JP Morgan is in talks to buy a stake in micro-blogging website Twitter, the Financial Times has reported.
The banking firm aims to acquire ten per cent of the social networking website for $450m (€327m). This deal would value the company at $4.5bn, two months after Kleiner Perkins led a funding round that valued Twitter at $3.7bn.
This month JP Morgan launched its Digital Growth Fund, which has so far raised $1.22bn, to give rich clients an opportunity to invest in fast-growing private tech companies. Last month Goldman Sachs set up a special purpose vehicle for high-net-worth individuals to invest in Facebook.
Demand for investing in pre-IPO tech companies has led to speculation of a second tech bubble. “There is a growing feeling that the current new investors will dump the stock on a gullible public on an IPO. Or they will play the usual round of ‘pass the parcel’. As long as you are not the last one holding the stock,” Richard Holway, a tech analyst at TechMarket View, wrote today.
In addition to the stake in Twitter, JP Morgan is looking to invest another third of the fund in a different tech company, likely to be Zynga or Skype, while the final third will be invested in six other companies, such as social buying websites LivingSocial or Gilt Groupe.
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