AppLovin Picks Up $400M In PE Investment, Plans Acquisitions And Potential IPO

It seems everyone wants a piece of AppLovin.

Private equity firm KKR bought a $400 million minority stake in the app marketing and discovery platform on Tuesday, lifting AppLovin’s valuation to around $2 billion from $1.4 billion just eight months ago.

Bank of America Merrill Lynch advised AppLovin on the investment, adding a new wrinkle to the AppLovin story.

Last autumn, AppLovin was nearly acquired by a Chinese PE firm called Orient Hontai Capital for $1.42 billion. But, in November, US regulators scuppered the deal due to concerns over national security and the China connection. Orient Hontai provided AppLovin with $841 million in debt financing instead, which meant no new shares were issued.

“The nice thing about a debt structure is that we’re operating the business exactly as we were and we don’t have any change of control on the board,” AppLovin CEO and co-founder Adam Foroughi told AdExchanger in March.

AppLovin will use KKR’s money to invest in new and existing products and services, including the company’s recently launched app publishing division, Lion Studios, and to make opportunistic acquisitions.

“Basically, it comes down to what makes us a stronger business and what furthers our goals of helping developers of all sizes get their apps discovered,” AppLovin CMO Katie Jansen told AdExchanger. “Right now, we are looking at content and our studio side of the business, but we’ll always consider M&A that helps us achieve our mission.”

KKR is more than ready to fork over more cash to trigger growth at AppLovin. The firm “look[s] forward to supporting the expansion of [AppLovin’s] global mobile gaming platform through continued investment,” said Herald Chen, KKR’s head of tech, media and telecom, in a statement. Chen will join AppLovin’s board.

The investment also gives KKR a chance to bask in the reflected glow of a market growing at hyperspeed.

Mobile revenue, mainly driven by gaming, is a $70 billion market, according to a recent report from mobile market researcher Newzoo. AppLovin claims to drive more than 1 billion installs annually for its game studio clients.

But there’s another reason AppLovin was courting investors so soon after scooping its massive Orient Hontai debt investment.

Reuters reports that AppLovin, which is profitable, plans to earmark a portion of the money it’s getting from KKR to buy back some of Orient Hontai’s stake and to possibly start it on the road to an IPO.

For the moment, however, AppLovin remains one of the largest independent mobile ad platforms out there.

Enjoying this content?

Sign up to be an AdExchanger Member today and get unlimited access to articles like this, plus proprietary data and research, conference discounts, on-demand access to event content, and more!

Join Today!