Elevation in $100m Homestore PIPE

Days following the announcement of its debut deal, private equity firm Elevation Partners has announced an agreement to buy $100m worth of convertible preferred stock in Homestore, an Internet real estate services company.

Elevation Partners, which recently closed a debut $1.9 billion (€1.6 billion) fund, has announced a $100 million investment in Homestore, a provider of online real-estate services.

The investment will be in the form of a convertible preferred security with a $4.20 conversion price, currently 18 percent over Homestore’s closing price on Nov. 4. Fully converted, the investment would give Elevation Partners a 14 percent stake in the company.

Homestore’s stock price has drifted between $2 and $5 per share for more than three years after plummeting from over $100 per share in 2000.

The announcement comes just days after Elevation Partners announced a debut deal – the creation of a $300 million video game development platform comprised of well known companies Pandemic and BioWare.

Homestore, based in Westlake Village, California, runs a network of online real estate sites and provides tools to realtors. In a statement, Elevation Partners co-founders Fred Anderson and Roger McNamee said they were attracted to the investment in part because of the company’s rich content. Elevation Partners is focused on building businesses around strong intellectual property, mostly media IP.

Anderson and McNamee will join Homestore’s board of directors, increasing the number of directors to ten from eight.

Elevation Partners was founded by two former Silver Lake Partners cofounders,
Marc Bodnick and McNamee, former Blackstone senior managing director Bret Pearlman, former Apple Computer CFO Anderson and rock star Bono, who will bring entertainment industry “domain knowledge” to the firm’s strategy, according to fundraising documents.

In March the firm initially agreed to purchase UK video game Eidos for roughly £71 million ($102 million), but the deal subsequently fell apart.