By Agency Reporter

Thursday, 25 Nov 2010

Facebook Incorporated’s soaring valuation is spurring shareholders to slice and dice their stock, giving investors everywhere from Silicon Valley to Wall Street a chance to bet on the company, Bloomberg reported on Wednesday.

EB Exchange Funds LLC, based in San Francisco, as well as New York firms, Felix Investments LLC and GreenCrest Capital LLC, had opened Facebook funds for investors looking to get a piece of the social-networking company and its half-billion users.

By creating derivatives of the stock, the investment firms were helping Facebook keep its shareholder count at 499 or less, the maximum number a company can have before it has to disclose results to the public. They are also potentially creating a new class of assets for investors, letting them tap fast-growing private companies like Twitter Incorporated, Zynga Game Network Incorporated and LinkedIn Corporation, all valued in the billions of dollars.

”It‘s proving to be a really effective way for accredited investors to invest in private companies,” said Founder, EB Exchange Funds, Mr. Larry Albukerk.

”I don’t necessarily know if it’s a good investment or not – I just know people want to invest and we provide a means for them to do that,” he added.

Facebook, based in Palo Alto, California, had more than tripled in value since March to $40.7bn, according to SharesPost Incorporated, an exchange for private companies. Zynga, the creator of online games such as ”FarmVille” and ”FrontierVille,” was worth $5.4bn, and social-networking service Twitter is at $3.4bn. SharesPost values professional-networking site LinkedIn at $2bn.

EB Exchange was buying as much as $15m in Facebook shares for a limited liability company that‘s open to outside investors, according to a November 1 letter to prospective shareholders obtained by Bloomberg.

While Albukerk confirmed that he created the LLC entity, he declined to comment on whether it was investing in Facebook, citing regulatory restrictions that limited what he could say. A United States Securities and Exchange Commission filing from October says EB Exchange is raising $15m for a ”pooled investment fund.”

According to the investor letter, units in the LLC are offered in $10,000 multiples, with a minimum investment of $100,000. EB Exchange makes money by charging a five per cent fee to enter the LLC and then another five per cent when the shares were distributed after an initial public offering or acquisition. An LLC can have no more than 99 participants.

Across the country in New York, Boaz Rahav, an 18-year veteran of the financial industry, founded GreenCrest earlier this year after talking to institutional investors who were having trouble finding a way to invest in Facebook. He expects to raise at least $100m for his Facebook-specific fund.

 

Source: Punch