Spectrum Poised to Fundraise After Investing in BATS

Spectrum Equity, which unveiled two separate deals this week, appears close to fundraising for its next pool.

On Wednesday, the growth equity firm and TA Associates each acquired a minority stake in BATS Global. Spectrum and TA bought the 4 million shares owned by Lehman Brothers Holding in BATS, according to a statement. Financial terms were not disclosed.

BATS, which stands for Better Alternative Trading System, is the world’s third-largest equities exchange. It operates two stock markets in the U.S. as well as BATS Chi-X Europe.

In its other deal this week, Spectrum on Tuesday said that its portfolio company, Extreme Reach, agreed to buy the TV business of Digital Generation for $485 million cash. Spectrum Equity initially invested $51 million in Extreme Reach in May 2013. The growth equity firm has agreed to invest up to an additional $47 million fund the Digital Gen buy.

The pair of deals are the latest for Spectrum, which is investing out of its sixth fund. Spectrum Equity Investors VI collected $680 million in 2010. Firms typically begin fundraising once their pool is 70% invested. Spectrum’s Fund VI is 70% committed post BATS, one source says. It’s not clear what Spectrum’s fundraising plans are. Spectrum officials declined comment.

Spectrum, which focuses on Internet/digital media, software and information services, has been active over the past year.

Seamless North America, which is backed by Spectrum, acquired GrubHub, an online and mobile food order service, in May. In January, Spectrum, Accel Partners and Meritech Capital Partners invested $103 million in Lynda.com. Spectrum, last September, also provided $25 million to WeddingWire.

Earlier this year, portfolio company SurveyMonkey raised $800 million in a debt and equity recap led by CEO Dave Goldberg and Tiger Global Management. Spectrum received some of its money back with the recap, but SurveyMonkey was a Fund V investment.

It’s not clear if Spectrum has completed any exits recently. An investor group led by Permira acquired Ancestry.com for $1.6 billion. Spectrum sold much of its stake in Ancestry with the deal. However, Spectrum’s investment in Ancestry.com also came from its fifth fund, which collected $1.2 billion in 2005.

Spectrum has completed $3 billion in liquidity events over the past three years, the source. But much of this came from the firm’s fifth fund, the person says.

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