May 15 Investment firms TPG Group Holding
Advisers Inc and Dragoneer Investment Group LLC jointly reported
an 8 percent stake in Etsy Inc, the Brooklyn-based
online retailer of handmade goods, Etsy disclosed in filings on
The disclosure comes just weeks after activist hedge fund
Black and White Capital LP, which owns roughly 2 percent of
Etsy, urged the company to explore a potential sale. Etsy's
shares have fallen more than 30 percent since their initial
public offering (IPO) two years ago.
Etsy shares jumped more than 8 percent in after-hours
trading to $12.30.
TPG "has contacted representatives of Etsy to offer to
engage in discussions regarding strategic alternatives," it said
in a filing with the U.S. Securities and Exchange Commission,
where it disclosed a 4.3 percent stake. Dragoneer has a 3.7
"We are now reviewing our strategic and operational plans to
ensure Etsy is focused on the most value-enhancing near- and
long-term opportunities," Etsy's CEO Josh Silverman said in a
statement in response to the filings on Monday.
Silverman, a former eBay Inc executive, was
appointed CEO two weeks ago. He took the role from Chairman and
CEO Chad Dickerson, who stepped down after nine years in the
seat. The role of chairman went to Etsy board director Fred
Etsy was a darling of the artisanal set at the time of its
IPO, but it has struggled as sales have slowed and new channels,
such as Facebook Inc's Instagram Inc have created
alternative platforms for the independent sellers Etsy caters
to. The company has also had to pour more money into marketing,
after years of being able to rely on word-of-mouth.
Etsy, which reported a net loss of $421,000 this quarter,
announced it is laying off 80 people, roughly 8 percent of its
workforce, earlier this month.
It is not uncommon for private equity firms to do so-called
"toehold investments" for reasons that include long-term
investing and getting to know management. While such investments
can sometimes morph into deals, as with Leonard Green & Partners
LP's investment in BJ's Wholesale Club Inc, they often do not.
Dragoneer, an early stage investor in Etsy, has worked with
TPG before, including its investment in music streaming service
(Reporting by Lauren Hirsch in New York; Editing by Lisa