Facebook has been valued at $66.5bn in a significant share sale in the social networking site ahead of its expected initial public offering next year.
Interpublic, the advertising group, sold half of its 0.4 per cent stake in Facebook for $133m to an undisclosed buyer.
The sale is likely to put the spotlight back on to the secondary market for private company stock. The loosely regulated market attracted scrutiny from regulators earlier this year after shares in internet companies such as Facebook and Groupon began trading at multibillion-dollar valuations without public listings.
Facebook’s implied valuation has increased more than fivefold in less than two years, driven largely by demand for small stakes in the company available on the secondary market. Interpublic, which owns McCann Erickson and other advertising agencies, disclosed its Facebook stake in a filing with the US Securities and Exchange Commission earlier this year after it grew to a value of more than $200m.
People close to Interpublic said it owned slightly less than half of 1 per cent of Facebook, and paid less than $5m for its stake in 2006. At that time, the social network was valued at between $1bn and $2bn. Like other media groups, Interpublic makes small investments in new technology companies in the hope of identifying strategic partnerships and potentially realising a financial gain.
Interpublic won the right to invest in Facebook by committing to spend $10m for its clients on the social network, an early win for such a website seeking to bolster its image with advertisers. Facebook is taking an increasingly large share of internet display advertising.
“Facebook has since become a part of daily life for hundreds of millions of people around the world,” said Michael Roth, Interpublic chief executive.
“Its ubiquity has meant the strategic value of our initial investment has moderated, while the financial value of that stake appreciated significantly,” he said. “As a result, when an attractive opportunity to divest a portion of our position recently presented itself, we decided it made sense to do so.”
Interpublic’s divestment of half its stake is being seen as a sign that the secondary market for the social network’s shares may be reaching its peak.
Facebook has the right of first refusal when its shares are sold on the secondary market. However, people close to the deal said that it was not the buyer in this case.
The social network is understood to be working towards a public offering next year.
Interpublic is among a number of media companies that are aggressively buying back shares. It plans to use the pre-tax gain of $132m from the Facebook sale to increase its existing share repurchase programme from $300m to $450m.
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