Blackstone takes majority stake in Bumble parent

February 2020 | DEALRFONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2020 Issue

Private equity giant Blackstone is to acquire a majority stake in MagicLab, the parent company of the dating and social networking apps Bumble and Badoo, among others, in a deal which values the company at around $3bn.

Under the terms of the deal, Andrey Andreev, the founder of MagicLab, will sell his stake to Blackstone and be replaced as chief executive by Whitney Wolfe Herd, Bumble’s present CEO.

MagicLab’s portfolio of brands are increasingly popular in the online dating, social and networking spaces. Bumble, for example, regularly features among the top 10 lifestyle apps in the US, according to App Annie data. The application has around 75 million users, according to some estimates.

Blackstone, one of the world’s largest investment firms, has around $554bn in assets under management through its asset management business. The deal, which will be carried out by the firm’s new growth division, Blackstone Growth Equity, which launched in January 2019, is something of a departure for the firm which usually undertakes leveraged buyouts of struggling legacy companies. MagicLab, by contrast, is profitable and has annual revenue growth of around 40 percent.

In a statement announcing the deal, Mr Andreev said: “Blackstone presented MagicLab with a great opportunity to further develop the brands and platform, and I am confident Blackstone will take MagicLab to the next level in terms of growth and expansion. I am incredibly proud of the company, and of how we have connected millions of people around the world. At MagicLab, I have had the pleasure of working with some of the best and most talented entrepreneurs. My aim now is to ensure a smooth and successful transition before I embark on a new business venture in search of innovative leaders with new and exciting ideas. I am grateful for all the support of my partners and employees over the years as we couldn’t have gotten to this point without them. I wish MagicLab and Blackstone every success.”

“This transaction is an incredibly important and exciting moment for Bumble and the MagicLab group of brands and team members,” said Ms Wolfe Herd. “Blackstone is world-class at maximising the success of entrepreneur-led companies, which presents a tremendous opportunity. We are very excited to build the next chapter with them. I am honoured to take on the role of CEO of the group. I will strive to lead the group with a continued values-based and mission-first focus, the same one that has been core to Bumble since I founded the company five years ago. We will keep working towards our goal of recalibrating gender norms and empowering people to connect globally, and now at a much faster pace with our new partner.”

“We’re excited to invest in MagicLab, which is a pioneer in the fast-growing online dating industry,” said Jon Korngold, Head of Blackstone Growth. “They have a highly talented team and strong set of platforms, including Bumble, which was built on a commitment to inclusion and female empowerment. This partnership is a perfect example of Blackstone’s ability to use its scale, long-term investment horizon, and deep bench of operational resources to help entrepreneurs take advantage of transformational growth opportunities in order to create global industry leaders over time.”

Citi Global Capital Markets acted as the financial adviser to MagicLab and Baker McKenzie acted as the legal adviser to MagicLab’s majority shareholders. Simpson Thacher & Bartlett LLP acted as the legal adviser to Blackstone.

Mr Andreev has attracted considerable attention over the last 12 months following a controversial story in Forbes in which a number of former female employees alleged that Badoo’s workplace environment at its London headquarters was hostile and discriminatory toward women. Mr Andreev has denied the allegations.

Richard Summerfield