How you can get a slice of Facebook

If you would like to invest in Facebook analysts recommend you open an offshore account rather than buying shares in local companies that have stakes in the social network.

Investment company, Blackstar and multimedia firm,  Naspers both own a small stake in Facebook, but analysts believe that acquiring a share in either of these companies will not result in any significant gains from Facebook’s public listing.

Paul Whitburn of Regarding Capital Management says because of the size of the stake that both companies have in Facebook, a shareholders’ return on their investment would be diluted and will not result any significant gains.

According to Abdul Davids, head of research at Kagiso Asset Management, Naspers has a 0.72% stake in the social networking site through its investments in Russian firm MailRU and Chinese social network Tencent valuing its stake at approximately R5.5bn, provided that Facebook is valued at $100bn (R764bn) when its lists.

In January 2011 Blackstar invested $400 000 (R3m) in Facebook through FBDC Offshore Investors managed by Goldman Sachs.

By going through either of these companies, “you’re not going to get a lot of exposure to the Facebook IPO itself,” said Whitburn.

“Investors should rather get the share directly by opening an account offshore – this will be your best bet,” he says or by investing in local unit trusts with exposure to Facebook, says Theo Botha, an analyst at Stanlib.

Botha has cautioned that it’s still early days and that the markets response to the company will only be evident upon its listing. But once all is revealed Botha adds that Stanlib could be looking at investing in the company through one of its funds.

Facebook filed for an initial public offering (IPO) on Wednesday that could value it between $75bn and $100bn.  The network’s founder Mark Zuckerberg’s stake in the business could be worth $28.4bn (R217bn), making him wealthier than Google’s co-founders and almost on par with Larry Ellison, who started Oracle, which engineers hardware and software for PCs.

With more and more social-networks listing, Whitburn and Davids have cautioned South Africans against this buzz warning of a “tech-bubble”.

Whitburn says the over evaluation of these companies, could be dire when the bubble pops. “Facebook is a not a bad business, it’s probably better than its peers in in the industry, but it’s still grossly overvalued,” warns Whitburn.

*Rand/ Dollar exchange rate taken at R7.64

Source: Moneyweb