Facebook valued at $US11.5 billion on new private company index – but app developer outranks Twitter

Social networking giant Facebook has been valued at $US11.5 billion in a new index created by private stock exchange SharesPost, prompting new talks of a potential float for the company later this year.

The index, which tracks seven major sites, also valued Twitter at $US1.44 billion and executive networking site LinkedIn at $US1.31 billion.

The Facebook valuation has been noted as more than double the price offered by Russian company Digital Sky Technologies when it put forward a share purchase offer last year. The recent valuation places Facebook’s shares at $US26 each based on the estimate of 442.4 million diluted shares, an increase from Digital Sky’s $US14.77 proposal.

However, the $US11.5 billion figure is also lower than the $US15 billion cited by analysts when Microsoft purchased a 1.6% stake in the company in 2007.

SharesPost founder and chief executive Greg Brogger says the index is the first of its kind and will provide more information for investors in a bid for greater transparency in the market.

“Since our launch just a few months ago, we’ve connected buyers and sellers directly in the negotiations of more than $US229 million worth of transactions and seen more than $300 million worth of posts to buy and sell,” he said.

“Part of our job is to support those discussions by surfacing as much data and analysis as possible – the SharesPost Index is the next logical step in those efforts.”

The SharesPost index is designed as a way for investors to trade in companies without having to wait for an initial public offering, with the index cited by analysts as tracking companies likely to go public at some point.

The sites included are Facebook, Twitter, LinkedIn, gaming company Zynga, Linden Lab, car manufacturer Tesla Motors and building materials group Serious Materials.

Valuations are created through numbers suggested in previous financing arrangements, recent price of shares sold on SharesPost, average valuations from analysts and the midpoint between the highest offer to buy and the lowest offer to sell.

The information on the index will be available to any user, but only “qualified buyers” may buy and sell stock. These are defined as institutional investors, or people with net worth of at least $US1 million or a salary of at least $US200,000 during the previous two years.

SharesPost says the index will help potential buyers and sellers determine which companies are worth trading, and could enable start up companies to monitor investment demand before IPOs.

“We’re trying to create a reference point,” Brogger told BusinessWeek. “There’s so little information available in the private-company space. The index gives people an easier way to have a benchmark they can use in conversation about a company’s value and then the ability to track changes in the value of these companies.”

While Facebook has not made any comment for some time on the prospects of an IPO, recent developments within the company suggest a float will occur in the near future. Last November the site reportedly created a dual-class share structure, giving chief executive Mark Zuckerberg more voting power and control.

It is understood the Facebook board, which includes entrepreneur Marc Andreessen, Jim Breyer, Don Graham and Peter Theil, have also been given more control. A similar move was taken by Google before it went public in 2004, in order to give its founders more control over the long-term development of the company in contrast to shareholders’ short-term interests.

Zuckerberg also said last year an IPO would occur at some point, but he gave no further details.

SharesPost said Zynga, which is San-Francisco based and produced the “Mafia Wars” and “FarmVille” game apps for Facebook, was valued at $US2.61 billion – more than double the $US1 billion figure put forward by Terry Schallich, head of capital markets at Pacific Crest Securities last year.

Tesla Motors, backed by Google founders Sergey Brin and Larry Page, is the only company on the index to have already posted a filing for an IPO, with a valuation of $US1.28 billion as of 1 March.