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TheStreet Open House

The Deal: Cox Buys Back AutoTrader Stake For $1.8B

NEW YORK (TheStreet) Providence Equity Partners is selling its stake in online car retailer AutoTrader Group back to media conglomerate Cox Enterprises for about $1.8 billion, a source told The Deal.

The private equity firm, which bought a 25% stake in 2010 from Cox, will have a return of about 3 times the $640 million it invested, or an IRR of 38%, the source said.

The transaction values Atlanta-based AutoTrader Group at about $7 billion. After Providence's investment, AutoTrader built itself up with a number of M&A transactions, including taking a 21.8% stake in Chinese online car retailer Bitauto Holdings (BITA)

The AutoTrader.com exit is the latest in a series of deals in which the firm has sold off assets, generating returns for funds, including its $12 billion 2007 vehicle.

In late 2012, Providence sold its stake in the YES Network, a cable service carrying the New York Yankees, in a deal that valued the company at about $3 billion, after holding it for more than a decade. Last year, the private equity firm also disposed of its 10% stake in Hulu for $200 million by selling the Web entertainment carrier back to the joint venture that it had started with NBCUniversal, News Corp.'s Fox and Walt Disney (DIS) ABC in 2007. Providence also sold its stake in online video platform iQiyi.com to Chinese search titan Baidu (BIDU).

At the end of last year, Providence sold George Little Management to Emerald Expositions for $335 million-after the private equity firm acquired GLM in a $173 million transaction in 2011.

According to figures maintained by the California Public Employees Retirement System, Providence Equity Partners V, its 2005 fund, generated a net IRR of 3.4 and an investment multiple of 1.2 times; its Providence Equity Partners VI fund generated a net IRR of 3.3 and an investment multiple of 1.1 times. Those figures are accurate as of June 30, 2013, according to the pension fund's website, however, and do not factor in recent exits.

Other bigger exits loom for Providence Equity. Last year, The Deal reported the private equity firm, along with Thomas H. Lee Partners, TPG and Saban Capital Group, would look to bring Univision Inc. back to the public markets this year-the consortium bought the Spanish-language programmer in a $13.7 billion deal at the top of the last leveraged buyout boom market.

The private equity firm has other investments to build on: in 2013, it established a partnership with the National Football League to target startups for investment, and in 2012 it invested in media executive Peter Chernin's Chernin Group, an investment firm that backed Tumblr, Flipboard, Pandora Media (P) and other online properties.

--Written by Chris Ciaccia in New York

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