VSS exits insurance marketing biz from Fund IV

Ares Management also exited its stake in Tranzact, which was sold through a limited auction process, VSS Managing Partner Jeffrey Stevenson told Buyouts. Ares had not responded to a request for comment as of press time.

White Mountains Insurance Group could not be reached for comment.

VSS acquired its stake in Tranzact in 2007 for $185 million. Stevenson told Buyouts: “It’s a very good return for our investors.”

Tranzact marketed a wide range of consumer products prior to when it was acquired by VSS. Its performance suffered through the recession, but later recovered as the company built up its direct-to-consumer insurance vertical—now its primary line of business. The transition led to a 5x improvement in Tranzact’s EBITDA from its recession-era low, Stevenson said.

“They went from a more generalist marketing services company to being more of a specialist,” Stevenson said. “The hold period here was longer for two reasons. The first was that we went through a recession…The second is that Tranzact really transformed itself.”

Tranzact was a portfolio company in VSS Communications Partners IV, a $1.3 billion 2005 vintage fund that was generating a 0.78x multiple and negative 4.96 percent internal rate of return as of March 31 for backer Teachers’ Retirement System of the City of New York.

The firm has readied exits for several of its Fund IV investments recently, including a $180 million deal with Sony Corp for media network CSC. In early October, UBM Plc announced that it had agreed to acquire trade show organizer Advanstar Communications from VSS, Ares and Anchorage Capital Group for $972 million cash.

Stevenson expects to bring another Fund IV portfolio company to market during the fourth quarter. He declined to say which of the firm’s portfolio companies will be sold.