The extent to which B2B publishers are feeling the effects of the downturn has been illustrated by a report suggesting Apax has written off its £300m investment in Emap’s B2B magazine division.
According to a report in the Telegraph, private equity firm Apax told investors in March that it has written down the value of its investment in the business to zero.
Apax paid £1.3bn for the B2B division of Emap in a joint venture with Guardian Media Group.
According to Media Guardian, the £300m which has been written off by Apax represents the group’s own money. It also borrowed to finance the deal, so it is effectively saying that if it sold Emap now it would only get roughly half its money back – as it would have to pay off creditors first.
It is only a paper loss – because Apax and GMG will have been planning to hang on to Emap for at least a couple more years yet.
But it is a sign of the extent to which the recession has hit B2B values. And it also a sign that Guardian Media Group may now be regretting the decision to invest so much of the £334.8m in made from selling half its stake in Trader Media Group in 2007 in Emap.
According to GMG chief executive Carolyn McCall, Emap is currently generating operating profits of £100m a year.
Apax declined to comment.