Spectrum Equity to make 3.2x its money on Passport sale: CORRECTED

Spectrum Equity Investors, which is expected to begin fundraising soon, has scored another exit.

Spectrum and Great Hill Partners on Wednesday agreed to sell Passport Health Communications to Experian for $850 million. Franklin, Tenn.-based Passport Health provides data, analytics and software to hospitals and healthcare providers. The company is expected to generate $121 million in revenue for the year ended Dec. 31 on $30 million EBIT.

Spectrum, along with Great Hill Partners, completed a recap of Passport Health in 2008 and led a $232 million investment. The two firms held a majority stake in the company.

The Passport sale is the fifth realization from Spectrum’s fifth fund, Fund V which raised $1.2 billion in 2005. Exits include iPay, World-Check, Ancestry.com and SurveyMonkey. However, Ancestry and SurveyMonkey are not full exits, a source said.

Passport’s sale is expected to generate a 3.2x return for Spectrum, the person said.

Spectrum is expected to begin fundraising for its next fund sometime soon. The growth equity firm is investing out of Spectrum Equity Investors VI, which collected $680 million in 2010. Fund VI has yet to produce any exits. Spectrum’s sixth fund, a much younger pool, was posting an 8 percent net IRR as of September 30, 2013, according to a source.

The firm’s fifth fund was generating a net IRR of 17% as of September 30, the source said.

Over the summer, Spectrum and TA Associates acquired a minority stake in BATS Global Markets, which is merging with Direct Edge Holdings. The merger will create the second-largest U.S. stock exchange. Seamless, which is backed by Spectrum, also merged with GrubHub in May.

Officials for Spectrum declined comment.

(Correction: A prior version of the story incorrectly referred to the Passport sale as the fifth realization from Spectrum’s fifth fund.)

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