Applovin is a Controlled Entity With Significant Insider Ownership
We are doing research on a company, Applovin. We learned that corporate control is centralized in three entities. This makes them a Controlled Entity. They also have a few insiders (5 workers and 2 investors) that hold 85% of the common stock. Another two ‘independent’ investors hold or held 14%, and Silicon Valley Bank’s wealth management arm held 4% before they were restructured.
“Governance risk is a key consideration with ownership and control,
board oversight and effectiveness, and management being key
considerations. AppLovin is a controlled company under NASDAQ
corporate governance requirements with Adam Foroughi (co-founder,
CEO, and Chairperson), Herald Chen (President and CFO), and KKR
Denali Holdings, L.P. (KKR Denali) holding all outstanding Class B
super voting common shares (20 votes per share) which provides
roughly 93% voting control. AppLovin relies on NASDAQ controlled
company exemptions to avoid certain corporate governance
requirements. Accordingly, shareholders of AppLovin are not
afforded the same protections as shareholders of other
NASDAQ-listed companies with respect to corporate governance.” Source Here.
According to a recent SEC filing Schedule 13G on December 31, 2022, by Arash Adam Foroughi, CEO of AppLovin, he and one other party (either Herald Chen or KKR Denali) have the authority to direct the vote of all shares of capital stock of the Issuer. Mr. Foroughi’s SEC filing here and KKR’s SEC filing here.
Herald Chen, CFO, used to work for KKR before joining AppLovin, in the role of Head of Technology, Media and Telecom in the Americas, and Mr. Chen led the firm’s investment in AppLovin, according to Reuters, source here.
We are surprised to find out that KKR has been selling shares in Applovin. In May 2023, they sold 15 million shares. Today, it was announced, that as of August 18, 2023, they expect to sell another 10 million shares. Both are private placements, one back to the corporation and one to an investment advisor to…