Zoosk Said to Seek 2014 U.S. Initial Public Offering

Photographer: Fred Dufour/AFP via Getty Images

A wall of photos of potential male dates for an Online dating service. Close

A wall of photos of potential male dates for an Online dating service.

Photographer: Fred Dufour/AFP via Getty Images

A wall of photos of potential male dates for an Online dating service.

Zoosk Inc., the online-dating site that gained popularity by helping make romantic links between Facebook Inc. (FB) users, is seeking to create its own connection with investors in public markets.

The San Francisco-based company, which offers to match people online and charges for premium services, has picked Bank of America Corp. (BAC) to lead its initial public offering, along with Citigroup Inc. and Royal Bank of Canada, according to people with knowledge of the matter. Oppenheimer & Co. and William Blair & Co. will serve as co-managers, said the people, who asked not to be identified because the information isn’t public.

While online dating has become popular in recent years, the business is challenging to sustain in part because after customers find a match, they tend to stop paying for the service. Zoosk, which claims more than 40 million active members, lets people create a profile and search for singles for free. It has bolstered revenue by providing additional social features -- such as sending relevant discounts to couples -- to keep users coming back.

In the $2.1 billion dating services business, Zoosk has a 2.9 percent market share and trails Match.com and EHarmony Inc., according to researcher IBISWorld. Match is owned by the conglomerate IAC/InteractiveCorp (IACI), while EHarmony is closely held. Spark Networks Inc. (LOV), operator of ChristianMingle and JDate, is publicly traded, with a market capitalization of about $133 million.

Allison Braley, a spokeswoman for Zoosk, declined to comment, as did representatives from Bank of America, RBC, Citigroup, Oppenheimer and William Blair.

Online Dating

Close to 4,000 businesses compete in the dating services market, according to IBISWorld. Zoosk said in May that first-quarter revenue topped $40 million and visitors to the website more than doubled from the prior year.

The company was founded in 2007 by Iranian entrepreneurs Alex Mehr and Shayan Zadeh, who met as students at Tehran’s Sharif University of Technology and moved to the U.S. in 2000.

Zoosk gained users quickly by tying itself to Facebook and the hundreds of millions of users who were posting personal information and photos. It’s since grown in mobile, an increasingly competitive market featuring applications for smartphones and tablets like Tinder and Badoo.

Following Facebook’s troubled IPO in May 2012, there was a lull in social-networking deals until Twitter Inc.’s debut last month. Twitter is up 89 percent from its IPO price.

Zoosk has raised more than $60 million from investors including ATA Ventures, Canaan Partners, Bessemer Venture Partners and Crosslink Capital.

To contact the reporters on this story: Leslie Picker in New York at lpicker2@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net; Pui-Wing Tam at ptam13@bloomberg.net

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