Trade Me a valuable asset for Fairfax Media in troubled times

Mum and dad investors who bought into Trade Me at the end of last year, were not told explicitly of the sell-down just six months after the float. Photo / Supplied

Once dismissed by Australian market analysts as an expensive purchase for Fairfax Media, Trade Me has emerged as valuable currency in troubled times.

Fairfax is selling 15 per cent of one of its most successful assets - on top of the 34 per cent floated at the end of last year - to offset problems in its publishing business.

The divestment, sold off-market to selected investors at the weekend, leaves Fairfax with a 51 per cent stake in the online auction company which it says it has no plans to sell.

Mum and dad investors who bought into Trade Me at the end of last year, were not told explicitly of the sell-down just six months after the float.

Market players who took part in the December 2011 float had expected a further sell-down, but said that initially they had expected it to be in another month. The latest sell-down is not expected to have a big impact on the way Trade Me is run.

Three of its five directors are appointed by Fairfax, and that is not expected to change.

But Trade Me chief executive Jon Macdonald said that the initial 34 per cent float distanced the company from Fairfax and meant it related to the rest of the market more independently.

Former Fairfax chief executive David Kirk - now chairman of Trade Me - drew a mixed reaction when he bought Trade Me for A$700 million in 2006, but the float of 34 per cent of the company last year raised A$364 million.

The latest 15 per cent raised A$160 million, a total of $524 million for selling 49 per cent of the firm.

Meanwhile, Fairfax, which takes one-third of its non-Trade Me revenue from New Zealand, announced a big restructuring of its Australian assets owing to the growing shift of advertisers to digital media.

However, Fairfax insists that the major upheavals across the Tasman will not happen here, because readers' switch to digital has been slower here.

Fairfax New Zealand chief executive Allen Williams said there were no plans for job cuts in New Zealand.

The main effects of the restructuring, which will mean the loss of 1900 jobs over three years, were on metropolitan newspapers such as the Age in Melbourne and the Sydney Morning Herald.

Williams said Fairfax was proceeding with regionalisation of the Sunday Star-Times newspaper after July 1.