The Hong Kong billionaire Li Ka-shing has reveled in a recent conference call that he raised his stake in the social networking site Facebook with some $40M more. That amount comes on top of his previous commitment of $60M, which brings his total investment in the popular site to $100M. What is his actually equity position in the Facebook, however, remains mystery to date, but considering what Microsoft has bought for their $240M (1.6%) it might turn out that Li Ka-shing’s ownership is perhaps below 1%. For Microsoft it might be quite clear what is the driving force behind such pity deal (locking down some advertising inventory and keeping Facebook away from the rival Google), but what the benefits for the Honk Kong billionaire are is very unclear for us. May be everything comes down to a potential IPO, which as we understand is not going to happen any sooner than 2010, despite some recent rumors for a possible IPO in as early as 2009. We think there is no other viable exit for your investors than going public if you have already taken more than $300M funding money off little to no steady revenues. There was no word on today’s Facebook pre-money valuation.
Here is what Li, who is chairman of telecom company Hutchinson Whampoa, told reporters on his company’s conference call:
“Facebook is doing very well and we could have some synergy between the 3G services of Hutchison and Facebook, so the customers could use Facebook on mobile phones.”
The combination of the social network and 3G networks is seen by Stacey Higginbotham from GigaOm as the most logical reason why Li Ka-shing was so eager to increase his stake in Facebook. Facebook users can already access the site on their mobile phones through the Facebook mobile page.
Well, this might be the answer of our question from above what are the benefits for the Li Ka-shing in the context of Microsoft’s deal with Facebook.
A little more Facebook history and facts.
The latest comScore metrics, we have seen, revealed that Facebook is actually havingover 100M unique visitors per month.
Peter Thiel, cofounder of PayPal and managing partner of the Founders Fund was the first angel investor in the company. He invested $500,000 into Facebook in early 2004. Later Accel Partners poured $12.7 million more in funding, at a valuation in the $100 million range.
The next year , Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as returning investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was in the $525 million range.
Facebook is reported to have turned deals down from Friendster, Yahoo, Viacom and the mighty Google a few months ago when Zuckerberg has chosen Microsoft to partner with. Microsoft de-facto has invested $240 million into Facebook for just 1.6 percent of the company in October 2007. This put the company’s valuation at over $15 billion on just $150 million in annual revenues.
Mr. Li Ka-shing is the Chairman of Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited. Cheung Kong (Holdings) Limited is the flagship of the Cheung Kong Group which has business operations in 55 countries around the world and employs about 250,000 staff. In Hong Kong alone, the Group includes eight listed companies with a combined market capitalization of approximately HKD981 billion (31 October 2007). Hutchison Whampoa Limited is a Fortune Global 500 company.
It would be interesting to find out what’s the equity position Mr. Li Ka-shing has secured for his $60M considering what Microsoft has bought for their $240M.