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North America: October 2001

Applied Materials establishes corporate venturing arm, Primedia shuts VC operations, Accenture Technology Ventures announces write-down…

Accenture to take $125m VC hit
Accenture's venture capital arm, Accenture Technology Ventures, looks set to write down as much as $125m. The firm said the hit was as a result of restructuring the portfolio rather than poor performance. It explained that it was restructuring ‘so that variations in the portfolio's value do not have an adverse effect on the company's profit and loss statement going forward'.
VentureWire 15.10.01

Texas Pacific may buy Bankgesellschaft
Texas Pacific Group has said that it is looking at acquiring German public sector bank Bankgesellschaft Berlin and may approach the Berlin ministry of finance. Berlin's finance minister Christiane Krajewski is reported to have already been in talks with Norddeutsche Landesbank and J Christopher Flowers over the sale of the troubled bank. Texas Pacific has some experience of turning around banks - it has restructured American Savings Bank and Korea First Bank.
Wall Street Journal 2.10.01

Bowman pulls out of VC investing
US technology fund Bowman Capital is reported to be pulling out of venture investing and releasing its limited partners from commitments to their latest private equity fund because of the deterioration in the market climate. The Financial Times (26.10.01) said that Bowman had halted fund-raising and is handing back some of the capital call it made on investors earlier in the year. It is also closing its European operations.

Eight million jobs created by VC investment
In a month when surveys showed nothing but doom and gloom emanating from the US private equity industry (see Trends for this month), the NVCA lightened the mood by releasing statistics showing that venture capital investment had created nearly eight million jobs over the last 30 years and $1,300bn in revenue. The survey said that $273.3bn of venture capital invested over that period had created 5.9 per cent of the US's jobs and 13.1 per cent of GDP. The NVCA said the figures were ‘remarkable' because venture capital accounted for less than one per cent of US investment activity over the last three decades.
AltAssets 23.10.01

Hamilton Lane joins forces with Vanguard
Hamilton Lane Advisors is to manage a fund of funds for the wealthy clients of the mutual fund the Vanguard Group, PrivateEquityCentral (9.10.01) said. In a statement, Vanguard said that Hamilton Lane would be able to provide access to some of the top private equity firms and that it had an ‘extensive due diligence process'.

Applied Materials sets up corporate venturing fund…
Applied Materials, the largest supplier of products and services to the global semiconductor industry, has formed a new venture capital fund to invest in the next wave of processing technologies and silicon optical devices. The fund, Applied Materials Ventures I, will be structured as a limited partnership and will work with other venture capital firms to accelerate the development of promising start-ups.
AltAssets 29.10.01

…and Primedia shuts corporate venturing arm
US media company Primedia has said that it is to close its venture capital operations and is waving goodbye to four out of its five VC staff. The one Primedia Ventures partner left is to manage the arm's nine remaining portfolio company investments. Founded in 1998 with $20m from its parent company, Primedia Ventures invested in web content and e-commerce companies targeting consumers. Primedia committed another $50m to its VC operation after it had invested the first fund. Having invested a total of $30m over its lifetime, Primedia Ventures will return $40m to its parent.
PrivateEquityCentral  2.10.01

Blue Capital cancels fund-raising
New York firm Blue Capital has said that it will no longer be raising its second fund as planned. Blue had originally planned to raise $350m, but said that poor market conditions and waning smaller investor interest had brought the firm to its decision. It added that it would wait until 2002, when conditions might have improved. The firm lost a co-founder, Brian Dale, in the 11 September terrorist attacks.
Bloomberg 5.10.01

Private equity veteran murdered
Ted Ammon, one of the most famous names in the private equity industry, has been murdered at his Long Island home. Police say he died of ‘blunt-force trauma' but have yet to come up with a theory as to motive. The 52-year-old was a former partner at Kohlberg Kravis & Roberts and had been involved in the infamous hostile takeover of RJR Nabisco immortalised in the book Barbarians at the Gate. He leaves two children and was in the middle of divorce proceedings.
AltAssets 25.10.01

Connecticut returns to private equity investing
Connecticut State Treasury has announced that it is to resume investing in private equity, two years after stopping all alternative investments when a kick-back scandal came to light. The treasury has said that it will allocate 11 per cent of its $22bn fund to alternatives, including buy-out, venture capital and mezzanine, but would invest it slowly. The scandal involved allegations of its former treasurer Paul Sylvester taking bribes from private equity firms in return for committing to their funds.
PrivateEquityCentral 12.10.01

JP Morgan announces better results, but still in red
JP Morgan Partners, the private equity arm of US banking giant JP Morgan Chase, unveiled a much brighter set of results for the third quarter than the preceding three months but remains firmly in the red. The firm wrote off $103m in the latest quarter, compared with its massive $826m write-off in the second quarter.
AltAssets 18.10.01

Ardesta expands venture operations
Ardesta, which incubates and funds tech and microsystems companies, has said that it will lead more later stage deals and expand its staff. The firm also said it would focus more in the future on optical and telecommunications companies. Set up in 2000 with $100m from high net worth individuals, the firm currently tends to seed companies and provide early-stage financing. However, founder and CEO Richard D Snyder told VentureWire (4.10.01), it will be ready to step up and provide follow-on financing as and when companies need it. So far, the fund has only led one later stage deal, a $5m series E round for Micronics, a developer of microfluidics-based services.

Bin Laden family liquidates investment in Carlyle
The giant US Carlyle Group has bought out investments held by the Saudi Bin Laden family to pre-empt any controversy that might stem from the private equity group's stake in military and aerospace firms. A report in the New York Times (28.10.01) said that both parties had mutually agreed the decision. The enormously wealthy Bin Laden family has investments spread around the US and Europe. Its first investment in the Carlyle Group dates back to 1994, when it committed $2m to the $1.3bn Carlyle Partners II buy-out fund.

Calsters ups private equity exposure
California State Teachers Retirement System (Calsters), the third largest public pension fund in the US, is to increase its investment in private equity over the next three years. Its investment committee has voted to increase its allocation to alternative assets to eight per cent from five per cent and decided that all that increase will be in private equity, according to PrivateEquityCentral (17.10.01). At the same time, the committee voted to scale back its international exposure.