Cash-rich China is apparently looking to purchase a rather large piece of social networking website Facebook, enough to give it a say in decision making within the company and to make millions of users slightly worried.
Nicholas Carlson of business website Business Insider has been told by THREE separate sources that China has suddenly become VERY interested in the world's largest online property, whose membership is bound to reach one billion users (up from 750m) once it becomes officially available in the most populous country in the world (ed: even though Facebook is not in China yet, there are already more than half a million Facebook users from there).
The first source was someone within a fund that buys Facebook stock from former employees, while the second one said that Citibank is trying to buy up to $1.2 billion worth of Facebook stock for China's sovereign wealth fund (SWF) as well as another Middle Eastern SWF. The third source, from an investment bank, said that he also heard of a rumour about Citibank wanting to buy Facebook shares on behalf of China.
Last week, GSV Capital bought Facebook stock (225,000 shares at $29.28) giving Facebook an implied value of $70 billion, which means that Citbank may be looking to acquire nearly 41 million shares on behalf of wealthy third parties or roughly 1.7 per cent of the company.
Carlson however points out that China is unlikely to have any say in Facebook's overall strategy because the Chinese shares would be too low to matter and these would be ordinary, non-voting stock. Also SWFs are focused on acquiring money rather than political meddling, but more importantly, Facebook knows that messing up with its users could see them leaving in droves to competitors; the spectre of Myspace is there to remind it that even giants can fall.
Current big Facebook shareholders like Microsoft and Li Ka-Shing have used their stakes to better their partnership with the social network. Microsoft's investment dates from October 2007 and may see Microsoft-owned Skype being rolled out in Facebook as early as next week. As for Li Ka-Shing, his investment allowed him to get the first Facebook phone out via Three mobile and InqMobile.