OnlyFans in Talks for Minority Stake Sale
OnlyFans is reportedly negotiating to sell a minority stake, which might value the company at around $3 billion. This figure is actually lower than the $3.5 billion the company aimed for prior to the passing of its private CEO last month.
Architect Capital, based in San Francisco, is looking to purchase less than 20% of the company, with a potential closing date as soon as next month. This represents a significant reduction from their initial interest in acquiring a 60% stake earlier this year, which is largely why the valuation has decreased, according to reports from the Financial Times.
The situation around the sale has become urgent following the death of Leonid Radvinsky, the owner of OnlyFans, who passed away at the age of 43 after a hidden battle with cancer. His widow, Katie, is now managing the negotiations and oversees a trust that contains her late husband’s shares.
As previously reported, OnlyFans turned to Morris & Company, an investment bank established by Ken Morris, after other banks declined to take on the representation of OnlyFans.
There were indications last month that it was proving difficult to gather support for backing the acquisition, as many mainstream investors are wary of the reputational risks involved, particularly in light of regulatory scrutiny.
According to filings, OnlyFans takes a 20% cut from its approximately 4.6 million creators, and since the platform isn’t available on app stores, it does not share profit with Apple or Google.
Legal challenges have also plagued OnlyFans over the years, even as the platform remains highly profitable. The investors involved in the acquisition, including those from e-cigarette company Juul Labs, are looking to fund the purchase by drawing in outside investment through a specialized funding vehicle. OnlyFans operates under Fenix International Ltd, registered in the UK.
Part of the proposed agreement is that the investors will collaborate with OnlyFans to develop new financial services and products aimed at supporting its creators. There are even discussions of acquiring or partnering with fintech companies to resolve persistent banking issues reported in the industry.
Last year, Visa began enforcing tougher chargeback and fraud measures that had a severe impact on OnlyFans. A report from payment processor Myntpay noted that adult websites often face higher transaction fees, around 5% to 10%, compared to the typical 2% to 3% seen in standard e-commerce.
OnlyFans, Architect Capital, and Moelis have all not responded to inquiries about this situation.
Founded in 2016, Radvinsky acquired a majority stake in OnlyFans in 2018, transforming it into a financial powerhouse by enabling creators to charge directly for their content.
In the fiscal year ending November 30, 2024, OnlyFans reported an operating profit of $666 million from revenues of $1.4 billion, as per UK corporate filings. The company also recorded selling expenses of $449 million and administrative costs amounting to $197 million, all while employing just 46 people. Notably, around 64% of its revenue comes from the United States.
