Trade Me sells LifeDirect back to former owner

Trade Me chief executive Anders Skoe said LifeDirect didn't fit with the online marketplace's strategy under new ownership. Photo / File

Trade Me has sold its LifeDirect business back to the financial adviser it bought it from, saying the insurance comparison website doesn't fit its portfolio anymore.

Lower Hutt-based financial adviser Mark Solomon has agreed to buy back the business for an undisclosed sum, with settlement expected on April 1.

Trade Me bought LifeDirect in late 2013 for $7.5 million, including earn-outs. While the business remained profitable, chief executive Anders Skoe said it didn't fit with the online marketplace's strategy under new ownership.

"We don't think Trade Me is the best long-term owner for LifeDirect. It's a profitable business with great growth potential but we only have so many resources and we can't prioritise LifeDirect over the many other opportunities we have," Skoe said in a statement.

Trade Me was taken private by Apax Partners last year, which hired Skoe to transition the company from renting out space for firms to list their classified ads to building products that can take a listing and expose it to a user.

When Trade Me went public in late 2011, it was treated as a mature software company that paid reliable dividends. However, its private equity ownership is focused on pursuing growth opportunities and Skoe has been working through those options since joining the company last year.

"LifeDirect has been performing well. Like any company, we need to make choices around where we focus our efforts, and we have other high priority opportunities within Trade Me," Skoe told BusinessDesk.

The value of the business hasn't been impaired, but Trade Me declined to comment on whether it would book a gain or loss on the sale.

Solomon said in a statement that he was delighted to re-engage with LifeDirect, but wasn't immediately available for further comment.

Trade Me said Solomon will offer 15 of the 18 LifeDirect staff new roles, and that it hoped to redeploy the three remaining staff.

The company declined to comment on who made the first approach.

When Trade Me bought LifeDirect in 2013, it was generating annual revenue of about $3.8m.

The business was included in Trade Me's other segment, which reported a 6.8 per cent decline in revenue to $35.8m in the year ended June 30, 2019 and a 12.7 per cent drop in earnings before interest, tax, depreciation and amortisation to $14.4m.