Bumble founder Whitney Wolfe Herd received a $ 125 million payment after a complex reorganization of the dating app’s parent company, according to a regulatory document prior to its initial public offering.
The 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 initial public offering prospectus published on Friday.
The prospectus also showed that Bumble Holdings, which owns Bumble and the European-centric dating app Badoo, had a loss and grew at a slower pace after the 2019-led private equity group reorganized.
Bumble has released a focus on the experience of women in its dating apps, exploring the growing market for online dating services. The company registered 42.1 million monthly active users on Badoo and its eponymous app at the end of September, of which about 2.4 million were paying users.
But the company’s growth has slowed since Blackstone agreed to buy a majority stake in 2019 and installed Wolfe Herd as chief executive, after allegations of a toxic work environment under former boss Andrey Andreev.
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 about $ 3 billion.
Ms. Wolfe Herd received a cash payment of $ 125 million as a result of the deal led by Blackstone, according to the documents. Bumble also lent $ 119 million to an entity controlled by Mrs. Wolfe Herd. She paid off the rest of the loan this month.
Corporate governance experts often warn against such transactions, which can raise questions about conflicts of interest. WeWork sparked a negative reaction to similar related party transactions during its 2019 public offering attempt.
Blackstone, the venture capital group Accel and Ms. Wolfe Herd are expected to retain control of the votes on Bumble after the IPO.
In a change that is common for private equity firms, Bumble will also be structured as an umbrella partnership that grants tax benefits to insiders. The new shareholders will buy shares in a holding company, Bumble Inc, under the control of Bumble Holdings.
The IPO order comes in the wake of a strong market for new listings in the United States, after shares in other consumer technology companies, such as Airbnb and DoorDash, have increased with IPO prices.
The list will increase the rivalry between Bumble and the dominant player in dating apps, Match Group, owner of Tinder, OKCupid and its namesake Match.com. The two companies recently engaged in a legal battle over allegations of patent infringement and theft of trade secrets, before ending all litigation last year.
Bumble also faces growing competition in the dating industry, as the social media group Facebook launches 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 of positive gains of $ 69 million during the same period in 2019, but a number the company said was affected by transaction costs.
Growth slowed last year. In the first nine months of 2020, Bumble reported revenues of $ 417 million, an increase of 14.9 percent over the same period in 2019, but slower than the 35.8 percent growth in reported revenue from 2018 to 2019.
Bumble reported 2020 finances in two sections to reflect a change in corporate structure after the completion of the Blackstone-led reorganization.
The company said it would use the IPO’s funds to a large extent to pay off debt and buy back shares from private shareholders. Goldman Sachs and Citigroup are acting as the main subscribers to the offering.