneur).

    Buyout Deals

Citigroup Venture Capital International has acquired a controlling interest in Receivable Management Services (RMS) from PNC Equity for an undisclosed amount. RMS is a Bethlehem, Pa.–based global accounts receivable management company.

Hicks, Muse, Tate & Furst has agreed to acquire wholesale insurance brokerage Swett & Crawford from Aon Corp. (NYSE: AOC). No financial terms were disclosed. Joining Hicks Muse on the equity tranche are Banc of America Capital Inv*stors and Emerald Capital Group, while CSFB is arranging the necessary debt financing.

Morgan Stanley Venture Partners and BA Venture Partners have acquired a majority ownership position in National Healing Corp., a Boca Raton, Fla.-based operator of managed wound healing centers. No financial terms were disclosed. First Albany Capital served as I-bank and advisor for the transaction.

CGS Management, a Swiss buyout firm, has sold Electronicpark Holding AG to Cicorel Holding SA for an undisclosed amount.

The Carlyle Group has agreed to acquire a majority ownership stake in Universidad Latinoamericana SC, a private university with campuses in Mexico City and Cuernavaca, Mexico. No financial terms were disclosed.

Thales SA has agreed to sell its High Tech Optics unit to Candover for approximately 220 million euros. Royal Bank of Scotland will provide financing for the transaction.

Vista Equity Partners has completed its acquisition of MSDI Mobile Data Solutions Inc. (TSX: MMD; Nasdaq: MDSI), a British Columbia, Canada-based provider of mobile workforce management software. The total transaction was valued at approximately US$70 million, or $8 per share.

Castle Harlan has completed its acquisition of The Restaurant Co., the operator and franchisor of 483 family restaurants under the Perkins Restaurant & Bakery brand. The deal was valued at approximately $245 million, with sellers including retired Restaurant Co. chairman CEO Don Smith (retains minority stake) and BancBoston Ventures. Smith has been succeeded as chairman and CEO by Joseph Trungale, who previously had served as president and COO.

Aloha Airgroup Inc. has signed a letter of intent with The Yucaipa Cos. and Aloha Aviation Inv*stment Group LLC (managed by IBS Capital Holdings) for a substantial equity infusion into Aloha Airlines, pursuant to a plan of reorganization. The Agreement is subject to U.S. Bankruptcy Court approval and other conditions.

Pacific Equity Partners has completed its acquisition of Worldwide Restaurant Concepts Inc. (NYSE: SZ), operator of hundreds of Sizzer and KFC restaurants, based primarily in Australia. The sale price was $6.92 per share.

Change Capital Partners, HgCapital and Graphite Capital are in the running to buy UK fashion company Republic for approximately Gbp100 million, according to The Evening Standard.

Volkswagon AG reportedly is considering the sale or spin-off of both its Eurocar rental subsidiary and auto consulting division Gedas. The Eurocar news comes shortly after Ford agreed to sell Hertz Corp. to a private equity consortium.

    PE-Backed IPOs

National Waterworks Holdings Inc. has withdrawn registration for a $400 million IPO, pursuant to a pending acquisition by The Home Depot Inc. (NYSE: HD). The company currently is controlled by Thomas H. Lee Partners and JPMorgan Partners.

Horizon Lines Inc. a Charlotte, N.C. container shipping company, has reduced its proposed IPO terms to 12.5 million common shares being offered at between $10 and $12 per share. It previously filed to sell 15.63 million common shares being offered at between $15 and $17 per share. It plans to trade on the NYSE under proposed ticker symbol HRZ, with Goldman Sachs and UBS serving as lead underwriters. Castle Harlan acquired Horizon Lines last July from The Carlyle Group, in a transaction valued at $663.3 million. Carlyle had taken control from CSX Corp. as part of a February 2003 recapitalization.

Telenet, a Belgian cable television operator, is planning to raise up to 300 million euros vioa a public flotation next month, according to Reuters. Venture capital firm GIMV holds a 14.9% stake in Telenet.

    PE-Backed M&A

Symantec Corp. (Nasdaq: SYMC) has agreed to acquire WholeSecurity Inc., an Austin, Texas-based provider of behavior-based security and anti-phishing technology. No financial terms were disclosed for the deal, which is expected to close next month. WholeSecurity has raised around $18 million in VC funding since its 2000 inception, from firms like Venrock Associates, New Enterprise Associates and Parker Price Venture Capital.

Astea International Inc. (Nasdaq: ATEA), has acquired FieldCentrix Inc., an Irvine, Calif.-based provider of mobile field force automation solutions. The deal is valued at around $3.34 million in Astea common stock. FieldCentrix has raised over $60 million in total private funding since its 1996 inception, from firms like Atrium Capital, Brentwood Venture Capital, Sigma Partners, Piper Jaffray Ventures, Rustic Canyon Partners and Forrest Binkley & Brown.

    Firm & Fund News

Genesis Partners, an Israel-based VC firm, has held a $150 million final close on its third fund, according to VentureWire. It had held a first close on more than $100 million earlier this year

First Albany Companies Inc. (Nasdaq: FACT), the parent bank of FA Technology Ventures, has retained JH McCann & Co. to search for its new CEO.

    Human Resources

Christopher Daniel has joined Praesidian Capital Inv*stors as a managing director, and head of the middle-market mezzanine firm’s new office in Los Angeles. Daniel previously worked for a high-net-worth family office, and before that was a partner with Windjammer Capital.

Rick Nathan, managing director of Goodmans Venture Group, has been appointed president of Canada’s Venture Capital & Private Equity Association (CVCA).

Jay Turner has joined the partnership of GuideCap Partners, a merchant bank serving clients and inv*stors in the southwestern United States. He previously was managing director with Banc One Mezzanine Corp.

Curt Launer has joined Sagent Advisors as a managing director in its I-banking group, where he will focus on the energy and power sector. He previously was a managing director at both CSFB and DLJ.

Ilan Zipkin has joined Prospect Venture Partners as a general partner, according to Private Equity Insider. He previously was with MPM Capital, where he had been promoted to the general partnership just three months ago.

Correction: Francois Joly has joined Probitas Partners as a director. Yesterday’s PE Week Wire misspelled his name.

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Sept. 23, 2005

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