PE
Primer
VCs and private-equity
investors are chatting, debating--even bellowing-- about
beauty contests, fallen angels, mezzanines and road shows.
What are they talking about?
Aftermarket:
Any stock sold after its initial public offering sells at
the aftermarket.
Beauty Contest: The contestants: investment bankers. The
judge: A pre-IPO company. The prize: Doing the deal. The
goal? Smile a lot, and try to stand out.
Broken IPOs: When an IPO ends up trading less than
its offering price soon after it’s offered, it’s a
sticky issue.
Fallen Angels: Those companies that are doing things
right, only to see their stock tank for reasons outside
their control.
Mezzanine Funding: When talking IPOs, mezzanine
capital typically refers to the last round of financing
before an IPO goes public.
Private Equity Funds: Usually limited partnerships,
such funds consist of general partners who run the fund and
raise money for it by attracting limited
partners—institutional investors and wealthy individuals.
Road Show: To attract indications of interest, there’s
nothing like being there—or at least that’s what
underwriters hope as they visit groups of institutional
investors in the quest to attract money for IPOs.
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Private
Equity Update
Wireless gets more sun
Sun Microsystems (SUNW)
said that its investment arm would spend $100
million to fund private wireless firms in 2001, which should
prompt startups to begin sniffing around Sun’s Santa
Clara, Calif. headquarters.
The networking
company created the fund to help position itself against
competitors like IBM (IBM),
Hewlett Packard (HWP) and Compaq Computer
(CPQ)--all of which are angling to sell network servers to
the wireless market.
Sun Micro has already plowed VC funds into other wireless
companies, including Everypath and Nuance
Communications (NUAN),
and has invested about $500 million in startups to date.
Holy
funding
Trinity
Ventures, a VC firm
based in Menlo Park, Calif., attracted $540 million for a
new fund that will invest in wireless communications,
e-services and software startup companies during the next
two years.
Fund investors
include Goldman Sachs and Grove Street Advisors
for CalPERS.
Optical
firms get lit
Shrugging
off bad news from Lucent Technologies and Nortel
Networks, VCs have recently turned their focus on
several private equity deals in the optical networking
sector.
Centerpoint Broadband Technologies, a newly formed
optical transport systems maker, said it raised $130 million
from several investors, including $250 billion fund giant Putnum
Investments. Other
investors in the deal include OppenheimerFunds,
Amerindo Investment Advisors, Firsthand Capital
Management and Pilgrim Baxter & Associates.
Meanwhile, fiber optic component maker Cierra Photonics
said it has secured $40 million in its Series B round of
financing led by Worldview Technology Partners. Other
investors in this round include The Mayfield Fund, Soros
Fund Management and Chase Capital Partners.
Optical components designer MPI MetroPhotonics nabbed
$40.9 million in its second round of financing from Yorkton
Securities and other unnamed investors. The Ottawa,
Canada-based firm said it would use the money to buy
semiconductor manufacturing equipment, hire more employees,
and find a new location.
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