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North America: December 2001

Canadian private equity still way behind US, corporate venturers stand their ground, end of year sees US IPO flurry, Softbank changes name to Mobius…

US Heartland Industrial closes first fund at $1.4bn
US old economy buy-out specialists Heartland Industrial Partners finally closed its debut fund at $1.4bn. The firm started fund-raising about two years ago and closed a little short of its original $2bn target, highlighting how tough market conditions are, even at the less risky end of the private equity spectrum. The fund closed with a $150m investment from the Canadian Pension Plan Investment Board.
AltAssets 12.12.01

Corporate venturing still strong, despite general slowdown
While many have predicted the large-scale withdrawal of corporate venturers amid the general economic gloom, a recent Accenture survey suggests that the vast majority of corporate venture capitalists are sticking to their guns. As many as 85 per cent of US executives have no plans to close their corporate venturing operations, according to the survey. However, it also found that corporations were unwilling to allow business units to invest on their own in uncertain economic times. It said that 55 per cent would invest via joint ventures; just 17 per cent said they would invest through independent venture units.
SiliconValley.com 12.12.01

Canadian private equity still lagging far behind US…
Canada's private equity industry is worth approximately C$36bn, according to a survey commissioned by Goodman & Carr and conducted by Macdonald & Associates. The industry has undergone a steady growth since its infancy in the 1980, but it is still dwarfed by its neighbour, the US, whose industry is worth close to US$1,000bn. Institutional investors, such as pension funds and insurance companies are still reticent about investing in the asset class, the survey said. Unsurprisingly under these circumstances, the largest contribution is made by high net worth individuals, followed by pension funds at 30 per cent and corporates at 25 per cent. Over half of capital invested in the Canadian industry is in venture capital and there are more than 150 groups focusing on this stage in the country. Mezzanine accounts for around 11 per cent and buy-out the remainder.
PrivateEquityOnline 14.12.01

…but focus shifts to life sciences
Canadian venture capitalists are focusing their energies on genomics and bioengineering following the high-tech downturn, said a survey by Deloitte & Touche and the Canadian Venture capital Association. Perhaps more interestingly, however, is the fact that the survey found that VCs have earmarked the majority of their remaining capital for new investments rather than follow-on finance. This bucks the trend seen in most reasonably developed private equity markets as VCs, starved of any meaningful exit opportunities, have been forced to concentrate on nurturing existing investments. The survey also found the country's VCs in an optimistic frame of mind as 53 per cent of respondents said they felt that economic conditions were likely to remain static or improve over the coming six months.
Canada NewsWire 17.12.01

Riverside opens Dallas office
US firm The Riverside Company has opened a new office in Dallas, its fourth. The private equity firm already has offices in New York, Cleveland and San Francisco. It has also promoted Andrew Strauss to partner. The firm recently announced the closure of its 2000 Riverside ApPreciation Fund at $412m, exceeding the original target of $250m.
PrivateEquityCentral 21.12.01

Softbank Venture Capital changes name to Mobius
California-based Softbank Venture Capital changed its name to Mobius Venture Capital ‘to reflect its independent status' from the Japanese firm Softbank Corporation that has been its biggest investor since the firm was started in 1996. It said the name change would have no bearing on the management, its funds, or the scope of its operations.
AltAssets 6.12.01

Cornell endowment on hunt for buy-out funds
New York state-based Cornell University endowment has said that it wants to invest in at least two buy-out funds to rebalance its portfolios between venture capital and LBOs. The endowment is currently worth around $3bn.
Alternative Investment News December 2001

St Paul says it is still committed to VC
St Paul has said that it will continue to invest in venture capital through its venture arm, despite the company's recent woes. The insurance underwriter recently announced it was to sell off parts of its insurance business after it was badly hit by claims from the 11 September attacks. The firm has kept a steady pace of investment through this year of around $60m per quarter. However, it said it would slow down to ease its parent's cash flow.
The Deal 13.12.01

US sees end of year IPO rally
The US market for new issues received an end of year boost after ten initial public offerings were scheduled for the last week before the IPO market closed for its holiday break. The IPOs were from five different sectors including technology, finance, defence and biotechnology. Although not exactly a trend, this rush could well help boost confidence among the nation's exit-starved venture capitalists, who have been monitoring the IPO market for possible signs of a recovery.
SiliconValley.com 12.12.01

Bowman pulls out of hedge funds, too
Following its recent move out of private equity, Bowman Capital has decided to pull the plug on its hedge fund activities, too. The firm said that it would return capital to investors in its four hedge funds. Once a technology finance giant, Bowman will now concentrate on rescuing its $1bn Crossover Fund, which invests in both public and private markets.
PrivateEquityCentral 28.12.01

Montgomery moves into alternatives
San Francisco-based Montgomery Asset Management, which currently specialises in mutual funds, announced it is to launch a series of alternative asset products. It is to launch a fund of hedge funds in January and will branch out into private equity and venture capital funds later in the year.
PrivateEquityCentral 4.12.01

US VCs in sector shift
The most popular sectors for venture capital investment in the US have changed over the last year, according to a survey by Second Venture Corp. Instead of focusing mainly on technology, VCs have shifted their focus to entertainment, hospitality and professional services, it said. The survey also found that US start-up companies typically seek around $100,000 in financing on average; launched and profitable companies look to raise between $1m and $3m.
Internet Week 5.12.01