July 1st, 2010
Bankrate To Buy NetQuote, CreditCards.com
By Beina Xu
June 29, 2010
Of DOW JONES LBO WIRE
Personal-finance portal Bankrate Inc. is planning two big acquisitions, less than a year after being purchased by private equity firm Apax Partners.
Bankrate inked a $205 million deal to buy NetQuote Inc., which is backed by Spectrum Equity Investors LP and Stripes Group LLC. It agreed to pay $145 million for CreditCards.com, which Austin Ventures purchased in 2006 with financing from American Capital Ltd. According to Moody’s Investors Service, Apax will contribute $80 million for the purchases, bringing the firm’s total equity contribution in the platform to roughly $650 million.
Apax Principal Sean Fernandes said the two deals will give Bankrate “market leading positions,” adding that the firm will focus on integration and organic growth going forward.
Bankrate upsized a proposed senior secured notes offering to $300 million from $280 million, according to Standard & Poor’s Ratings Services. The demand for the notes was “very strong,” Fernandes said.
Bankrate, Spectrum, Austin Ventures and American Capital executives were not available to comment.
Roughly $238 million of Bankrate subordinated shareholder notes will be converted into preferred stock, Moody’s said.
The deal will roughly double the company’s revenue, said Moody’s, which assigned Bankrate a B2 corporate credit rating. Bankrate’s revenue for the 12 months ended March 31, pro forma for the acquisitions, was about $258 million, Moody’s said. S&P expects to give a B corporate credit rating after the deal closes.
Denver-based NetQuote helps customers choose from around 4,000 agents selling auto, health, life and home insurance. Spectrum and Stripes acquired NetQuote in 2005.
CreditCards.com is an online comparison-shopping engine for credit cards. Austin Ventures led an October 2006 buyout of the company. In 2007, CreditCards.com filed for an initial public offering worth up to $115 million but withdrew the offering due to unfavorable market conditions.
Apax bought Bankrate last September for $571 million, in a notable all-equity deal, after the company rejected the idea of introducing leverage into the deal structure. Fernandes said it had been a “very conscious” decision to undertake the deal with all equity.
“We bought the business all-equity because it has a strong growth profile,” he said.
Bankrate offers information on mortgages, home equity loans and credit cards through its online portal. Its operations include Interest.com, Mortgage-calc.com, Nationwide Card Services Inc. and Savingforcollege.com.
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