Ripplewood portfolio company makes $110m divesture

The Reader’s Digest Association has agreed to sell school groups and youth-focused fundraising group QSP to Time, which co-owned the unit until 1971. A Ripplewood-led consortium purchased the media company for $2.4bn in 2007.

Ripplewood Holdings portfolio company The Reader’s Digest Association has agreed to divest itself of school and youth groups fundraising unit QSP through a $110 million (€73.5 million) cash sale to magazine and website publisher Time.

QSP’s relationship with Time goes back to the fundraising company’s 1963 founding at which time the company was run jointly by Time and Reader’s Digest. Reader’s Digest bought out Time’s stake in 1971.

Pleasantville, New York-based Reader’s Digest is a multi-brand media company marketing books, magazines, music and video products.

An investor group led by Ripplewood completed a take-private of Readers Digest in a transaction valued at $2.4 billion in March 2007. Also in the investor group were J Rothschild Group, GoldenTree Asset Management, GSO Capital Partners, Merrill Lynch Capital and Magnetar Capital.

JPMorgan, Citigroup, Merrill Lynch and the Royal Bank of Scotland provided debt financing for the transaction.

Ripplewood is best-known for leading a consortium with JC Flowers that in 2000 acquired the troubled Long-Term Credit Bank of Japan in a $1.2 billion deal. Renamed Shinsei Bank, the company was listed in 2004 after a drastic turnaround. It is widely viewed as one of the most lucrative private equity deals ever, and remains the most successful Japanese buyout to date.

The firm is currently raising a US-focused fund targeting $4 billion, according to the Probitas Partners’ 2008 Private Equity Deskbook. In August 2007, a source told PEO that Ripplewood was targeting a $2.5 billion main fund supplemented by a co-investment fund to draw on for larger transactions.

The previous US-focused Ripplewood fund, Ripplewood Partners II, closed in 2000 on $1.2 billion.