The company’s owners, including Cox Enterprises Inc. and Providence Equity Partners, may be trying to capitalize on rising demand for cars and trucks as well as momentum from Facebook Inc.’s filing for a $5 billion IPO this week. Talks regarding an AutoTrader IPO are in early stages and the owners could decide against a deal, said the person, who declined to be named because the process is private.
Private-equity firms are seeking to shed assets and return money to their backers through so-called exits, the process of selling or taking a buyout-backed company public. At the same time, U.S. new-vehicle sales are returning to pre-recession levels. Sales may rise for a third straight year in 2012 for the first time since 2000, according to data compiled by Bloomberg, and used-car prices are at a near-record. Facebook’s IPO is also helping boost Internet companies’ valuations.
Exits fell to their lowest level in seven quarters, London- based researcher Preqin Ltd. said in December. The slowdown comes as firms are marketing new investment pools to clients who often wait for payouts.
An AutoTrader stock sale could bolster Providence Equity’s efforts to secure commitments for a new buyout fund, which has attracted more than $3 billion. The firm, founded in 1989 by Jonathan Nelson, oversees $23 billion in equity investments. It took three months to complete its biggest fund, the $12 billion Providence Equity Partners VI, in February 2007, before the credit crisis froze buyouts.
Andrew Cole, a spokesman for Providence, Rhode Island-based Providence Equity, and Lou Laste, a spokesman for Atlanta-based AutoTrader, declined to comment on the company’s plans. A message left after normal business hours with Cox Enterprises, based in Atlanta, wasn’t returned.
Formed in 1997 under the name AutoConnect.com, AutoTrader was created as a subsidiary of Manheim Auctions Inc., the world’s largest operator of wholesale auctions. Manheim is a unit of Cox Enterprises, a closely held media company.
AutoTrader, which attracts more than 14 million buyers each month, according to its website, first attempted an IPO in 2000 and withdrew the offering, citing market conditions. In May 2010, Cox Enterprises announced Providence Equity acquired a 25 percent equity interest in AutoTrader, led by Chief Executive Officer Chip Perry.
The company was on Yahoo! Inc.’s wish list as part of a tax-efficient asset swap with Alibaba Group Holding Ltd. and Softbank Corp., people with knowledge of the matter said last month.