Elevation Partners, the private equity fund owned by U2’s Bono, has just seen its initial $210 million investment in Facebook quadruple in value, to $750 million dollars, with the recent growth in the social network’s valuation to $50 billion.
Elevation’s 1.5 percent stake in Facebook has risen with the company’s valuation after Goldman Sachs invested $450 million in the company.
Although the megastar’s fund previously hadn’t disclosed the amount it invested, now the San Jose Mercury News and other media outlets say Bono’s fund had picked up about $210 million in private stock when the social network was worth $13 billion.
The Irish rocker will be pleased that one of his business ventures has succeeded, due to the fact that his investment firm Elevation Partners, was once voted the worst in America.
Elevation Partners earned its title of worst American investors atfer they purchased 25% of mobile communications company Palm. According to The Sun, the value of Palm plummeted and lost the investment company a huge chunk of money.
Now Goldman’s investment in Facebook is giving Bono’s fund some more needed gains. Elevation’s co-founder Marc Bodnick, credited with landing the social network deal along with a stake in Yelp, told the Mercury News, “this might be the best we’ve had in a year. The investments we made in that category look prescient. Elevation has just needed to stay patient for awhile.”
Facebook, the largest social networking site, has seen its estimated value leap from around $30 billion to $50 billion, and there have been crazy rumours going around that Facebook will close down in March.
However, Facebook is still a privately held company, which is why Bono cannot sell his shares yet and cash in. Despite much hype, Facebook has yet to float on the stock the market, with many analysts saying that the latest round of investment could actually delay the company from doing so.
Nate Elliott, principal analyst for Forrester Research, believes that Facebook didn’t even need Goldman’s cash on the operational front and that the deal was about re-positioning Facebook as tech superbrand, as well as giving the company the chance to give some money back to initial investors and employees without floating.
“I don’t think the Goldman Sach’s investment has happened because Facebook needs the money operationally,” Nate Elliott said. “It has enough money to build the business in the way it needs to be developed from this point on.”
“The investment happened, in our opinion, so that Facebook had a way of letting early investors and employees take money out of the company without it needing to IPO.”
“We have tried to find operational costs it might need to cover while building the business, but its advertising revenues more than cover their costs.” [via The Telegraph (UK), Online Social Media and All Facebook]