Private equity company KKR is set to acquire a minority stake in AppLovin for $400 million, a deal which values the app discovery platform at $2 billion as it lays the groundwork for a potential IPO.
KKR’s head of technology, media and telecom Herald Chen explained in an interview with Reuters the investment is “an opportunity to play” on two fast-growing trends: mobile advertising; and gaming.
Funds from the deal, provided by KKR’s $13.9 billion Americas XII fund, will be used to grow AppLovin organically while also helping to finance potential acquisitions, he added.
AppLovin CEO and co-founder, Adam Foroughi said: “Our company is successful enough already to be a public company, so we wanted to start laying the groundwork for the public markets in the next couple of years so that we can be ready in case an initial public offering makes sense for us”.
The company’s value has gone up from $1.4 billion in November 2017, when Orient Hontai Capital was lining up an acquisition, until push back from the Committee on Foreign Investment in the US meant it instead secured $841 million in debt financing from the China-based private equity investment company.
Orient Hontai Capital invested $140 million into the company for a 9.98 per cent ownership stake in January 2017. AppLovin will use some of the funds from KKR’s investment to purchase a portion of this stake.
The app company has around 300 million daily active users and drives over 1 billion downloads for gaming companies each year. Last week it launched Lion Studios, a media division which works with mobile developers to publish and promote their apps.