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Billionaire George Raymond Zage III and James Lu, majority shareholders of Grindr, have raised $1 billion in preliminary and conditional debt financing as they explore a buyout of the New York-listed firm. The deal would value the LGBTQ dating app at $3 billion.
The loan supports the possibility of taking the company private at a minimum $15 a share, according to an Oct. 14 regulatory filing with the U.S. Securities and Exchange Commission. While it didn’t specify which entity would provide the funding, Semafor previously reported that Zage and Lu have been in talks with New York-headquartered Fortress Investment Group.
With financing lined up, Zage says it’s possible that the deal could be completed before the end of the year. The company will be taken private if their shareholding reaches the 90% threshold, he tells Forbes Asia.
“We filed a 13D with the SEC to state our intention to take the company private,” Lu, chairman of Grindr, adds in a messaged reply to Forbes Asia. He noted the company’s board had been informed of their intention prior to the SEC filing.
Zage and Lu, who own a combined 64% of the company—are considering a move to take Grindr private after media reports claimed that SeaTown, a unit of Singapore state-linked investment firm Temasek, which provided loans to one of the Grindr shareholders, had seized some of the underlying shares and sold them in the open market. SeaTown did not reply to a Forbes Asia request for comment. According to the SEC filing, Lu sold 1 million shares worth $13.2 million to Zage and 300,000 shares on the open market.
The buyout plan emerged as Grindr shares dropped more than 20% this month even as the company posted a 25% rise in net profit to $17 million in the second quarter from a year ago. Last year, Grindr saw its net loss widen to $131 million due to a non-cash loss related to its warrant liability on $345 million in sales, which jumped by a third. It completed the redemption of all public and private warrants earlier in February.
“We think the company is significantly undervalued,” Lu says. “There are many things happening with the company that we are super excited about. We are bullish about the company’s future.”
Commenting on the drop in Grindr’s share price, Zage says the decline was triggered by perceptions in the market that the company’s second quarter earnings missed analyst estimates. While Grindr doesn’t provide quarterly earnings guidance, Zage says, “I haven’t seen any negative change in the outlook for the business.”
Zage successfully oversaw the Asian division of U.S. hedge fund Farallon Capital Management before setting up Singapore-based Tiga Investments in 2017. Three years later, he joined Lu, cofounder of U.S. buyout firm Joffre Capital, and American serial entrepreneur J. Michael Gearon Jr. to set up San Vicente Acquisition to buy Grindr for about $608 million, with Zage’s privately held Tiga owning 54% of the joint venture.
The partners then merged Grindr with Zage’s blank check company Tiga Acquisition in a transaction valued at $2.1 billion, to take it public on the New York Stock Exchange. The stock surged over 200% when it listed in November 2022, landing Zage in the three-comma club (after accounting for pledged shares.) While shares have corrected by about 65% since the frothy listing, it’s earned him a spot among Singapore’s 50 richest and still accounts for the bulk of his $1.4 billion fortune today.
Launched in 2009 as one of the first location-based dating apps for gay men, Grindr has since become the most popular LGBTQ mobile app worldwide, claiming over 14 million monthly active users.
