Grindr Stock Skyrockets After SPAC Merger, Minting At Least One Billionaire

Amid a slowdown in public offerings in 2022, one company has bucked that trend this week. Grindr, the LGBTQ+ dating app founded in 2009, merged with a special purpose acquisition company (SPAC) Friday on the New York Stock Exchange, with the stock surging as much as 493% around 11 am EST before falling and closing 214% higher at $36.50 per share.

Grindr first announced a deal to merge with Tiga Acquisition Corp. in May at a valuation of $2.1 billion, including debt. Tiga’s shareholders approved the deal on Tuesday, setting the stage for the merger to close on Thursday. Still, 98% of Tiga’s shareholders opted to redeem their shares for cash at $10.48 per share, rather than convert them to stock in Grindr—a total payout of about $284 million.

Those few Grindr and Tiga shareholders who kept their stock in the newly combined company have gotten a rather unexpected windfall, at least for now. According to a November 1 filing, roughly 77% of Grindr shares are now held by Delaware-based San Vicente Holdings LLC. San Vicente’s largest shareholder is G. Raymond Zage III, the 52-year-old chairman and CEO of Tiga, who owns 54% of San Vicente through Singapore-based Tiga Investments Pte. Ltd, which first invested in Grindr in 2020. At Grindr’s stock price of $36.50 at the market close, Zage’s 43% stake in Grindr was worth roughly $2.7 billion. Zage is a former investment banker at Goldman Sachs and also helped set up the Asian division of Farallon Capital, the hedge fund established by billionaire Tom Steyer, in 2002.

The next largest shareholder of San Vicente is James Fu Bin Lu, 40, a former NASA engineer and entrepreneur who also worked at Amazon and Chinese search engine Baidu. Lu has been Grindr’s chairman since 2020 and is the managing and founding partner of tech buyout firm Joffre Capital, which co-invested in Grindr in 2020 alongside Tiga Investments. Lu owns 23% of Grindr through his Seattle-based family office Longview Capital Holdings. His shares were worth about $1.4 billion at the market close.

The catch: Zage and Lu both pledged all of their stakes in San Vicente to “certain lenders in connection with a financing arrangement,” meaning that they used them as collateral for loans. Forbes discounts pledged shares by 50%, bringing Zage’s estimated net worth down to $1.3 billion and Lu’s to about $720 million. The two other shareholders of San Vicente—Tiga president and Farallon Capital and Goldman Sachs alum Ashish Gupta, and J. Michael Gearon, a co-owner of the NBA’s Atlanta Hawks and the founder, chairman and CEO of Atlanta-based family office 28th Street Ventures—hold shares worth an estimated $280 million and $560 million, respectively. Unlike Zage and Lu, they did not pledge their shares.

While Zage has the largest equity stake in San Vicente, its voting interest is split 50-50 between Lu’s Longview and Gearon’s 28th Street, giving them investment and voting power over San Vicente’s shares in Grindr. Representatives for Grindr and Tiga did not immediately respond to a request for comment.

Grindr posted a $5.1 million profit on $146 million revenues in 2021, up from a $13 million net loss and $104 million in sales in 2020. The app operates in more than 190 countries and territories and reported 10.8 million monthly active users in 2021, with about 744,000 paying users as of June. Still, the app is much smaller than its publicly traded rivals: Bumble, which has a market capitalization of $4.3 billion, posted a net profit of $287 million on $766 million in revenues in 2021, while $13 billion (market capitalization) Match Group—which owns Tinder, Hinge and OkCupid—racked up a $278 million profit on $3 billion in sales last year.

Grindr’s ownership has changed several times since it was launched in 2009 by Joel Simkhai. In August 2015, the company was close to being acquired by online dating service Ashley Madison for a price between $60 million and $70 million, but the deal was ultimately canceled, according to Pitchbook. Five months later in January 2016, Grindr sold a 61.5% stake to publicly traded Beijing Kunlun Tech, a Beijing-based online game operator chaired by former billionaire Zhou Yahui, for $98 million. Beijing Kunlun bought the rest of the company for $152 million two years later in January 2018.

But as Grindr prepared for an IPO in 2019, it ran into trouble with the U.S. Treasury Department over national security risks tied to its Chinese ownership. The Committee on Foreign Investment in the United States (CFIUS), which has the power to review transactions involving foreign investors in the U.S., effectively forced Beijing Kunlun to divest its ownership in Grindr in March 2019. That led to a yearlong effort to sell the company that culminated in June 2020, when a group of investors including Catapult Capital, Joffre Capital, San Vicente Group and Tiga Investments completed a leveraged buyout of Grindr that valued the firm at $618 million.

That wasn’t the end of Grindr’s troubles: The company was hit with a $7 million fine by Norway’s data protection authority in December 2021 for sending personal data to advertisers without user consent. And last May, the Wall Street Journal reported that user location data from Grindr was sold to advertisers from at least 2017 through 2020. “Since early 2020, Grindr has shared less information with ad partners than any of the big tech platforms and most of our competitors,” Patrick Lenihan, a Grindr spokesman, told the Journal at the time, adding that the sale of that data was no longer possible under Grind’s current privacy practices.

So far, Grindr’s first day as a public company has outperformed that of Bumble, the last dating app to go public in February 2021. Bumble’s shares closed 64% higher on its first day of trading, turning its founder Whitney Wolfe Herd into a billionaire, with an estimated $1.5 billion net worth. But Bumble shares soon began tumbling. By November 2021, Wolfe Herd was gone from the billionaire ranks.

Bumble’s stock traded 46% below its IPO price on Friday. That’s a cautionary tale for Grindr, even as it flies high on its first day as a public company.