A Canadian private equity firm founded last year for this purpose has bought MindGeek, the beleaguered parent of Pornhub and many other well-known adult entertainment assets. Ottawa-based Ethical Capital Partners announced last week that it has acquired Luxembourg-based MindGeek – whose operations are based in Montreal – along with its vast portfolio of websites and production companies, for an undisclosed sum.

Members of the firm, of which there are six listed, include a criminal defense lawyer, a former superintendent of the Royal Canadian Mounted Police, and an accomplished investor and executive who also happens to have founded Meta Growth, a company that “would ultimately become Canada’s largest cannabis retailer and third largest cannabis entity in Canada by revenue,” according to the bio for Rocco Meliambro, who chairs Ethical Capital Partners.

Meta Growth, which was founded in 2015, was itself acquired by High Tide in 2020, making it the country’s largest cannabis retailer at the time with a reported 65 outlets. But that is not Meliambro’s only claim to cannabis fame. Per his bio, “He was also a member of a group that helped found Canna Royalty Inc., ultimately acquired by Cresco Labs.”

The MindGeek acquisition is unorthodox on many levels, especially by individuals who admittedly have no prior experience with adult entertainment and yet have publicly committed themselves to bringing a new level of transparency and responsibility to all of its properties, including its most notorious website.

“Pornhub has been mired in controversy amid multiple lawsuits alleging the site’s owner allowed child sexual abuse material and other illegal content to be uploaded and profited from it,” reported ctvnews.ca following the announcement of the sale. “MindGeek’s website boasts 115 million daily visitors to its various porn properties, which include websites such as YouPorn, Redtube, and Brazzers.”

Adding to the lawsuits, MindGeek revenue was curtailed in 2020 when MasterCard and Visa prohibited the use of their cards following a damning editorial by New York Times columnist Nick Kristof. Limited transaction activity was subsequently reinstated, but the damage was done, leaving open the opportunity for someone to attempt the resurrection of Pornhub.

A source with knowledge of the situation who wishes to remain anonymous says that the negotiations between Ethical and MindGeek have been underway for about a year, a likely indication that the purchaser spent a great deal of time on due diligence.

Interestingly, this is not the first attempt by someone from the cannabis industry to buy MindGeek. In 2021, another group of investors under the name Project Narsil – after the The Lord of the Rings sword – also made an offer.

That effort was “led by Chuck Rifici, a former Liberal Party volunteer CFO who went on to make a lot of money in legal weed,” reported The Logic. Rifisi founded Tweed Marijuana Inc. with Bruce Linton in 2013. Tweed was renamed Canopy Growth Corporation in 2015 following Rifici’s departure from the company, but he remained a major shareholder and invested in other cannabis companies in addition to his subsequent attempt to acquire MindGeek.

“Project Narsil was shrouded in a fog worthy of Tolkien’s Misty Mountains and a non-disclosure agreement that one prospective investor described as ‘one of the more vicious I’ve ever seen.’” added The Logic. “Though the proposed deal ultimately fell through, Project Narsil offers a glimpse at how, even amid media controversy and legal threats, some investors saw the Montreal-founded, Luxembourg-based technology company MindGeek — owner of the likes of Pornhub and Brazzers — as a lucrative opportunity.”

An opportunity apparently considered as or more lucrative than cannabis. Even though Project Narsil was unsuccessful, their investor pitch deck, which The Logic saw and reported on, outlined in three steps what Rifici and his partners had in store for MindGeek:

1) Acquire a company, which the deck identifies only as “Narsil,” but which sources confirmed was MindGeek;

2) Restructure the company and rehabilitate its reputation, making it ripe for a sale or a merger with a SPAC; and

3) Get very rich in the process.

“The acquisition target is one of the most recognized and undervalued brands in the adult entertainment and technology sector,” read the pitch deck.