December 16, 2012 10:00am by David Farrar

Fairfax sells remainder of Trade Me

Fairfax Media is reportedly selling its remaining stake in Trade Me for about A$650 million (NZ$810m).

If the sale were to proceed, it would considerably pay down the company’s debts.

The stake is reportedly being sold to a range of New Zealand and Australian institutions in a placement through UBS, according to market sources.

The quoted sale figure would exceed what Fairfax paid for Trade Me in its initial investment five years ago.

Fairfax bought the online auction company from founder Sam Morgan and his fellow private investors for NZ$700m in 2006 and previously recouped NZ$364m by selling a 34 per cent stake through Trade Me’s initial public offering in December 2011.

Morgan went on to be made a board member at Fairfax.

In June, Fairfax further sold down its holding by 15 per cent at a discounted price of $2.70 a share, retaining 51 per cent of the company.

The sale is surprising because it is regarded as the best asset in the digital arm of Fairfax, said Lance Wiggs, a former Trade Me insider who worked on the initial sale to Fairfax.

‘‘It does make sense for investors that you want to separate your assets, one old media, one new media. If I was Fairfax I would want to own Trade Me, not old media,’’ Wiggs said.

The purchase and sale has been a net gain for Fairfax. However I do wonder at the wisdom of selling the only part of your business that actually made money!