Social Discovery Group (SDG), a closely held technology company focused on connecting people, has appointed an undisclosed investment bank and is preparing for an initial public offering, Chief Investment Officer Bill Alena told Mergermarket.
A listing would be in the US, according to Alena, who said there is no timeframe for such a move. Going public would give the profitable New York-based company more flexibility to finance acquisitions, he said on the sidelines of TechCrunch Disrupt in San Francisco last week.
Comparable public companies are Dallas-based Match.com [NASDAQ:MTCH] and Austin, Texas-based Bumble [NASDAQ:BMBL], Alena said. In terms of size, the closest comparable to SDG is German private company Parship, he added.
SDG expects to generate USD 400m in revenue this year, founder and CEO Dmitry Volkov said on stage during the conference. For this report, Alena said revenue is growing at an annual average rate of 20%. Volkov owns 90% of the company, Alena said, without providing additional details.
In the meantime, SDG is looking to make acquisitions to expand its offering, he said.
It wants to acquire a dating platform in Japan that has USD 25m-USD 30m in revenue and 15%-20% EBITDA margins, Alena said. Acquiring international dating platforms with revenue up to USD 70m is also a priority, he added.
SDG is engaged in active discussions, said Alena, who manages the company’s M&A strategy. He would like to close a deal by year-end and average one to two deals per year.
Its products include dating sites, social and entertainment apps with a focus on video streaming, artificial intelligence technologies, and game mechanics. SDG includes 40 brands, comprising 250 million users in 100 countries, according to its website.
In July 2021, the company acquired Australia-based Cupid Media for USD 51m, and in November 2019, it bought San Francisco-based Dil Mil for USD 50m.
Acquisitions of companies with revenue up to USD 70m can be financed with SDG’s current resources, the executive said. For larger deals, the company has already identified a group of private equity firms that would be ready to support its strategy, he added.
SDG is also interested in acquiring minority stakes of 10%-30% in growing technology players in the space, Alena said, adding that these deals will be carried out by the group’s investment fund.
The company has 800 employees in offices around the world, according to its website.