Hoping to seize upon investor excitement over social-networking companies like Facebook, JPMorgan Chase is planning to start a new fund to invest in an array of Internet and new media companies, people briefed on the matter told DealBook on Sunday.
The proposed fund, which will be run by JPMorgan’s asset-management unit, is seeking to raise between $500 million and $750 million from wealthy investors to pour into privately held technology companies like Twitter and the social-buying site Groupon, these people said.
The idea is to place bets on companies with established business models and steady revenues before they go public in widely anticipated stock sales.
Several popular social-media companies, including the professional social network LinkedIn and the Internet radio company Pandora, have already filed to go public. Those filings presage even more eagerly-anticipated stock sales by Groupon and especially Facebook.
Interest in these companies has been running high recently. Groupon raised $950 million in financing from several big investment firms, after having spurned a $6 billion takeover offer by Google. And trading in existing shares of these companies on private markets has been frenzied over the past few months, with Facebook valued at $53 billion on SharesPost, a so-called “secondary market.”
JPMorgan plans to buy and sell shares in these companies on behalf of clients, and will not directly invest the firm’s own money, one of these people said. But simply having a base of ready base of retail investors could give JPMorgan’s investment bank a competitive edge in winning business from the fledgling technology firms. Analysts have long viewed retail customers as a more stable source of capital, compared to money that moves in and out of stocks owned by hedge funds and other institutional investors.
Read on.dealbook.nytimes.com/2011/02/13/jpmorgan-to-start-social-media-fund/
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