Identify
Bankrate has long been regarded as one of the premier
destination portals for personal consumer finance information in
the United States.
Founded over 30 years ago as a print publisher of the Bank Rate
Monitor, the company migrated its rich data online in a consumer
friendly format in the early days of the internet. As the internet
continued to evolve and grow, Bankrate grew with it. By focusing on
its online operations, Bankrate successfully catered to consumers'
desire to compare and review products in a real-time environment.
Initially focused on providing consumers with information regarding
mortgage products, over time the company diversified into ancillary
areas.
Today, the company's flagship website, Bankrate.com, is one of
the leading US websites for consumer finance matters, including
banking, mortgages and tax. Several of the company's other brands
including InsureMe.com and CreditCardGuide.com are leading
destinations for comparison shopping of personal insurance products
and credit cards. Bankrate aggregates rates and other information
for more than 300 financial products from more than 4,800 financial
institutions across the US. In addition to distributing this
information on its own sites, Bankrate provides content to a
network of online partners, including Yahoo!, America Online and
MSNBC, as well as to over 500 national, regional and local
publications. The company's rate tables appear in national
publications including the Wall Street Journal, The New York Times
and USA Today.
The company generates revenue by selling advertising to
financial services companies and for providing new customer leads
for certificates of deposit, mortgages, credit cards and insurance
products to leading financial institutions and intermediaries in
the US.
Why did we like the company?
We first got to know the management team in early 2008. We were
immediately attracted to their vision for the company and how they
planned to make it the undisputed leader in each of its key
markets.
In late 2008 the financial crisis hit, significantly impacting
financial institutions' outward focus on attracting new customers
and, in turn, impacting the company's growth trajectory. The Apax
team, however, remained convinced of Bankrate's long-term
prospects. We had a unique perspective on the market space in which
Bankrate operates because it falls at the intersection of two of
our sector teams, Financial Services and Media. Core to our thesis
was (a) the belief that a secular shift by consumers to research
financial products online would continue, (b) that financial
institutions' advertising and marketing budgets would bounce back
from the cyclically depressed levels seen in 2009 and (c) that the
online share of marketing budgets would grow at an even faster pace
than the overall bounce back as financial institutions increasingly
look to target customers in the cost-effective online channel.
Like management, we also viewed the core Bankrate platform as an
attractive base from which to consolidate other finance websites
and create a true market champion.
Management and Apax firmly believed that a private setting
afforded a better setting to pursue the kind of transformational
M&A opportunities that we had in mind, which would be
challenging to execute in a public company environment. Finally,
having built a strong relationship with the management team during
the course of the preceding year, we had significant confidence in
their ability to grow the business.
How did we do the investment?
Following our initial approach to management, the Board decided to
conduct a limited auction for the company in the spring of 2009.
However, by this time, based on our relationship with the
management team built over the course of the prior year, the Apax
team had been able to conduct significant due diligence into the
company and the financial services markets to which it was
exposed.
Another significant advantage for Apax was the experience of key
deal team members, Mitch Truwit and Seth Brody, in managing and
operating leading online businesses including Priceline.com and
Orbitz.com. Their prior experience and insight allowed the deal
team to focus on key operational initiatives that could be
implemented in a post-deal setting to drive incremental value.
In July 2009, Funds advised by Apax Partners agreed to take the
company private, in a transaction backed with Apax Funds' equity
and rollover investments by the company's Chairman and management
team. Recognising the challenging macroeconomic backdrop at the
time we made the initial investment, we elected to fund the
transaction entirely with equity.
Support
Since closing the transaction in September 2009, the
Apax deal team has supported management with key operational and
strategic initiatives.
Seth Brody, an operating executive in Apax's Portfolio Support
Group, has been assisting management on several website
optimisation initiatives that have already resulted in tangible
increases to the company's profits.
One of the highest priorities for Bankrate was to pursue
accretive M&A that would allow the company to become the
undisputed leader in each of its key markets.
Two of the highest value targets on the list were Netquote.com,
the #1 provider of online insurance leads and CreditCards.com, the
#1 site for credit card comparisons. The management team, supported
by Apax, aggressively pursued both opportunities and has recently
signed purchase agreements with both targets. These transactions
are expected to close within the next month or two. Following
completion of these acquisitions, the combined Bankrate sites will
be the #1 online platforms for mortgage, deposit, insurance and
credit card lead generation, dramatically shifting the company's
profile and allowing Apax Funds to reposition it upon an ultimate
exit.
Finally, the board has been enhanced with the addition of Jeff
Boyd, CEO of Priceline, as a non-executive board member.
The deal team expects to continue to assist management to
identify growth opportunities and support their implementation over
the course of the investment.