Getty Images Owners Consider Sale or IPO
The owners of Getty Images, the world’s largest distributor of stock photos, video and other digital content, have retained bankers to examine a possible sale or public offering of the business they took private four years ago for $2.4 billion.
Hellman & Friedman, the US private equity fund, is working with Goldman Sachs and JPMorgan Chase, five people familiar with the plans said, adding that a sale or IPO could value the business at as much as $4 billion.
The move comes as interest in the sector has been piqued by other sales.
Last week the private equity fund Kolhberg Kravis Roberts took a 50 per cent stake in Fotolia, a stock photography manager, in a bid to consolidate the fragmented marketplace for licensing online digital images and videos.
The Fotolia deal came as its owner TA Associates looked to sell a stake in the business it had acquired in 2009. The Boston-based fund will retain just under a third of the shares following KKR’s investment.
The investment in Fotolia came in the same week as rival Shutterstock, with 19m images for sale, filed papers to raise $115 million in a yet to be priced New York IPO, which is being led by Morgan Stanley .
KKR likened the Fotolia deal to its investment in BMG, its music publishing joint venture with Bertelsmann, the German media group, which has conducted acquisitions of smaller publishers and catalogues since its creation in 2009.
Getty is most likely to draw takeover interest from private equity funds, possibly including KKR, one person familiar with the talks said.
A sale would face challenges, however. A leveraged buyout by another private equity fund would require a large equity check of about $1.5 billion, and a $4 billion transaction would be the second-biggest buyout of the year, according to Thomson Reuters data.
A flotation could also be complicated by a shortage of similar quoted businesses against which to value it, the person added.
Hellman & Friedman has already recouped much of its investment in Getty through a pair of special dividends. In 2010, Getty paid out $496m to its owners, and earlier this year Getty launched a $275 million term loan that it used to help fund a $379 million dividend for its owners.
Last year Warren Hellman, co-founder of Hellman & Friedman, died aged 77.
Getty Images was founded in 1996 by Mark Getty and Jonathan Klein to bring the fragmented stock photography business into the digital age. When it was taken private by Hellman & Friedman, shareholders received $34 in cash a share, well below the $95 level the shares reached in December 2005.
All parties declined to comment.
Additional reporting by Richard Waters in San Francisco