Private equity driver gears up for Auto Trader flotation

Apax first bought into Auto Trader in 2007

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The Independent Online

The private equity firm Apax Partners yesterday buckled up for a potential £2bn float of Auto Trader, the used-car sales website, in what could be the biggest listing of the year so far in London.

Apax first bought into Auto Trader in 2007, acquiring a 49.9 per cent stake from Guardian Media Group, and took full control of the business last year, buying the remainder of GMG’s stake. In January, the buyout firm drafted in Deutsche Bank and Bank of America Merrill Lynch to bring the operation to market.

As equity markets recover from their wobbles last autumn and the FTSE 100 pushes to all-time highs, the climate for a float now looks far more favourable.

Auto Trader began life nearly 40 years ago as a magazine, generating a fortune for its founder Sir John Madejski, who later bought Reading Football Club.

Sir John – who is no longer a shareholder – spotted the potential of the idea while on holiday in Florida in the 1970s and co-founded Hurst’s Thames Valley Trader magazine in 1977, later changing the name to Auto Trader and forming as partnership with the Guardian group in the early 1980s to expand the reach of the title nationally.

The brand was early to move online, launching a website in 1996 before dropping its print edition entirely in 2013.

It now enjoys a dominant position in the used-car market with 35 million monthly visits to its site – more than four times as many as its nearest competitor. The site also carries nearly twice as many adverts as its nearest rival, and around 80 per cent of car dealers advertise with it.

The float plans come weeks after reports of interest in the business from the US private equity firm Hellman & Friedman, which owns a German equivalent of Auto Trader.

It will also spark speculation that another used-car website, BCA Marketplace – the owner of – could revive its own float plans after pulling them in October during the stock market turbulence.

It is likely that a listing would lead to Apax offloading about 30 per cent of the business, as well as netting paper fortunes for management, including the chief executive Trevor Mather.

Apax refused to comment on management stakes, although shareholders will be subject to “customary lock-up arrangements”.

The company would use the float funds and a new £550m term loan to clear its existing debt pile.

In the year to 30 March, the business generated continuing revenues of £237.7m and underlying profits of £136.1m. In the nine months since then, it has grown sales by another 8 per cent, with underlying profits up 16 per cent.

Apax’s other investments include the fashion chain New Look – owned jointly with the private equity firm Permira – which has hired JP Morgan to work on a float in the coming months. Apax also owns Top Right, the publishing and exhibitions group formerly known as Emap.