Deal round-up 15/09/03

LDC exits Spearhead investment; MTI funds VegaStream MBO; Sofinnova invests in Varioptic; BTG, Quester co-lead Xention round; Investcorp provides E12.1m for Utimaco; Benchmark Capital, Index Ventures back E3m round; Atlas, LCF lead U3 Pharma second round

LDC exits Spearhead investment


Lloyds Development Capital, the private equity arm of UK bank LloydsTSB, has completed the sale of Spearhead Exhibitions, a Surrey-based firm which owns and organises exhibitions and events in the aerospace, defence, oil & gas and marine science.


The business has been sold to Reed Exhibitions 20 months after LDC backed a £10m management buyout of the business in December 2001. The deal represents a highly profitable exit for LDC, which made a 36 per cent return on investment since the management buyout.


Spearhead were advised by Grant Thornton Corporate Finance, while Barclays Leveraged Finance provided the structured debt for the sale.


MTI funds VegaStream MBO


UK-based early-stage technology investor MTI has made a £3m investment in VegaStream, a supplier of business VoIP (Voice over Internet Protocol) gateways. The investment comes as part of VegaStream's management buyout from Pace Micro Technology.


VegaStream returns to the MTI portfolio, having been originally funded as a start-up business by MTI in 1997, before being sold to Pace in March 2000. Investors in VegaStream besides MTI, include VegaStream management together with Pace, who retain a 20 per cent share in the new business. As part of the transaction, Ernie Richardson, director at MTI, joins the board of VegaStream.


Sofinnova invests in Varioptic


Sofinnova Partners, the Paris-based venture capital firm, has backed an initial E2m round of financing for Varioptic, a Lyon-based firm which designs and commercialises optical lens technology.


Varioptic was founded in March 2002 by Bruno Berge, a professor at l'Ecole Normale Supérieure in Lyon. He invented the Varioptic technology, and started the company, which was spun off from the ENS laboratory with the support of the laboratory. Varioptic has developed an electrically controlled, variable miniature focal lens for use in digital cameras which it intends to put into commercial production in 2004.


BTG, Quester co-lead Xention round


A group of investors led by BTG International and Quester have completed a £4m round of financing for Xention Discovery, a drug discovery company based in Cambridge. Other investors joining the round included Albany Ventures and Enterprise Venture Capital Trust, who join existing investors MVM and Isis Equity Partners.


The financing will be used to further develop and advance the company’s drug screening programs in cardiovascular and neurology. Xention has now raised £8m in venture financing, following a first round of £4m closed in August 2002.


Investcorp provides E12.1m for Utimaco


Investcorp has provided E12.1m in financing for Utimaco Software, a provider of corporate IT security solutions. As part of this transaction, Hazem Ben-Gacem, a partner at Investcorp's venture capital group, was appointed to Utimaco's supervisory board.


The funding package, which consists of a capital increase and convertible bond, will be used to enable Utimaco to develop the company’s range of products and explore potential acquisition opportunities.


Benchmark Capital, Index Ventures back E3m round


US venture capital firms Benchmark Capital and Index Ventures have provided E3m in Series A financing to Video Island, a UK-based home entertainment company which rents DVD products to consumers. George Coelho, partner at Benchmark and Danny Rimer, partner at Index Ventures, will join the Video Island board.


The proceeds of fundraising will be used for sales and marketing, business development and further investment in logistics and the company’s selection of DVDs. The firm was founded by Robin Klein, founder and chairman of Retail Variations and Simon Franks of Redbus, the UK based media and entertainment group.


Atlas, LCF lead U3 Pharma second round


Atlas Venture and LCF Rothschild Venture Partners have led a E13.25m second round of financing for U3 Pharma, a German biotech company based in Munich. In addition, the BioMedical Sciences Investment Fund of Singapore backed the fund in addition to previous investors including Medicis Venture Management and Alta Partners.


In conjunction with the financing, Joël Besse of Atlas Venture and Michèle Ollier of LCF Rothschild Venture Partners have joined U3 Pharma’s supervisory board. The proceeds of the round will be used to develop several of the group’s anticancer drugs into clinical development.