Li Ka-shing foundation buys Facebook stake: source

SAN FRANCISCO Mon Dec 3, 2007 8:32pm EST

SAN FRANCISCO (Reuters) - Online social network Facebook.com has closed a $60 million investment by Li Ka-shing through the billionaire Hong Kong tycoon's foundation, a source familiar with the deal confirmed on Monday.

The source said the deal, which values Facebook on the same $15 billion terms as the stake Microsoft Corp took in the fast-growing social network site in October, involves an investment by the Li Ka Shing Foundation.

Li-backed companies such as Hutchison Whampoa Ltd and TOM Group were not involved, the source said.

The stake gives Li a 0.4 percent share of Facebook. Microsoft's holdings represent another 1.6 percent.

The All Things Digital blog, owned by Wall Street Journal publisher Dow Jones & Co, reported the deal on Friday.

A Facebook spokesman declined to comment. Spokesmen for Hutchison and Li's foundation also declined to comment.

Earlier on Monday, TOM denied it had invested in Facebook after reports of the investment by Li, TOM's major shareholder, helped push its shares 48 percent higher in Hong Kong.

"There is speculation that Li's investment could translate into closer ties or a partnership between TOM and Facebook," an analyst with a U.S. investment bank said of TOM's leap. "But I believe it's too early to talk about any co-operations."

Founded in 1980, the Li Ka Shing Foundation has focused on funding a variety of health, education and environmental projects in recent years.

But it also has taken stakes in various Internet projects, including a $45 million investment in May in Joost, the Internet television site founded by the co-founders of Skype.

Facebook opened the investment round to a variety of partners but only Microsoft and Li's foundation have participated, the source said.

Providence Equity Partners LLC, a $21 billion media-focused private equity firm, looked at joining the latest round but walked away, said a second source familiar with those negotiations, citing the high valuation Facebook had sought.

In October, Microsoft announced its $240 million investment that valued Facebook at $15 billion. Facebook also agreed to let Microsoft buy an additional $260 million worth of shares should Facebook seek further capital.

In prior rounds dating back to 2004, Facebook has taken about $40.7 million from venture capital investors including PayPal co-founder and former CEO Peter Thiel along with Accel Partners, Greylock Partners and Meritech Capital Partners.

(Additional reporting by Vinicy Chan in Hong Kong and Michael Flaherty and Tiffany Wu in New York; Editing by Braden Reddall)

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