Canadian buyer aims to improve Pornhub owner's reputation

By Maiya Keidan and Isla Binnie

TORONTO, March 17 (Reuters) -

Ethical Capital Partners (ECP) this week

bought

Pornhub owner MindGeek, its first ever acquisition, with the aim of improving the internet platform's reputation, the young Canadian private equity firm's partners said on Friday.

ECP partner Sarah Bain said they were confident that MindGeek operates legally and responsibly. Less than a year ago, concerns about the company's business model triggered the departure of its top management.

"We realized that an opportunity to correct misconceptions is really at the heart of what this business needs," Solomon Friedman, partner at ECP, told Reuters.

"This is a company that has everything and such enormous untapped potential."

Solomon, who is based over four hours north of Canada's main financial hub in Toronto in Ottawa, said MindGeek's proprietary online safety tools were highly sophisticated and could be applied outside the adult industry.

"The big players - the Facebooks, the Twitter, Reddit - they cannot touch what MindGeek has had to do in order to keep what is adult content safe and secure."

Friedman also said ECP, which launched in 2022, according to its website, had no imminent plans to make major restructuring changes or hive off parts of MindGeek's business.

He declined to comment on outstanding legal issues.

MindGeek, founded in Montreal but now based in Luxembourg, has been at the centre of the adult entertainment industry since the advent of video streaming, but has faced controversy.

Pornhub was

cut off

by Visa and Mastercard's payment networks in 2020 after investigations identified unlawful content on the platform.

A French government minister said on Friday he will

meet

the new owners of Pornhub to ensure minors are protected and that the site does not break any laws.

"We are confident that MindGeek operates legally and responsibly," Bain said. "We look forward to meeting with stakeholders, such as payment processors to communicate the path forward for MindGeek and its holdings and to correct any misperceptions."

MindGeek has since said that Mastercard reinstated access to its subscription sites, but both the payments firms suspended ties with the company's advertisement arm TrafficJunky after a lawsuit raised questions over whether they could be facilitating child pornography.

ECP is one of just four private equity firms headquartered in Ottawa, the nation's capital, compared with 118 in Toronto, according to the Canadian Venture Capital & Private Equity Association (CVCA).

Bain said neither MindGeek nor ECP had any exposure to Silicon Valley Bank whose collapse a week ago has sent technology companies

seeking alternative funding

. (Reporting by Maiya Keidan in Toronto and Isla Binnie in New York Editing by Marguerita Choy)