Finance house JPMorgan Chase & Co. recently established a new $1.2 billion Digital Growth Fund that’s looking to invest in social media as a big growth opportunity for investors, and now the fund looks to be getting ready to make its first major investment. According to reports in the Financial Times, the Wall Street Journal, and the New York Times—all citing unidentified sources—the company is looking to buy a minority stake in social networking service Twitter. How much? The reports put the deal in the 10 percent range, with JPMorgan willing to put up to $450 million into the company.
If true, that would mean JPMorgan places the market value of Twitter around $4.5 billion. There’s no indication yet whether JPMorgan would execute the deal by taking over existing investors’ stakes in the company or by doing a deal directly with Twitter.
Spokespeople for both JPMorgan and Twitter have declined to comment on the reports.
A valuation of $4.5 billion would be a significant uptick for Twitter, which recently secured a $200 million investment by a group led by Kleiner Perkins Caufield & Byers, which put the market value of the company at around $3.7 billion. However, since then, some of the potential power of social media has become plain on the international stage, with the service playing a major role in protests in Egypt that led to the resignation of President Hosni Mubarak. And Twitter was very active last night as untold thousands of avid users “livetweeted” the Academy Awards ceremonies for their friends and followers.
JPMorgan Chase’s Digital Growth Fund is in some ways a response to Goldman Sachs’ raising $1.5 billion to invest in Facebook.