KKR & Co agrees to purchase minority stake in AppLovin Corp for $400 million

KKR’s investment will allow AppLovin to grow as it places systemic structures that will enable to become a public limited company.

Private equity firm KKR & Co disclosed it will acquire a minority stake in AppLovin Corp for $400 million.

The development comes in the wake of Washing forcing the U.S. mobile marketing firm to scrap a deal to be acquired by China’s Orient Hontai Capital, a buyout firm, citing U.S. national security concerns.

KKR’s deal values AppLovin at $2 billion, up from $1.4 billion in November 2017.

As per Herald Chen, KKR’s head of technology, media and telecom, the investment is KKR’s bet on mobile gaming and mobile advertising, two fast-growing industries.

“This deal is an opportunity to play both those trends,” said Chen.

As per a study new Newzoo, a market research firm, the mobile gaming market is likely to touch $70.3 billion in sales in 2018

According to Chen, funds for the deal will be sourced from KKR’s $13.9 billion Americas XII fund.

AppLovin also sees KKR’s involvement as an opportunity to grow since it essentially places systemic structures that will potentially enable it to become a public company, said Adam Foroughi AppLovin’s co-founder and CEO.

“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,” said Foroughi.

Incidentally, AppLovin will also utilise the development to purchase a portion of Orient Hontai Capital’s stake by using funds sourced from KKR.

While Raine Group acted as financial adviser to KKR, Bank of America Merrill Lynch acted as AppLovin’s financial adviser.

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