Spectrum to Make 7x Its Money on Ancestry.com

Spectrum Equity looks like it will make about 7x its investment in Ancestry.com.

Yesterday, a group led by Permira agreed to buy Ancestry.com in a $1.6 billion deal. The company, whose website helps users trace their family roots, will be taken private at $32 per share. Permira, and certain co-investors, are putting in $503 million equity as part of the deal, according to an Oct. 22 SEC filing.

Spectrum’s investment in Ancestry.com dates back to 2003 when the growth equity firm acquired a minority stake for $13 million. In 2007, Spectrum then bought a majority stake in Ancestry.com in a deal valued at $300 million. The investment in Ancestry.com came from Spectrum Equity Investors V LP, which collected $1.2 billion in 2005. The firm, which has invested in SurveyMonkey, WeddingWire and AMC Entertainment, actually invested $100 million equity as part of the transaction, according to SEC filings.

Ancestry.com went public in 2009, raising $115 million. Before the IPO, Spectrum owned 67% of the company, or about 25.7 million shares, SEC filings say. Spectrum sold a small chunk, or about 2.5 million shares, in the IPO.

Spectrum as of March 2010 owned 23.2 million shares of Ancestry.com, or 54.7%. The firm sold stock through two secondary offers (one in November 2010 and one in May 2011). Via the two secondary offerings plus the sale of IPO shares, the firm realized about $360 million. It also reduced its stake to its current 31.1%.

With the sale to Permira, the value of Spectrum’s remaining holding in Ancestry.com is about $424 million (Spectrum had 13.26 million Ancestry.com shares as of March, according to SEC filing). However, Spectrum will continue to own $100 million worth of shares in Ancestry.com, an SEC filing says. Spectrum is apparently selling the rest.

Including realized and unrealized gains, Spectrum’s estimated $113 million investment in the company has grown to $784 million.

Spectrum declined comment.