Facebook announced today that they had accepted an investment from Digital Sky Technologies in exchange for a 1.96 percent equity stake, valuing the company at $10 billion. The company also plans on purchasing an additional $100 million in common stock that will help Facebook employees cash out some of their vested shares. While Alley Insider speculated last week that this was a move by Facebook to try to attract other investors, the deal is now final.
The latest investment suggests that Facebook will continue to pursue their goals as a private company for at least another couple years as Mark Zuckerberg suggested in a statement to Reuters last week. Facebook will be hosting a teleconference later today with details and we’ll be sure to post any notes from the call. Below is the press release:
PALO ALTO, Calif., May 26 /PRNewswire/ — Facebook today announced that Digital Sky Technologies (DST), one of the leading internet investment groups globally with significant stakes in Eastern European and Russian internet businesses, has made a $200 million investment in Facebook in exchange for preferred stock, representing a 1.96 percent equity stake at a $10 billion valuation.
In addition, DST has indicated that it is planning to offer to purchase at least $100 million of Facebook common stock from existing common stockholders that would facilitate liquidity for current and former employees’ vested shares in the company. The details of the plan are expected to be announced to eligible participants during the summer. Consistent with Facebook’s practice with other recent investors, DST will not be represented on the Facebook board or hold special observer rights.
“This investment demonstrates Facebook’s ongoing success at creating a global network for people to share and connect,” said Facebook CEO Mark Zuckerberg. “We’ve worked hard to bring more than 200 million people – 70 percent outside of the U.S. – onto Facebook to share with friends, family and co-workers. A number of firms approached us, but DST stood out because of the global perspective they bring – backed up by the impressive growth and financial achievements of their internet investments. We’re looking forward to working with the DST team.”
“Our investment experience in other regions reveals the tremendous value social networking companies create as they redefine how people communicate and interact,” said Yuri Milner, chief executive of DST. “By every important metric – user growth and engagement, technological innovation and financial performance – Facebook is on a similar trajectory, though on a much more global scale. We’re delighted to invest in Facebook, Mark and his management team as they make the world more open and connected.”
Based in London and Moscow, DST is a well-respected investor in a number of successful internet companies, holding significant interests in Russia and Eastern Europe, such as Mail.ru, Forticom and vKontakte. DST’s main assets account for over 70 percent of all page views in the Russian-speaking internet and its social networks are the market leaders in more than 13 countries, addressing a combined population of more than 350 million.
DST is run by its three partners who have complementary backgrounds in operations, investments and finance: Yuri Milner, previously CEO of Mail.ru, the #1 Russian language website; Gregory Finger, previously head of the Moscow office of NCH, a multi-billion dollar hedge fund; and Alexander Tamas, previously co-head of internet and software coverage in EMEA for the Investment Banking Division of Goldman Sachs. With its advanced understanding of opportunities in technology and social media, DST is a good fit for Facebook and an insightful partner that can help unlock additional growth opportunities.
Also of interest is that the investment firm is an investor in Facebook’s competitor vKontakte. Perhaps this Facebook investment is a diversification. The last international investment that Facebook received was from Li Ka-Shing, the Chinese billionaire, back in November of 2007. Since that investment and the Microsoft investment, Facebook hasn’t received any other rounds of funding.