Click here for printer friendly page

North America: May 2003

NVCA seeks to defend University of California in disclosure suit, venture investment in Canada plummets, Walden to cut fund size for second time, US pensions and endowments increase allocations to private equity, Altira closes energy technology fund…

Venture investing in Canada falls to seven-year low
Venture Capital investment in Canada fell to a seven-year low in the first quarter of 2003. Geo-political uncertainty and the SARS outbreak have been blamed for the dramatic slide in venture activity. The value of venture investments in Canada fell to $305m from $754m in the fourth quarter of 2002. This dramatic decline follows a 51 per cent leap in the fourth quarter of last year according to figures released by the Canadian Venture Capital Association and Toronto-based Macdonald & Associates. The most significant decline was in the size of the average deal, which has plummeted to $1.4m in the first quarter of 2003 from $2.9m in the fourth quarter of last year, $3.6m for the whole of 2002 and $5.1m in 2001.
AltAssets 22.5.03

US Charterhouse Group holds first close at over $300m
US Charterhouse Group International has held a first close on its latest fund, Charterhouse Equity Partners IV. The fund has currently raised $300m, 40 per cent of its $750m target. Charterhouse launched the fund in November last year and expects to hold a final close at the end of 2003. The fund has a hard cap of $1bn. The fund's investors include the State of Michigan, an existing investor, and Dutch Pension manager NIB capital, which has not previously invested with the firm.
PrivateEquityCentral 16.5.03

Wisconsin ups private equity allocation
The $46bn retirement fund of the State of Wisconsin Investment Board has decided to increase its private equity allocation from five per cent of assets to six per cent. The announcement follows an asset allocation study and the fund intends to reach its new target over the coming 18 to 24 months. Its current private equity portfolio currently represents around four per cent of the fund's assets.
The Private Equity Analyst May 2003

US Wind Point Partners closes fifth fund at $476m
US-based Wind Point Partners has closed its fifth fund with commitments of $476m. A number of repeat investors including the State of Michigan Retirement Systems, the State of Wisconsin Investment Board, DaimlerChrysler Corporation and Northwestern Mutual Life, have invested in the fund. In addition, a number of new limited partners, including Teachers' Merchant Bank, the private equity arm of Ontario Teachers' Pension Plan, Mass Mutual Life Insurance, the Illinois State Board of Investment and PPM America, committed to Wind Point Partners V. Wind Point focuses on identifying CEOs to build enterprises via acquisition and growth.
AltAssets 15.5.03

US army launches venture fund to develop power sources for troops
The US army is setting up a $25m non-profit venture fund to spur private sector development of lighter, more efficient, power sources for troops in the field. The Venture Capital Initiative aims to promote the innovation of portable power and energy technologies to lighten soldiers' loads. The enterprise will be modelled on the CIA's initiative, In-Q-Tel. In-Q-Tel was launched in 1999 and invests in cutting edge technologies designed to boost US intelligence capabilities. In-Q-Tel has invested in more than 40 companies since its inception.
Reuters 9.5.03

CalPERS publishes performance data on its Grove Street venture investments
Giant US pension fund CalPERS has finally published performance data from its Grove Street Advisors venture fund of funds investments. Grove Street had originally resisted the release, which reflects CalPERS' desire to maximise transparency. Grove Street manages almost $3bn for CalPERS in more than 110 separate venture capital limited partnerships. The investments are structured in three different funds of funds, California Emerging Ventures I, II, and III, which date back to 1999. All three of the vehicles currently have profoundly negative internal rates of return, although CalPERS cautioned it was far too early to make a meaningful interpretation of their performance at such an early stage in the funds' life.
AltAssets 2.5.03

Thomas McNerney closes inaugural healthcare fund
New-York based healthcare specialist Thomas, McNerney & Partners has closed its debut fund on $216m for investment in medical device, biotechnology and pharmaceutical sectors. The newly formed private equity firm has a broad mandate to invest in companies at all stages of development, investing between $10m and $20m per company. Thomas, McNerney and Boezi founded the firm in 2002. Thomas previously led the healthcare technology private equity practice at EM Warburg. McNerney and Boezi both joined the firm from the healthcare team at Coral Ventures.
AltAssets 7.5.03

US Ballast Point Ventures closes fund at $56m
US Ballast Point Ventures has announced the final close of its debut fund with commitments of $56m. Ballast Point Ventures is the only Florida-based fund to have raised new money for investments since 2000 and will focus on providing venture funding to companies in Texas and the South East of the US. The fund originally targeted $65m and has received commitments from 50 high net worth individuals and several institutional investors. Ballast Point Ventures' two managing partners, Richard Brandewie and Drew Graham, were formerly general partners at South Atlantic Venture Funds. South Atlantic was founded by Donald Burton and has invested $175m in over 60 companies in Florida, the South East and Texas.
AltAssets 30.5.03

Walden proposes further fund reduction
San Francisco-based Walden International has become the latest fund to propose a second reduction in size to one of funds. Walden joins firms such as Accel Partners and Mohr, Davidow Ventures, both of which have recently cut the size of their latest funds. The firm is looking to cut its PacVen Walden Ventures V fund to $600m in the third quarter of this year, following a reduction to $741m last year from its original size of $926m.
The Private Equity Analyst May 2003

