According to a report from Business Insider, China�s sovereign wealth fund — China Investment Corp. � wants to get shares of Facebook. (Hey, who doesn�t?)
To this end, it looks like CIC is working with investment bankers at Citigroup to pull off a transaction, which could amount to about $1.2 billion. Of course, there is no shortage of money. CIC has more than $330 billion in assets.
Interestingly enough, Facebook might be receptive. There�s no secret that the company�s CEO and cofounder, Mark Zuckerberg, desperately wants to get into China. After all, to maintain its hefty growth rate, that country will be critically important.
Thus, with an investment from CIC, there may be a warmer reception to Facebook in China. The company may even want to push for some type of strategic agreement as well.
But it could be tricky. Wasn�t Facebook a key part of the downfall of repressive governments in the Middle East? Besides, other top Internet companies, such as Google (Nasdaq:GOOG), have had extreme difficulties maneuvering in China.
But there is a precedent for such a strategic investment � in May 2007, CIC invested $3 billion in Blackstone Group (NYSE:BX), getting a 10% stake. The goal was to allow Blackstone to get better access to deals in China.
On its face, it looked like a good idea. But so far, there hasn�t been much traction with the relationship. If anything, the investment actually marked the peak of the private equity bubble and the shares plunged.
In other words, could Facebook be facing the same thing? Keep in mind that the firm could fetch a valuation of more than $100 billion and just about everyone on the planet is clamoring to get shares. Is this really a good time to buy such a stock?
Tom Taulli�s latest book is �All About Short Selling� and he has an upcoming book called �All About Commodities.� You can find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.
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