A Russian investment group on Tuesday paid $200 million for 1.96 percent of Facebook, valuing the social-networking giant at $10 billion. Digital Sky Technologies, which also has stakes in Eastern European and Russian Internet businesses, acquired preferred stock.
DST also plans to offer to purchase at least $100 million of Facebook common stock from existing stockholders. DST executives will not take a seat on Facebook’s board or hold special observer rights.
Facebook Chooses DST
“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 coworkers. 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.”
Based in London and Moscow, DST holds significant interests in Internet companies such as Mail.ru, Forticom and vKontakte. DST’s assets account for more than 70 percent of all page views in the Russian-speaking Internet. What’s more, its social networks are the market leaders in more than 13 countries, addressing a combined population of more than 350 million.
“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, CEO 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.”
Contradictory Signals
Facebook was founded in 2004 and has yet to turn a profit. The company expects to see positive cash flow sometime next year. From a valuation standpoint, it’s noteworthy that…