In March 2022, Jared Kushner was called to testify in front of the Jan. 6 House committee regarding the attack on the Capitol that occurred in the waning days of his father-in-law’s presidency. In his private life, meanwhile, Kushner was doing deals, including one that took him to a niche and soon-to-be troubled corner of Amazon’s e-commerce empire.
Weeks ahead of his testimony in Washington, Kushner and others from his private equity firm, Affinity Partners, took a boat from their beach office in South Florida to meet with a company called Unybrands at its headquarters in nearby Miami, according to people familiar with the matter who asked not to be named because the talks were private.
Unybrands, founded in 2020, was one of many players in the then-booming market of Amazon seller aggregators. Companies in the space took advantage of low interest rates and pandemic-driven growth in e-commerce to collectively raise more than $16 billion from top names on Wall Street and in Silicon Valley with the intent of rolling up independent sellers on Amazon’s marketplace.
Kushner started Affinity in 2021, shortly after leaving his advisory role in the White House alongside his wife, Ivanka Trump. With Affinity, he attracted headlines for raising some $2 billion from the Saudi government, a highly controversial move given the cozy relationship between the Trump administration and Saudi Crown Prince Mohammed bin Salman, who U.S. intelligence officials said approved an operation to capture and kill journalist Jamal Khashoggi in 2018.
When it came to the Amazon aggregator market, Kushner was jumping in at the worst possible time. The tech bubble was bursting following a record wave of venture investment in 2021, when investors across the globe pumped $621 billion into startups and high-growth companies, more than double the prior record set a year earlier, according to CB Insights data. Rising rates and soaring inflation in 2022 led to slowing growth and layoffs across the industry, including at Unybrands.
Kushner was introduced to Unybrands by a tech entrepreneur whose company also had financial ties to Saudi Arabia, WeWork co-founder Adam Neumann, two people with knowledge of the matter said. Prior to its failed IPO in 2019, WeWork had raised billions of dollars from SoftBank and its Saudi-backed Vision Fund.
Neumann’s family office invested in Unybrands around the peak of the aggregator market in 2021, according to filings in the U.K., where the company has an operation. Neumann, who was ultimately ousted from WeWork by top SoftBank execs, introduced Kushner to Unybrands early the following year.
For about 90 minutes on that March day, members of Unybrands’ C-suite fielded questions from Kushner and his team, and showed off some of the eclectic mix of products the company had acquired: dietary supplements, cookware, microwavable weighted stuffed animals and the top-selling nail dryer on Amazon, the sources said.
Kushner was impressed by what he saw, they said. A month after the meeting, he wrote Unybrands a check for $75 million, according to documents viewed by CNBC.
Affinity’s investment in Unybrands, which hasn’t previously been reported, was one of the private equity firm’s earliest deals. It’s since backed a handful of companies, including a fitness technology startup, an online classifieds operator and a solar financing company, with its investments totaling a reported $1.2 billion to date.
As Kushner was getting into Unybrands, tech stocks were cratering. The IPO window slammed shut in 2022 and venture funding dried up for cash-burning startups. The Amazon aggregator space, which had blossomed during the pandemic, began to unwind as consumers tightened their belts and more people returned to brick-and-mortar stores. Aggregators that, less than a year earlier were throwing lavish cocktail parties and giving away Teslas for referrals, were suddenly strapped for cash.
The cost of doing business on Amazon — from advertising and listing fees to shipping and fulfillment — continued to creep up, making it harder for aggregators to run the companies they’d acquired profitably. Layoffs ensued, and some companies sold off underperforming brands.
The most high-profile collapse was Thrasio, which was once valued at a reported $10 billion before filing for bankruptcy in February of this year. The company then lost its CEO and a string of top executives, CNBC previously reported.
Distressed deals have been occurring across the space. Razor Group, which counts L Catterton and BlackRock among its investors, acquired SoftBank-backed Perch in March. Heyday, backed by Khosla Ventures, has been exploring tie-ups with other aggregators, a former employee said. The company laid off its entire creative and brand teams in November, said the person, who asked not to be named because of confidentiality.
