10th March 2011. In a deal that values iSelect at A$300m, US private equity firm Spectrum Equity Investors has acquired 10.2% of existing iSelect shares for A$30.16m. In 2010 iSelect had revenue of A$43 million and EBITDA of $9.3 million, pricing the investment at an effective 6.97 times sales and 32 times 2010 EBITDA.
Whilst focussing on “comparision” services to consumers, iSelect derives most of its revenue by acting as a broker to insurance providers, who pay to be partners, and take part in the comparative process using iSelect’s patented algorithm. Reveneue grew almost 60% in 2010, with most growth coming from its entry into life and general insurance advice. Almost half of its revenue was from trailing commissions – recurrent revenue paid to intermediaries such as iSelect.
iSelect was founded in 2000 by managing director Damien Waller, and David Urpani, who invented of the price comparison software. Ninemsn (a 50% joint venture between Microsoft and Nine Entertainment) acquired a 35% shareholding in 2006.
Spectrum bought existing equity, believed to be from the company’s founders and private investors. It is understood that ninemsn has retained its 35% share holding.
iSelect became an unlisted public company in 2010 to allow for raisings of A$15.6m by broker EL&C Baillieu Stockbroking, to allow for more than 50 investors,
About Spectrum Equity Investors
Founded in 1994, Spectrum Equity Investors have raised five investment funds representing $4 billion of private equity capital. Their investment activity is focused on business services, entertainment, communications, information services, media, and related growth sectors. The companies in which they invest are leaders in their industries, have well-established business models, are run by experienced management teams, and have significant opportunities for future growth either organically, through acquisition, or both. Their investment activity includes private companies, public companies, and divisions of larger companies. They invest, either as a minority or majority investor, providing equity capital in a wide variety of transactions.
Spectrum Equity Investors typically invest between $30 million – $150 million per investment and are capable of underwriting much larger equity amounts in conjunction with their limited partners.
Their investment professionals operate from offices in Boston, Massachusetts and Menlo Park, California, and they invest across North America and Western Europe.