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An ambitious biotech venture capital fund led by a former chairman of Shell Oil Co. and launched less than 18 months ago has halted operations.
Local management of Houstonbased Momentum BioVentures is seeking to buy out the owners and restart the fund.
Momentum was formed with much fanfare in February of 2003. With former Shell top executive Steven Miller at the helm as chairman, the fund attracted a lot of early attention by announcing plans to invest $200 million in biotechnology and life science companies throughout southeast Texas. (See "Biotech funding gains Momentum," Feb. 28.)
But the initial hype may have been premature. Momentum directors, who are also investors, voted on July 19 to seek to gain control of the fund's common stock.
"We have entered into discussions with the MBV's majority owners, and expressed our desire to acquire the company and have the freedom to develop opportunities on our own," Miller says.
The fund was created as a spin-off of Dallas-based Momentum Equity Group, a licensed investment bank that structures deals for individuals with high net worth.
The holding company for Momentum Equity Group and Momentum BioVentures is Momentum Endeavors, which controls a majority of common stock.
The holding company's lead director is Anthony F. Vaccaro Jr. in Dallas, who owns 89 percent to 90 percent of the Houston fund while his partners own the majority of the remaining shares, according to Miller.
If the local management buyout goes through, Vaccaro will no longer be on the board of Momentum BioVentures, Miller says.
Calls to Vaccaro were not returned.
While Miller says there were "a lot of different reasons" for the board's decision, the primary problem was that Momentum BioVentures "never got to the working capital fund-raising level we wanted to "
The original prospectus stated that the fund would not go forward if...