Heyday approached Dragonfly, whose backers include L Catterton, about a merger but the talks fell apart in recent months, according to a separate person with knowledge of the matter.
Heyday didn’t respond to a request for comment.
Unybrands also began seeking a buyer. In February, the company sent a deck to prospective acquirers and investors, a person familiar with the matter said.
Unybrands said in an emailed statement that the company explored strategic opportunities as the aggregator space “was full of disruption” in 2023. The company and its investors ultimately decided to continue raising funds internally, Unybrands said.
Unybrands confirmed to CNBC that Affinity invested in the company in 2022, though it didn’t specify how much it raised from Kushner’s firm.
‘Kick-the-can’ mergers
Some of the consolidation is being fueled by lenders who want to avoid write-downs, sources close to a number of deals told CNBC. Jason Somerville, a founding partner of consulting firm GW Partners, which has advised sellers and aggregators on deals, echoed that sentiment.
“I call it more of a kick-the-can type of merger, where you have common debt or common equity mergers, and they jam them together to maybe restructure the debt,” Somerville said. “Pretty much 100% of these are being done in a distressed situation.”
At Unybrands, year-over-year revenue growth had slowed to 11% in March 2022, from 27% in February and 34% in January, according to internal documents reviewed by CNBC.
Following a continued slide, the company laid off roughly 10% of its staff in November 2022, according to people familiar with the matter. Unybrands held another round of job cuts last year, and again at the beginning of this year, the people said.
Unybrands told CNBC it grew almost 20% in 2022, reaching its target, though it didn’t say how much of that expansion came through acquisitions. The company also said it’s “never had a month with declining sales” and has focused on profitability and generating positive cash flow.
Unybrands didn’t directly respond to questions about whether it’s conducted layoffs. The company said headcount has grown from 115 employees in January 2022 to more than 230 employees as of this year.
For Kushner, the investment in Unybrands was part of an expanding portfolio. Kushner, now 43, was embarking on a new career in private equity after four years in the Trump administration. Prior to that, he spent nearly a decade running his family’s real estate business.
Affinity is backed by Saudi Arabia’s Public Investment Fund, which oversees $925 billion in assets and has spent years cozying up to big-name investors, particularly in technology, in an effort to diversify the kingdom’s revenue away from oil. Affinity also reportedly received hundreds of millions of dollars from wealth funds in the United Arab Emirates and Qatar.
The sources of capital received scrutiny due to Kushner’s diplomacy work in the Middle East while he was in the White House, as well as his friendly relationship with the Saudi crown prince. The House Oversight Committee launched an investigation into the investment in 2022, looking into whether Kushner’s financial interests influenced Trump’s foreign policy.
“Your support for Saudi interests was unwavering, even as Congress and the rest of the world closely scrutinized the country’s human rights abuses in Yemen, the murder of journalist Jamal Khashoggi by Saudi assassins tied to Crown Prince Mohammed bin Salman, and Saudi Arabia’s crackdown on political dissidents at home,” Carolyn Maloney, D-N.Y., who was chair of the Oversight Committee, wrote in a letter to Kushner in June 2022.
Republicans on the committee have delayed Democrats’ efforts to subpoena Kushner over the matter.
On Wednesday, Senate Finance Committee Chair Ron Wyden, D-Ore., initiated a new probe into Affinity, saying in a release on his website that he’s seeking “information pertaining to the tens of millions in payments Kushner is receiving from the Saudis and other foreign sources every year while exploiting private investment fund disclosure loopholes to shield the arrangement from public scrutiny.”
A representative for Kushner didn’t respond to requests for comment.
Taking control
Unybrands was still trying to expand as early as February of this year despite the turmoil in the market. The company announced a new funding round — an undisclosed amount from unnamed investors — alongside the acquisition of another company that would bring in six new brands to its portfolio. The investment would also go toward repaying $300 million in debt owed to asset management firm Crayhill Capital Management from a financing round in 2021.
