Apax to offload Trader Corp to Thoma Bravo

Thoma Bravo will pay around C$1.6 billion for the Canadian auto marketplace.

Global buyout house Apax Partners has agreed to sell Canadian automotive marketplace Trader Corporation to fellow private equity firm Thoma Bravo for C$1.575 billion ($1.2 billion; €1.1 billion), according to a statement.

The transaction is expected to close by the fourth quarter of 2016.

Trader is Canada's largest digital automotive marketplace, providing marketing software solutions to Canadian automotive dealers. Its websites – autoTRADER.ca, autoHEBDO.net and Autos.ca – attract 13 million visits a month, listing more than 450,000 vehicles on behalf of more than 5,000 dealers, Apax said. The company also provides software to help auto dealers make smarter and faster business, inventory, and marketing decisions.

Apax acquired Trader in 2011 in a C$745 million carve-out from Yellow Media. Under the firm’s ownership, Trader has redesigned its core website, launched mobile applications, repositioned its consumer brand and introduced new products and marketing software solutions, completing a print-to-digital transition.

The sale comes as Apax enters the final stretch of its latest fundraising. Apax IX has already amassed $7.9 billion, more than its $7.5 billion initial target, and has set a hard-cap of $9 billion.

The firm held an initial close on Apax IX on 20 May, with commitments reaching $7 billion, as reported by Private Equity International. The fund has since reportedly held an official first close.

Apax is offering LPs in Fund IX the choice of either a deal-by-deal carried interest distribution or the more typical European-style fund model, in which carry is not distributed until all drawn down capital is repaid to investors and the preferred return is met. It is understood that investors opting for the deal-by-deal structure will receive a discount on the management fee.

Thoma Bravo is also in market with its latest offering, Thoma Bravo Fund XII, which has a $7 billion target. Fundraising began in January for the vehicle, which is almost double the size of its predecessor, Thoma Bravo Fund XI, which closed on $3.65 billion two years ago.

Fund XII has a $7.2 billion hard-cap and is already oversubscribed, as reported by PEI. The fund will expand the firm’s strategy to include large cap transactions.

According to documents from the Los Angeles City Employees’ Retirement System (LACERS), which has made a $25 million commitment to the fund, Thoma Bravo has lowered the management fee to 1.5 percent from 2 percent for Fund XI. The carry will remain at 20 percent, but Fund XII will not have a preferred return rate. Fund XI did not have a preferred return either.