Tuesday 12 December 2017

Davy clients hold $60m in Facebook before IPO

Nick Webb

Nick Webb

Irish investors set to make sixfold return on stake in just two years

MORE than 100 well-heeled private clients at Davy stockbrokers are likely to make at the very least a sixfold return on their investment when $100bn-valued Facebook floats later this year.

Market sources have indicated that Davy private clients hold close to $60m worth of Facebook shares following an investment in a fund operated by US group Tiger Global.

Last week, Facebook filed documents at the US Securities & Exchange Commission in preparation for a $100bn flotation this summer. It is the biggest technology company float since Google went to the markets nearly eight years ago. Morgan Stanley is the lead adviser for the IPO.

Tiger Global invested around $164m in Facebook, building a 1 per cent stake in the social media giant from December 2009 to June 2010. The transaction valued Mark Zuckerberg's firm at just $24bn. Those shares are now thought to be worth up to $100bn.

Davy clients are believed to have paid around $10m for their stake in 2009. Apart from Bono and Facebook staff members, the Davy private clients are believed to be the only Irish private investors in the company.

Davy is thought to have invested in a number of Tiger funds. The Facebook punt was made through Tiger's fifth investment fund, with Davy believed to have invested client money in the sixth and seventh funds as well.

The stockbroker has also put its wealthy clients into funds operated by major technology investment group Silverlake. Irish clients have exposure to hot technology firms including LinkedIn, Zynga and Skype through these various investments. Davy declined to comment.

It has been suggested that Facebook's 400 Irish staff hold shares worth an average of €100,000 each, although this is likely to be heavily skewed towards longer serving and more senior members of staff. Facebook's Irish chief Colm Long and top designer Paul Adams -- who recently joined with Twitter founder Biz Stone to invest in Irish start-up Intercom -- are likely to be the big Irish winners from a flotation.

The Sunday Independent first revealed that Bono had become an investor in Facebook back in 2009. He is a partner in Silicon Valley private equity firm Elevation. The company spent $90m buying 2.5m shares in November 2009 and another $120m to pick up five million shares in June 2010.

Elevation holds a 1 per cent stake, which is worth up to $1bn based on current racy valuations. However, it is likely that Bono and his fellow partners may directly own as little as 10 per cent of that investment. Partners in private equity firms traditionally put up around 10 per cent of the cash for any investments, with the remainder coming from other institutional or private players.

Sunday Indo Business

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