WaMu wants to unload VC stakes

Washington Mutual Inc. has joined the secondaries parade.

WaMu, the former owner of Washington Mutual Savings Bank, is aiming to sell its stakes in 10 venture funds, as part of its Chapter 11 bankruptcy filing.

The VC holdings include investments in Arch Venture Partners (fund V), ArrowPath Venture Capital (fund II), Digital Partners (fund III), FTVentures (funds II and III and a sidecar fund from 1998), Madrona Venture Group (funds I and III), Maveron Equity Partners (its 2000 vintage fund), and Northwest Venture Partners (fund III).

Madrona Managing Directors Matt McIlwain and Greg Gottesman told online news site TechFlash that WaMu’s decision to sell the portfolio would have little impact on Madrona.

WaMu has committed about $36.5 million to the 10 funds, according to court documents. Most recently, it signed on to a $10 million investment in San Francisco-based FT Ventures’ third fund. FT Ventures raised about $512 million in 2007 to invest in expansion stage deals. WaMu reported that it has contributed $3.3 million to FT’s fund to date.

Overall, the company has contributed $27.8 million to the 10 funds.

In addition, Washington Mutual is seeking to sell its stakes in three companies:• WaveLink Corp., a Kirkland, Wash.-based developer of wireless communications software. Court documents state that WaMu is selling Series A and Series B stock with face values of $1 million and $4.35 million, respectively.

Financial Engines Inc., a Palo Alto, Calif.-based developer of financial portfolio management services. WaMu is selling Series E stock in the face amount of $5 million.

Isilon Systems Inc., a Seattle-based provider of digital media storage. WaMu owns common stock in the company, which went public in late 2006.

The VC funds are being sold by Washington Mutual Inc., which is the holding company that is operating as a separate entity from the banking business that is now owned by JPMorgan Chase. Washington Mutual Inc. is the business that is currently in Chapter 11, and its assets include common stock interest in Washington Mutual bank.

In late September, JP Morgan paid $1.9 billion for the bank subsidiaries. Washington Mutual Bank’s closure and receivership is the largest bank failure in history. —Alastair Goldfisher