Bumble IPO filing details $ 125 million cash payment and founder loan

Bumble founder Whitney Wolfe Herd received a payment of $ 125 million following a complex reorganization of the dating app’s parent company, according to a regulatory filing ahead of its IPO.

Details of Ms Wolfe Herd’s financial arrangements with the company, including a $ 119 million loan to an entity she controlled, are contained in an IPO prospectus released on Friday.

The prospectus also showed that Bumble Holdings, which owns Bumble and the Europe-centric dating app Badoo, suffered a loss and grew slower as a result of the reorganization led by the private equity group. Blackstone in 2019.

Bumble has focused on the experience of women on its dating apps, tapping into the growing market for online dating services. The company reported 42.1 million monthly active users on Badoo and its namesake app as of the end of September, including around 2.4 million paying users.

But the company’s growth has slowed since Blackstone OK to buy a controlling stake in 2019 and install Ms Wolfe Herd as chief executive officer, following allegations of a toxic work environment under former boss Andrey Andreev.

Mr Andreev left the company, formerly known as MagicLab, and sold his stake as part of the deal, Blackstone said at the time. The investment valued Bumble’s parent company at around $ 3 billion.

According to the documents, Ms Wolfe Herd received a cash payment of $ 125 million as a result of the Blackstone-led deal. Bumble also loaned $ 119 million to an entity controlled by Ms Wolfe Herd. She paid off the rest of the loan this month.

Corporate governance experts generally warn against such transactions, which can raise questions about conflicts of interest. WeWork sparked backlash for similar deals with related parties during its attempted public offering in 2019.

Blackstone, venture capital firm Accel and Ms Wolfe Herd are expected to retain voting control over Bumble after the IPO.

In a move that is common for private equity firms, Bumble will also be structured as an umbrella partnership company that provides tax benefits to insiders. The new shareholders will buy shares in a holding company, Bumble Inc, with a controlling stake in Bumble Holdings.

IPO filing follows a strong market for new listings in the US, after shares of other mainstream tech companies such as Airbnb and DoorDash increased their IPO prices .

The list will increase the rivalry between Bumble and the dominant player in dating apps, Match Group, which owns Tinder, OKCupid and its namesake Match.com. The two companies were recently embroiled in a legal battle over claims of patent infringement and theft of trade secrets, before settling all disputes last year.

Bumble also faces increasing competition in the matchmaking industry as social media group Facebook rolls out its own dating service for its 2.7 billion users.

Bumble reported net losses of $ 117 million in the first nine months of last year, a reversal from positive profits of $ 69 million during the same period in 2019, but a figure which, according to the company, was affected by transaction costs.

Growth slowed last year. In the first nine months of 2020, Bumble reported revenue of $ 417 million, an increase of 14.9% over the same period in 2019, but slower than revenue growth of 35.8% announced from 2018 to 2019.

Bumble presented the 2020 financial data in two sections to reflect a change in corporate structure following the completion of the Blackstone-led reorganization.

The company said it would use the proceeds of the IPO largely to pay off debt and buy back the stakes of private shareholders. Goldman Sachs and Citigroup are the main underwriters of the offer.

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