Grindr Could Go Private: Financial Challenges Explained

Grindr Owners Pursue Privatization Amidst Stock Decline

According to a Semafor report, the principal stakeholders of Grindr are actively seeking to take the LGBTQ+ dating application private. This move follows a downturn in the company’s stock price, which has reportedly led to a personal financial predicament for these owners.

Key Stakeholders Identified

The individuals at the center of this situation are Raymond Zage, a former hedge fund manager currently residing in Singapore after relocating from the U.S., and James Lu, a Chinese-American entrepreneur with prior experience at Amazon and Baidu. They spearheaded the 2020 acquisition of Grindr, transitioning ownership away from Chinese entities for a sum exceeding $600 million.

Subsequently, in 2022, they facilitated Grindr’s entry into the public market through a special-purpose acquisition company (SPAC) merger.

Collateralized Loans and Share Seizure

It is understood that Zage and Lu, collectively holding over 60% of Grindr’s shares, utilized a substantial portion of their holdings as collateral for personal loans. These loans were obtained from a division of Temasek, Singapore’s sovereign wealth fund.

As Grindr’s stock value decreased starting in late September, the value of the collateral fell below the outstanding loan amounts. Consequently, the Temasek unit executed the seizure and sale of a portion of their shares last week.

Disconnect Between Stock Performance and Fundamentals

The recent decline in Grindr’s stock price doesn’t appear to be directly linked to underlying business performance. Semafor highlights a 25% increase in profits during the second quarter.

However, some investor apprehension exists regarding potential margin compression, and the company has experienced changes in its executive leadership.

Potential Buyout Discussions

Currently, Zage and Lu are reportedly engaged in negotiations with Fortress Investment Group. Fortress, which is now predominantly owned by Mubadala Investment Company – itself controlled by the Abu Dhabi government – is being considered as a potential financing partner.

The discussions center around a buyout offer of approximately $15 per share, which would establish Grindr’s valuation at around $3 billion. Following the emergence of this report, Grindr’s share price experienced an increase.