Investors showed no love for Spark Networks Inc. last week after the company’s largest shareholder said it would essentially liquidate its stake in the West L.A. online dating business.
Great Hill Partners, a Boston private equity firm that holds 19.7 percent of Spark, gave notice last week that it planned to sell more than 4 million shares at $6 each. That could leave Great Hill with fewer than 100,000 shares.
The news sent the stock spiraling from $6.75 on Monday to close at $5.58 Wednesday. In all, Spark closed down 22 percent for the week ended Nov. 20, placing it among the biggest decliners on the LABJ Stock Index. (See page 60.)
Great Hill has been invested in Spark, which went public in February 2006, since December 2005, when it purchased 6 million shares from existing investors at less than $6 a- share and then acquired an additional 3 million shares.
As of April, Great Hill’s stake had grown to more than 9.1 million shares, or 43.5 percent. The firm first indicated its plans to sell shares later that month, and offloaded more than 3 million shares in May. It has sold more shares since, and if underwriters exercise their overallotment in the current offering, Great Hill would be left with just 62,500 shares.
A spokeswoman for Spark, which operates a network of dating sites including JDate.com and ChristianMingle.com, declined a request for comment. Officials of Great Hill did not return calls seeking comment.
Great Hill’s disenchantment with its investment comes after a failed run it made at the company in 2010. Weakness in Spark’s flagship JDate, a dating site for Jewish singles, led Great Hill to try to take over the company. Its bid was rejected, and Spark has since redoubled its efforts to court members for its Christian-oriented sites. Earlier this month, Spark reported that average paying subscribers to its Jewish sites declined 1 percent for the third quarter to 83,700 while subscribers to the Christian sites grew more than 27 percent to 197,000.
The company also reported net loss for the quarter of $2.6 million (-11 cents per share) compared with a loss of $1.7 million (-8 cents) for the same period last year. Revenue grew 9 percent to $17.4 million.
Spark Chief Executive Greg Liberman indicated during the company’s third quarter conference call that the strategy of focusing on its Christian sites has paid off.
“To be clear, investing in and fortifying Chris-tian networks foundation for long-term, sustainable growth remains a key focus,” he said, “and that investment continues to yield benefits.”
