Cupid feeling unloved after Toscafund sells stake

Cupid chief executive Phil Gripton is still in the dark about share sale but remains positive. Picture: Lisa Ferguson

The asset manager had been building up an interest in the Edinburgh-based firm since buying an 8.5 per cent stake in the business a year ago, but Cupid revealed yesterday that Toscafund has now offloaded more than 11.2 million shares, worth about £5.1m.

Cupid chief executive Phil Gripton told The Scotsman that he was not aware of the reason for the share sale, while Toscafund – founded by Martin Hughes in 2000 – did not respond to requests for comment.

Gripton, who took over as the dating website firm’s boss in December when co-founder Bill Dobbie stepped down, said: “Martin Hughes has his own agenda and it’s for him to decide what he wants to do. We’re waiting to hear what has happened.”

When asked if he was concerned about the share sale, Gripton replied: “Not particularly. We spent three days with investors immediately after our results and everyone was supportive of our story.”

Before taking over the top job, Gripton was managing director of dating services at the company and previously headed Edinburgh-based online marketing firm Bigmouthmedia. Dobbie remains as a non-executive director at Cupid and is its largest shareholder, with a 17.6 per cent stake.

The firm, which floated in June 2010, fell to a £2.8m loss last year, a period that chairman George Elliott described as “challenging”. It faced allegations that staff had posed as customers in a bid to encourage customers to buy subscriptions, but an independent review found the claims were “without substance” and Elliott said the company had emerged from the “frustrating experience” in a stronger position.

The Aim-quoted outfit also sold its “casual” dating websites – including BeNaughty, CheekyLovers and Flirt – to Grendall, an investment firm registered in the British Virgin Islands and managed by co-founder Max Polyakov. The sites included in the sale accounted for about 70 per cent of Cupid’s revenues, but the sale will provide the firm with £26m in cash over the next three years.

About 320 staff moved to Grendall following the £45.1m disposal in July, leaving Cupid with a 225-strong workforce, spread across America, France, the UK and Ukraine.

Last year’s losses were in sharp contrast to the £4.2m profit the business delivered in 2012. Sales from continuing operations – the more traditional dating sites such as Cupid.com and Uniform Dating – were flat at £26.6m.

Toscafund, which counts Scots-born Aviva and FirstGroup chairman John McFarlane as a non-executive director, last year teamed up with Glasgow-based London & Scottish Investments to buy £147m of commercial property, including buildings in Aberdeen and Glasgow.

The investments in Cupid were made through its Mid Cap “activist equity” fund, which launched in February 2008, and its “event-driven” Opportunity fund, set up almost nine years ago.

The hedge fund manager, based in London and Dubai, owns about 27 per cent of dermatology specialist Sinclair IS Pharma and has a 15 per cent stake in Speedy Hire, the tool rental group that last month warned its annual profits would fall short of previous forecasts.