NVCA enters disclosure fray
The National Venture Capital Association (NVCA) has become embroiled in the disclosure debate currently unfolding in the US by seeking to stop the University of California Retirement Plan from being forced to reveal its private equity performance figures. The NVCA has filed a complaint with a Californian court, saying that plans forced to reveal their private equity performance could be banned from future funds, thereby potentially damaging their investment returns. The NVCA has previously filed a similar complaint in defence of CalPERS, which was forced to dsclose the data last year by the San Jose Mercury News.
eFinancialNews 19.5.03

US Lighthouse Capital closes fifth venture debt fund
US venture debt firm, Lighthouse Capital Partners, has closed its latest fund at $366m. LCP V is the fifth in the firm's series of funds focusing on the technology and life science sectors. Lighthouse Capital makes investments in the form of secured loans to early and expansion-stage companies that have received equity financing from mainstream venture capital firms. Lighthouse invests across a range of sectors including communications, enterprise computing, storage, biotechnology and medical devices. Lighthouse Capital's latest fund received commitments from a number of existing investors including Massachusetts Institute of Technology, University of Richmond and Dartmouth College. New limited partners include Teachers Insurance and Annuity Association of America, State Teachers Retirement System of Ohio, Key Capital Corporation, SDCERA, Quellos Private Capital, Howard Hughes Medical Institute, Hamilton Lane and Verizon Investment Management Corporation.
AltAssets 28.5.03

SFERS switches from Cambridge to Portfolio Advisors
Following over a year of wrangling, the $10.5bn San Francisco City & County Employees' Retirement System has finally decided who to appoint as advisors to its $1.2bn alternatives portfolio. The systems investment board had initially whittled down the shortlist to include incumbent advisors Cambridge Associates and rival firm Pacific Corporate Group. Unable to choose between the two, however, they have now plumped for Portfolio Advisors, which currently manages more than $30bn in private equity investments.
PrivateEquityCentral 21.5.03

US firm to launch first ever exclusively Hispanic private equity fund
Chicago-based Hispania Capital Partners has launched the first national venture capital fund investing exclusively in Hispanic businesses. The fund is seeking to invest in excess of $70m. The private equity fund evolved from a 2000 alliance of the US Hispanic Chamber of Commerce and America's sixth largest bank, Bank One. Hispania is seeking to invest between $4m and $8m in manufacturing, service and technology businesses that Hispanics own or manage or that serve Hispanic communities. The fund is licensed by the Small Business Administration (SBA), which entitles it to guaranteed financing of up to twice the amount of private equity capital it raises. Hispania has raised $21m of funding so far and will therefore be supported by up to $42m of SBA leverage.
AltAssets 16.5.03

New Mexico commits to Ventana and vSpring
New Mexico State Investment Council has approved $35m in commitments to private equity. It will invest up to $15m to Ventana V and up to $20m in vSpring II to gain exposure to opportunities in the New Mexico region and across the South West. The NMSIC has a specific $200m regional private equity programme and has said that it is actively seeking funds that target the area.
Press Release 28.5.03

US Q1 venture fundraising slumps to lowest level since first quarter of 1994
US venture capital fundraising continued its downward spiral in the first quarter this year to record its lowest net total since 1994. Some 22 funds raised $996m but the net total was just $604m once fund reductions were taken into account, according to the National Venture Capital Association. The fourth quarter of last year saw 42 venture firms raise a total of $1.7bn, down from $2.5bn in the previous quarter but still a lot stronger than the latest period. The NVCA said more than 70 per cent of the number of funds raised in the first quarter were follow-on funds, reflecting the additional difficulty being experienced by first time funds. There were, however, a handful of successful new firms, such as Quaker BioVentures and Lumina Ventures.
AltAssets 7.5.03

US pensions and endowments up allocations to alternatives
US pension funds and endowments have increased their allocations to alternatives over the last year in an attempt to offset losses they have incurred on the equity investments, a recent report has found. The annual study by Greenwich Associates says that while alternatives still count for only a small proportion of their portfolios, at 7.5 per cent on average, many pensions and endowments had shifted part of their allocations from public equities and into alternatives, such as hedge funds and private equity. The survey found that 40 per cent of all funds invest in private equity, while as much as 60 per cent of endowments and foundations allocate to the asset class. The future looks good for alternatives, too, as 20 per cent of respondents said they were likely to make further shifts in their favour.
PrivateEquityCentral 6.5.03

Edgewater closes fourth fund on $200m
Chicago-based private equity firm, The Edgewater Funds, has closed its fourth fund on $200m. The firm launched Edgewater Private Equity Fund IV in the second quarter of 2001. Edgewater Funds was founded in 1991 and currently has $500m in assets under management. The firm has invested in over 80 companies in a range of sectors including business products and services, information technology and communications.
AltAssets 29.5.03

Altira closes $64m energy technology fund
Colorado-based early-stage venture firm, Altira Group, has closed its latest fund at $64m. Altira's fourth fund is its largest to date and will invest in energy-oriented technology companies. Altira Technology Fund IV will invest in technology opportunities in oil and gas, information technology for the energy industry, power generation, transmission and distribution, and renewable energy. The firm typically invests between $1m and $3m in North American companies.
AltAssets 28.5.03

Tough fundraising climate hits Palladium
New York-based Palladium Capital Partners has said it is to scale back its fundraising efforts, citing a difficult environment. In a letter the firm said: ‘It has become apparent that the fundraising process for Fund III will demand significantly more time than we had originally anticipated'. The firm had originally hoped to raise $300m. It will instead concentrate on its existing portfolio companies from its second fund.
The Deal 29.5.03