Target: Canpages Inc.
Price: C$225 million ($220 million)
Sponsor: Yellow Media
Seller: HM Capital Partners LLC
Financial Adviser: Sponsor: Scotia Capital, TD Securities; Seller: Signal Hill
Legal Adviser: Sponsor: Ropes & Gray; Seller: Weil Gotshal & Manges LLP
The exit brings to a close one of HM Capital’s last investments in the directories business, a once-popular sector for buyout firms that has faced serious challenges because of declining advertising revenue. The firm still owns a majority stake in Ziplocal, an Orem, Utah-based directories publisher.
“I wouldn’t say [directories businesses] are an active target at the moment,” Peter Brodsky, a partner at HM Capital, told Buyouts. “It’s an industry that faces its fair share of challenges.”
Nonetheless, Brodsky said the investment was “very successful” for HM Capital, though he declined to discuss the firm’s return in detail. The firm first invested in the company back in 2005 from
HM Capital’s strategy was to create a national, independent directories business similar to what Hicks Muse built in the United States via Yell Group Plc, a U.K.-based publisher of directories it partnered with
Brodsky said the firm achieved its goal with Canpages, quadrupling the company’s revenues thanks to several add-on acquisitions, initiating an online business which now reportedly accounts for about 23 percent of the company’s revenue, and building out Canpages sales and management teams. HM Capital had not been actively shopping the company, Brodsky said.
HM Capital was among several firms drawn to the directories business at the beginning of the decade. In September 2001,