Providence seals $1.9bn AutoTrader exit

The firm has generated a 3x return multiple from its minority stake in AutoTrader.

Providence Equity Partners has sold its 25 percent stake in AutoTrader Group to Cox Enterprises. The US firm received $1.8 billion from the sale, having previously taken a $100 million dividend in 2012.

Overall, the transaction generated a 3x return multiple and a 38 percent net internal rate of return, according to a source familiar with the transaction.

AutoTrader is a digital marketplace and software for US car dealers. Providence acquired its minority stake in the company in 2010.

“Through strategic acquisitions and the introduction of dealer software solutions, [management] have advanced the original vision of the company and created a game-changer,” Michael Dominguez, Providence managing director said in a statement.

Providence helped AutoTrader complete six add-on acquisitions, including car valuation company Kelley Blue Book.

The firm has acquired stakes in other media companies including Yankees Sports and Entertainment Network and Hulu, which streams online video of TV shows and movies.

Since its inception in 1989, Providence has invested in more than 130 communications, education and information companies. The firm has managed more than $37 billion in commitments, including its latest fund, which closed on $5 billion in July, Private Equity International reported. 

Based in Providence, Rhode Island, Providence is led by founder Jonathan Nelson, a former Narragansett Capital executive.