7/4/2011 10:30:25 AM

China SWF Aims to Buy Facebook Shares

China's sovereign wealth fund and financial firm Citibank are reportedly interested in buying a stake in social network Facebook.

(July 4, 2011) -- China's sovereign wealth fund is reportedly eyeing a stake in social networking site Facebook.

An anonymous investment fund source -- who had previously bought shares of Facebook from insiders -- told the Business Insider that the China Investment Corp (CIC) is positioning itself to possibly buy a sizable stake in Facebook. Additionally, the business news website reported that Citibank is also reportedly trying to obtain as much as $1.2 billion worth of Facebook stock on behalf of two sovereign wealth funds - one from China and another from the Middle East.

Industry observers claim that China's sovereign wealth fund aims to purchase a Facebook stake because Chinese leaders want to control social media. As a private firm, Facebook would need to approve any sale of its stock to China. Meanwhile, Facebook Founder Mark Zuckerberg is reportedly keen to invest in the Chinese market, which has more than 400 million Internet users, the Business Insider reported.

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In January,  the New York Times reported that a Goldman Sachs group that manages money for pension and sovereign funds turned down an offer to invest in Facebook before another section of the bank did just that. The $20 billion Goldman Sachs Capital Partners (GSCP), the internal private corporate equity group led by Richard Friedman, reportedly was offered an investment opportunity in Facebook before the bank used its balance sheet to purchase a $450 million stake, and, in turn, sell shares on to wealthy investors.

According to the Times, Friedman, “was concerned about Facebook’s $50 billion valuation and the terms of the deal.”

To contact the aiCIO editor of this story: Paula Vasan at pvasan@assetinternational.com; 646-308-2742