Billionaire Investors Pursue $3 Billion Buyout of Grindr
A $1 billion debt financing package has been secured by majority shareholders of Grindr, paving the way for a potential buyout of the LGBTQ dating app and a return to private ownership. The deal, as outlined in an Oct. 14 regulatory filing with the U.S. Securities and Exchange Commission, would value Grindr at $3 billion, or a minimum of $15 per share.
The move comes as shares of Grindr have experienced volatility, dropping over 20% this month despite a 25% increase in net profit to $17 million during the second quarter. According to sources familiar with the matter, the financing is preliminary and conditional, with discussions ongoing with New York-based Fortress Investment Group.
Strategic Shift Following Shareholder Activity
The potential buyout is partially fueled by recent activity involving SeaTown, a unit of Singapore state-linked investment firm Temasek. Reports indicate that SeaTown seized and sold shares previously held as collateral for loans provided to a Grindr shareholder. This prompted George Raymond Zage III and James Lu, who collectively own 64% of the company, to consider taking Grindr private.
“We filed a 13D with the SEC to state our intention to take the company private,” stated Lu, chairman of Grindr, in a message to Forbes Asia. He confirmed that the company’s board had been informed of their intentions prior to the SEC filing. Zage added that completion of the deal before the end of the year is possible, contingent upon reaching a 90% shareholding threshold.
A History of Investment and Public Listing
The current pursuit of a private transaction marks another chapter in Grindr’s complex financial history. Zage and Lu initially acquired a stake in the company through San Vicente Acquisition, a special purpose acquisition company (SPAC). The merger with Zage’s blank check company, Tiga Acquisition, valued at $2.1 billion, took Grindr public on the New York Stock Exchange in November 2022. The initial listing saw shares surge by over 200%, briefly elevating Zage to billionaire status.
However, the stock has since corrected by approximately 65%, though it remains a significant component of Zage’s $1.4 billion fortune, securing his place among Singapore’s 50 richest individuals. Last year, Grindr reported a net loss of $131 million, attributed to a non-cash loss related to its warrant liability, despite a 33% increase in sales to $345 million. The company completed the redemption of all public and private warrants earlier in February.
Undervaluation and Future Outlook
Despite the recent share price decline, Zage and Lu believe the company is currently undervalued. “We think the company is significantly undervalued,” Lu explained. “There are many things happening with the company that we are super excited about. We are bullish about the company’s future.”
Zage attributed the recent drop in share price to market perceptions that the company’s second-quarter earnings fell short of analyst expectations, despite the reported profit increase. “I haven’t seen any negative change in the outlook for the business,” he asserted.
Launched in 2009, Grindr has grown to become the world’s most popular LGBTQ mobile app, boasting over 14 million monthly active users. The outcome of the proposed buyout will determine whether the company continues its journey as a publicly traded entity or returns to private ownership under the direction of its majority shareholders.
