Gay dating app Grindr to go public in $2.1bn Spac deal

Gay dating app Grindr said it would go public through a merger with a blank-cheque acquisition firm – a deal that values it at $2.1 billion (€1.99 billion) and features Tiga Investments CEO Raymond Zage on both sides of the transaction.

Grindr said its existing shareholders would own 78 per cent of the company after the merger, which comes two years after China's Kunlun Tech Co divested it for $620 million due to US national security concerns.

While Grindr did not disclose the identities of its existing shareholders, Reuters previously reported that Mr Zage had a 41 per cent stake in the consortium that acquired Grindr. A source familiar with the matter said on Monday that Mr Zage continues to be an investor in Grindr.

Clearance

Tiga Acquisition, the Singapore-based special purpose acquisition company (Spac) that will merge with Grindr, is controlled by Mr Zage.

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Under the deal, Grindr will receive $284 million in cash from Tiga and up to $100 million in a forward purchase agreement.

Grindr and Tiga expect that their deal may require clearance from the Committee on Foreign Investment in the United States which scrutinises deals for potential national security risks, according to a copy of their merger agreement that was made public.

The committee ordered Kunlun to sell Grindr in 2019 over concerns that the personal data of US users could be accessed or exploited by China’s government.

It could not be learned if the committee had a role in Grindr's decision to explore a sale and merger with a Spac. A spokesperson for the US treasury department, that chairs the foriegn investment committee, did not respond to a request for comment.

Reuters reported last year that Kunlun and Grindr gave information to the committee about the transaction that contradicted disclosures to potential investors and Chinese regulators.

They told the group that James Lu, a former Baidu executive who was part of the consortium that bought Grindr and is now Grindr's chairman, had no previous business relationship with a key adviser to Kunlun, even though the investor disclosures and Chinese regulatory filings stated otherwise.

Executives depart

Grindr chief executive Jeff Bonforte and Grindr chief operating officer Rick Marini will step down and a search for Mr Bonforte's replacement is under way, a person familiar with the matter said on Monday.

Mr Bonforte and Mr Marini were part of investment firm Catapult Capital that competed against Mr Lu and Mr Zage to buy Grindr before they clinched an agreement to work together.

Atlanta Hawks co-owner Michael Gearon, another major shareholder who was part of the consortium that acquired Grindr two years ago, will continue to be invested in the company, the source said.

Grindr said in an investor presentation on Monday that it has 11 million monthly active users and that its revenue grew 30 per cent last year.

The deal values Grindr at 27 times its adjusted 2021 earnings before interest, taxes, depreciation and amortisation of $77 million. By comparison, shares of dating app peers Match Group and Bumble are trading at 22 times and 25 times their 2021 EBITDA, respectively, according to Refinitiv. – Reuters