Shares in gay dating app Grindr shot up more than 300 per cent in its public markets debut after completing a merger with a special purpose acquisition company, making it one of the few businesses over the past year to have its stock price pop following a Spac deal .
Shortly after Grindr executives rang the bell at the New York Stock Exchange on Friday, the stock leapt from an opening price of $16.90 to $71.51.
The jump was likely because few shares were being traded on the market after 99 per cent of shareholders opted to redeem their investment in the Spac following the deal’s completion. Spacs are listed vehicles set up to acquire target companies and take them public, and shareholders have the right to redeem their investment when they approve the merger.
Grindr announced in May it had agreed to go public through a merger with Tiga Acquisition Corp, a Spac set up by Ashish Gupta in 2020. The deal gave the business an implied valuation of $2.1bn and an expected $384mn in proceeds that the company said it would use a significant portion of to pay down debt.
With almost all of the shareholders opting to redeem their investments, Grindr will only receive a nominal sum of the $284mn in proceeds from Tiga Acquisition’s initial public offering. It has a $100mn forward purchase agreement in place with the Spac’s backer that will make up for some of the shortfall. Grindr’s shares pared gains to close at $36.50, still up more than double.
Grindr announced a new management team in September as it read for the public listing. George Arison, founder of online car sales company Shift, was named chief executive and started his role last month. Vanna Krantz, who was previously chief financial officer at fintech company Passport and Disney Streaming Services, took up the same role at Grindr.
Spacs, which had largely lurked in the backwaters of finance since the 2008 crisis, made a roaring comeback during the pandemic. Investors ploughed billions of dollars into blank-cheque companies and the pace of dealmaking created chaos on Wall Street as banks and lawyers tried to find enough resources to meet demand.
But blank-cheque companies have since fallen out of favor because of a number of high-profile failures and low demand from investors who found better returns elsewhere. Even with an IPO market that has largely been closed, Spacs have failed to make a comeback.
Grindr found itself at the center of a political storm in 2019, when the US government forced app owner Beijing Kunlun Tech to sell it on concerns that it threatened national security. The Spac deal gave Grindr a valuation that is more than triple what San Vicente Acquisition paid to acquire it from the Chinese gaming and technology company.