Gay dating app Grindr to go public via Spac at $2.9 billion valuation
The dating app was valued at US$620 million when it was sold in 2020 by its Chinese owner. PHOTO: REUTERS
UPDATED
May 10, 2022
NEW YORK (REUTERS, BLOOMBERG) - Popular gay dating app Grindr has agreed to go public through a blank-cheque firm or special purpose acquisition company (Spac) whose founder was part of a consortium that bought the company in 2020, according to a filing with the United States Securities and Exchange Commission on Monday (May 9).
The deal with Tiga Acquisition will raise US$384 million (S$534 million) including US$284 million of the Spac’s cash in trust plus up to US$100 million in a forward purchase agreement, valuing the company at US$2.1 billion including debt, according to the filing.
The dating app was valued at US$620 million when it was sold in 2020 by its Chinese owner after US regulators urged a divestiture over national securities concerns.
Tiga Acquisition went public in November 2020 to raise US$240 million, a few months after the Grindr sale. The Spac would have to liquidate later this month if it failed to reach a deal with a potential merger target, after several extensions of the liquidation deadline.
Mr G. Raymond Zage III, the founder and chief executive of the Spac, was a member of San Vicente, a consortium of investors that bought Grindr from Beijing Kunlun Tech in 2020.
Grindr, based in West Hollywood, California, had been approached by six Spacs prior to entering into the agreement with Tiga Acquisition, chief financial officer Gary Hsueh said in an interview.
Tiga Acquisition shares rose about 1 per cent in extended trading in New York on Monday.
While rivals like Match Group’s Tinder and Bumble are LGBTQ+ (lesbian, gay, bisexual, transgender and queer/questioning) friendly, Grindr is the most popular among members of the community. The app has about 11 million monthly active users, a fraction of the 100 million users across Match’s apps like Tinder and Hinge. Bumble had 40 million monthly users last year. Close to 80 per cent of Grindr’s users are under 35.Like other dating apps, Grindr provides a free service with upgrades available for purchase. The app differs from its competitors as users can view and message the profiles of 100 people closest to them without having to match first. Grindr had 723,000 paying users as at the end of last December.
Revenue excluding certain items grew to US$147 million in 2021, according to the company, a 30 per cent increase compared with the prior year, with adjusted earnings before interest, tax, depreciation and amortisation coming to US$77 million, a 51 per cent increase. For this year, Grindr is forecasting adjusted revenue growth of 35 per cent to 40 per cent over 2021.
The majority of Grindr’s revenue is from subscriptions, while a smaller portion comes from advertisement revenue. The company has faced issues with user privacy as the Wall Street Journal reported that a digital advertiser sold location data that could compromise users’ identities.
Grindr is choosing to go public through an investment vehicle that was once one of the hottest trends on Wall Street, drawing financiers, politicians and celebrities, who were able to make easy millions from investors piling into them.
But the shine is coming off after regulators outlined new plans aimed at tightening oversight of Spacs, including exposing underwriters to greater liability risk.
Goldman Sachs is pulling out of working with most Spacs it took public, throwing into doubt the fate of billions of dollars raised for them, Bloomberg reported.
Grindr’s Spac deal is expected to close by the end of the year pending regulatory and stockholder approval.