At the same time, Unybrands overhauled its board. Co-founder and CEO Ulrich Kratz, a former Barclays and Goldman Sachs executive, resigned as a director, along with the company’s two other co-founders, according to filings.
Kratz hailed the new funding as a “huge day” for Unybrands in a February LinkedIn post.
“We’re now positioned better than ever to serve our customers and to continue to provide attractive exits for successful entrepreneurs,” he said.
While Unybrands provided scant details about the investment, filings with the U.K.’s corporate register show that in March, Unybrands transferred control of the company to a new entity owned by Kushner and affiliated with Affinity called AP Investments II.
Two years after Kushner’s first meeting with the company, U.K. records show Unybrands reincorporated as UBHoldCo. Filings indicate that AP Investments II maintains control of the business.
“The relevant legal entity holds, directly or indirectly, 75% or more of the shares of the company,” the filing says, referring to the firm’s control of UBHoldCo.
Unybrands acknowledged the ownership change in a memo to shareholders about the funding round last month, though it didn’t confirm Affinity’s involvement.
“As part of the financing the Crayhill debt was repaid,” Unybrands wrote in the memo, which was viewed by CNBC. “It also became necessary to make some changes to our corporate structure, which has meant that our group’s operating assets have been transferred to a new entity.”
UBHoldCo lists Ian Brekke, Affinity’s chief compliance officer, and Affinity partner Asad Naqvi as directors. Unybrands’ original holding company also remains active and lists two directors. One is Affinity partner Bret Pearlman, a former Blackstone managing director who also co-founded Elevation Partners with Roger McNamee. The other is Max Fink, a partner at Neumann’s family office, 166 2nd Financial Services.
It’s unclear how the entities and their boards operate within Unybrands’ corporate structure. The company notified shareholders late last month that “our investor” recently finalized its tax structuring, and that it would share more details on the financing soon, according to a document viewed by CNBC.
Unybrands told CNBC it’s in the process of consolidating its operations under one entity with one board made up of its “operating partners” and investors. The company confirmed its most recent funding round included Affinity, alongside Neumann’s family office and angel investors. The company added that Kratz continues to lead the business.
Representatives from Affinity didn’t respond to multiple requests for comment. Brekke, Naqvi, Pearlman and Fink also didn’t respond to requests for comment.
Neumann, who reportedly developed a relationship with Kushner when he was in the Trump administration, had ties to Unybrands through its co-founder Eugen Miropolski, former COO of WeWork.
Several high-profile executives have also recently departed Unybrands since Affinity effectively took control. CFO Robyn Laguette stepped down in March, according to her LinkedIn profile. Mark Goldfinger, who was vice president of growth and was involved in the Affinity deal, left in April, he confirmed in an email to CNBC.
Kushner has never spoken publicly about Unybrands or acknowledged his firm’s investment in the company. He said recently that he’s focused on investing and won’t be returning to the White House should Donald Trump defeat President Joe Biden in the November election.
“I’ve been very clear that my desire at this phase of my life is to focus on my firm,” Kushner said at an Axios event in February.
While Unybrands may end up as a relatively small write-off for his multibillion-dollar firm, other questions are still swirling.
In October, Kushner appeared on the “Lex Fridman Podcast,” a popular show that’s drawn a range of guests from Amazon founder Jeff Bezos and OpenAI CEO Sam Altman to Ye, the rapper formerly known as Kanye West.
Asked about Affinity’s backers, Kushner said he hasn’t been accused of violating any laws or ethics rules, and said one of his goals with the firm is to build “economic links” between the Gulf and Israel.
“I think we’re doing very well with it,” Kushner said. “In terms of the criticisms, I think that I’ve been criticized in every step of everything I’ve always done in my life. And so what I would say is this business is actually an objective metric business. It’s about returns. So in three, four years from now, five years from now, see how I do. Hopefully I’ll do very well, and judge me based on that.”