LinkedIn Value Tops $2 Billion After Tiger Global Investment

Date: Wednesday, July 28, 2010
Author: Ari Levy, Bloomberg

Tiger Global Management LLC, a hedge fund founded by Chase Coleman, paid $20 million for a stake in LinkedIn Corp., valuing the professional-networking website at more than $2 billion, said two people familiar with the matter.

The purchase, at $21.50 a share for about a 1 percent stake, was from existing shareholders and doesn’t represent new investment, said one of the people, who declined to be identified because the sale has not been disclosed. LinkedIn, based in Mountain View, California, is closely held.

Hedge funds, private-equity firms and mutual-fund companies, facing a dearth of initial public offerings, are taking bigger stakes in private technology companies to benefit when they go public. Tiger’s investment follows its December purchase of shares in Zynga Game Network Inc., another Internet company that like LinkedIn is a candidate for an IPO.

“It’s relatively low risk for these companies to buy pre- IPO and gives them the benefit that generally they’re going to trade up,” said Ted Hollifield, a partner at law firm Dorsey & Whitney LLP, who works with venture capital firms and startups.

Coleman declined to comment, as did LinkedIn spokeswoman Krista Canfield.

According to SharesPost Inc., an online marketplace for privately held companies, LinkedIn has 105 million shares outstanding. The purchase price of $21.50 a share values the company at $2.26 billion.

From the start of 2008 through June, there were 44 venture- backed IPOs, about half the number in 2007 alone, according to the National Venture Capital Association. Over that stretch, more than 800 startups were acquired, the group said.

LinkedIn Valuation

LinkedIn has more than 70 million members who use the site to hunt for jobs, recruit employees and connect with industry experts. Chief Executive Officer Jeff Weiner said in an interview last month that LinkedIn is fielding inquiries from bankers interested in the company, without identifying which firms or saying whether an IPO is forthcoming.

In 2008, LinkedIn raised $76 million in funding from investors, including Bain Capital Ventures. The sum remains in the bank, Weiner said.

“We don’t need the capital,” he said. Other investors include Sequoia Capital and Greylock Partners.

Coleman was previously a technology analyst at Julian Robertson’s Tiger Management LLC, where he worked from 1997 until 2000, the year Robertson closed his $6 billion fund to outside investors. Tiger Global, based in New York, was seeded by Robertson.

Tiger Global’s investment in Zynga was part of a $180 million investment led by Russian firm Digital Sky Technologies, which has also invested in Facebook. Last year, T. Rowe Price Group Inc. invested in Twitter Inc.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net