Interesting report in the Financial Times that outlines JPMorgan’s Digital Growth Fund is looking to buy a 10 per cent stake in Twitter for $450 million, valuing the company at a heady $4.5 billion overall.
It is not clear if the JPMorgan fund will make a direct investment or buy out existing investors and shareholders with Twitter’s approval. But the fund does not intend to buy shares on the secondary market, the people said. The deal has not closed.
JPMorgan’s Digital Growth Fund was established this month to give rich clients exposure to fast-growing private tech companies, and follows a similar effort by Goldman Sachs to invest in Facebook.
The fund has raised $1.22bn to date, according to a filing with the Securities and Exchange Commission. But it plans to raise $1.3bn in total, and will have a maximum of 480 investors, say the people. JPMorgan expects to earn commission of at least $13m from the fund.
Besides the Twitter stake, JPMorgan hopes to invest another third of the fund in one other private web company – possibly games maker Zynga or telephony provider Skype.
The final third of the fund will be allocated among six other companies, they said – possibly to include coupons site LivingSocial, or Gilt, the flash-sales site. Twitter will be the fund’s focus. The company has 253m unique users per month, up 85 per cent from a year ago, according to venture capital firm Kleiner Perkins Caufield & Byers.
Note that user count in the final paragraph – that’s well above where I forecast Twitter was when I last wrote about the size of the network and further underlines how the march towards a billion users is definitely a two-horse race, although it’s worth noting that Facebook has added around 20 million new users itself in the past two weeks.
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